Show Notes
In this episode of Startups For The Rest Of Us, Rob and Mike put together a list of the most common things that are working and effective for SaaS landing pages.
Items mentioned in this episode:
Transcript
Rob [00:00]: In this episode of Startups for the Rest of Us, Mike and I discuss the 10 elements of highly effective SaaS landing pages. This is Startups for the Rest of us, episode 256.
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 [00:28]: And I’m Mike.
Rob [00:29]: And we’re here to share our experiences to help you avoid the same mistakes we’ve made. So [what are this week?] sir?
Mike [00:33]: Well I caught a nasty virus over the weekend so I was hugging the toilet the other day. I could not keep food down. So it’s what? Wednesday now, and I’m just kind of getting back into the swing of things and trying to catch up from having not gotten anything done the past several days, but it was pretty brutal.
Rob [00:49]: Do you get sick a lot?
Mike [00:50]: No. I almost never get sick. I’ll get sick like once every couple of years and that’s about it. But when it comes, it’s just brutal. I’ll be in bed for a couple of days just because I just can’t get out of bed. I remember making fun of you a little bit because you said that you were sick once, and you were so sick that you couldn’t even listen to podcasts, I was that sick. I remember [?] it was like, “Oh, I shouldn’t have made fun of him.”
Rob [01:14]: I totally know what Rob is talking about right now. That is funny. So, we’ve gotten a lot of comments on last week’s episode, episode 255, where you talked about moving on from AuditShark and that whole decision. You’ve received Tweets, you’ve received DM’s, we’ve received several e-mails, there’s more than a dozen comments on the podcast blog with folks just talking about how they felt this was one of our best episodes and basically wishing you luck and appreciating that you put yourself out there with the vulnerability and were willing to discuss this. I think it really hits home with people to see, it’s not only vulnerability, that’s a big part of it, but it’s also just to see you or anyone come out and talk about mistakes that they’ve made and to basically help show other folks how not to make those mistakes. I think that was really the point of last week, was to kind of bring it all to the front so, A: You could kind of have a post mortem. But then, the entire listener base for this podcast can kind of peer into it and think to themselves, “Wow, am I doing that right now?” or “Am I going to do that with my next product?” And really take it as al lesson for the community rather than a single person hiding away in a basement making these mistakes and no one learning from it. How have you felt about the response?
Mike [02:29]: It’s been overwhelmingly positive. I haven’t really seen anything negative about it, just a lot of thanks and appreciation. I don’t know. I guess it’s humbling. It’s more than I could have expected or hoped for. I guess. I don’t know. It was one of those episodes where, it was coming and I knew it was coming for a while, and I was kind of dreading it at the same time.
Rob [02:48]: Very cool. So let’s move on to what we are talking about this week. We received an e-mail from Stefan at vividwebcopy.com. He says, “Hi Rob and Mike. How about an episode SaaS landing page design?” And Stefan is actually, it looks like he is a copywriter, vividwebcopy.com, if you want to go check his stuff out. But Mike and I have a lot of thoughts on this topic, and so we wanted to weigh in. And I specifically put together this list. I was trying to boil it down into the most effective elements that I see that go into these landing pages that work and I want to talk about the typical SaaS landing page rather than going outside the box. Obviously, if you know the rules and you’ve been doing this and you’re an expert, UX guy or UI woman, you can break the rules. You don’t need to listen to something like this. But if you’re wondering about the most common and most effective things in general that are working for SaaS landing pages, that’s what we’re going to be talking about. And this typically a SaaS home page, although it can be often you copy your homepage to make landing pages for, say, Facebook ads and other stuff, because your homepage should really be that landing page that gets someone acquainted with your product quickly. So we’re not going to talk about long form landing pages, like getdrip.com right now, is a long form sales letter in essence. We’re going to talk about that because we are going to talk about the more traditional SaaS landing pages and you could see examples of these at places like bidsketch.com, planscope.io, getambassador.com, hittail.com, all of those are the more traditional scene that we’re going to be talking about. So to dive in, the first element of highly affective SaaS landing pages are to design it for first time visitors, to get in the mindset that you really want a first time visitor to come, get acquainted, and go down a very specific path that you’re outlining for them. If you have customers who are coming to your homepage to log in, they will find the log in box. Don’t make that prominent, don’t put that right smack in the best part of the screen right above the fold, this is for first time visitors, trying to educate them, get their interest [peaked?], have them figure out if it’s for them, and then get them to take the next step in the action. So often times, I will see a log in or a sign in button right in the same top navigation that you’re trying to sell to people and I disagree with that approach. I think it should be a tiny link above or maybe far off to the right. Like, there should be a separation because your customers are going to find a way to log in, don’t worry about that, but your goal is really to get those first time visitors to follow this path that you have in mind.
Mike [05:14]: Yeah. And the essence behind that is just to not give them false paths that they’re going to go down and waste time because it’s very easy to, and I’ve done this myself, I’d go to a web page and you just land on it and then there’s a log in button and you’re like, “Oh well, I kind of want to see the pricing and see what that stuff is like” and maybe it’s not obvious where to see some of that stuff, so you click log in and then it’s just giving you a username and a password fields to have you log in and there’s nothing else. There’s nowhere else for you to go on that page so then you end up going back and you get a little bit confused about where to go. So the whole idea of this is to make sure that when somebody is coming to your page, and they don’t know anything about your site or your application that you’re essentially walking them through everything. So that’s why Rob is talking about designing it for the first time visitor. You have to make a blanket assumption that the person coming to your site knows absolutely nothing. So because you’re designing these pages for the first time visitor, you have to figure out what the goal of that page is, what is it that you want them to do, why should they care about your product, and what are the next steps that you want them to take? Do you want to ask them for a trial, do you want to get them to get into pipeline there, do you want them to come back to your website in the future? Rob, you had a great talk a few years ago at the business software which was – I forget the exact title but it was something along the lines of, “The purpose of your website is not to get them to buy your app, it’s to get them to come back to your website.”
Rob [06:33]: Yeah. It was called “The number one goal of your website” and it just talked about how returning visitors are between six and twenty times more likely to purchase from you. I mean, very few people purchase on the first try. There are exceptions to that. If you have a price point, I’d say starting between maybe $10 a month, we’re talking SaaS here right. But anywhere under, let’s say $15-$20 a month and you have a high curiosity factor where you’re kind of giving someone something that they kind of curious about trying. So an example of this could be like HitTail. HitTail has this promise of, “We’re going to give you keywords that you’ve never seen before.” There’s this high curiosity of like, “Wow. What are my keywords going to be? And I can get them right away?” So you’re very likely to be able to sign up to directly for a trial and not actually need to go through an educational process first. It’s a low commitment thing. Most apps are not like that, I’ll say. I mean if you have a proposal app or even a marketing app or affiliate software, that kind of stuff is less about curiosity and it’s more about, “Wow, does this fit me? Why is this better than other things that I’ve seen?” and getting [signed?] before a trial right away is just a lot lower, there are lower odds to doing that and that’s where you need to start thinking about, “Okay, I shouldn’t push this trial right away but how can I start educating and how can I bring them back to my site in the future?” And bringing them back, of course, these days, re-targeting is a big one, and then getting folks on your e-mail list. These are the two biggest drivers of being able to start to build a relationship and bring people back. So instead of having a few people signed up, you get that 6 to 20 times higher likelihood of folks signing up. The second element of highly effective SaaS landing pages is to have a gripping headline. And I have a pretty simple formula for this that I’ve talked about in the past, but it’s to just have three things in place. The first is to make a promise in the headline, the second thing is to have an action word, like a verb, and the third one is to either have a directly stated “You” or “imply you” meaning, that you’re talking to the person who is reading the headline. So as an example, I’ll come back to HitTail again, because it fits this well. The headline at hittail.com is “Guaranteed to increase your organic traffic” and the promise is that it’s guaranteed to increase traffic, the action, the verb, is “Increase” and then there’s a “You”, it’s “your, you, or you’re”. You rarely should be talking about your app. Here’s another headline for HitTail that wouldn’t work nearly as well, “The best long tail SEO keyword tool.” Because there’s no promise, there’s no action and there’s no you. So I’m not saying that this is a hard and fast rule that all headlines need to follow, but I’ve found that it’s a really good starting point for me. When I sit down to write a brand new headline, I say, “What can I write first that follows these three rules?” and then I start massaging and thinking of other headline ideas. So I think it’s a good solid framework to begin with.
Mike [09:23]: Yeah. When you’re coming up with the headlines, it’s definitely all about the person who’s visiting the site, and again, it goes back to who is coming there and what are they coming for. But when they’re looking at the page, they’re going to be thinking, “What’s in it for me?” And this simple formula really gives them a good idea of what’s in it for them. You’ve got that promise, the action and you’re talking specifically about them. You don’t want to be talking about your app or the things that it does or how it works or anything like that. You want to be telling them how it’s going to benefit them.
Rob [09:51]: If you want more information on headline writing, you can head over to copyhackers.com and they have 7 different e-books and book two is $19 and it’s called “Headlines, subheads, and value Propositions” and that’s definitely a decent place to start. There’s a lot of info on headlines but that’s nice because it’s specifically for software and startups. Third element of effective SaaS landing pages are to have at least one visual element here at the top of the page. So as Mike and I walk through this list, I want you to imagine it as going from top to bottom. It really is a prescriptive order of starting with that headline, having a visual element either next to it or below it. And then from there, we go to element 4, element 5. Again, these are not hard and fast rules, once you know what you are doing you can mess with these things. But when you are starting out as a framework, this is a good solid place to start from. So this third element which is visual elements, I’m thinking of something like a video, short video, less than 90 seconds for sure or an image. And if you go to the web page of hittail.com, you’ll see an image that describes what HitTail does just with a couple of circles and some arrows. So it’s almost like a video, it doesn’t move but it has enough text and some arrows that it shows you what it does in that image and I think that’s important. I think just having an image of a random person sitting there clip art staring at a screen, I don’t think it’s helpful because it doesn’t actually talk about your value proposition or talk about your benefits or demonstrates something. I think this visual element needs to serve a purpose. So either an image that actually serves a purpose, a short video that gives some high level benefits, or the third one that really is ideal but is a lot harder to pull off, is an e-mail capture form related to the functionality of your application. So I don’t mean something that says, “Hey, here’s some education about this topic of how to find more affiliates or how to be an e-mail marketer of SEO, but actually starts to demo the functionality of your app. So an example of this is if you go to the bidsketch.com homepage, and you’ll see that Ruben has a form there where you enter your e-mail and it doesn’t sign you up for a course, it doesn’t send you education, it actually creates a proposal, it e-mails you a proposal basically demoing the functionality of the app. And so, although, he will send follow-up e-mails after that, that first one you get is essentially your first [foray?] into seeing how the app actually works. And I think if you’re able to pull that off in a way that’s pretty elegant and actually shows people how your app’s working, I think that’s a big win as well.
Mike [12:18]: Yeah. If you look at the Bidsketch website right there on that homepage it says, “Get a sneak peak at a sample proposal” so that kind of meets the element two that you said, a gripping headline, where it follows that simple formula for promised action and then talking about you, and then has that email capture form which says, “Send it to me” which gives you that sample proposal. So you get a couple of different things there and those two elements are combined. And Ruben has been doing this for a long time, so he has been able to effectively put those things together. And it may take you a couple of times to do this sort of thing but again, the goal of this episode is to kind of lay these things out and talk about the different elements and how they can be added to the page and in which order they should be added in order to give you a starting point. Once you’ve done this and you start testing it and checking with your customers to see how well it’s converting, then you can start playing around with these things, but this is just the framework that we’re following through.
Rob [13:09]: And the fourth element is to provide a couple of benefits, not too many, typically use the rule of three here where I would veer on the side of having 3, 6 or 9. Probably, the fewer the better, it kind of depends. If you go to planscope.io, you’ll see that right down below his visual element which is a video, Brennan has three benefits, [?] more estimates, one sentence describing what that means, “deliver better projects and grow your business”. It’s a really nice example of, boom, having three left to right, three benefits of what you’re going to get using planscope. If you go to hittail.com, you’ll actually see it’s three sets of three and each set is aimed at a specific market segment that is using HitTail essentially gets value, it’s SEOs, it’s internet marketers, and it’s e-commerce folks, and those are kind of the key three core areas that use HitTail, so both of them work. I think the thing that I would recommend is, when you’re providing benefits like this, stay grounded. The biggest mistake I see with benefits is that people go so high level that it doesn’t even make sense anymore, like it’s so vague that any app could do it. So I really don’t like benefits like, “Saves you time, makes you more money” because doesn’t every app do one of those two things? I mean, really that’s the point today, is that every business application needs to do that. So I think if you find yourself saying that, like come down one or two steps to be a little more specific, and again, like Brennan says on Planscope, “Win more estimates.” If you went up a step you could say, “Make more money” but that isn’t helpful. You got to drop it down one level or two. Deliver better projects to grow your business. These are things that there is some tangibility to them. And if you’re having trouble thinking of these benefits, what I would tend to do is to- if you make a list of benefits and a lot of them seem like features, like actual features you have built into the app, then read that feature and say, “All right, we built XYZ feature so that” “So that” is the key phrase there and you complete that sentence. So we have built this keyword suggestion tool so that you will get more keywords that you can then get more traffic from blah blah blah. And that’s your benefit after that “So that” period of the sentence.
Mike [15:18]: When you’re describing these benefits, whether you’re going with 3, 6 or 9 it doesn’t really matter. The headlines are going to be I think a little bit on the generic side because they tend to be only several, 3 to 5 words for the title of that benefit. I mean if you have them separated out into 3, 6 or 9 sections, the words there are going to be relatively tight. But then underneath it, when you start talking about what the details of that benefit, you can be very specific about it. So for example on planscope.io, Brennan says, “Win more estimates,” and then underneath it, he says, “Our collaborative estimating features help Planscope customers close 2 to 3 times more clients. And that piece right there, closing 2 to 3 times more clients, is helpful in a couple of different ways. One, it tells you exactly what the benefit is and two, it is very specific. And the fact that it’s able to close 2 to 3 times more client projects, means more money for you and that is, in a way implied but it is also led from the “win more” estimates headline. So keep those sorts of things in mind when you’re putting together those benefits. Another thing that you can do is you can take those benefits and separate them out onto different pages and talk more specifically about those. A lot of times when people are building a website for a new SaaS product, it can be difficult to figure out what information needs to go on the different pages. So make it simple, just start out by outlining the different benefits and don’t talk too much about them. And then later on, as you start to grow the site and you expand the footprint of the website, then you can talk about those benefits individually on their own pages and then you can link to them from your homepage some place. But I don’t think that you need to do that from day one and you don’t want to overwhelm somebody on your homepage with every single piece of information you possibly have, because that becomes a long form sales page. And I don’t think that’s what you want to start out with. You want to start out with educating them about your product, and then if they start if they start drilling into your website and are interested in those other features, you can talk more about them and you’ll be able to get more information about them according to your bounce rates and how long people are staying on the different pages by looking at the analytics behind those pages as people are visiting them.
Rob [17:24]: I’d also like to point out, I just noticed on Planscope’s homepage, their headline is “Gain total control of your agency” and that fits right into the three elements I said before of making a promise, having an action and having “you or your” in the headline. Element five of highly effective SaaS landing pages is social proof. This one is very common and very necessary. I do not think this is optional. Social proof can come in many forms and actually believe that having all three of them is ideal. The first and most common one people think of are testimonials from customers. I always recommend you have head shots with those as well if possible. So you have a head shot of a person and the name linked to their website. You don’t want anonymous testimonials or just a first name or something. And then edit their testimonial down to just the core part, so if it can be 10 words or 15 words, you’re doing really well. Pretty much the best SaaS landing pages I see have testimonials. The next piece to have, press logos, whether you’ve been mentioned, whether online or offline press. If people are going to recognize that logo, have that in there. And the third one is to put a vanity metric in there. So if your app has analyzed a billion keywords, if you’ve sent out $100 million of proposals or your clients have through your app, if you’re a web host and there were 9 billion page views through your network last month. I mean these are very much vanity metrics. They are not business driven and they don’t help your bottom line, but they are basically bragging rights to show you that other people are using it and that you held up under the stress and that you have experience in this field, and all of this ties into basically socially proving that your app is something that someone should consider.
Mike [19:04]: Yeah. Part of the social proof is just all these things that you talked about, the testimonials and the press logos, those are essentially trust factors and people want to be able to trust your app but you need to give them a reason to, you need to give them proof of some kind. So the fact that you were mentioned on msn.com or CNN, or wherever, those are trust factors, the same with testimonials, especially if you start including head shots of the people who said the things about you. Those are also considered trust factors. When you start talking about those things that Rob just mentioned in terms of the vanity metrics and the number of keywords processed, the amount of money that is embedded in the proposals that are sent out or the page views last month, those are also trust factors but they are internally related. So there’s two types, there’s the external ones that you don’t necessarily have control over and then there’s the internal ones which you do. You could obviously fudge those numbers. But when somebody’s looking at that website, they are not going to sit there and think, “Oh, this person is pulling my chain.” And as long as the other things match up, they are just going to believe those numbers. They don’t have to be accurate, they can be incriminated on a daily, or monthly basis, or what have you, but there has to be some semblance of trust there for them to take those numbers and internally process them and believe them. And the same thing goes for those external loads, I mean if it’s something that they’re going to recognize, definitely use it and it’s essentially your piggy backing on the trust of that other website. So as I said, the logos of other major news outlets or anything like that. You’re piggy backing on their credibility to essentially enhance your own.
Rob [20:35]: And just to clarify, you said, the vanity metric doesn’t necessarily need to be accurate, you can update it once a month or whatever. I’d agree with that, I think as long as your low rather than high, you’re [airing?] on the side of caution, right. It doesn’t need to be an exact thing pulling from your database as a live feed.
Mike [20:50]: Yeah, exactly. That’s more what I meant than anything else. It doesn’t need to be up to the second. That’s really what it comes down to.
Rob [20:56]: All right. So our sixth element of effective landing pages. This one’s an optional one, its features. It’s having features on your home page. So not benefits, and this is further down the page, remember we’re going in order from top to bottom. I have seen this done really well with some very specific features that set you apart. And in fact, if you couch it like that, and you specifically say “No other app has this feature or these are the features that our customers like most” or something like that and just give a few of them. You’re not giving a whole run down of everything but you’re trying to call it out and show why you’re different. You have to be very specific at some point during this journey and if you feel like you can do it by putting some features on the homepage and then folks can click through at the bottom of the homepage and get to like a tour or a features page with more specific mechanics of your app, I think it’s not a bad idea. I think if you’re not sure, probably don’t do this step but I have seen it done really well. The reason that I like when people start getting into features, definitely, on the website somewhere, you need a features page. Because if you’re just talking about benefits all the time, no one knows what your app actually does. If you go to a website for like an IBM software product or some Salesforce product that each own [bazillions?] of products, it seems like all you tend to find is benefits with a lot of marketing speak and it’s really hard to just get a list of what does this app do. And it’s hard for folks to figure out what you do if you never get down to the features. So you definitely need a features page somewhere and I think a few that call you out on your homepage is not a bad thing. Our seventh element is to look at your top nav and have four items or fewer in that top navigation and that includes your home link. So you really only have room for a couple more. So I would typically have something like home on the left, and then either a tour or how it works, which is kind of the same thing. It’s explaining the basic flow of your app. Sometimes it depends on if you want to include a bunch of features on that page, probably another discussion but sometimes a tour is just- if your flow is fairly complicated and you’re trying to teach people what your app does, then you’d have a separate features page and that could also be in the top nav. And then you can basically have a pricing page. I’ve also seen it done well to have another page that basically says [why, app name?]. So if you’re base camp, it says, “why base camp” or why should you choose base camp. That’s if you have a ton of press mentions, social proof or just so much more to say. In fact, with HitTail, we have a “Why” page in our top nav and the reason is, there was so many press mentions because the previous owner was actually a PR firm. There were mentions on TechCrunch and in multiple newspapers and offline magazines, just all kinds of stuff. So there were so many quotes that I found that I didn’t want to stuff them on the homepage, didn’t want to stuff them in the tour. Although, I sprinkled them all over the place. We really needed a dedicated page. It’s just another way to build credibility and that someone can click to and think through and then offer social proof.
Mike [23:47]: These elements in the top navigation are probably going to get hit a lot more than anything else. We’re going to talk a little bit more about the elements at the bottom of the page. but at the top navigation, those are the things that people see right at the top of the page and they are far more likely to get the users to click through to those than anything that you’ll find in the footer. And I’ve used this strategy before where I’ve embedded links in the footer and I’ve used this strategy before where I’ve embedded links in the footer purely for SEO purposes to get Google to essentially spider other pages on the site. But the reality is, if you start looking at the analytics for that, the users who are coming to your website, virtually, never follow through and click through a lot of those links. So you want to make sure that the pages on your site that you want to get the most traffic to for people who are hitting your site and you want them to learn more about your product or what it is that you are going to do for them, make sure that those links are in that top navigation.
Rob [24:40]: Our eighth element is to have an exit path at the bottom of every page. In essence, this is a button that takes someone to the next step of your flow. You want to think of this as a specific journey that you are leading someone through. So when they hit your homepage, you don’t want a bunch of extraneous links, you want a few options at the top. If you even have a top nav, which is probably another discussion. I’ve seen folks run experiments that I’ve worked where you basically remove the top nav and someone really only has one flow to go. You can scroll down and read and at the bottom, there’s kind of a tour button that leads you to the tour and you’re basically leading them through a flow. But in this case, having an exit path at the bottom of every page is something I think you have to have and I think a lot of people don’t do this. It’s to think, “Boy, after they read this homepage, they get to the bottom, so maybe they’ve read the social proof and the benefits and maybe a feature or two, what is next? What do they really want to know?” And then take them maybe through a tour and then perhaps take them to features or you could start letting them know, “Hey, you can sign up for a trial,” there’s some options to think through. You really want to have one main and then maybe a secondary, call to action, down at the bottom there. But not having this exit path at the bottom, then makes your reader get to the bottom, and look around, probably click on something in your footer or scroll all the way back to the top of the page and you’ve lost them, you’ve lost control of their journey because now they’re just wandering around clicking random stuff and that’s not an ideal scenario if you want to lead them through a path of education.
Mike [26:03]: If you take a look at, I’ll use HitTail’s webpage for example, if you go in, right on the main page at the top navigation, you’ve got home tour plans and then why HitTail and you already explained why you have the “why HitTail” there. But embedded in the text in the middle of the page, it says “Increase your traffic” with the big orange button or take a tour. Well that’s the second link in your navigation. So if somebody does click that, they go to that tour page and then at the bottom of that, there is essentially this call to action which says “Your free trial awaits, grow your traffic” And then you click on that, that goes to the third thing in the top navigation which is essentially the plans and trying to get somebody to sign up for a trial. So there are definitely times where the call to action at the bottom of your pages is essentially going to mirror what they would see at the top navigation, but that’s not always the case. They may well be an extended set of tour pages, for example, or additional educational content that you’re going to put in front of them to help essentially walk them through the process of getting to point where you’ve educated them enough such that they are going to sign up for your product or at least sign up for and e-mail course or something along those lines to be able to bring them back. And it kind of depends on where it is in the sales funnel that those people are likely to be. The one thing that I have seen a lot of, and this is especially prevalent in a lot of word press themes, is that they have this “scroll to top of page” widget that will pop up. That’s not something that you want to put in there. If you can disable that, go ahead and disable it because the fact of the matter is, if you have a long enough page that it needs something like that, they’ve already scrolled through the page, they don’t need another thing at the bottom popping up to say, “Hey, would you like to scroll all the way up to the top to see all the stuff that you just scrolled past?” No, they clearly know how to use a scroll bar. So if you can get rid of those things, get rid of them.
Rob [27:44]: Element number nine is something I already covered when I was talking eight, but it’s to basically limit the number of links and buttons that you have on the page. It’s essentially limit the number of decisions that folk need to make as they’re reading though it. Be opinionated about where you vision should go. Think through this flow, it takes time. Think through the journey. But it will absolutely increase the number of folks get the proper kind of education that you’re trying to give them. And our tenth and final element is put everything else within reason into your footer. So typically we will see footers on homepages say something like about contact, terms of service, blog, affiliates etc., and I think that’s perfectly fine. I think having 6, 7, 8 links down there is fine. And something we’ve done with Drip, because we have a PI docks and we have like a press kit, I didn’t want a link out to all of those, we just have a docs link at the bottom and it links to kind of a nested page. So you can obviously start nesting things at some point. but I am not a believer in having 20 links down here, but I do think that having the basic pages that you’re going to have in a marketing side and basically linking to all of them from the footer when you’re starting, is the way to go. I would not put an e-mail sign-up form down here. I see people doing that and no one is ever going to submit that. If you really want folks to sign up for your course or whatever, I would not put it in the footer and frankly, I probably wouldn’t put it in the header either because that’s really your educational call to action of trying to get someone to learn more and click through to a trial. I would tend to use a little JavaScript widget like something you get from Drip or [Sumumi?] or OptinMOnster, instead of trying to plug this thing down in the footer and that will give you control to have it pop up at certain times or not and just a lot better control of when to make it visible and when not to.
Mike [29:24]: Something else that’s helpful to put down at the footer is some sort of a site map so that it’s easier for the search engines to spider your website and get to all of the different pages that are going to be embedded in your site. I think if you rely too much on dynamic html that essentially is put there through JavaScript or anything like that, to display based on who’s visiting your pages, that can be a little bit difficult to have the search engine spider your website. You could also submit a site map to Google but, again, having a site map there that is human readable and, I don’t mean by human readable xml, I mean a link that just goes to a site map where it lists all the different pages and all the different sections on your site. As your website expands and starts filling more pages, that becomes more important because sometimes people can get lost on your website. You may know exactly where everything is but again, your website isn’t for you, it’s for the people who don’t know anything about you and want to learn.
Rob [30:18]: I haven’t been building site maps recently as we build new sites. Definitely, we do this, the xml site map that search engines use and they’re pretty good at crawling anyways, but it’s always nice to help them out. The human readable one, I need to look. We still have one for HitTail because one existed when I acquired it. You know, when we update it and stuff, it’s been kind of a pain as we add new pages to have to add them there too. I’d need to look to see how many people actually use it because I genuinely don’t know how many visitors that page gets in a given month. I’d be curious to see if those are still used. I know it’s something that we did 10 or 15 years ago when you designed a site but it’s not something that I typically put in sites these days.
Mike [30:55]: Yeah. I find that there’s a lot of sites that I go to that if they are large enough, there is so much content there that you don’t necessarily know where you last saw something, for example, and the site maps can really help out with that, but it depends a lot on how mature the product is. I don’t think that, up front, you need a site map but I think that in longer term, as your product gets bigger and bigger, you probably do.
Rob [31:16]: So to recap, our ten elements of highly effective SaaS landing pages are; number one, to design for first time visitors; number two, to write a gripping headline; number three; to have a visual element; number four, to provide three benefits or to think it in the rule of three; number five, to provide social proof; number six is an optional one to provide features on the homepage; number seven, to have four or fewer items in the top navigation; number eight, have an exit path at the bottom of every page; number nine, limit the number of links and buttons; and number ten, put everything else within reason in your footer.
Mike [31:50]: Well that wraps us up. If you have a question for us, you can call it into our voicemail number 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 Commons. You can 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 255 | Moving on From AuditShark
Show Notes
In this episode of Startups For The Rest Of Us, Rob and Mike talk about Mike’s decision to move on from AuditShark. They discuss events and reasons leading up to Mike’s decision as well as lessons learned along the way.
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 me moving on from AuditShark. This is Startups For the Rest of Us, episode 255.
Welcome to Startups For the Rest of Us, the podcast 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 Mike.
Rob [00:23]: And I’m Rob.
Mike [00:24]: And we’re here to share our experiences to help you avoid the same mistakes we’ve made. What’s the word this week, Rob?
Rob [00:29]: Well, I’ve been diving pretty heavy into paid acquisition for the past few days. Just spending the money to look at different approaches to it, trying different images, headlines, optimizations, all kinds of stuff. And since I’m dipping my toe back in the water after having not done it for quite some time, there’s almost like infinite possibilities. So I feel like I have to rule them out one by one again because so many of the ad networks change over time. And so if you look at AdWords or Facebook, even from last year to this year, there are so many new options. And without knowing which one’s going to work, I just have to plug some money in, run some ads, figure out how it’s going to work and then switch the approach to see which works better. So that’s probably the next week or two of my workweek.
Mike [01:12]: Do you have a budget in mind for how much you’re spending?
Rob [01:14]: A lot.
Mike [01:18]: I always think the exact same thing when I look at paid advertising. It’s just like, I hate doing this.
Rob [01:23]: The optimization, especially, is painful because you don’t have the ROI yet. So last time I did this it took me about five grand to figure it out. And from then on, I had a positive ROI, I was with HitTail. This time, I don’t know how much it will take, but I spent between $1500 and $2000 yesterday testing things, and I’ll probably spend a similar amount today. The thing is as if you have a smaller budget, you can do this over a longer period of time. You don’t have to spend that much every day. But you learn so, so much faster if you have budget that you can work through because you learn very quickly what’s working and what’s not. And you’re able to leave it running for longer and get larger numbers, more impressions, more clicks, and it just gives you a more solid feeling for the data you have. It will definitely be a chunk of money but I absolutely look at it as an investment. Last time I was able to make it work. It [channeled that scales?] so well. It’s not cheap, but once it works, it’s pretty crazy how many trials you can drive using this approach.
Mike [02:26]: It’s basically printing money at that point, once you’ve got it working.
Rob [02:29]: Yeah, it really is. Yeah, it’s pretty insane.
Mike [02:31]: Cool.
Rob [02:33]: How about you? What’s going on?
Mike [02:34]: Well, a quick announcement to anyone who’s interested in going to, essentially [?] to a mastermind group and a ski vacation rolled into a business trip, you can head over to bigsnowtinyconf.com or to bigsnowtinyconfwest.com. The first one is going to be up in Vermont. It’s going to be in the winter sometime. I forget whether it’s January or February. But basically, they’re going to be selling tickets in the next couple of days and they have a mailing list put together. And then the other one is in Colorado, which is put together by a friend of MicroConf, Dave Rodenbaugh. The first one is put together by Brian Castle. He also has a hand in the bigsnowtinyconfwest with Dave.
Rob [03:09]: All right. So what are we talking about today?
Mike [03:12]: Well, I think today you’re going to be walking us through me moving on from AuditShark. So I’ll kind of let you drive the show today and we’ll see where it ends up.
Rob [03:21]: This is a big decision, man. I realize the magnitude and the gravity with which you’ve treated this decision. So there’s a lot to discuss, all the way from reasons to end results, to some of the marketing challenges you faced. I think I want to kick it off with giving some type of timeline. And it’s a pretty loose timeline that we tried to put together right before the show, to give folks an idea of what AuditShark is and where you’ve taken the turns over the past several years. So AuditShark is basically software, it’s a service and it is auditing software for servers and networks and client machines.
Mike [03:59]: Quick correction. It’s not actually software as a service. It was downloadable at the end of it. It started out as SaaS, but not –
Rob [04:05]: Okay. This is good to know. Yeah, you’re right. So it started out as Saas and then it was downloadable. You’re right. You started coding in 2010, you had a full-time consulting gig, and from what I recall, you had the idea and were starting to build it but it was a huge effort, like it was going to take a long time. And we, at some point, talked about how long you thought it was going to take and it was like a year or more of coding. I think you got kind of an alpha or enough to show your initial audience, which was banks, small banks. That was around 2011 at some point. And there was some mixed stuff that happened [right there?]. There was a mixed understanding. You had talked to a few banks and then when you actually revisited it there was like a misunderstanding in the discussion and, if I recall, some of the banks didn’t get back to you and then other ones said, “We didn’t really need this tool,” or there was a word that was defined differently, or something like that. That didn’t work. So then you started, in 2012, looking for other markets. You looked at SaaS. Eventually moved onto more looking at enterprise stuff. So it was 2012. And then in 2013 is when you were having the health issues and you had a big motivation block where you had months, if not quarters at a time, when you said you just weren’t really making progress. And in 2014 you finally quit consulting. You went full-time on AuditShark and you set yourself a deadline. You said by some point in 2015 you wanted to have revenue and you wanted this thing to be working, otherwise you were going to pull the plug. And obviously, that time has come.
Mike [05:33]: Yeah, that’s a pretty accurate depiction of what the timeline looked like. Early on I was actually, essentially taking the product and cloning existing functionality from other products that were out in the market. I’ll be honest, I feel like in some ways that held me back very early on because I was very scared or very hesitant to, essentially, show my work to other people or to go out and piggyback on those products. Even though they were being end-of-life, it didn’t matter to me. The reality is that I can be sued 10 years down the road and it doesn’t really matter whether those products were end-of-life or not. But there was that underlying fear in my head that I didn’t necessarily want to run into any sort of legal entanglements. I think that early on that affected me more. I think I kind of ignored it as time went on but it was definitely a factor early.
Rob [06:18]: Right. And my memory of the early days, again, this was like five years ago, was that you wanted to build it but that you didn’t have a lot of time. And I questioned how serious you were about it at that time. I didn’t feel like you were putting in 20, 25 hours a week at night, coding until two in the morning. It kind of seemed like you coded on it when you had time and that it was going to take a really long time at that pace.
Mike [06:43]: Yeah. That’s right. And I also hired some contractors to help me out with some of the coding. Some of them worked out and some of them didn’t. I think that the fact that there was a programming language built into it, that really threw some of the developers for a loop. They didn’t know what to make of it. They didn’t know how to use it. It was confusing to them because they had to not only know C# programming, but they also had to know how to deal with databases and they also had to know how to deal with a lot of the front end stuff and then the back end code. And in addition to all of that, they had to understand this programming language that was kind of like LISP. I think that that skill set was just really difficult to find and the people that I was finding couldn’t handle it. But I couldn’t necessarily afford to hire much more skilled people because of budgetary constraints.
Rob [07:31]: In retrospect, do you feel like you managed them well and delegated well or do you think you made mistakes there, too?
Mike [07:36]: Oh, I definitely made mistakes there. I’m probably not different than other people where you think that you’re good at most things. And I will kind of be blunt about it. I’m probably not the greatest manager in the world. I’d like to think that I am, and I’d like to think that I’m very well organized. But when it comes to assigning tasks, there are definitely places where I’ll write something down or tell somebody to do something and it’s difficult to get the idea across to somebody, especially if it’s a difficult concept. So that’s where things like the screencast and things like that come in. And they’re helpful, but I didn’t necessarily always do them either. And even sometimes when I did them, there were times when somebody would come back with something that was just blatantly incorrect and I was like, “I don’t understand how you could of misinterpreted this because I was very clear here.” So there were certainly cases where the fault was definitely on me and then there were cases where, for whatever reason, they just didn’t understand or didn’t figure out what it is that I wanted them to do.
Rob [08:30]: Let’s dive in here because we have a pretty extensive outline of kind of every angle of this decision to move on. And I think listeners will be interested to hear you’re reasoning, the roadblocks you hit along the way, who you’ve used as sounding boards, just all kinds of angles of this. Let’s start with the reasons that you’ve decided to move on from AuditShark. Obviously, it’s a huge decision. You have five years, on and off, invested in this as well as a chunk of money. This is not a decision that you’ve taken lightly. So talk us through what made you finally decide to move on?
Mike [09:03]: Well, last year, I kind of set a deadline for myself and I said, “Okay, in order for AuditShark to really do something substantial, I really need to dedicate more time to it.” Essentially, at that point, what I decided to do was, “Okay, if this is going to happen, I need to be able to just dedicate the time to it.” So I ended up quitting consulting and that was last June. So from June until now, I’ve basically been full-time on my own business and mostly working on AuditShark. Now one of the big problems that I was having while I was doing consulting, and essentially funding the development of the product, was that I couldn’t effectively do the sales and marketing. So like if I needed to be on a phone call, it was very difficult for me to arrange that because of my travel schedule. And I think that on our 200th episode, my wife had mentioned how there were some years where I was on the road 45 weeks a year. So that was definitely a problem for me in being able to carve out that time. Because if I’m on site with a customer, I can’t exactly step out to accept a phone call or step out every couple of hours to start making an hour’s worth of phone calls. It’s just not easy to do that. So quitting consulting allowed me to make those phone calls myself. I could have hired somebody, but at the same time, had I hired somebody, I wouldn’t necessarily have been the one learning how to do all that stuff or learning the subtle nuances of what people were saying. And that would have been difficult to get from a sales rep back to me. And in addition, I didn’t necessarily have the money to hire a full-time sales rep. And I’m really not comfortable hiring somebody on like a commission-based, especially for product that isn’t established and doesn’t have a solid revenue stream that’s coming in. I just don’t feel good about that.
Rob [10:43]: Right. I would agree. You never got to product market [?], so you as the founder/CEO really needs to be the first salesperson. So it was obvious that the sales approach wasn’t going to work. But at that point when you realized that, did you ever think, “Boy, this product is just not something that I can do as a single founder and I should pull the plug now?”
Mike [11:01]: The thought crossed my mind a bunch of times. It’s not to say that I didn’t think about it or it didn’t weigh on me but when you’re in the middle of it, it’s like what do you do? What are your options at that point? If you’re looking at that saying, well, this isn’t flying right now, it’s not going anywhere, what can I do about it? So I would say that it’s one of those situations where it’s the analysis paralysis, where you’ve got so many options you don’t necessarily know what to do so you don’t do anything. I’ll be honest, I just didn’t know what to do. So in many of those cases, I just didn’t do anything. I didn’t make a decision one way or the other, I just kind of let things ride the way the way that they were going and kept doing motion but not necessarily any forward progress.
Rob [11:39]: And I can imagine that with, essentially, the [?] costs that you had of a few years of work, because when you made this switch, and I think when you realized that it was going to be phone calls during the day and one-on-one sales, this might have been what 2012, 2013? So you were already two or three years into it. You were already tens of thousands of dollars into it. I imagine the sunk costs had to have entered your mind at that point, of like, I could just shut this thing down because this is going to be hard to sell or this is just a hurdle, a roadblock, and I can figure out how to get over it. Is that kind of your thought process?
Mike [12:12]: Yeah, but I mean, something else that factors into it is how do you know whether or not it’s going to be something you can get through unless you try it. If you look at the Dip from Seth Godin’s books, how do you know you’re there? Unless you try to push through it, I mean, if you give up right then, clearly you’ve failed it or whatever it is that you’re doing. But if you at least give it a shot and try and push through it, then you have a chance at making it through. And you won’t know until you try that. So it made it difficult to kind of make a decision one way or the other.
Rob [12:41]: Yeah. It’s hard because there’s the school of thought of you should get something out there in seven days and then let it fail really quickly. And there’s Lean Startup with just iterating and iterating and pivoting and pivoting. And then there’s the opposite school of thought that you need to sit there and hammer on things for six months or a year before you’re going to see if it works. And I think part of that is personality driven. Folks listening to this, I think if you tend to flit around and move from place to place, from project to project, you should probably stick with things longer than you feel comfortable with. And I think if you’re listening and you tend to be more bullheaded about it and you stick with things too long, then you should think about cutting your losses sooner. And having known you, Mike, for what- we’ve known each other for ten years, but known you pretty well for five or six, I would say you [?] on the side of pushing with things, of being more stubborn with it. And that is like a great strength in certain cases, but I feel like in AuditShark’s case it may not have been. It may have kept you doing it past the point where it made sense.
Mike [13:42]: I would definitely agree with that. And it’s hard to know, necessarily, in advance whether or not the stubbornness can be a pro or a con until it’s too late.
Rob [13:52]: That’s right. And if you’re company becomes a $100 million company and you were stubborn, then you’re a visionary and a genius. And if your company tanks, then you were an idiot. You know what I’m saying? It’s like it’s all in the outcome.
Mike [14:03]: Well, I appreciate that.
Rob [14:05]: Yeah. [?]
Mike [14:06]: That’s okay. No, I understand. I knew what you were saying. I knew what you were saying.
Rob [14:12]: So somewhere around late 2013, 2014, you kind of made the switch and moved into this enterprise market and you started talking to more enterprises and the sales cycle got long and challenging. So that was another factor, I think, in your decision to shut it down. Is that right?
Mike [14:26]:Yeah. The enterprise sales is just really hard. And I think that there are definitely cases where it could work and there are some people who are built for that kind of thing. I don’t know that I really am. I prefer things to move a little bit quicker. I’ve still got a customer in my sales pipeline who’s been there, going on 20 months now. And it’s an enterprise deal they’ve got between 35,000 and 70,000 end points. But the reality is that, even if that deal came in tomorrow, I don’t ultimately believe that it would change the long-term outlook or the sales cycles. So it would bring in probably $300,000 in revenue but I don’t necessarily have a good scalable way to get in front of a lot of other people like that. So that makes it difficult. And in addition, I had somebody who was basically asking me for information about AuditShark and we went back and forth a little bit and they’re like, “Check back with me in three months.” And then, “Check back with me in six months.” So I started doing some research, come to find out that this person was actually project manager for a product inside their company that basically does what AuditShark does. Of course that’s heavily depressing. It’s very demoralizing at that point. You feel like you’ve been strung along.
Rob [15:37]: Yeah, that’s tough. We had several offline conversations over the past kind of year, I think, as you’ve pushed into this enterprise market. And there have been stops and starts. There has been progress. There was a light at the end of the tunnel at a certain point where you thought that you were going to be able to make this work. To be honest, as an outsider looking in, the past 12 months has been your most focused and, I’d say, productive period of time, working on AuditShark, in my opinion. Because you actually sat down and you made the sales calls and you were doing demos and you were doing webinars and doing marketing and that stuff. It’s like the first three or four years you were working on the product and trying to figure out what to built and trying to- it was more product focused. A lot less marketing focused. But you really were dug in and executing this past nine to 12 months. But this enterprise sale cycle, and just enterprise sales in general, has really been an uphill battle, I think.
Mike [16:31]: Yeah, and just for some of the listeners who haven’t listened to some of the earlier podcast episodes or heard what AuditShark really was for or what it was built on, I was essentially taking an enterprise level product that had sold recently well in the market and creating a smaller version of it that would have a lower price point and would address the same types of needs but for smaller businesses. I wasn’t necessarily looking to go to the enterprise market. I was going to say, hey let me take this enterprise solution and re-work it a bit for small and medium sized businesses. And when the banks didn’t work out, and then as a SaaS offering for small businesses it didn’t work out, then I said, okay, well that worked before in the enterprise market. That’s probably where I should go with it. And ultimately, it seems like the enterprise market is just really not a good fit for me personally. And the last reason I have for walking away from this is that I feel that some of the people that I’ve been targeting and talking to, who are in positions where they are tasked with solving this problem, don’t necessarily care about the problem themselves. And that’s really hard to take. As a developer, as an entrepreneur, you’re trying to solve problems for people and make their lives better. But if they don’t care about the problem, then why should you? It makes it really hard to care about their outcomes when they don’t care about it either.
Rob [17:52]: And we’ll talk a little later about some lessons learned from that, right? Because I think trying to get more validation up front could have had you learn that before spending the time to build the product. Maybe it could have. I think it’s arguable. But it’s definitely possible. So what’s the end result really? What are your sunk costs?
Mike [18:13]: Neglecting the time that I’ve spent on it, and if you kind of add in profit versus the money that I spent, I’m probably down about $50,000 in sunk costs. There’s about a third of that that I paid to a contractor who kept promising to deliver and updated version of the product for, it was probably close to four months. And that was complete mismanagement on my part. And I talked to my mastermind group kind of at length about that because it had been going on and on. And finally, it just got to a point where I was like, look, I need something from you. I need to see something and what I got was not what I expected. And I was just like, all right, I’m done with this. This whole contract is done.
Rob [18:49]: Right. That’s a bummer.
Mike [18:51]: Yeah. Probably a third of that $50,000 was spent on that.
Rob [18:55]: Right. You mentioned your mastermind group. I know you’ve had a bunch of sounding boards, folks you’ve talked to about this. Especially over the past year or two as you’ve been trying to make a decision about it. Who are folks who you’ve relied on for that?
Mike [00:19:09]: Yeah, so Dave Rodenbaugh and [?] are in my mastermind group. So I talked to them pretty frequently about it every couple of weeks. And then at Microconf Europe, I had a number of conversations with different people. Like Steven [?] and Patrick McKenzie. Even as far back as Microconf in Vegas, I talked to Steli Efti for quite a while about it because, obviously, as CEO of Close.io, he has a lot of insight into sales cycles. So I felt like talking to him would, at least, help me understand whether or not I was going in the right direction or the things that I was doing or not doing that I should be. And the end result of that was that if you’ve lost motivation and the needle isn’t moving then it’s going to be an uphill slog. And somebody specifically said, “You’re a reasonably smart guy and there’s a near-infinite problems you could be solving. You should probably be working on something that you enjoy rather than something you don’t.” And it stung, but at the same time I needed to hear it.
Rob [20:04]: Yeah. It all depends on what state of mind you’re in. If you’re in the first couple months and you’re all fired up about something being a good business and someone tells you that, you’re going to tend to ignore it. All of us would tend to ignore that if you’re fired up about it. If you’re at the end of your rope and you’re frustrated and you’ve been working on it for multiple years and it’s not working, when you hear that it’s going to sting, but I think it’s good feedback to hear because it makes you reconsider continuing to invest in this product that just doesn’t have legs.
Mike [20:29]: Right. And obviously there’s all the mental challenges that go with it, but it’s something that I’ve talked about on this podcast before and there’s a certain amount of obligation to succeed, I’ll say. And not to say that everything I touch is going to turn to gold, because I certainly don’t expect that, but I really felt like I had the insight into this particular problem and how to solve it to be able to push my way through and solve the marketing challenges. And I felt like a lot of the marketing challenges that I ran into, especially in enterprise space. The enterprise space is really very much relationship driven. I do not like the mode of operation. I do not like that mode of sales.
Rob [21:10]: So with all the feedback in mind from folks you’ve spoken to and given your reasons above, I know that you had in essence, set a deadline for yourself at a certain point last year. Can you talk us through really the final straw or the final deadline and how that worked out? You gave yourself the freedom to really decide to move on. How did that all work?
Mike [21:29]: Yeah. I had this initial deadline that I had set up, which was a year from going full-time on it. And I got near the end of that deadline and I was kind of worried about it because obviously, things were still not going very well and I was trying different things. And one of the things that I had tried was the AuditShark lock down service. That allowed me to kind of push things out a little bit because as soon as I started doing that, I got some immediate sales from it and I was able and go out and do some security reviews for a couple of people. And I sold two of them very, very quickly, and then there was a third one that was supposed to come it and ultimately, they ended up backing out. But I sold several thousands of dollars of those services very, very quickly. So I looked at that and said, well, maybe this is the part that has legs. Maybe this is where the product is destined to go. So I gave myself a little bit of extra time. My mastermind group members were on board with that. They said, “Look, this got some revenue very, very quickly. You should probably spend a little bit more time on it, even it takes an extra month or too,” because a lot of the other things you haven’t tried so far have worked. And it’s like you’re at the end of that timeline and suddenly, boom, something changes. And it didn’t feel right to just pull the plug at that point. So I extended the deadline by a little bit. But ultimately, it didn’t seem like that really made much of a difference. And also, the initial traction that I got from that was from warm leads, not necessarily cold leads. And I don’t know how long it would take some of those people to invest in the lock down service. But at the end of the day, I don’t think that the lock down service is something that I would want to do long-term anyway.
Rob [23:00]: Right. Yeah. So the combination of it, it’s like if you go with enterprise you didn’t really have a passion for doing enterprise sales. And if you did the lock down, you could probably sell it to more smaller, medium sized businesses but didn’t turn into something that you wanted to do. And, like you said, you didn’t know how to repeat that and you didn’t want to spend another six months trying to find cold leads and convert them with lock down. Your time had come, your deadline had passed.
Mike [23:24]: Right. I mean, you can only pivot some many times before. You can technically pivot forever but at some point you got to call it quits.
Rob [23:32]: Yeah, there’s always more suggestions. We could sit here and say, “Okay, so lock down had a little bit of traction, Mike. How are we going to plan to get more people to the website? And then you can do webinars and you can do this and do that” but it’s like you’re done. When you’re done, you’re done. So what are your plans with AuditShark, what are you going to do with it?
Mike [23:46]: Well, I think, for the time being, I’m just going to leave the website up and leave things on “Autopilot.” I’ll probably add a pricing page in there with just some sort of [low ball?] price and some sort of upper limit on the number of machines that you can use it on. But the reality is I’m not going to do very much with it at all. I did talk to a broker who said that he thought that I could definitely find a buyer for it because there’s definitely people who would be interested in this type of product. But the other suggestion that I heard was that the site definitely gets reasonable traffic on some of the pages that are super competitive. So for example if you search Google for SOX Compliance, I actually rank higher than Wikipedia for SOX Compliance. And if you look in the Google keywords tool, it shows that it’s a highly competitive term. So I’m getting like more than half of all internet searches for SOX Compliance. And that page is generating between 15 and 20 leads a week right now, for me. So I think that there’s definitely value in terms of advertising. But again, it kind of goes back to this situation of like in a way I’m kind of done and I don’t want to put a lot of time of effort into it, so I’m going to leave the site up for the time being but I’m not going to do a whole heck of a lot with it at this point.
Rob [24:54]: Yeah. It’s tough, man, because, I think my opinion on this is that leaving it up, if you make one sale magically or two sales for a few hundred bucks, it’s probably not going to be worth your time to support them. And I think that if someone downloads it and uses it and runs into any bugs, then you’re now on the hook for fixing that. If they run into support issues getting set up, you’re going to have to help them. And since you’re not planning on building this business, I’d be kind of hesitant to keep it for sale, to be honest. Even if you leave the site up for now until you’re really done with it, you may just want to remove the buy it now button and either have just a “contact us” button or like no way to purchase on the site. Just to avoid having to get your code, which has not been heavily production tested on hundreds of installs. So it probably still has some bugs to avoid a customer buying that and putting it on their stuff and then having to support it. Because, you know, what’s worse than selling zero copies of a piece of software, selling two copies of a piece of software. Because then you’re on the hook to support it and it’s a lot harder to just shut it down and walk away at that point.
Mike [25:54]: Yeah. For me, I think, there’s this mental barrier to going into [IS?] and clicking stop on the website. I feel like that’s really what it is. There’s two sides of this. There’s the logical side which says, “Look, this is done. This isn’t going anywhere and all the paths that you have to success are paths that you don’t necessarily want to do.” So there’s really no point. But then there’s the emotional side of it which is like, “I’ve put all this time and effort into it and to go in and hit that stop button” so that website no longer shows up, it’s kind of painful.
Rob [00:26:26]: It’s too soon.
Mike [26:28]: Yeah, kind of too soon. Mentally, I feel like it’s there but at the same time, it’s hard to just do that.
Rob [26:35]: I think that will ease up over time. I think now that you’ve made this decision, it still hurts and then, in a few months, I bet it will be a lot easier to do that.
Mike [26:43]: Yeah. And that’s what I think as well. I’m just going to kind of let the website ride for the time being and for the most part ignore it.
Rob [26:50]: So let’s talk about lessons learned. I think you’ve learned a lot during this process. I think other folks listening to the podcast have too. There’s been a lot of heartfelt discussions and the comments over the past several of years as we’ve had episodes that have focused on your building and launching and decision points around AuditShark. Talk us through some of the things that you feel like you’ve taken away from this experience.
Mike [27:09]: Well, I think that I’ve definitely realized that there are certain cases where the answers are not so cut and dry. So, for example, when we talked before about the timeline a little bit, and in 2013 there were some heath issues that I ran into. But I almost feel like those obscured my motivation issues or maybe compounded them because I don’t think that, kind of looking back in retrospect, at the time I was like, oh yeah, my health issues. I’ve got these under control now and now I can get to work and I can actually get things done. And I feel like because of maybe underlying motivation issues were obscured by the health issues. I think that it was not necessarily as clear to me that there’s two different things going on here, not just one. And it’s not obvious until much later. I was talking to Patrick McKenzie and he said the exact same thing happened to him on Appointment Reminder, where the product wasn’t necessarily getting very much traction and he ran into health issues. And then even after some of those cleared up, it still took him a good year and a half or two years of a very difficult grind to get the product to where he wanted it to be. And he’s the one who actually told me that the heath issues very much obscure the motivation issues. I think at Microconf Europe he called this the [Peldi?] test.
Rob [28:22]: Right. Like do you really want to work on this thing?
Mike [28:24]: Right.
Rob [28:25]: Are you going to be happy working with this group of customers and working on this product for the next 10 years? That’s really his question. I think there’s also a big question around validation. You’ve made some calls and you had a couple of banks that you had spoken to, but talk us through something that you would do differently these days regarding the early validation of AuditShark’s need.
Mike [28:25]: I would talk to a lot more of them. I talked to five and I felt like because I walked in the door and sat right in front of the person who was running the IT and talked to them directly, that I had a good handle on it. And then in addition, all my background and experience at the startup a long time ago, building exactly this type of product. Because I knew all the subtle nuances and I did all the consulting around it, but at the end of the day, I did not understand the needs of the small banks. Because what I was trying to do was I was trying to take a large enterprise product and put it down into a very small niche market with banks. And I didn’t do enough validation around that piece of it. I still feel like the product itself and this particular problem needs to be solved in the enterprise space, but clearly, as I said, that’s not a place that I’m going to go or able to go. But I definitely could have done a much better job validating those banks before I went off and built code for 12 to 18 months. And I think that had I done a better job of that, I might have realized much sooner that the banks were not going to be a good fit for the product. And ultimately, I wouldn’t have had to pivot because I would have never built to begin with.
Rob [29:53]: Right. Yeah, and then something I’ll add, that we talked about offline is that, you took too long between the idea and talking to the banks and getting to beta, right? It was like 18 months or more and that’s a long time. There were reasons for it. You have contractors that fell through. You had traveling. And you had all of that stuff, but it just becomes too long and it makes the journey too long so that it’s not fun anymore. It’s hard to keep motivation up over the course of 18 months or two years working on a product with no real validation.
Mike [30:22]: Yeah. And it’s interesting. I’ve talked to some people where they’ve heard about some of the inter details and inter-workings of how everything has happened and they’re shocked that I was able to maintain, I guess, stay on course for as long as I have.
Rob [30:37]: Yeah. And that comes back to that strength of being stubborn. I think you have that strength of being able to continue plugging away at something for a very long time and I think that’s why you stuck with it, and it’s both a strength and a weakness depending on the context.
Mike [30:51]: Yeah, the other thing that I think really was a big deal was when the banks, I was initially targeting, did a 180 on me. That should have been a gigantic red flag for me to reevaluate the entire thing instead of just simply pivoting. Because I had this product that I had built, I took it to them and they said, “Oh yeah, we must have misunderstood” or there was miscommunication. This is how we’re solving that. We don’t really need this. It’s an interesting thing but we don’t need it. And I think at that point, I probably should have done a complete reevaluation rather than simply trying to pivot. And I think that was big mistake that I don’t think I realized until recently. I can’t really remember ever hearing that lesson from anyone else before, but I think if you get to the point where you need to pivot, you need to evaluate everything at that point instead of just is this going to work or what’s going to be the most likely place for this, because it’s entirely possible that all the research and everything else that you’ve done before that point is essentially irrelevant at that point.
Rob [31:48]: Right. And you were in problem solving mode of like, “I’ve run into a problem, the banks didn’t pan out. How do I fix this problem in the context of this product? So how do I find different customers? How do I find customers for this app?”Whereas, maybe you shouldn’t have been evaluating how do I fix the problem but should I fix the problem and should I even continue with this product at all?
Mike [32:09]: Yeah. That’s a very subtle distinction, but extremely important, too.
Rob [32:13]: Yeah.
Mike [32:14]: I think there was also a certain amount of obligation that I felt because I had talked about AuditShark on the podcast. I almost felt obligated to continue. And I feel like looking back on it, that was also a mistake that I made. Sometimes the right decision is to call it quits and move on.
Rob [32:28]: Right. And I think that obligation probably extended beyond that and maybe even tied into the amount of money you invested and certainly the amount of time you’d invested. It just comes back to the sunk cost.
Mike [32:40]: One other thing I want to bring up is that I think when you’re looking for a channel for your product, and I think that on this podcast we tend to err on the side of telling people go for SEO or paid advertising, all these online mechanisms, and I think that once it gets to offline stuff you have to do a little bit more research on it. Because what I didn’t realize in going after the enterprise market was that the enterprise market is much more relationship driven than it is anything else. And I didn’t realize that up front and I should have. Because I’ve done enterprise sales before but probably not to the extent that an enterprise sales rep would have. I’ve been in the capacity as like a sales engineer and working through problems with people and doing proof of concepts and things like that, but when it gets into the part where you’re actually selling the software and getting to the point of purchase orders and things like that, it’s very, very relationship driven. And sometimes people will just ask you for proof of concept or a demo for the sole reason that they want to pit you against another vendor. And I’ve run into that. It’s a hard position to be in but those relationships that those larger businesses have, they’re there for a reason. So when I big business runs into a problem, they’re going to call up their large value [added?] reseller and say, hey, we have this problem, what do you have for us? What tools do you know of that can solve this particular problem? And they’re going to rattle off two of three and usually the top one that they come out with is going to be the one that gives them the best margin that they’re reselling. And I don’t have those relationships and I don’t really want to sell a product that is more sold on relationships than it is sold on technical merit.
Rob [34:15]: I think there’s a roadblock or a pretty big uphill battle if you’re a single founder bootstrapping a company and you’re trying to enter this market. I don’t know of any single founders who are bootstrapping, selling into the enterprise. I’m sure there’s one or two. There’s probably a counter example. But for the most part, the folks we know are not doing that because of the amount of time investment that it takes, the amount of cost, the lead time, and the sales cycles. There’s just all these reasons. So, I think when you initially launched or were going to start building back in 2010, you weren’t planning on going after enterprise. But there was a point in 2013, 2014, when you said this is what I have to do, and I think that if you had known what you know now about the enterprise sale cycle, that would have probably caused you to, hopefully, rethink the decision.
Mike [35:02]: Well, that’s another pivot point where I should have reevaluated much more than just where is this going to work. When I pivoted from banks to small businesses I should have reevaluated a heck of a lot more than I did. And then when going from there to the enterprise, I should have evaluated whether the enterprise is a good place for me to be in. I didn’t do it in either of those cases. And I think both of those were mistakes.
Rob [35:02]: So what’s next for you? You’re moving on, but what are you moving on to?
Mike [35:28]: I’ve kind of talked about this offline, but there’s a ton of stuff that needs to be done on the Micropreneur Academy and Founder Cafe, so I think I’m going to take some time to revamp some of the guts of that stuff over the next couple of months. And then right now I’m also testing out a couple of different ideas to see if they have any legs. Two ideas I’m testing right now. One of them is more of a one-on-one email follow-up. Because one of the issues I ran into when I was trying to do the enterprise sales was there were people who I would email them or I would call them and they just would not get back to me. And it would take a number of emails or contact attempts to try and get them either on the phone or get some sort of response. There was one, I think I talked about it were it was eight emails over the course of 16 weeks, or 16 emails over 16 weeks or something like that. It was a very long period of time. It was a very high number of emails to me and phone calls. And finally I got a response on the 16th one. I forget the details of that but it was a lot. And it was all with no response of any kind and then suddenly, kind of out of the blue, they’re like, “Oh, yeah. By the way. We’d love to set up a meeting for Tuesday.” It was weird the way that that works. And I’ve talked to a couple of people about this. There’s definitely some opportunities there where they want some sort of automated sequence for people who, not fall off the bandwagon, but fall off the radar or kind of move away from the negotiating table, to just help bring them back. So I’ve got an idea that I’m testing for that and I’ve talked to a few people about it, but I’m not so sure I want to go in that direction. And then the other one, this one’s a little bit fuzzier. It’s sort of an idea around spreadsheet automation. So there’s lots of people out there who build reports from spreadsheets or take data from different sources, kind of aggregated together, or imported into databases. And I think that some sort of spreadsheet manipulation product or something that builds reports from multiple spreadsheets and splices things together, or even just something very, very dead simple that takes spreadsheets and imports them into a database might be something that people would be interested in. Again, I’m still working out details on those things. I haven’t started writing code or anything like that, beyond some very, very brief prototypes that’s about it. But I’m kind of sifting through about 5,000 keywords right now to see if there’s an SEO play for that and then talking to people about that. I’ve already had a few conversations. One of them didn’t. So, we’ll see how it goes. But I’m not going to do anything until I get to probably 20 or 30 people.
Rob [37:49]: Well it’s been a long journey, sir. I know this is a big decision for you. So it’s cool that you’re willing to come on the show and kind of detail all the decision points and what’s gone on over the past several years so folks can get a better idea of what was going on at what point. And frankly, so we can all learn from the mistakes that we’d made, like we say in out intro.
Mike [38:10]: Yeah, I’ll be honest. This is a fairly painful set of mistakes. It’s not even just one mistake, it’s a bunch of them, not necessarily sequential. There’s definitely some things that went well and there’s some things that didn’t. I learned a lot along the way. Ultimately, it didn’t necessarily turn out the way I wanted it to. But not everything does. But at the end of the day I want to be doing something that I enjoy and have fun doing and am helping people who legitimately want to be helped. And there were a lot of things that just didn’t necessarily fall into place along the way. So, as I said, it’s kind of painful. I know logically that it’s the right move, emotionally it’s still a little painful, but hopefully that will go away over time.
Rob [38:51]: I imagine there’s also a bit of a weight lifted off your shoulders.
Mike [38:55]: Yes and no. There is and there isn’t, I guess. I’ve got all the technical cruft left around that it’s going to be there for a while. It’s almost like you break up with somebody and their stuff is still in your house.
Rob [39:07]: Yeah. You just can’t get away from it.
Mike [39:10]: I don’t know how else to put it other than that.
Rob [39:12]: Yeah. Well, I think that probably wraps us up for today. So if you have a question for us, whether about this episode or another one, call our voicemail number at 888-801-9690. You can e-mail us at questions@startupsfortherestofus.com. Our theme music is an excerpt from “We’re Out of Control,” by MoOt, used under Creative Commons. You can 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 254 | Planning Your Move from Day Job to Product
Show Notes
In this episode of Startups For The Rest Of Us, Rob and Mike talk about planning your move from day job to product. They give you seven milestones to follow to help you get closer to working from your business full time.
Items mentioned in this episode:
Transcript
Rob [00:00]: In this episode of Startups For The Rest Of Us, Mike and I will discuss planning your move from day job to product. This is Startups For The Rest Of Us, episode 254.
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 [00:28]: And I’m Mike.
Rob [00:29]: We’re here to share our experiences to help you avoid the same mistakes we’ve made. [What are this week?], Mike?
Mike [00:34]: I’ve only been back from MicroConf for a couple of days now, so I haven’t gotten a whole lot of work again. But aside from that, I bought a new car and it’s been the most painful experience I’ve had all year.
Rob [00:44]: All right.
Mike [00:45]: That’s like two or three years. For whatever reason, like they don’t make it easy to get a price quotes, and I kind of get the reason, but it’s just painful to get price quotes from anybody without having to actually walk in the door. It just sucks.
Rob [00:57]: Even on this day on age of the internet, car buying still not solved.
Mike [01:01]: Like I said, I understand why they do it because they don’t want you to go around to like 10 different dealers and get a price quote from them and then shop it around to them. But still, it’s just like you think it would be easier.
Rob [01:12]: You’ve done a lot of enterprise software sales, now you know what it feels like to be on the other end of that. Am I right?
Mike [01:19]: I appreciate that.
Rob [01:20]: Totally. Me as well, I’ve been back to work essentially two days. I did some work over the weekend to try to catch up on e-mail. I had a big backlog, but I spent the last two days kind of cranking though and getting caught up and really figuring out the focus of the next couple of months because it’s kind of time to continue building what we started during the summer with Drip. We’ve been doing webinars. We ran a contest. We have the content [?] going. We have a ton of integrations going. There is just a lot going on. While I was away in Europe, I was able to keep pretty close tabs on that.
What is nice is with [Slack?] and e-mail and get GitHub with Codetree on top of that. It was just easy for me to keep an eye on and figure out what was going on, to kind of keep up [the tabs?] with it. The nice part about being in Europe for that month was that I was able to do a lot of thinking and I had enough space because I was separate from the office, that I wasn’t kind of caught up in the day to day as much.
I made a bunch of notes about some entirely new projects that I want take on, some new angles about marketing and on the sales side. We actually need some inside sales help and I’m going to be looking for someone part-time to help with that. There is a lot of interesting stuff that’s on the dock and I’ll probably talk about it once more if it’s implemented. But, kind of planning right now about the next 60 to 90 days of what I see the marketing and sales winding up and then also working with [Derrick?] on figuring out what the next 60 to 90 days of the product is going to look like.
Mike [02:51]: Do you have an idea of how you’re going to go about planning that stuff? Is it going to be based largely on, I guess, interpretation of what customers are asking for or do you have specific things in mind that you know need to be done and it’s just more matter of prioritizing at this point?
Rob [03:06]: It’s the ladder, yeah. We have a couple of hundred feature request, additions, tweaks, some of which have come from internally of how we want to make the tool better for our own use. I use Drip- we use it for MicroConf. I use it for my book. I use it for the podcast. I use it for Drip and HitTail. I use it for ZenFounder and Startups For The Rest of Us podcast. I have a [?] of use cases on my own and we use it internally. Everybody in there is kind of putting feature request in.
Then we have customers constantly asking for stuff so the list is long. The challenge is prioritizing and figuring out what is the next thing that is going to either retain the most customers or get us the most new customers, and that’s really the evaluation process we are going through.
Mike [03:54]: Cool. What are we talking about this week?
Rob [03:57]: This week, we got an e-mail from [Casey Collins?] and he asked a question that spurred me to basically outline an entire episode, and his e-mail reads, “I’d been interested in hearing an episode on how and when to make the leap from the day job to working for your business full-time. I’m working a standard full-time job and just starting to build my SaaS app. What goals or milestones should I set to gauge whether or not I’m ready to make that leap.”
We’ve prepared seven milestones that I think you should target along this path. It may not be the same in every case, but this is a nice general framework to kind of get you going. Under each milestone, we have some action items you should take to kind of make sure that milestone is accomplished or to help you get to that milestone.
To kick us off, the first milestone is preparation, it’s really pre-milestone. There is a couple of things here that I think are key if you are going to embark on this journey and try to get from salary gig to making a living from product or even a productized consulting service. The first thing I think you want to keep in mind is that having a runway of some kind, some type of cash runway is amazing.
If you can get three months of living expenses, awesome. If you can get six months, even better. Because, even once you make the leap and you have an app that’s covering a good chunk of your income, it is so nice to have that comfort and the lack of stress by knowing that there is a chunk of cash in the back that you can turn to if you need to in like a dire situation or in case anything goes wrong as you make this jump to living off your product.
Mike [05:33]: I think something that kind of goes along tightly with that is making sure that you don’t have a lot of debt when you are trying to start a business. Debt itself can be crushing especially if you are floating a lot of money on credit cards or different debts that you’ve accumulated, whether it’s student loans, or mortgage, or car payment, or even just things where you have refinance something. Or you have financing on something for like your house, whether it’s like roof or siding or anything like.
Any of those debts, they basically weigh you down and they can make it much more difficult and much more stressful to start a business because you have all this interest in extra debt that you’re paying on a monthly basis. Yes, in some cases, it’s very valid, but it also hurts a lot because you have to pay attention to that and there is mental [?] associated with all that stuff. It’s not just about reducing the cost of your day to day living expenses, it’s about reducing the outgoing cash flow on monthly basis as well. Not just [?] cash itself, but the interest associated with it too.
Rob [06:31]: If I were in a position where I had $10 or $20,000 of credit card debt and I was considering going and start a product business, I would not start a product business. Instead, I would take my evening and weekend hours and I would do freelance work and I would pay that debt full before I did it. That’s just my style. I think that’s probably the best advice in most situations.
But, as you said, it’s just like anchors it, like sucks the cash out of you and it’s really going to be that much harder to start to make a full-time living off a product. It’s not hard enough without having that as well. I think the second piece of this preparation milestone is to get buy-in from the key people in your life. That’s most likely a significant other, whether it’s a girlfriend, spouse, husband, kids who are old enough, maybe it’s them, maybe if you still live with your parents, it’s them. But it’s someone around you who is going to be impacted by this. I think that’s the biggest deal, right, is are they going to be impacted by taking this leap?
If you share finances with someone else that someone who kind of needs to do the buy-in, and I think a husband or wife is a perfect example of this. Without getting their buy-in, A: you’re not really treating them with respect, like you’re going to be making financial decisions that could negatively impact the partnership and could negatively impact both of you and that person deserves a say before you do that.
Then the other thing is it can cause a real rift. I mean, businesses can cause divorce and it cause people to split up and that’s not something you want to do. I think having that conversation really before you start building this app and going on this [?] pretty tough journey is a good step to take.
Mike [08:11]: I think sometimes it’s difficult to explain exactly why it is that you want to do this. Because, building your own business is a heck of a lot harder and more involved than just going out and getting a full-time job, and you get the income from that full-time or the consulting revenue fairly quickly. Trying to relay that information about, “Oh, this is why I want to do this” and if you’re looking down the road a long term fulfillment or the monetary rewards down the road, it’s not always clear cut to most people.
I find that my brain tends to be wired a lot differently in terms of how I look at things like that than other people I know who are not entrepreneurs or not doing their own thing. They have a 9 to 5 job, they go to it, and they come home and they don’t really see how, “Oh, why is it that you’re working on this thing that you’re not seeing any benefits from it right now” and it could be very difficult to explain that kind of stuff.
You really do need to be on the same page, not just in why you want to do it, but what are the long term benefits of it. Let’s assume that you are successful and that also goes along with making sure that you’re relaying information about how things are going to your significant other, because they need to know how things are going, because they are invested in the relationship, maybe not necessarily in the business they want you to be successful, but as a by-product like it does affect your relationship and it really can hurt it over time.
Rob [09:30]: Yeah, I agree. I also think that I would consider giving someone who had a lot of questions about this and really wanted to begin with, give them the book “The End of Jobs.” Taylor Pearson came on the podcast awhile back but it helps explain why entrepreneurship is actually a logical choice and can be as good as or better than employment, especially moving forward, and it makes it kind of logical argument around that.
Last step for preparation is to put together a spreadsheet with estimates of how long it’s going to take to build what you need. At this point, it’s going to be more of a guess because I’m assuming you’re just starting conversations with customers or future customers at this point so you may not know exactly what you want. But a problem I see with some folks who are building products, actually, many of them, is that they don’t have any concept of how long it’s going to take them to build what they are building, and they just sit down to build the next page in the website, really, without a spec telling them what the overall scope of things is and no concept of when they will be done.
When I say spec, I don’t mean that you write some type of full functional spec like you would if you’re a consulting firm, I mean, a few lines on an Excel spreadsheet or a Google Doc that basically says, “Here are the high level” whether you want to do it from database up or top down from the UI element.
I’d typically go from UI stuff and you say, “How much each page is going to take you” and then you add some leeway time and you add some database architecture time, and some deployment time, and you can get a reasonable estimate, even if you’re not that great at estimating. If you’re within 30%-40%, that will help you know, is this a true year development project you’re tackling or is this a 3-month development project you’re tackling. Knowing that from the start is huge, and I think doing that, I feel like you’re flying blind and you have no concept of what it is you’re building and how long it’s going to take.
My other kind of final act for this is there is this cool function in Excel and in Google spreadsheets, called Workday. If you put all the numbers in, forget how many hours it is, you could put workday in and you can figure out what date that you’re going to complete this project, and it will give you the date as of today if you work certain amount of hours per week.
Then, if you don’t work in a week, that date pushes out and so this is a very tangible and real way to watch your date slip, really, without any work acquired on your [?]. Every time you log into this thing, you’re going to see, “Oh man, I’m not going to launch until February of next year” and you really need to get on this thing.
I think this is a key component to preparation as to have a concept of the scope of what you’re building, even if that changes, you’ll be within a month or two of it and when you’re working part-time like this nights and weekends, having this is I think a big kind of sanity checker to be able to have an idea of how long you’re going to be working on this on the side.
Mike [12:14]: Yeah. I think that’s a great suggestion. I didn’t know about the workday function, I use FogBugz and Teamwork and couple of other tools. But the interesting thing about that is that it’s almost like if you’re using a GPS and tells you that you’re going to arrive at 5:10 PM or something like that and you hit traffic, and suddenly it’s taking you longer and it continually pushes out.
At the end of the day, of course, when you’re 30 seconds away, of course, it’s going to be extremely accurate. But the further you are out, it is less accurate and that helps to give you an idea of how far you’ve realistically are from it. Because the further you are away from something, the more difficult it is to estimate it and I find that when you have a lot of test that you’re not necessarily as familiar with doing because you don’t do them on a regular basis, you can be wildly inaccurate by as much as 10x of how close you are with just your initial estimate.
Then even the things that you are familiar with, those things are very often inaccurate as well. I’ve seen developers who are like, “Oh, this will only take a couple of hours” and inevitably, it takes two or three days. I think I saw something recently where it basically said, “Take any estimate you have in order of magnitude in order to make it accurate.” I wouldn’t say that that’s necessarily far-fetched in many cases.
Rob [13:26]: That was our first milestone preparation. Milestone number two is to have one person commit to paying you for your product, and this is standard customer development, right. It’s getting that commitment and trying to validate the idea [?]. Notice no one has written any code yet, don’t go often build your product. In fact, Casey had said, “I’ve just started building my SaaS app.”
Casey, I would advise you to stop building your SaaS app and go do this instead. I say one person committing to pay you, that’s the first milestone and really, the next one, we will kind of combine it with this, is to get 10 people to commit to paying you. Name a price, get 10 people to commit and this is going to happen in person conversations, either in person, via Skype, or via e-mail, but it’s going to be one on one conversations. You can do this with split testing and sending bulk e-mail and using surveys. Right now is the time to dig in and really get 10 people, and don’t write a line of code until you have those 10 people.
That’s what we did with Drip. I’ve refused to get started on it until we had some commitments and I knew that we had enough interest that it was worth digging in and starting to write code.
Mike [14:32]: I think that step is really hard for a lot of people, because they don’t have anything that they can really show to people, yet, you’re kind of asking for people to make commitments to pay you for something that just simply doesn’t exist. The term that comes to mind is [vapor?] [?] “Oh, you’re selling something that just doesn’t exist.”
In some cases, the advice is, “Oh, you should definitely take somebody’s money and there is a counter advice which says that you shouldn’t, at a very least, get the commitment. But those two things are just kind of a natural progression. If you get somebody to commit paying you money, that’s only one more step to get them to actually give you the money. If you don’t deliver, if you don’t follow through, then give the money back. It’s not that big of a deal.
I was talking to a couple of entrepreneurs who deal in the real estate space and they were having a hard time doing this and I kind of put it in perspective for them because I was like, “Well, how much are they paying for some of their leads and how much are they making from some of the different things that they are doing” and of course, it’s thousands and thousands of dollars because it’s a percentage of the real estate transaction.
I was like, “You’re asking them for a commitment of $100 to $200 which is not a big deal and later on, few weeks later, we talked and they are like, “Oh yeah, I went out and I did that and I got three people to give me a $100.” And they are like, “Oh yeah, it was no big deal at all. The other person just didn’t even blink.” They are like, “Oh, $100?” “Sure, no problem, whatever.” Because in the [grand scheme?] things to that business, that $100 does not make a difference, but to an individual, it might.
It does depend a little bit on the type of business that you’re talking to. But getting that commitment means a lot and it helps you really determine, whether or not, it’s something that people are willing to pay for. Whether you ask for the credit card or you just ask them for that commitment, each of those things are a step that takes you a little bit further and it really just depends on how far you want to go.
Rob [16:14]: I agree with you that this is hard for most people and most people don’t do it actually, and this was very hard for me when we were getting Drip started because we wanted to build the thing. We just knew that everybody was going to throw money at us when it was done, and these conversations are hard. They are uncomfortable because you have an idea of what you want and you feel like when people tell you that they don’t quite understand what you are really saying, they don’t really get what you want to build.
But this is when the iron meets iron and the sparks fly and you have to figure out your vision for your product is correct, or if you need to make adjustments, or if you’re just not describing it well enough. This is where- I didn’t have anything to show. We had no screenshots. If I were to do it again, I would probably try to produce a screenshot or two or a flow diagram or something to demonstrate it, but all I had was a list of bullet points and it was just a value proposition.
You don’t need to walk through and say, “These are all the screens that are going to be in there and then you’re going to click this button and then that.” That’s not the point. The point is would you pay for something that does this, that gives you this end result, that’s what you’re selling here. You’re really selling a solution to a problem rather than an actual piece of software at this point, and you’re just finding out, “Is this enough for a problem that you would pay X dollars to have it solved.”
If you can get commitments for that, then you have to solve the problem, and maybe the software you have in mind right now, solves that problem and maybe it doesn’t, but at least to just start. If you launch that version 0.5 and it doesn’t quite solve it, then you iterate on it until it does solve that problem. But if you valid that this problem has a need, and people are willing to pay $100 a month for this thing, that’s a really good start, that’s 10x better start than most founders I know have these days, when they start writing code.
The second piece of the second milestone, which is basically to get 1 or 10 people to commit to paying you is to start building your launch list. It’s what to do right after you do get those commitments or as you’re going about getting those commitments. The traditional advice that I would give is to get a landing page up and start collecting e-mails from day minus one before you start writing any code, but you and I had a discussion offline, and doesn’t have to be an e-mail address that you ask for, it’s going to depend on your market.
If your audience is online, then yes, an e-mail address and a first name is fantastic, super helpful. But maybe you could ask for phone number instead if you feel like that’s going to be a quicker or an easier way to get in touch with people, or maybe you can just have a button right there that says, “Hey, if you want to hear about it when it launches, if you’re all in, give us your e-mail or otherwise, click this button right here and this will call me on Skype.”
There is like click to call services all over the place where they can click and they can either have a phone conversation with you right now, or they can schedule one. I can imagine some developers listening to this might think [you?] I don’t want to be talking to people, right, you just want to go in a basement and write code. I’m not saying you’re going to have to talk to people every time you sell every copy of your product. But at this point, this early in the game, if you’re trying to build something that people want, you have to get into conversations with people in order to figure out if what you’re building is going to solve their problem.
Mike [19:13]: I think that’s probably the most painful part of this is because we are so used to writing code that like that’s all we want to do and it does make sense because that’s kind of your comfort zone. It’s what you’re familiar with and you’re trying to talk to people about something that is very nebulous, it’s an unknown, you’re just trying to get to the heart of, “Okay, well, what is it that you would actually pay for as oppose to solving a problem” that somebody came to you and said, “I have this problem, solve it for me and please write code to solve this.”
What you’re doing is you’re kind of going at it from another angle which you’re just not comfortable with, trying to say, “Well, what problems do you have and are they painful enough that you will pay me for them or pay for a solution to them.” It’s just because of that, I’ll say, that awkward angle of approach, it makes it difficult for most people that are trying to make that mental leap.
Rob [19:57]: The last piece I’ll say about this building your launch list is we get this e-mail a lot saying, “How do I drive traffic to a pre-launch landing page?” and frankly, [?] you would do it after launch, you can do it pre-launch. There is SEO, there is pay-per-click that was mentioned in forums, there is in person conversations, there is called e-mails, and there is all types of stuff.
The point is not to get hung up with figuring out the silver bullet that’s going to drive this. The point is, at this point, really trying to validate the idea, make sure some people will pay you for it, and trying to build as large of an interest list as you can. Milestone number three is to get that first paying customer and this is that point, you’re still pre-launch, right?
But let’s say you’re approaching launch. I think this is when you probably have a beta version that does something and it does something well enough that some person says, “Hey, I’m really willing to kind of take a leap on you.” You give that credit card form, maybe you’ve let him use the app, you’ve let him tried out, get some value out of it, and then you ask him the big question [?] getting enough value out of this to pay X dollars for this app, whether it’s one time or monthly, and this is a big milestone. It’s milestone number three, which is basically to get some amount of money in your bank account from someone who is willing to buy your app.
Mike [21:14]: You’ll notice that this kind of comes before the full launch for the product. I think the last thing you probably want to do is to launch your app and have a ton of people using it, and only to find out that there are major problems with it, or there are things that you hadn’t considered in solving the problem that other people are having. I’m kind of a big fan of like the slow launch, where you take the product, you put it out there to like one or two people and get that feedback from them that you need in order to help make it better, but to also help flush out the bugs because you’re not going to have a perfect product from day one, and you want to start getting that feedbacks, so you can have conversations around some of the deficiencies of the product. Because there will be deficiencies, it’s not going to be perfect out the door.
The other thing that that does as kind of a side effect is that when somebody comes to you and says, “Hey, I like this and all but it would be great if it did this.” If you’ve already had those conversations, you kind of have a ready answers for those types of objections, and you can use that to help push people in one direction or the other, either that’s to say, “No. We are not going to do that because it just doesn’t make sense, it’s not in the road-map” or you can kind of twist that and say, “Well, yes, it is. That’s something that we are going to do and we are putting it in next week. Can I call you then or can we talk about it and revisit this conversation at that point?”
It puts you in a position such that you can have those conversations, you can have intelligent answers immediately at your tongue so you don’t have to sit around and agonize over what should I do here because you’ve already have the conversations, you know what the answer is.
Rob [22:44]: Milestone number four is to actually launch. Obviously, we can and have devoted entire podcast episodes to launching so I don’t think we should [?] this point. But what I do want to call out is that launching is maybe your halfway point. It might even be your third of the way point, because you barely have any revenue at this point. You kind of know that you might solve a problem for a small group of people.
I mean, you are really, really early in the game, so don’t feel like the launch is the finish line. The launch is when you e-mail your whole list and you try to convert as many as possible, you should have a really good launch day in terms of how many people you convert because this is your biggest interest list, make sure not to [conf the app?] to everyone on your interest list. It’s like the catastrophic mistake I’ve seen folks make. [You have?] 500 people on your list, it’s the most interested people you’ve gathered over the past six months while you’re building it and then you just give it away free to everybody on the launch list just to try to get them to use that and that’s not a good way to go.
If you actually want to make some revenue and get to the point where you can quit your job. This is milestone number four. It’s essentially getting to launch, getting through it, and getting some paying customers. Milestone number five is getting that first paying customer post launch from a cold lead. This is really starting your marketing after you’ve gone through your e-mail list or I should really say, continuing your marketing, because you should’ve already started it when you’re building your launch list, but it’s continuing to do those things and getting that first paying customer who signs up after launch.
This is really getting that first paying customer after you launch and now you’re building up towards that point of your quit my job income. I really should’ve added one more point to the preparation milestone, something you should’ve done before this is to figure out what is that number that you need to quit your job. It’s not your salary replacement, right, you might make $15,000 a month in your salary. But if you can cut your expenses and live on $7000 or $8000 a month, then that’s what you’re looking to do.
That should’ve been up in step one, is figure out your number, figure out the number that you need to hit. Right now, we are at milestone number five and you have your first paying customer from your cold lead after your launch, and you should be working your way towards that quit your job number that you figured out.
Mike [25:01]: I think part of the process that you go through after getting this first customer is to identify ways to make acquiring that customer or that type of customer repeatable. It’s really difficult, I think, mainly because there is such a small sample set here that you’ve only got one, what is it going to take to get another or should you go off in a different direction?
I think that most cases, you really want to try and figure out, “Can I repeat this?” and if not, “Are there adjacent areas where I would be able to easily get more customers?” so it’s about trying to expand from that one customer that you have into other people who are also cold leads, how do you go about [?], can you set up e-mail campaigns, how do you drive traffic, should you work on paid advertising.
These were all questions that you kind of have to answer and figure out which channels are going to work for you and which ones aren’t, and that’s not always easy to do, but there are definitely great resources out there like the Traction Book from Gabriel Weinberg and Justin Mares, that talks about all the different marketing channels you can try, and how to go into those and start testing them to see what will work for you, and what will not and what are the kind of the low hanging fruit for your type of business based on where your business is today.
Rob [26:13]: This is what I like to call, the scratching and clawing phase, because you’re basically doing anything, even stuff that isn’t repeatable to try to get to your number. As you said, you might be doing things that aren’t repeatable but you’re trying to figure out how to make them repeatable. The ones that work so so, you kindly leave behind, and the ones that work the best, even they are very time consuming or require a lot of manual effort, you still need to do them.
This is where your [?] things that are not going to scale at all. Because they don’t need to scale, they just need to get you to that $7, $8, $10,000 a month mark where you can quit your job. The last two milestones are really very similar. I put milestone six as hitting an arbitrary 50% of your income and this is having a net profit after expenses 50% of your income number that you need to quit your job.
Frankly, it’s just a milestone to celebrate more than anything. I don’t think there is any action items to take care other than to high five yourself and maybe have a nice sip of scotch on your way to reaching this income. This might take a few months, this might take a year. It depends on so many factors, but it’s when your heads down and you’re hustling, I find that having these milestones that you can celebrate with your mastermind group or with your significant other become a really big deal on your way to milestone seven, which is hitting that full income number that you need to quit your job.
As I said before, don’t try to replace your salary, just figure out how much it is you need to live and focus on that. The other thing I would look at is just decimating your expenses. Mike, you talked earlier about getting rid of debt, I know a friend who like sold a rental house that he had own for a long time and I think it was like upside down, so the rent wasn’t paying the mortgage and he went to this whole process of selling that before he tried to do this. I sold thousands of dollars of stuff on eBay and Craigslist as I was trying to make this transition. I mean, talk about scratching and clawing and doing things that weren’t going to work long term.
This is when you really have to kind of go to the mattresses and figure out what is it that I need to do, it’s not you’re responsible in order to kind of push me pass this point to where I feel comfortable, that I can leave my gig for the product income I have. Because, it’s never going to feel fantastic, right, it’s never going to be like, “Oh my goodness, I have so much income and I have so much free time and I’m just going to leave when I want to.”
You’re not going to have enough time before you have enough income, if that makes sense. I mean, you are going to be working 40 hours during a week for your day job and then 30 hours a week at night way before you have enough income to actually leave the job. You really have to kind of maximize this thing if you want to leave the job as early as you can.
Mike [28:51]: This is one of those situations where it’s unclear early on but as your income from the side project becomes much closer to your full-time income, this is where that runway becomes super important. Because, if you have that runway and you’re able to reach, let’s say, the 50% of your income, well, suddenly, if you had six months of runway before you started this process, once you’ve reached that 50% of your income mark, you now have 12 months of runway, not just six. Because, you essentially have all this money in the bank and the money that you have coming in on a monthly basis, essentially, extends that runway for you.
As your monthly income goes up, your runway gets longer and longer. Obviously, there is subtleties in there where the business starts to tank or things aren’t going so well, your runway can decrease as oppose to increase. But it’s helpful to have that, it really helps from a piece of mind standpoint and being able to, as Rob just said, decimate your expenses and get all of those things off the table. They help to avoid eating away your runway, and getting rid of those expenses that you just simply don’t need.
Rob [29:56]: Last thing I will add about reaching this seventh milestone of kind of your full income that you need is to think about how stable that income is, is it going to fluctuate? Because obviously, if it is a bunch of one time sales and you know that you’ve started zero at the start of the next month, then maybe you need more margin, maybe you need more runway. But if you have something that’s pretty consistent, even if it’s not a subscription, but let’s say it’s a WordPress plugin or it’s a website that has nice, solid, organic SEO and it’s pretty consistent month after month, then I think that you have a little more reason to be confident in that.
Obviously, if you have true subscriptions like SaaS apps or membership website or something like that, then maybe you need a little less margin and can leave as you approach that number. I don’t necessarily know that you need to hit that number if you can see your growth number is going up and you have a trajectory that you know within a month or two you are going to hit it all together.
I stopped doing consulting when my product income hit somewhere around 70% to 80% of my number, and remember, my number was way less than what I was making consulting. But when I got to that 70% of that number that I knew that I needed to make a rent and take care of the family and such, I knew I probably make it work for the next three or four months and kind of grow the revenue to get there because I was pretty desperate to get away from work and for other people.
Mike [31:16]: Yeah. All of this is about risk tolerance at the end of the day. I mean, that income stability and being able to cut your expenses, it’s a way to help mitigate the risks of going off and doing your own thing and not being reliant upon an employer for W2 form or 40 hours a week or what have you. You want to be able to being control of your own destiny and sometimes that means taking a little bit of risk. That doesn’t necessarily mean that you should put it all on the line and take an extended amount of risk. But there are certain cases where it does make sense to do that and it’s all about risk mitigation.
I’ve talked to people before where they think, “Oh, you’re an entrepreneur. I can never do that. It’s too risky.” The reality is that almost every entrepreneur I’ve ever talked most of them don’t like taking huge risks. They like to figure out what the risks are and do whatever they can to minimize or mitigate them or make sure that it’s not going to be a problem. It’s not about having high risk tolerance, it’s about making sure that the risks that are there that you are aware of, you try and do as much as you can to get rid of those risks. The reality is like that’s what this entire outline is about, it’s about how can I minimize the risk of going out on my own.
Rob [32:23]: I’m glad you brought that up. I’m actually listening to an audiobook right now, called The Self-Made Billionaire Effect. It is that small group who researched and studied a bunch of self-made billionaires. They had a list of 600 and then they randomly narrow it down to 120. They tried to do a scientific study of them and their predispositions and distill some of the characteristics and the behaviors and one of the things they said is that they did tend to have lower risk tolerances.
They were not these crazy risk takers like the world mythologizes and the press talks about. Not that we are trying to build billion dollar businesses here, but I do think that the sentiment is shared. That most of these successful founders I know are pretty methodical and consistent and they don’t tend to just jump around and take these massive risks like I think people think they do.
Mike [33:09]: That wraps us up for today. If you have a question for us, you can call it in to our voice mail number at 1-888-801-9690, or you can e-mail it us at questions@startupsfortherestofus.com. Our theme music is an excerpt from “We’re out of control” by MoOt used under Creative Commons. You can 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 253 | Key Takeaways from MicroConf Europe 2015
Show Notes
In this episode of Startups For The Rest Of Us, Rob and Mike talk about their takeaways from Microconf Europe 2015.
Items mentioned in this episode:
- Microconf Europe Recap
- Microconfeurope.com
- Product People
- Bootstrappedweb.com
- LeadFuze
- ZenFounder
- Jitbit
- Drip
- How DNS Works
Transcript
Rob [00:00]: In this episode of Startups for the Rest of Us, Mike and I talk about our key take aways from MicroConf Europe 2015. This is Startups for the Rest of Us Episode 253.
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 [00:27]: And I’m Mike.
Rob [00:28]: And we’re here to share our experiences to help you avoid the same mistakes we’ve made. So [where this week?], Mike?
Mike [00:33]: Well, with the exception of the loss of my phone in Barcelona, I think it’s been a pretty good week.
Rob [00:38]: Is that right? Yeah, so MicroConf Europe- this is our third European MicroConf, it’s our eighth MicroConf in total, and the last two years we did it in Prague. This year we did it in Barcelona, and you left your phone in a cab.
Mike [00:51]: Yes. It was one of those situations where there was a series of unfortunate events like leading up to it, and as I got out of the- had any of those things not occurred. So for example, if my SIM card had not like needed a password reset because the phone itself died and I needed to put in the PIN code again, but then I lost the card that has the PIN code on it so I couldn’t activate it. So I was walking around with a phone that couldn’t actually connect to anything, and I could have remotely said, “Hey, go do this.” But my phone is floating around in Barcelona some place and as I got out of the cab, I had my phone in my hand and I pushed off, and I must have opened up my hand and I closed the door, and then I realized. I was like, “Wait, where is my phone?” and as the cab is going away I was trying to run after it. I could not catch it.
Rob [01:30]: [?] Well, and the funny thing is is our conference coordinator, Xander, did the same thing two days earlier and left it in a cab, and he wound up getting it back, right? Somebody picked it up and took it to a cafe and he wound up getting it. So it’s a bit of a bummer, man. Hold on to your cell phones in the cities.
Mike [01:43]: Yep. I was so close. Like I said, it was a bunch of things that happened, and they just all happened just right, and that’s how I lost it. I know exactly where it is actually. It’s in that cab.
Rob [01:53]: So we got a lot of comments this year that kind of indicating that folks who had been to at least one of the prior Europe conferences. Some people had been to two prior- saying that they felt like this was the best European conference we had held. And I don’t want to get too far into inside baseball, but what do you think about that? Why do you think that’s the case?
Mike [02:14]: I think there’s a lot of reasons for it. I don’t think there’s one thing you can point to and say, “Oh, that’s the reason.” I think it was a lot of little things that added up. The first thing is obviously this is the third time we’ve held it over there. So we get a little bit more experienced over time at hosting a conference in Europe because we hosted in Vegas but we kind of have feet on the ground here so it’s a bit more difficult to do it over there. But at the same time, we kind of upgraded. I feel like the location of having it in Barcelona, it was a better option than Prague partially because it’s at the end of August and it’s warmer. The climate there is just better, it’s more conducive to having things outdoors. There was a lot of stuff kind of readily available in terms of being able to go out and go to dinner and things like that. And then the returning attendees, as you build up a conference and more people are returning, I think that that lends a certain atmosphere to the conference itself. And I think even if you held it in the same place, it would get better naturally over time because of the attendees. But as more of those people come back, it lends itself to a better atmosphere.
Rob [03:15]: So we want to talk through some key take aways that we brought away from the conference. We also heard from a lot of the attendees some of the key take aways they had, and I think we’ll kind of integrate them here. If you’re listening to this and you’re interested in reading through a full recap and the detailed notes from each of the talks, you can head to microconfeuroperecap.com, and that is our designated note taker for the Europe Conference, Christoph Englehart, and he has published a detailed note section on each speaker. So if you wanted to dig into any one of the talks that we mention, that’ll be the place you’ll want to go.
So to kick us off on day one we had Justin Jackson from Build & Launch podcast, Product People podcast, and he talked about marketing for developers because he’s writing a book on the topic right now. And he had, I think it was ten different recommendations for getting your first hundred customers.
Mike [04:07]: Yeah. There was a lot of actual stuff in there, and I think some of these were just completely non-intuitive, and he had these really neat examples. One of which he was using Google Images, not to manipulate, but basically gain attention for images on his website. The proof of concept that he used was if you go to Google and you search for “nerd mullet” in the images, it’ll pop right up, there’s a picture of him from high school, and it’s just really fascinating these little tidbits that you can use that I don’t think most big companies are going to do those types of things, but small companies have the capability and, I guess, the desire and need to do those things in order to stand out from those bigger companies that have a lot more resources. So it was really cool to see all the different tactics and things like that that Justin had put out there for people to take away that they can implement, and none of them were terribly difficult to do. It was just, “Oh, that’s really insightful; let me write that down.” I heard a lot of people saying, “I’m going to go do this” or “I’m going to go do that” based on some of the things they heard from his talk.
Rob [05:08]: Yeah, there were a couple of things that I liked about his talk. Number one is it was ten discreet tactics and you could kind of pick and choose which one you felt might work for you. The second thing I liked is he used the example of a MicroConf attendee. He actually used their website or their business in each of the points to say, “This is how he could specifically apply it.” And so it wasn’t just throwing out tactics, but it was actually trying to weave it into a story. If anything I would have liked to have seen more examples because there was the one website. But if he had picked maybe two or three, and he would have had time to do it, right, to give examples for each of the tactics for two or three websites it would have been, I think, even more valuable.
Mike [05:45]: Yeah, and I talked to him. He actually has each of those examples going into his book so I think they just didn’t make an appearance more than anything else. I’m almost positive that he has them.
Rob [05:53]: Got it. Yeah, I would agree. So our second speaker on day one was Brian Casel, and he was talking about productized services and the reason we wanted to have Brian out is because he has a productized course, it’s a video course, and ebook and a Facebook group and stuff, and he’s from the Bootstrap web podcast, and now he writes Audience Ops. The reason I wanted people to hear about productizing is I think folks often want to make the leap directly to software, and I think if that’s really what you want to do, that’s okay. But I think that knowing that there’s this alternative step that you could take to basically productizing a consulting service is really valuable. And Brian has experience with that because both his previous startup and his current one he’s working on are both productized services, and then he had a bunch of examples from people he knows including yourself, including Justin McGill, who’s running LeadFuze, and there were several others. And so it was cool that- I liked that he outlined the concept and then he just started throwing out examples of exactly how you guys have done it. In your case, it was like building the software first and then turning around and adding the consulting services later to make it more valuable. And in Justin McGill’s case with LeadFuze, it was doing the productized service, it’s outbound e-mail, doing that first, and then going back and launching the SaaS later, which he did just a few weeks ago. And there were other examples like that, so I really liked the structure of his talk, and I liked the concept was well communicated to the group.
Mike [07:13]: Yeah, I heard a lot of good feedback from different people who were thinking about launching something or building something, and his talk kind of shifted their focus to, “Huh. Maybe I don’t need to write any of this” “Maybe I can essentially just offer to do it as a service for people and then build tools to do the automation afterwards as I learn how to do those things myself and I understand exactly what it is that the customer wants and needs.” So it’s definitely a fascinating concept about how to build something complicated that customers have a need for and are willing to pay for and instead of building first and doing all the customer development, you just work with them directly and essentially do it as consulting and move on into building something after you’ve kind of worked out exactly what it is that they need.
Rob [07:56]: Yeah, and I don’t think productizing a consulting service is for everyone, but I don’t think everyone has heard about it. I want to continue spreading the word so that people can make their own decision based on whether they really are dead set on getting the software first or if they really just want to quit their job or quit the hamster wheel of consulting, I think productized services are a faster way to do that for sure.
Mike [08:19]: Yeah and that’s specifically because you can charge so much more for the services because people understand, “Oh, there is a person behind it who is doing that” and they expect to pay more for that kind of thing. So it gets you to a revenue faster.
Rob [08:31]: Right, instead of a SaaS that’s $20, $30, $40 dollars a month, productized services tend to be $500, $1,000 or $1500 a month. They are kind of the price ranges I often see. So you don’t need to have any customers to be able to quit your job at that level.
Our next talk was Sherry Walling, who talked about limits and liabilities and how to get to know yourself and how the limits and liabilities that you carry with you, like in your personality and psychology, can apply to both great things you can do and the things that are going to trip you up with your startup. And she talked about how your past and your origin story can really shape where you’re headed and can really help you understand how you react to stress and when you’re going to function well and when you’re going to probably fail under pressure. And she used specific examples from these founder origin stories we did over on the Zen Founder podcast over the summer. She pulled out specific examples of their stories and how you can tell your own story and apply that to where you are and how to get where you’re going.
Mike [09:32]: Yeah, I liked that she pulled all those different examples out and most of the examples she never said any of the names of them upfront. She just basically said “Oh, this person from here or that other person from there, and these are the experiences that they had early on in life and how they affected them.” And she went through some studies that basically said, “Oh, if you had these different things that happened earlier in life, this is how they affect you later in life.” And it was just fascinating that it had such a profound effect on you. And it was nice that she went through those stories and then afterwards, she revealed who those people were. They’re all names that you would probably recognize if you’ve listened to this podcast before. But it was just fascinating that she was able to take those, and because she presented them in sort of an anonymous way, you could just relate to them. You’re like, “Oh my God, that person went through this” after you heard who it was. So it was nice to see those things because it made it, I feel like more relatable. I think when you hear stories about a high profile person, you almost mentally project what you know about them now into that story. But if you hear that story first, and if you don’t know it that well, if you heard that first and then are told who it is, I think it makes a difference in how you perceive this story and the journey.
Rob [10:43]: Our next speaker on day one was Alex Yumashev from JitBit software, and he talked about bootstrapping to a $1 million a year software company. And Alex runs JitBit. I think JitBit helpdesk is really kind of their prime product at this point, their flagship. And I thought he had a good talk. I heard a lot of positive feedback about it. He offered a lot of his tactics and a lot of his own thoughts on things. Some of the things he said was controversial in terms of talking about some SEO and grey hat and other stuff. But he certainly has experience growing this business and has been doing it many years and has had many products so I think that his expertise was appreciated at the conference.
Mike [11:23]: The part that I found really interesting was the “Did this work or not?” and he put things up there like retargeting and SEO and stuff like that, and it was fascinating that the audience got some of them right and some of them wrong. Because, I think that some of them you would just naturally assume, “Oh, that works.” But, it doesn’t always work and I think that was his point. It wasn’t that this particular technique never works, it’s that it didn’t work for me. And I think that we just tend to naturally assume, “Oh, this worked for somebody else so it’ll work for me” and that’s just not always true.
Rob [11:52]: And rounding out day one, I spoke about the inside story of self-funded SaaS growth. It was basically the story about the last 18 months of Drip and growing that and it was very similar to my Vegas talk. I did make some adjustments to it, some things that I learned while doing it in Vegas. But overall, I felt like it applied to folks over there, it got a good reception. I had a lot of good questions about it, and overall, just felt good about how I’d given it.
Mike [12:18]: Yeah, I think there were a lot of people who were kind of surprised that there was this period of really low months kind of early on in Drip where things were kind of level and you weren’t really sure what to do, and then it was very obvious that at some point along the way, you got the product market fit and you were able to essentially overcome that problem. And I just don’t think that people realize how important that product market fit is. And I think the specific things you talked about were that your number of trials were going down but your revenue was going up because your conversion rates were going up. And as you focus on getting that right, the only reason the trials are going down is because you’re spending less time on the marketing side of things, so you’re getting less leads in but those leads are converting more, you’re getting more money. And at that point, you know that that’s when you’ve hit product market fit.
Rob [13:05]: And kicking us off on day two was Peldi Guilizzoni from Balsamiq, and he talked about a reluctant CEO growing up, and it was basically the growing pains of building a company that he really wanted to be a solo founder, and he reluctantly hired a couple employees, and then he said, “Well, no more than five ever,” and then when he hit ten he said, “No more than ten ever” and he’s actually at twenty employees now. And he had just fascinating tales of a potential acquisition that didn’t go through and just the stress and having to rethink he management structure because he didn’t want to have one, and then he found out he needed one [?] process, and he found out he needed some. And he was super vulnerable and really engaged the audience at a certain point in his talk. It was actually, both his and during Sherry’s talk. I looked around about halfway through and everyone was just wide-eyed, pencils down, no laptops clicking, and just super invested in the tale that was being told.
Mike [14:03]: Yeah, that was an amazing talk. It was just all the stuff that he talked about was stuff that you never see publicly, I don’t think, because most people are either acquired or not and afterwards, they’re just generally not able to talk about it. But he did go and get permission from them to talk about his experience and what went right and what went wrong and how it affected him. And I thought the thing that was really interesting was how badly his health suffered during that process because he was so stressed out and it was so difficult for him. It’s one of those things that most people don’t talk about, it’s like how your mental state can affect your physical well-being, and it definitely affected his physical wellbeing.
Rob [14:40]: The next speaker was Dave Collins, and he talked about the most sincere form of flattery, which of course is imitation. And he spoke about how you don’t have to try to reinvent the wheel on your website. If you want to improve conversions, if you want to improve your website, look to others who are already doing it well, and he had a bunch of examples of how to do that well and how not to do it well. And in talking to attendees afterwards, I actually got mixed reviews on it. I think some people didn’t fully understand what he was saying or didn’t agree with it or something, but then there were also people who took a bunch of notes and are going to apply it to their website. So in a sense, he kind of had a polarizing talk where I think some people really latched on to it and then others maybe had mixed feelings about what he was saying or didn’t follow it, one of the two.
Mike [15:21]: Yeah. I think that when you’re in different states of your business- because there’s kind of a life cycle to your business. There’s when you’re really early on and then you become a middle stage and late stage, and depending on where you’re at different things are going to be relevant. And I just feel like some things were more relevant to certain parts of the audience than others but I liked it. It was definitely interesting some of the things he put out there.
Rob [15:41]: And then we did a bit of an experiment with John Ndege, who has come to I think all three of MicroConf Europes, and he is a self-funded non-technical single founder of a SaaS company, and he has grown it to six figures, and he’s working with a non-technical audience, so it’s all medium and high [touch?] sales. And in essence, he did about a 20-minute talk, but it was him preparing slides and then he led through the slides and then I actually asked him questions during the talk to clarify some points. So it was kind of an on-stage interview mixed with a presentation. And so far, I’ve seen mixed reviews about it. I think some folks really liked the interview approach because it answered a bunch of questions upfront that you might have. I think some folks said since they were technical founders, it didn’t really apply to them which comes back to your point you made earlier. But to be honest, the non-technical founders who I talked to, there were maybe four or five who I talked to after his talk, loved it and said, “His was their favorite” because it related so much to their situation. And I think that’s an interesting thing to remember about these talks is as an individual you can rate the talks, but it’s always based on where you are and your personal biases and your personal thoughts and feelings. Going with John’s talk, it was a bit of a risk to go with a new format and to dive into what a non-technical founder has to do, but I think it was totally worth the experiment, and I think it’s likely something we’ll do in the future.
Mike [17:05]: Yeah, I’ve been going through it to see specifically from the feedback what people thought of it, but I thought it was an interesting format to have onstage, and I liked the fact that it was kind of like a 20-minute talk or so, so it wasn’t a full 40 minute and it wasn’t an attendee talk, which was only 12, it was kind of that sweet spot in the middle. But there was a lot of actual stuff in there. But again, as you said, specifically for a non-technical founder and as you said, there were a lot of those people in the crowd. So it was nice to hear from those people “Hey, I got a lot out of it and it tells me how I can approach things.” But we do get a lot of people asking us on this podcast, “How can I do this as a non-technical founder?” And one of the things that he said that I hadn’t necessarily realized before was that when he’s on-boarding his customers, he talks to every single one of them. And I don’t know what his price points are, but I think they’re like $100-$200 a piece, but because he talks to every single one of them, he gets all of that customer development and feedback he needs to help guide the development of the product itself. And I think that’s the important piece for those non-technical founders. Like, they need to know exactly what their customers want.
Rob [18:09]: And then we had Rachel Andrew from Perch who is a returning MicroConf speaker, and she talked about no exit plan. She talked about how she and her husband have launched their business and they stopped consulting, and everything’s going well except for they don’t feel like they can take a vacation, and they feel like they’re tied to this business, and they feel like they haven’t had enough money to hire someone who can help them with it. So the talk was really her thinking through how to do this, and she wanted to kind of talk to folks out there who are just thinking about getting to the point of quitting their job to maybe think past that and to not just focus on the short-term goal but to be thinking, “Once I get there, what am I going to do after the next step in order to not be tied to this thing” and basically not build yourself a job because that’s not what you want, right? You want to build a business that you can certainly make money from but that you can also be free of when you want to be.
Mike [19:02]: Yeah, that was something else that’s probably not talked a lot about. She was talking at one point about how she was answering support emails on Christmas, and it’s kind of a typical day that a lot of people take off and she’s sitting there answering support e-mails. And there, she talks about how she was working essentially 365 days a year, but on the other hand, she loves what she does. And I think that’s why most of us do what we do is because we really enjoy not just this mode of business but the things that we’re working on. That’s why we do what we do. It’s because we want a job that we love, not just because we want a job. If you want a job that you don’t love, that’s why most of us have those regular 9 to 5s. But if you want something that you really want to work on and you’re passionate about it, it’s okay to make less money if you love what you do.
Rob [19:49]: And rounding out our 10 mainstage speakers at the end of day two, it was Patrick McKenzie. He was talking about leveling up in essence stair-stepping his way up from bingo card creator to appointment reminder through consulting and then to what he’s doing today which is Starfighter, his current startup. And he actually tweaked the presentation. It was very similar to his one that he did in Vegas four months ago, but he tweaked it based on some feedback there, and he pulled out the part about selling an app, and he added some more things that I think were more relevant to the European audience where there’s slight more bend to being at the beginner end of the scale and kind of having just launched or being close to launch rather than being further along.
Mike [20:30]: Yeah. Some of the people I talked to had some interesting things to say about Patrick’s talk in terms of where he was with appointment reminder and how interesting it was to see that I’m actually further along than appointment reminder is or where I thought it was. Or it’s interesting to see how he had a very rough spot in the middle there because you see super successful people and just assume pretty much everything they do they knock out of the park, and that’s not always the case. Different businesses are harder than others. Some things are a lot easier, some things are a lot harder, and it’s difficult to know without seeing all the data and obviously a lot of that information is not necessarily public information to see. But yeah, I really liked how he tweaked a lot of it to make it applicable to those people who are earlier on.
Rob [21:14]: Yeah, and I think in Vegas and in this talk really was the first time he talked about appointment reminder revenue in public because I had not heard him say or maybe he had published a blog post at some point.
Mike [21:23]: Yeah, I think he talked about it in Vegas.
Rob [21:26]: Okay. That was his first time. Yeah. And it was, it was eye-opening for everyone just to see where it was at certain points as he’s cranking along and just how long that slow SaaS ramp up path is.
So we also did something for the first time in Europe this year. We did attendee talks. And we’ve done these in Vegas for a few years, but I think the last three, were basically folks who already have tickets can submit talk ideas and then they get voted up by the other attendees. They get a certain amount of votes, and whatever rises to the top, we do that many talks. And so we did six attendee talks. It was our first one in Europe. And while we don’t have time to go through all of them, I did want to call out, I thought Anders Pedersen’s talk was pretty cool. He basically talked about how he had tripled his revenue, and that was the clickbait headline, he said, that he used but in essence, he had tripled his revenue by raising his prices. And it was based on some other feedback that Dave Collins had given him in a teardown a couple years before in Prague. So it was nice for him to loop it back and basically talk about some of the health struggles he had had and some of the emotional struggles and how MicroConf Europe, the first year in Prague, was the first time he had ever kind of found his people and realized there were other people out there doing what he was doing. And it gave him this great sense of belonging and so he really paid homage to that and was thankful and said, “The reason my revenue tripled in essence was from being around all you people and I’m still learning but I want to now give back to you guys.” So I was inspired by his attendee talk.
Mike [22:49]: Yeah. The other interesting part about his attendee talk was how quickly that turned around. Wasn’t it that he implemented all the changes or most of them within 48 hours and one week later after he’d implemented those things, that’s when he realized oh my god, I just tripled my revenue by doing these small tweaks that I learned at MicroConf? So yeah, it was just fascinating to see that change of revenue based on solely marketing. Because he didn’t change the product really, it was all about the marketing stuff that he did.
Rob [23:16]: Yeah, because it was something like getting rid of a free plan or a free version of it so it was only charging for it and then actually going after the sale and it was tripling his price. I think it was those three things. When I say “Go after the sale” I think it was sending a single follow-up automated e-mail or two after someone downloads it. So it was just some basic stuff, but he said that instantly kind of flipped a bit and has been making that triple revenue ever since. So that’s good.
Mike [23:42]: Yeah. And we had a bunch of sponsors from MicroConf Europe as well. Anders was one of the sponsors who happened to be given that attendee talk through his Time Block application which is something new he’s working on. But there was also Teamwork.com, they had four people come over there, and they’re getting to be a really big company, 30 to 35 employees- that’s I guess really big in our circles.
Rob [24:01]: Yeah. I don’t know how you qualify this, but I’ve heard that they’re the largest bootstrapped startup in Ireland. That’s pretty cool and whether they are [?]
Mike [24:10]: Yep. I think in all of Europe.
Rob [24:12]: All of Europe? Wow. Yeah, it’s really impressive.
Mike [24:15]: [Peldi?] was also a sponsor with Balsamiq, and we had Craig Hewitt from Podcast Motor. The other sponsor is DNSimple, and they called out a URL from the stage for a comic strip that they put together basically on how DNS works and the URL was howdns.works. So if you go there, you can download their comic strip. It was really interesting having every single sponsor was essentially a bootstrap company, and it’s something we haven’t had in the past. But it was really amazing to see, not just people from the community, but just bootstrappers in general saying, “Hey, this is something we really believe in and that we want to be part of.”
Rob [24:49]: Yep. That’s what I liked, and big thanks to all the speakers who came out. They have busy schedules and they still came out and spoke, and of course, to the sponsors because we really couldn’t pull this off without them.
Overall, I feel really good about this year, man. I agree with folks, I think this was probably the best one we’ve done in Europe, and I guess we’ll see in the feedback once that comes back whether it holds true. And now we’re already working on MicroConf Vegas, it should be next April-ish in Las Vegas.
Mike [25:20]: Yeah. I think that Xander said that our contract is signed, so.
Rob [25:23]: Oh really? Oh that’s good.
Mike [25:24]: I believe it is. A couple days before MicroConf Europe started I think he said that he got the signed contract back so I think we’re good there.
Rob [25:32]: Very good. And so if you’re interested in rubbing elbows with 150 to 200 other bootstrapped software founders, who are either just getting started to having launched or have employees anywhere in that range, that’s what MicroConf is about, and we hold it, obviously, in Vegas in April and then we hold it in Europe some time in the fall. Head to microconf.com and enter your email address and we’ll notify you when tickets are available. Tickets really don’t make it to the open market anymore. They sell out before the e-mail list is exhausted. So if you think you might want to come, get on the list. Otherwise, we’ll see you back here next week.
Mike [25:32]: And If you have a question for us, you can call it in to our voice mail number at 1-888-801-9690, or e-mail it us at questions@startupsfortherestofus.com. Our theme music is an excerpt from “We’re out of control” by MoOt used under Creative Commons. Subscribe to us in iTunes by searching for startup and visit startupsfortherestofus.com for a full transcript of each episode. Thanks for listening and we’ll see you next time.
Episode 252 | The Unconventional MVP with Jesse Mecham
Show Notes
In this episode of Startups For The Rest Of Us, Mike interviews Jesse Mecham about the unconventional MVP. Jesse talks about his background and company as well as his first product he put out in the market.
Items mentioned in this episode:
Transcript
Mike [00:01] In this episode of Startups For the Rest of Us I’m going to be talking to Jesse Mecham about the Unconventional MVP. This is Startups For the Rest of Us, episode 252.
Welcome to Startups For the Rest of Us, the podcast 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 Mike.
Jesse [00:25]: I’m Jesse.
Mike [00:26]: And we’re here to share our experiences to help you avoid the same mistakes we’ve made. How you doing this week, Jesse?
Jesse [00:30]: I’m doing very well.
Mike [00:32]: Excellent. Well, I wanted to have you on the show today because I wanted to talk to you a little bit about your story and share the background of your company with the listeners and talk a little bit about the MVP that you essentially put out in the market and the product that you started with. But before we get to that point I wanted to let people know exactly who you are and a little more about your business. The company that you started is called You Need A Budget, and when did you start this company?
Jesse [00:57]: Back in September of 2004.
Mike [01:00]: Okay. And today you essentially sell personal budgeting software for, I believe it’s $60 per license, correct?
Jesse [01:08]: It is, yeah. It still does top software for the time being. 60 bucks, one time and then we’ve sold upgrades over the years to keep the revenue going.
Mike [01:16]: Right. So you call the company You Need A Budget. It’s kind of colloquially known as YNAB. Where does YNAB stand today? Like how big is the business, what’s your approximate revenue look like? How often do you do software releases and how many employees do you have, that kind of stuff.
Jesse [01:31]: Yeah. Software releases, we haven’t done one for a long time because we’re right in the middle of a big, completely from scratch re-write, moving to the web and changing our business model into a SaaS model. That part has changed quite a bit. We’ve been just heads down on that for a couple years. Size-wise, employees, I think we just hired our 30th or 31st. She starts next Tuesday. Her name’s Carrie and she’ll be managing our customer support team. So pretty good size team. A mix of part-time and full-time people. About two-thirds of them are full-time. We’re engineer heavy and we’ve got a couple designers. We need another designer here pretty soon. I always say we won’t hire anymore and then we hire again.
And then revenue-wise, last year we did about four and a half million and this year we’re looking to do maybe a smidge more. But just around there again.
Mike [02:24]: Right. So essentially 30 employees, four and a half million dollars in revenue. And this is a downloadable, one time purchase software.
Jesse [02:32]: Yeah, that’s kind of funny. But yeah. Just recently, Intuit, who’s our main competitor, they sell Quicken and QuickBooks and Mint. They own all those properties. They just mentioned that they were going to sell off Quicken, which is a good signal for us that we’re doing the right thing, getting out of the desktop software business as well. Little step.
Mike [02:56]: Okay. So, as I said, I wanted to focus in on the big picture first to give people an idea why you’re on the show because I think that the backstory behind YNAB is extremely important because essentially of where the business came from and where it started. So let’s start walking backward a little bit. What were some of the major milestones that you hit along the way? Were there specific software releases that you had that were extremely beneficial to you or certain things that happened in the market that really took you to the next level? Kind of give us an idea of what major milestones there were.
Jesse [03:25]: Yeah. There were some interesting ones along the way, maybe a handful. Our software- like our releases, which we’ll probably dig into a lot with the MVP, but moving from my original product into our first bonafide software product, that was monumental relatively for us, early on. Each new release we then moved into the Mac platform a couple years later. And as that platform grew in popularity over the years, we rode that. The app store, the whole mobile thing, we rode that with phones that sync up with your data and everything. And that’s also standard now, but back at the time, it was a big deal. So that wave we rode. We had a funny one where we would sell the software on the Steam gaming platform from Valve. And that was –
Mike [04:09]: Really?
Jesse [04:10]: – yeah. So we didn’t even think it would work but we were one of a few titles that they let in as kind of a little test to sell non-games. And we did really well in like their Flash sales and other things like that. That was a significant boost to our revenue back two years ago. The gamers, they buy compulsively. It’s a hilarious side story. It’s funny that you’re selling budgeting software and people are impulsively buying it and not considering the purchase. So there was some irony. But that was a big one. It got us out in the market quite a bit more. There were a lot of new users. So that was another big- there are tiny ones all along the way, but those are kind of big highlights.
Mike [04:52]: Right. When was this business founded? It was back in what, mid-2000’s? Something like that?
Jesse [04:57]: Yeah, I officially did the paperwork for it in 2007. So like three years later.
Mike [05:02]: Okay.
Jesse [05:04]: Where I started making money, very, very small amounts of money, was end of ’04.
Mike [05:12]: Okay. So you basically operated it probably as a- did you even file for a DBA yet or just run it through –
Jesse [05:17]: No way. I didn’t even think about that. I wanted to make rent with the money. It was like totally- nothing official about it, you know.
Mike [05:25]: Got it. I didn’t realize that. I thought you at least had a DBA in the early days.
Jesse [05:30]: Yeah, I don’t even know if I knew what that was at the time.
Mike [05:33]: Yeah, that’s okay. I guess you filed for the business back in 2007. When was it that you had hired your first employee? Was it after that or before that?
Jesse [05:40]: It was after that. I had been working with Taylor, that originally built our first piece of software. He and I worked together in ’06 for the first time. And then middle of ’08, I was able to convince him to jump ship from the video game industry and come over and build budget software.
Mike [05:57]: Got it. Okay. I guess take a step back a little bit. Where was the business financially when you decided to start hiring people?
Jesse [06:05]: That one’s tough. Every hire is scary. And early on especially. It’s not as scary now. Taylor, he and I originally worked out a revenue share because I couldn’t guarantee a salary. And I remember he took a significant pay cut from what he was making. No benefits. And I could probably back into it actually. Let’s see. The year that he came on we probably did maybe half a million in revenue. That’s a pretty good guess.
Mike [06:34]: Okay. So it wasn’t as though the business was struggling but at the same time, probably when he first came on, you didn’t necessarily know how well things were going to go with him on staff?
Jesse [06:43]: Yeah.
Mike [06:44]: You were kind of making an educated guess in looking back for your sales and kind of looking forward and doing some projections. But you still weren’t quite sure. It was still a risk in your mind.
Jesse [06:55]: Yeah. He took the bigger risk, in my opinion, because he left this career with the cash flow, a dip in cash flow and all that. I’m happy that it paid off for him later on. But it was an educated guess. It still was super scary, which I’m really conservatively wired. So where I feel scared, most people don’t feel anything. And I think anyone else would have probably hired quicker than me and it would have been batter. I just would drag my feet.
Mike [07:19]: Right. Okay. Let’s talk about your shift into the business. Where was the business when you finally decided to go full-time on it?
Jesse [07:26]: I was working as an accountant. I got a Master’s degree in accounting and I was working down in Dallas for a big accounting firm, working 80 hours a week for months and months. It was getting old. I had two little boys and a wife in this new city. It was rough. I had big, personal incentive to not do accounting. And also it’s really boring work. But to highlight how crazy conservative I was, I was making about twice in profit from YNAB what I was making at my day job. And I was working on it maybe an hour a day, if I could squeeze it in. So it took me so long to jump. When I was at about 15 grand in profit per month, that was where I felt comfortable, where I said, “Okay, I can start working on this more as a full-time endeavor.”
Mike [08:18]: Got it. So the business was hitting that 15,000 a month, which is ballpark 180k a year. And that’s when you felt comfortable leaving your full-time position and coming over and doing this full-time.
Jesse [08:29]: Yeah. And I still actually did other stuff on the side because I didn’t want to raid the coffers of YNAB. So that 15 grand in profit, you can look at it and you can eat it and feed your kids with it or you can reinvest it back in the business. And I was definitely more inclined to reinvest than to consume it. So I really tried to built up other things on the side as well and try and reinvest that profit as aggressively as possible.
Mike [08:54]: Right. Now you said at this time your day job was essentially as an accountant. And you have a Master’s degree in, I think you said, finance for accounting.
Jesse [09:01]: Yeah.
Mike [09:02]: You’re not a software developer.
Jesse [09:02]: No.
Mike [09:04]: What was your first product?
Jesse [09:06]: The very first one that we sold and made money was a spreadsheet. I originally built it for me and Julie, my wife, when we first got married. And it worked well for us. We were super poor but the budget seemed to be working well. And then I wanted to Julie to be able to stay home and be a stay-at-home mom when our first baby was born. That was a big deal to her so I was pretty motivated to try and make extra money. And about 350 bucks a month was my target. If I can make that on the side, selling this spreadsheet, we’d be good. We could get out of school. We would have to borrow money for it, that type of thing.
Mike [09:40]: So how much were you selling the spreadsheet for?
Jesse [09:42]: I tried at $9.95. Nine dollars and ninety-five cents. So like Bic Mac pricing. But I tried it at $9.95 and I couldn’t get any traction. For about two weeks I was paying for visits through Pay per click way back when it was cheap and easy and no one bought it. I had enough visitors hit the site where you should have seen some purchases just from the law of numbers, right. But no one was buying it. So then I had chatted with a friend one day on the bus and he said, “You ought to double your price. People aren’t buying it because it’s cheap.” And so I doubled it to $19.95 and saw my first sale that first day.
Mike [10:19]: Interesting.
Jesse [10:20]: I had to refund that sale but it was still a good thing. So still good.
Mike [10:25]: It’s ironic that you doubled your price and then you immediately had to refund that first sale.
Jesse [10:30]: I was at a negotiations class the other day. It was fascinating. This guy’s major negotiation work with countries and things. He was giving us this clinic and there was one little bit that jumped out that would apply to every single person listening. He said, “You never want to bargain with yourself.” And when we go to price our own services we always bargain with ourselves well before we’re bargaining or negotiating with someone that’s actually going to pay us. So you’ll bargain with yourself and just talk yourself down. And when you bargain it’s always about price. It’s never about value. So he was trying to get us to say, “Don’t bargain. Always negotiate.” And then do not bargain with yourself, especially. I think it’s applicable for anyone just getting started. We’re so quick to talk ourselves down to this barebones price and it’s not helpful at all.
Mike [11:20]: Yeah, that’s fantastic advice. And I think it especially applies to software developers who tend to undervalue what other people are willing to pay for their work. Especially given their average salaries, just to be honest.
Jesse [11:32]: Developers are wizards. They’re like magic people. How do you place a price on that? You got to think of yourself as a wizard and then maybe you could price more appropriately. From my view, I just see magic happen. And where people that are in the know, you have the cursive knowledge where it’s like I could build that. I could do that. That’s the worst place to be.
Mike [11:53]: So your first product, it was just this spreadsheet. You were selling it for $20 per download, I guess. And you said that at some point you got it to the point where it was making what, $15,000 which was when you decided to make the leap –
Jesse [12:06]: No, by that time the spreadsheet really capped out at making about five, six grand a month. Where I started making about 15 in profit was when we had launched our software, about two years later. That was the big jump.
Mike [12:22]: Got it. So there was this time period during which you were only selling the spreadsheet.
Jesse [12:25]: Oh yeah. About two years just selling the spreadsheet.
Mike [12:29]: And how long did it take you to build the spreadsheet?
Jesse [12:32]: When you’re building it for yourself you don’t really count that time, but if you were to start from scratch and build it and knew what you wanted and had a clear spec on it, it took me a couple weeks. Of course I tried to make it fancy first and then I pulled back as it got complex, which is a classic trap we all fall into. But over time I actually simplified it, stripped things out of it. But it wasn’t a huge endeavor. I mean two weeks, that’s not long.
Mike [12:54]: And that’s something you said you were making what, five, six thousand dollars a month from?
Jesse [12:58]: Yeah, toward the end when I learned how to market, that was the ticket. But I pulled up some stats while we were chatting. My first full year – so I launched in September of ’04. It didn’t really do anything. And then in ’05, by December of that year, I’d made in profits, 2500 bucks. And that was when I was in school as a college kid. I was working a 30 hour job, going to school full-time and doing this little business on the side. I wasn’t investing tons of time. And I was learning a ton as I went along. So I’m trying to paint this picture that even for someone to get to a grand or two with the information that we have available now, it’s totally doable. And the product, it was a spreadsheet. It’s a spreadsheet.
Mike [13:42]: Right. So you said that you launched the software product in 2006, right?
Jesse [13:46]: Yeah, end of 2006, right at the tail end there.
Mike [13:49]: How long did it take to build the software product itself?
Jesse [13:52]: It took Taylor, he was the sole developer, it took him nine months. We just worked over the phone. We didn’t beta test it, which is funny. I kind of used it a little bit but we did not do anything formal. Yeah, nine months with just a solo developer. And we were basically porting the functionality of the spreadsheet over into a Windows application.
Mike [14:13]: Right. And I think that’s the part that is really interesting because you start out with this MVP, which is nothing more than a spreadsheet which takes you about two weeks, and then you make this leap from – you’ve got a market, you’ve got people paying for this spreadsheet, and they’re clearly willing to pay for it. There’s a demand there that you have proven with this spreadsheet –
Jesse [14:30]: Absolutely.
Mike [14:31]: – and then you say, “Let me take that information and I’ll predict the future a little bit. If they’re willing to pay for this spreadsheet, I bet they would pay for this software product that I could build based on this demand.”
Jesse [14:42]: Yeah. I felt confidant enough about it that even risk adverse as I am, I had been saving money up to that point to put a down payment on a house, because in the U.S., if you think back to like ’06, ’05, real estate’s going crazy, right. So Julie and I are going to graduate in ’06 and we’ve got this baby, another one on the way, and I’m thinking we’ve got to get a house because everyone’s buying houses. So I’m saving for this down payment. In the meantime Taylor comes along and says, “I could improve your spreadsheet,” and I said, “No, I’d rather have you build separate software.” So he just agrees to like a project rate and it was a lump sum, milestone payment. Pretty standard stuff. And we do that over nine months. But I was confident enough in the move, I knew people would pay more for this software. And I knew that the software would also be, obviously, more attractive to more people. So I could charge more and appeal to a broader market. And I used our down payment money, for the house, that we had earmarked for that. I came to Julie and was like, “Hey, what about this thing instead? I have this stranger down in Texas that wants to build this.” She was game. But I felt confident enough because I had market knowledge. It was priceless. I didn’t feel like it was risky at all.
Mike [15:57]: That brings up a separate point. Because you’re not a developer, you didn’t start by building a piece of software because, quite frankly, you just didn’t have the skill set. How do you think that affected the evolution of the product? I think most software developers would immediately jump into building a product, but you went in a different way, I think, because you were forced to. How did that impact, not just the financials of the business, but how did it impact your approach to the future of the business?
Jesse [16:22]: It’s been a huge advantage for us that we started with that spreadsheet. When you think about building a piece of software, and it was fairly complex, that we had built in nine months, but because we were riffing on an MVP built on a spreadsheet, it naturally constrained the normal desire we have to add, add, add, and make more complex. Because it was just like listen, take this, make it so it can run without Excel. And it was like, okay that’s good. So how should the UI act? Well, let’s just have it kind of look a lot like the spreadsheet. Okay, that works well. Taylor and I both aren’t designers and weren’t designers back then even more so. So it forced us to just recognize we’re going to do still kind of the minimum, but take this obvious next step. I feel like a lot of times when you build first, with this grain-like open field in front of you, you have a hard time making decisions because you have so many options. Where we just didn’t have the advantage. It would be interesting to think how we could, as a budding entrepreneur, as this developer, how you could create artificial restraints for yourself to try and control that.
Mike [17:33]: Right. And I think that’s the problem that most of us as developers face is that we’ve got this open-ended problem that we’re trying to solve and we say to ourselves, “I could do this or I could do that,” and “It’d be really cool if I added this other thing over here,” and you end off into the weeds trying to add some stuff in that ultimately you don’t even know whether or not anyone is going to use it or going to care, unless you’re doing a lot of heavy upfront customer development. But because you had that MVP already in place and you knew what people were paying for, it was really just a process of replication so that you could produce incremental improvements on it and increase the price and do lots of other things.
Jesse [18:10]: Absolutely. Like just to give people an example, we launched the software end of ’06, that is supposed to compete with Quicken or Microsoft Money at the time. And it’s a check register with a budget laid on top of it, essentially. We didn’t even allow you to have multiple accounts in the software that we originally sold for $40. So we would just tell people every transaction goes in one big register. And we sold it and people bought it and it worked. It really worked. It wasn’t like we were selling them something broken. But you didn’t import from your bank, we didn’t handle reconciling to any accounts. We had very rudimentary reporting. It was so barebones and it still just gave us that much more knowledge to keep heading down the path. And that’s what you want. You don’t want to know the end goal. You just want to know that you should stay on the path you’re on and be content there. So we try to build, a lot of times for the destination and then who knows where that ends up.
Mike [19:13]: You mentioned Microsoft Money just a few seconds ago. Didn’t they go out of business or didn’t they shut that product down?
Jesse [19:19]: They did. They shut it down. Several years ago, actually.
Mike [19:22]: And now Quicken is being spun off. How does it feel to basically have run them out of business?
Jesse [19:27]: It’s hilarious. I feel really good. I feel like we conquered them. No. Intuit’s revenue for consumer non-tax revenue is like $340 million a year. They’re a four and a half billion dollar a year company. There’s such a far distance between them and the next guys it’s crazy. I don’t even know if they’ve heard of us. But maybe they have. That would be fun. It is cool to see that we’re headed in the same direction as the big guys because I think they obviously have major market knowledge with all the exposure they have.
Mike [19;58]: There’s a lot of benefit to having hindsight when you’ve gone through this process –
Jesse [20:00]: That’s true.
Mike [20:02]: – are there other products that you can think of that in hindsight you could have potentially come out with that were also not software related or were not directly pieces of software that either could have done well or had the potential, maybe not quite as much potential as what you ultimately ended up with or maybe something that could have exceeded it. Are there anythings that you can come up with that fit that mold that were non-software?
Jesse [20:26]: They’re all kind of related to YNAB and its core business but we’ve tested all sorts of different monetization strategies over the years. We’ve tested partnering with companies that we like. Like Betterment is one that we like. We don’t take commission from them anymore but we still refer them. We were kind of going like a blogger route early, early on where it was like affiliate relationships. I found that to be fairly distracting from the core. We did some servicing around, literally over the phone type work, coaching with business owners to try and teach them how to manage their cash flow better. And I actually ended up selling that off to my friend Mark who was running that for us anyway. And he now runs that Budget Nerd. But for us it was working, it was just I felt like we were losing focus.
Mike [21:17]: It was a distraction.
Jesse [21:18]: Yeah, it was a distraction. I’m very, very susceptible to the new shiny and so I really have to check myself and make sure I’m focused on just a few very core things, and then obviously drive that to the whole team.
Mike [21:32]: Now I think that focus is probably something that all software developers who are starting out and trying to find that product that they want to invest a lot of their time in, maybe it’s the next six months or maybe the next ten years. But what sorts of other advice do you have for people who are specifically looking at building software first? Because as we discussed, you had the spreadsheet first and that’s probably more of a non-traditional MVP. What other shortcuts could people come up with that would help them get to the point where they have a product that people will pay for?
Jesse [22:04]: I like the idea of utilities. So if you’re thinking software specifically, I’m trying to go that route. I like the idea of looking at a very, very concrete problem where the MVP, where the problem is so small and so specific that you can’t add too many features on top of it. I know the open source is a great solution for a lot of these, but I think you could not do the open source route potentially, and just say what is this utility that does this one thing that people on Stack Overflow are constantly asking about or that I’m constantly having to do again and again? Whatever it may be, and just release something very small, very concrete, one off, no subscription, only so that you can cut your teeth on the transaction, the marketing. And so the smaller the problem is the smaller the solution, super niche, the easier it is to market it, which means then you can- it’s tough to find the pain when you’re trying to sell financial software. It takes awhile. It’s complex as far as marketing goes. But when you’re solving this very, very concrete problem that like a little utility solves, suddenly it’s very clear. What I want to do it get people to a very clear value proposition and a very clear solution and get them to be able to build it quickly, release it quickly, have a defined market, just to practice that aspect. Once you start making money, the desire to build, it’s minimized a little bit because you realize this thing that I was procrastinating to selling, isn’t as hard as I thought it was. But all these developers, you guys don’t find it easy to sell but you find it easy to code so you procrastinate the selling and just keep coding and coding and coding. That was a long answer.
Mike [23:59]: No, that’s okay.
Jesse [24:02]: That’s like if I were to coach someone on, I’d be like find a smaller problem. Find a smaller problem, really, really small, and then see what you can do. Like a little ruby gem or whatever it may be, but just something super small and then go for it.
Mike [24:14]: Well I think the natural inclination for developers is to look at stuff like that and because they minimize the value of the particular problem that they’re trying to solve, and they say I could whip up something to fix that in a week or a month or something like that, they minimize how valuable that is to a base of people. And I think the other mistake that they make is that because they try to make something that’s a little bit more generic or bigger, it makes the marketing, as you said, a little bit more difficult because it’s not so well defined. Selling financial software, it’s not abstract, it’s just there’s no concrete pain point that you’re solving. It’s just, it’s financial software. But what specific thing are you doing that somebody might have a particular problem with? And it doesn’t allow you to focus in on the marketing.
Jesse [25:02]: And so that’s the- you can do it. Like in our field we know a lot about the market and how you talk about money. It’s basically around stress. But the idea if I were a developer releasing some little thing that I said could supposedly whip out myself for two weeks, that’s the value proposition right there. You talk to that developer and you say, “Listen, do you really want to spend two weeks doing this? I’ve done it for you and it will cost you half and hours wage.” And then suddenly you get some traction, the value proposition’s really clear, and then you can start to test the waters. I like the WordPress plugin market. I like it for that reason. Those can also totally metastasize on you. But I like it for that reason that you can do small little solutions and get used to the marketing. It’s not a slam dunk but it’s some – I’ve just had some thinking along those lines lately.
Mike [25:51]: Yeah, I think the other thing that that also helps people with is it helps somebody starting small because they don’t have to think about creating 30 or 50 pages on their website. They only need to create one that says, “Hey, this is this exact problem I’m solving,” and they tend to get very specific, highly targeted traffic, which somebody else or a competitor would treat as long tail traffic so they don’t care about it. So you’ll rank higher for it. And then over time you gradually increase the size of the product and it’s capabilities and what it does. And eventually ten years down the road you end up with youneedabudget.com, 30 employees and four and a half million in revenue.
Jesse [26:26]: Yeah, that’s not how I started, right? So you start super small and you don’t worry about how did Jesse do this or that because the answers are obvious when you’re in the moment. I know where we’re going now. I’m hopeful our decisions are solid. But it feels just as obvious to me now as it did six, seven, eight years ago because you just deal with the information you have on hand and you don’t try and predict the future, you just try to keep things small and concise and tight. And then when you’re deciding should I start a new product or should I keep going whole hog on this one, I would tell you to not start the new product.
Mike [27:04]: Something else that you brought up early was that you were doing marketing for this spreadsheet. And I know that there’s a lot of techniques that were probably highly applicable back when you first started this process, like for example, you mentioned Google AdWords were much more cost effective at the time. What other types of things were you doing to market this spreadsheet?
Jesse [27:25]: I was trying to get in with- blogging was just starting up and financial blogs were one of the first because people were pretty intrigued by the idea that you’re sharing finances online. That took off. And I would try and get in the blogging space and it worked to a degree. I tried to recruit affiliates for a while and have people be paid commissions to push YNAB. And I had some that were great but 98 percent of them were horrible and would sell one copy a month and then they would want the world from you as far as “Can you do this, can you do that?” So it was just kind of a time sink and we shut down the affiliate thing. The best thing I did marketing wise was an email course. It was no comparison. The absolute best thing I did early on was I wrote a ten-day budgeting, I think I called it a bootcamp back in the day. And it just taught them my four rules, my method for how you should think about money. And it was super soft sell. And it, I think, quadrupled, actually I have it right here. It doubled our revenue month over month and then doubled it again the next month. It was insane. It still works, too. We still use that as a marketing technique.
Mike [28:36]: Right. And I think that that actually illustrates a gap that a lot of people who are getting into entrepreneurship face also is where the initial expectation is I’ll create this product and I’ll create a website and then I’ll put a buy now link on my site and people will search for it. They come to the site, they click the buy now link or they download a trial and then boom, they’re a customer. But it doesn’t really work that way. The email course that you put out there, that’s basically building trust. It’s not just website, click the button, payment. There’s this time period in the middle where you have to build some level of trust before they’re going to give you money.
Jesse [29:12]: And you’ve got to recognize they’re not all ready to buy right away. They’re in different stages. And the email course does a good job of keeping its arms around them while they’re moving through those different stages.
Mike [29:23]: Right. And that’s something that in some cases re-marketing helps with that where you’re cooking people and then you’re advertising to them later on to help bring them back to your website. But the basic idea there is they’re not ready to buy today, they might be tomorrow, they might be six weeks from now but you still want to be able to maintain some sort of open line of communication with them to help bring them back when they are ready.
Jesse [29:45]: Yeah. Absolutely. Yeah, the re-marketing didn’t exist back then but it would have been gold. Works for us now. It’s the nature of the beast. And in our field with financial software people just aren’t ready. They’re in research mode and things like that. So it’s critical that you recognize that they’re in different phases. And some markets aren’t. Some are like I need to book a hotel, and if you can capture that, you behave differently. But most there’s a long process. I’m thinking about buying a new car, right. Guess how long it’s going to take me. And those marketers know that. You just got to make sure you understand what your cycle is for your buyer and respect that and keep in contact.
Mike [30:24]: Yeah, all great advice. Are there any parting words of wisdom that you want to leave for the listeners?
Jesse [30:30]: Enjoy it while you’re doing it, like enjoy the whole process and make yourself uncomfortable. Do things that you are procrastinating. There was a good book called the War of Art. I didn’t really like the second half of the book but the first half it’s about overcoming your resistance to really doing your best work. It’s been a book that I’ve thoroughly enjoyed. The creative types and developers are extremely creative, designers, obviously extremely creative. That is a book for you. You want to make sure that you’re overcoming what the author calls “Resistance,” and I think that’s just part of the battle. But enjoy the whole process. Just be in the moment with it.
Mike [31:12]: Thanks. So Jesse, it’s great having you on. If people want to learn more of the different you have to say, if anyone’s interested there is a video from Jesse’s talk from last year over on the MicroConf site. You go to microconf.com and then check out the videos there. His talk from 2014 is there. We’ll probably have the 2015 video up there because you were a speaker this past year as well. Where can people find you online and where can they specifically learn more about You Need A Budget?
Jesse [31:37]: So youneedabudget.com if you’re interested in the software specifically or if you just want to look at how we market and things like that it’s good to visit and see what we do there.
Mike [31:47]: I’ll second that. It’s actually very fantastic the way that you have a lot of information there and you do a lot of educational stuff around personal finance and helping to draw them in and kind of tell a story to them about this is what your life could look like if you follow this process.
Jesse [32:02]: Yeah, I have a good team there. And then the software’s excellent so there’s that as well. If you want to follow me online, I don’t tweet a ton but it’s @Jessemecham. I occasionally will tweet something trite. I go to MicroConf so if you ever want to meet face to face. That’s kind of the only conference I regularly attend. Just hit me up at email if you want. It’s Jesse@YNAB.com and I’m happy to chat or give unsolicited advice.
Mike [32:34]: Excellent. Well, thanks for coming on.
Jesse [32:35]: Yeah, you bet. Thanks, Mike. It was a lot of fun.
Mike [32:37]: 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 Out of Control by Moot, used under Creative Commons. You can 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.
Episode 251 | Email Marketing Demystified with Matthew Paulson
Show Notes
In the episode of Startups For The Rest Of Us, Mike interviews Matthew Paulson, founder of marketbeat.com, about email marketing. They also discuss his upcoming book “Email Marketing Demystified”.
Items mentioned in this episode:
- MarketBeat.com
- GoGo Photo Contest
- Email Marketing Demystified Book
- Mattpaulson.com
- Drip
- AuditShark
- AWeber
- MailChimp
Trancript
Mike [00:00]: In this episode of Startups For The Rest Of Us, I’m going to be talking to Matthew Paulson about Email Marketing Demystified. This is Startups For The Rest Of Us 251.
Mike [00:16]: 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 Mike.
Matthew Paulson [00:24]: And I’m Matt.
Mike [00:25]: And we’re here to share our experience to help you avoid the same mistakes we’ve made. How you’re doing this week, Matt?
Matthew Paulson [00:29]: I’m doing well. How are you Mike?
Mike [00:30]: Pretty good, pretty good. So, I want to introduce Matt to the audience. Matt is the founder of MarketBeat.com. He’s also the co-founder of Go Go Photo Contest and he’s a partner at US Golf TV. He’s also the author of 40 Rules for Internet Business Success. And we’re going to be talking to him today about a book he’s writing called Email Marketing Demystified and that comes out in a couple of months but that’s kind of the main focus for our topic today. Is there anything else you want to add to that? Did I miss anything?
Matthew Paulson [00:58]: The book called Email Marketing Demystified, it’s coming out October. We’ll get the details at the end but it’s myemailmarketingbook.com to get a free copy when it comes out.
Mike [1:05]: Matt, could you tell listeners a little bit about MarketBeat.com because I think this is one of the interesting reasons why I wanted to have you on the show because of the size of the email list that you have and that you manage on a monthly basis and the sheer volume of emails that you sent. It’s not just about oh, you’re writing this book on email market. It’s like you’ve got a lot of serious experience to back this up as well.
Matthew Paulson [01:25]: Yeah, so we published and invest newsletter to about 242,000 stock investor as of the data we’re recording this. Today, the newsletter we sent out, it’s freemium so most of the people sign up for the free list and we have 3,000 or 4,000 people that pay us 15 bucks a month to get the freemium version of the newsletter but it’s basically away for stock investor to keep track of the companies they own and kind of what’s going on with them. We send out probably about 10 million emails a month but I think we’re on track to do about 2 and a half million in revenue in 2015. We’ve been doing it for about five years now. It’s grown over time and figured out it’s a marketing channels that have really worked well for us and we’ve really been able to just kind of blow up the size of the list in the last 18 months.
Mike [02:05]: Yeah, I mean that’s an incredible size list, I mean not just in the sheer number of email addresses that you have and that you send emails too but like 10 million emails a month is a massive amount and I don’t think that most people can even kind of wrap their heads for.
Matthew Paulson [02:17]: Yeah, I think that’s a big, big number and then I go to the trafficking version concerts in February and Ryan Dice goes on stage and says, “Yeah, we sent out about a billion emails a month.” And it’s like, “Oh, crap. I got a whole another level to be at.”
Mike [2:30]: So, I wanted to talk to you about this because I think the email marketing itself is one of those marketing channels that people look at and they say, “Oh, yeah. I should do that but they don’t necessarily do it.” And, I think part of the problem is that email marketing, they don’t necessarily realize the ROI on it or they don’t realize the benefits and they start looking at all these other things and it kind of gloss over the fact that that is probably going to be the single biggest differentiator in their business long-term. So, can you talk a little bit about why is email such a compelling marketing channel over a lot of the other options that are out there.
Matthew Paulson [03:04]: Yeah. You see people today talking a lot about Facebook and LinkedIn and Twitter, if you add up the user base of all of those combined, it might be 1.4 billion people. Twice as many people use email marketing as all of the biggest social networks combined. So we got 1.4 billion people on Facebook, Twitter, LinkedIn. You’ve got 2.8 billion people on email. So it’s just a massive channel and people just don’t realize how big it is.
Mike [03:27]: So just because of the size of it is different though doesn’t necessarily mean that like if you spend $10 on email marketing, what about the same $10 spent on social media advertising either Facebook or Twitter or various other avenues, I mean is there a different between the email marketing versus the social advertising?
Matthew Paulson [03:43]: I think there is. I’ve seen a few studies. Some of them say that have query marketers and the responses that they got say that about 75% of people are happy with the results they get from email marketing and only about 60% are happy with what they get from social media marketing. There is a lot of data out there, there’s a McKenzie study that said email is 40 times more effective at getting customers and Facebook and Twitter just in terms of total volume. So the direct marketing association said that business were earned in an average of $43 for every dollar invested in email marketing, I don’t know what the logic behind that study was but if that number is anywhere close to crack, it’s a pretty great ROI compared to just about anything else that you can do.
Mike [04:21]: Yeah. And I think the tendency for a lot of entrepreneurs is to look at studies like that and be extremely skeptical of them because they depend on so many different factors, I mean I’ve done my own stuff where I’ve done advertise on Twitter and Facebook and tried to get those people to either buy directly or to get onto an mailing list and then have them buy after joining the mailing list, and what I found is that you can acquire Twitter followers for example relatively straightforward fashion. There’s documented processes that you can go through and follow to get those people onto your Twitter following. But to get those people to buy from you is a completely different ball game than sending email because you can send those emails week after week, month after month but it’s a little bit more difficult to get directly in front of them on Twitter because they may be following 5,000 people or 10,000 people and them seeing your message, it’s kind of hitting mess. I mean just by raw numbers for the first 24 hours in the day, how long is that message going to be in their feed? It depends a little bit on how many people they’re following but for my initial estimates is like five to ten minutes, it’s not very long.
Matthew Paulson [05:29]: Yeah, I think if you look at the [?] that Twitter has, maybe 2%, 3%, 4% of the people will actually see any given twit if that and on email you’re going to get an open rate if you have an engaged list of somewhere between your 20% and 40% so you could send 3 emails and make sure that everyone sees that or you could send 3 Twitter messages or Twitter post and maybe 5% or 10% your followers will actually see it.
Mike [05:52]: Yeah, so that makes it a little difficult so like compare those things because it’s no longer an apple to apple comparison. Email becomes a much better channel. One of the things that write in your book was it was such a profound quote that I have to call it out. You said every now and then I’ll hear someone that runs a website say something like I hate pops out and I hate marketing email. I would never use them in my business. What they’re really saying is I hate making money because email marketing is an incredibly effective marketing strategy and it’s so funny because you look at that quote and it stands and start contrast to like the raw numbers that we pointed out earlier to kind of justify what the ROI is. Why is that you think that entrepreneurs are so resistant to using email marketing?
Matthew Paulson [6:31]: Sure. I think tech people and entrepreneurs and kind of people in the communities that we hang out with, we kind of think we’re immune to marketing and we also think that kind of marketing is annoying, I mean how many of us are on a million email list from a million of different things and we get email, we don’t remember what it was and we just want off the list and we want to receiving email from people. So we think that our customers are just like us. We think that our customers hate email marketing just as much as we do. We think that they also think they are immune to marketing and it turns that we are not our customers. Our customers might actually want to get email from us because they are interested in our product and want to hear from us. You can’t assume that your customers are just like you are and your customers may behave in a very different way than you do with email. Like we might be inbox zero people and want to clear the inbox everyday but if you look at the email of my wife or a lot of other people there’s just a ton of different messages from ton of different brands and it’s more of a stream and they’re okay with having just content from a variety of people in there.
Mike [07:26]: You know, I know exactly what you mean. I mean I tried to maintain inbox zero as close as I possibly can so anything that goes in there is a little bit of extra stuff that I have to deal with but I’ve also seen people where I kind of glance at their phones and the little icon over there email says that they got 14,000 emails in there. I’m just like how do you even deal with that? And of course you think to yourself, well they just must not read any of it but it doesn’t necessarily mean that they don’t want to receive those emails either.
Matthew Paulson [07:51]: Yeah, yeah, I mean if you have a business and you provide helpful information to people and you send out over email, you’re going to have to assume that people want it because they’re not going to sign up for your email list if they don’t want it. If they sign up for your email list, that means hey, I want to receive email from you so you should probably send them some email if they want it.
Mike [08:08]: So seems like that’s one of those helpful hands I guess for getting over the fear of clicking on that send button when you got whether it’s a 100 or a 100,000 people on your mailing list because that’s one of those things that I think that a lot of people get hung up on is they get everything ready. They write the email and then there’s just like, “Ah, I don’t know if I should send this. Maybe I should wait. Maybe I should think about this a little bit more. Maybe it could be worded better.” And so they either delay on hitting that send button or they just don’t put it on their system yet. I feel that’s a very helpful hint for that, I mean there are other things that you can think of that would help people through that.
Matthew Paulson [08:42]: Yeah. I think that the two keys are one is to understand that no email is going to be perfect because not everyone all respond to in marketing email or a piece educational content in the same way. Every email will interest some of your subscribers but not necessarily all of them. So, you just have to know that depending on who the subscriber is and email is going to be hit or miss and you’re not going to hit everyone with every email and that’s totally okay. The second thing you can do to mitigate some of these fears is just to have systems in place. So before we ever send out a broadcast email that says I write my assistant has an SOP to follow so she checks the spelling and the grammar, she make sure how the links work, she checks all the prices and the numbers to make sure everything is correct in that email before we sent it out so that way we don’t have to go back later and say ops we made a mistake or anything like that, we know that an email is correct in the first time because there’s more than one set of eyes on it.
Mike [09:32]: Now that brings up another objection that I hear from people where they’re tracking the analytics behind some of their emails and once you go through and you click on every single one of those links, what it does is it starts adding numbers to every single one of those. It seems to like if you have a mailing list of 100,000 people then those 1 or 2 clicks may almost no difference in the analytics but when you only have a mailing list of say 100, those 1 or 2 clicks make a big difference I mean it’s a couple of percent. What are some strategies you can think of to kind of get around that particular fear?
Matthew Paulson [10:02]: Okay. So, I think a lot of entrepreneurs and marketers think that the emails that they send have to be perfect and I don’t really think that’s the case because a good email now is going to be better than a great email never and you just kind have to get over that and decide hey, every day or every week that I’m not sending out any email is the day that I’m losing sales. So even if your first message or your first several messages aren’t perfect, mostly your first messages are going to probably be pretty terrible that’s okay. Sending out an okay email is much better than sending out no email at all.
Mike [10:33]: Right. It’s about improvement over time versus getting things perfect.
Matthew Paulson [10:37]: Absolutely. I mean if you’ll look at some of my first emails or probably my first seven emails Mike sent out about Audit Shark forever ago, they’re probably not going to be anywhere nearly as good as anything he would write or I would write today.
Mike [10:47]: Right. Okay. So, let’s talk a little bit about like the basic email marketing strategy and I think the first step to that is talking about email service providers themselves and there’s kind of three different categories that they breakdown into is the transactional emails, the bulk emails, and then kind of true marketing automation and there’s different service providers who kind of addressed each of those different needs. Can you talk a little bit about what situations you would use each of those in and why?
Matthew Paulson [11:13]: Yeah, so transactional is just for brought email delivery. You connected them via an API and sent say, “Here’s my message. Please deliver it for me.” So that’s like [?] Amazon SPS, those are great if you’re writing custom software and have to do like a notification email, a welcome email, or anything like that. If you have a SAS app, you’ll probably need a transactional email service provider in there somewhere. It might not be the main thing you have but it’s way for people who are writing custom software and have account notification emails and stuff like that. Bulk emails are the mail chimps of the world, stuff like that. They’re really for managing an email list and sending out messages to that list. They’re weaker in some of the more advanced stuff like marketing automation and auto responders and some of those things. They’re okay for some types of list that are small and/or even big but just don’t have a lot of custom functionality that’s needed. They don’t need marketing automation, any fancy emails or anything like that if you’re just going to send a single email to your list or to check if things are okay. So the marketing automation platform, I think it’s really worth that right now. These are the companies like [?] and Fusion Software and a few others but these really have some advanced functionality that allow you to send specific types of messages to specific people at the right times. So if somebody buys a product, you could create a custom auto responder, send them email to on-board them or if they send for a lead magnet, you could to a special auto responder series just to them and there’s just so much that you can do with the marketing automation platform. If you’re really going to down to the road of – if you need to do email marketing, I think you are better off to starting off with point infusion software or something like that from day one because you hate to sign up for something simple and then have to switch ESPs later, that can be a big pain in the butt to do. So, I recommend start up with something of high level of functionality even if you’re not going to use it right away, it’s good to have down the line.
Mike [12:57]: And I think that’s one of those things where people look at that and say, “Well, I don’t want to pay for that now. Let me do what I have to do with this other provider and then grow into it.” But the reality is they’re just basically creating work for themselves down the road when they are successful with their products.
Matthew Paulson [13:11]: Yeah, and if you look like what a starting Drip account costs, 50 bucks a month or something like that, in any business that makes any amount of money, that’s just a very tiny business expense and I think it’s worth forking the money for that.
Mike [13:23]: Yeah, and I think to differentiate here a little bit more between a bulk email provider and something that does true marketing automation, I think one of the things that people don’t realize is that they look like for example Mail Chimp and what you just talked about there was the idea of oh they signed up for this and then they get a series of email, well, Mail Chimp does that and I think the differentiating factor is that with marketing automation software, things are event driven, so when somebody takes an action of some kind, then it is essentially an event in the system and that event triggers a series of other emails that it is essentially a sequence of emails but it is based on that event and you can kind of do it in Mail Chimp but I think those marketing automation platforms make it significantly easier to do and their designs to operate off of those of that.
Matthew Paulson [14:10]: Yeah, and if you look at Infusion Software or anything like that, you can have just kind of a nice visuals [?] how it actually works kind of tell them do this better than others but just nice to be able to see like what the different processes or if somebody does this lead magnet and then they get this email series and then they buy this and then they get this email series. It’s nice to have a more visual way of representing that.
Mike [14:30]: Right. And I’m in a complete agreement with you in terms of email marketing, if you’re going to do anything around email marketing, you really should invest in marketing automation platform of some kind. I’m hesitant to even recommend Mail Chimp at this point I mean not because they don’t do well with what they do but because email marketing can be such a critical component of the business that it almost seems like you have to have that in placed as opposed to trying to do with something like a free or $15 Mail Chimp account now only to have to switch over later.
Matthew Paulson [15:00]: Yeah, I absolutely agree with that.
Mike [15:02]: Well, the other thing that you can kind of add to it is that once you get involved in a marketing automation platform, your eyes are open to all the different possibilities where if you’re in Mail Chimp, you don’t necessarily see all the different options that are available to you because they don’t exist, but once you get into an email marketing automation platform like all of a sudden you see all this different possibilities that were just never there before.
Matthew Paulson [15:23]: Yeah, and if email marketing is going to be a big part of your business, these things aren’t really optional. You would really need to have good marketing automation in place and have different series and campaigns driven by events and you might be able to get away with that 10 or 15 years ago but email marketing has just gotten so much more advanced. You need to have the technology stacked in place that will let you do those kinds of things.
Mike [15:43]: So, now let’s talk about the different email service providers. Let’s talk about collecting email addresses and we’ve talked about this a few different times on this podcast but what are the different ways that people can go about collecting email addresses on their website?
Matthew Paulson [15:56]: Yeah, so obviously you need some opt-in form, you need some kind of offer and then a sign up box. So it’s typically a title, a subtitle, a textbox and a button and to sign up. There are different types of opt-in forms you can do. You can do an entry popup, an exit popup, a welcome gate, something in your sidebars, something below the post. I’ve tried a lot of different opt-in forms on my websites and I found that nothing comes close to doing the popup form welcome gate, just having something that people can’t miss right away. It tends to work very well to get email opt-ins. If you only show the people once a week, they’re really not that annoying so I think if you have scoop those box, it’s not easy to pop up on your website, I think it’s time to just maybe get over that and put it on your website anyway and see how it works. And then another good place I found is pretty one directly below the post of an article, so if you’re reading article, typically you’re looking for the next step to do. And if your email opt-in form is right there, it’s a really good way to get opt-ins. I like to use a combination of both the popup, like an entry popup and an entry form below the post and that does pretty well with opt-in rates.
Mike [16:56]: And I think that’s interesting what you said about getting over in the idea of putting in that welcome popup because personally, I’m not a big fan of those type of things and I don’t tend to put my email address in them but there’s also times where I’ll go to a website where even if I close it three or four times, if I find myself going back to them, I have a tendency to put my email address [crosstalk]
Matthew Paulson [17:14]: Yup, and again, that’s just a matter of we aren’t your customers so if even though we might not prefer our email address into a popup form, that doesn’t mean our customers won’t. So, it’s really a matter of trying it out and saying, “Hey, how many opt-ins am I getting from this versus whatever I’ll say and do from getting a lot more than maybe it’s just worth to leave it there even if you think it’s a little bit annoying.”
Mike [17:34]: Yeah, and that’s something you can even just try for a week. What’s the worst thing that’s going to happen? The people who came to your site are not going to come back? That’s not the end of the world, I mean your business is still going to keep going.
Matthew Paulson [17:43]: Yeah, there is a local coding boutique that does e-convert that is helping out a while back and they had email list and they have a list of maybe 500 people and their email stuff was so hard to find and I just – hey try popup for a weekend and see what happens. The guy was pretty resistant to it but when they did it, they went from having 500 emails on their list total to adding 500 emails every month and the popup is still there a couple of months later so clearly, it’s working for them well enough that they want to keep it even though the guy thought it was a little annoying to begin with.
Mike [18:13]: So let’s talk a little bit about how to entice people to actually sign up. In episode 248, we talked about 14 different ideas for high impact lead magnets. Are there lead magnets that either appeared on that list or that you can think of that worked really well or do you think a lead magnet is not necessary?
Matthew Paulson [18:30]: I think the lead magnet is absolutely necessary. You can’t just say, “Hey, give me your email address so I can send you email.” Nobody cares. You need to give them something to care about in order to get them to give you their email address. I think the format of the lead magnet matters less than the content in the format. So like, I don’t care if it’s a video, a guy, the PDF, whatever, but it should just be very relevant to the content on the page so that might mean that if you have five or six different topics that you talked about in your website, you might have five or six different opt-ins or a lead magnet that show up on each page based on the category that it’s in. So to me relevance is a lot more important than just the medium of whether it’s video, audio, or text whatever. It just is the content in your offer relevant to the content on the page.
Mike [19:13]: And I think that’s probably an important distinction to make for people because there are different types of lead magnets that take different amounts of time and effort to create. So, something that is very simple even though it’s relevant and it’s very quick to create, it can have just the same impact to something that takes 10 or 15 hours to build in terms of getting people onto your [crosstalk]
Matthew Paulson [19:33]: I absolutely agree with that. I don’t think that your lead magnet is something you should spend a lot of time on when you’re first getting started. Don’t let that be something maybe comes a 10-hour ordeal, just take some content you already have and make it into a nice format that’s makes for a nice PDF or something like that and makes it a nice download but I would spend a whole bunch of time doing the original content for your lead magnet.
Mike [19:52]: Yeah, that kind of brings up the idea of premature optimization if you’re spending too much time trying to figure out what is the best thing to do here, you are wasting time and you’re not actually building something to click through.
Matthew Paulson [20:02]: Yeah, I mean if you’re not getting many opt-ins every month, like if you have 100 opt-ins on a monthly basis, you’re not going to have enough people coming and to create a statistically valid split test anyway. So, it doesn’t really matter if you to think that the lead magnet that you have now wasn’t perfect because you couldn’t even test something else out to know whether or not it’s better or not. You just need to do something that’s good enough for an hour than once you start getting a ton of opt-ins every month then you can test out something better.
Mike [20:26]: Right. And it’s about optimizing down the road instead of now. So now that we have somebody on your email list, how do you go about marketing to them? What types of emails should you be sending to them and at what times should you be thinking about sending those emails?
Matthew Paulson [20:38]: Yup. So the first email that you send is probably the most important, that’s called your welcome email. And inside your welcome email you want to accomplish a few different things. First you want to set expectations about what kind of emails you’re going to receives, you might say, “Hey, I send an email every Monday about SAS news and applications or whatever. You can chat us.” And say, “This is what we do. This is what to expect.” The second thing you should do is try to get people to whitelist you or add to your their contact list. So if somebody replies you a message and adds you to the contact list, whitelist you in whatever way that you can, your messages are almost always going to automatically go to the inbox. So you want to ask them to do that right away and then at the bottom of your welcome email, like the PS of your message, you can do some kind of promotion for a product if you want to. So you can say, “PS, hey, do you want to learn more about whatever I do? Check out our cool product here so you could do that in your welcome email as well.” There are two other types of emails you send, one is that auto responder series. So that is 30 to 60 to 90 days the first however many days somebody is on your mailing list, you send them a series of emails, one every other day, one every third day, whatever you want to do. Those emails are designed just to get somebody familiar with your content and familiar with your products and services. So you might have say 15 emails in your auto responder series 1 every 3 days for 45 days, 7 of those might be sales emails for your product and either those just might be contact emails that teach people how to do things or provide people information that isn’t trying to sell something to them but just trying to help them out and establish a relationship and finally there’s broadcast emails so after someone is done with your auto responder series, don’t need to email them so you make a broad cast count every month and you send a mix of content whether that’s just new blog post, new podcast episodes or more product ads or this content whatever you want to do, you still need to send out. You need to keep email in people that are done with your auto responder series because if you stop emailing somebody, then they’re just going to forget about you and forget that they opted and did it in the first place.
Mike [22:29]: Now, one of the things that you just brought up there is that during the auto responders, not every email is essentially a sales emails. You’re not always pitching them a product. Can you talk a little bit about the contrast between establishing a balance of engagement versus generated revenue because obviously there are certain types of emails that are designed to engaged the user and essentially provide value to them and then there’s others that you send them that you’re essentially giving them a sales pitch, you want them to buy something from.
Matthew Paulson [22:57]: Yeah, it’s a lot like somebody that’s a fan of a podcast, person listening to the podcast thinks they have a relationship with the host of the podcast even though they don’t just because you hear them all the time, the same is true for email list. If I’m sending you email all the time and you’re reading it, like I might think that I have a relationship with Kathleen because I get her email all the time even though we’ve never meet. So, you have to think about it like you’re starting a relationship with somebody. You can’t just sell them all the time where you’re going to make them mad at you and they’ll go away and unsubscribe or report your messages and spam, you can’t do that all the time. So you really need to have a mix of content that is relevant to your audience or a stuff that’s entertaining, educational, helpful and stuff that generates revenue as well because that’s the point of being the business. So, a good balance I think is ever other or some people are more conservative than that they might do two content email for every sales email or and it kind of depends on the makeup of your mailing list.
Mike [23:48]: Now, in terms of the sales offers themselves, what are the different ways that you can use an email list to generate revenue for the business? What types of products can you offer? Obviously, there’s your own products if you have them, but what are the other ways that people can generate revenue from their list?
Matthew Paulson [24:03]: Sure. Obviously, you sell your own products and then you can sell other people’s products, through affiliate marketing kind of like what Kathleen does with his mailing this. He promotes a lot of other people’s products and gets a large commission check from [?] and lots of other places every month, people can do that. There are some other ways. There are advertising companies and networks and agencies that work with people that have email lists. I work for [?] investing media solutions that’s specific to finance but they will sell our newsletter ads in my newsletter so people will pay or advertisers will pay on a cost-perfect basis to getting them a newsletter. I’ll get revenue from that. They also sell [?] but they rent it so somebody can pay $50 APM or something like that to email my list, and that’s pretty good money if you can get it. That’s kind of the advertising method for the advertising strategy. That’s also on your thank you page, you can place ads called co-registration ads. So if somebody signs up for your mailing list, they might see offers for somebody else’s product and then if they check those, you might get a couple of bucks for whenever somebody checks those and signs up for a product. Co-registration advertising can be a good revenue source that people don’t realize exist that we do about 40 grand a month in [?] and your thank you page is just a very valuable, a place to monetize because somebody is just taking action and then they’re very likely to take another action if you give them an opportunity to take an action. So, if your thank you page says thank you, you should change it and put it in a co-reg ad, an adsense ad or just even try to sell one of your products in your thank you page because people are very willing to take action right after they signed up for your mailing list.
Mike [25:33]: And I think that this an area where people are also very averse to kind of sharing the fruits of their labor in terms of the emails that they’ve acquired but at the same time these are people who – they’re the ones making the decision about whether or not they’re going to sign up for one of these co-registration ads and I think that the other thing that you mentioned which I thought was very interesting was putting advertisements in your own emails to your own list, can you talk a little bit more about it because I think you very briefly mentioned it about sharing your email list itself, but I don’t think that it was probably clear the specifics of what that really means?
Matthew Paulson [26:06]: Yeah, so you don’t ever give out your email address or your email list to anybody else, that’s a big no, no, but what you can do is talk to an advertiser and say, “Hey, what’s an email from our list for what your product for the set amount of money. They might want to email 100,000 people they’ll pay $50 APM, that’s 5 grand they would pay me to send the email out. I usually work with an advertising agency that sells out stuff for us so I don’t have to really worry about it too much but it can be a good money when the advertisers are available and in season and that kind of stuff. Newsletter ads, that’s also I think the same agency but those are typically done on a cost perfect basis, so there are other financial publishers that people start talking on financial products that have ads they want to get eyeballs for they all put that in my newsletter and they’ll pay me a dollar or two for a products just to get somebody to go to their landing page. So much of that though is you worry about handling over your email to somebody else and a lot of that depends on the industry that you’re in, in the financial industry, people sign up for a lot of different crap. So I don’t care if somebody signs up for my stuff and then I get them to sign of two other stuff. If you’re a co-reg ad or through an email ad or anything like that but if you’re Ruben and you have got BidSketch, you’re only going to use BidSketch or you’re going to use somebody else. So in that case, you probably don’t want to do that, so it just kind of depends on what industry you’re in and if it’s a zero some game or not.
Mike [27:20]: Interesting, so let’s talk a little more about after the person has made a purchase from you. So you generated revenue of some kind from a specifically through these direct product sales or through the affiliate marketing or co-reg ads or the newsletter ads or anything like that, but after somebody has actually purchased a product from you, what sorts of things you do? How do you interact with them after you’ve made the sale? Because I’ve purchased products from people before where I’m getting all this email marketing and then I make a purchase and then I never hear from them again. What are the best practices with that?
Matthew Paulson [27:52]: Yeah, some of it depends on your business model. If you have a SAS app, you need to get them to keep buying every single month or every year. So you have a strong incentive for them to keep using your service array of program or whatever it is. After somebody buys, you should have some kind of consider an event in your marketing automation system and then you have a sequence that goes after that that really helps people use your products or you should remind them that they bought the product, remind them what’s your name, give them the link to go access it, just have two or three weeks’ worth of content that shows them how to use a product, how to get the best value out of it, all of that kind of stuff so that people will actually use your product because if they used their product, then they are more likely to buy a stuff from you in the future. If it’s a SAS app, they’re more likely to go up. The goal is to get people to engage with your product and actually use them because people that buys something and never use it which happens a lot more than you think, they’re going to bounce and they’re going to be somewhere else and never think about you again.
Mike [28:42]: So let’s circle back a little bit. We’ve talked to about how to choose an email service provider and collecting the emails and using lead magnets and then generated revenue from these people and kind of what to do after you’ve made the sale to them but what about the sales funnel itself, so there’s always different pieces that you kind of string together. How do you look at this from the kind of global standpoint. You’ve got this top level view and you want to say, “Okay. Over here we’re going to do this. Over there, we’re going to do that.” Are there any general strategies you have for kind of mapping out what this looks like? In the past I’ve used graph papering, you draw little boxes and point little arrows to different things. But are there other strategies you’ve used or seen people use that could help with this?
Matthew Paulson [29:22]: Yeah, I mean you really have to start what’s the end goal that I want people to buy my product? Do I want them to do who knows what and then you work backwards from there. So what needs to happen for people to want to buy my product, they have to become familiar with it, they have to learn about it, they have to understand why it’s better than anyone else and here I’ve done all these steps and then you have to convert them into an email sequence of some kind. You can do pen and paper like you do with graph paper or you can use [?] to make some fancy parts. Some ESPs has some of that stuff. I just work it out on the Word document of what kind of emails I need to send. I figure out okay, what’s in a welcome email that leads to this? What needs to happen in the auto responder series? Let’s say they get to the end of the auto responder series and then they don’t buy then, what do I need to do in my broadcast emails every month to try to get them to buy after that fact? So, it’s more about knowing the steps and less about knowing the specific emails right away. You have the steps and then you try to figure out how do those steps translates into the specific emails that will help people get down to fact?
Mike [30:20]: I find it interesting that you use a Word document because for me I’m much more of a visual person so having kind of like I said a graph paper map kind of helps me with that, is that depending upon the type of person that you are or is it just are there certain techniques that you think work better?
Matthew Paulson [30:34]: Yeah, I’m a pretty left-brain person. So I think it’s just how I think about things and how things connect together in my mind. For me, that’s how I do an auto responder series and then a broadcast team around, I print out a monthly calendar on paper and then just kind of fill in what emails I think I should send and what they so that it’s based on appropriately and there’s a good mix of everything but there’s not a whole lot that goes in. It’s not as complicated of a process as it might seem.
Mike [31:01]: It’s not that it’s complicated, there’s a lot of steps though, at least there can be and I think that that’s where people get hung up is, “Oh, I have all this work to do.” And then they just don’t it.
Matthew Paulson [31:09]: Yes, that does happen, because I think people will expect results from email marketing right away or results from email marketing right away and then they look at all of the stuff they have to do and then they get overwhelmed by it and just don’t do it.
Mike [31:20]: With the email marketing, it’s not just one or two emails that you need to send, I mean there are cases where you need to send 15 or 20 or 30 emails before you convert somebody to a custody, right?
Matthew Paulson [31:28]: Well, absolutely, I’ve got people that subscribed my free newsletter for two years before they finally upgrade whenever we sent out like a sale email. It can take a long time for somebody to finally get a sign that they want to buy you product.
Mike [31:39]: And maybe that’s part of the hesitation for some people to kind of invest in this is a channel because they look at that and they say, “Well, I sent out three or four emails and I only get a handful of sales.” So, email marketing isn’t working and they kind of [crosstalk]
Matthew Paulson [31:52]: Yeah, it’s a ramp, I mean it takes a long time to build up a list and to start figuring out how to actually make emails at sales because we print opt-in form in your website, you get 1,000 emails for a month even which would be good for a lot of people. At first month you only have a 1,000 people to email and that’s not a very big list to generate sales from because if you think, if I get open rates of 20% that means 200 people open an email and out of that, if 5%, buy it, 5% buy the thing. That’s maybe 10 sales I will get in the first month and that’s probably optimistic even, but once you get down to 2, 3, 4, 5, when you get 2,000 emails next month, 3,000 on your list for third month and so on down the line, then it only starts to get bigger and you start to get more results as it grows over time.
Mike [32:37]: So it’s more about the iteration process and the incremental improvements or the month over month improvements that you’re getting from it?
Matthew Paulson [32:44]: Yeah, I mean my first month that I did the freemium newsletter, I sold maybe 10 premium subscriptions. So I made $1500 that first month then I made nothing for like the next two months because I didn’t send out any emails to promote the product, so it was not just a matter of time to learn and try stuff and see how it works and not to list grow. The results aren’t going to happen overnight but 2 or 3 years down the line, the results are going to be probably a lot bigger than you could imagine right now.
Mike [33:08]: Well, this has been great so far. Where can people find out more about the book that you’re writing called Email Marketing Demystified?
Matthew Paulson [33:14]: Yup, so the book is going to come out October 1st, 2015. It will be available in Kendo, Paperback, and AudioBook formats. It will be in Kendo version for the first week, so if you want to be notified about that, I’ll go to my myemailmarketingbook.com, again that’s myemailmarketingbook.com. Type in your email and I’ll send you an email when the comes out and you can get a free copy. And if you want to follow me on Twitter, my user ID is MathewDP and you can follow my personal blog at mattpaulson.com and Paulson is P-A-U-L-S-O-N.
Mike [33:43]: Or if you got a chance to go to MicroConf, you’ve been attending to get MicroConf.
Matthew Paulson [33:46]: Yeah, so I went to MicroConf for this year in Vegas. I had a great time. I’m going to go back next year. I’m going to try to do an attendee talk so if you guys see that in the voting, actually vote for it if you’re going to come to MicroConf this year, I did one last year but nobody voted for it so we’ll hope I get in next year.
Mike [34:00]: Okay. Well, great. I just wanted to say thanks for coming on the show.
Matthew Paulson [34:04]: Thanks, Mike.
Mike [34:05]: If you have a question for us, you can call it into our voicemail number at 1-888-801-9690 or email us to us at questions@startupsfortherestofus.com. Our theme music is an excerpt from We’re Out of Control by Moot used under creative commons. 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 250 | 10 Ways to Use Engineering as Marketing
Show Notes
In this episode of Startups For The Rest Of Us, Rob and Mike talk about 10 ways to use engineering as marketing. They define engineering as marketing and discuss how it can help generate awareness of your company and product.
Items mentioned in this episode:
- The 8020 Manager Book
- MailChimp
- SumoMe
- Bounce Exchange
- speed.wpengine.com
- Hubspot’s Marketing Grader
- Pingdom
- DontTrack.US
- DuckDuckGo
- Baremetrics
- DotNetInvoice
- Dropbox
- Kissmetrics
- Drip
- Bingo Card Creator
- Tractionbook.com
- Themakerscrew.com
Trancript
Mike [00:00]: In this episode of Startups For The Rest Of Us, Rob and I are going to be talking about 10 ways you can use engineering as marketing. This is Startups For The Rest Of Us episode 250.
Mike [00:16]: 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 Mike.
Rob [00:24]: And I’m Rob.
Mike [00:25]: And we’re here to share our experiences to help you avoid the same mistakes we’ve made. What’s the word this week, Rob?
Rob [00:29]: Well, this is my last episode for a few weeks because when this comes out I’ll be in the middle of France or Spain. I’m taking a month with the family and going to Europe before MicroConf Europe in Barcelona in a couple of weeks.
Mike [00:42]: Very cool. Yeah, we’ll have a couple of Gaston for a few weeks until you return but the show must go on and on that note, we are on episode 250. So, I just wanted to say thanks to everybody who’s been listening to the podcast, been going on for around five years now. I think we had the five year anniversary a couple of months ago but 250 episodes is a pretty big milestone so I just wanted to say thanks to everybody.
Rob [01:02]: Yeah, it is indeed. Our five year anniversary was a few months ago but in early days we didn’t put out a weekly show. Yeah, it’s been good to be on there all this time. The other thing I wanted to mention is we have kind of a secret drip project going on. We’re in the midst of the biggest single feature edition that we’ve added since automation last year and automation if you recall was the big game changer that allowed us to pivot from email marketing and the marketing automation. And so, I don’t know that I’m going to be as lame as to say. That was Drip 2.0 and this is Drip 3.0 but it’s cool to embark upon this and sometime in the next month, I think we’ll have a pretty big announcement so stay tune on the podcast for me to talk about it or you can obviously go to [getrip.com?] send it for the mailing list if you’re interested in hearing about what we’re up to. The only other thing I wanted to mention is I just finished up a book called the 8020 Manager and I don’t tend to listen to a lot of management books just because that’s not necessarily something that I want to dive too far into. But, I like books that talk about 8020 even if it’s a little overly used but they talk about how to find kind of a maybe a core competitive advantage or a thing that you can focus on in yourself that will allow you to do things better, and that’s what I like about this is that it wasn’t all about being a manager. There were things about being a leader and there were things just about performing better in your job, in your company. So even if you’re not really managing people, there were some good and interesting suggestions in this book for how to key in on are you a really good networker, do you have a lot of people that know that can trust you then use that as your advantage. Are you really good at like researching, digging things out, then use that as your advantage. And if I recall there’s maybe 10 of them, 10 different suggestions and the author says, don’t try to do all 10, pick one that for you is going to be your 8020 because it’s not going to be for everyone. And then he said master that one, raise your game, and then pick another one. So, I found myself taking a lot of notes as I listen to this book which is typically a sign that I’m getting a lot out of it and so I wanted to mention it here in case folks haven’t heard about it, 8020 manager.
So what are we talking about today?
Mike [03:07]: Well, today we’re going to be talking about 10 different ways you can use engineering as marketing. So let’s talk a little bit about what engineering as marketing is and the purpose of engineering as marketing is to help generate awareness of your company and products and it’s also a way to provide incoming leads. So the basic idea is that you create or build something that you’re going to put out there and you’re going to do some marketing efforts on it to drive people to the tool or website that you’re building and you’re going to get them to use it because it’s going to be applicable and valuable to them. Now, it’s probably not something that you’re going to charge them for, it could be something that’s a bit of a strip down version of something you already offer or just a click little utility that somebody may find some value in but the basic idea is that you build something that it has some peripheral focus around your product. So, we’re going to talk about 10 different ideas that you can leverage to using your marketing efforts to help drive people to your products. So to startup with, the first question that you can ask yourself is, is there a competitive advantage that I have over my competition that I can highlight? What you want to do is you want to find something that your product offers that your competitors either don’t or simply don’t measure up to and then find a way to be able to highlight that to your perspective customers. And the examples I have for that is WP Engine Speed Test. When WP Engine came out with their WordPress hosting, one of the key advantages that they really focused in on was speed and being able to make WordPress faster. So, what they did was they built the speed test application where you could go, you could plug in your website and you go over the speed.wpnengine.com and you can see this example. But you plug that in and it will tell you how fast your website is. And what that does is it essentially helps to highlight how fast your current hosting is versus what they offer. And the basic idea is very simple, it’s very straightforward. They want to show that they are faster than their competition and by focusing in on at speed, they’re also able to highlight other pieces of information that might be relevant to you such as if your website is slow by X seconds, then you’re going to lose Y percentage of people to your website because they’re just going to say oh, this is too slow and they’re going to leave.
Now, in the case of WP Engine, by making your website faster, they’re actually helping you to attract customers and to keep those customers on your site rather than they click through Google, your website kind of hangs because it’s WordPress and it just happens to be slow on whatever current host you have and they say, “Oh, heck with this. I’m going to go back. I’m going to go someplace else.” And what WP Engine is able to do is capitalize on that fact and help you to gather more customers.
Rob [05:42]: And I think there are a lot of opportunities here to figure out if your unique selling proposition really is that you are faster or that you do things better than other people, then getting this free tool out there. Basically, you don’t just build a tool, you allow someone to enter their URL and then you ask for an email address so they can get the results. And I’ve seen this done like you said with WP Engine, Ruben did this with BidSketch where you enter your email and you get like a personalized proposal. And so he’s basically trying to show that their proposals, how nice they actually look and how simple it is and that’s the kind of thing you could customize. If you were on SEO company, I mean you could crawl someone’s website looking for broken links so you could crawl it and just look for SEO improvement opportunities, some things that are kind of low-hanging fruit. There’s a lot of ways to think about building a tool that really kind of captures your competitive advantage and I think if you sit down and give a little thought and you have some engineering bend with, you can put some together.
Mike [06:40]: The second way is to look at your product and see if there’s a free version of a report from your product that you could offer in exchange for an email address and that email addresses will essentially help get somebody into your sales [?]. But an example of this is something like HubSpot’s marketing creater and you can go to marketingcreater.com where you’ll be able to put in your website and they will give you a grade for your website based on all of the internal algorithms that they have and they’ll analyze it and essentially email you a report that shows you what your current marketing efforts look like and maybe some places where you can improve. Now, that doesn’t mean that they need to give you the entire report, they could give you let’s say the top three or top five different things in each of those categories. And oh, by the way, if you want to get all of these different things that you could be doing better, sign up for our service we’ll be able to give you all this stuff on a regular basis. We’ll give you daily reports, et cetera. But essentially, it’s used as an upsell opportunity to get somebody into your sales funnel and then be able to market to them on an ongoing basis and convince them to use your full-fledged product.
Rob [07:40]: Yeah, I actually have several points in my idea notebooks where I’ve gone through this exact exercise for several of my products including DotNetInvoice and the HitTail and Drip and I always find it fun to kind of think of what is something that someone would A like to see about their website but also potentially be like to share about their website, right, or about their business because just getting them to view it as one thing, and that’s cool, but if you have a Twit button or a like button there, and there is even a little bit of a viral thing of like, “Hey, these are metrics. What are your type of thing?” There’s another element there of marketing where you’re not just getting that one person but potentially getting them to share it to. And if you know your product pretty well and you know the most popular reports, it’s not too hard to realize which of these is probably going to be the most popular if there are any that are applicable.
Mike [8:32]: The third option is to see if you can show a demo of your product capabilities. So, if you go over to Pingdom’s website speed test for example, you can go to tools.pingdom.com and there’s a textbox there where you can just enter in the URL for a website and it will go through and it will do a complete speed test on that. Now you can use that for a variety of ways as an end-user but what Pingdom is trying to do is show you that hey, by the way, we can do these things for you and we can help you and drill in and analyze all the different ways that your website is slow, we can alert you when it starts to get slow and help you to make sure that your website is as fast as possible. Now, this is a little bit more generic than WP Engine Speed Test where that was specifically for WordPress hosting versus Pingdom’s options which is primarily intended for any type of webhost.
Rob [09:16]: Another interesting example of this exact thing I’m showing a demo of your product, I’ve seen some SAS apps that have an actual visual piece, maybe let’s say Drips that will opt-in widget where you can enter on a form, you can enter your website and the site reloads with your site in an eye frame and they’ll actually show you what your website is going to look like with that opt-in form down in a lower right or with the light box covering it or whatever. And so it’s a nice way to get someone just one more step involved, and this actually doesn’t require an email opt-in for that one. It’s just a tool to get someone to maybe enter their URL so that you could certainly reach out to someone later if you wanted, but I’ve always liked that idea of kind of showing them how it might feel to be using your product just to get them one step closer. I mean I think realtors, when they’re showing houses, they know that folks are thinking about making an offer when they start to imagine themselves in the house and maybe even start talking between spouses about, “Hey, would the couch go here? Would the table go there?” You start to get the mindset of, “Hey, we could actually be here.” And I think that’s a similar thing. It’s like showing a demo of you using your product and giving you actionable information about your own website, your own business because more value than just talking in generalities like we typically do on marketing websites.
Mike [10:32]: It’s kind of like showing the benefits without forcing the commitment.
Rob [10:35]: That’s right. And it’s reshowing not telling, because you can tell the benefits that my product will bring your more traffic and it will blah, blah, blah. But when you actually show them on their own website, there’s just more value there.
Mike [10:46]: The fourth idea for engineering as marketing is to advertise your product through your own customers, and I think that there’s a really creative way that Rob has actually done this through Drip and they get Drip which is that he put “Powered by Drip” at the bottom of the different email captures and there’s a pricing tier where you can remove that particular branding but I think that it’s very effective and I’ve heard from other people that doing similar things on various website widgets is extremely effective for gathering new customers because anyone who goes and takes a look at that is going to see that powered by logo. So, if they see that and they are interested in any way, shape, or form in doing that kind of thing and capturing that information, they’re probably going to click through that and also take a look at the product that’s behind it.
Rob [11:28]: Right. And there’s a bunch of companies that do this; Olark does it, SumoMe does it, Bounce Exchange. I mean this is a pretty common thing for folks who have any type of UI widget I think Hellobar does it as well. And to be honest, I was at MicroConf a couple of years ago, it was two or three years ago right as Derek and I were building Drip, and Heaton Shaw mentioned this specifically that if you have a visual component, you should mention and have it powered by and I ran back to Derek and said, “Oh man, you’ve been noting this down?” Because I was making notes, and he’s like, “I’m quoting this up already.” Like we were adding it as a conversation because we knew this was a no-brainer to do. And the other thing that I recently did is actually, originally we were the powered by link straight through to the homepage of Drip, but I realized that people clicking on it didn’t want a homepage. They really should get a specific landing page. So if you haven’t clicked on that powered by link in a while, I recommend you click it and kind of see what we did there with the copyrighting and how we couch the landing page and how we approached trying to link up with eth mindset of the person reading it.
Mike [12:26]: The fifth idea is it’s sort of a variation on this but it’s essentially embedding your company name or URL on different reports that come out of the product, and obviously you want to offer a pricing tier of some kind that allows removing this, but this is especially helpful in situations where people are using your products on behalf of their customers. So any product that serves agencies and spits out reports on behalf or their customers, it would be really good to be putting that type of information directly into the product. I’ve seen a bunch of downloadable applications that do this as well. So, when they dump things out to PDF, they embed their own company logo onto those reports and oh if you want the professional version of this product which will cost you an extra $200 or $500 more, then we’ll remove all of that branding from those reports.
Rob [13:10]: And you can see MailChimp does this not with reports but with the actual emails they send. If you’re on their free tier, there’s a little badge at the bottom, that’s a MailChimp badge. I think if you’re sending out any types of emails on your customer’s behalf and you have a free tier or a very, very low-priced like a cheap-mium tier, as [Dormesh?] calls it, where you’re basically charging your cost for the tier, I think that you should have some type of badge or link back or something in emails that are sent out on customer behalf in any type of visual UI component. And as you said, to offer pricing to your folks that want to remove it.
Mike [13:45]: The sixth way to use a microsite and I like microsites because they’re used for telling a story and it allows you to create essentially a marketing angle that for a current new story that might even be publicized or just a general feeling about that people are kind of going through and the example is that if you go over to DontTrack.US, you’ll see that DuckDuckGo has created a microsite that talks about tracking for website searches and they go through essentially what has become a giant privacy issue based on the US governments tracking of all internet communications and intercepting phone calls and things like that. So, they’ve essentially capitalized on this idea that hey, the privacy and security for just something as simple as website searches is important, so let’s create a website, we’ll talk about that particular story and then at the bottom they talk about not just DuckDuckGo but a couple of other sites that they have that kind of revolve around the same type of story but obviously, in this particular case, DuckDuckGo is kind of founded on the principle of hey, we don’t track you and we don’t store information about the people who are searching through our search engine. So it’s extremely relevant to create a microsite around that particular story and publicize that.
The seventh idea is for using a public demo and I think that most SAS applications are going to have probably some sort of a public demo available but the problem with public demos is you don’t necessarily have data to go into them and I like if you go over to demo.baremetrics.com, you’ll see that Baremetrics put together a demo that shows a completely working system and it included their own live data in that. So, this kind of combines two different things. One is the marketing angle of leveraging public transparency but it also shows real live data that’s going into the system and you can see that stuff track overtime and how it changes from day-to-day. And I think some of the issues that some people run into with a public demo of some kind is that demo, the data inside of it tends to be relatively static and maybe it gets refreshed once in a while but it doesn’t change overtime and if you go in today, and then you go in three months from now, that data is largely going to be the same. So it can look pretty barren unless somebody went through a lot of time and effort to make it look like a real functional application that somebody was in the middle of using.
Rob [15:57]: Yeah. I think we’ve largely moved away from the idea of kind of public demos or places where you can click on a demo version and see it all populated and we move more towards these free trial models, that I mean that’s kind of how SAS is done these days. But I think there is still room for public demos in certain spaces. I think that if it takes a lot of time to set anything up, like if the onboarding really is intense and it’s complicated, that I think seeing your app full-fledged working in the flesh can be helpful. Now, there’s also a drawback to it. If your app is so complicated that it’s hard to set up, it might be so complicated that you’re just overwhelmed when you log in and that’s not a good thing. But I also think that if you have any type of downloadable product certainly like a one-time sale piece of software like Perch or DotNetInvoice, then I think having some type of demo to at least be able to click around and feel how it feels, screenshots are good but I think that demo can help especially if you do ask for an email address before people can really click through and try it, you’re going to get the folks who are really interested in entering real emails and you’re going to get the ones who just kind of want to want to poke around. They tend to enter fake email address just do to it, so there’s certainly the roof of it and I think that with Baremetrics, they’re really good example because there are reporting tools. And so having reports that you can see really easily, and kind of explore the product is kind of a no-brainer because even if they just want to hook up to your data, it’s still interesting and relevant to see someone’s data in there and to see all the reports put together. It’s a little harder if you have an app that’s a backend cred app that’s supposed to taking a bunch of data and do stuff with it, and if it’s not catered to your specific data, I’d say it’s less interesting.
Mike [17:32]: The eight idea for engineering as marketing is to implement a referral program of some kind, and you can do this on a variety of ways but the basic idea is that customers who refer other customers get a bonus of some kind inside of the application and I think a primary example that most of us are probably familiar with is DropBox, and if you sign up for DropBox, you’ll get a certain amount of extra free space for inviting or referring other people to use the product. And in addition, that person also gets that free space as well. There should be a cap on it of some kind because you don’t want people running around in inviting everyone under the sun and they get basically the world handed to them for free, but at the same time, you want to be able to use some sort of a viral component to that to get people to share it amongst their friends especially if they’re getting value out of it. And in the case of DropBox, the value of DropBox is pretty evident when you sign up for it and people are encouraged to go out and ask their friends, hey, do you want to sign up for this? This is really awesome. We can both get a benefit if you sign up. I think affiliates kind of fall under this umbrella as well but not as much.
Rob [18:34]: Yeah, and this is less about engineering as marketing and more of a virality I think which is fine but I think anything that contribute to your virality kind of like the “powered by” logo is pretty powerful. Building up a network of affiliates and a referral network, and a referral program actually takes quite a bit of work to do and to manage it properly. I think you really have to have someone that people are stoked to share. But obviously, with something like DropBox which was a kind of a new product and like you said they gave both people the bonus, I think that can work. But I think their numbers also were, they’re B2C product when they started and so, B2C is going to have a better luck with this kind of stuff. I’m not saying it doesn’t B2B but it takes a little bit of I think a longer term to do it and I just think that the viral coefficient is going to be a lot less than when it’s B2C.
Mike [19:24]: The ninth way to use engineering as marketing is to leverage some sort of daily report email and show progress towards the goal and the daily e-report emails can show that progress but the core piece of this is showing progress towards whatever the goal is and for different applications, they’re going to have different goals. So for example, with Kissmetrics, you can get a daily email that shows you some of your KPIS with codeschool.com, you can get a report card that shows you how far along you are in inside of the school and showing you what sort of progress you’ve made. Anything where you’re showing progress towards that goal is something that you’re going to want to be able to highlight to people and use that engineering effort to say, “Hey, you’re making progress towards this goal. Don’t quit now.” And you can go in and implement additional things that look at that and analyze to figure out are they slowing their progress down, or they’re not making as much, are there ways that you can essentially draw them back into the application to help them move forward.
Rob [20:17]: Yeah, I think daily or weekly reports are powerful when like you said with the Kissmetrics I’ve seen perfect audience to a really good job of this. Some of these emails that I get are really irritating and I don’t actually care. To be honest, one that it’s not irritating but I never look at it it’s the one from [?] I just don’t care about the activity. I use it as a tool and I have no interest in it and I should probably just unsubscribe from it but I haven’t yet. Whereas something like Kissmetrics or email marketing software or Perfect Audience which is ads, that type of platform to me it’s a no-brainer and this is in our feature list we trip to actually build one of this but I think having a daily or a weekly report is a really key part of keeping your customers engaged.
Mike [20:58]: And the 10th idea for using engineering as marketing is to essentially leverage the content from your application for SEO, and primary example of this is bingo card creator has a ton of automatically generated webpages that are based on different bingo cards that were created for the application and some of these bingo cards are for either holidays or animals, bingo card creators designed to create bingo cards and from those there were all these different webpages that can be generated to essentially help fill out the website and the larger the footprint for your website, the higher the likelihood is that you’re going to start ranking for some of these very obscure search terms especially if you engineer it in such a way that you’re doing all the right things in terms of the H1 tags and the titles and all the different meta tags that go with it or the URLs, I mean there’s a lot of different things that factor into that. But most of that can be automatically generated especially if you have a large base of content that you can generate it from.
Rob [21:55]: And Bret Palombo also did this with distress pro, and I’ve heard of a few other folks doing it as well. Oh, Zapier, that’s the other one I was trying to think of. They did a good job with kind of linking up all of the things they integrate with. And so if you search for [linktrelo?] with Gmail for the longest time, Zapier will rank number one for that, I don’t know if they still do because they link them and they figure out how to create enough content to link all 150 of their incoming with all 150 of their outgoing. When you do that multiplication, that’s a lot of pages that they spit out and they kind of cover the nice surface area in Google. So, this is definitely something to think about and this is something that you had done I think about a year ago with AuditShark as well. How did that turn out?
Mike [22:36]: It went pretty well. The initial uptake on the traffic was pretty good and then it leveled off pretty quickly and it bounces a lot. It depends a little bit on how much Google is kind of searching around and finding pages that are not relevant for some of those long tail search terms but they are extremely long and most of the pages maybe only get like a couple of visits a month, but at the same time, I mean it does amount to thousands of visits every month because I’ve got I think well over 1,000 pages that are created for that.
Rob [23:06]: And it probably fairly targeted since they’re searching for such a specific thing.
Mike [23:10]: It is, but the problem is that they are searching for that specific thing and they’re not necessarily looking for a product to solve that particular problem. They’re looking more for information about what that thing does. So it’s not quite as targeted as I would like or at least I kind of found that out after the fact it does draw in traffic but not nearly as targeted as I would like, I mean those pages are definitely lower converting the most for the rest of the site but I think that your mileage in that particular situation is going to vary based on what type of information it is that you have.
Rob [23:39]: Right. So for some closing thoughts on this, obviously, it’s reasonable to ask for an email address and email people the results of most of these things. If you let them use the tool and you don’t get an email address in front of that, you’re losing a lot of value especially if you can get it into a system where you can actually tag them as the fact that they did the specific thing and not just dump them into a random list or dump them into a list of people who have used this tool but actually have them in a big bucket and just being able to tag, then you can see who are the people who have never visited, who’ve done this, and who were the people who are already trials and customers who are using and then kind of exclude them from that. It can really see your metrics really well, and then you can engage obviously just the people who have never use their tool that a lot differently than you would if the folks are already familiar with your tool.
Mike [24:24]: And we’re going to link it up in the show notes but there’s a couple of links that you might want to take a look at for additional examples of how people are using engineering as marketing. One of them is over at discuss.tractionbook.com and the other one is over at themarkerscrew.com and they both talk a little bit about engineering as marketing and have some examples there that are a little bit beyond what we talked about here. Some of them are I’ll say are a little bit less relevant in our particular space so they talk about Facebook and Twitter and some companies like that how they were leveraging some engineering as marketing but you still might find it useful and you might be able to pick some ideas out of there.
Rob [24:55]: If you have a question for us, call our voicemail number at 888-801-9690 or email us to us at questions@startupsfortherestofus.com. Our theme music is an excerpt from We’re Out of Control by Moot used under creative commons. 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 249 | Finding Your Competitors’ Customers, Pre-validating a WordPress Plugin, How to Hire a CTO, and More Listener Questions
Show Notes
In this episode of Startups For The Rest Of Us, Rob and Mike talk about finding your competitors’ customers, pre-validating a WordPress plugin, how to hire a CTO, and they answer more listener questions.
Items mentioned in this episode:
- Restaurant Engine
- MicroConf Europe
- Appear.in
- Endo Creative
- SendOwl
- Easy Digital Downloads
- BuiltWith
- Datanyze
- GroupAgree
Transcript
Rob [00:00]: In this episode of Startups For The Rest Of Us, Mike and I talk about finding your competitors’ customers, pre-validating a WordPress plugin, how to hire a CTO, and we answer more listener questions. This is Startups For The Rest Of Us episode 249.
Rob [00:23]: 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 [00:31]: And I’m Mike.
Rob [00:32]: 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 [00:36]: Well, we’re ready to announce the final two MicrConf Europe speakers. We’re going to have Brian Castle, the former owner of Restaurant Engine and he’s off working on Audience Opposite at this point, and we’re also going to have Justin Jackson who is in the midst of writing of a book on Marketing for developers. He’s the podcaster behind Products People and Behind Build and Launch. So it would be great to see those guys. I think both of them were on the stage over in MicroConf Vegas so it’ll be great to see what other things they come up with.
Rob [01:04]: That’s right, yup. Some more folks who have made the lead from coming and doing an attendee talk at MicroConf and stepping onto the main stage. So, we’re looking forward to hearing from those guys. Yeah, we’ve been getting a lot of really interesting listener comments on the podcast blogs so it’s at startupsfortherestofus.com and folks are commenting on individual episodes. We have a comment from Mathew on Episode 243 where we discussed the tools that we used to run our startups and we mentioned Skype and Mathew commented, he said, “We switched from Skype to Appear.in which seamlessly integrates into Slack. You can start new video chat by typing /appear and then a roomname. It also makes sharing screens easier and we can have multiple people on the same call. We’ve also started using Appear.in. It is nice that it integrates with Slack. It’s also HTML5 so it just goes right in your browser. You don’t need to download a [?] or anything. The drawbacks that I found to it are A, none of us can get it to work in Chrome. There’s no audio to it and I’ve emailed back and forth and done run diagnostics and all types of stuff with the Appear.in guys and it just won’t pick up any of our audio even though our audio works with whatever approaching that we use. In addition, Appear seem to, I don’t know if it’s an HTML5 where it renders in the browser or whatever, but it just hammers through processors, processing cycles. So, you run away like my pancakes on as soon as we started chat and it makes all of my internet browsing really slow. So if you’re going to try to browse and talk, it’s kind of tough. I have like almost like a brand new MacBook Air with a nice processor and everything. So, I like it for quick chats but it we’re going to do anything more involved, we turn to switch over to Hangouts or Skype.
Then we had a comment in episode 244 which is where we interviewed Josh Pigford and we talked about a number of things in that episode but one of them was transparency and Simon from [Small Farm Central?], he says, “I like the idea of “point in time transparency” rather than this level of sharing that only seems to help competitors. If the story of your business is important and you are targeting people who would care about revenue, then this point in time really makes sense because it allows you to craft a story and release only the metrics that are important for the story, rather than baring everything to the world.” So, I enjoyed that comment from Simon and it was kind of a summary there were a lot of folks who Twitted and emailed about kind of the discussion about transparence in that episode so I appreciated it. And the last one was on episode 247 where we talked about whether you should focus on people versus process and Jeremy Green posted and he said, “I just gave a presentation at WordCamp Boston on this very subject. It’s at http://www.endocreative.com.” And we’ll link it up on the show notes. He says, “In creative work, the most important thing is to have a process in place for the tasks that are the same for every project. That leaves you more energy and brain power to focus on the creative side of the project.”
So thanks everyone for your comments. There are more there than we can obviously read but I wanted to call at a few of those because they seem to really kind of hit the nail on the head and add something to the conversation.
So today, we’re answering a number of listener question. We have a pretty nice backlog right now. So, I had to call through those and pull out the best that I could find. The first one is about which niche should I focus on first and it’s Hylton from GroupAgree. And in that, I’m going to summarize because the email is further long and so Hylton is working a GroupAgree which he summarizes as a drama-free group decision making. And he says is that during his alpha, he’s found that his users identified a number of different context for making surveys. And so I’ll start to read his emails from here. He says, “Casual, such as what movie should be see, what restaurant should we go to, what game should we play at our land party. And then the second one is academic, what should our book club read, when should I reschedule my class so most students can make it and what should the topic be for our final project. And the third is business. How should we prioritize our customer’s feature request, when should we meet with the client, what should we do for our offices at summer activity.” In Hylton’s words, he says, “My question is this, with a product so broadly applicable that my users have successfully taken it lots of different directions, how do we identify which of these three niches to focus on first? This may sound like a good problem to have but it’s definitely stressful because it will define the direction by initial marketing campaign and I’m worried that choosing incorrectly now will send me back for to six months.” What do you think about this Mike?
Mike [05:07]: Well, I think even those three different niches that he identified. To me, it seems pretty obvious as to which one to go after and the three options were casual, academic, or business. And to me, I would go for the business because they are much more likely to pay you than any of the other ones. Like I could see myself using an app like this with my friends to find out like what restaurant we should go to or what movie we should see but I can’t possibly see myself actually paying for it. And then in terms of academic use, I can definitely see some uses for it but again, I think that it would be difficult to identify places where there’s like a business justification for actually showing out money for it. So to me, it seems obvious that you really need to go to the direction of the businesses because they’re going to be more likely to pay you than any of the other groups.
Rob [05:50]: Yup, I agree. And how to make a statement that having a broad appeal seems like a good problem to have and I disagree, I think it’s the exact opposite. I think having a great appeal is a bad thing early on when you don’t have a ton of money, a ton of staff, and you have to focus. You really want that narrow, narrow focus so that you can get a small group of people in there who just love, love, love using the product and then we’re in town from there and go broad later.
Mike [06:14]: One other thing that comes to mind though about this given the broad appeal in those other spaces, it might be possible to come out with and I wouldn’t do this right away. But down the road, when you kind of have things locked in, come up with something of a free plan or a free model where it’s like free for personal use or casual use only or something like that, it’s definitely not for businesses but to help essentially expand the footprint of the product and get it in people’s mind so that when they go to work and they start seeing places where they could use it, then it almost becomes an upsell opportunity or a lead generation engine for you. Again, I wouldn’t do that upfront because I think that freemium right off the bat is probably going to hurt you a lot more than it’s going to help but it might be something to consider down the road.
Rob [06:57]: So thanks for the question, Hylton. The next one is about licensing and delivering a downloadable product and it’s from Brian Wall. He says, “Hi, Rob and Mike. Thank you for your podcast. I’m a 14-year faithful employee for a software company in Fresno.” Which is funny that I’m never run into Brian. He says, “After all these years, you’ve opened my eyes and inspired me to take the plunge. I’m taking the stair step approach that Rob talks about and my first product will be a downloadable plugin for a product that runs on Windows and Unix servers. I expect it to be fairly low-touch in terms of sales. My question is, how to license and sell a downloadable product like this? Is this a good candidate for something like Gum Road or would you build your own dedicated storefront? I’m not so worried about activation keys but I do need a way to manage licenses, updates, renewals, cancellations, et cetera. What do you recommend?”
Mike [07:40]: This is hard because I don’t think that there’s a good option, but I don’t know as I would go about building my own dedicated storefront. There’s a lot of different options out there that allow you to do payment processing and I think that it feels to me like the underline assumption here is that you’re worried about too many orders coming in and having to process them all, and I don’t know as I would worry about that problem just yet. I would worry about it once you find that you’re getting a lot of updates and renewals and cancellations and things like that. I mean as long as you can issue a license to somebody, it doesn’t really matter. The other things, you’re not going to have such a high volume of them for the first probably 6 months or 12 months and it’s going to be a big deal.
Rob [08:19]: Yup. I would probably do it pretty manual at first, just with a stripe account is what I would start with. And I totally agree with Mike. I would absolutely not build my own storefront. There are a couple of ways to deliver digital products that you might want to migrate to after you’re getting more than, what purchase a week that you’re manually fulfilling. One that I’ve heard a lot of good things about is SendOwl, it’s send, O-W-L, and it’s Gum Road A in the little more at technical folks and I think it has more API stuff. So you might want to take a look at that. It’s a SAS app. The other one is a WordPress plugin. So you’d need a WordPress as your frontend but it’s called Easy Digital Download and I’ve heard a lot of good things about that. It’s written by a WordPress developer named Pippin who sells his own WordPress plugins through it. So if you have a onetime download and you want to manage license keys and annual renewals and all that stuff, it’s kind of baked into that. So if you’re willing to put WordPress as kind of the storefront, I think Easy Digital Downloads is probably what I would go with. But this is a good question, thanks for sending over Brian.
Our next question is about how to find people who are currently using your competitor’s products and it’s from Ryan@builderbuilt.com. He says, “Hey, guys. Great podcast. You continually provide well-thought out actionable content in today’s episode about why people might not switch to your SAS and provide some good tips on how to convince them to make that switch by removing barriers. My question is, how do I actually go about targeting companies who use my competitors’ solution so I can market to them?”
Mike [09:41]: I think there’s a few different ways that you can go about this. The first one is to find where those people are hanging out and talking about the competitors’ products online. And now, if this is on your competitors’ forum, you probably don’t want to overtly go in there and start pitching your own products. It’s not going to work. It’s not going to go over well. And the people who are currently happy with that products are probably not going to take kindly to you going in there and kind of pitching your own products. I would answer questions but I don’t necessarily think that I would say, “Why don’t you try this to solve your particular problem instead of trying to work within that competitors’ solution?” Another option would be to go over to core and see if there are people asking about what types of alternatives there are for specific products. So, if let’s say somebody is using unbalancing, go over to core and start looking around for people who are talking about unbalance and looking, actively looking for people who have offerings that are in an adjacent market or a competitors’ to unbalance because they’re looking to switch. They’ve already kind of made up their mind and they want to move away. Another thing that you can do is you can use SEOs. So, if you have a specific webpage you set up on your website where you talked about those other competitors and present them directly as competitors to your own products, you can essentially create your own story about those things. So, those are a couple of different things that I would think about in terms of ways to get in front of those people and then depending on what your personality is and how much time you have to go about that and the type of products you have, it may makes more sense to do one versus the other.
The last thing I can think of that you might want to do is offer what’s called a competitive upgrade. So if somebody already has the competitors’ products, you can offer them discounts for essentially turning in that products and switching over to yours and you could offer like onboarding [?] services and move to your data over and all kinds of different things. But again, that can be more of an enticement than something that actively convinces them to switch products.
Rob [11:30]: There are two services I know that actually crawl websites and they can actually figure out what stuff is Built With. The first one is called builtwith.com and these are both SAS subscriptions and they’re not cheap but builtwith.com is the service that I know that several of the kind of outbound legion guys use and they’ll say, “Well, my competitor is X, Y, and Z and it’ll give you a list.” Now, Built With crawls certain amount of websites every so often. The second competitor is more expensive but they crawl daily. So they cannot only tell you who’s using what, they can tell you someone started a trial of this yesterday, like they just installed the code. So it’s much more powerful but they are more expensive. That service is called Data Nyze, it’s data, N-Y-Z-E.com, both of those if you’re willing to put down the money are going to be good services to find out who’s using your competitors and for full disclosure, I am a small angel investor in Data Nyze but I have seen and used the interfaces for both of those tools. So thanks for the question Ryan.
Our next question is on validating a WordPress plugin before using and it’s from Dave Bush. He says, “Hey, guys” one of the things he mentioned on our recent episode was to avoid building before you validate a product idea. One of the things I still can’t get my head around is how to validate a WordPress plugin without actually building the free version first. There’s so many WordPress plugins out there, how can you get away with testing your idea for WordPress plugin without actually building an initial free offering?
Mike [12:54]: I think the misconception here is that in order to validate something, you have to go out and specifically talk to people or have a free version available. I think that there’s multiple ways to do can go about validation, and I think the bottom line is that validation is about gathering information and being relatively confident and what’s your analysis of the situation is. So, in this particular case, you sure getting a working prototype built and put it in out there and driving traffic to it and having people go through is going to give you that validation, but at the same time you can also get that validation by looking at what people are already doing today. So, instead of driving people to your own plugin and looking at those download numbers, take a look at the existing download numbers of other plugins that are doing similar things and measure those overtime and it should be fairly simple. You can go into wordpress.org, just take a look at the download numbers and it will tell you flat out like whether somebody’s downloads are increasing overtime or are they decreasing, when the last updates were, all that kind of information. And you can get a sense from that information alone as to whether or not it would be possible to put another plugin that offers similar functionality that it also going to get a some level of attraction from people who are looking for that type of plugin.
Now, it’s not an absolute guarantee but at the same time nothing is. I mean unless you have people giving you credit cards saying, “Hey, take my money,” that’s probably the next best thing that you can get without building something.
Rob [14:19]: I take it a step further. I think that is the initial validation. I would agree that I would poke around and look at what people are talking about, what the download numbers are; with a WordPress plugin, in my opinion, you can’t validate it until you’ve built that free version. WordPress is so much different from SAS and that with SAS you need some customers paying you a decent chunk of money and spending a lot of time validating that upfront is worth it because to build your SAS app might take you a year, I mean tremendous amount of time. It might take you more than that if you’re doing it part-time. Whereas with a WordPress plugin, you can build it yourself at nights and weekends in a month or two months, I mean you can build it full-time to get a kind of a prototype free version out there, probably in a lot less than that, you can hire developer. WordPress plugin developers don’t tend to be that expensive. WordPress plugins are not that complex to maintain. You don’t have to get servers up and running and do dev up stuff and there’s just all the stuff that makes is so much simpler to validate that after I did some initial look at numbers and other downloads, if I knew it was for a specific niche mark and then I knew that it fixed a problem for them, yes, I would reach out to some people I know in that market. But to do cold calling and do the interviewing and the other stuff that you would consider doing if you’re going to do customer development for a SAS app, I don’t think it’s worth it because the WordPress plugins that I see are making in volume, right. They’re doing $20 for a one-time thing or $40 or $50 for a one-time thing.
So going and trying to find 10 people who are willing to pay you for that, I question if you shouldn’t just go and build the thing, get it out there fast. And now, if you’re trying to build some super exotic that WordPress plugin is going to sell for $1,000 license, then yes. Now we’re talking about enough of a lifetime value where it’s worth really doing a bunch of upfront research. But if you’re sitting there, trying to think about how to validate something that you’re going to sell for 30 bucks one-time, I would say just go do it like go build the thing, go hire somebody to build the thing. Get it in the store, you’re going to learn so much by doing that and it’s really not that big of a risk compared to actually building a full-fledged app.
Mike [16:17]: And I think that’s the key point here which is the risk versus reward versus the investment that you’re taking and if it doesn’t take you very long to do it, you may as well just do it. I mean if you were going to build a plugin that literally only took you two or three days to build, would you go out and do the customer development? And the answer is no, why not? And the answer because, well, it’s going to take you more than two or three days to do the customer development. You may as well just build it and see if you can sell it at that point because your investment is so incredibly small.
Rob [16:42]: Right. I feel like this ties in to Dan Norris’s idea of the 7-day startup of if it’s going to take you less than 7 days to build the thing, then just go build it. I would say seven days collectively like if you would work let’s say 10-12 hours a day for 7 days, so what is that? Maybe 80 hours, if you can build it in less than that, even if you don’t have the 7 days and you have to do it 80 hours nights and weekends for the next month or two, I’d be more of the might get the code out there and will validate. So I appreciate the question, and I hope that helps.
Our next email is actually not a question, it’s some advice on hiring a CTO, it’s an audio recording and it’s from Ben Cole. And he says, “Hi guys. You briefly touched on hiring a CTO to help find and manage a development team in episode 242. I’ve had some experience in this base and a particular quick audio response with some tips for your listeners.
Ben Cull [17:28]: Hi, guys. First of all, I just want to say thanks for such a great show. I can’t wait for each new episode and you really got me hooked. Thanks for all the great info. I just wanted to talk about a topic that came up recently about CTOs for hire. Now, I’ve been in this position myself a couple of times recently and I think I’ve got some great advice for your listeners. My name is Ben Cull. I’m a senior .NET consultant for a company called SSW in Australia. And first of all, what you going to want to do is to find yourself a senior developer. Try and get them in as early as possible and get them into the meetings with your potential development teams because they’re going to ask the right questions and know what kind of team is going to work for you. Second of all, find a CTO that understands process because about two-thirds of what you’re going to be doing is ensuring the process is going smoothly. Now personally, in SSW, we use the scrum methodology but you don’t have to be that formal. My advice is just to ship small, ship often, and ship all the way to production. It really forces you to get your process together by even shipping your very first feature even if it’s a registration page. Ship it to production and you’ll understand that you need all the environments, and all the automation to get things running smoothly.
My next tip is to use video to describe your requirements. Now, as a product owner, you can get across way more information in the video than you can with just pictures and text. And on the flipside, get your developers to put together a video to demonstrate the functionality that they have just developed. This lets you give feedback a little easier and you can pick up on more of the problems quicker.
Finally, have retrospective meetings. This is probably the most important tip. And for people that don’t know a retrospective meeting is where you ask three questions; what went well, what didn’t go so well, and what can we improve. Now, you include the development team, the CTO, and the product owner in this and you’ll come up with things like, what went well. We had meetings at 10:00 AM instead of 8:00 AM because everyone has had their coffee and they’re raring to go. What didn’t go so well was support tickets took a while to answer. What can be improved, well, I think that the moment database development is a bit tricky. Maybe we should have one person in charge of that. Let’s try that out this week.
These are just a few tips to managing your remote development team and hiring a CTO to help with that. If anyone has any questions, you can catch me on Twitter. My name is BenWhoLikesBeer. Cheers guys.
Rob [19:44]: So thanks a lot, Ben. Thank you for that, and hopefully that’s helpful for folks out there who are considering doing kind of that CTO approach where instead of managing a develop for yourself, if you’re looking for an intermediary because you might not have the technical experience to hire someone yourself.
Our next question is about conversion rates from a launch list to paying customers. It’s from [Percaush?]. And he says, “Hi Mike and Rob. My question is about conversion rates. Is there a general conversion rate to keep in mind to translate from a beta signup list to a trial signup to paid subscriber. Put differently, how many in a range of beta signups lead to one paying customer?” Here are two additional pieces of information in case they matter. Number one, these beta signups are coming from a landing page and not necessarily from friends and a network so they are not well qualified. And number two, it’s a SAS product costing between $100 and $300 per year. Thanks in advance, you guys rock. So, this is a really hard question because having cold signups and trying to convert them to trials is hard enough but if you don’t have a product that someone wants to pay you for, meaning if you don’t have product market fit yet, then your trial signup to paid subscriber ratio is very likely to be somewhere within the approximation of zero, literally zero. I’ve seen people with launch list of 1,000 get one or two paying customers right out of the gate and then lose them within a month or two because they turn out. So, there is literally no number that I could throw on this that could give you an idea. Now, I can tell you that if you have a beta signup list of let’s say 1,000 people, if you mark it really well and you build anticipation and you’re sending them screenshots and the product looks good, and it solves the problem that they want, and you send a sequence of launch of emails instead of a single email, I think that you can get upwards of 30%-40% of your list to sign up for a trial. I think that’s your range. I think the low end is literally zero if you fumble a ball in all respects and if you did everything really well executed, I may even rich and say if you get 50% into a trial, but I think a reasonable performance is somewhere between about let’s say 20%-35% to trial. Then the number of trial folks who convert to paid and then who stick around, it’s all a bunch of other numbers, right? If you don’t have product market fit, then that number say from trial to paid, if you ask for credit card upfront is going to be between 10% and 20%, and if you do have product market fit, when you ask for credit card upfront, maybe it’s between 40% and 60%. If you haven’t asked for credit card upfront, then it’s going to be between 0% and 10% or 15% depending on if you have product market fit. Then insurance is going to kick in and you’re going to lose somewhere between 5% and 25% of your people per month depending on how well they like it, how much of a problem this solves for them.
So, that gives you an idea of how wide ranging these numbers can be, and if you multiply those numbers, those ranges that I gave you, it can give you literally anywhere from out of 1,000 people, it’s like anywhere from zero to several hundred paying customers. So, I think that’s the answer is not to try to think of what is the number that’s going to become paid. It’s the real question is how can you optimize every stage of this funnel and just wild up hands off of people so that they really want to stick around to the next page especially if you have a new product be listening to what their requesting so that you can actually build something people want because that’s the goal with this launch, right? Is to get to the point where you have something people want so that you can then continue on from here and scale it up. Thanks for the question Percaush, that was helpful.
Our next question is from David Sandbrand. And he says, “Hey guys. In the context of your listeners, when is a startup no longer a startup?” So of course if someone stops pushing forward and essentially folds, that would count. But I’m wondering more on the side of success post launch. So is it the number of clients, is it time since the launch, is it revenue based? I’d love to hear and extend the discussion on when is the startup no longer a startup? Is it Eric Ries’s or Steve Blank’s definition? Is it a startup is in search of a repeatable and scalable business model? And so once you’ve achieved that, then you become a – you’re not a startup anymore. So like HubSpot would not be startup right because they kind of raised funding when we need a product market fit, and then you figure out how to scale your marketing and sales, now you’re scaling and you’ve less startup, that’s a fair definition of it.
Mike [24:06]: Right. Yeah. I guess from my standpoint, it depends on how you classify yourself. I mean there’s different points of view that you can look at. It’s like, is your business no longer a startup by your definition or by somebody else’s? And at the end of the day, I almost wonder like does it actually even matter? And I think in most cases they answered that as really no. I’ve almost feel like when company’s self-identify as startups, they’re hungrier. They do a lot more things and they’re much more aggressive about taking a different path as they go down. But once a business kind of stops referring to itself as a startup, then it’s much more of a mature company, double quotes around the mature part, but really they stop going after things hard because they don’t necessarily have to anymore, they get comfortable. And I wonder if to some extent, somebody might look at that and say, “Well, that’s no longer a startup.” And it could be very early on.
Rob [24:54]: Yeah. I think it’s an interesting question. I wonder if it really matters. I guess I’ve never been at the point where I have not thought of myself as a startup, so I guess the companies I’ve worked at that sees being startups like you said become a little more maybe process-driven, they become bigger, they become – they’re trying to scale up. They’re not hungry. What’s a good word for it?
Mike [25:12]: Yeah, I mean I just remember when I was a pedestal and we were required, we had like 60 or 70 employees or something like that and we got acquired but to us, we were still a startup. We just raised like $8 million or something like that and then even before we got a chance to really start spending it, we got acquired. So, I don’t know.
Rob [25:29]: Yeah. I think the lean startup, or I don’t remember from Steve Blank’s definition or link startup where they say it’s a scalable, repeatable business model where it’s a company in search of a scalable, repeatable, business model. I like that definition in terms of summarizing what a startup is but I think in terms of what David is asking about, I think I would go beyond that because as soon as you find that scalable, repeatable business model, then you have to execute. You have to find hungry people. You have to motivate yourself and them, and in my opinion, you’re still a startup there. You are scaling revenue up but you can find that business model and only have 10 grand a month in revenue and I think you’re still a startup at that point because you’re still kind of clawing your way forward. So I think there’s a certain point where I don’t know, I don’t think it is just headcount. I don’t think it is just clients. I definitely don’t think it’s time since launch because that’s going to depend why learn if you built something people want. I definitely think that it’s way pass product market fit. It’s like product market fit, then scaling things up and I think for me personally, I would call something not a startup when there’s so much process in place and such a headcount that it’s now feels like kind of a big company. And even for me like working, I worked at a company that when it hit 100 employees, it felt like a big company because I’m not a fan of organizations that big. And so that was when I was kind of like I started thinking about taking my exit because it really didn’t feel like a startup any longer, but I think that certain companies could still feel like hungry startups even with more employees than that.
Mike [26:53]: Yeah. I mean I’ve been looking at over at the leanstartups.com right now and the quote that I think that you might have been referring to was that Eric Ries said that, “A startup is a human institution designed to create a new product or service under conditions of extreme uncertainty.” And I think that last part right there is really the key, it’s like “extreme uncertainty”. So, if you haven’t fit product market fit yet, then you’re probably still a startup and you should still be classifying yourself as a startup because you’re still hungry, you’re still trying to figure things out. And because you don’t have it figured out yet or you got that uncertainty, you need to keep going. You need to keep moving forward because you don’t know specifically what is going to work for you moving forward and what’s not. But once you figure that out, yes, you can be radically hit the product market and continue to grow, but once that I think starts the level out or once you’ve got it figured out, maybe you’re no longer a startup at that point.
Rob [27:42]: The quote I was actually referring to is Steve Blank’s quote from January 2010 on his blog, and he says, “In this post, we’re going to offer a new definition of why startups exist. A startup is an organization formed to search for repeatable and scalable business model.”
Mike [27:57]: Yeah. Tough question though.
Rob [27:57]: I agree. It’s a good one to think about. Thanks for tossing that to us, David. All right. We’re going to wrap up with one final question and it’s about client work versus the uncertainty of working on your own product, and this is from Joe Robinson of greenflagdigital.com. He says, “Hey guys. Have you seen any research or discussion topics about how when working for clients, your brain just clicks and does the work, but when you’re trying to work on your own products, there’s often too much resistance to fight through. Does this mean that fear of a client dropping you is way more than an incentivizer than the vague idea of success on your own product?
Mike [28:32]: I haven’t seen any specific research on that part of it, but I think I can talk generally around the kind of the concept of working on your own product versus working on something that somebody else is paying you to do. So, if you were working on a project that you’re getting paid to do, there is a very concrete and definable ROY on that time versus working on something of your own where you don’t get that. You don’t necessarily know if things are going to work out. So, it can be demoralizing to look at two different sets of task, one of them which you may or may not get paid at the end of the day versus one of them where you know you’re going to get $125 an hour. Most of us are going to gravitate towards that one that pays us $125 an hour unless we absolutely hate it and we will do anything to get out of staying on that treadmill and we will work on the other stuff on the side in the hopes that it will turn into something that gets us off of that treadmill. The other thing that I think comes into play really heavily is the fact that when you’re working on your own stuff, you don’t necessarily know what you have to do. There are a million and one things that you could be doing and you’re not quite sure if any of them has the right one to do. So, with client work, you know what you have to do and you know what you have to get done because the clients already told you or they’ve given you a problem and you have to solve that problem. You’re working towards kind of a known goal. But with your own products, yes, you have to build the products but at the same time, there’s all these other things going on with SEO and marketing, and code, and process, and SSL [?] and all these other stuff that’s kind of thrown in your way, that’s really hard to kind of sort out sometimes. So, you don’t know which you should be doing first. You don’t know what problems you should be prioritizing over others. And it makes it that much more difficult because you don’t necessarily have the experience to deal with any of them either because theoretically, you’re probably in a position where you haven’t really launched very many products of your own. You’ve launched them for other people but those people have kind of set the timelines and deadlines and things like that versus your own where it’s kind of on your own time, you’ve got a million different options and you’re essentially in a position where you have so many options, you don’t know what to do.
Rob [30:37]: Yeah. And for me, I think the latter one has a lot more impact. I think both of them are valid reasons but I think the indecision and the analysis paralysis of your own product, and not knowing what to work on next is what keeps a lot of people from working on their product, and also feeling like maybe their throwing their time away. But the fact that a client basically typically tells you what feature to build next or at least you can ask them and they have to make the decision, that makes it a lot easier because then you can go in, you can design, you can write some code. Whereas if you have to decide what you’re doing next, and that’s always a hard point. That’s always a sticking point in your schedule is any time you have to make a tough decision.
Mike [31:15]: I think some of that also comes down to the ability to self-regulate as well and I think that some people are more inclined to do that from a younger age than other people. There are specific studies that I’ve seen are about little kids who were given us option of getting a candy bar now or getting two candy bars if they wait, and it’s about that delayed gratification and whether or not they can handle it and I think that there are certain people who are predisposed to taking that instant gratification versus looking much longer term and being able to go down that road instead. It’s not saying that you can’t fight it and go against it, but I think there is a certain amount of predisposition of one towards the other.
Rob [31:51]: We appreciate the question, Joe.
Mike [31:52]: Well, I think that wraps that up for today. If you have a question for us, you can call it into our voicemail number at 888-801-9690 or you can email that to us at questions@startupsfortherestofus.com. Our theme music is an excerpt from We’re Out of Control by Moot used under creative commons. 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.
Episode 248 | 14 Ideas for High Impact Lead Magnets
Show Notes
In this episode of Startups For The Rest Of Us, Rob and Mike talk about 14 ideas for high impact lead magnets. They discuss the types of things you can offer in exchange for email addresses.
Items mentioned in this episode:
- Elon Musk: Tesla, SpaceX, and the Quest for a Fantastic Future
- The Micropreneur Academy
- Bidsketch
- GrowthHackers
- Digital Marketer
- Petovera.com
- Google AdWords Cheat Sheet from Software Promotions
Transcript
Mike [00:00]: In this episode of Startups For The Rest Of Us, Rob and I are going to be talking about 14 ideas for a high-impact lead magnets. This is Startups For The Rest Of Us episode 248.
Mike [00:17]: 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 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]: New iTunes reviews, sir. We’re at 432 worldwide reviews in iTunes. We’re going to read a couple of verses from Nick Goede in the US, he says, “Inspiring and enjoyable. A great podcast to listen to. It’s full of actionable advice and every episode has inspired me.” We have [Cole Klav?] from Germany who says, “Very practical and I like the varied topics. A good Tuesday starts with Startups For The Rest Of Us. I don’t conceive riding my bike on a Tuesday without listening to a new episode. In fact, I will actually ride my bike in order to listen to a new episode of this podcast.” So thank you so much for the five-star reviews. If you haven’t given us a review, I appreciate it if you could log in to Stitcher or iTunes or whatever pod catcher you use. Give us a five-star review. Even if you don’t leave a review a full-on text, multi-sentence review, it really helps us, keeps us motivated. Mike reads this when he’s sad and alone.
Mike [01:22]: When I’m crying into my pillow.
Rob [01:24]: Exactly. And it helps us rank and it helps our [?] which is going to keep us producing the podcast. We’ve been doing it for five years and hopefully we can do it for another. How are things with you?
Mike [01:33]: Well, I recently took a short-term consultant gig and the impetus for that was to say, it doesn’t pay very much to be perfectly honest, so I definitely did not take it for the money but it has implications for potentially an audit shark sale down the road. And the people who are having me on this project, they basically have a enterprise-wide compliance projects that they need to have sold. So I was kind of brought in and tapped to go in and take a look at everything and help them put all the data together in a way that they needed to be done and I don’t know, we’ll see how it goes but it’s pretty exciting so far.
Rob [02:06]: Yeah. You haven’t consulted for more than a year I think, how was it to be back in the saddle?
Mike [2:10]: It’s interesting. It’s funny because I remember having to go through all these different projects that were just to complete nightmare and hassle and this one has been a dream so far. They just basically dropped the problem in my lap and said, “We know you know how to do this and so just do it and give us the results.”
Rob [02:25]: That’s the best kind, right?
Mike [02:27]: So they’ve just completely left me alone and just completely hands off. I barely talk to them at all. It’s just kind of I do my work and hand it over to them and that’s the end of it.
Rob [02:35]: Yeah, that’s nice. Cool. Good to hear that things are going well with that and hopefully it leads to the enterprise sale you’re looking for. So, I read a book.
Mike [02:42]: Congratulations.
Rob [2:43]: Yeah, it’s my first ever.
Mike [02:45]: Was that paper?
Rob [02:46]: It’s called Elon Musk: Tesla, SpaceX, And the Quest for a Fantastic Future. I have to say, I was really impressed with Elon Musk with the risks that he has taken. He made a bunch of money early on with an app. I don’t remember what it was called, it was before PayPal and he just reinvested it. He like put it all on the line. I mean that’s tough, man. It’s stuff to make several million. I think he made 10 million or 20 million from the first one and it was all back in to what eventually merged with PayPal. I think it was called x.com. And then he made 150-200 million from PayPal, put it all back in to SpaceX and Tesla and SolarCity and he was basically, if these things had not pinned out and they were months and/or years when it looked like and all of them were going to fail, he would’ve basically been, I’ll say broke. I mean he wouldn’t have been destitute on the street but he would not have had very much money because it was all tied up in these companies. And then they have all succeeded widely and he is making a bazillion dollars now and certainly he’s not doing it for the money but I was really impressed by this guy’s ability to deal with stress, his ability to work extremely, extremely hard for long periods of time and just a sheer raw intelligence, like his IQ must be off the charts. So it was a really enjoyable lesson for me, if you haven’t listened to it, I definitely recommend it just a tail of someone who perseveres and then puts it all on the line over and over and is really changing the world frame, I mean a lot of startups talk about starting something to change the world and it’s like yeah, you’re building a delivery service for cat food or whatever, I don’t know how much that changes the world but the stuff Elon Musk is doing now, is literally driving our species forward.
Mike [04:21]: There’s demons in the closet too.
Rob [04:23]: What do you mean?
Mike [04:24]: How do I put it? Like I’ve heard stories and stuff like his divorce and how his ex-wife has come out and said that it was just very difficult living with him because he was so driven to succeed and so driven towards certain different things –
Rob [04:37]: I think that’s really important to call out actually. If you look at the “great people” like the Henry Fords, the Ben Franklins, the George Washingtons, the, I don’t know the great industrialist or the Steve Jobs, or the Bill Gates or the people who do big things, like this, they almost always, almost invariable have complete train wrecks for personal lives because they value their goal of doing the business or of changing the world or whatever how do you, more than they value people. And so, I don’t model myself after these people, right? I mean I’ve chosen the exact opposite. But, they have multiple divorces, they had all these terrible marriages, a lot of them have kids that disown them. I think Ben Franklin and all of kids disowned him. Steve Jobs –
Mike [05:18]: Steve Jobs disowned his own kids, I mean –
Rob [05:20]: They’re train wrecks, and it’s actually interesting to remember Sarah Hatter had a quote a couple of years ago at MicrConf. She said, “Don’t take business advice from people who have terrible personal lives, or don’t have work-life balance or something like that.” I really take that to her, like I’m not going to start a business like Elon Musk, or Steve Jobs, or any of those guys. But unfortunately, those seem to be the folks that actually do kind of change things on a world scale.
Mike [05:41]: I wonder how much of that is about the control that they exert over the business and I mean because if you look at Steve Job as an example, I mean he’s notorious for having exerted, absolute control over various parts of the business, and in your persona life, it’s very difficult to do that because there are people in life. They’re not your employees. Your kids are not your employees. Your wife is not your employee or your spouse or whoever. And so you can’t exert that level of control or that degree that you could if it was the business and you are basically given the person a paycheck. So, I think that it becomes difficult for them to deal with their personal lives because they can’t exert that control and maybe that’s why there are train wrecks.
Rob [06:22]: For sure. I would say that’s a big part of it. The other thing I think is it’s like being obsessed with your goal. It’s being kind of a workaholic I’ll say. It’s like if you work 80 or 90-hour a week which all of the people that I mentioned did, if not more, I think Elon is working 100 hour a week or some crazy thing and he’s done it for years, you can’t really maintain relationships with a life that looks like that.
Mike [06:43]: No, I mean and he kind of goes even one-step further I think, doesn’t he? He owns two public companies, doesn’t he? The SpaceX and Tesla, is SpaceX public?
Rob [06:51]: SpaceX is not public.
Rob [06:52]: It’s not public.
Rob [06:53]: I think SolarCity might be.
Mike [06:55]: And either way, I mean that’s still a heck of a lot of responsibility and probably not enough time to deal with all of it and once you’re trying to throw personal life in there, it’s hard to carve that out. So you need to have somebody within your personal life who’s going to be understanding that they are certainly not the number one priority and they may not even make the top 10.
Rob [07:12]: Yeah. So what are we talking about today?
Mike [07:15]: Well, today, what we’re going to do, is we’re going to go through 14 ideas for a high-impact lead magnets. And I was thinking about this because I’ve talked to a bunch of people recently about the types of things that they can offer as part of their website in order to get people to basically handover their email address. So, I think that most common one that I’ve seen that’s been recommended is an email course of some kind and obviously you’re very familiar with those through Drip. But I think that there’s other ones that people either overlook in favor of an email course that are potentially less work or have a different RY in certain cases or a better fit for certain types of customer. So what I wanted to do is go through some of these different ideas for different lead magnets because I think that people just kind of clause over them and think that an email course is the only one and it’s probably one of the better ones but I don’t think that’s the only one that people should be looking at. So I think before we start, we want to talk about exactly what a lead magnet is. And, as it kind of implies, lead magnet is designed to essentially help you generate leads and that could be leads for your product or for a course that you’re selling or just want to add to your email list. But, the basic idea is that you’re creating something and you’re offering it to them in exchange to get it for their email address. And so, that’s the primary goal for you is to get some of these email address. But you have to be able to provide them something of value that is significant enough that they’re going to give you that email address. So, the whole premise behind a lead magnet is that you’re using it to essentially bribe somebody to give you their email address.
Rob [08:46]: Yeah. And I’ve heard people call it an opt-in bribe and I don’t like that term. To me, it has like a negative connotation to it. I’ve always called it an opt-in reward but I think a lead magnet is probably a better term and a more common term for this. So to kick us off, the first idea we have for lead magnets is of course an email course and that’s what you mentioned. I tend to lean towards email courses, five-day, and seven-day email courses work really well. The real reason that I like them the most is it gets a subscriber used to hearing from you on a regular basis and it gets them used to opening your emails and they do tend to consume them because they’re smaller pieces of content. If you send someone, let’s say an E-book or a PDF, I don’t know how many of those I have on my desktop or in some folders somewhere that I’ve never read whereas when I sign up for email courses, I do tend to read them when I have spare time. I’ll read them on my mobile if they’re in my certain category in Gmail. I just think they’re consumed more. I think it gets subscribers used to hearing from you and opening emails which also tells spam filters that people are opening and reading your email. Gmail, I know uses behavior to determine whether it should deliver the emails under the promotions of the other tabs and I think that getting a five or seven to eight mail course kicked off will get the rest of your emails into their inbox, I mean if people are reading the early ones. So, that’s why I like put them together. I also think they’re fairly easy to assemble and we give away a free kind of blueprint which is the shell of putting the other five-day course. And even if you don’t sign up for Drip, we give it away in our knowledge base and we can link that up and shown us, but we have a bunch of blueprints that people use within Drip if you’re a customer and you can just link and kind of enter some specific content to you but the intro and the outro are already in there so that it doesn’t take a ton of time to set one of these up.
Mike [10:29]: Yeah, I’m a big fan of email courses as well and they work well as you said that I do train people to open your emails and they do help you bypass some of the spam filters because if Google recognizes or other email providers recognize that you are not flagging those as spam and you are taking action inside of that email course, then it is more likely to let other things through when you are for example presenting a specific offer to somebody or you’re running a flash sale or just a regular promotion of any kind. They’re going to let that through because they already let five or seven other emails through that you accepted and you looked and you probably clicked through. So, that’s very helpful from the standpoint of the person offering it. And if the person is getting value out of it, then clearly, they’re going to clicking on those.
Rob [11:15]: If I could think of maybe two drawbacks to give the other side of the story. I think email courses do take longer to create than some of the options we’re going to list. And I think in some markets, they might be oversaturated with email courses and they might be valued less than say an E-book or a cheat sheet.
Mike [11:32]: I think one of the other good points about an email course is that it helps to promote trust and it helps to establish you as some sort of an expert and whatever the industry is that you are promoting the email course on. So if you’ve created an email course on how to create landing pages for example. Whoever is receiving those is going to look at you as essentially the fact to expert of landing pages, and that may not necessarily be true but that’s going to be their perception. And when it comes to selling to that audience, the perception piece of it is extremely important.
Rob [12:04]: You said that it builds trust. I also like that it builds trust over time. Even if it’s only five or seven days, if someone hears from you every day, there’s just a little bit more of a longer term relationship than if they get one email from you with a PDF toolkit or something and you redirect and you’re like, “Oh, that was cool.” It’s not something where you’ve touched with them every day. So I think there’s probably a difference in the trust level there.
Mike [12:24]: The next lead magnet that you can use is the report of some kind. And for example this, you can head over to micropreneur.com, put in your email address, and you’ll get a short PDF that essentially outlines the high level concepts of what a micropreneur is and kind of walks you through the thought process behind starting a business and micropreneur.com is a website that Rob and I host, part of the Micropreneur Academy. But you can generate a report and create a PDF or a word document that can be associated with a landing page where people can just go in and they enter in their email address and they will get a report, and that report can be a sample report from the application that you have. It could be a sample set of data. It can even just be what you stand for. What source of ideas that you’re trying to promote your manifesto so to speak. So, there’s a lot of different ways that you’re going to leverage your report like that but my advice I think in most cases would probably be to use a specific landing page for that report because you really want that to be on its own page where you’re driving traffic to it that is relevant to that, and I think that if you have multiple different types of reports that you’re going to offer, then you need to be able to drive traffic that is relevant to that type of report and sometimes you’re going to be able to change the landing page copy and sometimes it’s going to be a little bit more difficult just because of the type of people who are coming. So, let’s say that you are doing something around email marketing, there’s going to be people who are much further along and you’re going to want to offer them a different type of report than somebody who is much more entry level. So, you have to balance those types of things and I probably wouldn’t necessarily recommend putting both of those on the same page for example.
Rob [13:59]: Right. And the other advantage to a report is if your audience happens to be more audio inclined, let’s say it’s something to do with podcast or you know that they might listen to podcast, you can turn a report into an audio report pretty quickly with a USB headset, read for 15-20 minutes, do a little bit of editing, and then you have now a report in PDF and an audio version of it, it’s pretty powerful. I mean it’s worth a lot to a lot of people to be able to listen to that. The other advantage by the way of having it on its own page is if you’re going to build links to it, you can get some SEO juice and rank for a specific term. And now, in some cases, it’s not relevant, but in others, having it hosted on your own website can just be better. My third idea for high-impact lead magnet is a cheat sheet or a handout. I’ve also heard Clay at LeadPages called this like a tools list, top 10 tools to get really good at taking pictures or top 10 things that the best gardeners use to trim their hedges or whatever. The nice part about this thing, the biggest advantage is these are pretty easy to put together especially if you’re already in a space and you’re knowledgeable, you could probably type this up as text in 5 or 10 minutes off the top of your head, and it intrigues people. People like tools lists, people like cheat sheets. I think there’s some value in just getting something out there quickly.
Mike [15:15]: I like that idea of just typing up something in Word or Notepad or something like that and that at least gets the ideas out of your head and then you can turn around and hand it off to a designer who could then make it look pretty and could make it something that could actually be printed out. I’ve seen things from Dave Collins over at software promotions where they have a Google AdWords cheat sheet which is essentially a kind of a four-page flier that walks through all these different concepts about how you should be using Google AdWords and what sort of things you should be paying attention to, which sorts of [gulches?] there are or areas where you need to take a little bit of extra care and it talks about each and every single one of those on this Google AdWords cheat sheet and it’s really well put together. There’s tons and tons of information on it. I’ve had that cheat sheet laying around for probably close to a year and a half now, I mean it’s really good.
Rob [16:01]: Other nice thing about a cheat sheet is if you just type this up in a text editor real quick and then you go into something like Microsoft Word or Publisher and just get one of the reasonable templates, you don’t need something fancy but just something that looks reasonably professional, you can kind of paste it in there, use their existing styles, and maybe not even need to hire anybody to make it look cool. And so if you can get by without having to invest a lot of time or money on this one.
Mike [16:26]: The next lead magnet is a template. So, you can make a downloadable template for a variety of different things. And these I think appeal very much to the do-it-yourself crowd especially if your application, whatever your app is automates the stuff inside of the template and tracks everything for you. I think a really good example of this is if you go over to Bidsketch, you can download some sample templates of what their proposals look like, and you can even just modify them yourself if you really want it to and just say, “Okay. I’m going to use this as my template and you wouldn’t have to necessarily buy the application. The application makes it a heck of a lot easier to replicate that over time and keep them all in one place and do all sorts of other things, but as a basic template to essentially get someone started, they’re still valuable because they can use them by hand until they get to a point where in their business, it makes sense for them to invest in a tool that will automate some of the rest of the stuff.
Rob [17:17]: And LeadPages did this a lot in the early days. I think they still do it when they talk about a landing page template, in a blog post, and then at the bottom for an email opt-in to give away that template in HTML and obviously that template is available inside LeadPages if you sign up and I heard that it is very successful for them. Tim Pages talked about that on a couple of webinars. Our fifth idea for high-impact lead magnet is to give away a free video. So a training video, a walkthrough of something and I think the key here is that video overtime, it used to be super, super valuable because no one was producing it but over time I feel like it’s becoming maybe a little less valuable. And so just giving away a single video, it depends on the market, right, but some people might not be that wowed with it. It’s also, you can’t listen to it on the go and you need to carve out time with audio. You probably not going to want to watch it at work in your cubicle or whatever. So there’s some drawbacks to it in terms of it’s a little bit more difficult to consume than these other things. However, if you have a pretty well-produced video and you keep things pace pretty quickly and you have a really good title for it like three secrets you must know in order to do email marketing or the walkthrough that no one else will show you or whatever. I mean something that intrigues and kind of builds that interests, I think those a lot of value. The other thing is if you’re reasonably good, whether if it’s on camera or doing a screen cast, video can be super easy to produce and take you 5 or 10 minutes if you can get it done for a couple of takes. I might produce a bunch of screen cast and they get easier and easier overtime. And so, this is one that could potentially a hyper super value if you title it correctly and then keep the pacing moving but really not take a ton of time to produce.
Mike [18:57]: The thing that I really like about doing a video is that if you have a link back to your site for them to do the video and you’re not embedding the video directly into the email, you can get a sense of how much people are actually watching them by using the analytics on your webpage to figure out whether people are watching 30 seconds into the video and just cancelling it or watching the entire video. And I know that there are certain ways to see how much people are leveraging the things that you are sending. So for example, if you send somebody an email course, you can look at open rates. If you’re sending people a PDF, you can check the download numbers and things like that. But just because somebody downloaded the PDF doesn’t mean that they actually ever opened it and looked at it. And again, there are some tools that will allow you to do that but it’s a lot more advanced and it’s a little bit less obvious that you’re going to be to get that information whereas with the video, you can track to see how far into the video is people are watching and if you need to re-record some parts of the video or see which parts are resonating when people because they watched that part of the video three or four times, you can get that information and that’s why I really like the idea of using these videos to send people to a webpage and monitor the usage on that page.
Rob [20:03]: If you’re going to record a video, I would say record it as quickly as you can in terms of keeping the pacing going really fast and then have someone edit it so that when you’re typing, it just appears on the screen. No one wants to sit there and watch you type. And you can take like an eight-minute demo and crunch it down to between four and six minutes pretty easily if you just cut out time to load screens and time for you to fill in forms and all that stuff, and it will definitely increase the number of people who make it through the entire video if the thing moves faster and it’s the shorter overall.
Mike [20:35]: The next lead magnet is a toolkit. And I think tool kits tends to consist the things like checklists, and spreadsheets, and guides about how to do different things. But essentially, it’s a resource that people can leverage to perform a particular task and these are really good for allowing people to manually do something that your application does automatically for them. So if you have this series of steps that somebody would have to go through, you can provide those as a checklist or they could purchase your application and it will automatically be taken care of for them. But, if they don’t even know what those steps are, chances are good that you can take a lot of those things and add them into a checklist or a spreadsheet and package it up and allow them to download it as a toolkit and you can market that toolkit in exchange for the email address so that you can then upsell them later to your full application. So the seventh idea is a free trial, and when I say free trial, most people will say, “Oh, it’s a free trial of the application.” And I think that that’s probably the wrong way to pitch it when you’re offering this as a lead magnet because you don’t want to offer it as a free trial. You want to offer, so let’s say you’re giving them 14 free days of your application, you want to offer them 14 days of whatever the beneficial output is. So for example, Ruben Gamez who owns Bidsketch, he offers a 14-day trial for proposals that can help you make money for your business. And that’s the way it’s offered. It’s not offered as a 14-day free trial for Bidsketch, it’s offered as that 14 days of proposals for you. So it’s a very slight difference in the way that it’s marketed.
Rob [22:04]: Yeah. Kind of pitching the benefit rather than the pitching the fact that you’re going to have to spend a bunch of time getting on-board it into an application or pitching the benefit rather than the work the person has to do to get the benefit.
Mike [22:15]: Exactly.
Rob [22:16]: Our eight idea for a high-impact lead magnet is an E-book or a physical book. Obviously, this tends to be a lot more work than something like a report. I would typically think a report is maybe 5 to 20 pages whereas an E-book, I would think 40 to 100 pages, 40 to 200 pages. And a physical book is probably in the realm, I mean you could have a paperback book that’s 50, 60, 70 pages. I know Jason Cone had used this at a smart bear where he wrote a book about code reviews and would give away paperback copies. I don’t remember if you had to pay shipping. I think they might just give it away.
Mike [22:50]: Nope, they gave it away. Yup.
Rob [22:51]: Yeah. They gave it away totally and they covered the cost and he said that when they would go in to do sales calls and they saw that book up on the shelf, it was a shoe and because they had literally written the book on the topic. So it’s a total no-brainer. I think if you’re marketing your price point more [?] than you have the time or can produce something like this, I think this is pretty valuable.
Mike [23:10]: The ninth idea is access to a community. And I’ve seen this a lot in different info products but you can offer access a set of forearms or choose a [slot shot?] instance or anything along those lines where people are essentially buying into this community aspect for a particularly type of product. And I think that it works really well when you’re trying to educate people about how to do something whether that’s design skills or programming skills or how to build a business or how to do an email campaign. There’s lots of different ways that people want to communicate and by providing them access to a particular community, that can be one benefit that people will buy into. One that I see do this really, really well is growthhackers.com where you go over there and one of the benefits of growthhackers.com is just having access to that community. And by joining the community, they get your email address. So, it’s really an interesting way of harvesting email addresses to send out promotional emails or educational emails and use those as leads for your products or your business.
Rob [24:13]: The 10th idea for lead magnet is a swipe file, so a collection of tools, information, guides, or text snippets, et cetera that you have picked up from your experience in the niche. So if you are selling at the copywriters, then that’s probably a really common swipe file that I’ve heard of is a bunch of headline ideas. Here’s my swipe file of 100 of the best headlines that I’ve ever seen and they serve as good inspiration and frankly a good swipe file is worth quite a bit. And if you already have it lying around, it’s kind of a no-brainer to issue it and it certainly doesn’t need to be formatted very well, that’s the other advantage. You could literally just do it as a Word doc or a text file.
Mike [24:50]: Our 11th idea is running a webinar and I like webinars because they have the sense of reality to it where it’s not just a video for webinar, the idea that you’re kind of pitching to people is they have to show up and I’ve seen people put into their webinar email campaigns, and when you’re inviting you they say, “Oh, we only have space for so many people.” And sometimes, just because they want to say that and it’s part of their marketing copy. Other times, there are technical limitations on the software that they’re using. So, depending on their level of go-to webinar for example, there might only be 25 space or 100 spaces available for them to run the webinar. And that can be a very good incentive for people to sign up and attend the webinar, but because it is a live session, you can ask questions on the spot and if you’re really interested in it, you’re going to show up and you’re going to be there for the live webinar versus the recording that may or may not be emailed afterwards.
Rob [25:43]: I’ve been skeptical of webinars because I’m just not a fan of them personally but very huge. Everyone who I hear who starts doing them has a lot of success with them. So, I think there’s a real value that people put on a live presentation like this and I think it’s absolutely something that you’ll want to move to though it’s a bit time intensive to set up obviously and it’s something you have to do on an ongoing basis. It’s not like a toolkit or an E-book that you can write ones and give away, but already, the webinars that we’ve done for Drip in partnering with other companies, they have been quite successful in terms of the number of trials we get out of them. So I think there’s a lot of value there.
Mike [26:21]: Well, you mentioned the part about it’s time intensive to do and you’ll have to create multiple webinars. I think you want to be able to pitch it to different segments of the population in different ways, especially if it’s for the exact same products. But if you have a sequence of let’s say six or eight different webinars that you’ve put together that are related are similar or overlapping in some way, shape, or form and you’ve Twit the copy and headlines and things like that, you can then repeat them because if people didn’t make it to one of them, if they’re on your email list, then you could potentially get them to one of your other webinars.
Rob [26:52]: Our 12th idea for lead magnet is a case study. So it’s like a deep dive into a specific type of problem of before and after, so what’s great is if you have existing customers, it’s so easy to do case studies because you can just interview them on Skype and either use that, do a video case study of it. You can have it transcribed or you could just take notes off of it and write out blog post case studies that can have a lot of impact because people get to see the true before and after of using your service, and there’s value there even though you don’t have to produce a ton of the content.
Mike [27:23]: Our 13th lead magnet is free consultations. And I think with the free consultation, you really need to be very targeted on the type of problems that you’re solving, but I think that that’s also a very good legion for a high-priced product. I don’t think that you want to do free consultations for a product that’s $39 or anything like that. But if you have a relatively high-price product, then those free consultations can turn into thousands, and thousands of dollars or revenue or annual contracts. I mean it just kind of depends on what it is that you’re offering. But at the of the day, you want to be able to have that consultations you can get on people’s radar and talk to people directly. This is I think extremely important early on when you’re still trying to figure out what your ideal customer is, but again, it goes back to what your price point is. And if you have a higher price product, it works a lot better than if you have a lower price product because it’s just not going to be worth it if the price point is below a certain point.
Rob [28:13]: And our 14th and final idea for high-impact lead magnets are to do a short interview and get a transcript as well. And what I like about this one is you can give away two formats, so you have both audio and something in text and this doesn’t require you to create much content and you can just pick an expert in the space. So, for example with email marketing. I interviewed Patrick McKenzie about a bunch of different pacific, marketing questions and then have it transcribed, and we have video of it. You can make an audio of it. And so, you don’t have to create the content but you get an expert who is essentially lending their credibility to it ending at some really good opt-in rates if people know who that expert is because you have name recognition. And so, even if you’re in a niche where you are not an expert. Let’s say you were doing horseback riding or something, you just need to find that big name and interview them. They probably haven’t been interviewed by many people if you’re in a small niche, and then you don’t have to learn all the stuff. You have a little bit of content there that you’re able to kick out. So, I’ve always like this idea as a way to get a lead magnet up pretty quickly but one that has quite a bit of value to it.
Mike [29:20]: So those are the 14 different ideas for high-impact lead magnets, and I think that there’s a couple of things that you want to consider when trying to decide on what lead magnet you’re going to create and I think the very first one is what is the goal of that lead magnet? What is it that you’re trying to accomplish? Is it that you are trying to get people to trust you? Is it that you’re trying to get people to have familiarity with you or brand awareness or are you trying to establish yourself as an expert? That is probably going to dictate the majority of what the content is. And then you also have to think about what types of formats your audience is going to be interested in consuming. Is it going to be video? Is it going to be swipe files? Is it going to be an email course? What is appropriate for not only the goals that you’re trying to achieve but the way that your audience is going to consume that information. And the last thing to think about is, what type of prospect do you think that you’re going to attract? And I think that’s probably an extremely important piece of it because if you’re attracting the wrong people, then it’s probably not a good idea to create that type of lead magnet. So to recap our 14 ideas for high-impact lead magnets. Number 1 an email course, number 2 a report, 3 three cheat sheets or handouts, number 4 templates, number 5 free videos, number 6 tool kits, number 7 free trials, number 8 E-books or physical books, number 9 access to a community, number 10 swipe files, number 11 webinars, number 12 case studies, 13 free consultations, and 14 interviews with transcripts. And the last thing to mention is we’ll link up a couple of different resources from this podcast and the show notes for this episode. You will find them over at digitalmarketer.com and petovera.com.
Rob [30:53]: If you have a question for us, call our voicemail number at 888-801-9690 or email us to us at questions@startupsfortherestofus.com. Our theme music is an excerpt from We’re Out of Control by Moot used under creative commons. 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 247 | Focusing on People vs. Process
Show Notes
In this episode of Startups For The Rest Of Us, Rob and Mike discuss focusing on people versus process. They dive into the question whether you have to hire exception people or run your business based on process.
Items mentioned in this episode:
Transcript
Rob [00:00]: In this episode of Startups For The Rest of Us, Mike and I discuss valuing people versus process. This is Startups For The Rest of Us Episode 247.
Rob [00:17]: 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 build your first product or you’re just thinking about it. I’m Rob.
Mike [00:26]: And I’m Mike.
Rob [00:27]: 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 [00:31]: Well, I’m in the middle of running a webinar but I had to set up everything up first so I basically copied one of my old webinar campaigns. Going through that and updating all of the little tiny things that need to be updated is incredibly tedious.
Rob [00:44]: Did you change the title and some of the content?
Mike [00:46]: Well, yeah. You change the titles then you have to go through, and you have to go through every single email to make sure you’ve changed the title there. All the dates, any times that you’ve changed, and then of course you have to reconfigure everything if you have it set off of a specific date. It’s just tedious to go through.
Rob [01:02]: Yeah, it’s almost like somebody needs to build a little placeholder thing on that you can enter it in one place and then reuse in a bunch of emails.
Mike [01:07]: Well, kind of. I mean it might be nice to have not tags but like variables that say, “Okay, put this here for the name of it,” or something like that. But even then, you still have to go through every single email and read all the copy and everything. I’ve got, I don’t know, like half a dozen of them or so that I had to go through so it was just a long process of like four or six hours to get everything done.
Rob [01:26]: Right, right. When you started this you said you were running a webinar right now which meant was you’re launching a webinar, right?
Mike [01:31]: Yes, yes.
Rob [01:32]: Yeah. You’re not actually running one while we’re talking?
Mike [01:33]: No.
Rob [01:35]: Cool. For me, we’re working on a bunch stuff. I’m running a webinar tomorrow morning. It’s kind of the first Drip-only webinar. It’s put on by us and it’s only going to be folks from Drip who are on it. Pretty excited by it. It’s nice to have first one, you can get a lot of attendee right? Because you can use your existing list and then the ones after this will have to pull from new folks and start running ads. But that prep has been pretty time intensive, to set up the slides and set up the demos and make sure the demos work, and work back and forth because I’m co-hosting it with Ana who does customer success with Drip. We know when you co-host something like that, it is so much to think about – who’s going to say this, who’s going to run the cameras, to figure out which person’s on at which point and then we’re also trading back and forth on some slides. So there’s a lot more complexity, a lot more logistics than when you’re just running one yourself.
The other thing we’re up to is we’re launching something called Drip University. It’s at getdrip.com/university, and the tagline that I finally landed on is “Courses so good other sites would charge for them.” So our first one is going to be a 20-part video course where I interviewed Patrick McKenzie, and each part is like a two to five minute video of a specific question and a specific answer about email marketing. So how often could you send, what are typical open rates, stuff like that. You get these questions all the time and so I wanted to get his take on it, obviously he does a lot of email marketing. If you go to getdrip.com/university, we’ll have that live in the next – it’s going to be a week or two until it’s live but obviously you could leave your email now and hear about it then. It’s kind of exciting. I’m excited. We have a couple of other courses that are already – we have webinars and stuff that we’re linking to that and other courses in mind that we’ll be launching in the future. So it’s kind of a way to help folks just have more answers about email marketing and obviously it’s a bit of content marketing for us.
Mike [03:27]: Cool. I’d imagine it’s a lot of those videos that you can probably reuse in some of your email marketing where you just send those out to people in sort of a Drip campaign.
Rob [03:36]: Exactly. Yep.
Mike [03:37]: Cool. So what are we talking about today?
Rob [03:39]: Well today, we’re talking about valuing people versus valuing process. And when I say it, it almost comes out weird like, “Shouldn’t you value people?” But it’s really this phrase that you hear in business about whether you have to hire exceptional people who are crafts people and super gifted, or whether you are able to basically run a business based on process and to hire folks who certainly are skilled and you hire the best you can but they don’t need to be these phenomenal talents. You often hear it out, we have to have a process and then we’re going to insert any person or we have to value people over process. The reason I want to talk about it is that for the past several years, I’ve heard a lot of people talking about the value of process. We have standard operating procedures, standard operating documents, you have Dan and Ian at Tropical MBA talk a lot about this, Brian Castle has talked a lot about it, and anybody who’s productizing a service is going to be talking about it. To be honest, I’ve never been a fan of process. I know that you need some. I have Google Docs and I have VAs who look at that stuff, but in general I don’t enjoy that, like I get bored with it pretty fast. So I started realizing that maybe I don’t fit in, like my personal way of running a business doesn’t fit in with the whole process emphasis. So I don’t particularly love creating them and I don’t particularly love following them. Within the span of a couple of months, I heard a couple of quotes from people who, I respect and they both talked about valuing people over process. It occurred to me that perhaps these are just two sides of a coin – that it’s not one over the other, that it really depends on your goals and perhaps your working style. So that’s why I wanted to talk about it today.
So the two people who had mentioned this valuing people over process, the first was the CEO of Pixar’s. His name’s Ed Catmull, and he has the book Creativity, Inc. where he talks all about their creative process. He kept pointing out in that book that in order to create the Pixar movies that they’ve done that they have to trust people, not process. They do have a process for creation but he says it wouldn’t get done without the people. The other person who talked about this is I heard Warren Buffett quoted as saying something very similar where like he said, “I just have to have really good people and then let them run it.” He also runs a bunch of companies so he has to hire like really good CEOs, and for him creating process wouldn’t work. But it just got me thinking along these lines, and I guess I’m definitely more of a believer in this people side of things rather than investing so heavily in process.
Mike [06:07]: Well, I think it depends pretty heavily on the type of problem that you’re having people solved too. So there are certain types of problems where there is either a single way to do it or there’s a single best way to do it and it’s clearly identifiable, or there’s a good enough way to do it and just go through these steps and although it’s not perfect, it doesn’t really make a difference. And then there’s this whole other classification of problems where you really need to have good people who are creative and are able to think outside the box and it’s not necessarily a standard type of problem. So for example, one of the things that you can look at is the software development which actually fits both of those types of things at the same time. So there are certain types of software development where you have to do design and you have to build good stuff, and that tends to happen I think more on the UI side of things. You need to have that creative side in place where you actually have to have good people. And then there’s other things, on the backend for example where the customer doesn’t see the code and it’s very straightforward, so like a simple [?] application where all the backend processes are pretty straightforward. That type of stuff, you can hire somebody who does more of a process-driven thing.
Now, of course the entire software development process, there’s a process in place for handling that and rolling out changes and everything else, but depending on the type of problem that you’re solving, it can go one way or the other. For any sort of services, business, some of the different names that you talked about earlier, any sort of productized service or business, those are heavily driven by process. You want to be able to produce a reliable output for those things so you’re going to need a lot of standard operating documents, you’re going to need a lot of processes in place. Anything that’s creative, you mentioned Ed Catmull from Pixar, they need to have a lot of creative people in there because there’s a lot of stuff there that you just can’t have a process for. They’re basically creating emotions. I’m not going to say that there’s no process that you could follow in terms of psychology to create certain types of emotions throughout a movie, but that’s very difficult to pre-engineer in a way that’s not predictable for an audience. You don’t want to have a ton of cookie cutter movies, which is certainly not what Pixar has ever come out with. They don’t do cookie cutter movies but they do do good movies.
Rob [08:20]: Yeah, it really is. The more I’m thinking about it, it really is a choice. If you want to grow fast, let’s say you’re venture funded, I feel like you have to rely on process because if you rely on people, you’re going to really not going to have a lot of process. You have to hire exceptional, exceptional people and so you must grow slower because by definition, you just can’t find that many people who are that good. So I think the question really boils down to is, should you hire the best you can find and rely on strictly documented processes or should you hire only exceptional people and rely on them to make good decisions realizing that it’s going to kind of stunt your growth a little bit?
Mike [08:55]: Well, I think there’s two pieces of that. They’re just entirely glossed over by that question, and the first one is, do you have the money? Second one is, then if you do have the money, then what do you want? What is your ultimate goal?
Rob [09:06]: Yeah, that’s right. There’s a couple of really good articles by Joel Spolsky on this topic. One is called “Ben & Jerry’s vs. Amazon” where he compares Amazon who is just raising a bunch of funding, and this was ten years ago. He wrote this maybe even more, maybe 15, and he compares them to just growing and growing and growing and obviously they needed enormous amount of process, enormous amount of employees and they just need to kind of plug them in where they come. Whereas Ben & Jerry’s was a very slow growth organic business. I don’t think it raised any funding. He talks about knowing your goals up front and I think that relates here.
The other article’s called “Big Macs vs. The Naked Chef” and we’ll link up both these in the show notes. But the Big Macs one is really interesting and probably even more applicable here because it talks about how the Naked Chef is this expert. He’s an exceptional chef and he can make everything up the top of his head, he doesn’t need any process, and he can start a restaurant but he can’t start a hundred restaurants without having a bunch of process and then bringing in people who are not as good as him. Whereas if you’re going to start a restaurant that serves Big Macs, he says Big Macs aren’t very good but they’re all not good in the same way. They’re very, very consistent and it’s because they have this killer process. So if you do want to get large like that, you kind of can’t. You just can’t rely on people as much as process.
I think some other roles that really lend themselves well like you said earlier to process are like virtual assistant roles, support, friend and support. That is one place where we do have a bunch of process. We have always had process for Drip and HitTail and [?] and all that stuff because it just makes sense and the things are a little more cookie cutter. I think if you have a manufacturing business, for sure, any type of productized consulting we’ve already mentioned. Yeah, I can’t imagine trying to scale that without having really good process and being able to hire – you hire good people. You hire as good as you can but they don’t have to be these truly exceptional people who are off the charts, either consulting in VC back there, perhaps the other places where you’re definitely going to need process just because you can’t find good people quick enough.
Mike [11:00]: I do wonder if a little bit of these just boils down to being able to think outside the box for certain types of problems. We did talk about it a little bit before. Any sort of creative activities, so Pixar obviously is a great example of scriptwriting and scripts in terms of movies and things like that, but anything where there’s not a clear best approach. Obviously movies fall into that, some software development falls into it, but I think that there’s also places in consulting where you do need to hire good people as well, so if it’s a consulting engagement where there’s the high potential that something could go wrong. I’ve done a lot of enterprise consulting before, and you need to have very good people. Process helps you to some extent, but you still need people who are extremely knowledgeable and know the software inside and out, and you can’t just throw some random person in there who’s got certifications because that doesn’t always work. They need to be able to not only manage the software but the project itself, and those are two different skill sets. There’s some people who are technical and some people who are good with people, and finding the overlap between those such that they’re able to solve not just the technical problems but also the people problems associated with that, that can be really hard to do and you can’t just have a cookie cutter process for something like that. Especially because there are situations that come up where you have to deal with them on the spot and you can’t just go consult a manual or you can’t go talk to other people, and you need to come up with an answer right then and there on the spot. Especially when it comes to a meeting where somebody looks at you and says, “What do you think we should do?” You can’t say, “Hey, let’s take a 30-minute break while I go talk to my colleagues and figure out what the best answer is.” Sometimes you just can’t do that. So there’s these places where you need to be able to think on the spot about that stuff, and that’s where the people over process comes in.
Rob [12:45]: Yeah, I would agree with that. I think any task that involves a high element of creativity or that’s extremely complex is really hard to turn into a process. When I say complex, that might not be the word for it, I’m thinking of software development like writing code. I’ve seen shops with 50 or 100 developers and how they tried it. Any process around something, any process for the basic steps of checking in code or checking out code from source control or deploying, those things, I’m not arguing against having process for that because it totally makes sense. But it’s like trying to turn software development itself, the art of taking a feature and architecting it, building it, and putting that out the door trying to turn it into a process, I’ve seen people attempt to do that. Again I’ll counter, it’s not a methodology either because Agile I would not say is a process, it is a methodology that guides you but you still need solid people. If you put crummy developers into Agile methodology, you’re going to get crap code out the other end. That’s what I’m kind of wrestling with. It’s like I think that certain roles really lend themselves well to heavy process and it’s the ones that are not necessarily as creative and they’re more road tasks and they’re not as complex as something like software development.
The complexity like I said might not be the word, it’s almost like craft. When it’s a craft, when you’re having to hand-shape something and build it yourself and pull a lot of brainpower and be that, they call it a knowledge worker. I think Bill Gates came up with that term. Those are the roles where you can put a process to it and I’ve seen it done “successfully” in the sense that software does come out the other side, but in my opinion, that software tends to not be very good. It either suffers from bugs or the features are not built really well or the UX is really awful. The stuff that I’ve seen that I want to emulate, the projects, the products, they are built by crafts people that are really, really good at their craft and it wasn’t a process that told them how to design the front end of it and how to build the UX and how to write the code. The stuff that really executes and is elegant tends to be done by these exceptional people. Frankly, I just enjoy being around people like that. They’re smart, they’re interesting. That’s who I want to work with day to day. So I think what’s occurred to me is even if it hampers my company’s growth because I can’t hire 50 people or whatever, I want to air on this side of valuing people versus trying to put everything into a process.
Mike [15:04]: I think one thing that comes to mind around this particular side of things is the unpredictability of the output. So if you do something, in the example of Joel Spolky’s “Big Macs vs. The Naked Chef,” on the Big Mac side they’re all cookie cutter. You know exactly what the input is and you know exactly what the output is and you need somebody to just execute that. But if you’re dealing with a problem where the end result is not necessarily known and you don’t even know if that’s the best result, I think that’s where the unpredictability is and if you can’t predict it, then you need good people. Process will help but it doesn’t guarantee success. It doesn’t guarantee that you’re going to get the best possible result. Even having good people doesn’t necessarily do that, but I think that it improves your chances. Maybe that’s really an additional element that needs to be taken into account is how predictable is the output? How predictable is the stuff that you’re putting into? For example if you got a process that’s executing and you have to evaluate the quality of the data going into it, well, you have to have good people in order to do that. Just process is not going to get you very far.
Rob [16:05]: Yeah, and let me point out that I think I have the advantage of kind of a little bit of naivety, right? We’re at five employees at this point. I think when you hit 10, 15 or 20, no matter how well you hire, perhaps you need to bring more process into it and there might not be any way around it. But somehow in the back of my mind, I want to try to avoid this heavy burden of – I’ve worked at companies where there were four developers and it was so much fun, and then we grew to 24 developers and it was awful. I hated it and I left, and that’s the traditional path that I see a lot of the dev teams go down and frankly just a lot of companies that as you get and add process, it becomes less fun.
Mike [16:42]: But I guess that introduces the question, is it because the team’s got bigger or is it because they lowered the standards and quality of the people they were bringing in?
Rob [16:50]: Yeah, they definitely lowered the standards and the quality of the people they were bringing in and they added a ton of process I think as a result. Maybe they would have added it anyways. But they couldn’t have gone to 24 people if they had raised some funding and they couldn’t have gone to 24 people without lowering the standard because there just aren’t’ enough candidates.
Mike [17:07]: Well, I wonder if there’s a correlation there between the quality of the people versus the amount of process.
Rob [17:13]: Right.
Mike [17:13]: It’s an interesting question.
Rob [17:14]: Well, it’s interesting to think like even Peldi who started Balsamiq, they hit, I don’t know, 12 employees? He spoke two years ago at MicroConf and he said they hit around 12 employees and that he had to introduce a decent amount of process. Actually that was one of the things he talked about in his talk was all the standard operating docs and the procedures, the stuff that he put in place. I was a bit surprised by that because I kind of thought of him as like a nimble startup, and I was thinking he was kind of in that camp of keeping it small and keeping it simple and keeping it lean and not putting much process on it. But A), maybe I was incorrect, maybe he just leans more towards process in general. It’s definitely a personality thing. Or B), maybe at 12, it becomes hard to do it. Although I can’t think of a couple of counter examples. I think like Xerox PARC back in the day, these research centers where they have PhDs and really, really smart people doing crazy exceptional things. I’ve heard that they have very flat management structures, they have almost no process, and they kind of just move forward in research stuff. I guess more of a scientific thing, and obviously you can’t put a process behind scientific research.
Mike [18:15]: No, but I would assume that once something gets to the point where it seems like it’s a viable product, there’s probably some sort of process in place to take it out of the research facility and put it into the market, and from there it becomes a full-fledged product then put a development team behind it and everything else. So there’s a point in which R&D is really not process driven, it’s more people driven, and then at some point when you start to scale it, that’s when you have to bring in that process. So maybe it’s that scaling side of things as well. That could factor into it. I like the idea of saying, “Okay, well, if there’s unpredictability in the output, that’s a factor in how much process you need. If there’s lower skills, you need more process. If it’s more creative stuff, you need less process.”
So it think the underlying question here is, what is right for you though? What stage is your business in? What fits your own personality? What kind of business do you want to build? You could build a very large company very quickly but you’re going to have to have a lot process versus if you want to stay small, you can probably get away with very little process especially if you have a small team. So those are the two different things that somebody might need to think about, and again it boils down to personal preference. You could probably forego a lot of process and grow slowly over time just by concentrating on hiring the best people in the world.
Rob [19:30]: Yep, I would agree with that. I think as a listener, that’s the point. Really the point of this conversation is not to use you or I as necessarily as the example, but for the listener it’s like, “What are your goals?” Because I definitely think that depending on where you want to head, it has a lot to say about what you are going to have to do in terms of putting process in place or of hiring the best people out there. A mix of both would be ideal, wouldn’t it?
Mike [19:55]: Yes, it would. Well, I think that about wraps us up for today. If you have a question for us, call it in to our voicemail number at 1-888-801-9690 or email to us at questions@startupsfortherestofus.com. Our theme music is excerpt from “We’re Out of Control” by Moot used under Creative Comments. Subscribe to us in iTunes by searching for Startups and visit startupsfortherestofus.com where you’ll find a full transcript of each episode. Thanks for listening, and we’ll see you next time.
