Show Notes
In this episode of Startups For The Rest Of Us, Rob and Mike interview Andrew Connell and talk to him about making a full time income with online training.
Items mentioned in this episode:
- Pluralsight
- Product Hunt
- A Startups Guide to Hiring a Virtual Assistant
- Kajabi Next
- Udemy
- Summit Evergreen
- The Single Founder Handbook
- Andrewconnell.com
Transcript
Mike [00:26]: In this episode of Startups For The Rest Of Us, Rob and I are going to be interviewing Andrew Connell and talking to him about making a full-time income with online training. This is Startups For The Rest Of Us episode 236.
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 [00:28]: And I’m Rob.
Mike [00:32]: And we’re here to share our experiences to help you avoid the same mistakes we’ve made. What’s going on this week Rob?
Rob [01:08]: You know I’m fresh back on the scene after going to San Francisco last weekend for Microsoft’s Build Conference, and Derek and I took a ride up there because we sketched out a little partnership between Drip and the Office 365 team. And they started a new program where, for the Office 365 developers, they are providing them with some software components and other stuff to help them build better software and sell more software, frankly. It’s just kind of like, if you have ever heard of the BizSpark program that they had for startups, it’s similar to that but it’s just for Office 365 developers and Drip is a part of that.
Mike [01:09]: Very cool.
Rob [02:00]: Yeah. It was nice. They essentially purchased a bunch of licenses from us and we went up and had a booth there and met a bunch of folks. Like any trade show, there is a lot of discussions that probably aren’t going to lead anywhere, you’re not going to get a lot of individual customers from there. But the ones that were really key were, the conversations we got in with a few Microsoft folks and as well as some affiliated folks of these other partners who then partner up with us. One company said, “Look, if you integrate with us, we’ll pitch you out to all of our customers, who might even add you as an add-on to one of our plans.” And these guys have a hundred times the reach that we do at this point, in terms of customers. If any of those pan out, that’s an enterprise sale cycle. This could take four months, six months to pan out. But if any of those work, that would be worth all the time plus more that we spent up at the conference.
Mike [02:02]: Cool. Congratulations and good luck with all those.
Rob [02:15]: Yeah. Thanks a lot. The other highlight for me was I got to say hi to Paul Thurrott and Mary Jo Foley from Windows Weekly. I have been listening to that show for a couple of years. And I was able to hang out with Andrew Connell, who we’re actually interviewing in this episode.
Mike [02:18]: Well, on my end, the Single Founder Handbook launched this week.
Rob [02:19]: Yeah. Congratulations, man.
Mike [02:20]: Thanks.
Rob [02:22]: It’s a big deal. Got it out in, what? Four months flat.
Mike [02:37]: Yeah. It’s about four months. It was done in probably two and a half to three and then it took a while for the editing process, and I did a private launch just before MicroConf, and then this week was the public launch. I did something new, I don’t know if I mentioned it last week, but I ran what’s called Thunderclap campaign.
Rob [02:38]: Yeah. You mentioned it.
Mike [02:44]: And I got it up to 475,000 for the reach according to their stats.
Rob [02:45]: Do you think it drove sales?
Mike [02:55]: I’m sure that it drove sales but not nearly as many as I would’ve hoped or would’ve liked. Because the reach, it just didn’t seem to drive as much traffic as I would have liked to have seen. It’s really [crosstalk]
Rob [03:12]: It’s the social thing like, “Hey, I have 10,000 Twitter followers, I’d tweet this and 200 of them see it, and of those 200, ten of them click it.” It gets really small really quickly. Facebook’s the same way with the algorithm that your posts only show up to five percent or ten percent of the people you follow.
Mike [03:40]: Yeah. But, I mean, I ran the math on it and I still expected a heck of a lot more from it. I’m actually going to go through these numbers in a lot more detail then probably publish them, most likely, publicly at some point. But just to kind of give you rough numbers of what I’ve looked at so far, if it was about 500,000, I was expecting around five percent of the people to have seen it. So you figure that’s what, 25,000. And of those, how many people would actually click on it. You think maybe one in a 100 or something like that. So that will be –
Rob [03:41]: I would like a little more.
Mike [03:54]: – yeah. I ended up with about 500 people clicking through. At least that’s what I saw. I guess maybe two percent, maybe that’s not nearly as bad as I thought it would’ve been initially when I was looking at those numbers. I seemed to have expected more for some reason.
Rob [03:57]: Because half a million sounds like such a big number.
Mike [04:04]: It does. It was about 500 click throughs, it’s really what it came down to, so divided by thousand.
Rob [04:09]: Mm-hmm. Yeah, with social media for sure. I mean with the e-mail, I would’ve expected to have been ten times that, maybe twenty.
Mike [04:13]: Oh, yeah, definitely. My e-mail was definitely surpassed that, that’s pretty clear.
Rob [04:16]: Right. And you also get some love on Hacker News.
Mike [04:52]: The interesting thing is that although the Thunderclap campaign itself didn’t directly do anything, somebody saw it through that and then they’re like, “Oh my God, what is this?” and then they posted to Hacker News and it ended up at number two on Hacker News. Somebody else posted that to Product Hunt. Got up to like number five or number six in Product Hunt and then it ended the day in the top ten. Because of that, it ended up getting included in the daily e-mail that Product Hunt sends out. So I got the e-mail from them this morning even though it was posted yesterday. As soon as that e-mail went out, I went over and I started taking a look at my server, and sure enough, people started showing up on the server and inside of my analytics.
Rob [05:04]: That’s cool. And that’s the kind of stuff where would that have happened if you hadn’t have had all the tweets go out? Maybe the tweets didn’t result directly in sales, but if they result in you making it to Hacker News and Product Hunt, there’s a lot of value to that, right?
Mike [05:05]: Right.
Rob [05:08]: Because those places, I do think you could find some people who will buy a book.
Mike [05:39]: Right. I was looking at my server at one point and it was pushing between twenty and thirty megabits a second at one point, just because there was so much traffic coming in and people were signing up for the free chapter that I put on the website where you could just put in your name and e-mail address, just click the button and it would basically add you to the e-mail list, and then you could download a free chapter from it. And that was directly through my website, so, of course, had I thought about it a little bit more, I probably would’ve put it on like a CDN or something like that, but didn’t think too much about it. I wasn’t expecting it to have that much traffic that quickly.
Rob [05:41]: Right. Are you talking about sales numbers publicly?
Mike [05:43]: Not yet. I’m sure I will though.
Rob [05:46]: Have you been happy with the sales numbers or did you expect more?
Mike [06:06]: I would say they are probably a little bit low below what I expected, but the week is not over. And I also have a ton of e-mail signups that could theoretically lead into sales. I’m kind of in the neutral phase at the moment. I think if I were looking at just the raw numbers, I’d probably be disappointed. But because there is all this additional follow up that I foresee that can happen, I’m fine with it the way it is.
Rob [06:07]: Very good.
Mike [06:28]: In today’s episode, we are going to be talking to Andrew Connell, and he worked as a corporate developer for several years. He has been a member of Micropreneur Academy for a couple of years. He has been to MicroConf. He started a training company back in 2009 and he has his own podcast called the Microsoft Cloud Show, and he is going to be here today talking to us a little bit about how to make a full-time income with online training. How are you doing today, Andrew?
Andrew [06:30]: Doing great Mike. Thanks for having me.
Mike [06:42]: Excellent. So why don’t you just give us a little bit of your backstory. We know some of the details ourselves, but I think the listeners are going to want to hear a little bit about where you came from, what sorts of things you’ve done in the past, and what has gotten you to where you are today?
Andrew [07:45]: Sure. We always do long bios but I started as a corporate developer, classic, just an employee at a big company building stuff internally and for outside customers. In about 2007, I went to go work full-time for a company as a contract instructor. After a year of that, I kind of split out on my own to do contract instructing, but as kind of like a 1099 or an independent contractor. It was really appealing because, with training, essentially, you get ninety percent of the revenue before you even deliver the services. So it wasn’t that big of a jump to go from a full-time job to a contract instructor. After I did that for about a year or two, the guy that was doing it, guy by a name of Ted Pattison. I was contracting mostly for him. The two of us started a training business that we ran for about four years. They’re still in business but about two years ago, I decided that I wanted to go back on my own and sold my interest to him. And so for the last two years, I have been doing a lot of video-based training and then content generation for various customers. Very little consulting. I do almost zero consulting these days.
Mike [07:55]: So how did you get started with the online training. It sounds like you got rid of your interest in the training company, which I assume, was that doing on site training at different locations?
Andrew [09:04]: Yeah. And I still do a little bit of that. We hold a public course. We’d rent out a training facility or a hotel ballroom over the span of a week. And then people would register at our company and we’d show up with manuals and virtual machines. I just sit there and teach them all week. But while I was doing that, while I was running the training company, we started to stand up a side business or another line of business, where we were going to do on-demand training, where we would record the courses and then people would come to the site and pay us for the courses. But it was one of those classic things that it was more important to focus on the revenue generating activities, and at that time, it wasn’t. So we were never getting it off the ground but the silver lining in it was that we had a ton of video content that we just weren’t using, we just had no way to go through and deliver it. About that time, there was another company, that where all my stuff is today, called Pluralsight. We partnered with them to essentially do our video trainings. So we gave them all of our videos and just kind of got seeded with being one of the authors there that had a lot of content, because we just gave them, I think that’s 76 or 80 hours of content right out of the gate. We did that, I think, late 2012 or something.
Rob [09:11]: To give listeners an idea, these videos, is it like Screencast with you talking over them or is it an actual camera set-up and you teaching a classroom?
Andrew [09:21]: That’s a great question. There is no camera. It’s essentially like a Screencast. So it’s like PowerPoint slides and then Screencast and then people can download a code samples and stuff like that.
Rob [09:47]: Cool. So it seems like this was a natural transition for you from in-person training to moving online. You already had the skill set, you already have the content. Because you are a software developer at heart, was there ever something in you that said, “I’m releasing an info product rather than an app.” Is that like an ultimate goal of yours to release a software, to build a SaaS app or build plugins or whatever or is the info product probably the right path for you?
Andrew [10:46]: Well, it’s funny you say that. In the last few months, I’ve been wrestling with myself about that. I thought that my goal was to build a software product. I’d always loved the idea, I’d always wanted to build something. But I think recently, I’ve looked at it and said, “I’ve got a knack for this info product stuff.” And as much as I really want to build a product, I had started on the SaaS product but let’s do the podcast for, I guess the better part of the last two years, something told me that say, “You’ve never done this” and these other guys were all saying that it is the hardest thing to jump into and you’re finding it’s the hardest thing to jump into, you should pretty much stop and focus on the thing that’s going to be the best revenue generating for you today. So right now, I’m solely focused on doing info products or video-based training. And there is a lot pieces to it. I’ve got two other friends that are doing software products that I hear the challenges that they’d run into and there are certain things with an info product, specifically around video training, video on-demand training, that I don’t have to deal with at all as far as a software product goes. Major headaches that are just not going to be an issue at all.
Mike [10:48]: Could you give us some examples of what those are?
Andrew [11:28]: Yeah. Sure. The big one is support. I don’t have support. So what I can do is people may send in questions from watching course and I can answer those questions, but there is no ongoing support. There is nothing that breaks, [it’s a video?]. Sometimes you have code samples that don’t work after whatever you’re basing them on is the technology has changed, but it’s not that big of a deal to go fix those. So I don’t have like outages or anything like that that I have to deal with. Because right now where I host my courses, you could think of it like a book publisher model where I just give my videos to a company and then they have a master catalog and people subscribe to their catalog and I get paid royalties based on the amount of minutes that they watch of my courses.
Rob [12:09]: Interesting. I think this is such a fundamental question that if you are listening to this, you should ask yourself. Are info product is something that you are interested in doing? Because I know that some software developers absolutely have no desire to teach and they don’t have, whether it’s the skill or the desire and they don’t want to do it. And that’s okay, and if that’s the case, then I would think about doing like stair-step approach that we’ve talked about here. I think that if you are interested in teaching, that the benefits that, Andrew, you’ve laid out, of the no support, of you can create it, it tends to be a little more evergreen, doesn’t need maintenance, that stuff is a real benefit of info products. And I think putting info products into the stair-step approach, is absolutely a viable way to go especially if you have the skill for it.
Andrew [13:30]: I completely agree. I definitely don’t want to put across the perception that this is the way to go. I mean, it is a way to go and for me, I have a knack for doing this and I enjoy doing it. One of the things I always really enjoyed was standing in front of a crowd or at least a small room and teaching some people, is that I get a satisfaction or endorphin rush or whatever you want to call it when I explain something that someone was confused about and you see that light bulb go off in the same way that when someone purchases a product and that solves the business problem for them or makes their lives easier, the same way that a software developer does. I get that same rush as well and I’ve just decided to say, “For me, this one kind of works.” I just finished three brutal weeks speaking between Europe and the U.S. at a couple of different conferences and I really get a lot of satisfaction from explaining something to someone that was really confused and seeing all these light bulbs go off and having people come up afterwards saying, “Thank you. Now I understand this stuff.” To me, I feel like I have helped someone and so the video training kind of helps that as well. Yesterday, I was doing a presentation, had a bunch of people come up afterwards and they’re like, “I’ve been watching your videos, super helpful. Thank you very much.” I definitely don’t want to put across that, like what you said, Rob, that, “This is the way to do it.” It is a way. There’s so many different ways of going through and doing this solopreneur or entrepreneur kind of lifestyle. This is just the one that works for me.
Mike [13:46]: One of the things that you brought up earlier, which kind of contrasts against my experience doing training was that, it sounded to me like you develop the training courses yourself. You started your training company and you were doing the training for people, it sounded to me like you were saying, you created all that content yourself. Is that the case?
Andrew [14:32]: That’s true. Yeah. It’s a bunch of companies where you can actually buy content and training courses from vendors. I have Microsoft background and Microsoft has a thing called the MOC or the Microsoft Official Curriculum, and you can purchase that each book or each kit. One kit would go to a student from Microsoft and then you can teach it, you can re-sell it. But for us, what we did- we founded our company more of a boutique style where we built our entire training course and then we turned around and we would sell it as our stuff that was better than what you will get from vendors. We also repackaged it and sold it to other training companies to go through and teach. We did all of our own stuff and I tell you, it was quite the learning experience going from building a five day course to building an on-demand course that the packaging and the delivery and how you structure courses, is just so radically different.
Mike [14:46]: Yeah. Different experience that I had was that we were basically mandated. We had to teach the official courses and if we didn’t we would have our training certifications yanked. So we had no options at that point. It was use their stuff or don’t be a training company.
Andrew [15:30]: Yeah. And that was a decision that we had to make. Because, I primarily have been teaching SharePoint or .NET or Office 365 over the last six, seven years, eight years. And with Microsoft, when companies would buy a lot of software from Microsoft, they would usually get training certificates that included as part of their purchase and we had to make a decision that we are going to do only our own stuff. But what that meant is that, we couldn’t accept any other training vouchers that these companies had because we weren’t teaching the MOC curriculum and we weren’t certified as Microsoft trainers. We went the different model of saying, “We’re not going to sell a Ford or Chevy style training, we’re going to sell a Lexus or a Ferrari style training and be a little bit more specialized.” And that worked out really well for quite a few years.
Mike [15:36]: But at the same time, you’re almost an off brand as well because you are not necessarily officially sanctioned by Microsoft either, right?
Andrew [15:59]: We weren’t. We were actually brought in by Microsoft quite a few times to help teach a lot of their developers and a lot of their consultants would send people to our courses. But you wouldn’t get a discount by Microsoft sending you to us or anything like that. We didn’t have any way to accept any of the vouchers that Microsoft was giving their customers. It was just a business decision and which way we want to go and how we wanted to structure the company.
Mike [16:13]: Yeah, the vouchers is the thing that I could see where that would be a painful decision to have to make, because you don’t know what the result of that decision is going to be and ultimately, it could torpedo your company. But at the end of the day, it may also turn out completely fine, you just don’t know in advance.
Andrew [16:44]: You really do. I can’t take too much credit for this one because the guy that I was teaching with as a contractor, he had written his own course where when he quote, unquote “hired me,” I did that in quotes because I wasn’t an employee, I was just a contract instructor, he told me he’d keep me busy at least one week a month and that was like that for a year, which was just a fine income and so, at least on the training side that was a fine income. I saw that that business model already worked and so we just ran with it and just said, “Yeah, we’re not going to take vouchers.” I wish I could take a lot more credit for that, but I can’t.
Mike [16:55]: So in transitioning to doing online training, you said that you use Pluralsight. Are there other training platforms that you evaluated that I guess or was it just what was available at that time and seemed like a good option?
Andrew [18:42]: At that time, we didn’t look at anybody else. And the reason why is because, at the time they were known as a Microsoft Development Training Services Company for on-demand training, but where they were lacking was where we were strong and that was in the SharePoint content. They had a bunch of content that was already there, but they had a ton on-demand and they were trying to get it in there and they couldn’t really get it in or it was going to take them a lot more time to grow it organically. And so we just worked out a deal with them where we provided them all the content that we already had to see their catalog and grow it by, I think it was either, two or three [X?] in that one category. And it made a lot of sense for us because the model that Pluralsight follows is that they essentially, like a book publisher, they do all of the marketing, they do all of the sales, they do all of the customer management and stuff, and you just provide the content and you get paid royalties based on the amount of content that people watch over the course of a month or over the course of a quarter. Since then, I have looked at a couple of different options. There’s other companies out there that follow much more of a, I guess you’d call it a self publishing model, like Udemy or Kajabi. These companies, you provide your course to them, they host it for you, either for a monthly fee or they just take a special cut, and then you are incentivized to sell it yourself, to advertise it yourself and to grow your customer list yourself and in exchange, you bring back a much bigger percentage of each sale than what you would with someone that’s doing more of a hosting model. It’s almost the exact same model of the difference between publishing a book with a publisher, like an O’Reilly or somebody like that, versus doing a self publishing. You keep more of the profit for you when you self publish, but in exchange, you also put a lot more of the leg work in the marketing and the sales and the customer generation.
Mike [18:47]: So how was Pluralsight set up for the customers who are purchasing the training packages?
Andrew [19:46]: Pluralsight’s got a huge catalog of courses and they just pay a subscription to the entire catalog. There’s two different levels. There is one for if you just want to watch it online, and then there’s another level that you get additional things like code downloads from the courses that have them, evaluations, and access to the mobile clients where you can cash courses offline if you are like on the subway or something and you want to watch it. So they pay a subscription and then they get access to the entire catalog. The authors get paid based on the amount of minutes watched, and so it breaks it down. The really simplest way to explain it is that, if Pluralsight pulled in a pool of money over the course of a quarter and they looked at how many minutes were watched of the entire catalog, if you are responsible for, let’s just say, ten percent of that, then you are responsible for ten percent of the entire revenue from the quarter and then they look at your royalty number and they say, “Oh, if your royalty number is,” let’s just pull a number out of the hat, let’s just say it’s fifteen, “Then you get paid fifteen percent of the royalty amount that you are responsible for for that quarter.”
Rob [20:01]: Do you think that Pluralsight was something that worked really well because you got in early or have the terms changed? Meaning, if I came in today, let’s say I went and launched ten or twenty Pluralsight courses of my own, do you think I could achieve similar success to what you’ve seen?
Andrew [21:10]: Yeah, you could. The terms are essentially the exact same as far as I know. Each time I put a new course in, I have a separate contract. So the process they work, again, it’s just like a book publisher, I submit an idea to them for the course, I have to make sure that is not already covered in the catalog because that would be cannibalizing one of the other authors. We go back and forth a little bit, they generate a statement of work, and then we agree to an upfront payment when the course is complete and a royalty percentage. And so the higher upfront payment you get, the lower your royalty is. But the higher your royalty is, the lower upfront you get. So you can say, even though it’s a lot of work, you say, “I only want to take like $250 or $500 when I complete the course in exchange for the highest royalty percentage I can possibly get.” That’s a bit of a game that each author has to play. It’s funny there is a constant debate that each author has amongst each other. Because if you pick a topic that you think is going to be somewhat timeless, I would think you would want to maximize your royalty instead of getting a big upfront payment. But if you pick a topic that might be a flash in the pan, then you may want a bigger upfront payment to get more revenue upfront.
Mike [21:15]: So you are kind of gambling as the author either way. It’s hard to tell which way to go sometimes.
Andrew [21:38]: Yeah. Most of the authors are doing it part-time. They have other jobs they are doing. Most of them I think are trying to get more of the upfront payment in exchange for the amount of work that you put in. Because it’s definitely not a trivial task to put a course together. It’s taken me quite awhile to optimize my development and production process to get it down to a number that I feel really works in profitable way for me.
Mike [21:44]: So with that question, how long does it take to create a course and how long are the different courses?
Andrew [23:08]: Generally speaking, they try to keep courses anywhere from one hour to four hours. And if you are outside of those parameters you have to have a pretty good case and have a back and forth with your editor. For me, I think that most courses work best if they are between an hour to two hours long. Partly because, a lot of authors or a lot of customers use on demand courses as the same way to use textbooks. We don’t go grab a textbook out of the bookstore and sit down and read it like a novel. We pull it off the shelf and look at the index and find that answer that we need or hopefully find the topic what we are struggling with at that time. And so you really have to be creative and smart about how you structure the course and that you also chunk little videos together in maybe two to five minutes segments, so that someone who needs an answer can just dive right in real quick. If you go through and you have a problem with something, you’re trying to figure something out, you find a course that looks like has the topic of what you need, the last thing you want to do is find a video that looks like it’s about 25 minutes long that may have the answer you want. You want to go dive and find a two minute video that explains what the problem is and how you can fix it and maybe has other videos that build off of that. But watching 25 minutes in hopes that it going to answer your question, that’s not a good way to package your course. You want to make sure that it’s easy for someone to get in and out and to be able to take advantage of your course a lot more. So I rarely see courses of, at least of mine, that you watched it all the way through.
Mike [23:21]: So are these videos, are they separated into little subsets of videos? So if you have a course that’s, let’s say ninety minutes long, are there like nine, ten minute videos in there or how does that work structurally?
Andrew [23:32]: So you have course and then each course is structured into modules. So a module would be like a major topic or like a chapter on a book, and then inside of that module, you have multiple clips and each clip is a video file.
Mike [23:33]: Got it.
Andrew [23:47]: I try to make mine anywhere from 45 seconds to no more than five minutes at a max and if it’s a demo that’s going to take a lot longer than that, I try to chunk that demo up into multiple clips into different components and different pieces.
Mike [23:50]: So for a one hour training course, how long does it take to put one of these things together?
Andrew [25:28]: Not to change the question, because it makes it easier for me to answer, but let me explain why I’m doing this. It’s hard because some modules you spend more time explaining than you do actually showing. A module that is mostly slide or is explanation and animations, is a lot easier to put together than a module that is much more demo heavy. And I’ll give you a couple examples. The last four or five courses I’ve done have been anywhere from two to four hours. I first started out with my four hour courses, took me anywhere from 120 to 140 hours to finish the course and that’s from planning the whole thing out, building the all the demos, building the slides, recording everything, cleaning up all the audio and stuff and then editing the videos, producing them and then rendering them all out and writing the questions and such. I have been able to get that workflow down anywhere from a 90-minute to 120-minute course, I can get it done in about 36 to 40 hours. But it’s a process that each author struggles with it. We see a lot of people talking, not just in Pluralsight but I see other people as well, how do you get your process down, how do you take advantage of sites like oDesk, now it’s called Upwork, and how you can take advantage of contractors to help you with the audio clean up, how to help you with the video? The hardest part of this entire thing of doing these video training courses is by far the audio. It is incredible how hard it really is to get into and get it done the right way, audio levels, background noise, good equipment. A lot of people think you can and say, “Oh, mine is just fine” but you can’t get a headset with a microphone on it and think that, “Hey you’re just fine.” You really need some professional equipment both hardware and software to get a really high quality sound out of it.
Mike [25:34]: I laugh because that’s exactly what we do for this podcast, we have had headsets with microphones on them.
Andrew [26:09]: For the podcast that I run, I use my recording rig. But for the headset mics and everything, what we find is that a lot of the background noise, a lot of the extra stuff that comes through that’s not on a dynamic mic or directional mic, that you don’t get from the headset ones, when you’re listening to it for a very long time, which is different from a podcast, but when you’re listening to it for a very long time, it can get to be pretty challenging for people. So the research has shown that it’s a little bit better to have a higher quality sound to get a much better output. So I have invested somewhere around $400 or $500 in the hardware that I’ve got sitting on my desk now.
Mike [26:16]: Now for the courses, you don’t have any control over pricing in any way shape or form, right? That all goes through Pluralsight, correct?
Andrew [27:29]: That’s correct. So for the company that I’m with right now with Pluralsight, I have no control over the pricing and it’s one thing that I have been kind of struggling with or I have been thinking about recently. I do a lot of work for one major software company and I would like to have the ability to package up a bunch of my courses on one topic and sell them to that company for them to either use internally or for them to give away to their customers. Today, I don’t really have that ability. I have the ability to give away free trials. This is the part where it’s a little bit different from a book. Any of the marketing that I do for my courses where they currently are, I’m really marketing the catalog and then trying to convince the people to go watch my course once they have bought a subscription. If I don’t do that, if they just go through and the buy a subscription and I’ve tried to get them into the catalog and then they go start watching someone else’s courses, there is nothing in it for me. It’s challenging because I have no visibility on when I send somebody there, I have no visibility into who my customers are. So that’s another thing that I know that, at least as a listener of the Startups podcast, and I’m sure some of the other listeners are too, that’s something I’ve always kind of struggled with and that I have no way to talk directly to my customers unless they ask a question through a little discussion form that we have on each one of our courses on the Pluralsight website.
Rob [27:36]: Right. It’s kind of like the app store model where you can’t really build a list or an audience and you’re a little bit at the whim of Pluralsight, essentially, in terms of communicating with them.
Andrew [27:56]: Yes. It’s exactly like the app store model. It’s just something that, anybody that’s built an app like that and you want to talk to your customers and do research, you’ve just got to hope that they will interact with you on the comments. So that can be challenging. You have a beat on what people want, you have a beat on what the market needs and stuff and you do your research, but no replacement for talking to your customers.
Rob [28:02]: Right. And just to give folks an idea, you have almost thirty courses in Pluralsight, is that correct?
Andrew [28:10]: That’s correct. But thirty courses, and I would say, ballpark, about anywhere from 100 to 115 hours or 110 hours, something like that.
Rob [28:11]: Of course work?
Andrew [28:13]: That’s correct. Yeah, across all of them.
Rob [28:32]: Andrew, I’m curious. You’re using Pluralsight, you’re obviously having success with it, making a full-time income from it. How much though have you given to looking at a platform like Udemy? There’s several others that are less of a publisher model and they are more of direct connection with your audience where you get a bit of high royalty rate on it, but it probably wouldn’t be as lucrative for you upfront. Have you thought about doing that?
Andrew [31:37]: Yes. So I have a Google doc with about ten different options that I have been doing a ton of research on and spending a whole lot of time looking at it and trying to do the whole like pros and cons on each one. I have the opportunity to speak at a bunch of conferences and I have the advantage of followers on Twitter and something of an audience and I would like to be able to take advantage of that a little bit more than just putting courses inside of a catalog and letting somebody else market them. It’s nothing negative about who I’m with right now, the part of building a software product that is appealing to me is the marketing side. Because I find that it is something I don’t know and it’s a challenge that I’d like to try and tackle. And what I’m doing right now, I don’t have the option of really doing that. So there is two of them that I have been looking at a lot recently. One of them is Udemy. They have a very different model from what I’m doing now where you build the courses, you publish them on the Udemy platform and you don’t pay anything for hosting them there. But if you sell the course through one of your promotion codes, then you keep a hundred percent of the sale minus the credit card transaction. If a customer finds your course organically through Udemy’s advertising or they’re an existing Udemy customer and they find your course by just going to their catalog, then you receive only fifty percent of the transaction. Udemy collects the other fifty percent and you split the transaction cost. So Udemy’s advantages to having a huge catalog and then they can turn around and they can sell their catalog to customers and make fifty percent on each transaction. But I have the ability to market straight to my customers, and let’s just say, if I did a course and sold it for $100, if I sold it, I may sell it for fifty bucks. If Udemy sells it, I’m only going to get fifty bucks as well. So either way, it’s splitting the difference. It works good for me. There are some downsides to that though, where with Udemy, you don’t get your customers. You have a way of talking to them either through broadcast messages or, I’d compare it to like a Facebook style Messenger chat where I can see their name and I can see that they subscribed, but I can’t get their e-mail address. There’s another one that I have been looking at called Kajabi Next. It’s a little bit different in the sense that you pay a subscription per month for hosting a certain number of courses. You get five for one level and you get unlimited for another level. But with that one, all of your transactions happen through Stripe and whenever someone registers for your course, you can do a Webhook to where it get sent out. So if I’m using any other mailing list to go through and maintain a list of customers, I can immediately capture all of my customers that purchased my course. They don’t have a whole discounting model or a whole promotion code model like Udemy does, but I could stand up my own little store or even if I wanted to go, I could use something like Groupon and sell my courses and then get their e-mail address and go into Kajabi and then, it’s called inviting an individual to your course. It’s basically like saying, “Give us their e-mail address, we will send them an e-mail. They can get it for free now.” So I’m kind of going between the three different options. I’m looking at them for a couple of different things. I have a few courses I’m still working on with Pluralsight, but I’m looking at just a couple of different options to see what different challenges are. I really want to take advantage of marketing my own stuff and see what I can do with that, just to see if I can do any better with that kind of a business.
Rob [32:12]: Yeah. I really like that the options are laid out. I used Udemy with my Startup VA course, that’s startupvacourse.com, if folks want to check it out. And I had good results, but it’s as you said, you don’t have access to your people. You don’t know who bought and aside from kind of the internal broadcasting stuff, it’s been fine. If I were to do it again or if I were to release another course, I would probably look at something like Kajabi Next, just because it’s such a no brainer to have that Stripe, [Hookfire?] put it into Drip, right, because we integrate with Stripe and just have that list there and you’re constantly adding to your audience. I think there is a lot of value with that.
Andrew [33:57]: The two things that are bugging about that one. I agree with you, that’s the one I lean towards. But the two things that bug me about that, one of them is that when someone registers for your course, let’s say that they do it outside of Kajabi Next. And so you’ve set up your own store to where if you have courses and you want to package them together and you want to sell them for one rate, you would have to make that sale outside of Kajabi Next because they don’t have a way of doing that. So I would have my own store, I’d sell them those five courses, but then it would be a manual process for me to go grab their e-mail address and go invite them into each one of those different courses and I have to keep track of which ones they have access to. It’s not that big of a deal and it’s something that you could definitely outsource that to a VA, but my fear in that is that if I go down that approach, that someone is going to purchase a course, I’m going to be unavailable for a little bit and I’m going to definitely need to have a VA. They’re going to want to jump in and start looking at that course right away. And will it [out?] being automated, it can be a challenge. The other one though that’s a big one and you just cannot discount this one enough. So Kajabi, they have a bunch of courses, but I don’t think that there is a tremendous population that goes to Kajabi looking for a course. They’re going to find the course through your ads and through your different ways of marketing your course. At Udemy, they’ve got six million people that are looking at their courses. And I’ve got friends that have told me that they have courses there and that, anywhere from three quarters to two thirds of their revenue comes direct from Udemy and not through their own marketing efforts. They are not marketing their courses as much as I think that I would do it, but six million is hard to just say, “Yeah, I’m not going to look at that. I’m going to do it on my own.” That’s the one that really keeps pulling me back and just saying, “Maybe you can live with the fact you can’t talk directly to your customers.” But I’m not sure where I stand on. I keep going back and forth everyday.
Mike [34:27]: I think there is a spectrum there. There’s a tipping point in the middle where early on, it doesn’t makes sense, so you lean more towards something like Pluralsight, where they’ve already got the audience versus much later on when you’ve got your own audience, then you would lean more towards building it and hosting it yourself or doing through something like Kajabi Next, where you kind of maintain control of that audience. But there’s that middle phase that it’s like, “How do I go from this side over here to that side over there, so that I can make more money doing the exact same thing.”
Andrew [35:18]: It really falls down to the person that’s doing the course. If you are doing a development style course, like all my stuff is all about development, software development, and if the traditional developer may not have the desire or the skill set to do the marketing and they may just want to say, “I want to build the course and I want to put it somewhere and let you guys go through and sell it.” To me, I’d like to have the opportunity to try the marketing and to really figure out how to talk to my customers and how to get them to come in, how to re-sell to certain customer and how to do special deals for the companies I do a lot of work for. Or if I’m speaking at a conference, I’d like to be able to say at the end of the conference, “If you like this, here is seventy percent off of this course that I have.” And if they get in there, then I can up sell them on another courses. It just depends. I think it’s part, what you said Mike, and then it’s also part of do you want to go through the effort of trying to market it. It’s just to each their own on this one.
Mike [35:24]: Another platform you might want to look at is called Summit Evergreen. Keith Perhac is behind that. He was one of the sponsors at MicroConf this year as well.
Andrew [35:55]: There’s a [slot?] group that stood up around the Founder Café and I think he was the one or someone else was the one that actually pointed me to them as well. And so I haven’t dug into them as much just yet. It’s on my list of like seven, eight, or nine that I was looking at. For me, I know that I’ve got two things ahead of me before I can actually make this jump if I decide to make this jump to somewhat another platform. I’ve got about at least three months or four months before I can actually do this, and so that’s another one of my research that I have to go through and take a look at.
Mike [36:03]: Well, if you want to hear more about Andrew Connell, he has the Microsoft Cloud Show that you can go listen to, that’s a podcast that he runs, and Andrew, where can people follow up with you?
Andrew [36:12]: Two best places, I’ve got a blog that’s just my name, Andrewconnell.com. Two n’s, two l’s. And then also on Twitter, same thing, just @Andrewconnell.
Rob [36:13]: Sounds great, man. Thanks for coming on the show.
Andrew [36:16]: Absolutely. Thanks a lot for the opportunity, guys.
Rob [36:36]: If you have a question for us, call our voicemail number at 888-801-9690 or you can e-mail us at questions@startupsfortherestofus.com. Our theme music is an excerpt from We‘re Out of Control by MoOt, it’s used under Creative Commons. Subscribe to us 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 235 | When Is It Time To Level Up?
Show Notes
In this episode of Startups For The Rest Of Us, Rob and Mike help you answer the question, when is it time to level up? They address how to think through the process and what concerns there might be to leveling up.
Items mentioned in this episode:
Transcript
Rob: In this episode for Startups for the Rest of Us Mike and I answer the question “When is it time to level up?” This is Startups for the Rest of Us episode two hundred thirty-five.
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 are just thinking about it. I’m Rob.
Mike: And I’m Mike.
Rob: And we’re here to share our experiences to help you avoid the same mistakes we’ve made. What’s the word this week, sir?
Mike: Chris Kottom who had suggested our episode on stair-stepping had sent us in another link. He’s got a book called Minitest Cookbook and it’s aimed at helping Ruby and Rails developers write maintainable test cases using mini tests. I went over and checked out the website. It’s pretty cool. It’s got a lot of stuff in there. He’s got a nice little eBook that goes along with it and looks like it’s got a lot of good information in there.
Rob: Congratulations, Chris. We’ll make sure to link that up in the show notes. We also received some praise for episode two hundred thirty, which is our fifth anniversary episode where we had our wives come on and do the show. It’s from Patrick [May?] and he says, “Hello, folks. First off, I love the show and it’s real business life theme, no baloney for sure. I’ve never emailed you but after the spouse episode today I had to comment. Ladies, it was so great to hear from the other or better half of an entrepreneurs life. As a small scale farmer and entrepreneur I felt connected with this episode. My future wife and girl friend of eight years supports me, helps me tackle tough decisions, and keeps me focused when I wander. You guys rock and keep it up. Thanks.”
Mike: Thanks, Patrick. We really appreciate that. I’ve heard a lot of people have been pointing their spouses toward that particular episode and having them listen to it.
Rob: I know. It seemed to have resonated to hear that side of it. I’m glad. We were obviously inspired by Techzing’s two hundredth episode where they had their wives come on and Sherry was actually on that episode as well. But the format seems to speak to a lot of people and I think it tells maybe this other side of the story. It’s like the other business partner’s side of the story that isn’t told enough, I think.
Mike: The unsung heroes.
Rob: I think exactly. People who put up with us in the day to day life.
Mike: Well the only other thing I’ve got is my book is coming out for its public launch next week. So that will be out, I think about the time this episode goes live.
Rob: Very cool. So if folks want to check it out where would they go?
Mike: Singlefounderhandbook.com.
Rob: Nice. All right. Well this week’s episode Mike and I are going to be talking about when is it time to level up. And it’s actually based on a question from Simon at Small Farm Central. Simon writes, “I have a couple of products that I feel are pretty mature. They’re growing ten to thirty percent a year but I can’t grow them super fast because the market’s a bit tapped out. The vertical is very small and we rule the vertical pretty well. I have some new products that I’m working on but I’m wondering when is it time to reduce investment in these more mature products and focus on the new ones that probably have more growth potential. Even if I stop investing and pull back on my existing products, they will keep generating cash since they are SaaS apps.”
So the question is how do you know your product is mature, how do you now when to move on, and really we’re boiling it down to when is it time to level up? I’m using that term level up in the context of our stair-step episode a few episodes back, and also in the context of Patrick McKenzie’s talk at MicroConf where he talked about moving from Bingo Card Creator, which was a small price point, one time purchase and most of his traffic was a single channel. It was SEO with some ad words. And then he leveled up to Appointment Reminder, which was SaaS, and now he’s leveling up to [?] Starfighters.io. And it’s really in line with the stair-step approach that I’ve been talking about for awhile and that we’ve covered a few episodes ago. I think there’s more to dig into this, the specifics of when you should think about leveling up and what some of the concerns should be, and how to think through that whole process.
Here’s some thoughts about when to consider leveling up. And by leveling up I mean moving from that step one, which is typically a single purchase priced product up to multiple purchase priced products, and then up to recurring revenue.
Now in Simon’s case in particular he actually owns two small SaaS apps in this same space and he helps small farmer manage their web presence, is one of his apps. Imagine Squarespace for small farms. And the other one helps them manage their CSA programs. CSA is where a consumer you could pay the farm a monthly subscription and you get a basket of fresh produce every week or every other week. It stands for Community Supported Agriculture. But he knows this market really well. It is a very small niche market so it’s not going to be something that grows like an app for marketers or an app for designers. It’s a good point he brings up, says his growth is not super fast. It’s ten to thirty percent a year. Which is slower than a lot of apps that we might hear about. And I think that’s the first point at which you should consider perhaps moving on, is when revenue has essentially flatlined or is growing very slowly. And if you’ve spent six to twelve months trying to increase it and investing time and energy in trying to find new traffic sources or trying to improve conversion rates and they’re not going up, that is, to me, a leading indicator that you might want to think about adding another product to your portfolio or leveling up.
Mike: Yeah, I think that’s all about a balancing act, too. The ten to thirty percent a year, call it twenty percent, and if you try really, really hard and you get twenty percent but then you don’t try hard at all for the next six months, say, and you still get twenty percent growth, then it’s indicative that there’s not a lot of, I’ll say external influence, that you can provide that’s going to push that business forward. It’s going to move on its own but I think a lot of this also boils down to the fact that just certain types of markets, they take a long time to essentially tap into to get those customers onboarded. And I would imagine that this is not a very tech savvy crowd, so you’re probably going to have to do a lot of hand-holding in order to get those people on board. So, even if you are to try and scale those efforts up, it’s not as though you probably have the man power to be able to get as many people onboarded as you would like.
Rob: I think this relates to the law of diminishing returns. Early on as you’re building and you’re starting to market, you’re going to increase revenue month after month. And then at a certain point you’re going to hit a plateau, and we have talked about this in the past about breaking through plateaus, and there can be any number of causes for that, but if you’ve been working on an app for a number of years and you can see the pattern of it has been slow growth all along, and it’s going to continue to be that, then maybe that’s not a time to bail on it, right? Because it’s just the status quo and that is what this market looks like. But if you’ve had years of eighty percent growth, fifty percent growth, and then it’s slowly tapering off and you feel like you’ve peaked in the market and you might be starting to lose interest, then that’s the time where I think that you’re starting to perhaps lose momentum.
That takes us into our second point of when to potentially consider leveling up, is when your momentum has died down for an extended period of time. Basically, when you’re own personal interest is starting to wane. And I find that this often happens around the time when plateaus start to come up. Because when your business is growing like gangbusters, you’re momentum doesn’t tend to die.
Because the problem with losing momentum is that if you don’t care, if you don’t love this business any longer and you’re starting to maybe lose interest, you’re going to start wandering. You’re going to start thinking about other ideas, you’re not all in anymore, and the business is naturally going to suffer because of this. And so that’s the second thing, is if your revenue has peaked or is flatlined, or if your personal momentum and desire to grow the business has flatlined, both for an extended period of time, those are the points where I really start thinking about should I be making a transition out of this.
Mike: Yeah, I think those things are tied pretty well together in terms of the motivation and how fast you’re growing, because if you’re growing fast you’re motivated to keep doing it, but as your returns start diminishing on the same effort, you’re just not as motivated. And I found that even with the stuff I’ve done. I don’t know if there’s a specific name for that, but it almost seems like there should be.
Rob: Yeah, I know. I think there’s a judgement call to this because every business is going to hit some plateaus and every business is going to lose your interest for different periods of time. So you might have two weeks or three weeks or a month where you hit a plateau and where you’re bored with it and you’re fed up. And to me that’s not long enough. It’s got to be something like six months where you’ve tried everything you can think of and nothing is working, and you’ve asked for advice, and you’ve talked to advisers or mastermind forks or whatever community it is that you have, and you’ve tried everything that you can think about and you’re at the end of your rope and you’re still not growing. That’s the point where, I’d say, are pretty solid indicators that you either need to seek more help, like you need to pay a consultant to come in and help, or you need to start thinking about potentially moving on/leveling up.
Mike: I think something else that factors into this is how much money you’re making from it. There’s a difference between whether it’s something you’re doing on the side or versus whether it’s something that it’s completely your full-time income as well.
Rob: Yeah, I agree. And I think this begs the question of do you always have to keep growing, because there’s a lot of talk in the venture funded startup space about growth, and I think there’s also a lot of talk in the bootstrap startup space about growth, and I’m not sure that growth is necessarily an end goal for everybody, nor should it be. I think depending on where you are in your life, let’s say you’ve just had a child, you may not care about growing for a year or two, or you just want to rent a trailer and drive around the country and hang out with your family. Growth is not necessarily the end all be all of all this stuff. I know I talk about it a lot. It’s been a personal goal of mine to grow businesses over the past few years but if you hit the point where you’re making ample money to live on, I don’t think there’s anything wrong with living the life. Like in quotes, “Living the life,” for awhile and really evaluating whether or not you want to start another app.
You and I were discussing this before, not to use the word coast, because coast has a negative connotation, but I coasted on revenue for a solid eighteen months. It was around 2010, maybe, 2011, we had our second child and there was a solid ten months where I worked a day and a half a week, two days a week. Nothing grew but nothing flailed either. And then there was about another six months where I was just enjoying it and doing things and that’s when I wrote the book and that’s when the Academy really got built. I don’t think that a constant push for growth necessarily should be the goal for everyone at all times. I think it depends on your situation.
Mike: Yeah, growth for the sake of growth shouldn’t necessarily be the goal. It’s what are the things that you’re trying to achieve and why. Why is it that you want those things? If you want growth in order to make more money so that you can do X, Y, and Z then that’s fine, but at that point it’s not growth that’s the goal it’s that X, Y, and Z, whatever that happens to be.
Rob: Right. So I think what I’d do if I were in Simon’s shoes is to go on a retreat and I would get the heck out of Dodge for forty-eight or seventy-two hours, try to be alone and basically ponder this decision and its ramifications and ask a bunch of questions. There’s actually a good podcast episode. It’s Sherry and mine’s podcast called ZenFounder. And you go to zenfounder.com, episode two. We outline the things you should ask in a retreat. But one of the questions that I would be asking is do I still have interest in this niche? Do I still want to grow these apps? Do I really want to start over with a new product in a new market? Because I think that’s what Simon’s asking about because he’s saying his market is too small, currently. Because starting over with that new product in a new market is very, very hard and don’t underestimate how much of a challenge and how long that takes. Looking backwards at the past two plus years, that Derek and I have spent building Drip from scratch, it’s a ton of work. I think that’s something to really think about. It sounds great at the beginning and there are going to be some hard times again. So ask yourself, are you in a place in your life, and mentally where you want to take that leap and go through the hardship of starting something new.
Mike: And I think that if you’re going to do that that’s something that you have to really commit to because it can be very easy to become complacent when you’re in a place where you’ve got money coming in, you don’t have to work terribly hard to get that money coming in the door, and you can essentially drag out other things that you’re working on for an extended period of time because there’s no push or drive for you to complete it in a short amount of time. So just be mindful that if you’re going to go in that direction then you need to commit to doing it or not bother because otherwise you’re going to waste a lot of time and something that you could have easily finished in eight or nine months is going to take you three or four years to finish.
Rob: Right. And the good part is that Simon has a lot of experience. He’s basically grown these two SaaS apps to the point of success. I don’t know what his revenue is but I know that he has a few employees and he owns this market. So he definitely has a lot of experience under his belt and the true stair-step approach of learning these things early on. So I think he does have some advantages under his belt. But I do think that going on a retreat and thinking through do you need to keep growing right now, is it time for you to maybe live the life for a little while, take four or six months and coast and enjoy it, or are you geared up to really start something and hammer it out, start a new app. I think this ties into thinking about it, in terms of fast growth versus slow growth. Because every app and every market is not going to be fast growth. The vertical of small farms or catering to restaurants, or selling into hotels. There’s a bunch of niche markets that we can think of, especially if you’re building a niche piece of software for those markets, where I just don’t really think it’s feasible to have this hundred percent or two hundred percent year over year growth every year. Your growth is going to be slow the entire time, and I don’t necessarily think that’s a bad thing as long as you have the patience to do it and it’s not driving you crazy.
Mike: Yeah, and we had an extended conversation about how to essentially present that fast growth versus slow growth. We talked about auto pilot, we talked about coasting. All these different words that have different connotations depending on how you use them. And I don’t know what the end words for them really should be but it comes down to what your growth curve looks like. Fast paced marketing startups, you’re going to have a lot of heavy growth and it’s going to be easier to onboard people, and you’re going to be able to move them through your sales funnel quickly, versus these other things where the growth is significantly slower, in the neighborhood of, as we said earlier in the episode, the ten to thirty percent year over year growth. That is much slower but the question also comes out as to how far down the road does that growth look like it’s going to go? Is it going to tap itself out in a year or is it going to be ten years or twenty-five years? I think there’s a very big difference between some of those different numbers. And it’s going to influence, in some ways, what you decide to do moving forward. I think that ultimately what you do is also going to be heavily influenced by what you’re interested in.
Rob: Yeah, I think it ties into personality as well. Certain folks are more patient and more willing to just hang out an build a successful, highly profitable app but not feel like their always tantalized into going into that next high growth niche market that everybody’s talking about. I have a lot of respect for the folks that are doing that and can stick with one thing for years on end. So I think that’s an interesting way to think about it.
I think the stuff we’ve talked about so far can be summarized under “Is this something that you want to do?” You need to think about it from your personal perspective. I think another question I would ask myself is is there another opportunity that you can think of where each hour of your time will be worth five X, or ten X more than with your current business? Because if that’s not the case and you don’t have your finger already on something, I’d be less inclined to back away from this. Again, unless you’re really fed up with where you are and you want to make a quick exit, I’d be thinking about what’s next and thinking about how that will be different. Without that “What’s next,” it makes it a little harder. I think just leaving a business behind without having an idea of what you’d be up to next maybe leaves a question mark in my mind. For my personality I think it would leave me concerned but maybe that’s not a general feeling.
Mike: One thing that just jumped in my mind was, for this particular business, have you set out everything that you’ve achieved to do?
Rob: Yeah.
Mike: And I think that if you have then I think it’s probably definitely time to look around and see what else you could do and maybe move on. But if there are things that you set out to achieve originally that are still within the realm of possibility and you just haven’t done them yet, I think you may very well run into a place down the road where you’re like “Gee, I wish I had done that.” Maybe not. It depends on what those things are but it seems to me like that’s something else to keep in mind.
Rob: Yeah, I think that’s a good point. I think the last thing I’ll throw in here because it tied into my decision when I moved from HitTail and moved onto Drip, was is there an external dependency that could potentially render your product moot like you’re integrated with Twitter and they’re going to jack with your API, or you’re integrated with Google and they keep changing everything every six months. In Simon’s case, I don’t think it is, but in the case of HitTail, if Google’s going to be changing things and breaking your app altogether then it might be a good time to think about diversifying.
So I think those are the thoughts and concerns and the questions that I will be asking. And I know Simon asked a little bit about how do you know when your product is mature or how do you know when you own the market. I feel like you have a better sense of it than we do, just because we don’t know your market. And my guess is if you ask yourself or you look at the data, how many small farms there are and how many you’ve reached, you have a pretty good sense of whether or not you can accelerate growth or whether or not this is just a solid business that is hit maybe a plateau. I do think that I would think of it in terms of a plateau and not as the end all be all of the business because my guess is someone somewhere could take this business to the next level. The question that I would ask is what would it take to [?] X this business and do you think that’s possible? And that can play into this decision of if you think it’s possible and these are the steps then do you want to do those?
Mike: I think my sense of that is just very slightly different, which is just that is there a possibility for this business to double or triple in size within a reduced time frame than what you’re currently looking at? As I said, I think it’s slightly different than what you just said, but it boils down to is it even possible, not just for you but for anybody? And if it’s not that might be your indicator to say okay, let’s go do something else or, as we talked about before, maybe you’re just happy where you are and just keep running this business for the next fifteen, twenty years.
Rob: Right. Which I do not think is a bad thing because the pains of starting over are not to be understated. So if you decide to stick with it, that’s great. We wish you the best of luck. If you decide to use this as a time to have an exit and level up, I thought about three different options for how I’ve seen this done and two of them are good choices and the last one is pretty much a bad idea, but we’ll walk through each of them.
The first choice that I’m throwing out, and these are in no particular order, they’re not in priority or anything, the first option is to sell the app. What’s nice is that there is a market that has started to coalesce over the last couple of years for these higher end SaaS apps, especially, but pretty much bootstrap software. And even eCommerce and product test service and all that stuff. There’s now becoming a bit of a liquid market that is more than just the low end flip of market where everything’s twelve months of revenue or twelve months of profit or whatever. So there are definitely solid website brokers out there that are dealing in this type of stuff and the multiples vary depending on growth and all types of stuff, but frankly with a SaaS app that is fairly systemized I think you can get at least two and a half times your annual net profit and potentially up to three, three and a half. Which it becomes an interesting number at that point. If you’re doing a chunk of change each year and you’re able to get 3X that change then realistically your choice is do I take this money off the table now and give me time to start thinking about what my next idea is, potentially acquire something that is more interesting or build it from scratch, or do I stick around for the next three years and try to manage this thing on the side in order to earn that same amount of money?
The second option that I’ve seen people do successfully, but only a few times, is to actually put someone in charge of the app. [Heaton?] Shaw did this with Crazy Egg where they hired basically a CEO to run it, full-time, that person was not focused on other apps. I attempted to do this with HitTail, and I had Derek working half-time on HitTail, half-time on Drip. This is way back in the early days of Drip. The problem was is that Drip quickly grew. It became a bigger app, bigger opportunity than HitTail so I pulled him off and we both started working on Drip, and as a result it didn’t work out for me because I wasn’t willing or wasn’t able to find someone who I thought could totally run it on their own and run it, but perhaps Simon’s in a different situation here where he could really hire more of a CEO or COL level person who can continue to run the app in his absence.
Mike: Yeah, I think that’s the difference between whether or not you have somebody who is going to be involved in your old business that’s also in your new one. Because I think that with Crazy Egg, I don’t think that [Heaton?] and Neil had had anyone who was actively involved with KISSmetrics when they decided, essentially to relegate that to the back burner. So that may be the deciding factor, I’ll say there. But I think that this route is possible but I think that you also have to do it right. You have to make sure that you’re not stepping on an opportunity either forward or backward when you do it.
Rob: And the last of these three options for putting an app on the side is to try to do both. It’s to try to start your new app and just figure you can manage the old apps on the side and not hire someone who is not fully in charge of them. And this, from what I’ve seen and from what I’ve experienced, is not a good idea. Patrick has mentioned this with Bingo Card Creator that trying to do it on the side basically revenue dropped every year since he did that. I saw this with HitTail when both Derek and I stepped away from it, revenue dropped. It’s really, really hard to do two things well at once. The exception is early on when I had a bunch of small apps, I had little apps like [?] and Voice and Beach Towels and little eBooks here and there, those really didn’t need much management. They didn’t have a high touch sales process like I imagine the Small Farm Central does. They didn’t have nearly the moving parts that a real SaaS business did. They just really got leads through a single channel and they converted those leads and all of the stuff was really an automated process either through a virtual assistant or through code. So that’s an exception that if you have something that really, really can be automated, almost ninety-five percent or whatever, then I think you can put that on the back burner but it’s definitely much, much harder to do and I don’t know of any models I’ve seen successfully doing it with a more complex app like a SaaS app that’s doing five figures a month.
Mike: Yeah, it feels to me like that’s a function of the support and the onboarding. So for example, Bingo Card Creator, the onboarding is not very difficult but the support could potentially be much, much larger so you have to have somebody there who can manage the support side of things. And you have to be able to continue staying on top of the SEO because it’s such a low margin business. Because of the low margins you’re not going to be able to take your focus off of it because if you take your focus off of it, immediately your margins are going to plunge, your support costs are going to overtake everything else. And I think you probably experienced something similar with HitTail where you had Derek working on it half-time and then you pulled him off of it but them there wasn’t really anybody there to backfill that. It just seems like that factors into it heavily.
Rob: Yeah, the thing is most of us are running businesses that change frequently even though it may not feel like that. And if you have a business that relies on SEO for a lot of your traffic or relies on ad words, that stuff is changing every six months, so you can lose a lot of your rankings when Google decides to do an update or ad words get more expensive. Or if your using Facebook ads, as an example, they change algorithms and they change the way things are done and suddenly a main source of your traffic goes away and if it was your main business you would spend the time experimenting and figuring it out. But if you’ve now moved on to something else it’s really hard to shift your focus back and spend the week or two weeks or three weeks, whatever it’s going to take, to completely rediscover another traffic source or to reoptimize an existing traffic source that you’ve lost. And so that’s where, in every case that I can think of, trying to do an old somewhat complex app and to start a new one, it breaks down eventually. It may work for six months, it may work for twelve months, but eventually you’re probably going to hit a roadblock with one of these many changing things that we see that you’re then not going to have the time or desire to go back and fix.
Mike: Well, Simon, I really hope that that helps answer some of your questions. If you have a question for us you can call it into our voicemail number at 1.888.801.9690 or email it to us at questions@startupsfortherestofus.com. Our theme music is an excerpt 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 234 | Eight Things We Wish We Knew When We Started Out
Show Notes
In this episode of Startups For The Rest Of Us, Rob and Mike revisit eight things they wish they knew when they were starting out. After five years of additional knowledge and experience they share some new tasks on the topic.
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 revisit eight things we wish we knew when we started out. This is Startups For The Rest Of Us episode 234.
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 [00:23]: 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 [00:27]: Well, by the time this episode airs, I will be heading to San Francisco for Microsoft’s Build conference.
Mike [00:34]: Interesting. So how’s that going to work out?
Rob [00:36]: Yeah, because when we were offline you said, “Oh, because of all the .NET development you guys are doing these days,” because we’re [?] now, but Drip has been asked to be part of one of the Microsoft programs, and it’s kind of a nice little enterprise deal for Drip. They bought a bunch of licenses and they’re going to be implementing – I obviously can’t give too much. There’s an NDA until they announce it, but they’re integrating it into one of their big programs, so they comped us a booth there, and I think I’m recording a couple podcasts while I’m up there, and doing some lightning talks – couple fifteen minute talks about marketing automation and that kind of stuff. So, if you find yourself at MS Build give me a tweet @Robwalling or just swing by the Drip booth, and I’d love to connect with you.
Mike [01:15]: Very cool. So, I’m still trying to catch up on work after MicroConf. I don’t know about you but –
Rob [01:19]: Yeah, same thing. I just about dug myself out of email as of yesterday.
Mike [01:23]: Yeah, it’s funny. I dug myself out of email, and I was down to I think two or three, and now I’m back up to several dozen again. It’s like, “Oh, just let it stop.” It’s almost like the post office. You wish you could opt out of email, like all email, at some point.
Rob [01:35]: I know. My executive assistant I hired has been really helpful over the past two weeks because I went heads-down on MicroConf, and then she just kept everything sorted. And, it’s not that I’m getting any less email, in fact I’m getting more email each month, but she kept stuff in the this week and the today tab. So, when I came back I really only had maybe fifty emails that I really had to respond too, and typically when I come back from MicroConf there’s like between 3 and 400 emails that I basically have to just spend a few hours sifting through and replying to. So, she saved me quite a bit of time. It made me realize she’s only saving me, whatever it is 20 minutes a day, maybe, 20 to 30 minutes, but over the course of a week of not checking email, that time really adds up.
Mike [02:14]: Yeah, but that also comes down to the fact that you have to be using that time for good.
Rob [02:19]: I’ll say.
Mike [02:20]: Because if you end up wasting that time anyway, it doesn’t really buy you anything.
Rob [02:22]: Right.
Mike [02:23]: I definitely use to have that problem where I’d save some time in certain areas, and then I’d just end up wasting it elsewhere, so I wasn’t really gaining anything. So, this week I’m testing out a Thunderclap campaign. If you go over to thunderclap.it – somebody described it to me as sort of like an aggregated buffer app. So, what you can do is go over to thunderclap.it, you can set up a campaign, and you invite people to essentially help promote whatever your product or service is, and it will schedule people’s tweets, or Tumblr posts, or Facebook posts to all go out at a specific date in the future. There’s specific limits about how many people you can invite. There’s different levels that you have to meet, or you can pay for it to just go out no matter what. If you pay for it, then it’ll give you additional benefits of the service, so they have, essentially a freemium model.
It’s interesting because you can invite all these people to promote something that you’re doing, and then at the designated time, they all basically go into the social networks all at the same time. So, if you get a hundred people contributing, and each of them have say 2,000 followers, for example, then you get exposure to like a hundred times 2,000 people, which can be pretty significant. I mean, the time window for that exposure I think is pretty limited, but at the same time, you can get a lot of exposure all at once as opposed to doing it piecemeal and trying to get it throughout the course of like several weeks or months.
Rob [03:44]: Yeah, it’s certainly convenient. I had never heard of this before. I’m assuming it’s a new service, but it’s certainly convenient, and you’re using it for your book launch right? Your Single Founder Handbook comes out in a couple weeks, and at a certain date, at 11am Eastern, all of these tweets, and tumbles, and Facebook posts are going to go live all at once. So, I’m curious to see what impact it has, and to hear back about the experiment.
Mike [04:03]: Yeah, me too. It’ll be interesting just to kind of watch and see what happens. If nothing else, I mean, it’s not like I spent a whole heck of a lot of money on it.
Rob [04:10]: We have some new iTunes reviews, several new reviews actually. We have 417 worldwide reviews, and the most recent are from Trevor Jaye. He says, “Motivational, educational, and entertaining. These guys are great, and the fact that they can put out such great content every week is amazing. I highly recommend anyone looking for a bit of inspiration to tune into these guys as much as possible.” We also got a five-star review from Zach Kessin. He says, “Don’t make all the mistakes yourself. Learn from these guys who are sharing what they know so well.” So thank you very much for the iTunes reviews. If you haven’t given us a five-star review, we would love it if you would log into iTunes, or Stitcher, or Downcast, and you don’t even need to write out any sentences. You can just click the five-star button. We really appreciate it; it helps us keep the show going. It’s motivation for us, and it helps us rank higher in iTunes, and it helps more people find us.
Mike [04:57]: So, I remember reading a blog post from Joel Spolsky years and years ago, about something that they were doing where the interesting part of it was that the CEO was basically dealing with all these printer issues to print labels and manually send stuff out, and I’ve realized that he wasn’t joking when he said that sending products out manually was a logistical nightmare.
Rob [05:17]: I endured the same thing when I initially sold my book. I think I sold 300 copies, and then I had to fulfil them, and I had no plan in place to do that. It’s a lot more work than you think it is to pack 300 books.
Mike [05:27]: It is. It’s way more work than I thought it would be.
Rob [05:30]: I wound up hiring a local college student to come for an eight-hour day and basically fill out custom forms. This is before stamps.com, or at least before I knew it existed, because that’s what I would do now is get the scale and have someone do that. I actually had to go to the post office and do it. So, you had to fill out custom forms basically by hand. So, I had her come over for about eight hours and paid her to affix labels and do all that kind of stuff. It was well worth it. Even beyond that, I still had a bunch of logistical work of printing labels myself.
Mike [05:58]: Got you. Yeah, I found my wife had some things just laying around to be able to print the labels, so that was actually the easy part, but going through all the books and signing them all, that’s the part that really just takes forever. Instead of hiring a college student, I roped my wife into sitting there doing all that stuff for me.
Rob [06:13]: Or your kids, I think any one of those would be a good plan.
Mike [06:16]: I don’t know. My wife put the first couple of labels on incorrectly. They were in the wrong spot. The return address was in the middle, and I’m like, “What are you doing?”, and she’s just like, “I’m sorry, I just wasn’t paying attention.”
Rob [06:25]: Nice. Yeah, I have my eight-year old help sometimes fulfilling Drip t-shirts and books and stuff, and I will often have to correct his work.
Mike [06:34]: It’s almost like hiring.
Rob [06:35]: I know. It’s so hard to find good help, right? So what are we talking about today?
Mike [06:40]: Well, we originally did a version of this topic back in Episode 4. It’s been nearly five years, and the episode at the time was called “8 Things We Wish We Knew When We Started”, and I figured what we’d do is we’d go through that topic again, and see if there are different things that we would say now versus what we said then. So, I wanted to just revisit it. There’s five years of learning between when we did that episode and now. So, is there different advice that we would give ourselves, is kind of the main question. So, I copy-pasted the list into our outline, and I put that at the bottom. I didn’t really look through things before coming up with my list of four and you’ve got your own list of four, but I figured we’d go through them, and see how things are different now than they were five years ago.
Rob [07:18]: This is one of the most requested episode formats. We often get, “Hey you guys talked about x in Episode 15. What do you think now?” It’s pretty frequent, so I can see us doing several of these in the coming months; basically revisiting some old topics and giving a new take on them. It might be interesting to read our lists from Episode 4 before we start. My four from back in 2010, I guess, was that traffic isn’t enough, that one big link won’t make you successful, to thinking years not months, and that marketing and sales take as long to learn as software development.
Mike [07:50]: And my list was: number one, the amount of administrative overhead of creating a business is a lot higher than you think it is, number two, you can’t do everything yourself – outsourcing time consuming tasks is essential to success, three, don’t waste time making the optimal decision, make a decent decision and move on, and four, if it’s easy in the beginning, that’ll probably change – if it’s not easy that’s normal.
Rob [08:08]: Nice. So, let’s dive into what we’ve put together for this episode, kind of the updated takeaways. My first one is to play long ball – essentially, to think in years and not months. Like I said five years ago, I think that still holds true, and it’s something I really believe in, even having moved down the line now and been doing this for longer. I think that kind of ties into the stair-step approach that we talked about a few episodes ago, that I blogged about, that I’ve now had in talks. It’s that the odds are not great that you’re going to start something and have this grand success within a few months. That any time you hear about people doing it, there are typically some extenuating circumstances, that someone has tried five different apps, and then the sixth one caught, and grew really quickly. Or, if someone does it on their first app, that it usually is more of a Cinderella story. It’s a really unique outlier situation if someone does have quick success. So, think in years, not months, and go in it as a marathon, and look to play long ball instead of trying to get instant growth and instant success.
Mike [09:08]: Mine in some ways kind of ties into that theme or idea, because my first one is you can’t skip steps in the learning process. What I’ve realized is that if you try and reach too far, then things are just going to be that much harder for you. And, in some ways, I was kind of thinking about your stair-step approach in this, where there are certain things that you almost have to learn along the way. As you said, I mean, if there’s that Cinderella story, there are people out there who have gone from 0 to 100 in the first shot, but that’s not common. By skipping some of those steps, or trying to intentionally skip them, it makes it that much harder for you. You might as well have gone for something smaller in order to go through that learning process, because you have to go through it in some way, shape, or form. You’re better off doing some smaller things in order to get that experience and the successes under your belt, not just the learning successes but also the financial successes under your belt as you go through it, because if you go too far without those financial successes, obviously your runway’s going to fall short. So, you need to go through those steps in order to learn things as you go along.
Rob [10:09]: My second thing I wish I knew when I started out is the importance of relationships. Especially, seven, eight years ago, as I was really starting to come into fruition and have apps generate the majority of my income, I was trying to do it all on my own, because there really wasn’t a bootstrap community at that point, and I didn’t have connections. I didn’t have a mastermind group. There was no MicroConf . I didn’t have a network that I could leverage. People told me, “You need to build relationships.” Or, I’d read this in books, or hear it in podcasts or whatever. I didn’t realize how important that would actually be, and that having a community of like-minded people – how important that is, how much quicker and enjoyable it can make the journey, not only in ways of people helping you out, offering to promote your product, offering to give you feedback, but even the support of being able to talk to other founders and find out that what you’re going through is normal, and the hard times are what we all go through.
Having a mastermind group to talk to and get advice, some of the key insights of the last couple of years have come out of the two mastermind groups that I’m in. So, I think that if you’re trying to do this all on your own, and listening to a few podcasts, and you’re reading books, and you think that you’re just going to be able to kind of dive in based on pure knowledge and tactics and grow something, I think you’re missing out on a big piece of it, and I think you’re going to dramatically extend the length of your journey, and not in a good way. Right? You’re going to prolong the learning. You’re going to make a lot of mistakes that you would otherwise not if you had folks around to lend you a hand and lend you support.
Mike [11:43]: The second thing I wish I knew when I started out was that establishing trust is a critical step on your marketing path. I mean, I knew when starting out that people do not just come to your website and then buy from you. That’s not common behavior from most people. However, one of the things that I don’t think I fully grasped was the importance of all the different follow-ups and the individual touches from people, whether it’s emails, or different things on your website, or white papers, or phone calls, things like that. I don’t think I fully grasped how important all those little things are, because they add up to a level of trust that essentially helps convince people to buy, because people just online are typically in this mode of “no”. That’s their first thought. “Are you interested in this?” “No I’m not.”
I think it’s just very common for people who are browsing around on the internet, they see an offer of some kind, and their immediate answer is “no”. But, given enough time, and enough trustworthy touches, I’ll say, it essentially brings them over. Especially if they were interested in it at all. I mean, because they need to be able to trust you in order for them to buy into whatever the product or service is that you’re offering. And, it’s not going to be an immediate thing. It might be three or four emails or something like that, it might be an email course, it might be thirty or forty emails. But, you have to get through all of those different things to help establish the trust between you and the prospect in order to get them to essentially come over to the side where they look at it and say, “Hey, I trust this person enough to give them my money, and I think that I’m going to get value out of this transaction.”
Rob [13:09]: Yeah, and there’s varying ways to approach this. I think the two most common are to go out and build a personal brand and build an audience, and people then know, like, and trust you. This is done typically through blogging or podcasting or video blogging, whatever, Instagram, and people feel like they know you. Then you have some type of product you can sell them, whether that is a book, or a conference, or a physical product like Gary Vaynerchuk with wine, and that’s one way to do it. If that’s your thing, and you’re the personal brand type, and you want to build a personality and put in the time, it’s a long road because you have to put in a ton of time creating that content. That does not happen over the course of six months. It’s years and years of showing up every week and producing. I think some people come out and say, “This is the best way to do it, and the only way to do it.” And I totally disagree with that. I think it’s one approach.
The other approach is we see folks who build a software product. They build maybe a SaaS app and they establish trust not through a personal brand, not through blogging and putting out content every week, but through sticking around and building a product name that people start to associate with something, right? It’s essentially a brand, it’s trustworthy. So, you can see examples of this, like maybe with Bidsketch, or I think Baremetrics has a brand, and I think WP Engine now has a brand name. I would venture to say that in our circles, Drip has some kind of brand name. You don’t have to do it through a personal brand; you can build trust, like you said, with getting folks on a product email list essentially, like an email crash course, and building a relationship over time and providing value. Then, when someone’s ready to buy, it’s not some type of cold sale, although it might start off as a cold touch if you’re sending traffic to your site through ads. But, if you nurture them over time through these various touches, you can build trust without having to do the whole personal brand thing.
The third thing I wish I knew when I started out is that certain products have one natural marketing channel, and that in most cases you shouldn’t spend time looking for others beyond that channel. What I mean is certain websites might get a ton of organic SEO traffic. An example of this would be my beach towel website years ago, or if you have an e-commerce site that has long-tail rankings, or if you have a WordPress plugin that ranks in wordpress.org, they get 80, 90% of their traffic from a single source. It’s a very natural marketing channel for that product, but the mistake that I made early on, especially, was to then try to take that product and double down on it, and spending six months or a year trying to find other marketing channels and grow it. Often times if you have a product with a single channel, this is what I call a step-one product, it really isn’t worth the time trying to make ads work or try to do content marketing for a WordPress plugin, or going outside of this single channel that is essentially free traffic.
Mike [15:57]: So, are there any specific criteria that you can think of that would essentially relegate different products into “this is the only channel where this is going to work”, as you said, the natural marketing channel for it? Are there certain criteria or characteristics of them?
Rob [16:10]: Yeah, typically it’s lifetime value. Typically if it’s a one-time sale, and the lifetime value is less than say, I’ll ballpark it at about $120. If it’s less than that, it’s going to be really hard to invest money and acquire customers, because display advertising, pay per click, content marketing, any type of outbound email, any of that stuff, you’re going to need to make more than a minimum of 120. Realistically around 200 is when it starts getting easier. So, if you have one-time sales, and you’re only making 30, $40 off a sale, you just don’t have a lot of choices. If you have a current price, and you’re making more than that, between 120 and $200 that’s when you can start thinking, “Okay, I’m going to invest into some SEO. I’m going to have some articles written. I’m going to start building that email list. I’m going to go beyond buy ads and really expand out.”
Mike [17:00]: The third thing I wish I knew when we started out was that in many cases, it’s better to not know anything about what you’re getting into. Two notable examples I can think of off the top of my head were MicroConf and my book. I think in both cases, these things turned out well, but I wonder, going into it had I known how much work it was going to be, if I was going to go through and follow through with it. I mean, it was something that I wanted to do, but I didn’t fully realize how much work and effort it was going to take. I think a lot of other people have comments on this as well. I think Paul Graham has also said this. Basically, just not knowing what you’re doing can be an incredible benefit because you don’t know how hard it is, and until you get into it you don’t realize it. In fact, sometimes until you’re done with it, you don’t necessarily realize how hard it was. So, you’re willing to take those risks, you’re willing to go through that learning experience because you didn’t know any better.
Rob [17:50]: Yeah, I agree with this, actually. I have found myself in the midst of some things that were worth doing, but they were harder than I wanted them to be. Had I known how hard they’d be, I probably wouldn’t have started them. MicroConf , like you said, is a great example. I think building an app from scratch and growing Drip is another example of the last two plus years of my life spent doing it. These are hard things and I think as founders we have to do them. I think that’s how we’re wired, and if we didn’t do them we would be unhappy, I think, in general. I think that’s kind of what we need to do, but being a little naive about how hard these things actually are I think is a natural benefit, kind of like forgetting how painful childbirth is or something like that. It’s an adaptation that allows us to revisit these pains and keep doing them over and over, in essence.
My fourth thing that I wish I knew when I started out is that having multiple products is good. I like the diversification, I like the experience you get. But, entering multiple markets is not good. This is a mistake that I made early on because there was no one around to tell me that it was a mistake. But, in essence, I feel like I probably wasted quite a bit of time in having multiple small products that were in disparate niches, right? So, I was selling beach towels to consumers, I had some e-books on just random topics that were totally unrelated, I had .NET invoice selling to, essentially, .NET developers, consultants, and some small businesses who wanted control of their data. I had a number of other products, and there was no overlap between the audiences. There’s an old marketing saying that I like, and it’s, “Selling an existing product to a new audience is good. Selling a new product to an existing audience is good. But you almost never want to sell a new product to a new audience.” That’s when it’s hardest, right? When you’re first starting out, you have to do that, but once you get one under your belt, my advice would be to not stray out and try to do this new market and new product thing again, because that’s when the time frame really extends and the learning is so painful. So, if I could do it all over again, I would have looked to take the initial audience of the first product or two that were successful, and double down on that, and essentially, find out what else they needed, and basically build or acquire products like that. I just think the flywheel and the momentum that you build serving the same market, there’s a ton of benefit to it.
Mike [20:13]: The fourth thing that I wish I knew when I started out was that community is everything. I think this relates back to number two for yours, but it’s hard to get by completely on your own. I think that when I started out, back in 2005 or so, there was a part of me that really believed that you could just kind of sit in your basement and work on stuff and things would work out for you. You didn’t need other people. Obviously, a lot of things have changed since then, but I feel like in the last five years it’s really emphasized to me the importance of having all those other people to rely on and talk to, whether it’s MicroConf , or inside a founder cafe, or just in a mastermind group. All these other people, just as you said, they give you direction, they give you these other insights about their experiences that you don’t have, or you’re not privy to, because you didn’t have those experiences. So, they can help direct you on the right path and keep you off of the wrong one.
Rob [21:01]: So, you actually had four more that you came up with, under the “others” category. So, these are like our four bonus things we wish we knew when we started out.
Mike [21:09]: And, it’s interesting. I wrote these down because I was just kind of brainstorming a little bit about what sorts of things that came to mind that either other people have brought to me, or I’ve kind of noodled around in the back of my head a little bit, but we’ll go through these four. The first one was that the more you learn, the harder it is to make decisions sometimes. This kind of goes back and relates a little bit to the fact that sometimes it’s better to not know anything about what you’re getting into. But, if you know a lot about something, sometimes it’s difficult to make a decision because you start thinking about all these “what if” scenarios. You think about all the different challenges and problems you’re going to have, and all these different things, and you view them as roadblocks. So, you sit there and you spend more time trying to think about how to avoid those roadblocks rather than actually sitting down, doing the work, and just saying, “Okay, I’m just going to plow through this, regardless of however long it’s going to take.” So, maybe it takes you a little bit of extra time to plow through them, but you are not procrastinating, you’re essentially wasting all that other time trying to think of ways around the problems that you haven’t even gotten into yet.
Rob [22:08]: Kind of the curse of knowledge, right?
Mike [22:10]: Yeah.
Rob [22:11]: Yeah, I think that the more I’ve learned, I have found it easier to make decisions, but I do think that I found it harder to give clear, concrete advice when people ask questions because I think of all the things that could potentially go wrong now. I see so many more pitfalls. So, I think in talking about it, I have – naturally I put up a lot more caveats. It’s always “it depends”, and there’s a lot of different variables and then you have to give ranges. I think things were so much more clear five years ago when I knew a lot less, and I could just emphatically say, “Yes, you should always do this. You should never do that.” The more I learned, the more I realized that that’s not the case, actually. That’s why I’m suspicious when people come out and use these words: always, never, should, because they reek to me of inexperience, of your view is not broad enough to realize that there are nuances to this and that none of these things are black and white. Very, very rare that you’ll find something that where “never” and “always” apply.
Mike [23:09]: The second one was that you’re never too old to become an entrepreneur. I actually had a couple of people joke to me leading up to MicroConf that, “Oh, I’m going to be the oldest person there.” The reality is it doesn’t necessarily matter. I mean, people have different career paths and different personal life arcs that go along with them. You can be 21 years old, you can be 65, you can be 75. I mean there are definitely entrepreneurs out there who are also advanced in their years. It almost doesn’t matter. You’re never too old to start something new.
Rob [23:39]: The third one is that knowing what you want or need isn’t as important as knowing why you want or need it. I think this depends on your time frame. I think if you’re early in your entrepreneurial career and maybe you’re trying to quit your job, I think knowing that you want and need it and that you’re willing to really drive for it and invest a lot of time, I think that’s as important as knowing why, because I think just getting there is such a journey that focusing on it is huge. Now, once you get there, you’re suddenly going to discover “wow, this isn’t all it’s cracked up to be”. It’s great, but it doesn’t fulfil you for the rest of your life, right, the arrival fallacy in that you get there and then within a few months you then need to start sorting out your “why”. I think that’s at every step. At every goal and big arrival that you think you’re going to have over the course of your 20, 30 year entrepreneurial career, I think first you need to decide on “what”, and then you’re going to get there and you’re going to achieve that “what”, and then you have to figure out “Why did I do that, and why did that fulfil me?” And that “why” that drives you to that next “what”, that next thing of what is it that I’m going to pursue and how am I going to kind of chart this course of starting businesses.
Mike [24:48]: Yeah, for me this one was more about understanding that the “why” is not about what it is that you’re achieving, it’s about the journey to achieve it. Your real goal isn’t necessarily to achieve whatever the goal is, but it’s to enjoy that journey, to go through it, and experience all the things that go with it. Yes, it’s great to achieve whatever the goal is, whether it’s $10,000 a month in revenue, or 50 or 100. That’s great, but knowing that your journey is essentially the driving reason behind it, at least for me, that’s the driving reason. Different people are going to have different thoughts about why it is that they want to achieve these different goals. But to me, it’s the journey that’s important; you have to enjoy life and to enjoy whatever it is that you’re doing. If you’re not enjoying it, then why bother?
And then the last one on my “others” list was “quitting while you’re ahead is not the same thing as quitting”. I remember this as a quote from the movie American Gangster. It just struck me as something that is fundamentally truthful, because you look at that and say, “Well, if you’re quitting, nobody likes a quitter.” But, at the same time, when you’re quitting while you’re ahead, because you know that other things are going to come along that are either better or are going to torpedo all the things that you’ve done so far, you’re essentially recognizing what your situation looks like and making a conscious decision to move on, versus being in a situation where you’re fighting a losing battle that you cannot possibly win. For example, a number of years ago where they were trying to create a calendar app. It was going to be all web-based, and then all of a sudden out of left field Google comes along and announces that they’re coming out with a calendar app as well. Instead of trying to fight against that machine, they did what I thought was a very admirable move, and just decided to kind of pull the plug and say, “We’re going to quit this. We’re going to go on and move on to something else.” They made that as a conscious decision and I think that’s the differentiating factor here, is that you’re making a conscious decision to move on versus fighting against a machine that you know you’re going to lose against, and folding up shop well in advance of that because you’re deciding to say, “Hey, look this is not going to work out. I recognize that. I’m just going to move on and I’m going to do something where I can be successful.”
Rob [26:47]: That wraps us up for today. If you have a question for us, call our voicemail number at 888-801-9690, or email us at questions@startupsfortherestofus.com. Our theme music is an excerpt from We‘re Outta Control by MoOt used under creative commons. Subscribe to us 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 233 | 7 Takeaways from MicroConf Vegas 2015
Show Notes
In this episode of Startups For The Rest Of Us, Rob and Mike discuss their seven takeaways from MicroConf 2015.
Items mentioned in this episode:
Transcript
Rob [00:00]: In this episode of Startups For The Rest Of Us, Mike and I discussed our seven takeaways for MicroConf Vegas 2015. This is Startups For The Rest Of Us episode 233.
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. What’s the word this week, Mike?
Mike [00:33]: Well, I got back from MicroConf about maybe 12 hours ago. I got in around midnight and it’s 1:00 in the afternoon right now and I’m still recovering even though I had an extra day on the tail end of the conference. So, I don’t know about you but I’m tired.
Rob [00:45]: Yup, yup. Feeling pretty out of energy. I slept until noon two days after the conference and still just can’t quite recover. I can’t quite catch up. I didn’t even stay up that late. I didn’t drink very much. It just kind of takes it out of you. It’s this extrovert hangover, I think.
Mike [00:59]: Yeah. I drank a lot of water but I really didn’t drink anything else. It’s just constantly. It’s weird because it’s Vegas so of course it’s weird because it’s Vegas so of course it’s actually dry and I felt like I was over drinking water and I was always just not drinking enough and I always felt full though because of that.
Rob [01:12]: Yeah. For sure.
Mike [01:13]: So, one of the things I heard from a lot of first-timers at MicroConf was that it was really intimidating because there were just so many people there but I got somewhat mixed reviews about the attendee badges. So what we did this year, which was a little bit different in previous years. In the past what we did is we gave people things that said basically returning attendee and some people kind of as a joke started putting like two, or three, and four of them on their badges. So this year we switched over and to help eliminate that, we’ve handed out this first-time attendee ribbons essentially that you could hang underneath your badge. And some people loved them and then there were a couple of people I talked to who were just like,Yeah. I ‘m not wearing that.
Rob [01:49]: Yeah. For the most part, I heard that people liked it because it allowed them to connect with other folks who were also first-timers. I think I only met one person who said that they didn’t want it on there, that it was like a badge of shame or something, but I thought it was a good idea and it allowed folks to connect.
Mike [02:03]: Yeah, I did too and I don’t know how you felt about it but I felt it was, if you saw somebody with a first-time attendee badge it was like,Hey, come talk to me.
Rob [02:09]: Exactly. Yup. I felt the same way. Sherrie told me the same thing that she was kind of trying to help post, help like welcome folks who had the first time. I got an interesting email from Scott Ewell of Bootsrapped with kids, both he and [Brock?] made it to the conference and Scott said,This was a more rewarding experience for me the second year. Last year I felt a little intimidated/overwhelmed by it all, but this year, seeing familiar faces from last year and reconnecting was a really great experience. And then, this is a part of like I said,I think there’s an evolution from. And he has a number of steps and it’s; number one, working in Corporate America; number two, discovering micropreneurship; number three, attempting something and feeling the impostor syndrome; number four, connecting the one or two others doing the same; number five, discovering the broader community; and then number six feeling part of the broader community. And it feels like for Scott, this second time that he’s really starting to connect and feel part of that broader community which is both MicroConf but obviously even beyond that.
Mike [03:04]: Yeah. That ‘s a really interesting way to put all that. I really like that. It’s not something I could really probably thought of in those terms before. But yeah, those are definitely great points. I really like how he just kind of laid it out like that. One of the things that I found this year and I don’t know if you felt this way, even though the conference was about the same size, it felt harder this year to get to everyone. So for example Scott, I went to the gym one morning, I think it was on Sunday morning, and I had a longer discussion with Scott at the gym while we were working out that I did any of the time. I barely saw him the rest of the conference.
Rob [03:33]: Yeah. I think just due to the fact that so many people come back to MicroConf. We get between a 60% and 70% return rate that everyone knows each other now. A lot of people know each other. And so, it means that you have more people that you want to talk to and there were probably a dozen people who I know really well that I just never got a chance to talk to even though I saw them around.
Mike [03:54]: Yeah, same here. I think there were a lot of people who I know them online but I hadn ‘t really met them in person and I wanted to carve out time and talk to them and it’s just never really got around to it. We were never in the same place at the same time or busy in other discussions, something along those lines, but I don’t know, I don’t know what the answer is there. [crosstalk] conference.
Rob [04:11]: I know. Yeah. We haven’t grown it. It’s been the same size for two years. We definitely have some discussions to have just around making sure that first-timers get a chance to engage with people. There were some chat on Twitter about trying to get more women to the conference. I think these are both things that you and I planned to discuss and try to attack for next year.
Mike [04:31]: Yeah. I had some conversations with some people at MicroConf. So if anyone has any thoughts or suggestions, feel free to privately email us and we’ll kind of take them under consideration, especially if it’s just around like ideas about what to do, about some of those things because Rob and I have our own thoughts and opinions on it but it’s just the two of us kind of thinking about these things and talking through them and relaying what other people have told us and just the conversations we have had. And so if you have thoughts on these things, just feel free to email them to us.
Rob [04:56]: So I want to dive into our seven takeaways for MicroConf this year. The first one is that relationships are crucial and I think this came out in a number of talks. This also came out in a number of conversations I had in the hallway track of people talking about how valuable their masterminds are. I started thinking about it and the number of times I mentioned Derek, Rubin or Jeff Epstein in my talk, probably 20-25 times just kept saying,Yeah. I was trying to make this decision. And then I asked their opinion or Derek and I decided this, for a guy who ‘s kind of a single-founder type and likes to do stuff solo, I sure mentioned other people and how much they ‘ve helped me a lot.
Mike [05:35]: Yeah, I find that too. I think it came out a lot more at the conference and just on that note if people are looking for a mastermind group, there’s a website you can go to called mastermindjam.com and Ken Wallace is behind that and he basically helps put people together into mastermind groups based on a profile of like different criteria and things like that. So if you’re interested in one, definitely go to over mastermindjam.com and Ken will try and put you together with like-minded individuals.
Rob [06:01]: I’m glad Ken did that. You and I have been talking about doing something like this and just haven’t had the time so it’s great. So he’s a Micropreneur Academy member and he came to MicroConf this year and he obviously sees the value of mastermind group. So I like that there’s a resource for our community to take advantage of that.
Mike [06:14]: I think the second major takeaway for MicroConf is do not hang stage lights near a sprinkler system.
Rob [6:20]: Yeah, in case you haven’t heard, we had a sprinkler go off in the middle of the conference and it spilled black smelly water that had been in pipes for 50 years all over the back of the room. Luckily, it was the back and not the center so we got a few people wet, I think a pair of shoes, and maybe a laptop were ruined but that was pretty surprising. What were you thinking when you saw that happened?
Mike [06:42]: I remember thinking,I’m not entirely sure what’s going on but I’m glad I paid that extra dollar for terrorism insurance just in case.
Rob [06:50]: Seriously. Yeah, it was a complete shock. This thing just goes off in the back of the room and people start scattering and again luckily, it was all the way against the back wall so it wasn ‘t like it was above a huge group people, but people pretty much evacuated the room and it was right as we were heading in the lunch and I was thinking right as that happened like,Wow. Is this it? Is MicroConf over this year? How are we possibly going to recover from this? But within about 10 or 15 minutes, I started realizing,This will go on. Even if we just get a portable PA system in here and we do some groups until they can get a room for us, I could do my talk without slides. I just started thinking of all the alternatives that we could start doing and realized that the conference would not be over.
Mike [07:32]: Yeah. It kind of goes back to all the different problems we ‘ve had over the years to be honest because somebody asked me,How’s the conference going? And every time that anyone asks meHow’s the conference going?, I always turn around and ask them. Yeah, because if they don ‘t see anything, then it’s going great because there’s all this stuff behind the scenes that you and I see that things are going wrong and if nobody notices then things are going great. And pretty much every year, we’ve had something go wrong and almost nobody has ever noticed. And this is I think the first year that something major has happened where it’s not like you can hide that. It happened right in the middle website tear downs and it was obviously that something is going on. It cleared the room. So, you just have to kind of deal with it and move on. There was a little bit of indecision there it’s like,Okay. What is going to go on now? How do we handle this? How do we move forward and not just have to end the conference right this second?
Rob [08:21]: Yeah. And the nice part is since it was during lunch, the hotel was able to scramble and get another room set up and in essence, they did it over lunch and then for about another half hour. So we lost half hour of the schedule but we just ran a half hour over towards the end of the day. So we didn’t lose any programming and the only thing that it did was put us 30 minutes behind schedule which is pretty impressive to be honest. I was thankful that Zander was there to handle that and that the hotel was able to scramble that quickly and get us back on track.
Mike [8:49]: A bunch of people said that it was kind of amazing that we were able to recover as quickly as we did from that little incident, not exactly little but from that incident, it was just amazing how fast we were able to recover. And Zander did a fantastic job. I can’t count the number of people who came up to me and said,Wow. Zander is awesome. He does a really, really great job helping you guys to this conference.
Rob [9:07]: Yeah. He’s really taking a lot of the load off of us. So, our third takeaway from MicroConf 2015 is that if you have a product that you need to find your fit first whether you call it product market fit or whether you call it building something that people actually want and are not churning out of, that you need to find that before you start marketing. This came up in a number of different talks. I think most notably my talk focused on it for a good third of the talk and Hiten Shah spent maybe a third to a half of his talk talking about how to find product market fit, what it looks like, how to measure it. And in the responses to the survey that we sent to attendees afterwards, a lot of folks were talking that this was their number one takeaway is to not just build something and then try to run all these marketing approaches that we always hear about but to build something, ensure you have this fit, and then start marketing because if you start marketing before that too hard, then you will just lose a lot of money and basically pour it down the drain.
Mike [10:06]: Yeah. It’s about the efficiency of what your marketing is because if you don ‘t have that product market fit first in your marketing, it’s just the efficiency is so much lower because you’re going to convert all that worse and people are going to churn out faster because what they bought is not going to necessarily what they were expecting and I think that ‘s really the main takeaway from that. It’s more about the efficiency of your marketing.
Rob [10:26]: Fourth takeaway from MicroConf was that buttons matter and to test them, and often to test them in conjunction with headlines. And this was from Joanna Wiebe ‘s talk. Joanna is from copyhackers.com and her talk was one of the highest rated this year and I thought it was a very, very good talk. She talked a lot about how much the text on buttons actually matters and just showed a number of split test talking about why that ‘s the case and why we often focus too much on headlines and don ‘t look enough at the text that we’re putting on buttons.
Mike [10:58]: One of my big takeaways from her talk was that there’s always a lot of these best practices that people repeat over and over again and the reality is that a lot of them don ‘t necessarily pan out and you still have to test them and even if they’re best practices, you still have to test those things because it’s not always clear that they ‘re really going to work that way.
Rob [11:15]: If you haven’t followed Joanna, I’d recommend checking out @copyhackers on Twitter or right in copyhackers.com because she has some really exceptional content around copywriting and conversation rate optimization. Our fifth takeaway was actually from one of the attendee talks. So over the past couple of years, we’ve allowed attendees to submit talk ideas and then before the conference they are voted on by the other attendees. And so, I think this year we got around 35 talk submissions and we took the top 12 and so these actually all 3 of these last takeaways are from attendee talks. This first one is from Jacob Thurman and he’s been to every MicroConf as I know I think for the last five and he talked about selling his single-founder software product. He called it a [Micro ISP?] but it’s in essence just him running the show and it was a fascinating look at what it took to build this up and then the decision-making process of whether to sell and how much to sell it for, and he had some really actionable takeaway that seems like that would be all kind of a gut feeling. But he had this great spreadsheet where he laid it out and he also talked about how to make big decisions and not make them poorly.
Mike [12:28]: A couple of other things that were takeaways from his talk is to not make big decisions when you’re not at your peak level of performance and he had this acronym called HALTS, H-A-L-T-S. It would basically stood for, don ‘t make big decisions when you are hungry, angry, lonely, tired, or sick because you’re going to make good decisions at any of those points. And it intuitively makes sense when you think about it that way but if you’re making those decisions in the moment, then I can definitely see how you would make the wrong decisions and come to regret them later.
Rob [13:00]: Yeah, and for the record the HALT acronym without the S it’s actually very famously used in psychology and he talked about that and then he realized he had a stomach issue during this time where he had stomach pains and so he added the S to it and I thought that was pretty clever.
Mike [13:14]: And I think this is the topic that most people in our community don ‘t necessarily talk a lot about because it almost seems like there’s not a lot of buying and selling in our particular space, I’ll say. I know that there is some but I think it’s just not widely discussed.
Rob [13:27]: Yeah. It seems like more and more this is happening as our space is getting more mature because there are more people self-funding. You would see Patrick McKenzie selling a few. I’ve obviously bought a lot in the past and sold a few. I think Brian Castle sold one or is selling one. [Field Erickson?] selling were [?] but I mean there is becoming a little bit of liquidity as more of us are doing it and I think as we kind of stair-step up, it can either autopilot your old ones or you can sell them and selling them is not a bad idea to get a nice little chunk of cash. Now in the old days, selling them meant putting them on flip and getting 12 to 18 months ‘ worth of profit which was a drag but now if you actually build a good product, you can get 3 years ‘ worth of net and it makes it more realistic to do, right. It makes it more worthwhile I guess I’ll say because it allows you to take that money and then invest it up into more complex products.
Mike [14:17]: Yeah. That ‘s kind of the leveling-up that we’ve kind of talked about a little bit on this podcast in the past. So, it’s good to see that stuff going on though.
Rob [14:24]: Yeah. Our sixth takeaway was from Ted Pitts attendee talk, and Ted is with Moraware Software. He’s one of the co-founders Ted and Harry who have been to a lot of the MicroConfs as well and they run countertop installation software. So it helps countertop installers to schedule and do things like that. And he talked about the most important SaaS metric that no one talks about which was profit, and I thought it was cool because he talked about how they’re doing substantial amount of revenue with only seven employees, and that they’re not a big sexy Silicon Valley startup but they ‘ve been in business for, what was it? 10 years, or 12 years.
Mike [15:01]: Yeah. It ‘s a long time.
Rob [15:03]: Yeah, it is. And you know what, they’re just legit like they’re just around and they’re stable and both of them have [known?] an attendee talks and Harry has been on the podcast back around episode 40 or 50 and they’ve just kind of been around the community and I like their presence, and I like that they’re not going after these big startup ideas even though they have a successful business. They haven’t thought of flipping it and selling it to go after something more sexy, and that they’re really just content to run this highly profitable business that kind of owns this niche and it does really well with it. I think that’s something to be kind of respected. I respect what they have done and I like to hear Ted talk about it in his talk about them at finally achieving profitability even though they ‘ve kind of been profitable for years but just talking about the rough ups and downs of getting here.
Mike [15:47]: Yeah. I thought it was interesting to how Ted put things into perspective with really just talking about profit. It opens up your options, is really the bottom line. It lets you do things that you might not otherwise have the ability to do and just being able to have that profit around to use as you want it or you need it. Obviously, if you need it then you have to spend that money, but you don ‘t have to spend the money. You can just keep it and there’s nothing wrong with that. There’s nothing wrong with just keeping the money.
Rob [16:12]: Our seventh takeaway from the MicroConf 2015 was from Jordan Gal ‘s attendee talk and he talked about outbound email and called emailing prospects and essentially said doing sales calls, doing sales emails for prospecting and what I like about his talk is it was 12 minutes. It was super actionable. He laid out all the numbers of exactly how much it cost to compile a list, to send the emails, to work with the leads. It was really compact and he showed all the tools that he used, and so, I appreciate that. I think that ‘s something we’ve always tried to do with MicroConf is to have actionable talks that you can basically takeaway and use in your business next week and Jordan has definitely delivered on that.
Mike [16:50]: Yeah. That was a very tactical talk. He told you exactly how to do it. It was basically a play-by-play of this how we do this and this is how you can too, and I thought that that was very, very useful.
Rob [17:01]: I think that ‘s part of the feedback we got from the survey. What’s nice this year is we’re recording this episode but we have already sent the survey and received feedback from the attendees and that is typically not the case. But some of the feedback, as always, it ‘s mixed, right? Some people I want more inspiration, some say less inspiration. But one of the threads that I was noticing is some folks wanted some more tactics and I don’t know quite why that happened this year but it seems like there were some highly tactical talks and maybe fewer technical talks that we’ve typically had.
Mike [17:31]: Yeah, I’m not sure. I think it depends a lot on where people are in their business which is another one of those discussions you and I kind of have to figure out because there ‘s those people who have come back. I asked in the audience, how many people were at the different numbers of MicroConfs and so who was there for the first time, who had gone to one or two, three or four before. And then there were probably a larger number of people there who have been to five MicroConfs than I would’ve thought based on where you are, you’re going to want different amounts of tactics and I think we’d need to go back and take a look at some of the feedback and kind of figure out where people are at before we made those judgment calls. But it’s an interesting discussion to have and an interesting problem to think about. So, you have to look at those things and maybe take those into account as well.
Rob [18:12]: Yeah. That ‘s a really good point. I think that is probably why we’re getting more and more varied feedback where in the early years it was pretty consistent like,You should do this to improve the conference. And it was obvious that ‘s what we needed to do, but now we get this wide swath of input and i think it comes from having some folks who are, there are still a handful of people who are looking for an idea, who attend MicroConf but that ‘s really a minority. But we do have people who are just launching and just getting started and then we have folks who are running literally multimillion dollar software companies, and it’s kind of like how do you present enough content for all of those groups, that whole spectrum to be happy with it when they get something out of it.
Mike [18:51]: Yeah, to be useful to everybody. If you’re catering to everybody, you’re really catering to nobody and that ‘s kind of what makes it toughest because there’s this big spectrum from right now of people who are first-time attendees and they’re just kind of thinking about it. They just don ‘t even have an idea yet, and they’re there for inspiration, and then you do have the people who have been to five and they ‘ve got a business that ‘s doing several million dollars in revenue every year. Catering to both those types of people at the same time, I think it’s really, really challenging for the speakers.
Rob [19:17]: One other thing we tested out this year was workshop. So we did two workshop the day after MicroConf. One was headed up by Hiten Shah and the other by Patrick McKenzie, and you had actually wanted to do this for several years and I’ve been kind of against them to be honest just because I’ve never seen them well executed. And then when I went to DCBKK, Dan and Ian ‘s event last October, I saw workshops that I thought were well executed. And so far, the initial feedback was that the workshops were worth it and we haven’t even pow wowed on this offline but I get the feeling that this is something that we’re going to want to continue because I think that is where the more advanced folks were catered to. Because if someone is doing 50,000 MRR in their business, they aren’t necessarily going to get a ton out of general talks anymore but these workshops for Hiten and Patrick really dug in to everybody ‘s funnel and everybody ‘s process and gave super actionable points of how to grow. I get the feeling that ‘s where they got their money ‘s worth.
Mike [20:19]: Yeah. I talked to several people because what I’m going right now is I have to go back through and look up everybody ‘s information and reach out to them but I want to schedule at least 10 or 15 minutes to talk to every single person who went to a workshop if I can get them on Skype or on a call or something like that. And I’ve already had three or four of these discussions already because there are people who stuck around after the conference, but that was the sense that I got from people. There were definitely things that we could’ve done better upfront in terms of communication and letting people know what the workshops were and what was going to be in them, but we didn’t get tickets out until partly into January. So, we got that done and we got that all taken care of and then all of a sudden, we ‘ve got workshops to deal with and if we don ‘t do them this year, we have to wait another year to do any sort of iteration on them. So, I wouldn’t say that they were added in after the fact but the reality is it was just working on them was held up by the fact that we didn’t have a signed contract for the hotel until January. So, some of that was our fault buty the people coming out of the workshop by and large, all I’ve heard is great feedback from them just,Yes, I would absolutely do this again. It was fantastic. It was very, very helpful.
Rob [21:22]: So does wrapping up MicroConf Vegas make you excited for MicroConf Europe here in the fall?
Mike [21:29]: As long as there’s no sprinkler systems involved.
Rob [21:31]: I know. Oh, we’ll get planning on that soon. So, to recap, our seven takeaways from MicroConf Vegas 2015 were number one, that relationships are crucial; number two, don ‘t hang stage lights near a sprinkler; number three, find your product fit first and then start marketing; number four, buttons matter, test them; number five, don ‘t make big decisions when you’re not at optimum performance; number six, the most important SaaS metric no one talks about is profit; and number seven, how to run an outbound email campaign.
Mike [22:01]: If you have a question for us, you can call it into our voicemail number at 1-888-801-9690 or email it to us at questions@startupsfortherestofus.com. Our theme music is an excerpt 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 232 | How to Design a Killer Client Demo
Show Notes
In this episode of Startups For The Rest Of Us, Rob and Mike talk about how to design a killer client demo. They put together a basic four part outline that will help you take your customers to the next step.
Items mentioned in this episode:
Transcript
Mike [00:23]: In this episode of Startups For the Rest of Us, Rob and I are going to talk about how to design a killer client demo. This is Startups For the Rest of Us, episode two hundred and thirty-two.
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 going on this week, Rob?
Rob [00:28]: A couple weeks ago I mentioned I was going to be hiring an executive assistant, super part-time, remote, to help with my email volume, and to go through and do some filtering. And I’ve been thinking about doing this for a couple of years, and really couldn’t see a way that someone could actually help and save me time. But with my schedule going from having four hour tasks, that I do during a day, to basically hundreds of five minute tasks, which is essentially what I do now, I really did see that I probably needed to do it.
So I hired an executive assistant. Found her on oDesk. She’s based here in the U.S., and it’s actually working our pretty well. She’s basically just filtering my inbox into two separate labels. She’s either putting them in one of the two labels or she’s deleting them. And I just gave her instructions, and walked her through the screencast, and then if she has questions she asks me. So the two labels I’m using are ” _today” and “_this week”, and it really translates into “urgent” versus “you can do this whenever.” And underscores there, of course, to keep them at the top of the list. But I’ve been shocked at how much time it’s saving me. It’s not hours a day, for sure, but it’s probably maybe twenty to thirty minutes a day. Just getting all that sorting gone, there’s TrueTwit validations that come through from people on Twitter and she’s handling those and one by one I’m figuring out these little things she can do to save me two minutes here and two minutes there, and it’s cool. It’s cool just to open up Gmail and never look at the inbox. That’s been the hardest thing, either on my phone or on Gmail, is to only look at Today tab essentially and see what she’s putting in there.
Mike [02:00]: Yeah, that’s interesting, because I find the same thing. If I try to avoid doing my email throughout the day, or just try to batch it up, the most difficult thing is not going in there and looking at it just out of habit, sheerly our of habit. I grab my phone and it’s like “Oh, do I have any messages?” It’s obviously a bad habit, but hard to break, too.
Rob [02:16]: Yeah. I do the same thing. And I have peeked in the inbox, especially on weekends. She doesn’t work, so on the weekends I do have to check on my inbox if I want to see stuff that’s coming in. But overall, I’ve been pleased with it so far, and I’m hoping that overtime I can give her more and more little things to do as she learns my work flow.
Mike [02:32]: Very cool. So we got a lot of positive reviews from the “Being Married to a Founder,” episode a couple weeks ago, when we basically outsourced the podcast to our wives. Jay Adams said, “This is one of the best episodes yet. It’s great to hear insights from other founder’s spouses, and how it relates to our own situations.” And Richard says, “Well done. That must have been quite scary to do. I’d love to hear some more advice you could give to founders on how they can make it easier on their spouses.
Rob [02:55]: Very cool. Yeah, I thought that was a neat fifth anniversary episode, right? We could get off the mic and put some other voices that I think have a lot of interesting things to say. And Richard, if you’re looking for other advice on working with your spouse and communicating, that kind of stuff, I have a podcast with Sherry, my wife, and it’s called Zen Founder at Zenfounder.com. Every week or two we’re addressing that kind of stuff. It’s keeping your family and yourself sane while you’re starting up.
Mike [03:20]: And I’ll vouch for it as it’s a good podcast. I listen to it.
Rob [03:23]: Cool. So I have some bad news. I hired a part-time marketing assistant, essentially. He had a full-time job during the day, and he was doing stuff on the side for me. And I had a thirty day trial. We were trying to figure out if we could work together, if he could do the work and stuff, and he quit about three weeks in and he just said, “It turns out I don’t have as much free time in a week as I thought I did.” He said, “I feel bad that I can’t put in as much time as you need, so I’m just going to bow out now before it becomes an issue.” So that was a bit of a bummer. It’s a bit of a bummer to try and get down to someone and hire them, and then have them not be able to do it. But the good news is through some crazy circumstances I stumbled across a candidate who could not only fill that gap of online marketing, but she also has customer success experience, giving demos. She has a unique skill set, I’ll put it this way. Because, normally, you can find someone who can do onboarding, and be a customer liaison or account executive, but they don’t have internet marketing experience. And she happens to have both of them. So I made her an offer this week and it looks like things are going to move forward with that. So very good ending to what was otherwise some bad news that I received last week.
Mike [04:30]: It’s always rough to have to end one of those things in the middle of it, especially when it’s not your decision. But in some ways it’s better to have those decisions forced on you, early, especially, then to have to make the hard decision later on and say “This isn’t working out and I have to end it.” Because then it’s more of a mental weight that you’re going to carry around for probably at least a couple of weeks, if not a month or two, before you pull the trigger and say “This has to end now, because it just can’t go on any further.”
Rob [04:53]: Exactly. And I really appreciated him just coming out and saying. I have no ill feelings at all. I appreciated his honestly, and the fact that he didn’t want to waste either of our time. He didn’t just fade away like a lot of contractors do, and not get back in touch, because that’s, like you said, a real bummer because it drags on for weeks and weeks.
Mike [05:10]: Yeah. I might have mentioned this before. I was interviewing somebody for a developer position, and my typical process is go through, talk to them for a little while on a phone call and explain to them what the position is, and then ask if they’re still interested. And I actually had somebody tell me, “Yeah, I’m not interested.” I was shocked. I was just like “Oh. Okay.”
Rob [05:28]: That’s good to know now.
Mike [05:329: “That’s good to know now. Thanks.”
Rob [05:32]: So before we dive into the meat of this episode, we got an email from Wilson Peng and he says, “I’m a self taught Rails guy, but self-teaching myself through all the sites you mentioned didn’t work.” And he’s referencing our episode, it was three or four episodes ago where we talked about whether a non-technical founder should learn to code or not, if they’re going to start a SaaS app. And we threw out some different sites like One Month Rails and Udemy and other things and he says, “After I started working for Iron.io I was pretty much able to code anything, mainly because we worked out of a co-working space, which is where all the [Dev?] tool startups work, and it was beyond easy asking for help when I ran into problems.”
What I thought was interesting is, one thing we didn’t mention on the “Should I learn to code episode,” is that in my opinion, the best way to learn to code, by far, is to get a forty hour a week job coding and have a mentor. Have someone you are either an apprentice to, or they’re just an informal mentorship relationship, where you can go and they can show you how to architect and they can show you the stumbling blocks and how to get around them. The reason we didn’t mention that on the episode is that the person asking the question already has a full-time consulting business going and he’s thinking about launching a SaaS app on the side. So he doesn’t really have the leeway to go and work forty hours a week salary for someone to learn to code. But in my opinion, it’s far, far better to get a full-time gig in coding, if in fact you do want to learn to code. So what are we talking about today?
Mike [06:59]: Well, we have a question that came in from Guy Lewis, and Guy wrote to us and he said, “Hi, guys. It almost goes without saying how valuable your podcasts are, so firstly, thanks so much for sharing your hard-earned experience. My question is can you do a podcast on how to set up an online demo? What tools and equipment are necessary, and what have you learned about managing consistency across a team? Thanks again, gents. Guy Lewis.”
Well, Guy, I think in terms of the tech itself, the tech can be fairly straightforward, especially if you’re doing an online demo. For our podcasts we just use Skype. I use Pamela on my machine because it’s Windows, and Rob uses –
Rob [07:29]: Call Recorder.
Mike [07:30]: – Call Recorder because it’s on a Mac. You probably don’t need those particular features, and you probably wouldn’t be using Skype to run a demo. I would recommend either GoToMeeting or WebEx. If you go with GoToMeeting, I will warn you in advance that the recording does not work very well. So if you’re anticipating recording the demo, I’ve always had problems with it, and when you do get the recording it always goes into this unique GoToMeeting format that you have to use their player for. So just keep those things in mind when you’re using it. But otherwise, in terms of the tech, in terms of the headset and microphone, I would use a headset. Don’t use a stand alone microphone. Use something that is going to sit on your head. You don’t really want to be using a phone if you don’t have to. If you are going to use a phone, make sure you’re using a headset that goes with it, so that as you turn your head or look at different screens your voice isn’t fluctuating for the customer. You want a very uniform experience when you’re doing that.
As I said, the tech stuff itself is very easy. I think that when you’re looking at a client demo, what you really want to concentrate on is, what is the customer looking for? What is it they want to learn? How do you present it to them? And how do you go through that process of conveying the information to the customer in a way that is going to essentially lead them from that call to whatever the next step is.
So what we’ve done is we’ve put together an outline of the four basic steps of how to design a killer client demo that is going to help you take that customer from where they are today to the next step, whether that next step is them giving you a credit card right then and there or another call or a trial or et cetera.
Rob [08:57]: Yeah, to jump in and actually touch back to the tech stuff. When you get your headset make sure it’s a USB headset to avoid the hum. I often find that gaming USB headsets are pretty good. The other service that I’ve used for giving demos is Join.me, and it’s a free service, but obviously that comes at a price. Free like a puppy. I have used Skype for a bunch of demos, and it’s not the most professional thing, just because you have to add them as a Skype user, as a contact, and then share the screen and stuff. It works fine, but moving forward, if I were actually to start scaling this up, like you said, Mike, Skype is not the way to do it.
Mike [09:30]: Yeah, both GoToMeeting and WebEx have free tiers. So I think that you get up to two or three users, or something like that, and it’s completely free. So as long as you’re not running a large scale demo for five or six people in different locations, you’re good.
Rob [09:44]: Cool, let’s dive in.
Mike [9:56]: So the first step in designing a client demo is your open. And in the opening, basically what you want to do is you want to let the other person talk. You don’t want to go into what it is that you do, or how you do it. What you want the customer to do is you want them to describe their problem in their own words. And if more than one person is on the call, you want them to ask them to reiterate their current challenges and allow other people who are also on the call to chime in. That does a couple of different things. First one is it level sets everyone’s expectations, so that everyone on the call knows exactly why they are there and why they are talking to you. The second thing it does is it allows them to provide you with the information that you need further on in the call.
Now you can leverage things that they’ve said later on, but you can’t do that unless you’ve asked them. So if they say, “Well we’ve had a problem getting our servers connected to X, Y, and Z services.” Later on in your call you can create a hypothetical scenario and you talk specifically to that and you say, “Well, and so and so had this problem where they were trying to get these servers connected to X, Y, and Z services,” and basically reiterate exactly what their problem was, and the fact that you’ve been able to solve it. But again, if you don’t ask those questions, you don’t know the information, so you can’t relate it to them later on.
Rob [10:57]: Yeah, I like this open. I think this combines maybe the first two questions of what I consider a really good sales call outline. And this was presented by Harry Hollander two years ago in his attendee talk at MicroConf. His first two questions of the three question outline are, number one, “What are you doing now for X?” So for me it would be “What are you doing now for email marketing?” [Auto Shark] might be, “What you are doing now to access your server’s security risk.” And the second question is, “What about that isn’t working for you?” And I think that those two combined, kind of gets at this opening, right? You’re basically saying “”What’s your situation today, and what’s the problem with that? Why are we even on this call? Why are you looking at this as an opportunity?”
Mike [11:38]: So, also as part of the open, once the stage has been set, that’s about the time when you start talking about who you are, what the product you have is, what the history of the product is. Some people don’t like to do this. Other people prefer to do it. If you’re talking to large enterprises it’s almost expected of you that you’re going to talk to these things because they want to know that whatever it is that you’re pitching to them has a history behind it, that they’re going to be able to rely on. So the larger the customer, the more you’re probably going to have to put this type of thing in here. But at the same time, there are situations where the person’s done their research. You probably don’t even have to talk about it. I’ve actually gone into demos where I walked in and I asked the questions and then I put up a slide and said, “This is our history.” It’s really not important. Nobody cares. And just clicked to the next one. And people laugh about it but they remember it, too. They realize that what you’re doing is you’re getting to the heart of the matter, the things that matter to them, because you don’t care about you, you care about them and care about solving their problems. And in some ways it’s just psychology. It’s just explaining without telling them that you care about them, and you’re not there to just talk about yourself.
Rob [12:41]: Sure. Yeah, what I’ve found is – I haven’t done many cold demos, they all have quite a bit of interest by the time we get on a call – and so I tend to give a little bit of info about Drip when I get on the call, but it’s like you said, you don’t want to talk about yourself here. You’re really trying to get at what the customer is trying to achieve. So I think building a little bit of credibility up front is helpful. You can say, “We’ve been in business this long,” or “We have this many thousands of customers,” or just position yourself like “We’re the lightweight marketing automation that doesn’t suck. That’s really who we are,” just to get even one or two sentences in there of setting the stage of the call. And you can always go into this later. The person’s going to have quite a few questions for you – at least they should – and you can answer those toward the end once you’ve gotten this early stuff out of the way.
Mike [13:28]: Yeah, you bring up a really, really good point there, which is you have to know what the stage looks like before you even get on the call. The last thing you want to do is get onto a call and think that you know who you’re talking to, or the type of customer that you’re talking to, and get it wrong. Because you can very well end up showing them the wrong presentation. And we’ll talk a little bit about that later on, but just to give you a very brief example, one of the people that I was talking to in the past couple of weeks, I thought I was talking to a very small IT company that did security assessments, and I went in and I gave my sales pitch, and I was talking to them and I was like “Oh, yeah, we work in this general vicinity and people who we are interested are between the two hundred and five hundred node range.” Which that’s going to depend on who you’re talking to. You don’t want to sell somebody who’s working with extremely large environments that you deal in the small range. Well, it turns out that that was actually what it was. He’s like “Yeah, we wanted this for a thirteen thousand node environment,” and I’m like “Oops! Just shot myself in the foot there.” So you really want to know what the stage is before you even get on that call. So if you have a way to ask questions before you even get to the point where you have the demo, that’s the ideal scenario, because then you can tweak your presentation specifically to them. And usually it’s worth doing that if you’re going into these direct one-to-one sales environments.
Rob [14:37]: Yeah, and I’ve found it helpful to have a lot of flexibility during this whole process. I know we’re still on step one, which is the open, but I haven’t prepared slides for these sales demos. I typically will get on the line, have a conversation, get a little more detail about what they’re looking for, and then I will demo the part of the app that they want to see and I will do a live demo. I realize that won’t work in all cases. If you were demoing to five people or something, you probably want a few slides to give them whatever credibility and give them some ideas of common questions or something, but I feel like having a lot of flexibility and really making it a conversation, rather than a presentation, has worked out better for me.
Mike [15:14]: Yeah, and I think that just depends a lot on the size of the customers you’re working with and what their expectations are.
And that goes into your second part of your demo which is, essentially, the lead in. And I think that, Rob, you probably handle these things a little bit differently than I do, but I like to gather as much information about the target customer as I can before I get in there so that the demo itself is tailored explicitly to them. So it almost looks like they’re the ones who are part of the demo. And the way I do that is I essentially start out by telling a story, and the story is about a hypothetical client of mine. It’s best if you can use a real one, but I try to include a photo, a job title, et cetera, and explain who the person is that has the problem. And this problem that they’re having should very closely mirror the problems of the person you’re talking to. And the only way you’re going to be able to do that is if you’ve talked to them on the phone, or via email, before you even get on the call. So, especially if you’re talking to groups of people, then you can talk to one person, get a feel from them about what the problems are that they’re facing, and then incorporate those in the demo. And then when you get into the demo itself, you’ve got two, three, four, five people on the call, and you’re relaying exactly what their situation is to them, and to the rest of the person – except for that one who you had previously talked to – the demo that you’re presenting is exactly describing the situation that they’re in. So at that point it really looks like you are on the ball, you are doing exactly what it is that they need you to do.
Rob [16:33]: That’s a pretty nice hack. Yeah, I’ve definitely never done this. I always just take the questions, find out their situation, and answer them and do a demo. But if you actually have prep work that you’ve done in advance, I think that would come off quite professional.
Mike [16:44]: Yeah, like I said, it depends on how much time you have to prepare, and what the dollar amounts are. If you have a twenty-five dollar product it’s not worth doing this every single time. But if you’re selling for thousands of dollars, it makes a big difference. Especially in their perception, and the number of people you’re doing these demos for. Because at the end of the day it’s all a numbers game.
Rob [17:01]: Right, and I think you raise a good point that we should probably touch on here, is when should you do these demos? Because, obviously, if you have a ten dollar a month SaaS product then doing a demo for every new prospect isn’t feasible. It’s just not economically viable. Now I do think that early on in your product’s lifespan – basically when you’re doing a lot of things that don’t scale – I do think that even with a ten dollar or twenty dollar a month product, that I would be willing to do these demos, because the information you’re going to get out of them is so valuable to you. But once you’ve hit the point where you have built something people want, and you’re getting people to sign up for your trials, then I tend to only do these demos for people who are going to spend more than X dollars a month, or per year. And for me that number is right around a hundred and fifty, two hundred dollars a month. It will depend on your business. Like you said, Mike, if you’re selling something that’s thousands of dollars – let’s say you have a fifty thousand dollar contract, or fifty thousand dollar project that you’re going to be selling – than obviously it’s worth doing something like this. I don’t know if you have a specific number in mind of how low it goes before you won’t give a demo?
Mike [18:01]: It’s got to average out to at least a couple hundred dollars a month, is really what it comes down to. So if I’m selling something for five thousand dollars I’ll do a demo. But if it’s for a thousand I might or might not.
Rob [18:11]: Right, a thousand a year.
Mike [18:12]: Yeah. Those are excellent points. You have to know what those numbers look like, and what’s worth it for you to do the legwork before you go down this road.
Rob [18:18]: And I actually think that number goes up over time, at least in my experience with the product, because early on you’re just scraping to do everything you can to get sales. You start giving to most everybody and then it’s like “All right. Only people who are going to pay us fifty bucks a month, then we’ll do it.” And then you get a few months more down the line and that doesn’t move your needle anymore, so you need to jump up to a hundred bucks or a hundred fifty bucks. And I think overtime with any good product that is growing, that’s naturally going to happen, and that dollar amount is going to go higher.
Now there is an in-between here where you can record, certainly not a personable demo, but if someone requests a demo and they are only a thirty or forty dollar a month client, you can send them a pre-recorded screencast that isn’t highly produced, and looks almost as if you could have recorded it just for them. I’ve known a couple guys who do this, and I’ve started doing it as well. It will still give them a nice demo, and as long as you have a few markets that you’re focusing on and you can record one for each, that’s pretty applicable to this person’s question, that’s a nice in-between. So you don’t have to just tell them “No,” but you can say “Sure, here’s this screencast demo that we’ve recorded,” and send it to them, and not have to do all the scheduling and the manual in-person thing.
Mike [19:22] Yeah, those are great ideas. Jumping back to the lead in, another thing that I like to incorporate in the lead-in is part of this hypothetical story about a hypothetical client, talk about the things that that client tried, what didn’t work, and why those things didn’t work. And these are things that you can extract from the initial person that you set up the call with. Before you had said that Harry basically starts out the conversation with those things. I don’t know if it makes a material difference. Maybe it does, maybe it doesn’t. I haven’t tested it. But again, having those things in there so that the customer knows that you know what you’re talking about and you have addressed these types of issues before and if those things mirror their experiences, then again, you’re speaking their language. They know that you’ve gone down this road before, and that level of trust just goes up with you.
Rob [20:05]: Yeah, and the cool part is that, assuming you’ve vetted your customer well and you have the information before the call, you can tailor that story, like you said, to mirror their journey. And the customer will essentially be nodding their head the entire time, because they know what this path looks like. And like I said before, it comes of really professional when it looks as if you’ve really catered everything to them and it really connects with their use case.
Mike [20:27]: Yeah, and in some ways you can almost relate this entire presentation back to something that you would find on a long form sales page, because the long form sales page it intended to walk them through the journey, talk about all the different pain points, and hit on all the different things that that person who’s reading it, all the challenges they’re likely having with whatever the situation is that they’re in, and you lead them down the path. Well, you’re doing the exact same thing in this particular demo. You list out all the different challenges, what the customer ultimately did about them, and all of those things should lead down the path to your product.
And that leads up to step three of the demo, which is the middle. And in the middle you’re going to talk about how you went about solving the challenges for this customer. And again, going back to step one, you relate it back to that opening so that your product and your company history converge with this hypothetical customer who mirrors your prospect. And again, you’re basically aligning the starts. You’re putting everything all in the right places so that the only natural conclusion that the person can come to, that is listening to the demo, is that your product sounds like it’s going to be a great fit.
So once you’ve aligned all these things, one of the other things you want to do is you want to touch on all of the different challenges, but don’t necessarily talk too much in detail about them, because you want to allow the customer to come back and provide you with additional input because, obviously, they’ve tried different things and they’re going to have different perspectives. They’re going to have some bad experiences that they’ve gone through, with maybe some competitive products or manually doing things. You always want your product to be the natural conclusion but you want to essentially allow them to speak to you to say “Hey, by the way, we did try that and it didn’t work and here’s why.” Or if they have any objections. You want them to be able to bring those things up so you have an opportunity to talk to them about it. And if you’ve done your homework in terms of doing sales demos, at the same time, anytime a customer asks you a question on a call you should also be keeping a separate document some place that it lists your customer objections, because those are the things that people are going to want to know and you want to be able to have a concrete answer for any time the customer says something. For example, “Oh, that price point is too high.” It’s like, “I understand that you say that but,” and then you list out five reasons why your price isn’t too high. And if you have those things all thought out in advance, because you have taken the time to set those things off to the side when a customer asked about it, and then you think through exactly what the answer is, when another customer comes to you and says “Hey, I have this particular problem,” you tell them the price, they say that’s too expensive, then you have a concrete answer that you don’t have to think about. You don’t have to come up with it on the spot, because if you come up with it on the spot it’s going to be different every time. And it really helps to have that concrete answer. And as you give the answer, if somebody pushes back with it you make a note of that objection, you work it out on the spot, and then you go back to your objections list and say, I tried this, they said “What about this other thing,” so you have to come up with something else to respond to that objection as well.
Rob [23:19]: I think the important thing to keep in mind here is if someone’s objecting to your product they can either be just throwing up roadblocks, as some people do, and they just want to see if you have answers, or they could genuinely be concerned that the product isn’t a fit. And the idea of these demos, just as with all sales, it’s not to convince someone to use a product that isn’t a good fit for them. And I’ve been on calls and demos like this before, where I realize halfway through that the product isn’t a good fit for them, and that they should go use, either a more expensive competitor, or maybe it’s a less expensive competitor. They just don’t need the features that I’m offering. And at that point I’m not trying to convince them to put on this shoe that isn’t going to fit their foot. So that’s something to keep in mind is that try not to just think about objections and the counterpoints to those. Then you will come off as perhaps being pushy or something. Keep in mind that you really want to listen to what a customer says and try to get at the deeper meaning of that.
At the same time, I think there are a lot of objections that are thrown up. Price is one. That’s a lame objection. If the product is a really good fit for them, and it’s going to make them a ton of money, or save them a bunch of money, or save them time, then the price is not super relevant, within reason. It’s some twenty, thirty percent difference between a competitor, it just doesn’t make sense. So that is a lame objection. It is something that I would push back on pretty hard, but I would always do it very courteously with a “Yeah, I totally understand.” Kind of have to lead it in that way, right? I make it a conversation. It’s not like an argument. I want it to be much more conversational than argumentative.
It probably goes without saying but I think it’s something that you want to keep in mind is that sales, in my opinion, is not about convincing someone to use a product. It’s just assessing their needs, and trying to figure out if you’re a good fit. And if it is, showing them that it’s a good fit. And that’s what I think these four steps that we’re laying out here are doing.
Mike [25:00]: Rob, you bring up an excellent point, is that if your product is not going to be a good fit you have to be honest with them and tell them flat out and say “Look, I don’t think that this is going to be a good fit, and here are the reasons why I don’t. You’re looking for this, I don’t have that. You’re looking for this other thing over here, we don’t have that either. And the way you need to do this over here is not going to work with your systems,” et cetera. You can essentially throw the objections up yourself. And sometimes people are just looking for a way to get off the phone. They already have their own agenda, or something like that. There are going to be people out there who have their own agenda when you get on a call and you’re just not going to know about it. And it sucks to be in those situations because sometimes a vendor’s brought in for the sole purpose of being compared to somebody else. And it’s not that you ever had a real chance to begin with, it’s just that you might have been brought in to help lowball a price or something along those lines, and you don’t know it. But that being said, you do have to know when you’re in over your head, and if your product’s not going to be a good fit, tell people. And if they push back at that point and say “No, no. We really want to try it,” handle them with kid gloves a little bit because you don’t necessarily know what you’re getting into.
Rob [25:58]: Right. Especially with SaaS, where they can cancel at any time, right? It’s not like you get some big one hundred thousand dollar signature and you’re really trying to push this through. If you convince someone to try your product out, you’re going to spend a lot of time onboarding them, and then if they cancel in thirty days you have actually wasted more time and you’re out more money than is worth it.
Mike [26:15]: So near the end of the middle section is really when you want to get into how your product works. You want to show them. So it’s not enough to lead them through this hypothetical scenario, where you’ve talked about their problems and how this hypothetical customer solved their problems with your product, that it mirrors their situation, and then leave them hanging. You want to prove it. And I actually have a slide in my presentations that basically says “Prove it,” because I’ve said all these things, but you have to show them that you mean what you just said. And so I’ll walk them through whatever the presentation is, and specifically focus on the things that they’ve said are important. So if they want to know about discovery I show them that. If they want to know about recording I show them that. You really have to get a sense of specifics, what are important to them before you get to that point. And, obviously, when you’re demoing a product itself you can go anywhere you want. There’s no real script to that. But the outline itself of how the demo will go, essentially leads you to this part where then you’re showing them the product and how it works and how it solves their problems.
Rob [27:12]: So we’ve covered the open, the lead in, the middle. Let’s talk about the close.
Mike [27:18]: In the close you essentially want to talk about what the next steps are with the prospect. And you want to formally agree to some sort of a timeline, whatever that timeline happens to be. So if, for example, you’re talking with an organization that, let’s say that they’re very informal, they only meet once a month or once every two months, you’re next call with them might not be for six weeks. Obviously you don’t want to be selling to those types of people, but if you are you have to know what that timeline is. And it’s not just about setting expectations for them, it’s about setting expectations for yourself, because you don’t want to be thinking, “I’ve got to get ready for this sales demo, and I’m expecting this sale to come in”, only to realize it’s not going to come in for at least eight weeks, because the customer isn’t even going to talk to all the people that are involved for another four or five weeks. So those are the types of things that you need to keep in mind, but the timeline itself, ask them directly about what their timeline is, do they need any other people to be involved? It goes back to the BANT acronym. Do they have budget? Who has the authority to make the decision? What are the next steps? All these different things that factor into it, you need to know what those things are and figure out what those are on the call. Just ask them flat out. What’s your budget? Whose got the authority? Do you actually have a need for this, which you’ve clearly established that. And what’s your timeline? So that’s what the BANT, B-A-N-T stands for.
Rob [28:36]: Yeah, timeline’s a big one, because otherwise these things can drag on and people won’t make the decision. And you can bring this up very casually. I will typically say “All right, so do you have any other questions?” And they’ll say, “No, I think that wraps it up.” And so then I’ll say, “Okay, so would you like to sign up for a trial? What’s your timeline? I can get you set up with a trial.” It can be something easy like that, and it doesn’t feel forced and they can feel free to say “No, I’m not ready,” or “Yes, I’d like to get started right away.” It can be brought up pretty casually. That’s in the less complex scenario, right, where there’s only one or two people involved, but I think your BANT applies when it’s selling into the enterprise and there are multiple stakeholders that you have to get on board.
Mike [29:09]: That’s another good point, is that all these different steps, I think that they naturally lead you through the process, but the specifics of how you address the questions or how you deal with asking what the next steps are, whether it’s very informally or having a focused discussion on it. Maybe you even take that discussion offline with a manager who has the authority to actually sign the check, because he doesn’t necessarily want all his techs in the room talking about the actual budget for it, or pricing. Maybe those are things that aren’t necessary for them to know, and a lot of people just don’t want their techs involved in those discussions. But all of this goes back to the idea that, ideally, you should know what you want out of the call and out of the demo before it even starts. Do you want them to go to a trial? Do you want them to make a purchase? Do you want to get to another call? Do you want to talk to somebody who’s in charge of budgeting? What is the next step? And that depends a lot on what your type of product is and what the logical next step is. And your entire presentation, or your demo, should revolve around what that next step is going to be. It should lead to it.
Rob [30:07]: Right and I often ask, before a call, as we’re emailing to set it up, “What would you like to get out of the demo?” Right? So finding out what the customer, or I guess it’s a prospect at this point, wants is also super valuable to make sure that you can provide that during t demo.
Mike [30:21]: I think the only other thing I’d mention is if you’re dealing with higher end products, what you don’t want to do is if somebody emails you or calls and says “Could you send us over a pricing sheet,” the last thing you want to do is send it to them. It sounds counterintuitive because they’ve asked for it, but you want to have a demo and a discussion about what their needs are first. Because, otherwise, it’s the fastest way to walk yourself out of a deal.
It’s funny because I’ve done this in the past. I’ve never responded to a pricing request with pricing information and then later landed the sale. Every single time I’ve sent pricing to someone who asked for it, without doing a demo and having a discussion with them first, every single time I’ve regretted it and it’s never worked out. And it’s not to say that it can’t in some situations, but if you have higher price points I don’t think that it works.
Rob [31:04]: If you have other thoughts for us or questions regarding this killer client demo outline you can call our voicemail number at 888.801.9690 or you can email 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 startups and visit Startupsfortherestofus.com for a full transcript of each episode. Thanks for listening. We’ll see you next time.
Episode 231 | Breaking through SaaS Plateaus with Ruben Gamez
Show Notes
In this episode of Startups For The Rest Of Us, Rob and Mike discuss breaking through SaaS plateaus with Ruben Gamez.
Items mentioned in this episode:
Transcript
Rob [00:00:00]: In this episode of Startups For the Rest of Us, Mike and I discuss breaking through SaaS plateaus with special guest Ruben Gamez. This is Startups For the Rest of Us, episode 231. Welcome to Startups For the Rest of Us, the podcast that helps developers, designers and entrepreneurs to be awesome at launching software products. Whether you’ve built your first product or you’re just thinking about it. I’m Rob.
Mike [00:00:28]: And I’m Mike.
Rob [00:00:28]: And we’re here to share our experience that will help you avoid the same mistakes we’ve made. So [?] this week Mike?
Mike [00:00:28]: Well we’ve got an e-mail from Trevor Smithland. He wrote in to let us know about a product he has called Enhance Cast and essentially it’s a podcast listening app that allows you to instantly access the content that is coming out of the podcast. So essentially they do some transcriptions and they basically bookmark a bunch of different things and if you’re busy doing something, essentially it allows you to bookmark the content to be able to come back to it later. They do some fancy [pasings?] to make sure that the content is marked up with meta tags, but I looked at it and it was pretty cool. It was almost like a visual representation of the podcast. You can find that at enhancecast.com.
Rob [00:01:06]: Very nice. Lets dive in the interview today. This week we have a special guest on the show. It’s Ruben Gamez with Bidsketch. Thanks a lot for coming on the show Ruben.
Ruben [00:01:15]: Thanks for inviting me.
Rob [00:01:16]: So my guess is that most people listening to this podcast already know who you are. Ruben is the founder of Bidsketch which is proposal software, it’s a SaaS app and started of being focused on designers but now really Bidsketch is more of a horizontal app and it has a pretty [?] market. Ruben when did you launch Bidsketch?
Ruben [00:01:35]: I launched Bidsketch about five and a half years ago.
Rob [00:01:37]: In terms of Saas timelines you’ve been around quite a long time.
Ruben [00:01:41]: Yeah, I’ve been doing this for a while in the interviews that I had I used to say that I was in software. I guess I have to change that up a little bit.
Rob [00:01:48]: Yeah because it changes over time and now you can say SaaS and a lot of people know what that means. Where as five years ago we used to say web based software and that’s still how I kind of talk about my stuff at cocktail parties and I typically get the “what does that mean?” So the reason we wanted to have you on the show today Ruben is you and I talk quite a bit. We’re more in touch about things. We’re actually in a mastermind group as well and one thing I’ve noticed about how you operate is that you are really good at breaking through plateaus. There are inevitable plateaus when you are running a business and specifically with SaaS I am starting to see this pattern of folks hitting a plateau right after launch. So typically in revenue is in we’ll say is about a thousand bucks to two thousand bucks to low four figure amount and people launch and then that launch dies down and they don’t know what to do next. So there is kind of a plateau as they figure that out. And then the next plateau depending on pricing, [insurance?], and all that stuff seems to hit around lets say ten to twelve thousand bucks a month and it often requires an adjustment. Unless you’ve got everything just right from the start and you knew your market and your pricing’s on, you’ll probably going to hit a slowdown about there and then there tends to be this next one, let’s say it’s in the twenty five, forty thousand dollar range that we see folks hitting. There are different causes for each of these but you’ve powered trough these plateaus and I’ve seen you do it using a series of tactics, you’ve a good mind set about it and frankly you seem to have a high level of process. I know you haven’t blogged about it and I haven’t heard you talk about it on a podcast so I kind of wanted to dive in to that today and figure out how it is you think so that others can learn from you.
Ruben [00:03:27]: Sure. One thing I’d like to mention is that what I’ve noticed from certain apps is that that first plateau is a lot higher if the price point is higher for the app or product.
Rob [00:03:39]: That makes a lot of sense. I mean I saw myself with HitTail which was a ten, twenty dollar product on the low end versus Drip which was a 49.99 product on the low end. Although they were slightly different and that I had a launch list for Drip so I could get out to several thousand people quickly. That first plateau, instead of being a one or two thousand dollars it actually was about seven thousand dollars. So which was a much better place to be at. If you were trying to quit your job you’re almost there if you’re already at seven, but I agree. People who are going after ten dollar price points, even getting to a thousand dollars a month is quite a bit of work. So I guess to start when your opinion or from what you’ve seen, because you’ve also talked to a lot of entrepreneurs, founders are asking you for advice and that kind of stuff. Why do you think there is that one to two thousand dollar plateau right after launch?
Ruben [00:04:29]: Sometimes I talk to people that have hit that plateau or say they’ve hit a plateau but actually haven’t hit a plateau. It’s more about that they haven’t got enough product market fit to get any growth initially. So there is a difference between hitting a plateau and just getting started.
Rob [00:04:46]: Yeah, go into that further. What do you mean by that, the difference?
Ruben [00:04:48]: So if you just launched and you have maybe no customers or you have maybe five customers or six customers because I’ve talked to a group of people that fit this profile. They either have no customers or they have 10 or fewer customers. Generally that means they never had growth for them to get to a plateau. So they haven’t plateau, I don’t consider that a plateau. They’re just getting started. They need to get enough product market fit to actually get some interest and get people paying for the product. At that point it’s very questionable whether there is anybody that really values the solution to the problem enough to want to pay for that product.
Rob [00:05:29]: So the question is still “have they built something that anyone wants to use?”
Ruben [00:05:34]: Right.
Rob [00:05:35]: They haven’t even answered that yet.
Ruben [00:05:35]: Right.
Mike [00:05:36]: So at that point that’s very different place than you do have a thousand in recurring revenue or two thousand in recurring revenue so there is some interest there. Right? And obviously getting to product market fit is really hard. It takes a lot of work and there is a lot that you can do to get there. For the people that are in that one to two thousand dollars and they start to hit a plateau generally you see a couple of reasons why they’re hitting that. One of the more common reasons is that they just don’t have enough volume, they don’t have enough trials, they don’t have enough qualified traffic to be able to get to where they want to get. They are trying to get to six thousand or ten thousand and ten thousand is pretty common for a lot of people, but they are working on optimizing their conversions because they think that they need more customers. “Well I’m not getting enough of these trials to convert to customers” or “I’m having to many people cancel”, but in reality they just don’t have enough trials to focus on that just yet. It’s really important to not ignore that but if you’re just getting a thousand visitors a month or two thousand visitors a month your price point isn’t extremly high and you’re converting a hand full of those customers. [And to trial some of those to customers?] then you’re not going to optimize your way in to a ten thousand dollar a month business.
Rob [00:06:57]: Well that’s more of a balancing act because your balancing between getting traffic versus making sure that you’re not leaking everybody out the bottom of your funnel. So how do you go about making sure that you’re balancing that correctly?
Ruben [00:07:10]: Well this is why I mention that there is a difference between the businesses that just have something like ten customers and the ones that have enough to be in the thousands and recurring revenue because they do have some interest. So one of the problems that I see often is that people don’t know where their conversion rates should be or their retention should be. Now every business is different but there are ranges right, there are rules of thumb. So I’ll see somebody working on trying to improve their retention. Let’s say that they’re trying to do somewhere around 5% or 8% or something like that, but they’re working with such low numbers that you can’t really count on those numbers too much. Now I’d look at retention and say “wow, you really need to work on retention!” even in low numbers if a quarter of your customers aren’t sticking around then that’s definitely a red flag for me. But really when it’s just you, you kind of need to switch and focus more on one thing than the other. Especially if you’re doing part time so once you learned what the ranges are and you see there aren’t any obviously red flags to where just nobody is converting into a paying customer and almost everybody leaves after a couple of months then really the next thing is to get enough volume to sort of take you to the next level, but then you also want to go back if your retention is a little high and focus on that and make that better.
Rob [00:08:34]: Yeah I view it as a pendulum. I always swing to one side and then I notice that you kind of optimize something to the point of these numbers are starting to look good. [?] has gone down and now it’s time to insert more traffic into that funnel. I’ve even seen a pendulum swing over, lets say maybe four years ago, I remember Mike and I talk on another podcast about how everyone is focusing on traffic and people weren’t optimizing enough and they weren’t split testing enough and they weren’t doing that stuff. I see it the other way now. I think to many people are trying to optimize to early, but that’s basically what you’re saying here is that you can’t optimize your way in to a ten thousand dollar a month business. Yo need to drive five, ten thousand uniques a month in order to get to that point probably, and it depends on price point and all this other stuff but one or two thousand uniques a month isn’t going to do it.
Ruben [00:09:24]: Right, exactly. That’s one of the more common things. Another one is pricing. So you’ll probably not going to get pricing right when you launch. You’re probably not going to have pricing right a year or two after you got your product out and people don’t spend enough time testing and adjusting their pricing early on. In the early days in the first few weeks and months that’s when you need to test your pricing most. It can be a little bit harder if you’re working with very small numbers, but we’re talking about businesses that do have some customers and have had a little bit of growth. So you should be just testing prices and improving that.
Rob [00:10:02]: Yeah, that makes sense. I’ve done the same, I’ve changed HitTails pricing twice after I required it and with Drip I’ve changed the entire pricing model. It was based on one thing when we’ve launched and it’s now based on a number of subscribers. It’s a more standard marketing automation approach. Then I think I’ve actually changed not the price points themselves but the volume that you can do for each price point. I think I’ve changed it at least twice, maybe three times and all that is based on user feedback and looking at reports and that kind of stuff. I won’t say it’s right or wrong but I know it can be better optimized but it’s something I don’t have time to invest in to much right now.
Mike [00:10:36]: Right, and it’s better than it was when you first started.
Rob [00:10:39]: It is, I’ve moved in the right direction. I think when you first start to it’s hard because lets say you wan’t a 99 dollar a month app. You really need a lot of functionality for someone to pay 99 bucks in any type of volume and so you either have to spend a lot more time building that app or you have to have some type of brand name because over time the more customers you get, the more people are talking about it, you do become that brand and people will say, “Oh, well everyone recommended this to me so I am willing to pay 99 buck.” But when no one has heard about you it is hard to ask as much as your app might be worth up front.
Ruben [00:11:12]: That’s true. In the early days I modeled my pricing after after fresh books pricing because a lot of people just look at ether competitors or alternatives that may be similar and basically copy them in pricing and that’s pretty much what I did. Fresh books wasn’t a competitor, but they were the most similar of the apps that were out there because after someone creates a proposal, once they get a deal then they create an invoice. I went with that pricing mode but it was wrong for my business. I didn’t learn that latter until I started testing pricing and sort of learnt what worked for my business and start talking to people. Once I did that really ignited some big growth for it.
Rob [00:11:50]: I kind of mentioned at the start that we have three plateaus we’re going to talk about. There is that first one that is post launch and sounds like the pattern you’re seeing is most people try to optimize their way up to there, bur really they should be going after more traffic in general. The second plateau if I recall when you hit, that is when you adjusted your pricing, is that right?
Ruben [00:12:08]: Right.
Rob [00:12:09]: Talk to us a little bit about that process. You hit this plateau lets say between ten and fifteen grand a month and you’re wondering why it’s not going up. How did you figure out what the cause was? Did you have to run a lot of different tests and try things or was it pretty obvious? And then how did you go around fixing that?
Ruben [00:12:24]: I launched with that same pricing, so I’ve gone a long time without testing pricing at all. So I had this feeling in the back of my mind that I should make a pricing change, that I should do something there. Also I’ve added a lot of features since then so it was a very different product from when I launched the other thing is I wasn’t charging very much for a B to B app. So if you have a B to B app and you’re charging ten dollars a month or twenty dollars a month for your low end plan, that isn’t necessarily wrong but you can very likely charge a lot more for your lower tier plan. So there are all this things that are coming together and there was some feedback. Feedback is tough with pricing, because a lot of the feedback that you get with pricing is that is too expensive which isn’t right. You have to mostly ignore that unless almost everybody tells you that, you are going to get a certain amount of people just telling you that every single month so one of the things that I did was add a cancellation comments in a free form text field. When somebody went to go cancel, it was required to fill out and add their comment in there and every once in a while I’d see people complain about the price, so I think my lower end tier plan was nine dollars a month and people would say this is too expensive etc., etc. I kind of wondered about that, “should I charge it a little less”, I never did it. I think I charged five dollars a month, but one of the interesting things as I moved up my pricing and ran all different types of tests is that every time that I change pricing, say right now my lower tier is 29 dollars a month, I always get the same number of people saying that it’s too expensive, but if I reduced it by five dollars or ten dollars, they’d pay for it. That never really happens because my product was ten dollars cheaper, it was twenty dollars cheaper, so I always find that really interesting.
Mike [00:14:18]: But I think that it’s difficult for somebody who is starting out to make those mental leaps because you’re looking at this looking back in retrospective and say, “well I was there and you didn’t buy it then and now it’s more expensive and you’re complaining that five or ten dollars would have made a difference”. But for the person who is stuck at this plateau they don’t have that history, they’re not that much further in to the future and trying to look backwards.
Ruben [00:14:39]: Right. I think the important thing for them is to know that it’s normal to get people saying that it’s too expensive. If they’re not getting that then they’re definitely under charging. I think the time to wonder whether it is over priced might be just when a lot of people are saying that, that is one of the top reasons why people are cancelling.
Rob [00:15:02]: I would agree with that based on experience as well. So that was at the back of your mind and that’s why you’ve attacked it early on. How did you go about figuring out what your pricing tier should be and do you actually restructure your pricing or did you just kind of increased the tiers themselves, just increased the dollar amounts per tier?
Ruben [00:15:19]: There had been one or two tests that I ran in the past, early on when I first launched with pricing. Basically I just increased the pricing on the tears I had and I got to a point where I just wasn’t making as much money. So then I lowered the pricing back to where I was making the most money. Later on when I revisited the pricing and I wanted to run these new tests, I changed my approach I didn’t just increased the pricing on the tiers. So that was okay to get me up to a point, but the big results came from just completely just restructuring my pricing. Started of doing a lot of customer interviews and looking at my usage data. So it was a combination of qualitative and quantitative data that I used to figure out what were the key features that people were using and what type of customers were signing up. So I changed my pricing from two plans to three and those three plans directly reflected the type of customers that I get. So one of them is a freelancer plan, the other one is a studio plan, and the last one is an agency plan. All of those changes helped me earn more per customer per month.
Rob [00:16:31]: After you made that pricing adjustment you keep saying you tested it. Now did you run a split test where you had half the people see the old pricing, half the people see the new and then did you just follow it through trial signup or did you followed it all the way through to see how many converted which each price point?
Ruben [00:16:47]: Yes so I actually had multiple tests with pricing, so I tested pricing maybe four, five months, something like that. I started of with some of the more simpler tests. I wanted to isolate for example plan names from pricing increases. I wanted to know that going with three plans was actually making a difference. So I wanted to know that renaming the plans from these generic plan names: basic, premium, whatever I was using to something to what a customer could look at and say this is the plan for me. I wanted to know that that made a difference. I also did that with plan features. Then once I actually got to the revenue number, I’ve let those run a little bit longer, in each case didn’t just look at whether or not more people were clicking on the signup button. I’ve also looked at, “do more people sign up” and then, “okay, now I have a trial”. Then I continued to look at, “do those trials convert”. So at the end do I end up with more money? Same thing with retention, it takes a lot longer to look at a retention because customers some times will be around for a year or two. You can’t always follow on retention until it’s just been several months. I actually had to row back a pricing change that had been in place for three months because I looked at that retention and it wasn’t better. Everything else looked good, it looked like I was making more money, but about three months later when I looked at retention for those [cohorts?] I saw that this is actually worse than what I had before so I [went right back?].
Rob [00:18:20]: It’s crazy. So you really have to look at your data and not just look at how many people clicked that initial sign up button, it can change all the way down the line.
Ruben [00:18:29]: Right, once I decided okay, this is working better I switched it over. So I did split test that and I switched it over but when I rolled back my pricing I wasn’t still split testing that. Everyone was going over the new pricing. The important thing about that is I think that you just have to continue watching it and sort of compare it to what it was before your price increase.
Rob [00:18:53]: Right and are you using KISSmetrics to kind of track that all that way through? Is that longitudinal data?
Ruben [00:18:57]: Yes I use KISSmetrics and then I just look directly in my data base. So I use both.
Mike [00:19:02]: It sounds to me like one of the interesting points that you kind of– I was almost completely glossed over, but you at least mentioned it that testing these pricing points I mean it sound like they’re early on when you hit that post launch plateau, pricing is one of those issues that you really need to look at to make sure that you are charging the appropriate amounts and then at the next plateau you hit, by changing your pricing you are able to essentially accelerate your growth of the product. But in each of those cases it takes a while to get through those pricing tests. I think you have mentioned three or four months of testing in order to just test the price and then in addition to that you said that in order to test retention and basically make sure that you’re not loosing people faster that takes even longer.
Ruben [00:19:42]: Right, but you can capitalize on these pricing changes sooner. So some of these pricing changes are– if they’re working early on meaning if you’re getting more trials out of it, there is a pretty good chance that those trials will convert at a similar rate. So what I have seen with price testing is that that’s what happens, most of the time they will convert at the same rate. The churn will be about the same, there might be some differences but it’s not major, so you can actually switch things over, but if you do that then you do want to watch that to make sure that you are right about the trial to payed conversion rate and that you are right about the churn rate as well.
Rob [00:20:18]: So you kind of make a quick decision and then you back check that and 90 days later you can truly verify that everything turned out the way you thought it would based on your math.
Ruben [00:20:26]: Right.
Rob [00:20:29]: So it’s interesting you know we talk about these plateaus and I imagine that there might be someone in the audience who doesn’t know what that looks like so I was thinking as you were talking that you might have a SaaS app where you’re doing four grand a month and the next month you’re doing fifty five hundred and that feels fantastic. Then the next month you’re doing six grand and then seventy five hundred and you’re just going up. You’re at ten grand, eleven grand, twelve grand, and then all of a sudden it’s twelve two and the month after that is twelve thousand four hundred, and twelve thousand five hundred and literally your revenue just stalls out. I’ve been through it, you’ve been through it, we’ve seen this and it can kind of rattle you because a) it’s unexpected, it’s like, “everything was going so good and all of a sudden it’s not working” and it can also discourage you. So we’ll touch on the mindset in a second because I think that’s important but when you’ve seen these plateaus coming the first time it kind of shocks you, the second time you kind of figure it out and the third time it’s like almost expected, you’re almost anticipating it. How long have most of these plateaus– do you think there is a range, like how long is it taking you to break through each of them? In months.
Ruben [00:21:29]: In months?
Rob [00:21:29]: Yeah.
Ruben [00:21:30]: Generally four to six months. It depends.
Rob [00:21:35]: It depends on how deep it is and how much stuff you have to do to test and all that.
Mike [00:21:39]: I think the sooner you can break out of it the better, I mean the best thing is to avoid them. Do it all together right.
Rob [00:21:44]: Just see them coming and be constantly– see that’s something you’ve done really well. Recently as you have run a lot of split tests now you’re at the point obviously where your traffic tens of thousands uniques a month and you can run split tests and optimize your way to an increase in retention or whatever.
Ruben [00:21:58]: right but even in the early days when you have a lot less volume you can forecast when you’re going to plateau. I think barometrics came out with some forecast tool that — for free recently — that helps you do that. But it’s a really simple calculation you can just do it in a spreadsheet or open up a calculator and looking at a percentage of the customers that are cancelling at what point am I basically going to plateau. [As the number of trials not in customers?] are not going to be enough to upset that.
Rob [00:22:26]: Yes, then you can look and say, “is churn to high” and if so I need to start working on that now, six months in advance of that plateau. Or is it that my number of trials is still at a hundred and fifty every month, but if my churn is low but I only have a hundred and fifty trials, how do I get to three hundred trials in the next six months? Right? Six hundred is sustainable. Or is it a price point? If my average revenue per customer is only fifteen dollars a month, twenty dollars a month, how do I double that in the next six months? Right? Is that the kind of process you go through?
Ruben [00:22:56]: Exactly so one of the more interesting things was that even in the earlier days like I said a lot of times it’s just volumes. Sometimes it is retention. Well, it’s always retention, retention is always part of it, but sometimes it’s churn that they need to focus on. So one thing that I was thinking about was at what point in the early days, lets say somebody has a thousand dollars a month in recurring revenue or so. At what point is their churn to high to actually say, “okay, this is the thing that I need to focus on”.
Rob [00:23:29]: Earlier you said it was a quarter, 25%.
Ruben [00:23:32]: Yeah, even lower than that like if I was starting over again and I had product and my churn rate, even in the early days and even if I know that numbers aren’t all that great when you don’t have that many customers, you don’t have that many trials coming in, there is a difference between having a 15% churn rate and 5%. I have had 5% churn in those early days. If I had a product that had a 10%, 15%, I’d probably pay attention to that.
Rob [00:24:01]: So I think my number would be anywhere over 15%, it would be any twenties too high. The problem with this is that we’re talking about an average and typically your first sixty day churn is going to be a lot higher then everything else and when you average everything in it gets kind of muddy.
Mike [00:24:18]: The other thing that makes that difficult is that it could be a function of what your product is. So for example when Rob and I were testing things with the [?] we noticed that there was a distinct drop of at the forth month. And by that time someone has paid a couple hundred dollars they have to really think about it, it’s like, “am I really going to continue on this path or is this just something I was kind of interested in but not really and I’m not going to follow through with it”. And people were making the decision around the forth month to basically just kind of drop out. So sometimes it’s time dependent as well.
Ruben [00:24:46]: I agree. It very much depends on the type of product. With some products it might be kind of natural like how you mentioned of membership sites and [?]
to where you see a big drop of after a certain point of time. And for that industry or for that type of product, churn reads might be higher, so that’s a good point. Even Jason Cohen mentioned somewhere that he was worried of his churn at 2% for WP engine and then he found out that, “hey, that’s actually doing pretty good, that’s the normal for hosting”.
Rob [00:25:16]: That’s crazy low. Most SaaS operators would kill for that. So that’s the thing I mean I think to talk about an aggregate number is not totally accurate, it would be so much better to have that cohort, that churn grid to be able to look at it, but with Drip I didn’t have the churn grid, until maybe four or five months ago because the data just wasn’t there in order to get an aggregate number. So when I was looking at it when we first launched it was 23% a month or something. It’s because I had a ton of new trials in the funnel and as those moved on and my trial volume kind of dropped of after the launch, that dropped way down, it dropped in to the I think it was at 12% or 13% for a while and then I get a bunch a new trial and it kind of bounce right up because for sixty days your so ruff on churn.
Ruben [00:25:59]: Yeah well that’s the other thing that I like. Drip is a really good example because you can’t solely rely on just you analytics, not to look at collective data. Watching you work on Drip and getting to product market fit so a lot of people just say, “well getting to product market is binary”, but it’s not, it’s a [gradient?]. So you can have a lot of product market fit or just enough to get to a point. What I found interesting watching you work on Drip was that early on you didn’t have really good numbers because the amount of customers you had, but you relied a lot on customer conversations and gut kind of, right? You knew what you were building and what you wanted to see and because you did have that experience on other products and apps it’s sort of a little bit easier to go with gut sometimes.
Rob [00:26:51]: That’s right and I think that if you don’t have that then the customer conversations are huge and then I think finding someone either a mastermind or a mentor or adviser, someone who does have that feeling and who has experience to [?].
Ruben [00:27:04]: Exactly.
Rob [00:27:05]: Cool so we kind of cover the first two plateaus that one to two thousand dollar range, the ten to fifteen. Then there is this twenty five to thirty thousand dollar plateau. Lend you thoughts I mean how did you push past it, do you have thoughts on the general cause of that that you see in other apps? Or do you think it varies widely?
Ruben [00:27:22]: So there are obviously a lot more people who back at one thousand or two thousand dollars a month or ten thousand right then get to twenty or thirty thousand or even forty thousand. So I know fewer people that gotten up to that point and then only some of them plateau there and it seems to kind of be different from the ones that I know so I can’t really say that I noticed really specific patterns but it’s usually a retention. Right? Losing way to many customers still or you just need to get a lot more customers to get in to the next stage. For me it was more about setting up, once I automated my marketing because it’s a combination of some manual processes and automation, but setting up systems and processes to scale up marketing.
Rob [00:28:06]: Kind of moving it up to the next step or the next level.
Ruben [00:28:10]: Right, it’s more about doubling down on what’s working.
Rob [00:28:13]: So you have seen a lot of plateaus, you have gotten through a lot of them. When you see that you are going to be plateauing in how ever many months it is, what’s your process at that point? Like how do you start thinking about it mentally in order to– are you preempted or when you get there to start systematically knocking out the things that are keeping you at that plateau?
Ruben [00:28:35]: Generally if you look at it at the highest level what I do is try to identify where is my problem. Ether I am not getting enough customers or I’m loosing to many customers. It’s always a combination of both, but one of them is going to be a bigger problem then the other. But that’s too broad it’s too hard to tackle. So even if I say, “ok well I’m just not getting enough customers” then what? There is so many different things that you can do with that, so what I do is I break it down to the smallest possible things that I can. So I’m not getting enough customers so “ok, why not?”, am I not getting enough traffic? Am I not getting enough qualified traffic? Am I not getting enough trials? Are those trials not converting into customers at the right rate? What is it that is going wrong? So as part of this process is setting a goal that I want to reach and I typically start with this. I’ll pick my number and I want to get to– it’s usually revenue based to this much recurring revenue, what do I need to get to that number, so then I start to break down how many trials I need at this price point to get there. What does my churn need to be? Maybe start to play around with some numbers. What if I get more trials or increase my average revenue per customer or move down my churn? Typically once I’m looking from that perspective and then I take a look at my problem areas I just start by picking of the lowest hanging fruit. So there are going to be some things that are just a lot easier to do then others. So maybe increasing my traffic will get me more customers but so will dramatically reducing my churn, but maybe my churn is at a low enough place to where it’s just going to be way to hard and way to much work to do that, so the easier thing is to really get more traffic.
Rob [00:30:30]: Got it. And getting those rules of thumb. What kind are the ranges? What should my churn be? What should my trial to paid be? What should my visitor to trial be? But that’s part of the method that you’re using to analyze this and the way that we have come across those values is a) by personal experience of the apps that you run, right it’s your experience, it’s also by talking to other founders weather it’s in a mastermind or talking to people, doing skype calls, talking to people at a conference, maybe MicroConf. I think folks in Founder Caffe or Micropreneur Academy could easily if they brought their numbers, I would happily analyze someones numbers on the forums. There are probably some blog posts somewhere that kind of talk about it but I think there’s so much more value being able to talk one on one or one to a group with other founders because the specifics of the situation always dictate where your numbers should be.
Mike [00:31:20]: Right, right.
Rob [00:31:22]: Any range that you and I could throw out here it’s still going to be a wide range because it depends on your pricing and your market and your this and your that.
Mike [00:31:29]: I think knowing the range is bare minimum that you need to know and there are too many people that don’t know that. So if I didn’t know that it would be almost impossible for me to be able to break out of one of these plateaus. And it would be a guessing game and it would have to be luck, complete luck.
Rob [00:31:48]: I’m going to throw out some ranges and I wan’t to see if you agree to them. Kind of a small B to B SaaS app lets say between Bidsketch which starts at around twenty nine bucks and on up to something that maybe starts to ninety nine bucks a month. That’s the lower end range that we would be dealing in with boot-strappers. I would say from visitor to trial when asking for credit card up front you should be between about 0.8% and 2%.
Ruben [00:32:12]: Yes.
Rob [00:32:13]: Alright, maybe 0.75 I mean one would be great but I think that if you would charge around ninety nine bucks a month I think getting 1% is ambitious and you could do really well. So that’s where I have that loathing. Not asking for credit card – what’s the range there? Is it five to fifteen? Is that too broad?
Ruben [00:32:29]: I went almost a year without asking for a credit card upfront. So I would say that five is too low but you know, I guess it depends on how much traffic you’re getting in and all that stuff. I would go with that. If you’re getting less then 5%, just know that five is low.
Rob [00:32:46]: Right so better have like a ninety nine dollar product if you are doing five. If you have a ten dollar product and you are doing five you’re in real trouble. You should be closer to fifteen. Okay, and trial to paid if you’re asking for credit card upfront I want to be between 40% and 60% conversion trial to paid. I know that some people go higher than that but –
Ruben [00:33:05]: Some go a little lower but if you’re in the thirty’s –
Rob [00:33:09]: Yeah, there’s room for improvement. And if you’re not asking for credit card, I’ve never had an app that I done that with but the range is what like ten to twenty? Five to fifteen? That’s the one I forget.
Ruben [00:33:22]: Yeah so I’d say five is too low. Maybe on the low end eight to twenty. Several people have done this. I’ve done this myself and it’s interesting, I’ve actually moved up that number like 8% to 17% and not have a significant or meaningful increase in paid customers. Simply because of how aggressive or passive I am in converting those visitors into trials.
Rob [00:33:49]: That’s right because if you are overly aggressive then they churn out really quick. Is that right?
Ruben [00:33:53]: Well less of then convert into paying customers, because I’m being super aggressive into converting them into a trial.
Rob [00:34:00]: Into a trial. Got it. Okay, and then churn rates, typically I see the first sixty days combined somewhere between lets say if you’re at 20% I think you’re doing pretty well and I’ve seen churn rates at about 40% in the first sixty days. To me that’s the danger zone if you’re above thirty nine.
Ruben [00:34:22]: It’s crazy that when you look at a business like [Mas?] and they’re like 40% from their first ninety days or something like that. They have a really nice business [?].
Rob [00:34:35]: Yeah I think that’s price point because they started at ninety nine, they had a lot of traffic, but I think forty is where the top end of where I’d want to be though.
Ruben [00:34:42]: Yeah if I had 45%, 50% I’d –
Rob [00:34:46]: [crosstalk] And then lastly post sixty day churn or ninety day churn. I mean this one really depends like you said Jason Colen with hosting with WP engine 2%. And that’s 2% per month after the first sixty that’s phenomenal. I think most SaaS businesses would kill for that. The ranges that I see I feel like 5% to 8% is where I see most bootstrap businesses in our price range landing. Like if you’re at 9% or 10% I’m starting to feel less comfortable with that. That means after your initial sixty day of churn you are now loosing one in every ten customers if you’re at 10% and that’s a lot, I mean it’s tough to replace that.
Ruben [00:35:23]: It is a lot. Typically at most any scale, if you’re loosing that many customers then you’d want to take care of that.
Mike [00:35:34]: So going back to the discussion about plateaus a little bit, once your business comes to this screeching halt, how do you go about making sure your mindset is in the right place because I think it can be incredible demoralizing hitting one of these plateaus and your entire business basically grinds to a halt for basically months at a time and you’re not able to kind of push to and figure out really what’s going on. Because your business it may not be getting worse, but it’s certainly not getting better and you are always looking to make sure that things are going up and to the right. So how do you make sure that your mind is in the right place and that you are thinking about the right things to help push through that plateau.
Ruben [00:36:10]: I think it helps to know that it’s normal, most businesses unless they have 0 churn or negative they’re going to plateau at some point. Expect it if you have a SaaS product, try to predict it, it’s pretty easy to do, so those things help. They help but it still sucks. When you hit it they’re not going to make it so that you feel like, “okay, this is okay, I can do this” and you’ll move forward without being fazed at all. For me it’s frustrating, I think one of the more common things I felt in the past, frustrated with the progress and especially if you try a lot of things, or in my earlier days when I had less experience I had less confidence that I could break through. S o the questions would come up and still to this date they come up, “can I go past this?” these are the negative talk that comes up every once in a while. And I think that one of the things that has been super helpful for me is that just being able to talk honestly about it. First it’s just being honest to myself about it and then having a mastermind group and having friend that I can talk to about it. It’s really easy for people to just ask, “hey how’s it going with the product, how’s everything?” and for the automatic response to be, “yeah, it’s going great” and then just talk about things that are going well. It’s a lot harder to be honest and just say that you’ve hit a plateau and that you’re struggling with the trials or churns or something like that. But I think it’s important to do, it’s helpful, it’s really tuff to just not talk about it and sort of try and deal with it entirely yourself in your head.
Rob [00:37:46]: Awesome. Ruben thanks so much for coming on the show, you’ve dropped a lot of knowledge here today. If folks what to keep in touch with you online, keep tabs on what your up to, what’s the best way to do that?
Ruben [00:37:56]: Twitter probably so earthling works on Twitter.
Rob [00:37:59]: Very good and thanks again hope to have you on the show again soon.
Ruben [00:38:02]: Thanks for inviting me.
Mike [00:38:03]: If you have a question for us you can call it into our voice mail 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. 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 230 | Being Married to a Founder: The Spouse Episode
Show Notes
In this episode of Startups For The Rest Of Us, Sherry Walling and Ali Taber discuss what it’s like being married to a founder and share their experiences on how they balance work and family life.
Items mentioned in this episode:
Transcript
Sherry [00:00:22]: In this episode of “Startups for the Rest of Us,” Ali Taber and I discuss what it’s like to be married to a founder. This is “Startups for the Rest of Us,” episode 230, the five-year anniversary edition.
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 Sherry.
Ali [00:00:34]: And I’m Ali.
Sherry [00:00:35]: And we’re here to share our experiences to help you avoid the same mistakes we and our husbands have made. So, what’s the word this week, Ali?
Ali [00:00:44]: Well, my name is Ali Taber, and I’m married to Mr. Mike Taber, and I am currently a group exercise fitness instructor, a personal trainer, and a small fitness studio owner. And we have two boys, six and-a-half and eight, and Mike and I just celebrated our tenth wedding anniversary in October.
Sherry [00:01:08]: Woo-hoo. Congratulations.
Ali [00:01:09]: Yeah. Yeah, we made it ten years. Whoo. A decade.
Sherry [00:01:11]: Double digits.
Ali [00:01:13]: Yeah.
Sherry [00:01:15]: And I am Sherry Walling. I am married to Mr. Rob Walling. I’m a clinical psychologist, and I have a private practice and teach. I’m at a couple of different graduate-level programs. I’m the mother of two sons as well, and Rob and I are coming up on our fifteenth anniversary in about a month.
Ali [00:01:38]: Wow.
Sherry [00:01:39]: I think –
Ali [00:01:39]: Congratulations.
Sherry [00:01:40]: – hopefully, he listens to this, and it reminds him to begin shopping now.
Ali [00:02:01]: MicroConf Europe has been in October the last two years, and he was looking at dates or whatever, and he’s like, “How about this weekend,” and I’m like, “You know that’s our anniversary weekend, right?” And he’s got that look like, “Oh, right. Right. Ten years. Okay. So, looking for different dates now.”
Sherry [00:02:06]: I’m surprised he just didn’t roll over and say, “But I’m giving you a trip to Europe”
Ali [00:02:12]: Yeah. I’ve never been to a MicroConf, and that is something I hope to remedy soon, but we shall see.
Sherry [00:02:20]: Yeah. What’s the story with that? I wasn’t quite sure I really believed that Mike was married.
Ali [00:02:26]: It just doesn’t seem to work out with our schedules and with the kids’ schedules, and we don’t really have family nearby. His parents are in Upstate New York, and my mom’s not that far way, but she works full-time, still. It’s either been a scheduling conflict or a “I really can’t afford to fly the whole family to Europe for a week,” or whatever, “or two weeks,” or what have you. And there’s always a huge time difference. I mean even the Vegas, it’s a three-hour time –
Sherry [00:03:00]: Yeah, it’s a –
Ali [00:03:00]: – difference for us.
Sherry [00:03:01]: – pretty big disruption with your family.
Ali [00:03:03]: Yeah, and it’s a ten-hour travel. Between the connecting flights and the time difference, it just never really has seemed to work out.
Sherry [00:03:11]: Well, maybe someday.
Ali [00:03:30]: Someday. I’m hoping someday. He really wants me to come. He was really disappointed a few years ago, and he was like, “I want you to come.” And I’m like, “What am I supposed to do with the kids?” It’s just like leave them with a cell phone and say, “Call us if you need anything. We’ll be back in three days.” It doesn’t really work that way when they’re four and five. They’re older now, so it’s a little bit easier. But someday.
Sherry [00:03:33]: I bet they’d have a lot of fun in Vegas.
Ali [00:04:01]: We were trying to do it this year. We talked about bringing both of the kids out to Vegas and making it a family vacation, trying to do it the week of spring break so I wouldn’t have to get the phone call from the principal like, “Hey, you know you’re not supposed to take your kids out for vacation other than school vacation weeks.” But so much goes into booking the hotel and which hotel they can get and which week they can get, and nothing seemed to match up in our favor. So, that was kind of a bummer. Whatever.
Sherry [00:04:009]: Yeah, there should be some perks. Since you’re the wife, you should be able to schedule MicroConf around your schedule, but it doesn’t really work that way. Does it?
Ali [00:04:11]: Yeah, it doesn’t really work that way.
Sherry [00:04:12]: We’re not that powerful.
Ali [00:04:19]: No. No. I’m like, “Just schedule it this week.” He’s like, “It doesn’t work that way.” Why not? It should.
Sherry [00:04:19]: Make it work.
Ali [00:04:25]: Make it work. Tell those Vegas hotel people they need to make this work because you have an angry wife.
Sherry [00:04:50]: That’s sort of a nice commentary on what it’s like to be married to a founder, though. In a sense, you’re married to somebody who has a lot of autonomy and flexibility in their life, but it doesn’t always translate to being that simple and easy once you add in the other dynamics of family and other commitments that you have.
What have you enjoyed about being married to a founder, or, to Mike, specifically?
Ali [00:05:42]: Well, I never probably would’ve started my own fitness studio if Mike wasn’t involved in being a founder and being an entrepreneur and starting his own business and coming up with product ideas. He really kind of gave me that confidence to do it, not to be afraid of failure, because I never wanted to be a business owner. I never thought I was going to be a business owner. It wasn’t something like, “Yeah, I want to own my own business someday.” I was like, “No. I don’t want to own my own business.” Both sides of my family had had family businesses, and I’m just like, “Ugh. I’ve seen what that looks like, and I don’t want anything to do with it. I want to show up to work. I want to do my job. I want to get my paycheck, and I want to go home and leave office at the office.” And that was fine when I was a graphic designer. That’s what I did before motherhood. I was a graphic designer, and I had a career before graphic design, too. I’m on my third career.
Sherry [00:05:44]: You’re more advanced than the rest of us.
Ali [00:05:53]: Well, I don’t know about that. Some people would call it being fickle. I don’t know. Life keeps changing, so I keep trying to change with life, I guess, and my interests.
Sherry [00:05:58]: Well, you’re sort of a serial founder, too, in that way. You’re founding different careers.
Ali [00:06:04]: I guess. Yeah, I guess that’s one way to look at it. My student loans don’t really look at it that way; but, you know. Whatever.
Sherry [00:06:21]: Well, I think you were talking about how the fact that Mike is a founder and has started a number of different things has made it more easy, or has allowed you to be more supported in your ability to start your own studio.
Ali [00:06:50]: Yeah, absolutely, because I know if I ever have any questions, and even though it’s so different than what he does in that it’s a brick-and-mortar, and I’m dealing directly with customers as opposed to developing a product that’s going to be sold to a business. So, the dynamic is a little bit different, but a lot of the same kind of marketing applies, and the time that you have to put into building a business is all relevant.
Sherry [00:07:02]: Yeah. I mean he sort of understands the process of making something and being the one who is holding all the pieces together. And so it’s helpful to have him as a partner in that, I would imagine.
Ali [00:07:06]: Yeah, it’s been really good to have him on my side. That’s for sure.
Sherry [00:08:04]: I think we’ve kind of experienced that in our family. And I think me, personally, like you, I’ve done some career shifting and started as a traditional, tenure-track professor and just really didn’t like it. I think it was because Rob had had a couple of really great jobs. High-paying, really fabulous jobs, that he left simply because he really just didn’t like them. I know that sounds sort of obvious, like, “Oh, you don’t like your job? Leave it.” But when you get a Ph.D. and do all of this work and plan to be a professor, it was a really big shift and really hard to make that decision. But because I had seen someone else do it, someone else walk away from something that on paper looks good, but in reality it wasn’t right for Rob, and in this case wasn’t right for me, it made it less scary to take that leap into a less traditional job structure. And I think we’ve –
Ali [00:08:05]: Yes.
Sherry [00:08:31]: – seen it with our kids, too. Once you step off that 9-to-5, someone-else-pays-your-paycheck path, all number of things become possible when you’re more flexible. And so we’ve done some different things educationally with our kids, and I think it’s really affected the way that we’ve structured our family, including taking them out of school for a month to go to Thailand last year.
Ali [00:08:34]: Right, yeah. Were you guys homeschooling then? I know you were doing that for a while.
Sherry [00:08:42]: We homeschooled for two years, and now, actually, my oldest son returned to traditional school. And my youngest son is going to kinder next year. He’s only four.
Ali [00:08:43]: Ah.
Sherry [00:09:13]: No, he was in school, and we just made an independent study arrangement. We kind of said, “We have these tickets, and we’re going. So, if you want him to be a student, we’ll have him do his homework.” We apologized. We didn’t ask permission. We just did it.
So, how do you two work out taking care of kids and both running very separate businesses? And Mike, he’s no longer consulting, but he was for a long time consulting and traveling a lot, right?
Ali [00:10:00]: Yes, he was. That was really tough. I didn’t really do much professionally when he was traveling a lot simply because I couldn’t with the type of business that I was in, where I had to be present for classes, or present for clients. It was really hard. He basically traveled, and I did the family stuff. I was basically a stay-at-home mom. I did all the cooking, all the cleaning, all the laundry, all the stuff that made it possible for him to just get on a plane Sunday night, be in a different city, fly home Friday night and then be home for a day and-a-half and then get on a plane. I mean there were months that it was back-to-back weeks of traveling, and he saw the kids a day and-a-half before he was back out on the road. It was really, really tough. So, I’m really –
Sherry [00:10:01]: Wow.
Ali [00:10:13]: – glad that he’s not traveling anymore. And it’s really allowed me to start to work more outside the home and develop a business for myself and for us as a family, too.
Sherry [00:10:20]: Yeah. Of the ten years that you-all have been married, how many years was he traveling like that, keeping that kind of schedule?
Ali [00:10:27]: He started traveling right after I got pregnant with Luke, and Luke’s just turned eight. So –
Sherry [00:10:28]: Wow.
Ali [00:10:42]: – I mean it wasn’t always back-to-back like that. And there were definitely some years where his travel was less than years. There was at least one year where he was gone 42 weeks of 52.
Sherry [00:10:43]: Whoa.
Ali [00:10:43]: Yeah, he was travelling. Yeah.
Sherry [00:10:56]: [For] him [to] make the transition from doing side businesses to making those his primary vocation sounds like it’s probably a game changer for your family.
Ali [00:10:58]: Moving away from the consulting and doing –
Sherry [00:11:03]: Yeah, where he’s making money and has products out at Shark and those kinds of things.
Ali [00:11:32]: – yeah, it’s really changed how our family dynamic is. He’s home. He sees the kids. We’re all more involved in each other’s lives now as opposed to being a weekend parent. It’s been a huge shift for him, too, because there’s so much more he’s involved with. He’s like, “Homework? What’s homework? I don’t know what these kids have to do for homework.” I’m like, “It’s this, this, this, this and this.” And he’s like, “How do you know all this stuff?” I’m like, “Well, I’ve been doing it forever.” So, that’s been a huge shift for him, having to be more involved as well.
Sherry [00:11:36]: It sounds like a lot of the dynamics have probably changed with that transition.
Ali [00:11:38]: Yeah, it has, but in a good way.
Sherry [00:11:42]: Yeah, and it’s allowed you to have the time and support to start your own business. Are you enjoying that?
Ali [00:12:17]: I am enjoying it. It’s been a little scary, but also really rewarding just to see progress in clients and having them tell you, “You’ve completely changed my life.” “You’ve saved my life.” I had a client who, he was on his way to a grave: high blood pressure, high cholesterol. He’s off all his meds. He’s perfectly healthy now. I was like, “See? Diet and exercise. Pretty amazing stuff.” So, just seeing that transformation for people, being able to work with them more one-on-one and being a part of that has been really amazing.
Sherry [00:12:20]: That’s great. It sounds like it’s really rewarding.
Ali [00:12:24]: It is really rewarding. It’s exhausting, too, because they can also be very needy.
Sherry [00:12:26]: Yes. Yes.
Ali [00:12:49]: “Should I eat this?” “Should I not eat this?” “What do I do with this?” “How do I do this?” But it’s good. It’s really good. And then just figuring out how to make the studio run, how to get the schedules. Do I need to bring in more instructors to help me with all of this? What can I outsource? What do I need to do myself? How do I market this? Mike’s been really helpful with giving me some ideas about how to really grow the business.
Sherry [00:13:12]: It sounds like there’s a lot of parallel process, though, in that scAling-up process that I know that Mike and Rob talk about a lot. Like, how do you decide when to hire contractors? How do you decide when you need more employees? And the pros and cons of that, and then, of course, marketing is a big conversation always. Sounds like you and Mike probably have a lot to talk about at night after the kids go to bed.
Ali [00:13:48]: Yes. Yes, we do bounce ideas off each other. He’ll help me with stuff. He’s been writing this book, too, and he needed to get the cover done. And he got it back, and I’m just like, “Do you want me to just get this done for you so you can be done,” and was able to just whip out my graphic design skills from my back pocket, from my previous life. And we stayed up one night after the kids went to bed and got that out the door. And I’m sure you and Rob go through this, too. You really have to work not just as a partnership in your marriage, but there’s a partnership with your businesses, too.
Sherry [00:13:50]: Sure, yeah.
Ali [00:13:52]: You’ve spoke at MicroConf, right?
Sherry [00:14:30]: Yeah. Yeah, and we’re doing a podcast together now called “Zen Founder,” where we talk about actually a lot of the things that you and I are talking about today, kind of work-life balance issues and mental health, managing anxiety, all of the kind of human side of doing a startup. And so that has actually been really fun for he and I to join forces and work together in a more formal way. Our fields, of course, are very different. Although we certainly have a lot of things in common. We both supervise people, manage people. So, no, there’s a lot that we talk about that’s sort of overlapping in our two work lives, but to be able to really do something together is really fun.
Ali [00:14:35] And so how do you guys balance the family and the professional life?
Sherry [00:14:44]: It’s like playing Tetris. It’s like figuring out where all of those little boxes can go and find a little spot.
Ali [00:14:46]: Like Google Calendar on crack, right?
Sherry [00:14:48]: Exactly what it is.
Ali [00:14:55]: Who’s in charge of this? Yeah, and everything’s color-coded, and “You’re picking up, and you’re dropping off.” “And here’s the bus.” And, “Who’s making dinner tonight?”
Sherry [00:14:57]: Right. No, it is –
Ali [00:14:58]: [Crosstalk].
Sherry [00:15:38]: – very much like that. Yes, and we have this Sunday night meeting. We work on our Tetris board. We just figure out who’s going where and what help we need and what babysitters need to come when and where. Some weeks, it’s kind of crazy, like we’re both going 18 different places in a day. But it’s another way, though, that’s fun to be partners because we’re both pretty invested in the well-being of our kids, and we’re invested in each other. And so we just figure out as best we can to make sure that everybody’s getting what they need at a given day. And sometimes that’s really challenging, but mostly we problem-solve together.
Ali [00:15:41]: I like your idea about the Sunday meetings. I’m going to write that down.
Sherry [00:15:41]: Yeah.
Ali [00:15:45]: “Have Sunday meeting.” “Need Sunday meeting.”
Sherry [00:15:47]: That’s when the Google Calendar magic happens.
Ali [00:16:09]: Yeah. Usually, I just slap stuff on there and share it with him. But he doesn’t always see it, and sometimes it doesn’t always sync up. I’m like, “I put it on the calendar.” And he’s like, “Well, it’s not on my calendar,” and then that’s a whole other, like, when technology fails you. And then you’re yelling at your spouse, because it was on the calendar but they didn’t see it because it didn’t sync right, or whatever. So, it’s good to have an actual face-to-face meeting –
Sherry [00:16:10]: Totally, especially in –
Ali [00:16:12]: – to work that stuff out.
Sherry [00:16:24] – highly technology dependent families. I think if Google Calendar somehow went away, I would just wander around in circles, really unsure of where I was supposed to be and what was going on.
Ali [00:16:27]: I’d cry. I’d just be like, “I don’t know what to do.”
Sherry [00:16:28]: “I’m lost.”
Ali [00:16:34]: “I don’t have my list of my appointments and what I’m supposed to do right now.” Oh, man.
Sherry [00:16:53]: I guess since this is the five-year anniversary episode of “Startups for the Rest of Us,” maybe we could do a little bit of reflecting back about what the last five years have looked like. One thing that Mike has talked about at MicroConf and in a couple of other places is that he’s had some pretty significant health issues over the past couple of years.
Ali [00:17:57]: Yeah, he has. He’s had back issues since I met him in 2001. That’s always been an ongoing issue with him. And then more recently was his low testosterone diagnosis, which was the most recent health issue, which actually was kind of trying for both of us because he just wasn’t himself, and he didn’t know what was going on with him. He didn’t feel right, but he didn’t know what was wrong. So, I think he really struggled. He was really unmotivated, and a lot of the symptoms of depression are similar to those for low testosterone. So, I think he tried to do a lot of things to get him out of this, quote, unquote, “funk,” and none of it was working, and it was really stressful on our marriage. And when he finally went to see the doctor, the first thing she did was treat him for depression, like, “All right. I’m going to put you on antidepressants.” You know, they give you that mental health questionnaire when you go see your general practitioner. I don’t need to tell you. You know what they are.
Sherry [00:18:09]: Yeah, yeah. “Do you ever feel listless? No motivation? Tired? Like you have no appetite, or to much appetite?” Yeah. So, there was some screening, and he just marked them all because that’s what he was experiencing, but it wasn’t depression.
Ali [00:18:27]: Right. So, big, red flags when you mark “yes” to everything on there. So, she put him on antidepressants, and he took them for a while. And then he was just like, “These aren’t helping. I’m not depressed.” Of course, he just took himself off of them, which that’s another thing. You can’t just take yourself off that stuff. You need to go see your doctor. People do that kind of stuff. That must drive you [crosstalk] –
Sherry [00:18:29]: I don’t prescribe medicine, no.
Ali [00:18:29]: – okay.
Sherry [00:18:40]: No. But I work in a pretty integrated clinic, so I work very closely with psychiatrists. So, I have those same conversations with people about like, “Oh, you can’t just stop your medicine. You have to” –
Ali [00:18:40]: Yeah.
Sherry [00:18:43]: – “talk to us first. You’ll get sick.”
Ali [00:18:47]: Right. Yeah, you can’t just stop taking it. You’re supposed to wean yourself down and this and that.
Sherry [00:18:47]: Yeah.
Ali [00:19:01]: But anyway, she’s like, “All right.” She had sent him for some more tests and discovered the low testosterone and put him on a testosterone treatment, which is a gel he’s got to rub on his body.
Sherry [00:19:03]: And he’s doing much better now, right?
Ali [00:19:09]: He’s doing so much better. And it was almost like a relief. It was like, “Ah. Thank God there’s a reason I’m feeling this way.”
Sherry [00:19:27]: Oh, sure. Once there’s a problem, then you can work on figuring out what to do about it. That’s fantastic that he’s doing better.
And so the last five years, with all of the travel and the illness, there’s been a lot that’s been going on while Mike has been working on this podcast.
Ali [00:19:40]: Yeah, I guess so. It all seems kind of a blur. I mean we said, like, “God. They’ve been doing this for five years.” I’m like “It feels like a blur.” I don’t even know. It’s just so much has happened in the last five years. I’m sure everybody feels that way.
Sherry [00:19:43]: Yeah, we’re just in a time of life when time moves really fast, I think.
Ali [00:19:50]: Yeah, and you turn around and you’re like, “How’d the kids get so big?” Another year’s gone by, and –
Sherry [00:20:25]: I think the last five years, we’ve moved across the country, had a child. I changed jobs. Rob has bought and sold a couple of apps and companies and things. Started Drip. Maybe he started HitTail. No, I think we had HitTail, or, he had HitTail before then. But, yeah. So, life looks phenomenally different now than it did five years ago, both for him and for us as a family. And I guess the podcast listeners have probably walked alongside that process with Mike and Rob as their lives have changed.
Ali [00:20:30]: – absolutely. So, how do you feel about Rob’s latest product, Drip?
Sherry [00:21:53]: I think it’s cool. So, Rob and I have a little bit of an interesting arrangement. Even though we’re very connected and we do a lot of things together, even professionally, I’m pretty separate from the day-to-day running of what’s going on with the apps. So, I know that he has said over and over that he will never do this again. He will never start an app from scratch and do all of the design and architecture. I kind of ignore those statements, because I feel like I’ve heard them before. But, generally, I think Drip is kind of his mistress a little bit.
I think that’s a little bit how it is. He’s got HitTail. He’s got Drip. He’s got a couple of other things going on, and I sometimes have to vie for some attention from them. Generally, it’s gone fairly smoothly. There was a time about six months ago when he was really worried about the revenue flow, because he’d just hired several people, but, Drip wasn’t quite having the momentum that he needed it to have for the number of folks that he had hired. And he was sweating it. And it was really filtering over into our family life and our relationship, and I was getting a little Drip-angry. Like, “Get this app out of my life. This is causing too much trouble.” But since then, I’ve had more love for Drip. Drip is pulling its weight a little bit more.
Ali [00:22:19]: Yeah. That is true, though, how the stress of the business can really change the dynamic of your marriage and your family. Like you said, “Ugh. I hate Drip.” or, “I hate that product, because it’s ruining my life right now.” But it’s one of those things that kind of goes with being married to an entrepreneur. It’s interesting to hear you talk about it like that, because I’m like, “Oh, all too familiar with all of what you just said.”
Sherry [00:22:28]: Yeah, like the emotional quality of your relationship rises and falls along with the AuditShark, or the Drip growth curve line.
Ali [00:22:28]: Yeah.
Sherry [00:22:34]: How are you feeling about AuditShark? Do you and AuditShark need any couples therapy?
Ali [00:23:06]: Oh, yeah. I mean Mike’s been working on AuditShark for a really long time. It’s a very complicated product, and I remember when he first told me about it, he had that little-kid gleam in his eye about how amazing it was and this and that and everything he wanted it to be able to do. And of course, I just glaze over because I’m still not tech-savvy. I’m so far from any of this stuff. So, he gets all excited and tells me stuff, and I just glaze over. My eyes just glaze over, and he’s like, “You’re not even listening to me, are you?” And I’m like, “I’m listening. I’m listening.”
Sherry [00:23:09]: “I’m trying. If I understood the words you were saying.”
Ali [00:23:34]: Yeah. I’m just like, “I don’t even know what you’re talking about.” I’ve learned more about HIPAA Laws and all this security software stuff. I’m like, “You’re speaking a different language right now, but I’m doing my best to keep up.” But he’s put a lot of blood, sweat and tears into it, so it’s hard to be “Down with AuditShark.” because I know how much nurturing of the product that he’s done.
Sherry [00:24:10]: And I think that is what’s really hard about being married to a founder. It’s not just that they have an intense or demanding job, it’s that so much of themselves is wrapped up in it. And so, really, if AuditShark, or if Drip is suffering or not doing well, I just feel like their souls or their psyche is going along with the product. I think it is, like you said, so much of them is tied up in that product, that it’s a different dynamic, even, than someone who’s a physician or a fireman and has a job that requires them to be really intense and focused. It just takes a piece of them in a different way.
Ali [00:24:26]: Absolutely. So, you mentioned earlier how Rob had left these great, salaried jobs. And was there any point at which [you] hoped he would go back to a salaried job and left all this founders stuff behind?
Sherry [00:25:34]: Not really, to be honest. Rob has done a pretty good job of, I think, assessing risk pretty well. He’s always stepped down, so when he first moved from having a salaried position to contracting, he went half-time at his salary job and did half-time consulting. And then when he moved from consulting to products, he just did this sort of slow shift. And so by the time he was all the way a consultant, or all the way an entrepreneur who was doing products, there’d been enough build-up process that I wasn’t worried about it. And I had seen that it was working before he made the leap. I think because we are so addicted to our flexible schedules, like, taking off on Fridays often, or being gone for a month when we want to, it’s been such a benefit that I enjoy so much, that I think it has helped buffer any anxiety that I might have about an instable income source or anything like that.
Ali [00:25:50]: What do you do with your patients that you see when you’re like, “Okay. I’m going away for,” because you have a very face-to-face, people rely on you, like, “Help me. I’m having an anxiety attack, and I need to talk to you right this second.” So, how do you take off time like that?
Sherry [00:25:52]: How do I abandon them?
Ali [00:25:53]: Yeah.
Sherry [00:25:53]: Yeah.
Ali [00:25:55]: Well, I didn’t mean it like that.
Sherry [00:27:02]: But they probably would think that. I try to do a really good job of just saying up front, “This is how I live my life.” I’m really committed to my work, and I’m really committed to taking care of my patients, but I am gone for four weeks, usually in the fall. And I’ve gone for a couple weeks in the summer and usually gone between Christmas and New Year’s. And I just try to tell people that when I begin to work with them, so that it’s not shocking or surprising. I also work with a really great team. I work in a clinic where there’re other therapists and other physicians, so generally the people I work with individually have at least another point of contact. So, they either have a psychiatrist, or they’re in a group therapy session, or something like that. So, I have people that help cover for me when I’m away.
Yeah, it’s hard on them. It’s hard on my patients, and it’s kind of messy. But they have consistently told me, and I believe them, I think, that they know that this is part of who I am and that they like working with me. So, they’ll deal with it.
Ali [00:27:06]: They’ll deal with it. They’ll suck it up for the month they have to talk to somebody else. Then –
Sherry [00:27:07]: Right.
Ali [00:27:09]: – as soon as you come back, they’re like, “Oh, thank God you’re back.”
Sherry [00:27:14]: It hasn’t really hurt my practice. I’ll say that. It hasn’t really hurt it.
Ali [00:27:23]: That’s good, though. That’s kind of where I’m at now. My psychologist might take two weeks off, or take a month off. We’re just like, I can’t just –
Sherry [00:27:24] I committed to these people.
Ali [00:27:33]: – Yeah. I’m like I don’t have anybody else to rely on. If I’m not there, then classes and sessions don’t run, and there’s no revenue. That’s –
Sherry [00:27:33]: Yeah.
Ali [00:27:43]: – the scary thing about being a sole proprietor. And there’s no one but me right now, so it’s all or nothing. So I’m either there making money, or I’m not.
Sherry [00:27:45]: And if you’re not there, there’s no money.
Ali [00:27:49]: There’s no money to be made. That’s kind of scary.
Sherry [00:28:30]: And it’s been interesting to see Rob and Mike do that to some extent, in that they have decided to be partners in some of these ventures. Sharing MicroConf, sharing the podcast. And I think that has been really beneficial to Rob, because he has somebody to talk nuts and bolts with that’s not me, and he has a partner in it. So, it doesn’t feel as isolating, or as scary when you have two brains. Maybe someday you’ll take on a partner or something like that, but that’s one thing that I’ve enjoyed about watching them develop over the last five years, is that they have a system of getting each other’s back and sharing the labor, certainly of planning MicroConf and things like that.
Ali [00:28:44]: Absolutely. It’s finding the right partner, too, because you just don’t want to find a partner. You want to find the right partner. I’m really thankful, too, that Mike has Rob who he can talk about all this nerd stuff with that I’m not like just “I don’t know what you’re saying.”
Sherry [00:28:45]: They speak the same language.
Ali [00:29:19]: Exactly. And I’m like, “Go talk to Rob about this stuff, because you’re speaking a different language, and I don’t know what you’re saying.” I try to do my best, but he knows I have limitations in that department. But you’re right, though. It’s nice that they have a different sounding board besides us, and it’s great that they even have built this community with MicroConf and the podcast so that there is, it’s not like a partnership in the sense that it’s two people working together, but it’s this, I don’t want to say “support group,” but it is basically a support group: “Where can I go to ask a question?” “How do I find out more about X, Y or Z?”
Sherry [00:29:35]: Both MicroConf and the Founder Café, I think, exist because people are married to people like us who are like, “I don’t know what you’re talking about.” They have filled that need and, thankfully, not had to go outside the marriage but just figured out where to find a spot to talk about these things.
You know, given that you are ten years into this relationship and so many years into being married to a founder, are there any words of wisdom that you have for other founders or their families about how to figure this life out? How to do it well?
Ali [00:30:36]: As long as I’ve known Mike, even when I first met him, he was already working on a side project. He had a full-time job, was going to grad school and was working on a product. So, I always just kind of accepted from the get-go that that was who he was. That was a part of him. That was kind of his deal. So, I think for it to work, you have to accept that about your spouse, that this isn’t just like they woke up one day and said, “Hey, I’m going to start a business today.” It’s almost ingrained in them. It’s part of who they are.
Sherry [00:30:50]: Yeah. This is who they are. And whatever business they’re working on, or dreaming up, or scheming, or doing the marketing for is like another appendage. It’s pretty intimately attached to who they are.
Ali [00:31:19]: Yeah. And asking, or expecting, or wanting them to be anything other than that is just not going to make the relationship work. And being really supportive and listening and, like you said, get that Google Calendar out and start planning how you’re going to balance everything. And communication is definitely key, because if you don’t have a good communication pattern with the person, it’s just not going to mesh. It’s not going to work, for either person –
Sherry [00:31:19]: Right.
Ali [00:31:31]: – because it isn’t going to do well, and your marriage and your family isn’t going to do well because you’re shut down from interacting or letting the other person know what you need, or what they need.
Sherry [00:32:16]: And I think, to add to that, one of the things that sounds like both Rob and Mike have done pretty well is that they have done a good job of listening to our dreams, of also using their entrepreneurial skills and their spheres of influence and investing in us the way that we have invested in them. At least in our marriage, it’s never felt one-sided. Like, Rob’s doing really cool, amazing things and has this interesting entrepreneurial life, and I’m schlepping kids around. I think both of us are really committed to the growth and well-being of each other and that my dreams are really important to him. And if I say I want to do something, he’s like, “Okay. How can I make this happen for you?”
Ali [00:32:17]: Mm-hmm, yeah.
Sherry [00:32:31]: That’s been really important, and I think that might be a little bit exceptional in the founder world, especially because the apps and starting these businesses can be so all-consuming if people aren’t doing a good job of paying attention to what’s going on with their partner.
Ali [00:32:59]: Mm-hmm. Absolutely. I would agree with everything you just said, because Mike’s been very supportive, too, of everything that I’ve wanted accomplish outside of raising kids and making dinner. Yeah, it definitely has to be a real partnership.
So, I was wondering. I know that you and Rob each take a personal retreat at least once a year each, sometimes twice a year. Is that right?
Sherry [00:32:59]: Yeah.
Ali [00:33:11]: And I was wondering how you both came up with the idea to take a personal retreat. What was the catalyst for that idea? And maybe what you guys consider a, quote, unquote, “personal retreat”?
Sherry [00:34:18]: Yeah. It’s a great question. It’s something that has been so significant in our lives. In our other podcast, on “Zen Founder,” we jus recorded, I think it’s episode 2, but it’s a whole episode about this, so you can check that out, or people can check that out if they’re interested. But, basically, we have just benefited so much from the time away from normal life. I think we started doing it when I realized that I was really unhappy in my job, and I just thought, “Oh, my gosh. I have spent years preparing for this job, and I just need to get away and sort out how am I feeling, what am I thinking and what do I want to do about it.”
So, the first retreat that was one that I went on, and it was really all about “What’s going to be my direction,” and it was so helpful, because getting away from home and stepping outside of the routine really allowed me to think pretty clearly.
We didn’t come up with this. There’s lots of material about how to do retreats. And –
Ali [00:34:22]: Yeah, I grew up Catholic, and going on retreat was just what you did.
Sherry [00:34:24]: – yeah, it’s a regular process.
Ali [00:34:24]: Yeah, yeah. But you go and pray. So, the whole idea of a personal retreat, I was just like, “Hmm. What’s that like?”
Sherry [00:34:34]: So, I go and go on walks, or –
Ali [00:34:37]: Think.
Sherry [00:34:51]: – right. But it’s the same kind of process. It’s that silence, a more quiet, subdued environment to look inside. So, it’s probably similar to your retreats as a child, but maybe less guilt-ridden.
Ali [00:34:54]: Less time on your knees, praying, maybe more of reflection.
Sherry [00:34:56]: More time drinking wine on the beach.
Ali [00:34:58]: Now you’re speaking [crosstalk].
Sherry [00:35:06]: Like that. Check out that episode. You might like it. It talks about how both of us have used them in slightly different ways.
Ali [00:35:19]: Okay. Yeah, I definitely will. So, do you have a special place that you go to do those retreats? Or, do you change the location of the retreats depending on what you need for the retreat, or what you’re looking for out of it?
Sherry [00:36:03]: Yeah. We have done different things. We live about a little over two hours from the Central Coast of California, which is a really beautiful, lovely area. So, we generally go there. The last one I went on, I went to the Santa Cruz Mountains. So, I wasn’t on the beach, I was just in the mountains in a cabin. Other times, I have just stayed in a nice hotel by myself, because I wanted a bubble bath in front of the fireplace, things I don’t get to do at home. We set aside some money and plan to do something that is really in line with whatever either of us is feeling like our vibe is at that time.
But, you certainly don’t have to spend a lot of money. You could go camping, if you like to go camping. I don’t like to go camping. That’s not restful to me.
Ali [00:36:04]: I don’t like to go camping either.
Sherry [00:36:05]: – so, no camping for us.
Ali [00:36:08]: No camping. That is not my idea of vacation or fun.
Sherry [00:36:10]: It’s a lot of work.
Ali [00:36:15]: It is a lot of work. I’m like, “This quest sucks. I’m not doing this anymore.”
Sherry [00:36:23]: Yeah. Send me to the hotel that has the wine bar and the nacho bar, and that’s pretty much what I do.
Ali [00:37:06]: That’s an awesome retreat. I can get down with that. You know, Mike and I have talked about it, and he had suggested it. I actually did one. I just checked myself into a hotel for a weekend. And Mike started doing a couple. He’s done, I think, one or two. But they really are nice. They’re just a nice break from reality, almost. I can just go and be alone and focus on what is it I want out of life, or to pursue next. Or, how am I going to build out from here? Would you say that that is really an important component to being a[n] entrepreneur, having that time?
Sherry [00:39:04]: I really think so because no one is telling you what to do. Right? No one is telling you whether to sell your app or grow your app. No one is telling you what to launch or not launch, or what features to add. And no one is telling you what kind of life you’re going to have. You’re not working for a corporation that says, “This is what’s possible for you.” Everything is possible. And so much of your life is determined by what you want, but I think the frenetic nature of doing a startup makes it very difficult to really check in and ask the question “What do I want?” “What’s going on in my life?” “What are my goals,” beyond just responding to bug fixes and customer complaints. Especially once you’ve got something going that has some momentum, you can just sort of coast on that for a long time.
And so I feel like taking a retreat as a founder is foundational. It’s essential, because how else do you know what the hell you’re doing? Like, how else do you know what your life is going to be like? And I think people who don’t have any mechanism for introspection can easily drift really far away from who they want to be and how they want to be living. And the retreats, for me, just totally reset me.
Well, we should, I guess, probably move to wrapping it up. But maybe if this isn’t too weird, I can actually say something to Rob and Mike, and that’s that we are really proud of you and really impressed with what you’ve done with the last five years and really proud of the community that you two have built together and proud of the way that you’ve handled yourselves and grateful for the good partners that you’ve been to both Ali and I.
So, congratulations on five years. We are very excited for what the next five years will bring, and whatever it brings, you know that you have partners who are super supportive and love you both very much.
Ali [00:39:07]: And we’ll, hopefully, make it to MicroConf someday.
Sherry [00:39:12]: And maybe all four of us will meet at some point in person.
Ali [00:39:13]: That’d be nice.
Sherry [00:39:15]: That could be your five-year goal, Ali.
Ali [00:39:28]: That is my five-year goal. You know? That’s my five-year goal is to make it to MicroConf and actually meet Rob and Sherry face-to-face so I have some faces to go with the names that I hear so much about.
Sherry [00:39:33]: That would be fun. Cool. Well, you want to
Ali [00:39:39]: And then we can all tell embarrassing stories about what Rob and Mike were like in their younger years, and that’s always a good time.
Sherry [00:39:46]: If we come on again in the next five years, we’ll just make it a total roast, like, all of the embarrassing stories that we don’t want to say yet.
Ali [00:39:49]: Oh, so fun. So fun. I’m in.
Sherry [00:39:52]: Sounds good.
Ali [00:40:24]All right. So, if you have any questions for us, call our voicemail number at 1.888.801.9690. Or, email us at questions@startupsfortherestofus.com. Our theme music is an excerpt from “We’re Outta Control” by MoOt, used under Creative Commons. Subscribe to us at 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 229 | 8 Years to Overnight Success with Phil Derksen
Show Notes
In this episode of Startups For The Rest Of Us, Mike and Rob interview Phil Derksen and talk about his eight year journey to overnight success.
Items mentioned in this episode:
Phil’s plugins:
Other links:
- Rob’s “Finding your Flywheel” talk
- “Getting Real” book by 37 signals
- Kyle Brown’s WordPress support service
- Pressnomics conference
- Phil on Twitter
- PhilDerksen.com
Transcript
Rob [00:00]: In this episode of Startups For the Rest of Us Mike and I interview Phil Derksen and we talk about his eight year journey to overnight success. This is Startups For the Rest of Us episode two hundred twenty-nine.
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 your’re just thinking about it. I’m Rob.
Mike [00:28]: And I’m Mike.
Rob [00:30]: And we’re here to share our experiences to help you avoid the same mistakes we’ve made. What’s the word this week, Mike.
Mike [00:34]: Well, last week I think we got a little over zealous in our recording and we talked about some of the different books people should be reading if they’re a founder and one of the resources that I completely forgot to mention, because it’s clearly written down and I just totally spaced and forgot to mention it, Josh Kaufman, who’s the author of The Personal MBA has on his website a list of the best business books. He’s got a list of one hundred of them. If you just go to his website, we’ll link it up in the show notes but it’s personalmba.com best business books. They’re all categorized into different categories so there’s advertising and costumer development and all sorts of different things but that is a very comprehensive list that has been curated by him. He updates in on a yearly basis. So as new books come out, definitely go back and take a look at that list again because it does change from time to time.
Rob [01:22]: Right. And then as part of him keeping it updated is that he has to reevaluate every year which good books came out about business creation and weigh them against the classics, so to speak. So I think it’s a pretty cool list.
Mike [01:33]: Yeah, there’s definitely a mix between somethings that are fairly old that were written fifteen, twenty, thirty years ago, but then there’s also a lot of new stuff as well. It’s a testament to how good some of those older books are because they’ve been on this list and they’re still there even though there’s a lot of new stuff that has come out.
Rob [01:50]: So an update on my stuff. I’m in the process of hiring two people right now, not full time. One is actually just going to be a few hours a week. Basically she’s like a remote executive assistant. You know how I’ve been complaining every year about how much email I get and just trying to find a better way to manage that?
Mike [02:07]: How much email do you get? I use Gmail Meter to keep track and it emails me a report every month to let me know how much email I’ve gotten and all sorts of statistics. Have you used something like that to track how much you actually get?
Rob [02:18]: You can go into the Gmail settings and there’s a report and it will spit it out. I don’t use a special plugin but last time I looked I was averaging about a hundred and ten messages a day for every day of the month. So it was thirty-three hundred emails a month. It’s enough that it’s a pain.
Mike [02:31]: I get about that much as well.
Rob [02:32]: Do you?
Mike [02:33]: Mm-hmm.
Rob [02:34]: Look at you. If I hire someone who’s good maybe you could use her as well. I’m just getting her started today but as I’ve gone through it I’ve always struggled with what can someone possibly do that is actually helpful, that’s not just five minutes of time saving but really trying to get in and understand what I’m doing through all these different businesses and be able to intelligently reply to more stuff. She actually is going to be able to run my calendar so that if podcast stuff comes up I can just say “Yes, now talk to her to schedule it.” I think that sounds like that’s only a few emails back and forth and that’s only five minutes but what’s interesting, it’s not even the time I’m trying to get back, it’s the distraction. It’s the mental distraction of the sheer volume of tasks that you have to deal with. Because what I realized, most tasks for me, don’t take that long but I just have a lot of them. So my week is comprised of a few hundred five minute tasks. I obviously have some longer tasks but the more of those few hundred, five minute tasks I can get off my plate I think that’s going to free me up. I’m excited about embarking on that and I’ll keep you guys updated as that goes.
Mike [03:38]: I think what you’re really looking for there is the ability to off load a lot of the decision-making there so you can help yourself avoid any level of decision fatigue. Because if you can have somebody go in there and manually, essentially, categorize some of those emails or respond to the ones that don’t necessarily take a lot of time but maybe need to be responded to, maybe just a quick thanks or something along those lines, then those things can still get done and it helps you avoid those mental context switches between them that pulls you out of the more important higher level stuff that you need to get done on a regular basis.
Rob [04:08]: Yeah, that’s right. What I realized is that I do have some processes, as an example, if someone emails me for a podcast interview I now have questions of like “How long have you been around,” “How many listeners do you have,” and I’ve started just doing that exchange all the time now and realizing that I probably need to have someone else do that. There are criteria. I don’t just say yes to everything anymore and I think that someone else can really help out by saving me the time to do that. And then the other position I mentioned, I’m hiring someone for customer success which is basically doing Drip pre-sale demos, helping with onboarding, building tutorials, that stuff. That’s also probably a twenty hours a week contract but I have a couple pretty good leads on that as well. I just feel like I’ve been on Skype for the past two days doing a bunch of interviews. Both these people, maybe not the email one as much, but the customer success person is going to be video demos. I have to do an interview with them. It can’t be something I can hire over email.
So today I want welcome a friend of mine, Phil Derksen. Phil’s a lifetime Micropreneur Academy member. He’s attended every MicroConf even the one way back in 2011. He is a Fresno local. He actually lives just up the road from me and we’re in a Mastermind group together, which we’ve been in since, I think 2010. Phil has just left his day job. He has been on his own for about a month and he’s living, now, fully on his own product income after spending several years striving for that goal. His products are pinplugins.com, it’s a Pinterest WordPress plugin and wpstripe.net. So it’s a Stripe WordPress plugin.
Welcome to the show, Phil. It’s great to have you on.
Phil [05:49]: Yeah, thanks, Rob. Thanks, Mike for having me on. I’ve been a huge fan of the podcast since you guys started it out and obviously just honored to be here so I appreciate it.
Rob [05:59]: Absolutely. It’s our pleasure. I’m going to kick us off with a question that I think a lot of folks who have not had enough product income to quit there job [are] probably thinking about. So after maybe eight years of building products you finally reach that goal of supporting yourself and quitting your day job. Does the feeling that you have now, does it live up to how you imagined it would be now that you’re on your own?
Phil [06:20]: Yeah, it definitely does. I love the feeling of working when I want, where I want, what I want to work on, that feeling day in, day out now from the start of the day to the end, it’s an awesome feeling. I’m probably still working a little too many hours because I’m still adjusting. It was recently. But I’m loving it. To me it does.
Rob [06:39]: Have there been any major surprises as you basically moved on? You don’t have a boss now. That first week were you shocked or surprised by anything?
Phil [06:47]: Maybe. I think I expected that the day was going to have a lot less time pressure because I was used to having a full day of work each day and then working on my own products whenever I could squeeze them in, in the evenings or early in the mornings or whenever I could. I thought it would be pretty lax. I have the full day to do stuff. I know it’s early but I’m still finding that there’s just so much to do and I’m still trying to get caught up. Like I said, the big plus to it is I’m just working on my own products now so every minute I work that feeling I’m working on my own business, my own products not somebody else’s it’s getting me through. I much prefer what I’m doing now, even though I’m still busy, than what I was doing before.
Mike [07:26]: Do you feel like it’s a lot more stressful now because obviously, you have to be able to pay the bills and you just recently quit your job so there’s that added pressure to make sure that your products are performing. Do you feel that stress, yet, or is it too early?
Phil [07:40]: I think it is a little early. I do feel it though. But I think it’s a good motivator, too. It might kick in down the road but I also waited this long, I obviously got my sales to a certain point before I made that jump. So I’m not too stressed out but it is there a little bit.
Mike [07:56]: Was there a point during this journey that you didn’t know if you’d be able to pull this off?
Phil [08:01]: I never had a “I want to give up,” feeling, but I definitely got pretty discouraged at times. It just seemed like it was taking so long for me to get where I’m at, to get here. At times I was a little discouraged because I didn’t start sooner. I didn’t start really pursuing this seriously back before I had kids when my wife and I we [?] dual income, no kids. I waited until it was tougher. I had a mortgage, I had kids. As my job kept getting better and better I would change jobs, that trap that I felt I had to climb out of, got higher and higher. I’m not real risk adverse for myself. I’m not super risk tolerant either but for my family I didn’t want to take huge financial risks. I felt a little trapped there that I just had to do this over the long haul and take a long time to do this.
Rob [08:50]: You’re in a same position a lot of us are and a lot of listeners are where you are married and you may have a child or two and you have a mortgage. I think you made a really good point that the further down that line you get, with the greater income as you get down your career path, it does become a harder and harder thing to risk all of that. You have to take your business a lot further in order just to meet your existing standard of living rather than if you had done in when you were twenty-three coming right out of college, seems like it would have been a much easier path. I’ve thought that the same way about it myself because I didn’t really start until I was late twenties as well.
You said you experienced some discouragement along the way, you never thought you were going to give up. Why do you think you didn’t give up? How did you push through the discouragement?
Phil [09:33]: I guess, like a lot of listeners here, too, I just have that extremely strong desire to own my own products instead of working for a company or clients. I’ve thought about it a couple times, at this point in my career, maybe, I’m at the point where in a typical American career, it’s coming up about halfway through. If I had worked the rest of my career in a nine to five gig I might actually, financially, come out the same. I hope not. I hope my business does better. All things said and done it’s the journey more than anything, I guess, is what I’m saying. Even though it’s been tough doing this on the side up until now, this journey is what I want to do. This is the kind of path I want to work regardless of financial outcome in the end.
Rob [10:14]: So when you started out on this journey, did you think it would take this long?
Phil [10:17]: No. No, I didn’t. When I really started seriously trying to make an online product business, I didn’t think it would take this long but I was learning a lot going through the Academy, talking with other folks. There’s a lot to learn but I made a lot of mistakes along the way, too. I did not expect it to take this long but that’s just how it worked out.
Mike [10:36]: You just mentioned that you made a lot of mistakes along the way. I think that there are certain mistakes that you almost have to make in order to get the experience so that you know not just what not to do but why not to do it. Could you talk a little bit about what some of those mistakes were that you ran into?
Phil [10:51]: Sure. Failed products and things like that?
Mike [10:53]: Either failed products or decisions that you made to go after a particular market, for example, where it didn’t pan out and you look back out in retrospect and it’s clear to you why it didn’t work out but it’s also clear that you don’t necessarily want to go back and do it again and try and redo it anyway.
Phil [11:11]: I would say it was about eight years ago that I really started getting serious about building products on the side. It was about that time I read Getting Real by 37Signals, that book, and started following them, the whole stay lean and don’t worry about scaling, that kind of thing. That’s where I started my learning process. My first projects back then focused on tackling what would be a cool technology to solve not real business problems. For instance, there was one I remember that Amazon’s web services were just coming out around that time, getting popular like S3 and payment services and such, and I thought it would be cool to use that technology and create a pay to download game service. Going after the downloading game market kind of thing. Just –
Rob [11:59]: A solution in search of a problem, that kind of stuff.
Phil [12:02]: – right. Just because Amazon had these new web services.
Rob [12:05]: I did a few of those.
Phil [12:08]: Rob, you talked about, in one of the MicroConf talks, about the different levels of, it was the Flywheel talk, Asprin, vitamin, new and entertainment. I think that I was focused too much on the bottom end of that, the entertainment and new technology. When the need isn’t really there, people aren’t really looking for your solution. Obviously, I’ve always had the entrepreneurial bug but I also enjoy coding a lot. Even now, when I get into some coding problems, I’ll waste a few hours away even when I should have been using that time to spend on something else and maybe hiring out that work. I can get into that a little bit. Back then, it’s still the same thing. I just was wanting to tackle challenging technical issues. Another one I tried, it was just a web based grocery list creator. I built it to show off, at the time, cutting edge web based drag and drop. The iPhone app store just came out and was taking off so I thought I might get into mobile development. It was all focused on that technology.
Rob [13:07]: That’s when I met you.
Phil [13:09]: Yeah.
Rob [13:09]: Do you remember my first comment when I evaluated it as a business?
Phil [13:12]: It was something about if you enjoy working on it that’s great but that’s not a business problem.
Rob [13:17]: Yeah. It’s a nice little B to C app. You might make ninety-nine cents from it but it wasn’t something that was going to allow you to even get a few thousand bucks a month.
Phil [13:26]: That I entered into a local tech event here and it was fun but I didn’t make a dime from it. Those are a lot of my mistakes. It was about that time, too, that I found you guys, found the Academy, met Rob, and started in on that path.
Rob [13:39]: Yeah, I think that’s an interesting thing I want to follow up on is what finally changed? What switched from that to where here you stand today a few years later and you have two successful products and enough revenue to quit your job?
Phil [13:52]: Yeah, the Academy and just that mindset that finding real business problems and strategies for finding what people are looking for to solve these. Going through that whole process, and again, it took awhile, I had a lot of experiments, but I wouldn’t call them failures. They may have all not made any money but going through and learning SEO keyword tools and AdSense and affiliate stuff like that. I bought some domains to do the exact match domain name back when it was a little more popular. I got my feet wet with hiring VAs, paying for content, writing, that kind of thing. So I was just learning a lot at that time. I bought a four hundred dollar drop shipping site off Flippa. I don’t know if you remember that one. Rain water –
Rob [14:35]: Rain water barrels.
Phil [14:36]: – yeah.
Rob [14:38]: That was great.
Phil [14:39]: And I live somewhere where you won’t find any rain water barrels so I knew nothing about it. I eventually turned that into an affiliate site and eventually let it expire. Actually, I sold it but the guy never took it. He never did anything with it either. Those were all just early learning experiences and that was all before starting in on WordPress plugin.
Rob [14:58]: Right. And was there a mindset shift there as well? It sounds like moving from technology in search of a problem to more of looking for a business problem, like a pain point type of thing went along with that.
Phil [15:11]: Yes. And also some of the other guys in the Academy were having success with WordPress plugins so guys like John Turner and Dave Rodenbaugh, I say what they were doing and talked to them and thought this would be a good route to try.
Mike [15:26]: I guess during this process, what are one or two different internal factors or personality traits that you think are really the ones that carried you through to this point? Is there anything that stands out in your mind?
Phil [15:37]: I guess what keeps me motivated is my products are selling while I’m sleeping, while I’m on vacation, those things. Knowing that I’m not trading dollars for hours. I don’t know if you’d call it a personality trait but that’s one of my big motivators. Even the business name that I came up with for this, it’s called Moonstone Media, the way that came up is I was hanging out with my family at the beach, just enjoying family time, on vacation and later on I pulled out my phone and a bunch of sales came through. That was the time I was trying to come up with a business name. I named it after the beach which is called Moonstone. I guess that’s that biggest thing is that I can step away for a little bit and the business still moves forward and might even continue to grow a little bit.
Mike [16:22]: It sounds to me like that’s a lot of positive reinforcement as well because that isn’t necessarily an internal factor or a personality trait but it’s a situational experience that you’ve come to where you are in a situation, you’re on the beach, and sales are coming in. I can see how that can just be innately motivational where you see this is happening and not just that it’s possible, but it’s happening to you, and it allows you to double down on this behavior, which is of course pursuing this path.
Phil [16:52]: Yeah, exactly. I also set some sales and launch goals along the way and I didn’t always meet them when I wanted to, but I just think it’s important to have those goals but also to celebrate them. That’s another tip, I guess, if you’re not already doing it is when you have that launch, or you meet a certain sales member, I had sales members of five thousand a month and then the next one was ten and a half and then ten thousand, I had a little reward in mind for that already set out. It can be whatever you want. They don’t have to be extravagant, and I don’t even think they should be something that replaces special occasions like vacations with your family or anything like that that you’re already going to take. Something extra like I joined my first wine club when I hit five thousand a month, just something fun, a winery that I liked. You could also just go out to a nice restaurant, and extra night out, I guess, or extra vacation, or for us parents, maybe a whole day to yourself just for fun.
Rob [17:49]: I have a friend who bought himself an iPad when he hit a certain [?] goal.
Phil [17:51]: Yeah.
Rob [17:53]: That’s cool.
Phil [17:54]: And then for me, the top one there, the last goal when I hit ten thousand in sales in a month, that was my trigger I can finally quit my job. I did try more the punishments, if you don’t meet this you don’t get this. I didn’t find those worked as well. I can’t watch Walking Dead or any football games until my sales hit this X of dollars or something like that, just taking away some fun things. I found that wasn’t working. When I was striving for the rewards, I naturally sacrificed some things to get there.
Rob [18:24]: Yeah, I like that. I’ve never tried the stick approach, as you said it. I’ve only tried the carrot and I think it’s a really good thing for people to try to do. Assuming you have some control over it, right, before you have a product it’s tough, but as soon as you launch something and you’re at a certain revenue mark and you just want to grow it, you’re in more control of being able to do that and I think it can be really helpful. It’s motivation to work a little more, right, or to be a little more focused, or not take the evening and go out for happy hour and watch Walking Dead, but to take that evening and maybe put in some hours on your product.
Phil [18:54]: Yes, it’s what worked for me. Different personalities might work different ways but –
Rob [18:58]: Sure.
Phil [18:59]: – you got to find that.
Rob [19:00]: Phil, you obviously learned a lot on this journey, you made some mistakes, you had some successes, but you have a process laid out, you and I have talked about, where you are able to launch a WordPress plugin and turn it into something profitable, essentially. Could you walk us through that a little bit?
Phil [21:15]: Yeah, sure. After learning some of those basics through the Academy and seeing some other members successful with WordPress plugins, I went ahead and did my own. What happened was I was going to follow what I saw work for them, and that is the Free [?] Model, where you have a free plugin in the WordPress repository, you see if it gains popularity and then you start building a premium version of that. This was fall 2011 and my wife who’s a photographer, I had been helping her, tinkering around with her WordPress site for a year or two and I also got more familiar with WordPress building trying to build my own landing pages and such for the previous endeavors, and she was like “Hey, this Pinterest sharing button’s all over my site,” and this was when Pintrest was really starting to take off. So I said “Why not? I’ll try it.” The need was there . It wasn’t B to B necessarily but there were people online asking for it, she was asking for it. There were very few Pinterest plugins in the repo at the time. I taught myself a little bit of WordPress development and in December of 2011, around that time, I launched my first free plugin in probably a month, maybe two, of my own development time. So I didn’t yet hire anybody. Real simple, just outputting Pinterest embed code but in a plugin. I was pretty fortunate. Downloads started coming in pretty quickly and pretty rapidly and that’s when I was like “Wow, I have something here.” At that point I tried to make best use of my time and I did what you guys have done and I went oDesk and hired a WordPress developer. I went through a few candidates. At the time I was on the lower end, ten dollars an hour, overseas developer. I found one and the code wasn’t high quality but I wasn’t really good at WordPress development at the time and I wanted to make better use of my time so I used the approach off of a few test projects, trying to find the best candidate at that price point. Found somebody and took about four months and probably paid around a thousand dollars but got my first paid plugin out the door. Also, just a note, and I recommend this, I started building a mailing list within the free plugin right from the beginning. I’ve done that ever since, too. I did continue teaching myself WordPress development. I wanted to learn more and I wasn’t satisfied with the code quality. I did find myself fixing code quite a bit. I think the mistake I made here is that I spent a lot of time on this. I should have hired a more skilled developer and just risked that but I also wanted to get some more cash flow first –
Rob [21:49]: It’s also hard when you’re that early because you just don’t have the money. I was in the same boat where I had to hire developers that were five to ten bucks an hour and you just have to deal with it. I believe that you start where you have the means to and then as soon as you can you level up with who you can hire.
Phil [22:05]: – right. I guess that may have not been a mistake, necessarily, but it felt like it delayed my first paid plugin launch quite a bit. All of the other stuff always takes more time, like crafting the landing page and all the copy and everything. It always takes longer than you expect. May 2012 I launched my first paid version of the Pinterest plugin. It was right after MicroConf that year, I remember. My first plugin sale to a stranger was only twenty-three bucks with a launch discount but I still have that receipt, I printed and framed it and hung it on my wall. In fact, it’s behind my desk. My first ever sale to a stranger. That’s another motivator.
Rob [22:43]: Yeah, that’s cool.
Phil [22:44]: But I did expect a big launch and very few bought that first week. I was a little disappointed there. I had pretty high expectations, I think. In that first week, I think I only made about two hundred and fifty bucks. And the first two full months actually didn’t get that high, it was only three hundred or four hundred dollars. So, again, a down point thinking I was going to make this big bang and it didn’t happen.
Rob [23:07]: I think that’s pretty common. I think our eyes get pretty big. You hear of other people’s successes as well, right, and you start measuring up to that.
Phil [23:14]: Right. Exactly. I sat down and I think I also didn’t have the features prioritized correctly, like what people really wanted and wanted to pay for. Because when I sat down and built the next version of that plugin, it was a different plugin but the real pro version of it, I would call it. When I launched that in October that was a much bigger splash so it turned out all right. The two months previous, in fact, were less than a hundred dollars of sales so while I was trying to do this, I felt like that first paid plugin launch was a little bit of a failure. When I launched the next one in October, that actually made twenty-five hundred the first month and the next couple months. I count that as my big breakthrough.
Rob [23:57]: Right. There was a lot of trial and error to it. There was a lot of learning. It’s like you said, by the time you’d got there you had put together a number of sales pages, you had figured out how the WordPress repo works, you had figured out how to write the good copy, how to make a good wordpress.org page. All that honing the tools, it’s having the tools on your tool belt to do it. You didn’t necessarily need to learn content marketing and [outbound to cold?] email because you weren’t running a business that needed that. That’s what I think is something important to communicate, is you learned a very well defined niche skill set and you’ve learned to do WordPress plugins really well, but that means you shouldn’t be listening to folks who want to be venture backed or want to launch a SaaS app, in particular, or who want to do something else because you guys don’t necessarily need the same skills in order to succeed.
Phil [24:42]: Right. Exactly. Even paid acquisition doesn’t make sense up to a certain point.
Rob [24:46]: That’s right because you don’t have the lifetime value to support it.
Phil [24:48]: Right.
Rob [24:49]: The interesting part is you’re really a textbook case of stair-stepping. I talked about this a few episodes ago, Mike and I ran through it, and in essence that first step is the single channel, single purchase price app and then it’s non-recurring. You double down on that and you create enough products that you can eventually reach step two which is where you can buyout your own time and you basically find hat freedom. Step three is typically trying to find a recurring revenue model. It doesn’t always have to be but that’s how I played it out. Now that you really achieved step two, you’ve achieved a goal that a lot of folks are going after and you achieved it by leveling up, right. By going from playing high school ball to college ball to the minor leagues to just stepping up your skills and plotting along and doing it in a really repeatable fashion. I’m curious what’s next for you. Are you going to double down what you have already had success with, which is launching plugins, and launch more plugins at this point or are you thinking more along the lines of going towards recurring models like SaaS?
Phil [25:47]: I think I’m going to repeat this process. I did it for a Stripe plugin. It’s a lot easier the second time around, and I also changed some things with that. I’d went after a more eCommerce, B to B, so I was quicker to a certain revenue point with that. I do have another plugin in the works. Since it’s working and I still have quite a bit to build and I have quite a bit of features and add-ons and things like that that people are requesting, I’m going to continue that for a while. Maybe I will do that SaaS eventually. I’ve been going through ideas here and there but I’m just not rushing it or setting a deadline of when I’m going to do it because the plugins are working. I know it’s a long path on the SaaS apps.
Mike [26:28]: Yeah, I think that’s one of the features that I’ve seen of successful entrepreneurs is they find the thing that’s working and then they double down on it. I think what Rob just talked about, in terms of looking at SaaS because SaaS is viewed as the Holy Grail of the software industry, but at the same time you’d have to learn an entirely new set of skills in order to pull that off. It would be a pretty significant change from what it is that you’re doing now, right?
Phil [26:50]: Right. Exactly. On the second plugin, on the Stripe plugin, that’s when I went after a more B to B audience. As I was building that up I hired a more mid-level developer, tried to off-load that more and then when I launched the Stripe plugin I did the same thing [?] Model. Took me just a few months to get the first paid plugin out there. During that time I hired actually another Academy member, Kyle Brown. He has a product [ice?] service, I guess you could call it. It focused on WordPress. Just a shout out to him, wordpressproductsandplugins@wpsaas.net. I hired him to basically hire all my tier one support, him and his team. That has been a huge load off my back, too, and I continue to use him for future plugins as well. I already have that relationship in place. It’s a little bit of an experiment here, but my third plugin, it’s a Google Calendar Events plugin, if you look it up. It’s actually an adopted plugin. I adopted a free plugin off the repository and it already had a lot of downloads and the author agreed to hand it over after we talked back and forth and he wasn’t interested in maintaining it. I have had to do quite a bit of re-factoring, stabilizing, and updating it. The paid plugin’s not out now but I’m going to repeat pretty much all those steps on it except that I’m coming in where it’s already got a big audience. I’m not creating it from scratch basically.
Rob [28:13]: Right. So you’ve learned from your successes as well. Like you said, you hired someone who is a middle tier developer rather than super junior and cheap because you have the means and you know it’s worth the time. You’re working with Kyle Brown on handling support because you know it’s worth your time to outsource that. Even though you have to pay him money, you know that your time is more valuable. I know the backstory of you WordPress Stripe plugin and I know that that hit more revenue faster then either of your first two Pinterest plugins. There’s some luck involved, there’s something about the niche but there’s also something about you taking your experience and leveling up and expanding. I feel like the GCal plugin is probably the next step in your journey.
Phil [28:53]: Yeah, the only challenge now though is now I’ve set myself up with three separate customer bases –
Rob [28:58]: Mm-hmm. Makes it tough.
Phil [28:59]: – yeah. I’m happy with where I’m at but that is tough. There’s very little cross-selling between them but that’s where I’m at so that’s okay.
Rob [29:07]: Yeah.
Mike [29:08]: So you’ve mentioned the Academy and Kyle Brown, what are some other external resources that you’ve leveraged to help you get to this point because you can’t just go down into a cave and learn everything that you need to learn completely on your own. There’s obviously some help involved from other people and external resources. Could you talk a little bit about some of the different things that you leveraged to learn or get to this point, especially with WordPress because you said that you learned that from scratch?
Phil [29:54]: Yeah, definitely the conferences. MicroConf, I know it’s run by you guys but it’s been key because at those, each year, this will be the fifth one coming up, I’ve connected with a lot of peers and speakers, too, face to face, and then continued those relationships later on. Some of those guys are in the WordPress space. There’s another conference as well that’s similar that I’ve gone to for three years now called PressNomics. It’s a lot like MicroConf in it’s size. You keep it small, less than two hundred folks but it’s focused on the WordPress business. I’ve met a lot of guys doing the same thing there. In fact, it was just in January as well. Community, talking with guys online and offline, learning from them, just sharing with each other what we’ve learned. Masterminds, obviously are a big one. I have the local one here with Rob. You get a lot of inspiration, help with ideas but they’re keeping you accountable, all that stuff. It can be fun, too. I’ve had some off and on online ones as well, more focused in the WordPress space with John Turner and Brad Tunnard and guys like that. They’ve all been super helpful. They’ve gotten to where I am now before I did. They love sharing what they know as well, so that’s all a part of it, right there, that community and that help from peers.
Rob [30:52]: Phil, thanks so much for coming on the show. I’m sure folks have enjoyed hearing your story. It’s definitely inspirational and I think we’re all looking forward to your attendee talk at MicroConf 2015 here in a couple weeks.
Phil [31:04]: Looking forward to that.
Rob [31:06]: Yeah. So if folks want to keep up with you on the Interwebs what would be the best way to do that?
Phil [31:11]: Yeah, you can catch me on Twitter @Philderksen or you can head to my personal site Philderksen.com. I got all my products linked there and I’ve neglected the blog for a while but I want to start sharing more of my journey there.
Rob [31:23]: And your last name is D-E-R-K-S-E-N.
Phil [31:26]: Correct. If you’re at MicroConf say hi to me there.
Rob [31:29]: Sounds great. Thanks a lot for coming on.
Phil [31:31]: All right. Thanks, guys. Appreciate it.
Mike [31:32]: 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. 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 228 | 9 Must-Read Books for Founders
Show Notes
In this episode of Startups For the Rest Of Us, Mike and Rob discuss 9 must read books for founders. They compile a list of book s that are tactical, deal with mindset, and how to setup and work remotely.
Other Links:
Books mentioned in this episode:
- Traction
- Remote
- Saas Marketing Essentials
- E-Myth Revisted
- Work the System
- The Ultimate Sales Letter
- The Ultimate Sales Machine
- Zero to One
- A Guide to the Good Life
- Essentialism
Transcript
Rob [00:26]: In this episode of Startups For the Rest of Us, Mike and I look at nine must-read books for founders. This is Startups For the Rest of Us episode 228.
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 [00:31]: 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 [00:48]: Well, we’ve got a nice email from Ryan van Schoor from agentivity.com and he says, “Hi, guys. We’re now a successful startup in our fourth year, and we contribute a lot of our success from listening to your podcast. Just wanted to say thanks and if you ever needed to ask us a few ‘how did that work for you’ questions just give us a shout. Best wishes, Ryan.”
Rob [01:20]: Awesome. Thanks for writing in, Ryan. Yeah, if you have a success story, if you’ve been able to launch product, quit your job, we always love to hear it. We do have a success stories page on our website where we will link out to you, get a little bit of SEO juice, and a little bit of recognition. If we’ve had some type of impact on you, whether it’s MicroComf, the podcast, or the Micropreneur Academy, or my book, and your forthcoming book. I know you’ve talked about it on the podcast, but if you haven’t signed up for Mike’s mailing list, go to singlefounderhandbook.com and Mike’s looking to get his book out here in the next couple weeks. Is that right?
Mike [01:31]: Yes. I’m hopefully finalizing the editing probably tomorrow. And then after that I have to go back and forth with CreateSpace and get a printed copy of it to see how it looks and then after that it’s good to go I think.
Rob [02:32]: Very cool. I wanted to re-visit a question that had come through two or three episodes ago. The person who asked it originally asked : which magazines do we read? Because he likes to read physical paper in the morning. And I realized that I went off on a tangent and said “Oh, I don’t read any anymore, and I cancelled all my subscriptions.” But he did ask – assuming he’s listening to the podcast – what stuff he might have available to him? What magazines might there be? A couple came to mind actually. Ink Magazine and Entrepreneur Magazine, they’re reasonable periodicals. I’ve always liked the articles in there. Over time I realized it’s more Entre-porn than anything else. There’s not a ton of tactical stuff. However, if you really are reading this as a hobby – just like you’d read the morning paper just to keep your mind occupied while you’re having breakfast – it’s not a bad thing. There’s worse things you could read for sure. I also used to subscribe to Fast Company but it’s so design focused that it does a lot of fashion and other things that just aren’t that interesting to me. And then, for news I will read Time Magazine now and again. How about you, any other ideas come to mind?
Mike [02:44]: No. Like I said, I stopped looking at magazines in any way, shape, or form after my wife left the publishing industry. And at the time, really the only one I even looked at was hers because she brought it home and it was free.
Rob [03:05]: No, I get it. That’s the thing, you aren’t missing anything if you’re not reading these. But if you really do want a physical copy of something, I used to stack them up, get a month’s worth on my desk and then whenever I’d go on an airplane I would bring them and basically I had to leave them there or throw them away. And this was before you could have Kindles during takeoff and landing. When I don’t have electronics I want to keep myself occupied.
Mike [03:07]: What year were you born?
Rob [03:12]: Just within the last six months they’ve allowed Kindles.
Mike [03:12]: I’m kidding.
Rob [03:21]: Yeah, all right. I was like, “Dude. It’s not like it happened that long ago.” You sound like the old guy at the club saying that though. Anyways, what else? We have any other questions or comments?
Mike [05:14]: We have an email from Mike Buckbee who says, “Hey, Mike and Rob. I run Expedited SSL which is a Heroku add-on for rapidly installing SSL onto your Heroku site.” I think this ties back into a previous episode we did where we had talked about some of the different levels of products and moving up the ladder and somebody had commented how building on an existing platform was essentially step one-and-a-half. You could essentially tie into an existing application infrastructure and leverage the benefits that that platform gives you, and essentially helps establish a recurring revenue stream for you. And Mike goes out and he lays out a couple of the benefits and the downsides of having an app like this. The first on he says is “Being on Heroku pre-selects an audience that’s willing to spend money instead of man-hours to accomplish infrastructure goals. [Discovery?],” he said, “probably ninety percent of my customers come from the official add-ons directory, greatly simplifies MVP because billing user management, et cetera is all handled for you.” It also forced him to have a very narrow target for his prospects which is a huge differentiator for something like GoDaddy, which sells certifications to everybody under the sun. Now some of the downsides he said was things like cash flow, because there’s this gap between when people buy stuff and when he gets paid for it. And in his case he needs to buy credits from a certificate authority in order to be able to re-sell them to people he’s servicing. And then, in addition, they take thirty percent off the top. So for every fifteen dollar plan that he sells he only gets ten dollars of that. So depending on what his customer acquisition plan looks like, and the sales funnel, it can be a little bit limiting. It obviously impacts your flexibility in terms of negotiating for some of those credits. And then there’s also limited customization of landing pages for the sales funnel because, obviously, you’re tied to that platform. So whatever they offer you, in terms of the sales page for being able to offer those add-ons, is going to impact how you can present it to the customer. So there’s definitely benefits to this, but obviously there’s downsides to that approach as well.
Rob [05:42]: Yeah, thanks for writing in Mike. This ties back into the stair-step approach , where someone had written in and said, This might be step one-and-a-half, where it’s a small piece of software in someone else’s ecosystem with a single marketing channel, but it’s recurring. So it could be that branch between that WordPress plugin and a Joomla add-on or Magento add-on and a SaaS app. There’s that in between of still having a small thing that has recurring revenue. Love to hear about it. Thanks for writing in, Mike.
Mike [05:44]: So what are we talking about this week?
Rob [07:55]: Well, we’ve put together a list of our nine must-read books for founders. Obviously, this list would change over time. I don’t feel like this is a timeless list that’s going to be around forever, because tactics change. The idea for this episode came out of a question from Jeff Hines at touchpointdashboard.com. He say, “Hi, guys. I’ve been enjoying the podcast and I know sometimes you recommend books to read. I’m going to by Rob’s book Start Small, Stay Small, but is there a compiled list of books you suggest?”
The answer to that is no, we don’t have a compiled list. That list would change pretty frequently. But we did sit down and think through what are a handful of books that if someone was asking, How can I market my startup or my SaaS app or my software add-on, what books should I think about reading? So we have a mix of tactical. We have some about how to set up and work remotely, and then we have some about more of the mindset. So today, in all, we’re going to cover nine books.
To kick us off I’m going to start with the book Traction. It’s by Gabriel Weinberg and Justin Mares. What I really like about Traction is that in my idea notebook I have several pages of writing ‘what should my next book b?,’ because I always knew I was going to write a second one, and I had three ideas I liked the best, and one of them was almost identical to what Traction turned out to be. And that is a list of a bunch of different marketing approaches. I think there’s twenty-something chapters, and each chapter covers a single marketing approach that you could use to market your startup or software product. Each one is an interview, or a case study, with someone who does that really well. So, they talked to Noah Kagan about a certain topic. They talked to Andrew Chen, I think about paid acquisition. They talked to several others, and overall, the book is an awesome overview. It’s not super tactical in a sense that you can read it and go do that approach right away, but what I like is it’s a big list that I would build my marketing plan from. If I’m going to launch a new app, I can just go down the Traction list and say, “Which of these could possible apply to my new app? And which do I want to prioritize at the top? And then individually go and research and dig in further somewhere else on the actual tactics that I want to attack.
Mike [09:49]: Yeah, and in the book they even go through and give you essentially a mechanism for trying to figure out which of those tactics you should start trying out first, and what is going to tell you whether or not it’s successful or not. So definitely take a look at that book. I would highly recommend it. We had Gabriel on the show previously when the book first launched, but it is very, very good.
Our second book on the list is Remote, and Remote comes from the guys over at Basecamp, formerly 37Signals. Remote talks about what it takes to run a remote team, for the most part. But I think that there’s a lot of this book that can actually apply to people who are running their own businesses. So, for example, there is an entire section on how to deal with the fact that you are a remote worker. So it’s not just for the people who are running the team, it’s also about what the people in the team should do, what they should expect, and how they should interact with one another, because if you’re running a business by yourself then you probably have contractors working for you around the world or in different time zones. The book addresses a lot of the issues with that. One of the other things this book goes into, which I’d highly recommend for people, is dealing with the excuses of why remote work won’t work for you. It goes through them and basically addresses them one by one about all the different excuses that somebody could come up with and say “Well, I don’t want to run a remote office,” or “I can’t run a remote business,” because of X, Y, or Z. It just lists them out and digs right into them and says this is why that line of thinking is wrong. So for example, losing culture. I need an answer from people now about whatever question you might have, or if I can’t see somebody how do I know that they’re working. The reality for a lot of those things is it almost doesn’t matter. It’s more about the people that you hire. If you can’t see somebody, how do you know they’re working? Well, even if you can see them, how do you know they’re not sitting there playing solitaire or some online game all day long? You can pretty easily alt tab into a different screen when somebody comes to walk by your desk. So there’s all these excuses and they basically walk through and debunk those.
Rob [11:27]: I think Remote is a good book for you if you’ve never worked remotely before, you’ve never worked on a distributed team, or you’re trying to basically pitch that case to someone in order to work remote. When I read it I didn’t get very much out of it, but it’s because I’ve worked from home for ten years, and I worked on remote teams for twelve or fourteen years. So I did like the way they thought through it, and I liked some of the stuff they referenced, but I didn’t take a ton of actual ways that I think will change the way I do business. But with that said, obviously, if you haven’t had that, if you don’t have that experience and you are trying to figure out if you want to build a remote team, or have everyone on site, I think it’s a good book to read.
The third book on our list is SaaS Marketing Essentials and it’s by Ryan Battles. What I like about this book is its laser focus. Obviously, if you’re not going to launch a SaaS app, then this may be one you want to skip. But I like the way Ryan dives into niche validation, he talks about some really tactical things on marketing, on building the app, on what it takes to support it and get it launched, and the whole process of getting it out into the world. It gives you a realistic expectation of what to expect, and gives a ton of resources that you can follow and learn more about. In my opinion, this is the most tactical and comprehensive book out there today on launching a SaaS app. Because a lot of the stuff that you read, if you do subscribe to blogs – let’s say SaaStr Jason Lemkin, he has really good posts – but a lot of it is aimed at the five to one hundred million dollar SaaS apps. It’s not aimed at bootstrappers. And while Ryan’s stuff can be applicable to both, it really is more focused on launching a product on your own with no funding.
Mike [13:13]: The next book on our list is Work the System. Work the System, it’s more of an advanced version of the book The E-Myth Revisited, whereas the E-Myth Revisited basically addresses – or at least brings to light the problems of – being an entrepreneur, and that the main problem that it brings to mind is that when you start out a business you start it for a number of reasons, probably because you looked at what somebody else was doing and said “Well, I can do that,” Or you didn’t like how things were being run, so you created your own business. Typically is starts out as a freelancing business and as you start promoting your business you start doing more and more of the work yourself. So eventually, what you find is that the business can’t run without you. Obviously, that’s a poor way to run a business, and the E-Myth Revisited essentially brings that to light, versus Work the System which essentially assumes that you know that that’s what the problem is. It talks a lot more in-depth about the systems, and documentation, and all the different considerations you need to take into account in order to build a business that is going to run without you. So in Work the System, they really drill down deep into those different things, tell you what you need to do, how you need to think through some of the different problems and the different processes and how to create, essentially, an operating document for your business that other people can follow.
I actually modeled a lot of the stuff that I did in my business around this concept because it’s so much easier to just have a document that people can go to if they have questions, or if they need information about how to do something. I’ve actually gone in there myself, where somebody else has written documentation and I’m like “Oh my God, this is an emergency. This had got to be done and it’s got to be done right now. How do I do this?” Instead of muddling my way through it, I was able to go to the documentation that somebody else – who I’d hired to do a different job – they did the documentation, they updated it, and I was able to follow it, which was awesome.
Rob [14:39]: Our next book is The Ultimate Sales Letter by Dan Kennedy. There are a lot of books out there about copywriting and there are some decent books about copywriting on the web specifically. But what I like about The Ultimate Sales Letter is it’s based in this history of direct email marketing and almost all of what’s in here applies also on the web. I think Dan Kennedy’s a mixed bag. We were talking before the show that some people love him, some people hate him. He really is a polarizing figure. And I’ve taken from Dan Kennedy the things that I like about his approach. I do think that he takes things too far sometimes, and I don’t necessarily agree with some of his stronger sales tactics – just not my style. With that said, he’s very smart, and he’s a very good copywriter and a talent marketer. What I like about The Ultimate Sales Letter is it gives you a really solid formula of how to think about the purchase process in a buyer’s mind. He talks about it in terms of a long form sales letter, but it can be broken down into a sequence of emails. It can be broken down into a sequence of web pages on a SaaS marketing website. It works in many different forms, and if you can pull the theory out of this, and not get caught up in, Oh, this is a stapled piece of paper being mailed to someone, the copywriting fundamentals that he talks about in here are really quite valuable.
Mike [15:49]: The next book is The Ultimate Sales Machine by Chet Holmes. Chet, in this book, goes through essentially what is a high-touched marketing engine for getting sales for your products. There’s a lot of different, I’d say, techniques in here that are more about gaining attention and standing out from the crowd. For example, one of them is to send people a mailer that is going to stand out from all the other things. Instead of just sending a postcard, you might send them a box, and that box might have some smaller things in it. It might just have some papers in it, but the fact is it’s a box. Or if you send somebody something in overnight mail, that’s going to rise to the front of somebody’s pile because they’re looking at it saying “I just got this thing that was overnight mail. It must be important.” There’s a lot of different techniques and strategies in here that he goes through, and talks essentially about the entire process of getting the attention you need from the people who are going to be involved in that high-touched sales process. It’s also about trying to optimize that sales process, putting the right people in place, and then make sure that your focusing on educating the people in that process in your organization, the skills that they need in order to do the jobs that they need to do to facilitate that process.
Rob [18:29]: This is one of the few books that I listened to on audio, then I purchased a physical copy of it. And it’s one of maybe twenty or twenty-five books that I still own a physical copy of, because it was so valuable to me when I read it. I’ve never actually implemented his process in full. His process is definitely for higher-priced items. It’s more of an enterprise sales thing, because he goes into spending a lot of time and a lot of money chasing after your dream one hundred customers. However, there’s so much else in this about the mindset of sales, the mindset of marketing that you can take away. He starts it off with time management secrets of billionaires – is the first chapter. Instituting higher standards and regular training is the second one. How to run effective meetings. Even if you’re not working in an office, all of this stuff is valuable. And he’s such a smart guy and he applies his systematic thinking to all of these topics. It’s one that I have listened to multiple times and I still reference back to the physical paper copy I have in front of me.
Our next book is more of a high level thought provoking book rather than a tactical one. It’s called Zero to One and it’s written by Peter Thiel. To be honest I didn’t think I was going to like this book. I listened to it because a lot of people recommended it, and I heard folks talking about it. And I have now listened to it twice. Again, it’s almost like he’s so smart that everything he talks about is not trivial,and it’s not obvious. I think that’s a big thing. When I’m listening to a book and I hear a lot of obvious advice, obvious time management advice, obvious ways of thinking about starting companies, it just gets boring, because I’ve either heard it before or I’ve thought it myself. Very, very little in this book is stuff that I’ve heard about or thought about before. It’s incredibly thought-provoking. He does talk a lot more about starting billion dollar companies. The idea is that most companies started go from one to, which means their incremental improvement. So all the business that our bootstrappers are starting, in general, in our community, are one two businesses and they are improving upon an existing idea. He talks in the book about going from zero to one, meaning starting from nothing and building a SpaceX or a Tesla, completely revolutionizing an industry. But as a bootstrapper don’t let that scare you away because while he does spend a chapter or two on that, the rest of the stuff he talks about is just how to have an open mind, how to think about things intelligently. He talks about how to focus more on marketing. He doesn’t go into tactics, in particular, but I loved when he starts talking about how engineers don’t know how to market their stuff. It’s a lot of what we see in dealing with developers who tend to build first and then think it’s going to market themselves. Overall, when someone this smart sits down and thinks about writing a book, anything he talks about is going to be eye-opening, and I think you need to check it out if you haven’t read it.
Mike [20:24]: The next book on our list is a little bit different from previous ones. It’s called A Guide to the Good Life. Rob you had mentioned this book, I think, on last week’s episode. But essentially, the Guide to the Good Life is about how to prioritize your life and the goals that you have in life and how to view them differently than you might otherwise be doing now. It really delves into, what’s called stoicism. Stoicism is a philosophical point of view where you look at things and you try to purge negative emotions. Let’s say that you’re trying to become an author. You’re going to have to submit your book over and over and over again to publishers – assuming that you’re going the traditional publisher route. And you’re probably going to be rejected time after time after time again. The way the stoics would view that is that instead of viewing each one of those things as a rejection, you view it as something that was essentially a milestone that you had to overcome. I think that I’ve heard Steli Efti talk about this on a couple of his sales presentations before, where, let’s say you’re doing sales calls for example. Instead of looking at it and saying “Well, I want to call somebody,” and you work up the energy and you call and they say no, or they get off the phone with you very quickly, instead of looking at that as a failure, look at that as a check box that says, I made one call. But your goal is not to make a sales call and land a deal, it’s to make the call. So by changing your perspective and what your goals are, you’re essentially helping to purge a lot of the negative energy from your life and allow you to do things that you might not otherwise be able to do, mainly because most people have psychological barriers that they simply can’t overcome. I thought that the book was really well put together, and there’s a lot of really good techniques in there that are extremely helpful. And in some ways you can look at that stuff and say you’re lying to yourself. But at the same time if those tricks are working for you, and they’re allowing you to reach what your ultimate goals are, then who’s to say that using those methods is wrong.
Rob [22:04]: Yeah, that’s the thing. I think when people hear stoicism they might roll their eyes, or think this is really touchy feely. I really like the framework that it gives. And of course, as with any book, it’s like you don’t have to believe or buy into everything that’s said, but there’s a lot in this book that I took away. I have several pages of notes actually, which is a sign that something was impactful to me. Some of the things I really enjoyed were, they talk about meditation, and they talk about dealing with difficult people, and how to avoid whiny and melancholy people. They call them [seep sorrows?]. This is two thousand year old, three thousand year old stuff. So it’s really interesting that people don’t change. We see them in our lives today, and you saw them two thousand years ago. He also talks about negative people kind of like trolls, essentially, or haters – as you put in the outline last week. He talks about gossiping. But it’s not just obvious stuff. As I say all that you probably think, “Oh, well he says don’t gossip, and stay away from those people.†But they give an entire framework of why that works, and then actual techniques and tactics of how to think about all this so it makes sense. So I’m a big fan of this. I actually heard some people talking about stoicism, I think it was Tim Ferris interviewed the author of The Obstacle is the Way. I listened to that book and I was not particularly impressed with it. So I was like I’m not going to get into this stoic stuff. Then I hung out with Travis Jamison from Supremacy SEO, he’s in the tropical NBA crowd, and he said that this was the book to read if I wanted to get an entry level into it. So I read it, I was blown away, I took a bunch of notes. I re-read it and I’ve been trying to implement pieces of it certainly over the past six months, since I originally listened.
Mike [22:51]: I think the other thing that I really liked about it was that it focused on living in today. A lot of us have smartphones, so what we’ll be doing is we’ll constantly be out with our families and checking your phone. It talks about being able to live your life today, like if God forbid something happen to one of your kids tomorrow, would you feel bad about the five minutes that you were spending on your phone as opposed to paying attention to your kids. It really puts things into perspective about what you should be paying attention to and how you can focus on the here and now, because it may not be there tomorrow. Or how are you going to feel if you weren’t paying attention and you’re going to have all of these regrets. You’re still going to feel bad no matter what if something were to happen to one of your kids, but you’re not going to feel as bad about all that wasted time that you weren’t present even though you were there.
Rob [24:06:] I want to wrap up the list with number nine, it’s called Essentialism. I mentioned this book a few episodes back as well, but what I like about this one is it’s also a mindset book. If you find yourself taking on too many things, if you find yourself saying yes to things and then getting to a meeting and wondering why you’re there, or if you find yourself overloaded with stuff that isn’t moving yourself or your business forward, this book is amazing. It reinforced a ton of stuff, of hard decisions that I’ve made over the past five to seven years of saying no to a lot of invitations, of saying no often. Basically making no my default answer. And that’s not always easy to do, and it doesn’t always feel good, but this book basically backs all that up and it solidified it and it gives a lot of reasons why, and it gives examples. It really goes into the ramifications of not saying no and of accepting everything, and then the ramifications of saying no and how it can change the way you work, change your productivity, and change your focus. So this – kind of like A Guide to the Good Life – might be one of the most important books on this list. Even though it’s not a tactical thing about marketing, it’s a five or a ten-Xer because it gets within your mindset, and it can make mental shifts within you, and that’s where enormous productivity gains can often happen.
Mike [24:41]: So just to recap, our nine books are Traction, Remote, SaaS Marketing Essentials, Work the System and the E-Myth Revisited – by default association -Ultimate Sales Letter, The Ultimate Sales Machine, Zero to One, A Guide to the Good Life, and Essentialism. And if you have a question for us you can call it into our voicemail number at 1-888-801-9690 or email it to us at questions@startupsfortherestofus.com. Our theme music is an excerpt 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 227 | How to Deal With Haters
Show Notes
In this episode of Startups For the Rest Of Us, Mike and Rob discuss how to deal with haters, the different types of haters and strategies you can use to deal with them.
Items mentioned in this episode:
Transcript
Mike:[00:00:00] In this episode of Startups For the Rest of Us, Rob and I are going to be talking about how to deal with haters. This is Startups For the Rest of Us, Episode 227. 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:[00:00:23] And I’m Rob.
Mike:[00:00:24] We’re here to share experiences to help you avoid the same mistakes we’d made. How are you doing this week, Rob?
Rob:[00:00:27] I’m doing pretty good. And MicroConf, is five, six weeks away, and we have several new speakers who’ve come on board. I’m very excited to have Steli Efti. He’s going to be talking about inside sales and how to do it as a two-person team focusing on B2B stuff. Steli was on the show. He was on our podcast 20, 30 episodes ago, and a lot of folks liked his interview. He does a lot of speaking and is experienced, so I’m stoked to have him there. Sarah Hatter from co-support, she spoke maybe two or three years ago at MicroConf and had a very high rated talk. She’s basically a support expert and so she talked to really small companies and startups about how to handle support and how to make your customers really happy, and how to, even with a one or two-person team, how to kind of make this work. So I’m stoked about that. And then Jason Cohen is coming and he’s going to be doing Q&A. And he’s also going to be doing Smart Bear Live, so I’m stoked to have him on board.
Mike:[00:01:18] Well, last week I was on The Business Insights podcast answering some questions about starting a business. It’s more of a generic entrepreneur podcast rather than a lot of podcasts that we’re probably more familiar with that have a developer slant. So they have a lot of entrepreneurs on from various different types of businesses in different markets — so think from construction to physical products, all kinds of different things. It was a fun episode to do. I think they’re going to have me back on there at some point in the near future.
Rob:[00:01:43] Cool, what did you talk about?
Mike:[00:01:45] It was a lot of mindset stuff about starting a business and what sorts of things people make mistakes about when they’re thinking about starting a business, or what sorts of things are preventing them from starting, mostly mindset stuff though.
Rob:[00:01:57] Nice, are you starting your press tour for your upcoming book?
Mike:[00:02:01] Yeah, that was a little bit a part of it. I almost kind of viewed it as a practice run or a trial run for that sort of stuff. He’d sent me over something asking me . . . he’s like, “Oh, can you send me a bio?” And “Send me this,” and “Send me that.” And as I was writing it out, I’m like, “Huh, I should really take this stuff and send it to the side and polish it up a little bit. So that way, when people asked me for that stuff, I just have it all ready to go.”
Rob:[00:02:20] Yeah, that’s a good thing to do. I actually have a couple of different-sized head shots, and I have a bio, multiple different copies of my bio in HTML and in text. And it’s in a public Dropbox folder, basically, so when I get asked or if I do quotes for a blog post or whatever, I just right-click and do “share as” and kind of let folks have that. It’s just an easier way because I kept finding myself rewriting stuff and digging through text files and random directories for it. So it’s nice to have all of that in one place.
Mike:[00:02:44] I am totally going to steal that idea.
Rob:[00:02:46] Yeah, it’s pretty good. It’s pretty good. So on my end, I have hired someone for a trial to help out with HitTail marketing. I mentioned this maybe a month ago that I was going to start looking for someone, and I was going to do a whole formal process where I send folks to a Google form and kind of did some interviews and stuff. But just casually mentioning on the podcast, it got several emails. It’s like seven or eight different folks who said that they were interested in helping. And so I had conversations with several of them, and I arrived at someone who I think is a pretty good fit and wants to do it longer than just a few months, right? Because I want someone to be around for at least a bit of time to make it worth both of our whiles. And so I have extended him an offer for a 30-day trial. He actually has a full-time gig, so he’ll be doing this on the side, and is going to be helping with a lot of pay per click and some content and stuff with HitTail. And then hopefully he can help me move into Drip. It’s a lot of tactical stuff because I’m kind of doing the vision and the proving these things out. But once I know something works, it doesn’t make sense for me to continue to do that process.
Mike:[00:03:46] Yeah, but that’s a matter of making sure that you’ve got the process down, or at least, not even recently documented, but like understandable to somebody else, like you need to be able to explain it to somebody.
Rob:[00:03:56] Exactly, right. So I either need a Google Docs with some steps or a Screencast, or probably both, to be frank. The Google doc will be the high-level thing, and then the Screencast will be kind of the button-clicking and the theories. The nice part is when I was doing this five years ago, I’d hire someone to help with some ad network and there was just no material on this. I mean, there weren’t good screen casts. There weren’t good videos you could buy. I mean, that’s one of the reasons I launched the Academy was because I couldn’t find any of this stuff. These days, I want him to get more experience with Facebook ads. He’s already run some, but I want him to get experience. So sure enough, you go to U-2-Me. You go to AppSumo. You go to Coursera, Udacity. I mean, there’s all these places. StartupPlace I think is another one. And you can find some pretty good courses on exactly what you need, and so that saves me so much time into having . . . and I can just spend $50 bucks or $100 and give it to him, instead of me trying to record all the steps, and then trying to keep that up to date. Now, that’s the other thing. This stuff changes so quickly that I’d rather find someone who’s good at it and then just buy their new course and give it to someone on my team, rather than me having to always know how everything works, because that just doesn’t scale well, right? It just isn’t applicable as where you get a little bigger. So what are we talking about today?
Mike:[00:05:06] Well, today what we’re going to be doing is talking about how to deal with haters. And I kind of got inspired by this from a tweet that I put out, and it just kind of came to me. I tweeted out and I said, “It’s rare to see successful people who are also trolls. Successful people know how hard it is to do what you’re doing.” And most of my tweets, they’ll get a couple of retweets here and there or they’ll get a couple of favorites. And this one ended up getting retweeted 16 times and got 25 favorites, and it went out to like 30,000 or 40,000 people, which is kind of ridiculous for a tweet like that. I’m sure there are certain tweets that you hit the right person, or it gets retweeted by the right person, and it can go pretty viral very very quickly. But it’s been a while since I posted one that was for myself personally that got this kind of response. So it got me to thinking about the fact that as you start doing more and more things in public, you have a tendency to attract people who are going to talk down about whatever it is that you are doing. So I kind of wanted to talk a little bit through what different types of haters there are and what sort of strategies you can put in place to deal with them.
Rob:[00:06:04] When you did that tweet, did you get a bunch of trolls who responded to it?
Mike:[00:06:07] I got one.
Rob:[00:06:08] Did you?
Mike:[00:06:09] It’s awesome.
Rob: [00:06:11] The irony is so thick.
Mike:[00:06:12] I know.
Rob:[00:06:15] I’m glad you bring this up because as soon as you start doing things in public, there’s just going to be negative comments about it eventually, right, the more things you do. And I think what’s interesting is the term “haters” might be too strong in a lot of cases. Sometimes it is actual constructive criticism. Sometimes it’s meant to be destructive criticism. And sometimes, it’s just someone who’s off the deep end or not on their meds, or something is really obnoxious about them. So there’s a lot of levels do it, and I think that’s what we’ll be talking about today.
Mike:[00:06:43] So kind of in preparation for this episode, I went out and did a little bit of research. And I found somebody by the name of Dillon Forrest. He’s got website dillonforrest.com. That’s where his blog is, and he has a full blog post article about all the different types of haters. So I thought what we would do is we’d start by going through his list of haters, and then I thought we’d go through a different list, which is the ultimate cheat sheet for dealing with haters. So to start off with, the first type of hater is bean counters. And these are the people that Dillon says they’re the ones who are always counting your expenses for you and is trying to make you afraid of the things that it is that you are doing. And he kind of relates it more to the financial side of things, but I think that it also applies to anything, whether you’re doing AdWords, which is kind of a financial transaction. But if you’re spending time on different things, and they’re saying, “Oh, you shouldn’t be doing that,” but they don’t have a good reason for why you shouldn’t be doing that other than you’re wasting your time and you’re being dumb about it.
Rob:[00:07:36] So is this more someone inside your own company then who has insight into exactly how you’re spending your time? Because if it’s someone on Twitter, right, they wouldn’t typically know exactly what I’m up to.
Mike: [00:07:45] Well, that’s the thing. It’s more for people outside of your organization, so just people that you don’t know, especially on Twitter. Facebook, I think a little less so because obviously, you have a little bit of flexibility with saying who is kind of in your circles and who can see it and everything. But obviously, with Twitter, people can call you out randomly, and you have no idea who they are. So I think that this is much more applicable to people who are looking at what you’re doing from an outside point of view and they don’t know all the details. I think that’s one of the hard thing about these things is that you’re doing stuff, and they’re seeing this really tiny snapshot — that happens to be public — of what you’re doing, but there’s all this stuff that’s under the surface that they have no idea what’s going on, or what it’s about, or what you’re doing. They don’t look at any of the details because they don’t see them. And they just see this one little thing. And it’s almost like taking a comment out of context and they use it to attack you over.
Rob:[00:08:35] Yeah, it’s interesting. If we are going to talk about this type of person, or a troll, or hater, or whatever you want to say… if someone I don’t know starts commenting that something I’m doing with my marketing is incorrect or stupid or it’s not going to work, I don’t know this person, right? I have no idea if they know anything about what they’re talking about. And that’s the problem is if you’re unknown — at least in my eyes — then you don’t have the credibility for me to listen to you. At the same time, if a friend of mine, or a colleague, or someone that I trust, even if they don’t know exactly everything I’m up to, if they made the exact same comment, I would be much more likely to listen to it and engage because I know where they’re coming from. I know their experience level, and I know that I can engage them in a conversation, right? I can actually reply and say, “Oh no, you’re misunderstanding. This is what’s going on.” Or I can say, “Huh, I hadn’t thought about it that way and you’re right.”But again, if I don’t know that person, then more often than not, I find that people who are doing this kind of bean counter attitude, they kind of don’t know what they’re talking about. Like as soon as you push back, you find out oh, the person has never actually launched anything in public. And so why would they know that my AdWords spend was out of whack or that I shouldn’t be creating content? It’s like they haven’t done it.
Mike:[00:09:43] Yeah, I got one when I was running ads for my book. And it was funny because it was very early on, and I was running one of the Twitter ad campaigns. And I forget what the headline I had used was, but it was something along the lines of “Do you want to start a business? Click here to learn more about the Single Founder Handbook.” And somebody had actually tweeted to me, “Step one: Don’t advertise on Twitter.” I was really pissed off for like 30 seconds. And I was just like, “Yeah, you probably have never done this before so you have no idea what you’re talking about.”
Rob:[00:10:09] Right.
Mike:[00:10:10] And I think at that point, I’d had something like 80 or 100 emails that have been given to me so far. So I was just like, “Yeah, clearly you’ve got no idea what you’re talking about. So thanks, anyway.”
Rob:[00:10:19] Yeah. Unfortunately, it’s all too common. Because I’ve run ads on reddit, on Facebook for multiple products, and you get a similar response of like, “I don’t like your ads,” or, “There shouldn’t be ads on this platform,” or “Your ads aren’t working.” That’s the one I love where it’s like, “Well, how do you know they’re not working? I’ve gotten a bunch of trials out of this. They are working. That’s why I’m paying the money.” But the funny thing is, folks who complain about your ads, but then not realizing that if you weren’t advertising, reddit and Facebook would have no revenue model aside from raising VC funding. That’s how they make all of their money. There would be no reddit and no Facebook without this, so it just doesn’t make any sense.
Mike:[00:10:56] And on that note, I do have to call you out on one of your recent Facebook ads. Because I was looking at Facebook, and over on the right-hand side, I see this giant picture of a snake. And I’m like, what the hell is that?
Rob:[00:11:06] I’m getting quite a few comments about that one.
Mike:[00:11:11] And then I saw that it-
Rob:[00:11:11] It’s the highest click-through rate of all of my ads. It’s crazy.
Mike:[00:11:14] Is it?
Rob:[00:11:15] I know.
Mike:[00:11:15] That’s hilarious.
Rob:[00:11:16] I know, and it was purely on a whim. It was a stock photo that was in something and I accidentally clicked it. And I was like, “Oh, that’s a terrible ad.” And I was like, “Why don’t I just…” Anytime I think something is a terrible idea, I test it, and that’s what that one was. So yes, I have received tweets and emails about it. And I would stop doing it. I wish that it hadn’t worked. It does get some clicks.
Mike:[00:11:34] But that’s the thing. It’s like it goes back to these people who are making comments about stuff that they think they know your business better than you do, and that clearly there’s things that will happen that you don’t expect. And without looking at the data, you wouldn’t know. And of course you’re not going to share with these people anyway.
Rob:[00:11:49] So that was bean counters. We have four other types of haters. What are they?
Mike:[00:11:53] So the second one is expert spectators. And essentially, what these people do is they look at the things that you’re going through and learning, and then they dismiss them and say, “Well, that should’ve been obvious to you. I don’t know why you wasted all your time and effort doing that.”
Rob: [00:12:07] This one used to make me really mad. When I was blogging once or twice a week, I would spend eight hours plus on each post, and I would think through all the lessons I learned. I would do research. I would talk to people. I would what I considered crafted a very accessible and teaching blog post. It didn’t always happen, but every once in a while, I would get someone on Hacker News or Digg or something who would say exactly this, right? “Well, obviously,” or they would say, “Yeah, this whole post breaks down to this one sentence: ‘You should never do this with your customers.'” or, “They are toxic customers. Stay away from them.” And I always felt like, well, of course, you can summarize any blog post — any blog post — in a sentence, so how is that helpful to anyone? Like the actual post itself had all this information, and it felt like I’ve invested all this time and put in essentially hard work to communicate this message, and then somebody comes by and spends 30 seconds writing some obnoxious sentence trying to show how smart they are. And I don’t feel like it benefits anyone. And the first time it really pissed me off. And then, over time, I just learned to kind of let it go.
Mike:[00:13:05] Right, but I think there’s these expert spectators that they almost feel like that’s their job is to look around at what other people are doing and just comment on it without having any basis for teaching other people. It’s really what it amounts to. It’s like they’re not interested in teaching other people because they want to teach you what you have done wrong. It’s really what that comes down to.
Rob:[00:13:26] Right, which doesn’t tend to be helpful. People who are kind of self-appointed police of the internet to point out how everyone else is wrong, and it’s like, “Yeah, that’s helpful.”
Mike:[00:13:33] Yes, I think the quickest way to get attention anywhere is to spell something wrong on the internet. Isn’t that how the saying goes?
Rob:[00:13:38] Yeah, something like that.
Mike:[00:13:40] So the third type is of hater is club members. They make it clear that startup founders are an elite species of humans and you’re not good enough to join them. I don’t run into these types of people too often. I think that I used you on occasion, but I don’t know how many of these people that you run into. And I wonder if that’s because we don’t necessarily dwell in the funded startup circles. I mean, maybe it’s more common there, but I don’t seem to run into this very often.
Rob:[00:14:03] Yeah, I haven’t either. It doesn’t ring true with my experience.
Mike:[00:14:07] Well, number four is academics. They have no practical experience, but they read up on all of the entreporn and they tell you exactly what you should be doing.
Rob:[00:14:15] This kind of reminds me. I think we lump these guys in with bean counters. But probably a couple times a week, I get either an email or a tweet or something pointing something out about something I have done wrong in essence. And when I actually engage and say, “No, here’s why that’s not wrong,” or I’ll say, “Okay, what would you do?” I find out that they really don’t know what they’re doing. And oftentimes, they’re not actually haters. They were genuinely trying to help, but they just aren’t experienced enough to realize that it’s not helpful. And when I reply to them, they’ll actually be like, “Oh, I didn’t know that. Thanks for the tip.” And so it really is just a conversation, but it’s almost like that first email comes off kind of like offensive or like, “I’m smarter than you and you’re doing this wrong.” When I get that, I’m like, “Really?” But the nice part is if you do engage in like a meaningful conversation, oftentimes it just turns out to be kind of a misunderstanding.
Mike:[00:15:04] Yeah, there’s definitely a right way and a wrong way to deal with the people who come in either with an email or a tweet or something along those lines. And I don’t necessarily like seeing this stuff from Twitter just because of the fact that you’ve only got 140 characters. But I guess in some ways that is helpful to know that there’s only 140 characters. You know that they have to keep it short. But at the same time, there’s no room for that extra explanation that might push the conversation in a different direction. So the fifth type of hater is snipers. They always look for the best angle to shoot down your ideas, your efforts, and anything else that you are doing. I think with the sniper, most of these people are probably not going to be either your customer. Maybe some of them don’t even necessarily realize that that’s what they’re doing. I know that when that I first started business, I was talking to people — friends and colleagues and stuff like that — and they didn’t really understand what I was doing. And they would come up with all these different reasons about the things I should and shouldn’t be doing, and it almost fell back to like the academics where they didn’t have the practical experience. But at the same time, they were shooting down my ideas as invalid or, “You shouldn’t be doing this. You should be doing this other thing over here.” And it’s demoralizing, I’ll say. Like it has a combination of the no practical experience, but also it’s a just a demoralizing factor to have those people come out and say, “Oh, you shouldn’t be doing this,” or “That’s going to fail. Don’t go in that direction.”
Rob:[00:16:20] Yeah, and I think there’s a continuum here because those people who said that, I wouldn’t call them haters. I would call them maybe friends of yours who are critics, and they’re critical of your stuff. And they’re discouraging you because kind of their mindset is limited. And that’s where I think there’s this whole continuum. And it can start… maybe on the left-hand side it’s someone who emails you and they just don’t have a lot of tact. They’re actually nice, but they’ll send you an email that comes off like they’re really being a jerk, but they’re actually a nice person. And then in the middle, maybe someone who’s just critical of a lot of things. Again, they’re not a bad person, but their mindset leads them to believe something that is different than yours. And they have a limited mindset, and so then they say things that are discouraging. And then I think there are people who are kind of just intentionally, all the time, kind of ragging on everyone around them for whatever reason, if their life is bad or that’s their view on the world. That’s even where this term “haters” feel strong. And there’s this whole continuum of sometimes the feedback or the criticism can be constructive, assuming that it’s communicated well and that you are actually trying to help someone out. So I think that’s probably an important thing to keep in mind as we’re talking about this is this isn’t just people who are being belligerent on the internet. It can be friends and family, right, who are discouraging you and who are trying to kind of tear down your dreams because they don’t understand what you’re trying to do.
Mike:[00:17:33] Especially when it comes from friends. I mean, they’re concerned for you. They don’t want you to fail. In some ways, they see themselves as trying to protect you from harm, and that can be more difficult to get around because if you’re really committed to moving forward and trying to start your own business, you’re going to have to ignore some of those people and you’re going to have to do things your own way. You’re going to have to go out and make mistakes. And if you happen to fail, the response can turn out to be, “I told you so,” which of course is not going to be helpful for whatever relationship you currently have. But at the same time, you’re going to have to go against what their advice is. You’re going to have to sit there and say, “Yes, I’ve heard you. I hear what you’re saying, but I’m going to ignore you and go down this other path that you just told me that I shouldn’t even though I trust you.” So now that we’ve looked at the different types of haters, we’re going to look at an article from James Altucher, and he has the ultimate cheat sheet for dealing with haters. And he has ten different ways to deal with haters. He kind of lumped haters, trolls, and people who are kind of concerned about your overall general well-being and welfare together, but this is a cheat sheet for how to deal with them and some of the different ways to deal with them based on what it is that they’re saying. So the first one is that whatever they’re saying or whatever is being said, it’s about them. And there is a little bit of truth to this, I think. Because especially when you start relating it back to jealousy, if somebody comes in and says, “Oh, you shouldn’t be doing this,” then it’s possible that it’s because they want to do it or they wanted to do it, and they just have been never been able to get the willpower to do it, or haven’t overcome their fears, or basically made excuses to not go through and do that. And I think to a certain extent, the jealousy is a little bit part of it. But I don’t necessarily think that it’s all that either. I think some of it is just they want to project their fear on other people.
Rob:[00:19:14] I think sometimes some people are just having a bad day. And I think sometimes people are having a bad year, and other times, people are just more critical and judgmental than other people. It’s a personality thing or the way they were raised. So I would agree. In general, the churlish behavior or the extreme criticism that’s not constructive and not helpful, I think tends also to stem from that person.
Mike:[00:19:35] The second part of the cheat sheet is to realize that in some ways, it’s also about you. And one of the examples he gives is there are certain people out there who it almost feels like their sole purpose in life is to push people’s buttons. I’m sure people have kids like this. Mine certainly get on my nerves sometimes, and they definitely know how to push my buttons. But some people just get a little bit defensive when people push their buttons, and that’s going to happen, especially when people are out there and that’s what they do. They want to kind of provoke a reaction because some of it kind of boils down when you were kids, and to get somebody’s attention, you’d hit them and say “Oh, why did you hurt your friend?” “Well, he wasn’t paying attention to me.” And some of it is just about getting that attention from other people.
Rob:[00:20:15] And the third point that James makes, he calls it the 24-hour rule. And he basically says that if someone attacks you — whether it’s office politics, whether it’s someone in a relationship with you, or if it’s more of an online thing — he says the 24 hour rule tends to work, that if you never respond to the initial attack, it goes away in 24 hours. And if you respond even once, then go ahead and reset that clock. And especially as things get faster and faster online, this clock has, I think, has gotten shorter and shorter. I think maybe it used to be multiple days, even a few years ago, but now, in general, again, if it really is non-constructive feedback that you’re getting and it’s something that just feels like a blazing attack, ignoring it tends to be the best way to handle it. And in some extreme cases, it doesn’t work, and people seek out other means if they’re attacking you directly. But if it’s just kind of a drive-by or something like that, it’s almost never worth engaging in the conversation.
Mike:[00:21:06] Yeah, I’ve definitely found the 24-hour rule helps. I don’t think I’ve heard it called that before, but sometimes just ignoring those things can make them go away. Sure, it’ll maybe hurt your productivity for a little while, but you look at the other things that are going on, and it’s just like I could spend the next two hours worrying about this person who tweeted something at me, or I can get the work done that I had laid out for me because I’ve got six or eight-hour day ahead of me because I’ve got a ton of things to do. So which is it? Are you going to waste two hours thinking about that, or are you just going to brush it off and move on? I think the point about that clock getting reset is a really important note because I have seen places where like if you reply to somebody’s tweet or you email them back, it opens up the door for that continued conversation, versus if you just don’t touch it, then for whatever reason, it just seems like it goes away. The fourth one he has is the one-third rule. I think he calls it the 30/30 role. This is essentially there are three different types of people. There are people who they love you, they hate you, or they won’t care. So where do you want to spend your time? Where do you want to allocate the mental resources associated with the people who are sending you messages, whether it’s email, or tweets? Where are you going to spend the time that you have available? And you can either spend it on the people who are trying to drag you down, or you can spend it on the people who love you. And “love you” is — put that in quotes — the people who respect you and admire you and are looking at what you’re doing and saying, “Hey, that’s really cool that you’re doing that.” There’s also that subsection of people that don’t care, but those people that don’t care are probably not going to be interacting with you. So it almost really boils down to that love you-hate you thing.
Rob: [00:22:40] Yeah, it’s amazing that once you start blogging, or you have an app, or you sell books or something, if you’re doing a good job, you get a ton of positive feedback and it feels great. And then you’ll get one person or two people over time who make comments that just are kind of off-the-wall. Someone like disagreeing with the font choice you used on your blog, literally like a line height. I got an email about that one time. And the person was really upset about it. I had never heard about that. I never have thought about it and no one had ever mentioned it for years, and then someone writes in and like, “Your font and your line height are way off and it’s impossible to read,” blah, blah blah. And he was very [pained?] about it. It was just like, “Wow.” It’s crazy like certain people just have very strong opinions about things that you may not, right, and most people may not. And so you have to decide how you’re going to deal with that. If you’re going to say, “Okay, thanks for the feedback. I’ll address it.” Or just say, “Okay, thanks for the feedback,” and not address it, or if you just kind of brush it off. It depends I think on how attacking it is and what exactly it’s attacking. I think the other thing though is its easy to get that email and then stew on it for a day or two and kind of let it distract you and let it be a background process. Someone emails you and says, “Oh, I couldn’t use your app because the design is so awful.” And then they send you screenshots and they have all these things circled and, “This is wrong. This doesn’t work with the UX? Principle,” or just some crazy feedback about it. You can get hung up on that, right, and you can carry that with you if you let that person have power over you. The choice you have to make is, again, am I going to brush this off and delete it? Am I going to address it and say, “Thanks for the feedback.”? Or am I going to carry it around and let it distract me for a few days? Because it’s amazing the amount of time and energy that you can allow someone to suck from you if you let them, and that’s your choice. And that actually leads us to the fifth point here that James Altucher makes. He basically has a phrase that just says “Delet.” And he says, “I’m always happy when someone disagrees with me. I don’t mind that. But often, people are incapable of expressing disagreement and having it not come out in a way that is obnoxious or hateful. And when I can, I delete them.” I put “delete” in quotes. He says, “Sometimes it’s not a blog commenter but it’s someone in real life.” But even then, he says he deletes them. He doesn’t speak to people who are just toxic, right, who are bad and who are always… sometimes when the feedback itself comes across, and it’s like,”Well, that’s actually legitimate feedback, and it’s an opinion of yours.” But the way that it’s expressed is just very like he said. It’s obnoxious. It’s hateful. It’s rude. And it’s really hard to take feedback like that and not be offended by it, frankly.
Mike:[00:25:03] Yeah, you definitely have to take steps to cut toxic people out of your life. There’s definitely people I’ve done that with, whether it’s friends, colleagues, family, what have you. Everyone has to take those steps on occasion. And it’s not pleasant sometimes, especially if you do know the people. But then there’s other times where it’s a random email and honestly, the delete hotkey in Google is pretty easy to learn. So you can take those things, just flag them as spam or what have you. You don’t have to listen to them. You don’t have to let it affect you, but you do have to make the conscious choice to not let it affect you because the things that you are doing are important to you. The sixth point he has here is that hate is contagious. And he has a tweet here that somebody had put out that says, “James Altucheror = #humangarbage.” And he says he has no idea why the person tweeted it or who it was, but he got really angry about it because it didn’t follow any of these other things. It wasn’t about them. It was really about him and it was a personal attack. And your natural response, in many cases, is to attack back. And his argument is to not do that. Because as soon as you start that, it essentially becomes a never-ending path. There’s always going to be this back and forth. So if you can essentially restrain yourself, if you can go back to that 24-hour rule and not go back and start that clock over again, you can hopefully break that cycle. But at the same time, as Rob just said, you have to make sure that you’re not going to let those people have power over you because it will affect you.
Rob:[00:26:27] If you’re the type of person who struggles to let things go, and I think most of us are probably like that, that when someone attacks you that it feels harsh and that you carry it with you for days, there’s a book called “A Guide to the Good Life.” And actually, I want to give a shout out to Travis Jamison from supremacy SEO for pointing me in this direction when he and I were hanging out. But it’s basically kind of a summary of Stoic philosophy. But there’s a really good chapter in here about dealing with gossips and people who are toxic in essence. And the Stoic philosophy talks a lot about how to let this kind of stuff go and how specifically to do that, and why it’s worth doing that, and even ways that you can… like actual phrases you can use if someone insults you to your face, and what you can say to kind of exaggerate it or make a joke about it or whatever. And since I read that, I’ve used a ton of those techniques. Some of them are ignoring. Some of them are “deleting” — in quotes — like James said. And then some of them are engaging back, but with a joke, even when someone says something hateful. So you have to use your judgment on that, but I would recommend A Guide to the Good Life — I listened to it on audiobook and I’ve relistened to it once — if you need more practice of learning to let this kind of stuff go.
Mike:[00:27:36] Another tactic that James points to is that they look stupid. The idea behind this is that you can imagine that whoever this person is on the other end, especially if you don’t know them, that they grunt, they drool, and they look stupid. And it makes it easier for you to deal with them and kind of mentally relegate them to the background because they grunt, they drool, and they look stupid. I mean how could they possibly have an intelligent conversation with you or have a legitimate beef with the things that you’re doing because they simply can’t understand it? And maybe they had a good point, but if it came across wrong, you can use this as essentially a mental defense to help put you in a frame of mind where you can just ignore whatever it is that they have to say.
Rob:[00:28:16] The last point that James makes is he says, “Time heals all wounds.” In essence that he just starts and he says, “Hate can’t last forever. Often, it turns into a dull simmer.” And that’s really maybe the best lesson of all this. If someone posts a rude comment about you or says something that you find critical, it’s not going to be around in five years. This is a very short-lived type of thing, and that learning to shake it off quickly and kind of move on… because frankly, you have better things to worry about. And you have more important ways to be spending your time than going back and forth with someone on Twitter 140 characters at a time for two or three days and thinking about your next retort, and thinking about this and that. You know what I’m saying? One of the best pieces of advice I heard about it is Scott Hanselman, and he said, “I just don’t engage.” He says, “I get feedback and I just don’t argue with people because I found it’s a tremendous waste of time. Because, A, you’re never going to change anybody’s mind. And B, I have all this other stuff going on. I’d rather spend time with my family than be sitting there hacking away at my phone trying to prove someone else wrong. It just isn’t that helpful.”
Mike:[00:29:21] I don’t know if this is a function of age or not, but I definitely remember when I was younger, I would think to myself, “Oh, this person’s wrong, and I have to explain to them why it is that they’re wrong and why that I think that they’re wrong.” That probably boiled over into places of my life that it probably shouldn’t have, but at the same time, it was whenever when somebody was issuing criticism as well. And you’re absolutely right. If engaging them is really putting your energy in the wrong place because you’re not going to change their mind. It’s hard to accept that you can’t do certain things, and changing some people’s minds is going to be one of them, and it maybe something that you just have to get over it. It’s not necessarily easy, because it’s something that I definitely struggle with a little bit. But at the same time, you can’t do everything that you always wanted to do.
Rob:[00:30:03] I think this is a good reminder, too, to kind of temper your own feedback of people and to reread that critical tweet that you’re going to send or that email that you’re going to support to someone’s support queue, or when you’re giving someone feedback, and think about it from their perspective. Are you going to come off as a hater? Are you going to come off as someone who’s being obnoxious or not communicating your thoughts, your preferences with care? But you’re just firing off an angry email because you’re so angry about something when in fact, you’ll probably be taken as more legitimate if you temper your words and you’re more thoughtful and careful with them.
Mike:[00:30:38] Yeah, I think we’re all guilty of kind of going on Twitter and venting a little bit here and there. I know that I’ve been guilty of it in the past week. There was something with Google Docs, where like it popped up a message from the calendar, and every single tab in Chrome just stopped working. I don’t know what was going on. I had to flip over to that tab, click the OK link. And somebody tweeted me and said, “Well, that’s by design that way.” And it’s like, “All right, it’s by design, but it shouldn’t impact everything else that I’m working on.”
Rob:[00:31:05] That wraps us up for today. If you have a question for us, call our voicemail number at 888-801-9690, or email us at questions@startupsfortherestofus.com. Our theme music is an excerpt from “We’re Outta Control” by MoOt used under Creative Commons. Subscribe to us in iTunes by searching for “startups,” and visit us at startupsfortherestofus.com for a full transcript of each episode. Thanks for listening. We’ll see you next time.
