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Startups For the Rest of Us

Episode 225 | How to Run a Paid Advertising Campaign

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[00:00] Mike: In this episode of Startups For The Rest Of Us, Rob and I are going to be talking about how to run a paid advertising campaign. This is Startups For The Rest Of Us, episode 225.

[00:07] Music

[00:15] Mike: Welcome to Startups For The Rest Of Us, the podcast that helps developers, designers, and entrepreneurs be awesome at launching software products. Whether you’re launching your first product, or you’re just thinking about it. I’m Mike.

[00:23] Rob: And I’m Rob.

[00:24] Mike: 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?

[00:27] Rob: We had a nice tip from Josh Ayernov, and it’s about using Todoist, and email. This ties into a discussion you and I have had a few times, where I mentioned that I would love to be able to, basically, reorder my Gmail email, and make it a “to do” list. And he says, “Hey guys. Love the show. I’ve been using Todoist lately, and they have a Chrome extension, which lets you add a task from email, and append the email to the task as a url that goes back to that email. So if I have an email I need to respond to – that I need to postpone – I can just make a task, and click on it. So it essentially integrates the two. I figure if anyone is using Todoist, this would be a good tip, and if you’re interested in, kind of, being able to reorder your Gmail inbox, it could also be helpful.”

[01:08] Mike: That sounds really cool. It sounds very similar to what you’re, kind of, doing manually right now, with Trello, where you, kind of, send things over –

[01:13] Rob: Exactly. Forward it over, and then come back and search. Yup. Which is a little bit cumbersome – it works for me – but I can see, if I was not using Trello, I would consider using something like this. We had discussed the new EU VAT laws a couple of weeks ago, and Ryan Delk from GumRoad dropped me a link to an email. We’ll link it up in the show notes. It’s actually a blog post, and it says, “How we’re handling VAT at GumRoad.” The nice part is if you are using Gumroad, they basically handle it all for you, so you don’t have to worry about it. If you want to hear more about that, you can check it out in the show notes.

[01:41] Mike: Very cool. So this past week I went to a local photography studio, and had some new photos done. I took the time to update my social profiles – clean shaven, a little bit lighter, and no glasses.

[01:52] Rob: Yeah.

[01:53] Mike: It was like $130 for the sitting fee, and then $5 for each photo that I wanted. There were 10 that looked good, so I just grabbed 10, in different poses and outfits, and stuff like that.

[02:03] Rob: Yeah, every couple of years it’s nice to get a couple of head shots done. I’ve actually done it – the last couple of head shots I’ve gotten, one was when we did a big family photo shoot. We hired a photographer to come out to our property and do different location shootings here, indoors and outdoors. And I said, “Hey, can you just do a head shot while you’re here?” Then the other time was when I recorded that video course on how to hire a VA for your startup, which is startupvacourse.com. So, it’s nice to have a couple of different ones you can rotate.

[02:29] Mike: I figured I’d have something professionally done, that I can actually use in more of a professional manner.

[02:34] Rob: Right. So what are we talking about this week?

[02:36] Mike: Well, today we’re going to be talking about how to run a paid advertising campaign. But I don’t think we’ve ever actually done an episode on walking through what it is you should be doing, how do you compare different platforms, what sorts of things you should look at when you’re going through that, what things you should document. Things to pay attention to. Things to avoid. And I thought that what we should do is we should walk through a lot of those things so that people understand, kind of, the process that we go through, and learn from that, and maybe offer some insights back onto the comments of the podcast. Share the things that we’ve gone through, and what things we pay attention to because we thing they’re important.

[03:11] Rob: I think our intent is to make this, A, a little bit entertaining – so that you actually want to listen to it. And B, keep it high level enough that it’s something that is like “evergreen” content, so that you could come back to it in the future if you wanted. But it also gives you, like the mindset – if you’re going to start embarking on driving paid traffic – it gives you the mindset of how to, kind of, conceptualize all of this.

[03:31] Mike: So I think the first step in running a paid advertising campaign, is to know what your target cost of acquisition is. If you don’t know what your cost of acquisition is, you kind of need to guess what it is that you’re going to aim for, and use that as a guideline. Because when you start advertising on these different platforms, the cost of acquisition is going to vary dramatically between the different platforms. So, know what your target is, before you even start running the advertisements.

[03:57] Rob: I’m going to give you a couple of rules of thumb about how I would calculate – or ballpark – what I would use for my cost to acquire a customer. The first I’d start with is to figure out what is the average lifetime value of a customer. I’ll throw out three scenarios. One is that you have a one-time purchase product. Let’s say you have an ebook, or you have a WordPress plugin, or some downloadable software you charge “X” dollars one time for it. Now, some people may buy that, and then buy other things from you, but if you don’t have a bunch of data – that are easily at your fingertips – I would just ballpark it, and say, “My lifetime value is going to tend to be just the dollar amount someone would pay me for that.” Right? So if I sell four different pieces of software, for $40 each, I would say the lifetime value is going to be $40. Because I’m going to just say – unless I know for a fact “X” amount of people go and buy multiple items – I’m going to say, “My one-time purchase is $40.” And I’m going to start with that. If you have an e-commerce web site, I would just look at my average order value. Again, if you have the data, and you can go and say,

[04:55] “Well, this many people re-order, on average.” And if you can calculate it, that’s fine. But if I was going to ballpark it, what is your average order value. And if you’re a subscription service – so let’s say your SAAS, or your membership web site – I would tend to ball park – membership web sites tend to between four and six month, lifetime. So you can – to be on the low side – you might want to say, “Hey. It’s four times my monthly fee.” And SAAS tends to be between five and ten, until you’ve really hit product market fit. So again, if you want to be on the low side, and be more conservative, you can say five, and ten is not unrealistic for a reasonable service. So once you have that number – and if you’re selling a $19 ebook, then your lifetime value is $19. And if you have a SAAS app that’s $30/month, then maybe it’s $300 for that lifetime value. In general, you want to turn a profit, right? You don’t want to break even unless you have a back-end. And so, if I was going to be trying to scale up a SAAS app eventually, I would probably say, “To acquire a customer, I don’t want to spend any more than one-third of my lifetime value. And if I was going to try to acquire someone for a one-time purchase, you know, maybe you could creep up to 50% or 60%. But you don’t want to 80% or 90%, because then your profit margin is really, really low – unless you are trying to build that list and sell more things down the line. That’s a quick summary. There’s obviously a very large topic, to figure out what your target cost per acquisition should be. But that’s how I think about it conceptually.

[06:17] Mike: Yeah. I mean, you want your cost of acquisition to be as low as possible, but still at a point where you’re going to be able to make money. I think the other point to drive home here is, just because you have a target cost of acquisition doesn’t mean that over time you’re not going to be able to reduce that by optimizing some of your different ads. Because when you first start out, you don’t know what you’re doing. And that’s part of why you’re testing some of these different platforms and strategies. And when you do that, over time you will naturally get better at it. Or, at least, hopefully you will get better at it. Sometimes the platform makes changes, and they basically screw you over. Or there’s a lot of competition that comes in, and there’s really not a lot that you can do about it at that point. Your long-term goal is to get better at it, and thus drive your own cost down.

[06:58] Rob: Yup. The rule of thumb I use is, if I run ads and send them to a landing page, and do what I’m trying to do, and I can get within 3X of my target cost for acquisition, then I continue, right? Then I try split-testing, and optimizing ads, and doing other things. So that means if I can pay $50 to acquire a customer, and the first time I run an un-optimized campaign, it’s $150 or less, then I’m within target. But if I run it, and it’s $500 to acquire – meaning it’s 10X, it’s obviously possible that you could optimize into that, but that’s where I tend to just back out and say, “Boy, this channel is not going to work for me.”

[07:36] And I think this actually begs the question of like, “Well, what type of lifetime value do you need, in order to be able to support paid acquisition?” And it depends – B2C, B2B, and all of that stuff – but, in general, what I’ve seen is I don’t know anyone who’s making paid acquisition work, profitably, that doesn’t have a lifetime value of around $100. And so, if you are selling a $20 or $30 ebook, that’s hard. If it’s out of an ecosystem, you know? If it’s not a loss leader. If you’re actually trying to turn a profit on it, it’s pretty tough with a $20 or $30 lifetime value. There are exceptions. Patrick McKenzie with “Bingo Card Creator” has done it. He’s also very, very good, and he’s spent a lot of time – he’s one of the best people at AdWords that I know. If you are in a niche where the clicks are at all expensive, then you are going to be paying, easily, $100 or more to get someone to come and try your app, or turn into a customer. And so that’s where low lifetime value stuff doesn’t tend to be ideal for paid advertising. And you need to look at things more like SEO, content marketing by rally or word-of-mouth – kind of, the other marketing approaches.

[08:41] Mike: So once you know what your target customer acquisition cost is, you have to start identifying the platforms you’re going to use. And there’s a lot of different platforms out there, and it also depends on the specifics of whether you’re going after desktop users or mobile users. But, you know, there’s also like the standard ones that, kind of, cross into both mobile and desktop – like Twitter, Facebook, AdWords, Buy-Sell Ads, and a number of other ones. I mean, Rob, I’m sure there’s a list that you have taken a look at, and have leveraged as well.

[09:11] Rob: Yeah. Boy, I had a list that was like a mile long, when I was really hammering on this stuff with Hittail. And I ran on all types of crappy B2C networks. It’s like, there’s one called Chitika. To be honest, I don’t even remember the names of the other ones, because the ROI was so bad. I mean, I would pay $50 in ads, and you’d get all these 10 cent clicks, and no one would stay on your site more than three seconds. Like none of them. And so, instantly, that was just a non-starter, because I knew that if I spent $500 no one was going to stay on the site. There are a limited number of ad channels that you can think about if you are in the B2B space. You mentioned several of them. I would add LinkedIn. I would add AdWords, even though it’s very expensive – it can be expensive. The Bing ad network is reasonable. YouTube is actually something I’m doing right now, and I’m experimenting with. And then the other channel is re-targeting, which kind of spreads across all of these channels. But re-targeting is, while different from what we’re talking about – we’re talking about driving brand new traffic right now – but re-targeting is something I would want to have in place before I ran these paid ads. Because re-targeting gives you the chance to then advertise to them again, and your conversion rate on those is going to be a lot better.

[10:22] Mike: Yeah, that’s a good point. But the one thing you do have to be careful about with re-targeting is sometimes they have policies around, you have to have a product that people can reasonably buy. And sometimes if you’re sending people directly to a landing page, so you can’t buy from there, sometimes they get a little antsy about even allowing you to use their re-targeting capabilities on landing pages.

[10:43] So the next step is to run a series of tests on each platform for a specified amount of time. I’m partial to basically setting aside $100 and running the test for a week. And that’s a very small test. I understand that it’s probably not going to be representative, but at least it, kind of, dips your toes into the water. It gets you, at least a little bit comfortable, with how that platform operates – what things you need to make those things work. You know, there are certain platforms, like Twitter and Facebook, you can put images into those advertisements. But when you’re doing that, the requirements for those images are different sizes. And they will appear differently to the users, based on whether or not it’s showing up on the desktop or on a mobile device. You have to play around with those things a little bit. And when you’re first setting these things up, it can take way more time than you ever thought imaginable to like just tweak your images, and stuff like that, to get them to show up inside the advertising platform. So it can be, kind of, nightmarish process – in terms of the amount of time that it takes – but you do still have to go through that process to figure out, what is it you need to do? And then be able to take those things, and write them down, and say, “These are the requirements for this particular network.” And then hand them off to a graphic designer. Once you get through this, if you decide to double-down on a platform, you can then take those requirements, hand them off to somebody, and say, “Hey, I need you to build me images that go with this, this and this. And these are the different sizes.” It allows you to repeat the process in a way that is a lot more effective in terms of your time, as opposed to the first time where you’re just trying to figure things out. You’re trying to get familiar with it, get comfortable enough to be a little bit dangerous. And then from there you need to start optimizing. But from there you don’t want to go through the process of trying to optimize before you even get started.

[12:27] Rob: I second your surprise at how long it takes to set these things up. Every time I do paid acquisition I think, “I’m just going to go in, by a few ads, set up a budget, and be out.” And it’s always hours later, because I wind up finding images, and crafting headlines, and running all the split tests, and doing all of that type of stuff. So give more time to this than you think you’re going to need. There’s not a shortcut, like any other marketing approach.

[12:53] Mike: Yeah, like three or four times as much time as you think you need.

[12:56] Rob: Yup. Exactly. The other thing I would do – probably before I ran a test, if you haven’t done much paid acquisition – is to pick a single channel, pick one of these. And I would educate myself. I would dive deep into it. I would probably buy a course, either on Mixergy Premium, or Udemy, or from AppSumo. I have taken courses on all of those. There are some really nice experts who give you some good insight on how to work the system. Or you can even find an expert on it. So like Amy Porterfield, is an example, is a Facebook ads expert. So I bought a course from her on how to improve my Facebook ads. Or if you find a good blog, or a good podcast, on the topic, typically they are monetizing that by selling a paid course on whatever topic you want – Twitter ads, of AdWords. That’s what I would do, and that’s what I have done. So when I started really doubling down on Facebook ads with Hittail, I bought like four or five Kindle books. I listened to several podcasts, and I bought some paid video courses. And I went through all of the material quickly.

[13:55] I didn’t spend weeks doing it. I mean, I did this all in, like, one day. I skimmed through the books. I tried to find out the things that people were saying in common, and the differences. And you can find yourself almost becoming an expert by proxy, if you just immerse yourself quickly, and give yourself like an instant PhD in that technology, just by hearing a bunch of stuff. Then you go and use all of the best practices that you’ve developed, and then you hammer on a test. Now, you said do a small test, $100 in a week. I tend to want to move faster than that, and I will throw more money at it. I might budget $100 a day, and sit there and watch it. Because I want to know quickly if this is going to work or not. And if I get four or five days into it, and I’ve spent a decent amount of money, I can start to tell where the trend line is going. When I’ve made paid acquisition work in the past, it typically is an investment of a couple thousand dollars before I’m starting to become confident in my ability to execute on it. And sometimes it’s more than that. But that’s, in my head, kind of a mental marker that I use of like, “Yeah, I might get a few grand into this before I really know if it’s going to work.”

[14:58] Mike: Got it. Yeah, see, I run them, kind of, in parallel at the same time, on multiple channels. Maybe at some point I would get a little bit more confident and, say, dump $100 today into like three, four, or five different channels at the same time. But I also found that trying to flip back and forth between the different ones, and keep track of which ones were performing, and which ones weren’t. You could easily rack up a pretty hefty advertising bill, in just inside of a week, if you’re paying $100 a day on five different channels.

[15:25] Rob: That’s the thing. I only test one channel at a time, because I need to be an expert on it. Like, I can’t become an expert on five channels, and then try to run them parallel, or else I’m running around like a chicken with no head. When I do a channel, I immerse, I focus on that channel for maybe a solid week. And I don’t really do anything else, except for – I mean, I do my other projects and stuff – but I don’t try to scatter myself. Then if that channel doesn’t work, I can move on to the next one. If it does work, then you can start trying to figure out that repeatable process of, “How am I going to run this long term?” Because I’m not going to spend 20 hours a week on this every week, even though this week, getting it set up and monitoring every – I mean, I would literally monitor it every couple of hours. Like, log in, look at it, see what it’s going to do, stop ads, start new ones. You know, I was really into it. Again, I’m not saying this is the only way to do it. This is how I do it. I like to dive into things anyways, and be pretty intense about them, and find out very quickly if it’s going work or not, rather than taking a more hands-off approach that I think you’re talking about.

[16:20] Mike: Yeah. I think it’s interesting that you have a different approach to it than I did. Where what I did was, as I said, I would run several of them in parallel, and then after that week I’d basically look at that channel I thought was performing the best, and essentially double-down on that one, and optimize it. So I ran through an ad, and I compared Twitter against Facebook ads, and found out that Twitter was performing about four times better than Facebook was. And then I went in, and I optimized the Twitter campaign, and I essentially doubled conversion rate on the Twitter campaign. So at the end of the day I basically made eight times better than what I was getting on Facebook. Clearly, there’s different ways of doing it. I think it depends on how much time you have to play with, and how much your budget it, and how quickly you want to move forward with the paid advertising.

[17:04] Rob: Yeah. That’s a good point. There was a point where I ran through, I think, about twelve ad networks, in the span of maybe three or four weeks. Which means I obviously did do some of them in parallel. And what I did was, the bigger ones that had more information about them, and that I just had more confidence that they would work. Those were the ones that I dove into, and I only did those one at a time. Right? So that was like AdWords and Facebook. Whereas the ones – like the B2C ones I was talking about, 7-click and Chitika, and these kind of weird things, and Bing ads – I would set them up and let them run in parallel. Because it’s not like there’s a way to become a master at those. You just, kind of, had to throw it out and see what was going to happen. So I did do more parallel stuff with the things I didn’t think were going to work as well.

[17:48] Mike: Yeah. That totally makes sense. So the next step in this process is to document everything that you’re doing, so that you’re able to refer back to it later. I use a combination of things like screenshots, and spreadsheets, and Google Docs – pretty much anything that I need to be able to come back and recreate it, or ask questions in the future. I do that for a couple of reasons. Partly, is just so I can acquire information, and set it to the side so it acts as a true snapshot, and partly because I don’t necessarily trust the platforms to not change underneath me. So if I need to find something later on, I can do it. And some of them actually make it very difficult to go in and tweak some of your settings. I remember back when Facebook was still making a ton of changes to their advertising network. There were things that would just break every other day. So, I kind of learned quickly to just take screen shots, and make it so that you could go back and do it again. That’s not to say that you need to document everything heavily. Just make sure that you’re taking screen shots, so that if you take a screenshot of like the demographic information that you’re going to be targeting for one advertising network, it’s a lot easier to just go refer to the screenshot, than it is to go there, log in, and the try to compare it to another network that you’re trying to advertise on.

[18:59] Rob: Yeah, I haven’t done a good job at this step of documenting things.   I typically leave it in the system where it’s in. You know, if it’s in the Facebook ads system, I’ll refer back to it, and go and try to look for trends. And I’ll graph stuff, and I do review the data, and see who’s clicking, and optimize and stuff. But I don’t think that I have a single, external doc that documents anything, that is shared with anyone. Because I’ve pretty much done most of the ads stuff myself. Now, with that said, if I was going to be outsourcing this, or even having someone in my team do it, we would need some kind of a way to communicate and document the tests we were running, so that we could share our findings, right? There’s this concept of a “growth spring”, and it’s similar to the “coding sprints” with SCRUM. It’s like a one to two week, or it can be a 30 to 90 day, thing of trying to grow your company by using a single tactic. And so if you do a growth spring with Facebook Ads – however long that takes – you really want to document the experiments you’re running, and what you’re learning from them, so that you can share them with others. To date, like I said, I have not been very good at this, and I’ve kept it all in my head. So if I was going to pass it on to someone else, I would have a bit of documentation to do beforehand.

[20:09] Mike: Well, I think that also, kind of, goes back to the difference between how you have done it, and how I’ve done it. Whereas you do that really hard, deep dive into one advertising network, where I’ll step back and do things a lot slower, and compare the networks against each other. In that case, I kind of need those screenshots in order to make it easier for me to be able to compare between the two. Versus, if you’re kind of going deep in one particular network, it’s not as important, because you’re tweaking within that network, and you typically have all the information right there at your fingertips, and you can just look at it. It depends on how much you think you need to document some of that stuff, too.

[20:46] The other thing I like to do is compare the results from one platform against each other. And I think that the best way to do this is to make sure that your advertising is as similar between the different platforms as possible. But do keep in mind that there are going to be differences between advertising on LinkedIn versus on Facebook and on Twitter – partially because of intent, but partially because of the audience as well. So you might say one thing to the people in LinkedIn, and something different to the people on Twitter. And another thing I like to do – as I said before, comparing against like Twitter and Facebook – double-down on what’s working, or try to optimize it. I found that on Twitter I was able to do four times as well as Facebook right out of the gate. And I found that using the Twitter cards, for example, I could essentially double my conversion rate, by essentially eliminating steps by forcing people to click on the advertisement, and then go over to a landing page, and then enter their information. With the Twitter cards it’s literally one click. They can just click a button that says, “Learn more, and send my information over to Mike Taber for what he’s working on.” And I’ve found that by getting rid of those extra steps, it doubles my conversion rate on that.

[21:55] Rob: Yeah. The thing to keep in mind when you’re doing paid acquisition is that it’s a lot harder than you think it is. You don’t just set up and ad, and instantly have positive ROI. It takes work. It takes optimization. It takes comparison. I mean, we’re recording a whole episode here, and we’re barely touching the surface of the amount of, not only up-front optimization, but the ongoing work it takes to run an ongoing campaign. You know, because it adds burnout and that kind of stuff. So keep that in mind – as you’re embarking on this – that this is… The nice part about paid advertising is it’s very quick, right? It’s like instant ramp-up, instant ramp-down like a faucet you can turn on and off. And it scales really well, if you can make it work, because any of these channels that we’re talking about are pretty highly scalable. But the downside is that it often will not work for you. A lot of channels just won’t convert, and you will spend some money that you won’t get back, and you won’t have a positive ROI on that.

[22:49] Mike: So let’s talk about some general thoughts on paid advertising. One thing that you just mentioned was “ad burnout”. Why don’t you expand a little bit on that, on exactly what ad burnout is first.

[22:58] Rob: Sure. The idea is that ads have a certain lifetime, and over that lifetime you’ll see this gradual decay of click-through rates, and of results, because people basically get blindness to your ads. So if you use the same image for months at a time, over time that click-through rate will just naturally fall. So you can’t just – as a rule – post an ad, and expect it to work forever. There are some exceptions to this. AdWords is one where you don’t tend to need to renew your ads, because it’s intent-based, right? It’s search-based. So the people who are seeing it tend to be new people all the time, and that’s a good thing. If you’re on Facebook, and you’re targeting a demographic, then someone who’s interested in “email marketing” will see that same ad over and over, and over time – even if they’ve clicked it once – they’ll become blind. Your audience is so big, and you need to change it up. So that’s the idea. “Ad blindness”, “ad rot”, “ad burnout”, it’s all the same idea. It’s that the performance of your ads will decay over time.

[23:56] Mike: Going back to what I talked about, in terms of documenting things, one thing that I’ve seen is that the ad networks that I’ve worked with don’t tend to track what your conversion rate is over time. Because of ad burnout, you kind of have to do it yourself. Because all they do is they give you this raw number, and it’s within this snapshot of time, or it’s like the total amount of time that you’ve been running the ad, and it will just be a number. So, if you’re not paying attention to what that number is, yesterday, and the day before, and the week before that, then it can slowly drop over time, and you don’t notice. So that’s something else that you, kind of, have to keep in mind. As I said before, in terms of being able to drive people to a landing page, it’s very helpful. And if there’s any way to bypass that process, or shorten the entire time that it takes in order to acquire somebody’s email address, then that’s definitely an avenue that you should explore and look at. I mean, like I said, on Twitter I was able to double my conversion rate just by using the lead cards, as opposed to sending somebody to a landing page, and then they have to enter their information.

[24:59] Rob: Right, and Google AdWords has that same capability, where you can capture an email right there in the ad. I’ve never actually tried that, so I don’t know its effectiveness. But I imagine that if someone is interested, it’s a decent way to go.

[25:10] Mike: Another option you have is that if you have an email list already. So if you have an existing product – where you have customers, and you’ve got information about them, like their email address – then you can take those email addresses and upload them to some of these ad networks. What they use is something called “related audiences”. Essentially, what you do is – you’re going to be able to target people who are like that list of email addresses that you uploaded. I know that Facebook does this, Twitter does this. I don’t know if Google Ads does this or not, but –

[25:40] Rob: I don’t think it does.

[25:41] Mike:– what it does is it allows you to target other people, for advertising, who are like your current audience. And that’s extremely helpful.

[25:48] Rob: Yeah. So it’s similar to re-targeting, right? Where re-targeting, you are essentially targeting based on the action that somebody has taken – which is visiting your web site. In this case, you’re targeting a specific group because they are demographically similar to your audience – to people who have actually signed up for it. And “demographically similar” I’ll put in quotes, because that’s Facebook’s judgment call, right? They have these algorithms – so they have this social graph, where they can link people together and see similar folks. So it’s, kind of, a black box for you, but you get the recommendations based on that. I’ve used the “related audience” stuff on Facebook. I have not had luck with it, but I have heard that it is doing very well for some folks.

[26:32] Mike: It hasn’t worked nearly as well for me, but I do know some people who are making it work extremely well. Something else you can pay attention to is, any sort of related information you can get from the different advertising networks. So if you can get age, or location, or demographic, or platform information you can zero in on those particular things, and some of those are going to convert better for you. I haven’t figured out exactly why that is. So, for example, I’m running a Twitter advertising campaign right now, and the people who are using Android devices are converting more than twice as well as people who are using IOS devices, which is kind of bizarre.

[27:10] Rob: I’ve used this quite a bit, especially on Facebook. I found out that there was a certain age bracket that converted better. Absolutely. There are like 14 states in the U.S. that convert way, way better – like two or three times better than all of the other states. I didn’t notice anything with platforms, in particular, like you said. But you can get these out of the Facebook Ad platform, once someone clicks on stuff, once you run some ads, and then you can go back and see who clicked on it most, and narrow your demographics. Now this means you can’t scale this ad up, as well, because you are starting to exclude people. So you won’t get as much traffic, even once you ratchet your budget all the way up. But those will be your highest ROI clicks, and so early on that’s what you want to shoot for. Then later on, if you are exceeding your ROI, you can always dial those back a little bit. You can widen that age range, or you can go to those states that maybe don’t convert as well, when you’re really trying to scale it up and drive the maximum amount of traffic.

[28:02] Mike: So, another I’ve found is, do not trust the metrics that they’re giving you. You have to take anything that they’re telling you with a grain of salt. Especially when it comes to Facebook and Twitter, because they use what’s referred to as an “engagement”, which is not necessarily a conversion for you. The other issue that I’ve found is that their idea a lead, and yours, can be wildly different, depending on whether they’re counting it just based on a click, or all the way through your acquisition funnel to get an email address. Also whether or not they’re charging you for that lead, or not. There are some ads that can be shares, for example, and depending on whether or not it was showed to somebody – and then they clicked through it, and you were charged for it. Or if they shared it, and one of their friends clicked through and signed up for it – you might be charged for the first one and not the second one – and that skews your numbers. So be really, really careful about how you’re looking at a lot of those numbers. And make sure you fully understand exactly what you’re interested in. Whether it’s email addresses, or impressions, or actual sales all the way through the sales funnel. It really depends on why it is that you’re running these ads, as to the specifics of what you’re looking at.

[29:15] Rob: Yeah, I agree with this one. I’ve seen some folks touting the Facebook news feed ads, over the right-hand side ads – because you get more clicks, or the clicks are cheaper, I guess is what it is. And the click-through rate is higher. But if you actually look at what a click means for a news feed ad, it means someone clicking any link on that ad – and there’s like five or six links. So if you’re trying to drive them off site to your web site, half of those links – or more – don’t go to your web site. They go to like your Facebook page, or some other random place – completely not useful for you, and not going to contribute to your conversions. But they count that as a click, and you get charged for it. Then, on the right-hand side ads, any link there is actually going to lead off-site to your web site. So every click there is a real click to your web site. So like you said Mike, these things can be misleading, and I hope they’re not being intentionally misleading, but it has felt like that to me, at times, where the numbers don’t really add up because of the way they’re defining certain thinks, like clicks.

[30:14] Mike: It’s complicated because your perspective, as somebody who’s buying these ads, is going to be different than their perspective, as somebody who is creating the mechanism for you to run the advertisements. If any of the advertising platforms reach out to you, and offer any sort of a free one-on-one, to help you improve your advertising, definitely take them up on the offer. It gives you the ability to ask them in-depth questions about exactly how things work, and you can start questioning the numbers that you’re coming back with – or that they’re coming back with – and ask them, “Hey, what does this mean?” or, “I saw this, and these numbers don’t add up. Why do they not add up?” And you can start getting an in-depth description, or explanation – directly from them – about why some of those things don’t add up. Sometimes it’s very helpful, and sometimes you look at it – and they’ll look at it – and they’ll say, “Yeah, we know. We’ve heard that a number of times. This is how you can, sort of, get around it” So sometimes they do have work-arounds for you, but it’s always worth it to take the time to follow up on those things, and be able to get in front of them the questions directly, so you can get answers directly from the vendor.

[31:20] Rob: Yeah. I would agree with that. They seem like they might be a waste of time, but I agree. If there’s quirks in the system, these are the folks who know it, and these are the folks who can alert you to it. I did let Google, at one point – they wanted to like optimize one of my campaigns. So they copied it, and asked if they could create an optimized version based on their “best practices”. And this was three or four years ago, probably. It was an AdWords campaign, and I ran theirs along with mine, and theirs was awful. It was horrendous. It was spending a ton of money. The budget was high. It wasn’t getting many clicks. It wasn’t getting conversions. I eventually stopped it. And I don’t know what the story was, because I genuinely expected them to have the knowledge to be able to do this better, but the campaigns I had running were far superior to it. So, I think in terms of that – which is super-specific advice – I think, take it with a grain of salt. And if they do run or optimize a campaign for you, you just need to watch and compare, like anything else. But just in terms of meeting with them – like you said – and getting advice on the platform and all that, I think that’s a worthwhile hour you can spend on the phone with them.

[32:18] Rob: If you have a question for us, call our voice-mail number at 888-801-9690. Or email us at questions@startupsfortherestofus.com . Our theme music is an excerpt from “We’re Out of Control” by Moot, used under creative commons. Subscribe to us in iTunes, by searching for “startups”, and visit www.startupsfortherestofus.com for a full transcript of each episode. Thanks for listening. We’ll see you next time.

Startups For the Rest of Us

Episode 224 | Should a Non-Technical Founder Learn to Code?

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[00:00] Rob: In this episode Startups for the Rest of Us, Mike and I asked the question. Should a non-technical founder learn to code? This is Startups for the Rest of Us, episode 224.

[00:10] Music

[00:17] Welcome to Startups for the Rest of Us, the podcast that that helps developers, designers, and entrepreneurs be awesome at launching software products whether you’ve built your first product or just thinking about it. I’m Rob.

[00:26] Mike: And I’m Mike.

[00:27] Rob: And we’re here to share our experiences to help you avoid the same mistakes we’ve made. So what’s for this week, sir?

[00:32] Mike: Well, we got an email from Aaron Weiner from Software Promotions. And he had a comment and sort of a clarification question about episode 223 where we had given some advice about when bootstrapper should start worrying about insurance and security and things like that. And he got a question what it was we were really trying to say when we talked about security because one of the things that I had said was that these companies have billions of dollars at their disposal. And they have large security teams. And if you’re being actively targeted, there’s absolutely nothing that you can do about it. His disagreement on that was that it sounded like I was saying that entrepreneurs shouldn’t spend any time on security.

[01:12] To clarify for everyone, the issue isn’t so much that you shouldn’t spend any time on security. But what I was saying was if you were being actively targeted. And so the difference between actively targeted and what I call more of a drive by is that if a hacker has a vendetta against you, there is absolutely nothing you can ever do that is going to stop him. So they can essentially go through your testimonials page, find out who your customers are, and then target them. Do DDOS attacks. Take down their servers and say, “Hey, if you don’t stop doing business with this person, I’m going to keep coming after you.”

[01:42] And it could very seriously and negatively affect your business. And they don’t even have to get your customer list. If they get your customer list and they have half of it or most of it, then you’re in serious trouble because then you’ll have very big PR problem to deal with. And they have the list of all your customers. They can go after them as well.

[01:58] But on the flip side of it, if it’s a matter where you have the ability to lock down your server and you’re not, those are the things that are more like targets of opportunities. So people who – I refer to them as script kiddies. They’re just writing the scripts against every IP address on the internet trying to see what it is that’s out there so that they can dig in and start pulling information out of those servers. And if you have a server out there that isn’t properly locked down or secured or there are cross-site scripting vulnerabilities in your code on your SaaS app, those are the types of things that they’re going to exploit. And it’s not because they don’t like you. It’s because they can. And so you do have to do the basics and the bare minimums just to make sure that those things are taken care of. But if they’re actively going after you, then you’ve got a really serious problem at your hands.

[02:41] Rob: It’s a judgment call. It’s like how much life insurance should you get? Well, you should get enough.

[02:46] Mike: All of it.

[02:47] Rob: You should get enough. Yeah. I mean there is a point of diminishing returns at a certain point. And I think that’s kind of how you have to handle it. You know how we answer a lot of questions with, “It depends.” This is a really it depends like it’s very heavily that your call, your risk tolerance, and how much you stand to lose. Thanks for the question, Aaron. I’m glad you wrote in to clarify that.

[03:07] So I want to announce the launch of my new podcast. It is called Zen Founder, and it’s myself and my wife. She’s a clinical psychologist. It’s at zenfounder.com. We have links there to get into iTunes and subscribe to email and such. We have four episodes live right now. One is called “Three Strategies for Staying Sane While Starting Up.” And then we have one all about retreats where we outlined how we’d structure our retreats because she’s kind of the one that got me started with annual retreats. We have one about procrastination. And then we actually interviewed Greg Baugues who did this talk at BOS about depression and developers.

[03:44] So kind of a gist of the whole podcast is like staying sane while starting up and it’s how to balance startup family and life. And so we plan to put out an episode every Wednesday morning. So if you like this show and you like the mental aspects of getting all this going, I think Zen Founder will be a good fit for you.

[04:04] Mike: Very cool. I’m looking forward to it. Something else related to MicroConf is that we’re in the process of looking for sponsors for MicroConf. So, if you’re interested in sponsoring MicroConf or if you know of somebody who is, feel free to drop us an email. You can send it to sponsors@microconf.com. We also have a pool of tickets set aside specifically for sponsors. Our expectation is that when people sponsor the event, they will be coming. And we do make tickets available for those sponsors. It’s not a huge pool of tickets, but there are some available for them. And so if you’re interested and weren’t able to get a ticket, you could also sponsor the conference and you’ll be able to get a ticket in that way.

[04:39] So when you’re sponsoring MicroConf, MicroConf sponsorship started about $1500 and they go about to about $6000 for the kind of top-tiered sponsorship. And depending on what level of sponsorship you sponsor the conference at, you get more tickets. So for example, the community sponsorship at $1500, you get one ticket with the master plan, the $6000 sponsorship that comes with four tickets. But one of the things that sponsoring MicroConf does for you is that it gives you additional publicity for the conference. We do call out our sponsors at the conference. We include information from the sponsors on the USB drives. We include information about the sponsors to the attendees. There are links back from the website over to the sponsors’ websites. And essentially, we will work with you to try and figure out what other ways we can be creative to help the sponsors get additional publicity and meet their goals from the sponsorship. So again that’s sponsors@microconf.com if anyone’s interested.

[05:34] Rob: So we’ve received a lot of feedback about the possibility of diving into more technical topics. And overall, it looks like there are a lot more downvotes than upvotes on doing that. But what’s interesting is the few upvotes have kind of said, “Yes, I’d like to hear more about technical topics.” But then they’ll say something that’s not really a technical topic. So it’s maybe the bare minimum you need to know about hosting a SaaS app or topics that are – I mean they’re semi-technical, but it’s not like digging into the nitty-gritty like a developer podcast would do.

So maybe we may want to look at doing one show where we kind of walk through because we’ve had several suggestions on some specifics of how to do that and to kind of make it non-technical founder friendly or at least just give it like a founder’s point of view, right? You don’t need to be at such detail to know everything about it, but as an example like I know that we use Honeybadger which is from Benjamin Curtis. And we use that with Drip and HitTail, and it shows us all of our errors.

[06:29] Now, I couldn’t show you every point of integration that we use or how Honeybadger gets our info, but I don’t think that’s what people need to know, right? I think people might just need to know, “Hey, if you’re going to be launching something, you have to have a way to capture your errors in a way that you can dig into them and then talk about at a perspective of here are a few services that do it rather than the nitty-gritty nuts and bolts to have to do it all.”

[06:50] So in today’s show, we’re going to be talking about whether a non-technical founder should learn to code. And this is actually spurred on by a question that I received via email from a friend of mine. And unfortunately, I didn’t get his permission in advance to use his name. So let’s just call him John for the sake of this. But he says, “I’ve got solid marketing chops, but there’s a part of me that wants to get in on the SaaS action. If I was going to get into software and wanted to bootstrap it, would it be worth learning to code myself? And if the answer is yes, where would I start?” So we seemed to have three questions going on here. The first is talking about starting a SaaS app at all. The second is, is it worth learning to code if I’m going to do that? And the third is where you would start if you were going to move forward with that.

[07:32] So let’s start off with the first topic here. John had asked, “I’ve got solid marketing chops, but there’s a part of me that wants to get in on the SaaS action.” And I have some thoughts on just that statement which isn’t even really part of his question. It’s kind of setting the stage. But it comes back to what we said a couple of episodes ago in episode 222 where we talked about the stair-step approach to launching products. I’m concerned with the idea of being a non-technical founder and jumping directly into launching SaaS. And I’m actually concerned about a technical founder doing it as well but for different reasons.

[08:05] So a technical founder is probably going to know how to build the SaaS, but they’re not going to know how to market it because marketing a SaaS app is more complicated than say marketing a WordPress plugin because it’s a multi-channel. It’s more expensive. It’s recurring. There’s a lot of complexity there. A non-technical founder may know how to market a SaaS app because they’re able to handle the multiple channels. They have that tool belt. But purely getting one built is maybe ten times more complicated. And be supporting it ongoing in terms of the hosting and the error stuff, all the stuff we’ve kind of talked about it already and scaling it for a non-technical founder is going to be a real challenge. So I think if you’re non-technical, you haven’t learned to code, or you’re considering, I wouldn’t try to jump to that third step just yet. And if you don’t know what I’m talking about, go back and listen to episode 222. It’s just two episodes weeks ago and we talked through kind of the progression that I think is best both for technical and non-technical aspiring software founders.

[09:01] Mike: I also think there’s a big difference between a SaaS app that’s simple versus one that is a lot more complicated. And I mean you’re kind of a prime example of this where you’ve got HitTail and Drip where HitTail is very – I don’t want to call it a simple app. But the concept behind it is the valuable proposition is very simple to explain. And the application itself has a lot less code than something like Drip does. There’s a very big difference between trying to sell something like HitTail versus trying to sell something like Drip where Drip has a lot more complexity to it not just in the application, but in all the marketing that goes behind it. And that makes it a lot more difficult to sell. And it’s not to say it’s not worth it or that it ultimately won’t be able to overcome those hurdles because obviously you’re making it work. But at the same time if you’re jumping right to that level 3 as you call it from episode 222 that makes it much more difficult to do that versus doing a much more simplistic SaaS app like HitTail. And I’ve actually heard a lot of people who are going after this very, very tiny niches where the only thing that the app does is keeps track of what people are doing. And I’ve done this and a half dozen other clones of that type of technology where all it does is send you an email every day. You reply to it, and it aggregates those things and then sends out an email as a team. And something like that is much more simplistic than something like Drip.

[10:21] Rob: Yeah. I think I’m torn on this one because even if you have a single feature kind of a simpler SaaS app, I guess if it doesn’t need to scale and it doesn’t have a lot of real time interactions with websites like a JavaScript you install because all those things just make it – they just make it so much harder. If you have a SaaS app let’s say helping someone edit an image or it’s helping someone build an invoice and it really is kind of a CRUD app, create, read, update, and delete. It’s just doing things in and out of a database and it’s not getting pounded by customer requests or API requests. Then it is simpler. And if it was only five pages inside plus settings or something, maybe, maybe you could convince me that if you have marketing chops and you know how to market it that you could start with that. But the problem is it’s hard to know until you’re in it how complex the app is going to need to be. It’s like there is this range of complexity and getting started in SaaS. And I think if you’re going to do it as a non-technical founder, you need to definitely start on the simpler side. But frankly, my recommendation would be even to start with one time sales. Get a WordPress plugin out there, Magento add-on. And start getting a couple of thousand bucks a month to kind of learn the ropes and learn how to support it and that kind of stuff first.

[11:33] Mike: The other thing just doing what you just recommended is that essentially what that does is it allows you to figure out what it is that people really want before you’re going through that process of building all of that stuff. I’m technical and my inclination would be to sit there and write the code and show it to somebody and say, “Is this what you want or do I need to tweak it a little bit,” versus someone who’s non-technical who has to do that first and kind of describe it and then take that and then translate into software. And you’re going to have to do it through an intermediary. And I think that that forces you to not only figure it out a little bit better, but also learn how to communicate it because you’re going to have to not only communicate it back to the person who’s explaining it to you, but then you’ll have to turn around and communicate it to the developer because they’re the ones who are building it. You’re going to become very good at that communication process.

[12:24] Rob: Right. And if you look at say building a WordPress plugin, I mean you could get a plugin built in a few weeks, maybe a month, that solves a pretty reasonable problem for a lot of people. There’s no chance you’re going to do that with a SaaS app. There’s a lot of low-hanging fruit that has been taken out of the SaaS market. Certainly, there are still small apps that you could launch and make a few bucks here and there. It’s not as easy as it was. I think that there’s more long-term sustainability moving into that more complex range of SaaS. I think the other thing we haven’t even brought up is human automation. Can you use human automation to do it temporarily? Meaning you’re a non-technical founder. Don’t go try to build any software. That’s the mistake that all the technical founders do. Don’t build anything. Find a pain point. Figure out how to solve it without writing a line of code. So you hire some VAs. You do it yourself manually. Instead of having a fancy SaaS interface, it’s all done with Excel spreadsheets over email. And can you do that via human automation for five paying clients? Figure out all the ins and outs of it. And then you know exactly what the software needs to do, and you can build it one piece at a time. And that makes it so much easier coming back to the translation process that you were talking about where you’re going to have to talk to a customer. Try to figure out what they need. Try to turn it into a requirement. Then try to communicate that to a developer when you’re not a developer. That’s a tough process to do. The odds of you getting that right the first time are almost nil. Whereas using human automation if you have some folks that are cranking up these reports and you’re getting feedback. You’re iterating on those reports very quickly because it’s just a different way to prepare the same report. That’s the kind of thing you can iterate on fast. And then you have so much more intimate knowledge that you can use to basically this is exactly what we’re trying to do. We’re trying to take this process and turn it into code.

[14:15] So then this brings us to the second part of Johns’ question. He says, “If I was going to get into software and I wanted to bootstrap it, would it be worth learning to code myself?”

[14:25] Mike: I think that generally speaking, trying to learn to code if you’re the non-technical person and you’ve got solid marketing chops is not necessarily the way that I would go about it. There is a little bit of a caveat to that. And I think that if you’re bootstrapping it, and again, this is the difference between bootstrapping and self-funding where self-funding you are funding the development of the products from previous things that you’ve done or from your own salary versus bootstrapping whereas you’re building it from scratch yourself. I think that if you’re going to do that and you’re going to bootstrap it, then you need to at least learn a little bit about coding. That’s not to say you need to learn a lot. You don’t need to necessarily build the entire application. But you’ll also need to be able to learn enough about how to code to be able to ask the right questions and to be able to see if somebody who’s working for you knows what they’re doing. And again, it’s a lot easier in most cases to read well-written code than it is to build it from scratch.

[15:21] And as a non-technical person coming in and you know the basics of code, if you can read their code and understand it and it makes sense, then that’s probably a really good sign especially if they’re putting in on all the comments. They’re following the processes and stuff that you’re putting in place. That will help you do that. So you do want to learn at least a little bit about code. Do you need to become an expert in it? Absolutely not. And again especially if you have those marketing chops that you’ve kind of said that you already have.

[15:50] Rob: Yeah. When I think about timelines for doing this from a standing stop how long would it take you to learn how to write software and be able to build a production X, where X — let’s say it’s a WordPress plugin or X is a SaaS app. And I think if you’ve never coded in your life that to learn enough PHP and server setup and the development environment, I mean there are so many concepts, HTML, even just all markup and CSS and that kind of stuff. I think that if you basically invested full time from a standing stop that maybe you could have a WordPress plugin out in three months.

[16:30] But I think it depends on your aptitude and how much you enjoy it. And I think it might take four or five months to get to the point where you release something reasonable that solves an actual pain point for people. Not just the Hello World thing or a minimal little WordPress plugin. But there are so many paradigms you have to get around. And if you’re trying to build a SaaS app, I can’t imagine it. You have to get something out in less than 9 to 12 months. And that’s really not doing much else. I’ve tried to do teach a few friends and colleagues how to code and train people from zero. And I always forget just how many things or how many steps there are that it’s not as simple as just learning a syntax. It’s not as simple as learning Excel where you could get in, you typed in some things in there. There are so many moving parts now with JavaScript and HTML and CSS and the actual back-end language and then learning the database. Remember those early days where you would kill six hours just trying to get your code to connect to a database. And it was some simple error. You have a semicolon instead of a colon. That kind of stuff doesn’t really happen anymore once you’ve been developing for years. But early on that’s like every day. So you lose entire days to these pretty simple things. I mean if you think about it that time frame like ask yourself. “Is that what I want to be doing for these next 3 to 12 months just to get to this point?”

[17:47] I think there are three types of people in terms of coding. There are people who hate it. There are people who do it, but they put up with it. I mean they don’t love it. And then there’s just the people who is their brain. It works exactly how their brain works. I’m in the latter group like I love writing codes. I actually get an endorphin rush from building a class and having the polymorphism work. And then the first times it appears on the screen, it rocks my world. You need to figure out which type of person you are because if you hate it, then you shouldn’t learn to code at all. If you can up with it, you should learn to code enough to be able to hire someone as you said. And if you love it, then it’s debatable, right? If you love it, should you put in the year to kind of get decent at it and the two to three years to become really, really good at it? Well, I don’t know. That’s a question you need to ask yourself in terms of where you want to go with your life.

[18:33] Mike: You know your comments about running into very simple things that take you six hours to figure out what the problem was. It brings me back to some of those where I did run into those problems. And running into those circumstances, they can be a huge, huge time sink and they are not productive at all. They actually make you start to hate what you’re doing.

[18:55] Rob: Yeah, a quick anecdote. I was teaching my son who’s eight now. But when he was seven, I wanted to start to teach him how to code. And so I was thinking he’s going to need to build games like mobile games like drag and drop and blah blah blah. And I had him start with codecademy.com. And it was basically some simple like HTML and CSS stuff that I was thinking this is going to be so boring and there were some Python as well. And the first time he did like print Hello World or What’s your Name. And then he replies with Hello, Your Name, it puts your name in there. I just thought he’d be really bored with it. But it totally fired off the endorphin. I could see it and he got really excited. And I found this kid is done for like he’s going to be a programmer because he loved just the whole mechanism. He was fascinated with the mechanism of how it worked. Whereas I showed that – when I was younger, I remember showing it to my mom as I was learning to code. And she just had really no interest in it like it just didn’t click with her mind. I think that’s to kind of illustrate what it’s like for people who don’t necessarily have an interest in code and those who it really works for.

[19:55] So I think to round this out, the third part of his question is if the answer is that I should learn to code where would I start. And the good part is there is this enormous push in the world today to teach people how to code. So that means there’s a lot of options out there for you. The answer I’m giving these days because I’m asked this question twice a week now. The answer I give these days is codecademy.com. It’s code and then cademy. It’s codecademy. That’s actually a different site. But codecademy.com is free. You can learn a ton of back-end web languages, HTML, CSS, JavaScript. And frankly, all things being equal, if you want to be in the web world especially if you’re thinking about maybe doing a WordPress plugin, I would start in codecademy. I would start with HTML and CSS, and then I would learn PHP. And I would kind of use this experience to figure out what type of person you are. You can move at your own pace. It’s free. It’s a nice ease into it. And there are several advantages of learning PHP versus something like maybe if you’re going to be a lifelong programmer and you’re going to build web apps and build startups, I’d say learn Ruby or Python. But if you’re kind of going to dabble in it and you want to learn just enough, I would lean towards encouraging people to do PHP. And there’s a number of reasons for that. The first is it’s pretty easy to learn like PHP is actually pretty simple language. It’s come a long way. I feel like Ruby and Python are there’s a bigger learning curve and there’s more technologies involved if you’re going to pick it up.

[21:19] Mike: I think there’s also lots more resources for PHP for people. But it seems like when you’re looking around and you’re trying to find just how do I write PHP, there are tons of examples all over the place. And anywhere you turn like if you have a particular question about PHP, there’s usually more than one way to do it. But there seems like there’s like one straightforward way to do it versus something like Ruby and Python where because they touch on a bunch of different technologies, the answer tends to depend a little bit on what it is that you’re trying to do. There’s a little bit more complexity to Ruby and Python just because of the fact that there are additional I’ll say abstract frameworks that you kind of have to keep in mind. There’s conventions that you have to keep in mind. And if you’re not the type of person who is going to look at that and look at it in a more abstract fashion, then PHP is going to be a lot more straightforward versus something like Ruby or Python. And it’s not to say anything about power or efficiency or anything like that. It’s if you’re coming at it from a strictly non-technical point of view. PHP is going to be more straightforward to understand because you don’t need to know anything about some abstract framework that’s going to be make assumptions about how stuff works.

[22:26] Rob: I think another advantage is that it powers WordPress, Drupla, Joomla, Magento. These are great plugin and theme ecosystems. And so if you do learn PHP, then you’ll know enough to be able to participate in those and be able to kind of hack some code there.

[22:43] Mike: Another advantage is that PHP developers can be found all over the world. And they tend to be a lot cheaper than Ruby or Python developers especially when you start trying to find experienced ones. And part of that is just the factor of PHP being around for so much longer.

[22:58] Rob: Yeah. You know it was a kind of a hobby language early on. It came up in kind of a different form. And so there’s a lot of introductory stuff that makes it easier to learn. If you’re going to go this route and you do want to learn how to do PHP and go kind of the plugin route and work your way up, like I said, I’d start with codecademy to figure out if this is something you want to do and take all the HTML, CSS, JavaScript, and PHP stuff. And then the site that I’ve heard and it’s actually recommended by Chris Lima, which tells me that it’s good. It’s a paid for site and it’s pippinsplugins.com. And I’ve heard him from several of the WordPress folks that I know that Pippin knows what he’s talking about. And he has several production plugins in the store and he just has a great kind of framework idea and it’s super cheap to get into this. It’s a monthly fee of under $10 a month. So it’s a no-brainer. So specifically, once you have a kind of some basic PHP knowledge to dive into it, it’s specifically for plugins because you can go anywhere. You can go to Udemy and you can get courses on how to build just PHP database-driven websites, right? But you kind of want to start focusing pretty early on. It’s like am I going to build a WordPress plugin? Am I going to build a SaaS app? Am I going to build just a website and to really dive into that early?

[24:10] There’s also a teamtreehouse.com, and they have PHP web app course if you kind of want to go that direction. If you’re listening to this and you’re thinking there’s no way I want to do PHP. I know that kind of go into Ruby approach, Ruby on Rails approaches for me. And I’m going to jump straight to SaaS app because you realize if you learn Ruby, then you’re not going to be able to do the kind of the WordPress plugin approach. But if you decide if you’re convinced that’s where you want to go, the path I would see taking is starting with codecademy.com and doing much of the similar stuff, HTML, CSS, JavaScript, and then doing all the Ruby courses. And then onemonth.com is a nice introductory course to Rails, and it’s pretty cheap. It’s a one-time fee. I think it’s $50 or $100. And then gotealeaf.com, there’s some really good Ruby on Rails stuff. Go Tealeaf sponsored MicroConf a couple of years ago. I’ve heard a lot of good things about their course. And it’s definitely more advanced, more in depth than onemonth.com, a little more expensive as well. But I think you’ll come out of that with some pretty solid Ruby on Rails skills.

[25:10] This is the path that I’ve been meaning personally to go down since I basically started having all of our apps done in Rails because both HitTail and Drip now are completely in Ruby on Rails. And I know just enough Ruby to be able to kind of maybe read some of it, right, and I couldn’t code it at all. And this is the path that I have set out for myself when I have time. And that’s I think which you might find as an non-technical founder is that if you do this upfront, it will help you be able to hire and manage people. If you try to learn it well enough to actually build or produce SaaS app, it’s going to take a really long time, a year or more. And if you push this off and you try do it while you’re building the SaaS app while someone else is building, you may run out of time to do it, which is the situation I found myself in.

[25:52] Mike: Yeah. I think there’s a couple of differences I want to point out between something like codecademy and One Month versus Go Tealeaf. And that’s that codecademy and One Month are both more self-paced instruction. So you’re essentially going through them. It’s generally free, but you have to essentially teach yourself versus Go Tealeaf. It’s paid, but there’s an instruction there to help you. So depending on the type of person you are, you might want to lean towards one versus the other. But if you’re under a time crunch or you don’t necessarily do well with setting your own deadlines, for example, which may be a problem in and of itself later on when you’re trying to launch the SaaS app. But if you’re going to much better with an external company setting that deadline for you and setting that course schedule, something like Tealeaf is going to be a much better preparation for you because they have a set course schedule and an outline. And it only lasts for so long and you have to show up and you have to do the work. So it’s not like the other ones where you can push it off and push it off and push it off. Then eventually you still haven’t learned anything.

[26:56] Rob: You know, Mike, there are a lot more topics surrounding this to discuss. Kind of the next step is OK so I’ve done all that. Now what like how do I hire a developer? There’s thoughts of like OK. I’ve hired a developer. How do I spec this thing out? Do I try to do the waterfall approach? Do I try to do more of an iterative approach? I think there’s couple of different topics there. And if you’re listening to this and you’re interested in hearing about either one of those or both, hit us up on Twitter. I’m @robwalling and Mike is @singlefounder. Let us know what you’re interested in hearing about along these lines.

[27:26] Mike: If you have a question for us, you can call it into our voicemail number, 1-888-801-9690 or email it to us at questions@startupsfortherestofus.com. Our theme music is an excerpt from “We’re Outta Control” by Moot used under Creative Commons. Subscribe to us 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.

Startups For the Rest of Us

Episode 223 | What to do when your partner quits, defining success and charging more for a self-hosted app

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[00:00] Mike: This is Startups for the Rest of Us, episode 223.

[00:02] Music

[00:08] Mike: 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.

[00:16] Rob: And I’m Rob.

[00:17] Mike: 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?

[00:21] Rob: You know, a lot is going on. Things are moving quickly. Growth is kicking in for me again, and it feels good to be past that first part of the year. I have a couple more books I want to talk about. The first book is called “Innovators” and it is written by Walter Isaacson, and he’s the guy that wrote the Steve Jobs biography, the definitive guide, and he has written several other biographies, a very, very good writer. I love his journalistic approach. I recommend Innovators if you want to hear the history of computers, dating all the way back to the 1700’s, and then he walks through how each group influenced the next group so it’s fascinating. You know, again, it’s not going to help you launch your startup or anything but it’s a really cool story. I actually had to fast forward the Steve Jobs era and the Microsoft era, because I’ve read so many books about those specific time frames that it wasn’t interesting. I’d heard it all before, but I did like the way he tied that together with the whole computer age of basically the 1940’s to the present. So if you haven’t checked it out I would recommend that book.

[01:22] Mike: We got an email in from Phillip Dirkson and he says, “Hi Rob and Mike. As you mentioned in the last episode on the “Stair Step Approach” launching multiple WordPress plugins over the years has allowed me to finally quit my nine-to-five gig and go with this full time. It’s been a long and gradual process. Podcast listener since episode number one, four-and-a-half years in the academy, four micro confs and two and a half years since my first paid plugin launch. But I finally got there. I can’t thank you enough for the guidance during this journey over the years.”

[01:46] Rob: Yeah, awesome. Phil has been to every micro conf we’ve had in Vegas, and he’s actually here in Fresno and, so he and I hang out now and again. So it’s really cool to see him go on this entrepreneurial journey and eventually hit that point where he’s been striving for, right? It’s what we’re all looking for, the ability to quit our jobs. So a hearty congratulations to Phil.

[02:07] Mike: So I went to “Big Snow Tiny Conf” last week. It’s put on by Brian Casel and Brad Touesnard. Brad is out of Canada, and Brian is out of Connecticut. So what they do is they put on this conference. It’s a twelve-person conference, but they basically just rent out this house, a bunch of people show up and they are all entrepreneurs and looking to build businesses. And we went out on the slopes for several hours each day, and then talked business into the wee hours of the morning. So it was a lot of fun. It was really interesting, and there were a lot of great stories there and I’m going to be keeping in touch with a bunch of guys.

[02:40] Rob: That sounds cool. It’s really nice to have those small venues where everybody can really bond and it’s not a big room of people. So the other book I wanted to talk about today, it’s called “Essentialism” and the subtitle is “The Disciplined Pursuit of Less”. And in essence the author goes into talking about how to make choices and where to spend your precious time and energy instead of giving others the implicit permission to choose for you. I highly, highly recommend this book if you have not read it. Even if you are already into saying no a lot and being aggressive about your own time, and about not letting other people make choices for you and put things on your calendar. A lot was reinforced for me, and I think I may go back and listen to it a second time. I took some notes, about half of it, sixty to seventy percent of it, I’m already doing. But there were some edge cases that this author goes into and I think it’s a very powerful look at how you can be in control of all aspects of your life; your personal, your professional, your family. Yeah, I was really impacted by this book and I think you should check it out.

[03:45] Mike: Very cool. So what we’re going to be doing today is we’re going to be going through a bunch of listener questions that have come in. Last month when we put out a call for new podcast episodes we also caught an influx of questions as well. So what we’re going to do is we’re going to go through some of those. And the first one comes in from Greg Millett and he says, “Hi. I need some advice. I worked on a product with a partner. He’s the main expert with the product idea, and is also the sales person with contacts. I’m the developer. Our plan was I would build the product and he would sell it. Now as you might expect this was a huge mistake and a sad story follows. I worked three hundred hours on the product. Initially my partner was proving valuable. He even secured an initial customer. Then he got too busy and I’ve basically not heard from him since. This leaves me with a working product I can’t push forward. He has the contacts, he knows the audience. Without him I can’t find customers or be as convincing. So my question is this: Do you think I can learn enough about the audience to be effective at marketing it? The only thing I’ve tried unsuccessfully so far is messaging potentially interested people on LinkedIn. How would you approach gaining a foothold with an audience that you don’t know well? I’d hate to let the product go since I’ve put so much work into it. Thanks.”

[04:44] Rob: So, to begin, I think if you’re listening to this it’s obviously very painful to hear, because I can imagine being in this situation, and it sucks to have invested three hundred hours of time and then not be able to yield the benefit of that. If you’re going to go into a partnership like this, my biggest piece of advice is to have that partner be working the same amount of hours that you are on the product. Because this stuff happens, where you frontload it, and then the other person backs out. But if they’ve also sunk three hundred hours into it then they have the same sunk cost and they will be less likely to do it. So that’s kind of my advice, not for Greg’s specific question, but if you’re going to go into this the other person should be selling as much as you are. And there shouldn’t have been one initial customer. There should have been ten or twenty that are lined up. Now I know that takes a lot of work, but that would’ve insured — it would’ve been really quickly noticeable after maybe a month or two, if his partner wasn’t doing it, and then Greg could’ve stopped. But the fact that his partner bailed on him wasn’t noticed until everything was done and the software was there. To step forward and answer Greg’s actual question, the question is, “Do you think I can learn enough about the audience to be effective at marketing to it?” And the answer is yes. The question is do you want to, and do you have the motivation to do that. I mean, I think that’s the bottom line. If it interests you enough that you want to spend the next three to five years learning this market, learning who they are and how to market to them, then absolutely. I think you can definitely learn enough about a market. The question is do you have the motivation to stick with it?

[06:13] Mike: I think there are two things that strikes me that specifically came out of what he said, and the exact line is, “without him I cannot find customers or be as convincing.” I think it might be a fallacy to think that you can’t find the customers, but I think you can definitely learn to be convincing. As Rob said, it boils down to whether or not you want to. In terms of “cannot find customers”, the only thing that you’ve tried so far is messaging people on LinkedIn. There are probably a number of different other ways that you can try and find customers. There’s tons of different ways you that can try to do that. But. you know. we’ve talked about a bunch of them on the podcast. I mean there’s SEO, outbound emails, cold calls, all kinds of different things. But as Rob said “it just boils down to whether or not you want to.” One thing I would also keep in mind is that it may be possible to sell this product, but you might not be the right person for it. So it may very well be a good product and a viable product but are you the right person to do it? And I can’t answer that, that’s something that you’re going to have to answer yourself.

[07:14] Rob: Also, he could potentially look for another partner in this space. Because it does seem like finding a developer is always the hard part right? When a marketing guy wants to find the developer, or the sales person wants to find the developer, going the other way I imagine you could have some luck if you come and say look, “I built this whole product. Here’s the situation. Do you want to come on as a partner?” I think that’s another option to consider.

[07:35] Mike: Yeah, I mean a lot of it boils down to whether or not it’s actually solving a real problem, because otherwise you’re back to the position – where a lot of developers find themselves in – where they built a product and then they go to find a market for it, and it almost seems like this product was built and initially there was some collaboration and then suddenly that collaboration went away and you end up in a position not by design or anything but you don’t have the customers lined up that you were going to go after. So Greg, I hope that answers your question and good luck. Keep us posted on how things go.

[08:07] Our next questions comes in from Anders and he says, “Hi Mike. I saw a tweet from Patio11 and I thought it would be a good question for you too so here goes. What is success? How do you define it and how do you know when you are successful?” Anders I think is a really good question. I think that when you are trying to define success for yourself it’s a matter of what your long term life goals are. So, for some people they go out and they try to build a business, and they go out and get funding and hopefully are shooting for that hundred million dollar exit. And there are some people that that is what is important for them, and that is going to signify success. I think in the circles that Rob and I travel in, and a lot of the people who listen to this podcast, having a hundred million dollars is not necessarily the definition of success, although it is a marker of success. I think that in many cases, especially for me, success to me means that I have the ability to make decisions about how I spend my time in a way that makes me happy. If you’ve ever been in a position where you had a full time job, and you were essentially going through the motions because you hated it so much you just showed up because it gave you a paycheck, and that was the sole reason why you showed up, is because you’ve got a wife and kids and family and you’ve got to support them. So you go to work every day and you get that paycheck, and you do what it takes to get it. But if you’re lucky enough to be in a position where you don’t have to go through that and you actually enjoy what you do – to me that’s success.

[09:33] Rob: I like that. For me I have these three parts that I’ve distilled it down to. And actually I took part of this from the “Internet Business Mastery Guide”, it was an episode I heard years ago. It really struck me and I wrote it down in a notebook. But in essence for me being successful for me requires three things to be in place. The first is freedom, the second is purpose, and the third is relationships. So freedom is basically being in control of my head space and being able to work on what I want, and when I want – so that I don’t have a salary gig. I don’t have a client telling me what to do. Now that’s typically the first thing that you need. So if you are working a salary gig and you don’t have the freedom and you want it, that’s all you need to focus on now, because purpose and relationships can come later but right now you need to get to freedom as quickly as possible. What I found is that once I did achieve that freedom, and I had products that were providing enough revenue that I didn’t need to work, then freedom wasn’t enough because I got bored. And that’s when you need to start thinking about purpose and relationships and so purpose can be many different things right. Purpose can be, “I just want to have as much time as possible to spend time to spend with my kids, or to homeschool my kids. or to travel full time or anything.” What is your purpose? I think that’s a deep, deep question. Like Mike said, you kind of have to ask yourself.

[10:53] I have kind of an overall purpose that’s to help other entrepreneurs, and to bring people together, and to use startups and entrepreneurship to provide a good life for as many people as possible. I have a very well-worded version of that in my notebook – that’s my purpose – but that is the gist of it. It’s to provide abundance for my family, and those around me, and those who interact with me. But every year I find that my purpose shifts a little bit, and it happens during that retreat that I take in January and so I do think that you might have slight changes in course there. And then relationships. I just don’t think a person can be happy if they don’t have relationships. It doesn’t mean you need to have a family or to be married but I think you need close friends. I think you need people that you can talk to and have a conversation with, and who know who you are. And if I had freedom and I had purpose and I was traveling the world and I had no friends and no relationships, I would be sad, and I think you would be too. So those are the three components that I believe that you need to be successful. And it’s always a balancing act because you never get there. You never arrive. You can get there and have all three of those in balance for a while, but then eventually it gets out of balance and you find that even though you think you have freedom, you’re actually working on stuff you don’t want to work on. So you have to reevaluate that, and you have to get back to it, but those are the criteria that I look at when I’m deciding if I’m successful today.

[12:10] Mike: And another question comes in from Adam Clinkett, which is very, very much related to this. So Anders’ question was “How do you define success?” and Adam asks “How do you measure success?” How do you know if you’re really succeeding? There’s a subtle difference between those, because defining success is what you ultimately want to achieve, but measuring it is sometimes a lot more difficult, because you don’t necessarily know where on that continuum of success you fall. Are you really close to meeting your goals? Or are you much further away? And sometimes there’s not a numeric value for that. Are you happy or are you sad? And it’s like, “Well, I’m a happiness level of eight out of ten.” And sometimes those are just really hard to measure. To answer Adam’s question, “How do you measure success?” I think it depends on what it is that you’re trying to achieve. Do you feel like you’re succeeding? Because you can be the poorest person in the world, but if you’re happy with what you’re doing then chances are you’re leading a successful life, and the success should be measured internally not by external factors. It’s not about how much money you make. It’s not about how many people view you as a success. It’s how do you view yourself? Do you feel like you’re succeeding? Are you happy with what you’re doing and how your life is progressing?

[13:21] Rob: Yeah, I measure success typically by looking back at the previous year. But I measure it by how much I’m enjoying what I’m doing. There are times when you’re not going to enjoy it, right? There are times when you have to work late nights, and times when you have to work too many hours in a week. There are times when you can’t be around your family or you have to do stuff that you don’t enjoy. But when I look over a longer swath of time – so maybe a ninety day period or a six month period or a one year period – that whole time should not be filled with those memories, right? It shouldn’t be filled with, “Boy that really sucked.” You know “That year really sucked.” Like I probably made a wrong turn at some point if that’s where I am. If a thirty day period really sucked, or I’m going into it and I’m saying “This is going to be hard for the next sixty days, then when I come out of that of course it’s going to feel bad. But over the longer term I measure success with that freedom, purpose, relationship stuff. But you have to do a rolling average, rather than look at it every day, because some days are going to be better than others. There’s like micro and macro, to be honest, because if I’m working on a single business – let’s say I’m trying to grow Drip – then my success metric tends to be month over recurring revenue growth. And I think that’s pretty easy to measure. And then you step back and it’s like, “What is your life success metric?” And that’s the criteria that Mike and I talked about earlier. So I think it depends on what scope you’re looking at when you do ask about success.

[14:41] Mike: So thanks for the question Adam. Our next one comes from Calin Jordan. And Calin asks “When should a bootstrapper get insurance?” And second question is, “How much time and resources should you put into security?” Good questions. When should a bootstrapper get insurance? I think the answer to that is when you have enough to lose that the likelihood of a bad event happening is getting more and more likely to the point that it makes sense to get that insurance. I know that talks probably around the issue a little bit, but let me throw together a couple of examples. If you’re making, let’s say, a thousand dollars a month from an app, the chances are good that going out and getting a ton of insurance for that is probably not wise. But if it’s your full time employment and you’re making, say, ten thousand dollars a month from it, it probably makes sense to go out and get some kind of insurance, especially if you’re touching other people’s machines or you could negatively impact their business or lose their data. Those are the cases when you might want to start looking at it, but there are businesses out there that operate with no insurance for years and years at a time, and they don’t get insurance until after they’re five or ten years into it. There are some businesses who never get insurance. The purpose of insurance is if something happens then they will cover it or at least cover some of the damages. And this comes down to risk. Are you comfortable taking that risk? How likely is it that something bad is going to happen? [16:06] Onto your second question, “How much time and resources should you put into security?” This ties back a little bit to the insurance. I think you definitely want to do the bare minimums in terms of making sure that people’s data is secure. So that doesn’t necessarily mean you go in and encrypt all of the user data. There are certainly cases where that makes sense, if you’re dealing with any sort of personal or private health insurance information, or anything like that. Or credit card numbers which you probably shouldn’t be storing anyway, those are the things that I would probably keep in mind but the reality is that you want to put time and effort into security when it makes sense, and it won’t make sense until after you have something to protect. If you’re spending a lot of time building a product, and building all this security mechanisms into a product when for the product itself it doesn’t matter, and people aren’t paying you for it yet, then you’re focusing on the wrong thing. You’re doing optimizations for something that it may not matter in three or four months because you may have very well ended up shutting it down because people are not buying the product.

[17:03] Rob: This is a tough one, it’s kind of like “I’ll know it when I see it.” You spend the minimal amount of time possible to feel confident that you don’t have any gaping holes or don’t have any holes as much as possible that you’ve locked stuff down. There are best practices, and you can of course dive in and try and do credit card or bank level security on everything and, like you said, it’s premature optimization. So you kind of don’t want to do that unless you do have social security numbers or really, really important critical information. But then there are just the best practices of web development; of salting and hashing passwords, and of having all your ports closed, and not allowing or using multiple passwords and having strong passwords for everything. That’s the kind of stuff where that’s the accepted best practice and that’s as far as I would go today.

[17:52] Mike: Yeah, there’s companies out there that have billions of dollars at their disposal and they still get hacked. You look at companies like Adobe and Home Depot. These companies have billions of dollars at their disposal and large security teams, and they still lose data and they still get hacked. The reality is that if someone is actively targeting you there is absolutely nothing you’re going to be able to do to stop them. They will get your data if they want it.

[18:16] Our next one comes in from Kevin Taylor and he says, “Hi Rob and Mike. I’m a long time listener and fan of your podcast and a lifetime member of the Micropreneur Academy. Keep up the good work. I’d be interested to know how you’re planning to deal with the EU VAT rules?”

[18:28] Rob: Yes there were some EU VAT rules that were passed. The interesting thing is if you’re in the U.S. nothing changed for us. This only impacts people who are in the EU. And if you’re in the EU then you need to research this because it’s not trivial, right? It makes things vastly more complicated. Obviously we don’t give advice, either way, on if you should be paying this or not. But if you haven’t, and you continue to not, then really nothing changed with this law. It only impacts EU based businesses.

[18:55] Mike: Yeah, the thing I would point out is that, because we’re based in the US and this is a tax law it does make it pretty difficult for us to answer or give specific advice. What I’m going to do is I’m going to post a link in the show notes to www.EnterpriseNation.com. They have a “Five Steps to VATMOSS” infographic that you can take a look at, which kind of walks you through whether or not you need to register, the dates that you have to register by, and additional information about it. It’s pretty high level, but it’s at least a starting point. And again we’re not CPA’s, we’re not attorneys, we can’t give specific advice along those lines, but we can kind of point you in the right direction in terms of helping you find the information you need. So Kevin I hope that helps out.

[19:36] Our next question comes in from Chris Willow and he says, “Hey guys. I have a software product in the SEO niche with two options: self-hosted or hosted. This is cheap for bigger SEO shops who get a lot of value from the app, so I’d like to charge them more for self-hosting. Say I add pricing tiers based on the number of clients they have, which is common for SAAS apps? The problem is there is no real reason for limiting a self-hosted app besides getting more money, so it could be hard to explain why we’re doing this. What’s your take on pricing plans for self-hosted apps, and does it even make sense to add limitations? Thanks, Chris.” I think in my mind it does. If you take a look at just about any server based application software, there are limits on the different tiers of that product that you get based on the amount of money that you pay for. Let’s take a long-standing example of like a mail server. I remember buying a mail server software a long time ago, and if you wanted five users it would cost X dollars. If you wanted ten users it would cost X plus whatever. [20:32] So there are definitely reasons and justifications for charging people more for a product that is going to offer them more value. The trick is finding out what those tiers are. And I think what you can use is if you have your SAAS app, and you are giving them an option of some kind say for the number of web sites they are able to manage their SEO for, you can limit it based on the number of sites, or you can limit it based on the number of accounts, or the types of reports. There are lots of different ways that you can segment that customer base to figure out what is important to them, and then charge the people more who are going to fit a criteria that would fall into that bucket. So let’s say that it integrates into something like SQL Server. Well, there are different editions of SQL Server that will have advanced reporting options, and if you hook into those chances are really good that they have an advanced version of SQL Server. So you can use that as a justification that says, “Hey, if you want to hook into this it’s going to cost extra.” Because you can reasonably assume that if they were paying that much extra for that version of SQL Server then they have the money to pay more for your application.

[21:39] Rob: Yeah, I agree with Mike. Chris mentioned in his email that there is no real reason for limiting a self-hosted app besides getting more money, so it could be hard to explain why we’re doing this. I would see how it goes, personally. I think the limitation is that they are a bigger company. This has been done since the beginning of software sales, right? This is how every enterprise software sale is done. So you’ve got to see how it feels, but this is the way to maximize revenue on that. I would almost take it a step back and ask, “Why do you have self-hosted and a hosted version?” How critical is that self-hosted version? I would move toward SAAS personally, just because of the maintenance, and then this question doesn’t even need to be asked. Or if the self-hosted one provides the vast majority of revenue, then why have the SAAS version? Why not just double down on self-hosted? If you have a fifty-fifty split I’d be surprised, but I would tend to lean towards hosting infrastructure itself, so that support is so much easier. You don’t have to deal with everyone’s crazy server configurations, helping them install on their own servers, and all that stuff.

[22:33] Mike: Our next question comes in from Chad, and he says, “Hi Rob and Mike. My app, “Pint Track”, is a loyalty program tracker specifically for bars. I’m in private beta with one bar and about a thousand users right now and gearing up for a public launch next quarter. Your podcast has already given me tons of ideas for both marketing and development. Here’s my question, I’ve recently finished reading Slicing Pie by Mike Moyer. It describes a system of dynamic equity split that founders can use to compensate employees and co-founders based on work invested, rather than using static equity grants. Have you guys seen this book, and if so what do you think of the plan or of the dynamic equity splits in general? Have you ever done anything like this before and if so how did it go?”

[23:09] Rob: This is a really good question actually. I had seen the “Slicing Pie” book, I hadn’t read it. Mike and I have researched and looked at an infographic and an explanation of kind of how this split works. I’ll say a couple of things. One, this is non-standard, so it’s going to be hard to find pre-done documents that can define this. I know that, as an example, Y Combinator has released what they have called their “SAFE” documents, S A F E, it’s an acronym for something and they’ve basically released those documents. So if you’re going to do standard equity splits, where you have vesting and that kind of stuff, then you can use their documents. But if you’re going to do something funky like this then you’re really going to need to hire a lawyer. There’s no chance I can imagine you writing this up and having this working because it’s complicated. That’s the other thing is the complexity of it. If you ever wanted to raise funding, even an Angel Round, I think you might run into issues because this is non-standard. When you tend to step outside of the lines on these things you are running a bit of an experiment right? If there haven’t been hundreds or thousands of companies that have done this – much like have done the standard four year vesting with the one year cliff of stock options – you’re kind of being a “canary in the coal mine”. And so I think it’s an interesting theory. I question if I want to be the “canary in the coal mine” on something like this, because it is pretty serious. The big objection I see on the home page of Slicing Pie dot com is you and a friend go fifty-fifty on a new business, you do all the work, he still wants fifty percent for doing nothing. Now what? Well the way you tend to get around that is you tend to have stuff that vests, and if that person is not working on it then their employment ends and they don’t get the stock. And they have to work a year to get twenty-five percent, and then every month after that they get a certain percentage. So, you know, it’s interesting. I like the thought of it as a thought experiment. It does seem perhaps a little complicated. But if you showed me ten companies who had done it and it had worked for them. I’d also be curious if employees like this — because if you have folks who have worked for startups in the past then they are going to know this whole stock equity thing, that the way that everyone else does it, and I think you’re going to have to explain this to every new employee you hire because no one is going to understand it.

[25:15] Mike: I agree with Rob. I think this is an interesting way of dividing the company, and it’s an interesting way of thinking creatively about it, but I think my issue is not necessarily with what this process is, or how it looks, but how do you define when somebody is no longer working for the company, especially if it is something that people are doing on the side. Because let’s say somebody hasn’t done something for two or three months. Does that mean they are no longer working for the product or the company? How do you define that? Are there specific rules about that? Is there a minimum number of hours that they have to work? And if that’s well defined great. If it’s not, then that’s when these types of things can start to kick in. The example that’s used on their website, if you do all the work and you’ve split the company fifty-fifty with somebody, do you have to give them fifty percent of whatever the benefits are? The problem, I think with that is, when do you define that they are no longer working for the company, and no longer entitled to benefits. Part of that goes with vesting, but even with vesting you can say, “OK, well you’re going to vest after one year of being involved.” But what happens if six months in they stop being involved, and then six months later they say, “OK. now I’m fully vested.” How do you define whether or not they are still working is really the fundamental question, and I think as long as you can answer that then things like this will come into play and you can get creative about vesting options and everything else. But until that question is answered, all of this stuff is kind of immaterial.

[26:43] Our last question comes in from Tom and he says, “Hi Rob and Mike. My little software company is growing and we’re hiring our first QA Engineer. In a past episode you both spoke about the testing tools you use for your products. I wanted to know what tools you’re currently using? Thanks, and I love the podcast.”

[26:57] Rob: So I’m not sure that we’ve ever spoken about our testing tools. Did we talk about unit testing frameworks? Because I had to ask my developers, because I don’t know anymore. But we use MiniTest, using Shoulda matchers – which is a gem – and Mocha for stubbing and expectations – which is also a gem. So that’s our unit testing framework, but we don’t actually use any type of QA or automated testing tools.

[27:22] Mike: Yeah, I haven’t used anything other than unit tests to be honest. I know there are different frameworks for testing UI’s, and hooking into it so that you don’t have to code directly against the code – so you don’t have to have your code arranged in a certain way, but it’s a little bit more fragile, because if you change the UI then you have to go in and rework those tasks versus hooking directly into like MVC frameworks so that you separated out all the different components that make up the application. But all I’ve ever done, really, is just rely on unit tests, and make sure that the inputs and the outputs of various things are working properly. And then do something more of a system test, where you’re not just testing a single function, you’re testing a string of functions that are supposed to work in a certain way. And then you set up your unit test to basically make sure that that system – or that set of components – is working properly together. But that’s all we’ve ever done. I haven’t really gone into the UI testing, or anything like that. Do you guys do any UI testing – aside from the backend code itself – or do you find that the UI tends to change subtly too many times to be able to add those things in.

[28:32] Rob: Yeah, we don’t. We don’t have any automated UI stuff, because the UI changes so quickly. I mean, Drip is still in such an evolution, and we’re adding stuff constantly. I think if your product was mature, and you weren’t constantly adding new things, you could think about doing some UI click-throughs. But we have thousands of unit tests. We have very extensive test coverage for our apps that we’ve built from scratch, and that takes a lot of the burden off of it. Obviously you can have UI issues and we do manually test those, basically we do not have an automated test suite that hits the UI.

[29:02] Mike: So Tom, sorry we couldn’t be a little bit more help in that. Maybe you’ll be able to find some people at Microconf who can fill you in on what sort of things they do.

[29:09] Rob: Today’s episode was filled with listener questions. And if you have a question and would like us to answer it on air you can call our voicemail number at 888-801-9690 or email us at questions@startupsfortherestofus.com. Our theme music is an excerpt from We’re Out of Control by Moot used under Creative Commons. Subscribe to us in iTunes by searching for startups and visit www.StartupsfortheRestofUs.com for a full transcript of each episode. Thanks for listening. We’ll see you next time.

Startups For the Rest of Us

Episode 221 | Updates on HitTail, Drip, AuditShark and More

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[00:00] Mike: In this episode of “Startups for the Rest of Us”, Rob and I are going to be talking about updates for Drip, HitTail, AuditShark and more. This is Startups for the Rest of Us, Episode 221.

[00:07] Music

[00:16] Welcome to Startups for the Rest of Us, the podcast that helps developers, entrepreneurs and designers be awesome at launching software products, whether you’ve already launched your product or you’re just thinking about it. I’m Mike.

[00:24] Rob: And I’m Rob.

[00:25] Mike: We’re here to share our experiences to help you avoid the same mistakes we’ve made. What’s going on this week, Rob?

[00:29] Rob: You know, Mike, there’s nothing like that feeling of having an email queued up to send to a few thousand people at a very specific time that you’ve publicly committed to, only to have your email provider disable your account overnight, almost mistakenly. Then email them to re-enable it but you missed the window.

[00:45] Mike: Yeah

[00:48] Rob: This is the story of our MicroConf early bird launch today. I had emailed, you know, our list was a few thousand people now. I’d queued up an email, but I’d let everybody know yesterday that we’d be notifying them, and were using MailChimp to do that, because we haven’t moved everything over to Drip yet. Sure enough, when I emailed folks yesterday, I said, “If you’ve already bought your ticket, just click here to unsubscribe. Otherwise, you’ll be notified tomorrow.” We had a lot of people unsubscribe because they had already heard about it. So the MailChimp filter just clicked and in the middle of the night, disabled our account. So the big launch at noon Eastern time today winds up being, when I got it out – actually, I had to export and import into Drip. So, in essence, Drip did save the day on this one. But it happened maybe a half hour later than it should have.

[01:34] Mike: You’re probably going to catch hell from people because everything wasn’t in Drip. But we talked about that. It just wasn’t really worth the time or effort because everything’s already set up in MailChimp. It’s not like Drip costs us anything extra to use, so it wasn’t really that big a deal.

[01:47] Rob: Yes, so I think I’ll be moving it. It’s about time to move this. This is my last MailChimp account that I have. I used to have four of them. At this point, I only have this one. It’s the MicroConf/Micropreneur academy account. But it seems like it’s probably time to get everything out of there and over into Drip. But seems like everybody got the email out of Drip and it sold out. I think it sold out within 10 minutes of the email going out.

[02:09] Mike: Oh, was it?

[02:10] Rob: I think it was about 10 minutes from the time it landed in inboxes until it said “Sold Out” on EventBright, even though at that point I think there were still like eight tickets left. You had to go through and divvy those out to folks.

[02:22] Mike: Yeah, the same thing, kind of, happened last year, and that was about 20 minutes before it started locking those tickets.

[02:28] Rob: Right. This year we did more of a layered launch through, right? We went to previous attendees that kind of got a second grab at it. It was Micropreneur academy members, then it was previous attendees/last year’s attendees and then it was the early bird list. So we had fewer tickets left for the early bird list this year than we did last year. How about you? What’s going on?

[02:47] Mike: Well, you know how I’ve explained that I’ve had a couple of hard drive issues? I believe that a couple hard drives in my office are all possessed. I’ve now lost three drives in three consecutive weeks. I don’t know what’s going on.

[02:58] Rob: This is someone trying to tell you something and it’s, “Stop screwing around with hard drives, and just go to the Cloud. Don’t have a local backup. That’s crazy. Three drives.”

[03:06] Mike: I don’t have a local backup. Yes, because that’s a good idea.

[03:09] Rob: Exactly.

[03:10] Mike: I’m getting tired of it but at the same time, it’s like I wonder if this stems back to me reading the “Back Blaze Hard Drive Report” where it basically spells out and says that Seagate drives have the worst longevity among all the different manufacturers. In all of my drives, with the exception of the SSDs are Seagate drives. So I don’t know whether they took that as a hint that they need to roll over and die, but it seems to be happening.

[03:36] Rob: Yes, well you’ve heard that term “mean time between failure.” MTBF? I think it’s supposed to be an average, but maybe it’s like an exact countdown.

[03:46] Mike: Yes, it could be a countdown. Yes.

[03:48] Rob: So I’ve been reading quite a few books lately. I’ve had a little extra time in the car and such, so I’ve been listening to audiobooks. One book that I want to recommend to folks, if they haven’t already listened to it or read it, it’s called “On Writing” and it’s written by Stephen King. Whether you like his writing or not is irrelevant, the brilliant part about this book is that it’s someone who is, in essence, a genius at something, right?. He is a phenomenal writer in terms of being prolific, and getting up and shipping every day. He’s written 35 books. He’s one of the best selling authors of all time, if not purely because of the volume that he’s put out. So again, whether you like his writing or not is beside the point. But it’s listening to — the first half of the book is a memoir, and it’s interesting to hear how that influences his story. The really interesting part is the second half, and you hear his process for staying creative and for delivering, for crafting story – which of course, I use to help write MicroConf talks, and podcast episodes and blog posts. It helps kind of shift and make you think about how to create content. Then, I like his rituals and the ways that he’s kind of set things up in terms of just being able to get up every day and deliver, which most people can’t. So it’s nice because it’s a pretty quick read and it’s not super dense. So I’d recommend it if you haven’t checked it out.

[05:07] The other book I wanted to bring to people’s attention is called “Smart Cuts”. This one is good. It’s basically a list of things of kind of, how to pack your process and get things done quicker. I wanted it to be more specific, and I wanted it to be a little more new information, but it was good, better than some other business books I’ve been listening to. So they have advice like, “Here’s how to hack the ladder. Don’t go through the entire process everyone else has to do. Train with masters. Basically find a mentor. Get rapid feedback. So it’s like, iterate quickly.” These aren’t just – what’s funny is all these things come out of our world, the startup space. With growth hacking, getting mentors and iterating quickly but they’re trying to apply it more to life in general. Like, if you want to become whatever, a politician, or you want to rise through the ranks of your business, or anything like that. There’s other advice like, “Ride waves of things,” so find a wave that’s getting big, like mobile or wearables. Find people who super connect, who know a lot of other folks. Maintain momentum, that kind of stuff. So it was good advice and I took a few notes. Nothing that really rocked my world but, you know, I think it’s always a good reminder to kind of hear this kind of thing. The writing was done well. I have to kind of revisit those thoughts and think like, “Am I not doing any of these?” I’ve heard this so much, but have I really embraced the simplicity and the 10X thinking they talk about in the book?

[06:26] Mike: Yes, I think some of those things just come down to – not that they’re not good ideas – but just actually following through and implementing them. I mean, there’s so much tactical advice that you can read about and just go online and search really quickly, and probably find 50 different ways to save time or to do things more efficiently. But at the end of the day, you actually have to implement something to do it. If you don’t do it, then you’re not going to get any sort of benefit out of it. At that point, you’re just reading more for entertainment or “entre-porn” than anything else.

[06:54] I guess since we’re diving right into our updates on the different products and stuff that we’re working on. This year, what I’ve started doing is I’ve started translating some of my over reaching year-end goals into quarterly and monthly milestones, so that they’re all a little bit more front and center. We talked about this a little bit briefly, back in December, I think. Where you have these over-arching goals at the end of the year. Let’s say, for example, one of them is to add a thousand people to your mailing list. Well, if you don’t have that front and center in front of you every month or every couple of weeks, then it’s very easy for it to get pushed to the side. Then you forget about it for long periods of time and then not come back to it. Suddenly, it’s September, October, November and you’re like, “Oh, shoot, I’ve got – one of my goals was to add a thousand people to my mailing list.” What I’ve actually started doing is, I’ve taken a look at some of my – I’ll call them more numerical goals? Starting to divide them up so that I have these concrete milestones that I’m attempting to hit along the way as opposed to, “I want to do “X” by the end of the year.” It’s, “I want to do “X divided by four” within the first three months of the year,” and then continue doing that so I’m not rushing at the end of the year to try to get everything done.

[08:01] Rob: Yeah, I think that’s a really good way to do it. I think it keeps those of us who are kind of task or goal-oriented, it keeps you having more shorter term goals so you can live up to them. One challenge is if your goals are not linear, it makes it a challenge, right? Because if you say, “I want to add four thousand people to my mailing list this year,” that may not happen linearly. So, I mean, may not be a thousand per quarter. As you get toward the end of the year and your list gets bigger and you have success, you’ll start building it faster. But I still think having that goal of a thousand for that first quarter is at least something to shoot for. If you only hit 500, you know that you’re probably a little bit behind schedule and you need to maybe kick up the effort unless you see that the curve is already pointing upward for that second quarter.

[08:41] Mike: Yes, that is something that came to mind when I was putting them together. But the other side of the coin that I thought about was the fact that if you have the strategy for –- let’s say that you’re trying to get 250 people signed up in the first three months, and you’re not able to do that, you come short by a significant margin. Then what you can do is look at that and say, “Well, what I’m doing so far is not working. I need to switch strategies.” And something else may work exponentially better. So it gives you that feedback loop and those milestones to essentially take that step back to say – evaluating what it is what you’re doing right now, and is it working or not? And if it’s not working then you need to switch tactics.

[09:20] Rob: Yes, and that’s why I like the monthly breakdown, because it helps you know really quickly if you’re off course. I’ve gone, so far, with app growth. I did this with HitTail and Drip. I set a goal – like for Drip, I said I wanted it to be 2.5x – what it was in December – by the end of this year. And I know exactly — assuming all my numbers through all the peak conversion and all the numbers stay where they are — I know exactly how many trials I need every month. If I’m at or above that, it’s very likely that I will meet or exceed that goal by the end of the year. I can even back that up to unique visitors to the website as long as they’re reasonably targeted. So I know an exact number, or a pretty close to exact number, of how many need to come through, and then how many convert to trial, and then how many convert to paid, and how long they stick around, all that stuff. So I’m a big fan of having those numbers around, even if you’re not a number person and you’re not super into the analytics side of things, having a general concept of whether you’re on track – even if you’re off by 20-30%, at least you have an idea of where you are, and you have an idea that you’re off.

[10:28] Mike: You know, a question for you – I’ve started asking this of people that I’ve been talking to recently just because, you know, I’m still kind of working out what my monthly goals are for the rest of the year. When you’re putting together things like that and you’re doing goal planning and you say, “Okay, I’ve got this goal out in the future that I want to hit.” Do you work from today’s date out towards that goal? Or do you basically start at that goal and then work backwards to today to figure out the different milestones that you need to hit? I’ve heard people do it both ways. I’m curious to know how you do it.

[10:57] Rob: I do it from today and work out. The reason I do that is, to me, it’s more realistic. I know what’s going on today and I can look at numbers and then just multiply, and see where I think it will be at the end. And to be honest, that 2.5x – as a goal for Drip, as an example – is a little higher than my current growth rate. So I need to increase my growth rate, not just stay linear. But if I stay linear, it’s still a nice number by the end of the year. I find if I shoot out towards the end of the year, I might name a number that’s just really big. “I’m going to be at $100 thousand, monthly recurring revenue by the end of the year.” Then it’s like, “Whoa! you could do that.” I know some people who do it. Then when you work backwards, it’s like Holy Toledo. You really need a lot of trials. I guess that could be a really good motivator, right? You could be aspirational for that.

[11:49] Mike: I guess what I was thinking more was, you take that 2.5x and then you start backtracking from – let’s say you made out this goal of 2.5x in 12 months. You say, “Okay, that’s what my goal is.” Then you say, “Well, what is that going to look like in month 11? I’ve got four weeks to do it, where can I go from here?” You backtrack. Then you start planning October, then September and backtrack from there as opposed to just pulling a number out of the hat and saying, “That’s where I want to be.” Because that is not necessarily realistic. That’s more what I was wondering.

[12:20] Rob: Yes, that makes sense. No, so that’s the thing. I didn’t start and say, “I want to be 2.5x by the end of the year,” and then work backwards. What I said is, “Where am I now and how fast is Drip growing currently? How many trials do I think I can start driving as of January,” right? Because I was making this goal in December. I put that number in a spreadsheet and calculated it out. When I dragged everything down, by December it was at like 2x. So I said, “Okay, that’s if I continue to grow as it is now, given the traffic sources that I have. I think I can add more to that, and I’m going to shoot for 2.5x.” But by the time I get to that goal, it’s already mapped out, right? It’s in that spreadsheet of how many trials I need per month in order to get there. So I arrived at the goal by calculating forwards.

[13:05] Mike: Yes, and that’s what I was wondering, was whether you were calculating forwards or backwards. Obviously, you calculate forwards.

[13:10] Rob: Yes, and to be honest, it’s a bit more of a conservative approach, right? I mean, if you were really going after heavy growth, you probably would go out and say, “How can I 5x this thing?” You know? Or, “How can I beat 100k per month by the end of the year?” and then working backwards? That’s an interesting way to do it too, right? Then to say, “What would it take? How would I have to change the company? How many people would I need to hire? What huge marketing approaches would I need to basically triple, quadruple, the number of trials that I have by the time I get to March or April in order to hit that goal?” That’s an interesting thought experiment. I actually think it’s worth doing even if you’re not going to make that a goal. It’s definitely an interesting thought experiment. It’s kind of like asking yourself that question. “What, right now, is keeping me from 10x’ing my business? What would my business look like if I had 10 times the revenue?”

[13:58] That’s a really interesting question to think about because it will your whole mind set. It’ll shift, kind of, the marketing approaches you consider. It’ll make you realize, “Wow, I may have to hire a lot of people,” or, “I may be able to do it without hiring.” It’s just that whole thought experiment of spending a few hours of thinking like that. I think it’s a helpful thing. That’s kind of thinking backwards from the goal, like you’re saying. I think that’s helpful too. It’s just not how I tend to do my individual goals, because I want to make my end-of-year goals really achievable. But again, some might call that too conservative as well.

[14:27] Mike: I asked the question just because, typically, I’ve always done kind of the same thing that you have. Lately, I’ve started reading and doing some research on this and kind of realizing that’s not the only way to do the goal setting and goal planning. If I’m working backwards, as you said, it’s a little bit more aspirational. But what I find is that it allows you to take a look at some of the different approaches that you probably would have considered in the past, and just rule them out. Because you can look at it and say, “I’m in August or September, and I need to get here in two months. I know that this particular approach is not going to work at that point, so I’m not even going to consider that in my list of strategies. I need to do something radically different.” Maybe it doesn’t work at all, but you still need to be able to consider other options. It helps rule things out, I guess, is really what it comes down to.

[15:15] Rob: Yes, that makes sense. So I have a productivity strategy that I’ve been kind of honing over the past several months. I’ve started pushing all of my calls to one day during the week. I don’t tend to do that many calls in general but I found that it’s that maker’s schedule versus manager’s schedule thing. If you haven’t read that Paul Graham post, go to paulgraham.com and he has an article called “Maker’s Schedule vs. Manager Schedule.” It’s about being interrupted and how it’s hard to be creative when you’re getting interrupted. So I don’t have a ton of calls during the week, but I’ve started pushing all of them to Wednesdays.

[15:47] And so like, today as an example, this is my sixth call that I’ve done today. Several of them were sales calls and there were some other things mixed in there, but I’ve found that it’s really helpful to get into a flow of talking on the phone. Because I don’t like talking on the phone in particular. But I find that on these Wednesdays, I kind of gear up for it. I drink a little coffee in the morning and then the further I get in, the more I’m like, “Hey, I actually am kind of digging this whole call thing.” I get into the groove of it. But any other time during the week – like if the calls interrupt my day – I’m totally never getting into the flow of it. So if you’re able to control your schedule a bit, and are able to keep your calls to a single day, it might be something for you to try, especially if you don’t particularly enjoy being interrupted or talking on the phone.

[16:29] Mike: Yeah, I find that grouping similar tasks like that together is a lot easier. It’s almost like, you know, when doing sales calls and things like that. If you just put it all into one block of time, it makes it easier to – I’ll say, be flexible during that time and not have to worry about, “Oh, I have to go back over here and tweak this marketing copy.” Then you’re kind of mentally context-switching between doing a phone call and then have to go back to marketing copy. Then you switch over to something else, some sort of management responsibility. It can be kind of a pain in the neck to do that and not to mention, it’s just not terribly productive. So just aggregating those similar tasks, I find that’s helpful. I don’t think I’ve ever dedicated a full day to like, meetings and calls, stuff like that. Mainly because they just kind of come up sometimes.

[17:13] Rob: I think the lesson is just that batching in general tends to get you into the flow and keep you more productive.

[17:20] Mike: So one of the things that I’ve done recently, also, is I mentioned a few weeks ago that I shut down my Moon River Consulting business. But one of the things that it’s doing is it’s making me take a really hard look at some of the different products that I’ve been, I’ll say, more or less neglecting. One of them which is the Alteristraining.com website which I had previously had under Moon River Consulting. I still own it, because I still have the domain name and everything. I basically just took everything from Moon River Consulting and kind of shoved it over under Moon River software so I could cancel a bunch of subscription services.

[17:52] I mean, I’ve already saved several thousand dollars a year just by not having that business any more. But I still have some of these products and stuff that I just don’t touch any more. Some of them are making money, some of them are not making hardly any money, but they serve as more of a distraction than anything else. So I’m trying to figure out what to do with some of them. You know, I’m looking at either selling them off or either just completely shutting them down. I haven’t really come to any solid conclusions about any of them yet.

[18:16] Rob: I think doing this pruning, especially for folks like us who start a lot of efforts, start a lot of products or own a lot of products, just doing some pruning now and again is a good way to do it, especially if something is continuing to make money and you really back burnered it, I feel those things don’t continue forever. So if you can kind of step away from it and hand it off to someone who’s willing to grow it while it’s still somewhat profitable, it’s a better time to do it than once the thing gets completely hosed and isn’t worth selling.

[18:45] Mike: Yes. I look at it from a financial perspective and I say, “Yes, this has absolutely made me money.” But at the same time, it’s like, do I hang on to it for a month, three months, eight months, whatever? It’s just kind of hard to take a look at those and, as you said, prune them off and just get rid of them. Especially when they’re making money but, you know, there’s this mental overhead that you have that is associated with it. I’ve already noticed that there’s a dramatic level of difference between what my focus is today versus what it was even four weeks ago when I still had both companies. Now I’m much more focused than back then and I don’t think that it’s just due to the fact that four weeks have passed. I think it has a lot to do with the fact that I’m not switching back and forth between two different companies and thinking about two entirely different businesses.

[19:32] Rob: Yes, I can see that. I think any time you can get stuff off your plate, doubling down on what’s working for you. So for me, with Drip, definitely starting to find some fly wheels. There’s been nothing – there’s been no single massive marketing approach that I’ve found. It’s like all my past experience, you just get a bunch of different things that work. But at this point, I have more trials in the Drip queue than we’ve ever had. So it feels good. Things are working. I had a bunch of stuff kind of ready in December, and didn’t launch that until the first week of January. Every time I do that and launch a bunch of different efforts, it just seems like the stuff kind of compounds and turns into even more that you hadn’t planned for.

[20:12] So, you know, in addition to the email mini-course that we run through Drip and basic re-targeting through Perfect Audience, I’m churning out blog content – well, I say, “I am.” I have an agency who’s doing content marketing. There’s some really good writers that are managed by an editor, and I have them creating the blog content for Drip. That’s starting to pick up some steam. Then all the integration marketing I did last year, with the integrations through Kickoff Labs, and Unbounce and Gumrow. Those things kind of just build over time and send a little more link juice your way. They send a few more customers your way.

[20:45] Then I actually did – I really wanted to get webinars going. I’ve been meaning to do that for a year. But I did the first webinar last week. After we integrated with Kickoff Labs, they suggested that we do kind of a joint webinar. That went really well. It was fun, and it was a nice entryway into it. So I think I’m going to start doing those. I want to do them just with Drip and Drip’s audience to continue to educate about this whole marketing automation stuff. Then a bunch of other stuff. Been on podcasts, interviews, done a couple guest posts. Then I’m quoted in some articles here and there about email marketing and marketing automation. Along with SEO and word of mouth, it just sort of all combines.

[21:21] The bummer is that I look in Google Analytics and it’s just so hard to tell what’s really working. It used to be so much easier when you could actually see your keywords and figure out what people were searching on. If branded search terms increased then you knew it was something like, “Oh, it’s ‘podcast’ or it’s ‘word of mouth’,” it’s something that people are hearing about and then typing “Drip” or “Get Drip” into Google. But now I’m not being able to see the keywords, you don’t know if people are actually searching for generic things, like “email marketing software” and you just rank high enough for that, and that’s what driving traffic. Or, if it’s actual you banging the drum that’s really driving it. So it’s a bit of a bummer that it’s a lot hazier than it used to be in order to be able to track your efforts to specific rises. But I do know that, basically, everything I’m doing right now seems to be compounding into sending more traffic and more trials through the funnel than it has been in the past. So it’s starting to feel good. I’m just getting to the point where I’m feeling like, “Ah.” This is where I wanted to be six months or a year ago, you know? We’re finally there.

[22:24] Mike: You know, it’s funny that you bring up the difficulties involved in finding information from Google Analytics about where your traffic is coming from, and what sorts of things are going on in there. Because we got an email from Will Gant, who said the fact that there’s this new spamming strategy with Google Analytics where people are essentially showing up in your Google Analytics. It’s basically just spam links. The idea is to, essentially, target people who are using Google Analytics and, you know, if you’re using Google Analytics then chances are good that you’re probably, at least, paying attention to who’s coming to your website, where they’re coming from and, you know, what the sources of traffic are. They basically – somehow they inject the data in there in such that it shows up in your Google Analytics account. Then you click on them and you go back to their site. So it’s kind of weird that not only is Google Analytics becoming less relevant over time, but you’re also starting to see spam inside of your Analytics itself.

[23:23] Rob: Whoa, that is – I have not heard about that. That’s crazy. I can’t imagine that would pay off. That seems so bizarre. That’s such a bizarre marketing approach.

[23:31] Mike: I’m sure that there’s a lot of other subtleties to it that I don’t entirely understand. But it’s interesting that people are doing that. It’s just because people are wanting to get these clicks. And maybe they’re selling something from their website, or are trying to get traffic back to their site. Whatever it takes at that point. It doesn’t take much to set up a bot that’s just going to go around to ten thousand or a hundred thousand websites and inject those. Then suddenly, you’ve got traffic coming back to the site. And if it’s an advertising-driven site, now you’ve got eyeballs on it. So they’re getting paid for it. So at some point, it could be worth it for them.

[24:06] Rob: You have to have such a volume on you, though. Even just ten thousand sites, that’s just not enough. That’s pretty crazy. I haven’t – it’s been a long time before I’ve gotten something actionable out of Google Analytics. It’s not the tool that it used to be. It’s getting harder to use, it’s more complicated. They’re changing terminology and without giving you keywords, it just makes it even worse. I actually, when I went to do keyword research, I literally logged into HitTail instead of Google Analytics because I wanted to see how people finding me. HitTail pulls from Google webmaster tools, which actually gives you the keywords people are using to find you. So it was helpful. I did go into webmaster tools as well, but it’s a harder marketing landscape than it used to be, for sure.

[24:43] Mike: So speaking of inbound links and paid traffic, I’ve been testing paid ads on Twitter and Facebook lately. It’s interesting because my ads between the two of them are very, very similar. But I’m getting five times the conversions on Twitter than I am on Facebook.

[24:58] Rob: Wow, is that for the same money?

[25:00] Mike: The same money. So basically, I have two identical landing pages set up. This is the thing I don’t like, is that, you know, with the conversion pixels for Twitter and Facebook, they tend to trigger regardless of how somebody comes through. No matter how you try and match up the numbers between what they tell you they sent traffic – like how many people they sent for traffic, versus what your numbers say on your site, they are always different. So I don’t necessarily trust if I go into my Facebook Dashboard and look at all my ad campaigns and see, “Oh, we sent 200 people.” And it’s like, “I’m looking at my site and my analytics are telling me they did not send 200 people. I certainly did not get the 80 conversions, or whatever it is, that they’re telling me that I got.” For whatever reason, sometimes people are just counted twice or they’re not counted at all. It depends on which one it is. But the bottom line is, I set up two completely different landing pages and I injected the tracking code differently, for Twitter on one page and Facebook on the other. Then I mapped everything and Twitter is just converting at five times what Facebook is.

[26:03] Rob: And the clicks are the same price?

[26:05] Mike: Well, the clicks turn out to be substantially more expensive on Facebook.

[26:09] Rob: Okay, so you’re probably getting more people through from Facebook, but it’s converting at a lower rate, but it’s super clicks?

[26:16] Mike: It is. I’m trying to think. It’s between $7 and $8 per click on Facebook. On Twitter, I think it’s like $1.50 or $2, or something like that. It’s pretty low.

[26:27] Rob: $7 to $8 a click, huh? Yes, that’s high. You should be able to get, using Facebook right-hand side ads, you should be able to get clicks between – it depends on your niche – but between 50 and 80 cents.

[26:39] Mike: There’s a difference between the clicks themselves. The cost per conversion is about $7 or $8.

[26:43] Rob: Oh, there we go. Okay, cost per conversion not click.

[26:46] Mike: Yes. The clicks themselves are about 50 cents or something along those lines. That is the price of them, but they’re converting it like 10%. It’s ridiculously low.

[26:58] Rob: That’s to email, they opt into something?

[27:00] Mike: Yes, yes.

[27:01] Rob: Okay. Yeah, that’s lower than I would like. I’d like to see it up around 20-25%.

[27:07] Mike: That’s what Twitter is converting at. And like I said, it’s an identical landing page and the advertising, the images and stuff are almost identical.

[27:15] Rob: So it’s the targeting. Yes, it sounds like you want to mess with your Facebook targeting, figuring out which niche. That’s interesting. I want to take a peek at your Twitter ad. I have it on my list to run some Twitter ads. I ran one, maybe four or five months ago and wasn’t pleased with it. Then I just bailed on it, which is not how you’re going to learn to optimize it, right? You’ve got to spend time in there doing it. But I’d like to see what you did, because I’ll probably try something similar.

[27:38] Mike: Right, yes. It was funny because very early on, before, I think I had only gotten a couple of conversions and I’d already gotten a complaint, on Twitter. Like, somebody tweeted to me and said something along the lines of, “You shouldn’t be using Twitter to be advertising.” I was like, “Are you serious? Really?”

[27:51] Rob: Wow. So speaking of that, I’m actually – in terms of a HitTail update, HitTail’s kind of been running in the background and, over time, I originally had hired Derek to help me, to basically be the product manager. Then I pulled him off of that to help with Drip, and he’s full time under for a long time. So over time, I’ve neglected to run more ads and to kind of keep the marketing fly wheels going with HitTail. So I need to hire someone, definitely part-time, to help out with a couple of very specific marketing approaches, mostly advertising. Maybe I’ll announce on the podcast.

[28:26] I need to get like a – kind of a landing page or an application form like a Google form set up to find out exactly which questions I want to ask. But in essence, I don’t really want – I don’t particularly want to hire an agency. I was considering that for a while, but the cost and the – I have some very specific ways that I want it done. I don’t think most agencies are going to work with me on that. So I really already have the process down and I know what works. So I just kind of want to hire somebody who’s hungry to do it and learn it. Just make it so that HitTail’s a bit more self-sustaining than it is now. Because without me doing some type of ongoing stuff with sending some traffic, it still has several fly wheel choices, but they’re smaller than if I were dropping the money to do pay per click. With pay per click, it definitely – the ROI is there. So it’s kind of a no-brainer to do it.

[29:14] Mike: Hey, by the way, did you – have you gotten any results from the emails that you sent out for people to essentially restart their trials from back in December?

[29:21] Rob: Yes. We did get a handful of folks who wanted to extend their trial. So it was definitely worth sending the email. It took me five minutes, maybe, to do it. I’m trying to think, it was maybe 10% of people responded and said yes? So it wasn’t a huge number but even getting one is worth it, right? If they continue through and become a paying customer.

[29:40] Mike: Yeah, you know, that one email is probably worth, you calculate the lifetime value –

[29:44] Rob: Several thousand bucks.

[29:44] Mike: Sure.

[29:45] Rob: For sure.

[29:46] Mike: So five minutes of work for several thousand dollars. Don’t you wish you could do that five minutes of work every five minutes?

[29:50] Rob: Every day?

[29:53] Mike: It’s funny that works so well for you, because with AuditShark, because of November and December essentially being holidays, I’ve essentially had to start over with most of my sales prospects from November/December. Just because the sales cycles are so long that people, you know, get involved with stuff and then they get distracted. They’re like, “Oh, we need to come back to this after the New Year, because all these things are in flux right now. And we need to make sure that we don’t introduce any new variables into our network because we don’t want things to change during the holidays.” It’s like a very sensitive time, nobody wants anything to break and they don’t want to try anything new. So they put everything off and then it’s just like, “Okay, now we have to restart the conversations over again.” You know, there’s still that – some level of familiarity, but it just kind of sucks.

[30:37] Rob: Yes, long sales cycles are a bummer and December is a bummer. It always is, man, unless you can run a special or unless they have budget that they’re trying to get rid of. Everything just kind of comes to a grinding halt.

[30:48] Mike: Yes. The only other thing is I’ve actually been looking at restructuring AuditShark a little bit. I’m still putting feelers out there for this. One of the things that I’ve kind of come to realize lately is that what I’ve traditionally tried to do with AuditShark is sell it as kind of a standalone software package. And I think that fits extremely well for certain types of businesses where they have a dedicated auditing department, or people who that’s their sole job. But I think there’s a lot of businesses out there that they want a system or piece of software like that but they don’t necessarily know how to use it. They’re not going to use it full time or even really, part time. They might use it once in a while. So it doesn’t have quite the same impact or the same draw for those kinds of people.

[31:32] So I’m looking at kind of exploring the possibility of offering it, instead of like a classical model where it’s like, “Sell the software and then you’re hands-off at that point.” A much more involved model where it’s, I come in – or we come in – we do like a software audit and analyze their network, give them reports, talk to them a little bit more and then, at that point, we basically walk away. So it becomes much more of a services engagement, I’ll say, which is – I don’t think it’s like the classic model of what we think is a successful SAAS or recurring revenue model, but at the same time, it really is a recurring revenue model. Especially if you’re going to them every six months or every year where you go in there, you do the audit and you give them the reports and say, “This is where you’re at. This is where I think you should be. These are the things that I think you should do.” Then you leave. Then you come back in three months, or six months or maybe you put together a plan to help them get to where they need to be. Then you come back and do that again.

[32:26] Rob: Sounds like it could be recurring or not, right? Depending on their preference. But it seems like the price point could be so much higher that you’d need so many fewer of those, right? If you’re going to do the enterprise sales anyways, it’s like you want to get that price point as high as possible. I would wonder, you know, you said you’d basically find the issues and then walk away, but it seems like they’re going to want remediation help, right? That seems like the biggest paying point of this whole deal. It’s not just finding the things but actually fixing them.

[32:52] Mike: Yes, and that’s actually something I’ve talked to Manage Services Providers about. Because Manage Services Providers can use it to identify issues but they want to use it as like a punch list, where they go into a customer and they say, “We found these 250 issues. We can fix these things for you, but it’s going to cost you this much money, because we’re going to need to go touch all these things. Here’s the billable hours that the MSP is basically generating from my tool.” So that’s one mechanism for them to use it, and then, of course, there’s the other one where I’m working directly with kind of the end customer. It kind of depends on who you’re talking to. So – but I don’t have remediation built into the product yet, so –

[33:28] Rob: Right, I wasn’t thinking build it in. I was thinking, add that as an add-on consulting service from AuditShark itself, that it finds issues and then – I mean, that requires manual work from you guys, obviously.

[33:38] Mike: That’s okay, because that might very well lead towards the idea of building that into the product. Because if I’m going to charge them for, say, two or three weeks worth of remediation services, then it would be in my best interest to say, “Okay, well, here’s a flat fee and we can fix all of these things for you. And instead of charging you for three weeks of manual effort, we’ll do it through the tool, and fix everything through there.” So in a way, it’s almost like backtracking from solving the problem for them and then building the software after the need is there. I mean, the software’s there. I’ve kind of gone about it backwards in some respects. I very well could have offered this exact same service without having AuditShark at all.

[34:16] Rob: That’s right, yeah.

[34:17] Mike: I could go in and do everything manually, but obviously, the tool makes it a lot easier to gather all that data from, you know, numerous machines. That’s what people do now, though, is they do it manually, but they don’t do all the machines in the environment. They’ll just do a small handful of them and they’ll say, “This is our sample.” That’s a big problem because then you get this sample bias where you’ve got three, four or five machines but it’s not those machines that are going to hurt you if your network is compromised. It’s the ones that slip through the cracks that you didn’t audit, because those are the low hanging fruit that a script is going to come out and take over. A script is going to take over. It’s not these ones you’ve already audited, it’s the ones that you haven’t.

[34:54] Rob: Right. If you can make this work, this makes sense. Because if you’re going to do this enterprise sales anyways, you’re going to have long sales cycles, you want that price point to be as high as you can make it in order to make this worth your while. Just selling software they’re never going to have at a higher price point is an actual consulting engagement. So I think, you know, whether you call a concierge, or you just call it add-on consulting services, whatever it is. I think it’s worth a shot. You know, it’s worth exploring. It’s like you said, you’re putting feelers out for it and I don’t see any reason not to do that.

[35:24] Mike: There’s consulting on one end, which is completely customized, and then the middle, you’ve got the SAAS offering where the customer’s kind of doing the work and then the low end, obviously, is like everything’s being done manual. There’s no automation whatsoever. But there’s this tier, I think, in between SAAS and completely custom consulting work where that type of services arrangement can – it’s essentially augmented consulting services. So it’s not quite a SAAS offering where you’re just giving them the software. It’s they’re doing the work themselves. And it’s not completely done for them like consulting services. It’s kind of this hybrid approach.

[35:58] So I think we have one last thing. Back in December, we had asked a lot of people for information and ideas on podcasts episodes that they could – if they could send it to us, we’d greatly appreciate it. But one of the things that we found is there’s a lot of episode ideas that are heavily tech-related. What we want to know is, we want to know if people want to hear some more technical discussions. What I mean by that is, there’s people who have asked us to provide discussions on things like engineering a SAAS for availability, doing backups, security testing, testing your code, optimizing your applications for database, your CPU, and memory to reduce hosting costs, server hardening techniques and other, I’ll say, much more technically oriented stuff. So if you’re interested in hearing about those things, I’d appreciate it if you could write into us, questions@startupsfortherestofus.com. Let us know what your thoughts are, or send us tweets, emails, actually, probably just the questions@startupsfortherestofus.com, or the tweets. Those are probably a little bit easier for us to manage. Just let us know what your thoughts are on that and whether we should kind of shift gears a little bit and delve into those topics, or just kind of reply to those people directly on what our thoughts are.

[37:05] Rob: If you have a question for us, you can call our voicemail number at (888)801-9690 or email us at questions@startupsfortherestofus.com. Our theme music is an excerpt from We’re Out of Control by Moot, 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.

Startups For the Rest of Us

Episode 220 | Our Biggest Failures in 2014, Pros and Cons of Domain Expertise, and Documenting Your Company Roadmap

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Show Notes

• Congrats to Micropreneur Academy member Adrian Rosebrock from PyImageSearch on funding his KickStarter in under 30 minutes.
• Startup documentary Your Own Way Out (direct link to some of Rob’s interview)
• Rob’s movie recommendations: Somm and Jiro Dreams of Sushi

Transcript

[00:00] Rob: In this episode of Start-ups for the Rest of Us, Mike and I will discuss our biggest failures of 2014, the pros and cons of having domain expertise and how to document your company road map. This is Start-ups for the Rest of Us, episode 220.

[00:13] Music

[00:22] Rob: Welcome to start-ups For the Rest of Us, the podcast that helps developers, designers and entrepreneurs be awesome at launching software for products, whether you’ve built your first product, or you’re just thinking about. I’m Rob–

[00:30]Mike: And I’m Mike.

[00:31] 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, Mike?

[00:35] Mike: You remember how I told you that my RAID partition had gone to heck, and I had to go to backups for some of my data? Well, my other drive failed this week.

[00:47] Rob: Wow. The other drive in the RAID configuration?

[00:50] Mike: Yes.

[00:51] Rob: Wow, what are the odds of that? That’s a bummer.

[00:53] Mike: The worst part is it wasn’t even being used. It was an old copy of all the data. It was like, “Oh, God, you’ve got to be kidding me”.

[01:00] Rob: I have a question for you, why are you using a RAID array? I got rid of all my hardware and I either use Dropbox or Crashplan for backups. What is this for, that you couldn’t do in the Cloud?

[01:10] Mike: It’s all of my local data. It’s just on my desktop. On my desktop I have a C drive and an S drive and my S drive is for all of my storage, and it’s like one-and-a-half terabytes. Whenever I throw stuff over there I just throw it on the RAID array, because if that thing dies I don’t want to have to download everything from the Cloud. It’s already being backed up I just don’t want to have to download it.

[01:33] Rob: That’s a bummer. It kills so much time too.

[01:37] Mike: The worst part is that it’s not completely dead. It goes up and comes down. It’s fine for a little while, and then it drops off the face of the earth for a little while and then it’s back up. I’ve got some brand new drives sitting right next to my desk that I haven’t installed yet so I’m hoping that I can get everything off and I won’t have to go to the backups in the Cloud and if I do I’ll probably just have to pay the two hundred dollars to have them ship me a brand new drive and be done with it.

[02:00] Rob: Yeah, I hear that. So, we want to congratulate Micropreneur Academy member Adrian Rosebrock from PyImage Search. We’ve mentioned him here before. He’s had several successful milestones. He launched a Kickstarter campaign today and he funded it in twenty-five minutes. It’s for his computer vision academy he’s starting. He’s had success with several e-books and other teachings on it. So congratulations to you, Adrian.

[02:24] Mike: What else is going on?

[02:26] Rob: There’s a pretty cool documentary that interviewed a bunch of start-up founders and entrepreneurs. It was filmed at DCBKK a few months ago in Bangkok. The URL is yourownwayout.com. I was one of the folks interviewed for it and what’s nice is that they released teaser trailers for each person. They interviewed Dan and Ian from Tropical MBA, Derek Sivers was there, I was there, several others, and they released these three to four minute previews with us answering questions; pretty good stuff. I hadn’t heard any of the other guys answers so it was neat. I went up to several of them and listened to their answers and it’s super professional. It’s a documentary film. It’s not like someone with an HD camera. These guys knew how to do the lighting and the miking and all of the cuts and everything. If you’re interested in seeing– at this point it’s previews and snippets and you give your email and they give you access to all of them– you should head over to yourownwayout.com, and you can go to slash Rob dash Walling if you want to see mine or you can enter your email and get access to all of them. I’m interested to see the whole film at this point after seeing all of these teasers. Did you check it out?

[03:34] Mike: Yeah, I did, I watched it. It was pretty cool.

[03:36] Rob: How about you, anything else going on this week?

[03:37] Mike: I’m fighting with GIT at the moment. Maybe it’s just me but it feels like GIT is extremely powerful but it’s very difficult to use.

[03:54] Rob: Yeah, well difficult to learn I would say. The folks I know who use it are really good with it but the learning curve is steep, because I think the paradigm is so dramatically different. I know the paradigm is so dramatically different than any other version control software.

[03:57] Mike: Yeah, I don’t even know if it’s really the paradigm that’s that much different. It’s just that – I’m using Windows – so GIT on Windows doesn’t play as nice as on UNIX or OSX or Linux

[04:12] Rob: If you talk to my developers, and you were talking to them in support, and you said you were using Windows they would say, “Okay, so my first instruction would be to drive to the Apple store and buy a Mac and get rid of that other computer”.

[04:24] Ok. So, I watched a couple of really interesting documentaries over the past couple of months that really focus on excellence and being super exceptional at a very focused thing. It’s a little bit about genius and it’s a little bit about the pursuit of becoming excellent – to the point of being obsessive about something – but I really enjoyed these documentaries. Both of them are free in the US on Netflix. You can probably find them other ways if you’re outside the US. The first one is called “Somm”. It’s short for sommelier. A sommelier is an expert in wine and there’s a small group of people who are going after the master sommelier certification and in 40 years only 170 people have achieved it because it’s this brutal, brutal test. I’m only about halfway through but already it’s fascinating to see how exceptional these people are at the task of choosing wines and the flavor palates and the culture and everything that they’ve learned about areas of the world where it’s produced.

[05:25] The second movie is called “Jiro Dreams of Sushi” and again it’s about a guy who has a tiny little sushi shop in Japan and instead of getting bigger he just raises prices and he only has eight seats and you come sit at the bar and he serves you whatever he’s making. He’s a genius sushi chef. He’s done it for fifty or sixty years, he’s never opened another restaurant and it’s two hundred bucks or so per meal per person. But you just come in– and it’s booked out six months, so you come in, sit down, he serves you the meal and he lets you know when you’re done. It’s amazing to see how far you can take something and how amazing he is as a sushi chef. So if you’re looking for a couple of cool documentaries that relate to the pursuit of something great and becoming exceptional at something, I’d recommend “Somm” and “Jiro Dreams of Sushi”.

[06:21] So, Mike and I are going to be answering a bunch of listener questions today. The first one is actually a comment about using Facebook ads to fill webinar seats and it’s from Joe Daniel and he says, “Hey guys, just listened to your podcast episode 204, great show. I heard the discussion on the webinar audience at the outset. I just wanted to throw my two cents in on the Facebook ads. I run webinars and I was able to get a lot of relatively cheap registrations via Facebook ads with my football coaching business because there’s little competition but it wasn’t really a well targeted audience. With my current business – which is teaching webinars – the opt-ins are expensive but more targeted. In highly competitive fields I’ve found it better to advertise to get opt ins with a freebie download than promote your webinars primarily to your list”. Like you said, you don’t want to burn out your list. I keep my opt ins tagged so I know who was on the list last time and who wasn’t and also who attended. I thought that was a nice little tidbit, and of course any email marketing or marketing automation software worth it’s salt should be able to help you with that. He says, “I’ve done over one hundred webinars in my football coaching business, and have started training others to use webinars in my podcast”.

[07:34] Mike: As long as you keep track of which tags you’re using, you can make those things pretty targeted and filter out who should be getting which offers. I know that there’s different platforms out there that allow you to do a lot of advanced things. Infusionsoft comes to mind–

[07:49] Rob: What about Drip?

[07:50] Mike: Yes, well–

[07:50] Rob: Drip will do it too.

[07:52] Mike: Yes, Drip will do it too but Infusionsoft is known for the capability behind having complex automation behind a lot of stuff. There’s a huge start-up cost. I think it’s two thousand dollars or something like that.

[08:07] Rob: And then three hundred bucks a month.

[08:08] Mike: So, it is expensive, but I’ve been told by people who use it that once you get into it and start using it, as long as you have a substantial customer base, you can get pretty complicated with the things that you’re doing.

[08:19] Rob: Drip, we’ve essential tried to build– we can do anything Infusionsoft can do, we’re at a lower entry level price point, but there’s a visual builder that they use. We may build that at some point. Well, we probably won’t build the builder, because the builder actually sucks, I’ve heard. But we want to build in some type of view that’s visual like them. And Joe’s podcast if you’re interested is called the “Webinational Webinar Podcast”. Thanks for writing in, Joe.

[08:47] The first question of the day comes from Micropreneur Academy member and multiple MicroConf attendee, Anders Peterson and he says, “Hi guys, listening to your latest podcast I thought you were going to talk about your failures of 2014, but you wound up not talking about them. So I’m curious, what are your biggest failures from 2014?”

[09:07] Mike: I would say that one of my biggest failures was failure to plan. It’s funny because I thought at the beginning of the year that I had things pretty well planned out, but once I got to the end of the year I realized that my planning was actually pretty atrocious. So I’m trying to do a better job of that this year. Something else, there are people who work for me this previous year that I just gave them way too many chances, and I should have just let them go earlier than I did. People feel bad about firing contractors, and people who are working for you, but at the same time if you’re a bootstrap business you have to pay attention too– it’s not just the money, it’s the time investment that you’re undertaking by giving people second and third chances. That’s something I really need to do better about is just pull the plug earlier and be done with it. That’s an ongoing struggle that I have. The third one, I think there are certain marketing efforts that clearly weren’t working for me for AuditShark that I continued doing because I wanted them to work. So I kept at it but the reality is that there are certain things that I really should have just pulled the plug on much sooner than I did. I’d say that those are three failures of mine that come to mind for this past year. What about you, Rob?

[10:19] Rob: I had many failures in 2014, and most of them stemmed from the same cause. I made an error managing my cash – my cash flow – and around tax time last year, March or April, I got a very large tax bill that was partially the fault of my CPA, our estimated taxes were off, but it just sucked a lot of stuff out of my bank account. And a couple of other big expenses came through right at the same time so suddenly I found myself having three full time developers that I had just hired and brought on full time, and my cash in the bank just plummeted. So a bunch of stuff came out of that. That was the root cause, but that made last year my worst year as an entrepreneur; my least enjoyable and my most anxiety-provoking, and the year that I worried the most about money and keeping going every month. It’s interesting when you think about it, because it wasn’t like the company was going to go out of business. The company has plenty of revenue, but it was the thing of failing. Did I make such a bad choice that I’m going to have to lay someone off? Or that I’m going to have to sell an app in order to pay this bill or whatever.

[11:30] And that feeling alone, I let it hang around way too long. I had it for the latter seven or eight months of the year, and I’m just now coming out of that and every month I kept looking like, “Well, next month will be better, next month will be better” and some months were better, but then I found myself back in the same boat. What I realized was the mistake was not managing my cash well, but I then let it go on too long without fixing it. I also let it push me to the point where I was forcing myself to work on problems that I didn’t want to work on, because I felt like I needed to drive revenue and I needed to drive revenue in the short term. So instead of being my normal relaxed self, where I work thirty hours a week and do what I want to and work on what I want, I fell out of that, because I felt like I couldn’t do that if the company was not highly profitable like it was in 2013 where it was throwing off a lot more cash. There’s a lot there, but it’s a mistake I’ve never made before and I will probably never make again. Now that I’m coming through that – because my apps have all grown since then – so I’m finally out of the cash issue. It’s a lesson that I’ve learned that I will take with me for the rest of my career for sure.

[12:47] Our next question is about the pros and cons of having domain expertise and it’s from Nils Rooijmans from watercoolertopics.com. He says, “Hi guys, great show, true learning here. I think the topic of looking at the pros and cons of having problem domain expertise might interest your audience and yourselves. I’d love to hear from you”.

[13:06] Mike: The typical advice that you’ll hear from people about building a start-up is that you want to find something that you’re knowledgeable about, because you may very well have insights into the problems in that particular area where you can exploit those and you essentially have a competitive advantage. That’s great advice, I generally tend to agree with it, but there’s a caveat there and that caveat is that it can make you blind to certain things. You can definitely have a little bit too much domain expertise and you can set expectations about what your users and prospective customers might be looking for or expecting, and it makes it more difficult for you because you don’t know what the terms are that they’re using for example that you should be targeting in SEO. So, you may know all of these technical terms for the problem and the problem space and the solutions for it, but your customers may not. And if you’re not specifically looking for those things that the customers are actually using, you can completely overlook that stuff and back yourself into a corner where you’re using these advanced terms that they’re just not familiar with because you’re not paying attention to what it is that they’re saying. There are definitely pros and cons of having that domain expertise, but I think if you do have that domain expertise you have to have a little bit more of an open mind about what is that the customers might actually be doing or looking for.

[14:26] Rob: Yeah, I think that’s going to be your biggest con, the blindness to how other people talk about it and being like, “Well, I can just build this whole product myself because I know what everyone needs” but not realizing that everyone does it a little differently. I can imagine you doing that with maybe project management software or CRM software and saying, “I’m a domain expert, because I’m a sales person.” So you build the CRM but it turns out that your process is not the same as anybody else’s so you can’t get anybody to use it. I think that could be one con. I have to admit, I haven’t really thought a lot about the cons of domain expertise. I don’t think they come anywhere close to the pros of it. I think the positives of having that domain expertise far outweigh the cons that we’re looking at. We actually included domain expertise as one of our eleven attributes of the ideal founder. It was in episode 133, “The Founder Test” It was eleven founder attributes that will determine the success of your product. We basically only talked about the positives of it, about your knowledge of the niche or a problem to be solved. So, while I do think there are some cons, I think they’re pretty small compared to the pluses that you’ll get out of having domain expertise. Thanks for the question, Nils.

[15:32] Our next question is from Emil Hajric from Help Juice and he says, “Hey guys, a few podcasts ago you mentioned how XYZ is on your road map, or how you plan to do Y in X month. We’re starting to grow and it’s getting a little harder keeping all of this in my head. Are there some tools out there that you use to help with this? Perhaps some methods as well. I would love to hear your take on it”. So, the way that I’ve done it is I either– if you really want a calendar– because we typically have features laid out, but we do it in more of an agile way. So there’s not hard deadlines it’s just you do a burn down chart and you build the next thing that’s in your cue. So, I don’t keep dates, which allows us to keep all of the features in our project management software, which is Fogbugz. But if I do have higher level things that I want to think about that I haven’t specked out to features, I will either keep them in a single Trello list or have them in a Google doc and have product road map with a bunch of bullet points, maybe I’ll categorize them or put them in some kind of order. If I wanted to attach dates to them, which I don’t know that I would recommend if you’re a start-up because trying to hit arbitrary dates will make you sacrifice on code quality or feature quality or whatever, but if you did, I would probably just use a Google doc to be honest. I’m sure there are other, more exotic approaches, but I’m such a fan of keeping things simple that I would use one of those approaches, the Trello or the Google doc.

[16:56] Mike: You almost have a two-tier system where something’s on your road map but you don’t necessarily know exactly where it’s going to fall, so something like that ends up in Fogbugz or in a Google doc, where you keep track of it but you don’t necessarily look at it as a short term goal. Then you have these other things that you’re working on immediately or going to be within the next couple of weeks and those are on your short term road map, and they’re basically scheduled. But I think that unless you have it scheduled, it can easily get pushed off because there’s other things that may come up that are a little bit more important. So, a customer comes in and they say, “Hey, I would buy if you had this.” but then you have another customer who comes in and they’re paying you a thousand dollars a month and they really need something else. Well, that something else is probably going to take priority because they’re already paying you so you want to keep them happy and you want to keep that thousand dollars a month of revenue coming in. The fact that as a high value customer they are paying you a lot more money, it’s very likely that that feature could be used by other high value customers. So it would be easy to push off some of those other things into the future. Like I said, if you’re not actively working on them right now, they can very easily get pushed off almost indefinitely, until you get to a point where a lot of people are asking for it. Then it moves on to your short term road map. So, in my mind there’s a difference between the stuff that you’re working on right now, or in the very near future which you essentially do have a schedule for, and everything else, which you may get to it, you may never get to it but you tend to just track it. And I know there are people out there who advocate and say, “Well, if it’s something that’s really important to your customers it will keep coming up so you don’t need to keep track of it.” But the reality is that the cost associated with just writing it down and putting it in a Bug report or in a Google doc, it’s virtually zero. So if you keep track of all those requests that are coming in, there’s nothing wrong with that.

[18:51] Rob: Yeah, I think it’s an important distinction you pointed out where a road map should be high level and more long term. So, if you have a bunch of little tasks you’re working on, then those can all be enumerated down to a very detailed level, and they could have specs and all that stuff. But you might have that for only your top 20 or 40 things that are being built, whereas a road map for me, in Drip, might say, “We’re going to implement lead scoring, and in the next three months we’re going to implement some minor CRM features.” But it’s like, I don’t have a spec for that yet until we get to the point where we start outline it. So I think keeping track of a road map is actually simpler than you think. I don’t think it’s an enumeration of every tiny little element of lead scoring or CRM. That’s it. That’s all I would put on that bullet line because a road map by definition is supposed to be a higher level view of this process. Thanks for your question, Emil. I hope that helps.

[19:47] Our next question is from Evan Carmi and it’s about how to learn sales and marketing as a developer. He says, “Hey guys, I appreciate your podcast. I’m a software engineer who just took the leap to try to start some small projects. I feel very confident about my technical skills, but I’m realizing more and more about my lack of knowledge in sales and marketing. I’m curious what resources you’d recommend for this – ideally things that are somewhat fast paced and cheap. I’ve seen a lot of great academies for two thousand dollars, but I think I’d rather spend that two thousand dollars on my project or on food so I can spend a bit longer trying to figure it out myself. I’m looking forward to hearing from you.

[20:20] Mike: Well, I think the first one I would say is the Micropreneur Academy is a quarter of that two thousand dollars. It’s only about five hundred dollars for a years subscription, so that’s one thing that I would look at. But I think that there’s also a very big difference between what you’re going to get from an academy or course that’s two thousand or twenty five hundred or five thousand dollars versus something that you’re going to get from the Micropreneur Academy. The Micropreneur Academy’s material is self-paced, so there’s not a lot of hand holding, you basically work on stuff on your own versus these academies that have a lot of hand holding, they’re a lot of high-touch. That’s partly also why they have such a high cost associated with them. So, I think depending on the level of help that you feel like you need, that should guide what you’re decision is in that particular regard, because if you need that hand holding then you’re probably going to want to lean towards the ones that are a lot more expensive. If you don’t, if you’re looking for self paced materials, you could even go down the route of– there’s a blog put out by Josh Kaufman for the personal MBA. Go to his website and he’s got a list of a hundred different business books on there that are essentially his top recommendations over the years. You can go through those books and just voraciously read through all of the different things that he’s recommending. There’s a lot of free or low cost material out there. Getting involved in something like a Micropreneur Academy, where you’ve got a network of other people where you can ask questions to, that could also be extremely beneficial. So, it really depends a lot on what situation you’re in, what you know and what you don’t have a lot of confidence in.

[21:53] Rob: So, thanks for your question, Evan. I hope that helps. Our next question comes from Adrian Pooter and it’s about finding out why customers are cancelling. He says, “Hi Rob and Mike, I find it very challenging getting responses from my customers about why they’re cancelling. I’m using the mandatory reason when a customer cancels, but some reasons need more information and deeper conversation which I’m not managing to get. I’d appreciate some ideas for getting customers and potential customers to engage in a conversation with me.”

[22:22] Mike: I think one of the things that I might lean towards, and I don’t know how exactly you’re doing the mandatory reason for when customers cancel, but if you go over to the less accounting blog– and we’ll link this up in the show notes, Allan Branch wrote a post on how to reduce customer churn when people are deleting their accounts. And what he did was essentially provided people with a bunch of different reasons as to why they might be cancelling their account — essentially given them different options. So if they were lost and didn’t really have any idea what to do with their account, then he would extend their trial or the support team would reach out to people. If it cost to much they might give them a discount of some kind, so there’s all these different reasons that he came up with, and based on the reason that the person chose to cancel their account, he would basically take a different action within the software. So, that’s the first thing I would do. It sounds to me like you might already be doing that, but one of the things that you can ask them to do is put in their phone number or something along those lines. If they’re giving you specific reasons which you really need to get that additional information. Something else you can do during the on boarding process is while people are being on boarded you can start asking for some of that information in case they cancel later. If you recognize that during the on-boarding process, someone is not activating their account, they’re not doing the things that they really need to be doing in order for them to actually provide value then you can insert those additional touch points. Maybe just send them an email saying, “hey, we saw that you might be having some trouble. Reply to this email or send us your phone number, and we’d be happy to do this for you or walk you through something”. That way you’re essentially trying to pull additional information out of them while they’re still going through the trial and before they get to a point where they’ve cancelled.

[24:08] And even if they have activated, you may way to have a screen pop-up while they log in that says, “Hey, you haven’t filled out this information in your profile yet.” and basically ask them for their phone number. I don’t know how draconian you want to be about it, but you could make it to where they absolutely can’t do anything unless they put in their phone number. There’s a lot of different ways to slice that but those are my thoughts off the top of my head about different ways you can get additional information out of people.

[24:35] Rob: I actually used a phone number approach that you mentioned, in HitTail, and we’re going to implement it for Drip, and the reason it’s good to have a phone number is mostly if people have billing issues, like a delinquent card and they’re not responding to emails. Often times people don’t want their emails to stop sending if you’re an email service provider, so having that is actually a good thing. I’ve never made it so they can’t get around it, but having someone’s email on file is good. Then if they did cancel and you wanted to reach them, obviously that’s something you could do. That’s not something I’ve ever tried. I also used to do the required field when people cancelled, and I found that that is not very effective. What I do instead is, when someone cancels we throw an event and Drip captures that event and it says, “This customer cancelled”. Then Drip is able to move them into a cancelled customer followup campaign. That campaign only has one email in it, because I don’t want to send someone an email every week asking for stuff. But that email subject line is, “A quick question” and it gets just under a 70% open rate at this point. So a lot of people open it. The email is short. It says, “I was hoping you could spare 15 seconds of your time and let me know why you decided to cancel your Drip account. Feel free to just hit reply and fire away. Thanks in advance”. Then it says “Rob, Founder of Drip”. Then it says “PS, I’d really appreciate a reply even if it’s just a few words”. And I get a lot of replies to this email. I’ve found it to much, much more effective than having that required field. Now, I don’t know if that’s going to solve Adrian’s issues, because he says it requires you to dig in a little more. [26:02] But what I have is once they’ve replied, you can then reply to them and they almost always reply to me if I have additional questions. So it could be more of a way to get a conversation going rather than them feeling like they tried to hit cancel and you stopped them and said, “No, we require a reason” and they just type in “too expensive” and hit submit. They’re almost disgruntled by that. but if you let the cancellation be easy and then once they’re free of your app you ping them right away or maybe fifteen minutes later you can send the email. I find that that’s worked better for me. The other thing you can do is you can actually go back and hand email your last twenty, thirty, forty cancellations, right from your company email address, in Gmail or whatever and just say, “Hey, I’m just trying to figure out why you cancelled. I’m curious.” And even if you only get five replies out of sending thirty or forty emails, it becomes a conversation so it’s a lot easier to get information out of your cancelled customers. Thanks for the question, Adrian. I hope that was helpful.

[27:01] The next question is from Brian, and it’s about hiring contract developers, rates and quality. He says, “Hi guys, I started listening a few months ago and I’m digging the practical advice. I met Mike at Businesses of Software. My question is, I hear you guys talk about developers you’re hiring, RAILS or otherwise, and I’m wondering if you’re hiring these folks via oDesk like you’ve hired VA’s in the past, specifically in the case of the full time people Rob has on his team. Where are these developers located and what rates are you paying for what level of experience? I was recently burned by a US-based firm who was charging a hundred fifty dollars an hour who totally dropped the ball on deliverables. Most of the top firms in the Bay area want one hundred sixty to two hundred dollars an hour for developers. I’d like to hire some solid individuals but while I’m a developer, I don’t know RAILS so I can’t manage the code and process very well. It sounds to me like Rob is not dealing with the RAILS code much, which to me suggests that these devs are senior enough to build the product semi-independently. What are your thoughts on this, Mike?

[27:56] Mike: The rates of one hundred fifty to two hundred sixty dollars an hour, I can see those coming from a firm. The reason is, the firms tend to have a lot of overhead. There are sales reps in front of those developers, so you’re never working directly with the developer. You’re basically working through a middle man who also needs to get paid somehow. And that’s how those companies make their money in terms of their consulting rates. They have to bill a high amount in order to be able to fund the business, and keep it running. So when you’re going in that direction you have to have a lot of money to burn. Obviously most of us are not in that situation. First of all, I wouldn’t work with firms or companies. You really have to go after individuals, because they have a lot less overhead, they don’t have nearly the start-up time, you don’t have to worry too much about paperwork in terms of how long it’s going to take them to get started. You can generally get up and running a lot faster with an independent contractor than you can with a firm. It’s also going to be cheaper. The problem of course is, how do you find good ones? That’s the million dollar question. How do you find a good developer at a reasonable cost?

[29:02] I’ve never hired RAILS developers. Most of the people that I’ve hired independently tend to come off of oDesk but it’s a lot of picking and choosing and trial and error when you’re trying to find people on oDesk. I got pretty lucky with one of the first people that I hired and after that it was a lot of trial and error. I went through quite a few people and there’s still times where I think that I’ve chosen very wisely and it turns out that three or four weeks later that just totally wasn’t the case. I think people get disenchanted by that particular approach. They go out and have a bad experience, and three or four more bad experiences and it never seems to work out for them. I don’t have any other good suggestions about how to go through that process other than keep trying and refine what your process is and make sure that you’re looking specifically for people who are following the procedures and processes that you’re putting in place, because that’s probably a little bit more important than technical competence. You want to make sure that they’re following the processes and procedures that you’re putting in place. I would probably be a little less concerned about whether or not they can code well. I don’t want to say that you don’t care how well they code, but you want to make sure there’s a baseline level of knowledge and beyond that make sure you can hand stuff off to them. If you’re looking somebody who can take something from ground zero all the way to product then at that point you’re looking for a very senior person and it’s going to be very difficult to find somebody like that in the US at a price point that’s not going to break the bank.

[30:31] Rob: I’ve had similar experiences to Mike. oDesk has worked so-so for me hiring developers. I’ve had some around for a few months. They’ve been okay. I’ve never had a ton of great success. I’m not saying it can’t work, but the developers I’ve found were interested in making a quick buck and doing some work but never someone I would bring on to build a whole product, because they just wouldn’t take ownership. In addition, as soon as you get into hot technologies like RAILS and I’d imagine Python, they get really expensive. I was hiring developers in Mexico and Central America and they were more expensive than I could find here locally if I were to hire someone for a salary. Locally for me is Fresno California, so it’s not a major hub like San Francisco or LA, but it is a place in California and to have someone local who can come into an office is obviously worth a lot more to me than having someone remote. I have three full time developers working for me and the first one was through my network. He’s a good friend of mine. He was going to do some consulting so I hired him instead. But the other two I found through a local company that I’m actually one of the co-founders of.

[31:35] It’s called Geekwise Academy and it’s a really cool, educational program here that’s basically six week crash courses on different technologies. There’s basic HTML, CSS, there’s RAILS, there’s .NET, there’s PHP, there’s WordPress, all this stuff and it’s like vocational education. It’s super cheap, a couple hundred bucks and people are in it for six weeks and by the time they come out– they’re just learning stuff. If they don’t have any background in tech then they’re not even a junior developer at that point. But a lot of these folks are self-taught, and they’ve been teaching themselves on the side while they’re working another gig. So you get people coming in after six or twelve months of them teaching themselves through one month of RAILS, or Tealeaf Academy, or even just free RAILS casts and stuff. Then they come in and take these Geekwise courses and it puts them into a junior developer right away. I hired two guys out of that. So if you can find something like that that’s local to you– and it really has to almost come out of the start-up ecosystem. Because if it’s something like ITT Tech or DeVry Institute or something, they don’t really know what start-ups need. That’s what Geekwise Academy is.

[32:46] If you can’t find one local to you, drop me an email, or search for Geekwise Academy on Google and check them out because job placement is part of it. We have an extremely high placement rate. We’ve educated more than one thousand people in the last year, and the placement rate on those people to come out and actually get jobs or freelance gigs is very, very high because it’s such tactical, vocational experience that we’re giving them. So those two developers that I’ve hired are obviously not senior devs, but I do have a senior dev who is managing that process and if I didn’t have that I would be doing it as best I could. The last piece is I would always go to the network first and then I’d go to a place like Geekwise. That’s what I’m using now. You can also hit a place like Authentic Jobs or We Work Remotely and find someone there who could potentially work full time for a lot less. Or even contract for a lot less than this one hundred sixty to two hundred dollar an hour mark. If you’re not in San Francisco, don’t hire out of San Francisco because it’s outrageous. You’re going to pay way more, because the start-ups there pump up the market. Hire out of town. Hire out of a place like Fresno, or out of the Midwest, or find a developer in a town that’s less expensive because they’re able to charge a lower rate and still make a living. It’s arbitrage. You don’t want to live in Fresno and live in the middle of nowhere and hire someone in San Francisco. That’s the worst thing you could do. You should either take advantage of your local cheapness, your local inexpensive, low cost of living. Or, if you live in San Francisco I would hire out of the area and you can probably get people at half or less of that price if you do in fact look in the cheaper metro areas or even outside of those major metro areas. So, thanks for the question, Brian. I hope that was helpful.

[34:34] Mike: Well, I think that about wraps us up. If you have a question for us you can call it in to our voicemail number at 1-888-801-9690 or email it to us at questions@startupsfortherestofus.com. Our theme music is an exert from “We’re out of Control” by Moot used under Creative Commons. Subscribe to us in iTunes by searching for start-ups and visit startupsfortherestofus.com for a full transcript of each episode. Thanks for listening and we’ll see you next time.

Startups For the Rest of Us

Episode 219 | The 10 Advantages of the Start Small, Stay Small Approach

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[00:00] Mike: In this episode of “Start-ups For The Rest of Us,” Rob and I are going to be talking about the ten advantages of “start small, stay small.” This is “Start-ups for the Rest of Us,” episode 219.

[00:16] Welcome to “Start-ups For The Rest of Us”, the podcast that helps developers, designers and entrepreneurs be awesome at launching software products. Whether you’ve built you’re first product, or you’re just thinking about it. I’m Mike.

[00:24] Rob: And I’m Rob.

[00:25] Mike: 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?

[00:28] Rob: Well, I wrapped up my two-day retreat and I came to a whole slew of conclusions. I had a lot of questions this year that I was mulling through. One of the big ones that came to me was that writing a book in 2015 is contingent on a few things, so I would like to write another book, or update my previous book, but there’s several events that need to happen, and I need to get some things off my plate first, and the more I looked into it, the more I realized I have too much going on in 2015, as it stands now, if I want to write a book.

[01:00] So there’s a couple of things I specifically outlined that I need to get done and, you know, like I said, off my plate, but that could take six months. It could take 12 months to do that. So I want to kind of revise my 2015 goals that I mentioned a couple of weeks ago, but overall the retreat was great. It kind of sets my mind off on the right foot for starting the new year, and I came back and already have made some changes to my work schedule.

[01:26] I’m doing a little more working from home than I usually do because I realized that I missed that, after working from home for a decade, and getting an office. I’ve kind of worked in the office all of the time, and now I’ve realized I’m getting a little stagnant in there, after doing it for a year-and-a-half.

[01:38] So just realizing some things that you don’t realize if you’re going into work every day. That’s why I do this, and so I have seven or eight pages of notes, and from there, I transcribed them into kind of this key list of bulleted take-aways, and I’m working to implement those, as I get back to work.

[01:54] Mike: You’re right, and I mean, that retreat is a good idea. I’d like to do another retreat in the very near future. I know I did one, but I feel like I need another one now, just because I feel like I started to recognize that I’ve actually been pretty burned out the past several months, but things have started to occur to me lately, and I really feel like I need to take another step back and just take a look at things, and one of the things that I’ve been looking at that’s been helping me out a little bit more has been taking a hard look at what my goals are for this coming year, and mapping them out, month by month.

[02:23] So instead of just having these broad goals where like this is what I’d ultimately want to achieve, actually laying the framework for all of those, like month by month, and basically chaining everything together as opposed to “shooting from the hip” every other week, where like I don’t necessarily have this – I have a longer term plan in place, but I’m not as deliberate about it, and I think that that’s what has come to mind a little bit more lately. It’s just being much more deliberate about what my path, moving forward, is as opposed to just, you know, this is my conceptual goal and I will get there whenever I get there.

[02:53] Rob: Yes, I really like the idea of mapping it out, month by month, if at all possible. The best kind of retreat mappings that I had were broken to the month. Sometimes, I do it by quarter, and that’s not as helpful, but sometimes I just find that I am not able to put it down, month to month, and so I think that’s really good.

[03:11] In addition, I also think that the ideal retreat schedule is to do it twice a year. After about six months, it’s typically when I feel like I should do another one, but I don’t always do it. Once a year is not quite enough.

[03:23] Mike: Yes, I mean, some of the other things that I’ve been looking at when I’m kind of mapping these things out, month by month, is that it actually helps me kind of focus and point at the things that I shouldn’t be doing. I basically killed Moon River Consulting, and officially closed that done, and everything, but you know I definitely think that I can do more, and by more, I mean doing less, depending on how you look at it.

[03:43] Because, you know, certain things I don’t need to be doing, or I shouldn’t be doing, and I shouldn’t be spending or wasting any of my time on it, and I think that identifying those along the way is going to be helpful for dictating what it is that I choose to do, versus what I don’t.

[03:55] Rob: Right, and you know that comes back to I originally started doing personal retreats because my wife Sherry did them, and she would always ask the question, and it’s this St. Ignatius meditation which ways, “What gave me life in the past,” time-frame, you know, one week, month or year in this case, and what sucked life from me over that same time-frame? And that’s the question she always started with.

[04:19] I didn’t use to, but nowadays, that is what I start with. So my first two pages of notes in my little notebook are, “What gave me life this year? What stole from me?” and that was both personal stuff, and so it was spending time with kids and doing things, and then professionally what really ignited my passions and what am I tired of doing? And what was really a drag on me, what do I need to, as you said, stop doing in 2015?

[04:41] Mike: I think the first couple of questions on my personal retreat were exactly the same, and so you know what is adding to my personal life and detracting from it? And the same thing for the professional life.

[04:50] For me, at least, that kind of dictated the rest of the mental conversation that I was having with myself during my personal retreat.

[04:55] Rob: Yes, that’s why I do it. I mean, Sherry and I actually outlined and recorded a whole podcast episode on personal retreats and the structure that we use and stuff, and that will be coming out when we get on the stick and get the new podcast launched.

[05:10] Mike: Very cool. Well, we finally have the dates for MicroConf confirmed. So that will be April 13th and 14th. That’s a Monday and Tuesday. That will be at the Tropicana Casino and Hotel in Las Vegas. So looking forward to that. Finally got all the paperwork straightened out, and that’s a huge stress relief to not have to worry about where it’s going to be, or you know whether or not we’re going to be able to have it there, or –

[05:31] Rob: I was concerned that we weren’t going to have a venue and we were going to be hosting it at your house or something.

[05:34] Mike: So what else is going on with you?

[05:36] Rob: Well, so per your suggestion, last week on the podcast, I went ahead and emailed everyone who had cancelled their trials during the last couple weeks of December, and like the very early part of January, because of the holidays. I don’t have any results on that yet. I just emailed them yesterday afternoon, and so it’s been less than 24 hours, but it was kind of fun to do.

[05:55] What was neat was, I could go into Drip and pretty easily just get those people out. You know, because I have “events” and “trial started,” and I have tags that they’ve cancelled, and so it was just kind of a drag and drop, drag and drop, and then draft the email and send it.

[06:09] It was fun. I hope it, you know, gets at least a few people who – it seems like people had written in and just said, “Oh, I just ran out of time during the holidays,” and my hope is to at least get a few of those folks back in and trying the app out.

[06:21] What’s going on with you?

[06:22] Mike: I’m recovering from a hard drive failure, actually.

[06:25] Rob: That’s brutal. Do you have backups?

[06:26] Mike: I do have backups, but what happened was, I had all the data in a RAID mirror, so if a drive went bad, it wouldn’t be a big deal. I could just order a new one, and it’d be there in a couple of days, but the problem is that the drive that failed, it was in a mirror configuration, and for some reason, whatever reason, that had stopped working like 18 months ago, so only the drive that was – that actually had the latest data on it, died.

[06:53] So then when it came back online, because I plugged the other one in, and said, “Well, OK, I’ve got most of my data here,” you know, kind of what’s going on, and that’s when I realized that things were wrong on it, and so Dropbox started synching and deleting all my files because it had old – just basically a snapshot from 18 months ago, and then the same thing with Sugarsync and like it took me like a full day to kind of recover from that, and then I’ve still got backups that are downloading from the cloud. So it’s been kind of a nightmare.

[07:19] Rob: That sucks, uh, yes, even with all the new-fangled backup software. I mean, we’re in better shape now with Dropbox and CrashPlan, or whoever you use, than we used to be, but it still sucks when you lose a hard drive.

[07:32] Mike: Right, there’s no way to overcome the time that it takes to download hundreds of gigs over the internet, and I’ve got a fast internet connection, but it doesn’t seem to matter because it is limited much more by their data centers and how quickly they can serve up the data.

[07:46] Rob: Yes, I know that there are a couple of backup services where, if you do have a bunch, you can pay them and they’ll like overnight you a USB hard drive, but it all depends on if that’s worth it to you, you know?

[07:56] Mike: Yes, that’s an option for me, but I have a lot of the data because of that data hasn’t changed on there, and then plus there was so much stuff on there, that I had it all in Dropbox or Sugarsync. So I touched base with Dropbox and just said, “Hey, I need you to revert this back to his snapshot in time,” and they said, “OK, no problem,” and they did it, and everything’s fine.

[08:13] So all of those things synched up, just – you know, perfectly OK, and all my data and everything is there. Is it really worth having – paying $200 to have them ship me the entire drive? Or do I just download things kind of as I need them? It’s like, “OK, I recognize there’s a few directories here and there that are not on this old drive. I’ll just download them.”

[08:32] Sure, it will take me an extra couple of days, but it’s not critical that I have that data, and even if I lose it, it’s not that big of a deal anyway.

[08:38] Rob: Yes, I would be in the same boat as you.

[08:40] Mike: So, just before we get into this, we have a quick listener question from Maurice Knopp , and he says, “Do we …” and I’m paraphrasing this, but he says, “Do we resist the urge to code, or sometimes do we do it for fun?”

[08:52] So he had a somewhat lengthy email, but I wanted to kind of answer that for him. I don’t know about you, but I tend to dig in, but there are certain times where I dig in just to learn something new or where, if I’m waiting for someone to do something, and I know that it’s not going to take very long for me to do, but it’s kind of time-sensitive, I’ll just do it myself.

[09:10] I do enjoy going in there, but there’s also times where I will go in there and I’ll see stuff that I don’t like, and then I have to resist the urge to start going and fixing a bunch of stuff. It’s like I came in here for one very specific reason, do the stuff that I came in here to do, and then get out. It’s not worth my going in there and “correcting a bunch of things” that are really more personal preference than anything else.

[09:30] So I have done those types of things, but I try not to get too heavily involved in the code these days.

[09:37] Rob: Right, and his original question was basically like he started as a developer and now he’s a manager, and he was asking if – he said he gets so much joy out of coding, do we still do it when we have the chance, or – you know, have we really like outsourced all of it?

[09:50] I mean, I’m kind of in your boat, although now my main apps are all in Rails, and I don’t – I’m not good enough in Rails to touch any type of production code. As of six months ago, I was still hacking away, making some fixes here and there. I still do a little bit of PHP. There’s a couple of things that have needed fixing in the past few months on some other sites, but I’ve realized that I can contribute more to my team and my company by doing other things, right?

[10:15] I have these – the marketing skills, the managing skills, and I spend so much time getting obstacles out of my team’s way that, if I’m trying to sit down and code, I need “head’s down” time. I need four-hour blocks, six-hour blocks. I mean, that’s when I work best, and I don’t tend to have a lot of those any more. I’m on that – you know, it’s that manager’s schedule, versus a-maker’s schedule, and unfortunately I’m a little more of a manager’s schedule these days.

[10:37] So, yes, I do – in response to Maurice, I love to code, and any time I get to do it, it totally triggers the endorphins in my brain like it always has, but I’ve realized that in order to do it right, I need more than I can give, and keep the business running. And so I, in general – you know, for all intents, I’ve stepped away. I mean, if I code more than an hour or two, every month or two, and I mean it’s kind of down to that level, although I’ve really enjoyed working – my son’s learning Ruby, and so I’ve enjoyed doing that with him, and that’s where I’m getting a little bit of my technical fix, but it’s certainly not writing production code.

[11:14] Mike: So thanks for that question Maurice.

[11:16] Today’s episode, it comes to us from Bruno Martin, and he also wrote a rather lengthy email to us. I’ll kind of paraphrase and pull out a little bit of it, and he says, “Across your episodes, I get some arguments favoring this start-up style,” and to that he means, you know, the advantages of kind of building a very small company, and “start small, and stay small,” and he says that “but sometimes there are some implicates. It can sound idiotic, but for example, you mentioned that you have a more comfortable lifestyle and that it was really appealing.

[11:42] I’m not sure I understand fully why this is the case. Maybe newcomers like me would like a short-overview of the advantages of this choice. I’d really love to hear your voices on it.”

[11:50] So, today, what we’re going to do is, we’re going to talk about the advantages of “start small, stay small” versus doing something along the lines of like Y Combinator, where you’re getting VC funding or going out and getting Angel investment, really building and bootstrapping your own business, and owning that entire life cycle of that business from beginning to end.

[12:09] And the first one, I think, is that you own your own time. You get to choose what you do and don’t work on. Typically, when you’re going out, and you’re trying to get funding, you’re essentially in one of two modes: either you are building the products, or you’re trying to find people to, you know, help fund the company.

[12:25] And, personally, that’s something that’s appealing to me. And maybe for some people it is, it’s appealing to go out and trying to get people to give you money to help further your product, but the reality is – I mean, for me personally, I’d much rather find customers to pay for the product, because that can fund the development and move it forward as opposed to trying to go out and find investors that believe in you and your skill set in order to move it forward.

[12:48] And a lot of times, what I’ve also seen is that – you know, some of the funded companies will tend to go after like a B2C market where there’s a huge play, but you’re not actually getting anybody to pay for it. So the value of what you’re providing is a little bit unclear. I mean, is it – you know, is something like Facebook really valuable?

[13:05] I mean, yes, you can look on the numbers. And, yes, after it’s gone IPO, sure, it’s valuable. For the longest time, Facebook was not making any money whatsoever, and it’s very hard to look at something like that, objectively, and say – you know, “Is this really worth something?’

[13:19] You kind of have to be in the right situation for it to eventually become worth something.

[13:23] Rob: Owning your own time is one of the biggest benefits of this approach versus taking funding. And, you know, we’ve talked about taking funding, initially in the past. Just a couple of episodes ago, we talked about when you should consider doing it. So I am not anti-funding. I’m just anti-everyone thinking that it’s the only way to start a software company, or the only way to start a start-up, right? So I just kind of want to make that clear, up front.

[13:45] We’re going to name a bunch of reasons, here, why self-funding is better than taking funding, but I don’t think that it’s like a clear dichotomy. I just think it’s what you value the most, and owning your own time is probably the one that I value the most. It’s being able to own your thoughts and own your head space.

[14:02] During your workday, being able to pick and choose what you work on, is a huge, huge win, and it’s something that I think, having been independent now for so many years, without consulting clients, because even when you’re consulting, you don’t own your time during the day.

[14:15] I know that you can prioritize, and you can pick which clients you want to work with, but when you’re working on something that someone else owns, there’s still this feeling of dollars for hours, and truly having like a product business where you own your own time, and can guide – you know, what you want to do, you can work on what you want, it’s a real benefit.

[14:31] Mike: And that leads us directly into the second one which is that you can set your own hours. You do get to work when you want, not when you don’t, and it is very flexible, within reason. I’m mean, obviously, you’ve got deadlines that you’re going to have to meet, internally, to be able to build products – you know, and do marketing plans, and get the products that you’re building out there in front of people, but you don’t necessarily need to work 16- or 18-hour days to make sure that investors are happy with your progress, or that you’re landing enough customers.

[14:57] I mean, there’s a lot of ways to build a business where you’re building it kind of in parallel with whatever you currently have going on, so that at some point in the future, you can make a transition between being an employee, a consultant or a freelancer, into doing a products-based business, or a services-based business where you’ve got, you know, some sort of recurring revenue that’s coming in from your customers, where you’re performing those services on a regular basis.

[15:21] I mean, people look at software as a service as like the Holy Grail of products, but at the same time, they don’t necessarily realize that the crux of that argument is recurring revenue, and if you have a bunch of customers that you are continually performing services for, that is also a recurring revenue model and, sure, you may still have to do work for it, but that’s what you’re looking for. It’s really that recurring revenue, so that you don’t always have to hunt around and charge people extra in order to make up for the time that you are finding customers.

[15:49] Rob: Having the flexibility to set your own hours, especially if you have a family, or you have some unique needs where working 9-to-5 at a fixed location, under someone else’s roof, is constricting. This is a really big deal.

[16:03] I think, early on, when I was still kind of working the 9-to-5, and I had to be at a certain place at a certain time, every day, I thought that being able to – you know, work at night, or work shorter days if I wanted to, work four or six hours a day, exactly when I’m most productive, I thought that it would be really cool, and I kind of romanticized it. And when I got out, I found that it was every bit as cool as I thought it was.

[16:28] Now, after doing it for – again, for you know, seven or eight years now, although since I was consulting even before that, I mean, it’s been a decade that I’ve kind of worked from home. So I’ve always been able to set my own hours, but I take it a little bit for granted, but this is absolutely like a game-changer, the first time that you literally wake up and you realize that you can do whatever you want, at whatever time you want.

[16:49] And this is where it then calls upon your own discipline to – you know, to actually get stuff done, and to work and to move forward, but I find that when the motivation is to work on your own products, and your own projects and things you choose to do, it becomes really easy, that you don’t need someone there kind of “cracking the whip,” so to speak, because you’re just fired up to get started every Monday morning. I actually remember looking forward to Monday mornings, and not looking forward to the weekends because I wasn’t going to be able to move forward on the cool projects I’m working on.

[17:20] Mike: Yes, I was going to mention that it can be dangerous, kind of, when you first get into that, where you are coming in and you wake up in the morning, and you can do whatever you want. You can also just stay in bed until noon, if you really want to, but at the same time, you know, you’ve got to move the business forward, and if you’re moving it forward for yourself, then that’s obviously a lot more helpful. But it can be dangerous, especially early on, when you’re first making that transition.

[17:42] Rob: Yes, and I mean, the contrast this with a funded start-up, you don’t really own your own time. You don’t set your own work hours, because your own work hours are basically as many as you can possibly work, and that’s 12 hours a day, 7 days a week, then so be it.

[17:55] And while launching, you know, a self-funded software company or start-up takes a lot of work, you can move at your own pace, as long as you don’t get too impatient with it. There are very few people that I know who own their own software company who aren’t like racing for some big green field event, that work a lot of hours. Most of us work less than full-time, and I’ve worked less than full-time for several years, and I consider that a luxury of not taking funding.

[18:21] Mike: So the third advantage is that you’re somewhat location independent, and you do get location independence from somewhat doing consulting, or freelancing. I mean, there’s certain ways of doing freelancing and consulting work where you’re not able to be location independent. But, for the most part, if you’re running a software company, you can run it from just about anywhere. I mean, if you’re running – and not even just a software company. If you’re running a technology company, you can run it from just about anywhere, especially if you’re using contractors to kind of fill in the blanks and supply you with things that you don’t necessarily have locally.

[18:52] I mean, you could run it out of Boston – the Boston area where I am, or you could run it from the middle of Nebraska. It doesn’t really matter. As long as you have an internet connection, you can generally get the work done that you need to get done. I think that – you know, you said that you were kind of getting work done while you were traveling between Thailand and Prague.

[19:09] Rob: Yes, that’s the beauty of it. I don’t want to over-romanticize this one, but it has allowed me to essentially take a full month off, both of the last two years. And then, in addition to that, I take another several weeks off, let’s say, typically in like four-day weekends, or in the form of a – you know, I went to Scotland for a week last year.

[19:27] So that allows me to take time off, but also to do – to get enough work done while I am on the road that I don’t come back to that mountain of emails that we always dread. And so there’s that kind of location independence, you know, being able to just be on the move, and there’s also the location independence of being able to live wherever you want. So, if you want to move to Portland, Oregon, and live there for a year, or you want to move to France, or you just want to move to a town out in the middle of nowhere. You know, you can do that. And as someone who is self-funded, it’s interesting because you can choose to live somewhere where the quality of life is high, the pace of life – you know, maybe you might like a slower pace of life, where you can get “more house for your money,” and that kind of thing.

[20:05] You don’t have to live in city center. I love urban centers. I love San Francisco and Boston, and big cities, but living there would be very expensive. And so I can choose to live outside of those towns and then go in on weekends. You know, take a four- or five-day weekend and go into San Francisco, just a couple of hours from me, or I – you know, we go to the coast all of the time because we really enjoy that. So there’s like a lot of different dimensions to this location independence, of where you actually physically live and have an address, and then being able to kind of go on the road and still get enough done that you could kind of be a perpetual traveler, you know, in the sense of the “digital nomad” term, you know, that the Tropical MBA podcast talks about.

[20:44] Mike: The fourth advantage is that your income is decoupled from the hours worked. If you do the right work, that work can pay off for a very long time. There’s also the other side of that which is, if you do the wrong work, then it’s never going to pay off, and you’ve just essentially wasted all that time working on something that just doesn’t pan out. But, at the same time, there’s always situations where you’re going to have to try things and experiment with certain techniques, or marketing channels, or advertising, that just is not going to work out. It’s either going to be a time sink, or a money sink, or possibly both, and – you know, it’s going to be a lot of experimentation. Your income is not directly tied to the hours worked. There’s going to be times where you put in a couple of hours’ work and that’s going to pay dividends for years. And then there’s going to be other times where you, you know, sink 20, 30, 80 hours into something, and it never pans out.

[21:30] So there is that balance that you have to strike, and hopefully you can do more of the things that pay off, and less of the things that don’t. The point of the matter is that you’re income is not directly tied to the hours, the actual number of hours that you’re working.

[21:42] Rob: Yes, and I think this is the case, both with self-funded or a funded start-up, but this is maybe more of a dichotomy between a product business and consulting. It’s actually been a bummer. There have been a few points where like my cash has gone low, and I’ve wanted the dollars-for-hours thing back, temporarily, because I’m willing to work a bunch of hours in order to make a good hourly rate, but now that I have products, you can’t just kick that into high gear.

[22:08] Everything takes longer, and I like to think that I use that illustration of a flywheel, where it’s like getting these marketing approaches going takes a ton of effort up front, but once you invest that time, they can pay dividends for a long, long time, and that is, of course, the beauty of having a product. It’s that you don’t have to work an hour for every dollar that it generates for you.

[22:26] Mike: The fifth advantage is that you get to choose who you work with, and I think that, as a company founder, and I think in general, you tend to get to choose who you work with because you can decide who you hire and who you don’t, but I think if you have investors, you’re essentially “married” to them in some way, and I think that this goes along with having co-founders, as well. It becomes much more difficult to break those ties. If you’re working with a contractor, and they’re not working out, for whatever reason, it’s a lot easier to walk away from them than it is to somebody who handed you a check for $250,000.

[22:56] Now, there’s certain customers that you’re probably going to have that give you a fairly hefty check, that are going to be difficult to walk away from, as well, but they don’t own your company, and there are ways to work through things with them to the point that they are no longer an issue, or they are no longer a customer of yours, but when somebody owns a piece of your company, it’s a lot more difficult to do that.

[23:15] Rob: Yes, getting to choose who you work with is a big deal, right? If you’re a salaried gig, the odds that you’ve been able to choose your coworkers, or choose the people that you manage every single one of them, is very, very low, unless you’ve built a team from scratch. It’s a big difference, and it’s such a difference to be able to work with people that you enjoy working with. And, certainly, if you’ve taken funding, and it depends on how much and to what level, but oftentimes you will have investors and you don’t have much of a choice, you know, who you work with, unless you had a lot of investor interest, and if they’re forcing you to grow, which if you’ve taken a million or two million bucks, then they will be, and then you have to hire quick, and you need to get to ten or twenty people within a year, and you can have much less choice. You will have some choice, but you’re going to have to be much less picky about who you hire in order to hit the growth numbers that your investors are going to want to have. So there are definitely pluses and minuses to that approach.

[24:10] Mike: The sixth advantage is that staying small means a lot less overhead, and that’s both financial and management overhead. If you have a small team, then the number of active connections you need to keep open with people is much lower, but if you have a larger team, or if you’re getting funding for a start-up, and you’re growing quickly, the investors want to see large growth in the companies that they invest in. So, if you have a team of 20, 30, 50 or 80 people, that becomes a lot more difficult. So you end up with a lot more management overhead in the company and the company is going to have to essentially absorb that cost. Now, if you own the entire company, you want that overhead to be as low as possible. So that’s why staying as small as possible, while supporting as many customers as possible, is advantageous because it’s advantageous from both a financial and a management perspective.

[24:58] But, it also keeps your stress levels down by not having to worry about the people that you’re reporting to above you, and then also having to worry about the people who are reporting to you. With funded start-up, I would say, I would liken it to middle management where you’ve got to report to the investors and then you’ve got all of the people underneath you who are reporting to you. That’s not for me. I’m not a big middle management type of person.

[25:18] Rob: I’ve talked about this quite a bit because, since the title of my book was Start Small Stay Small, I’ve had people ask me what that means, and the “stay small” part means stay small in terms of employee headcount, not in terms of revenue. So I’ve always wanted to grow my businesses as large as I can, in terms of revenue and net profit, but I’ve never wanted to manage 10, 20 or more people.

[25:39] And that’s really what this one comes down to. It’s that, if you raise funding, you will have to hire a lot of people. You will have management overhead. You will step away from the code, from the marketing, from the day-to-day nuts and bolts, and you’ll become a financial and a people manager. And if that’s what you want to do, then go do that, but if not, then the idea of trying to raise funding and climb that scale, it’s not in line with your goals.

[26:05] Mike: Yes, and there was a time where I used to want to do that. I used to want to build a large company and have dozens of people working for me, and I’ve kind of reversed my position on that, and that kind of leads into number seven, which is, you’re close to the customers. If you’re a small company, you’re really only a phone call or an email away from the customers. And that’s not to say that you can’t do that as a larger company, but when you are a much smaller company, of only one to five people, it’s a lot easier to be involved with the customers on a very regular basis because – you know, there’s not very many people doing the work.

[26:35] So you have to be doing the work. So you have to be interacting with those customers regularly. And I’ve found that I actually enjoy that aspect of it. I feel like if I were to grow a large company that I would lose that. It would be very difficult to grow a large company and still kind of maintain myself on the front lines, and interacting with people.

[26:52] Rob: I really like that that I know the names of a lot of my Drip, my HitTail customers. A lot of folks that come to Microconf are listeners. You know, that’s exciting to me, and I feel like you can pretty – it’s pretty easy to get removed from that, that if when you do have 10 or 12 employees, and you’re basically managing those folks, that they are then the front lines, and you can peek in now and again, but you’re not going to be connected to the customers the way that you used to be. So I think, and that may be a plus for you, or it may be a minus, but for me, I enjoy it, and I enjoy seeing, you know, the same name using multiple products that I’ve built, and I enjoy just kind of starting to build longer-term relationships with these folks.

[27:35] Mike: The eighth advantage is that you can be very agile. If an opportunity arises that, as a small business, you want to be able to take advantage of it, you typically can. You know, obviously, there’s – you know, time and money constraints that you have to deal with, like any other company, any larger company, but with a larger company there tends to be a lot more red tape. There’s a lot more people to talk to, to get things moving, and especially if you are in a larger company and you’re kind of higher up in the ranks. You can point at something and say, “This has got to get done,” but that doesn’t mean that it’s going to get done any time soon, and there’s usually a lot of other priorities that are vying for people’s attention and time.

[28:09] So it can be very difficult to get the ball rolling in a larger company whereas, if you’re – you know, a small team of one to five people, you can usually accomplish things in a fraction of the time that it would take a larger company to be able to do those things. Now, that said, you do have to have less resources to be able to perform those things, but when it comes to being able to turn on a dime, you’re going to rule over those larger companies.

[28:31] Rob: Yes, this is one of the fun parts of being small, it’s just that you can move so quickly and assuming that you’ve built a profitable business, you can take some time and kind of do some pet projects. You know, even within the scope of that same business. You can go off and build a feature that maybe no one has requested that you think would be cool, and you could spend a month of your time, or a month of a developer’s time working on it, and it’s just a – you know, an opportunity, or a whim that kind of strikes you, and you can go build something that’s cool, and this comes back to kind of choosing what you work on, right?

[29:01] You can’t do this all the time. If you did it all the time, your business would eventually start to go down, but being this agile, and being able to respond to things so quickly, as much as it is a competitive advantage, it’s just plain fun, as well.

[29:15] Mike: Another advantage of a small company that I like is that you have a larger scope of responsibility. I remember working at Wegmans and, at the time, the company was about 25,000 employees, but you know the IT department was only probably 200 or 300 people, or something like that, and it really felt like I didn’t have very much responsibility. There were – obviously, there were things that I had to pay attention to and work on, where – you know, like I had to carry around a pager because that’s what people did back in those days, and if a server went down, I had to deal with it, but at the same time, I didn’t feel like I had very much responsibility outside of my job, and it was more or less people coming to me and saying, “Here, this needs to be worked on,” versus, you know, me being able to kind of independently figure out what it is that I was going to be working on, or wanted to work on, and the responsibility, like the scope of my responsibility was kind of set by people outside of my control.

[30:04] It wasn’t as if I had the ability to go out and take responsibility for something. It was more or less that I sat in my chair and when somebody decided that there was something that I could handle, then they would hand it to me. Part of that, I think, is the direct result of – you know, where I was in my career at the time, but at the same time, you know, I just didn’t feel like I had any control over what I did have responsibility of.

[30:25] Rob: I think that leads pretty nicely into our tenth and final advantage of starting small and staying small, and it’s that you have such a large impact on your business, that there’s not that layer of employees between you and the end result, that while you are responsible for more things, directly, like everything will always fall back on you, if it’s just you, or if it’s you and a couple of employees, but you and all of your employees can have a major, major impact on your customers, on your revenue, on new features. You can make a huge difference, both in your business and in your employees, and in your customers’ lives when you do stay small.

[31:05] Mike: So, Bruno, hopefully that helps answer your question about what are some of the advantages of starting small and staying small. If any of the listeners have any questions, or thoughts about any advantages that they think we missed, feel free to come into the website at startupsfortherestofus.com and leave some comments on this episode.

[31:22] Rob: And if you have a question for us, you can call our voicemail number at (888) 801-9690, or email us at questions@startupsfortherestofus.com. Our theme music is an excerpt from “We’re Out Of Control” by MoOt. It’s used under Creative Commons. Subscribe to us in iTunes by searching for “Startups” and visit startupsfortherestofus.com for a full transcript of each episode. Thanks for listening. We’ll see you next time.

Startups For the Rest of Us

Episode 218 | Our 5-Step Process for Answering Emails, Managing Your To Do List and Staying Productive

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James over at Sweet Fish Media was kind enough to write up a summary of this episode. You can read that here.

Transcript

[00:00] Rob: In this episode of “Startups For The Rest Of Us” Mike and I discuss a five-step process to answering emails, managing your “to do” list, and staying productive. This is “Startups For The Rest Of Us” episode 218.

[00:10] Music

[00:18] Rob: 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.

[00:28] Mike: And I’m Mike.

[00:28] 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?

[00:33] Mike: Guess what I got for Christmas?

[00:34] Rob: What? Did you get another iPad?

[00:36] Mike: No. I got sick.

[00:37] Rob: Yeah, and you guys were laid out pretty bad for several days, it sounded like.

[00:41] Mike: Yup.

[00:42] Rob: Well, for me, I leave tomorrow for a 48 hour retreat in Shell Beach. I have a long list of questions to consider. Once I come back from that I will have a much better idea of being able to solidify the goals. You know, when we did our goals episode I hadn’t yet done this retreat. So I do expect to revise that, and I think if it is dramatically revised I may mention it on the next show. I am definitely looking forward to that, trying to get some clarity for 2015.

[01:08] Mike: Very cool. Anything else?

[01:10] Rob: Yeah, my “trial-to-paid” conversion rate – with DRIP specifically, I mean it’s doing good with all apps, but with DRIP specifically – it dropped by over 20% in the last two weeks of December. And I had a nice big bucket of trials that were checking DRIP out, and then conversions just fell off a cliff. So, it’s such a bummer.

[01:27] Mike: Well, you can probably go back to them and shoot to them an email to them and say, “Hey, I know December was a rough month, in terms of being able to carve out time.” You know, you can extend their trials by another 21 days, or 14 days, or something like that after the 1st of the year, and see what happens.

[01:42] Rob: That’s a really good idea actually.

[01:43] Mike: Maybe try to bring them back. Even on Twitter it’s commented like, December of a terrible time of the year for bootstrappers in general, just because conversion rates just fall of a cliff, and everbody’s leads basically start to plummet, just because people get busy. I’ve actually avoided doing stuff – or signing up for stuff – just because I know that I’m not going to get to it. So I’ve kind of gone off into a hole and started working on stuff, because I know that there’s really not much point in me doing any of that stuff online, and I think that if you go back to them – at least if you have the email addresses, if they did start, you might be able to bring them back.

[02:14] Rob: Yeah, that’s a really good idea. I definitely have email addresses. They’re all in DRIP, and they’re marked as “folk whose trial has expired”. So it’s just a couple of clicks to send them an email. I’ll think about doing that probably next week. I like that idea. Just give them a link to re-enable their trial. Yeah, I’m kind of taking this week to take care of some year-end bookkeeping stuff. And also, I noticed that my Amazon S3 charges are creeping up, because of all of the database backups that we’re storing there. So I’m clearing out a lot of files and putting in a automated process to start clearing those out, because 6-7 months ago, when we really started getting stuff into S3 it’s just really, kind of, all sat there. So we don’t have a script, and we don’t have any type of policy that removes things. The S3 stuff crept over $300/month and I realized that we need to get in there. So, figuring out how to do that. I have a DBA who’s helping with that. So, kind of just doing that year-end stuff I otherwise wouldn’t really focus on during the day-to-day running of the business.

[03:13] Mike: Aside from being sick, the only other official news I have is that I’ve officially closed down Moon River Consulting as a business. And I believe that will be effective as of the 31st. So this episode will be out next Tuesday. So by the time this episode goes live I believe that the businesses will be completely closed, and the only thing I’ll have to take care of is taxes for this coming year. Then after that I can, kind of, wash my hands of the whole business.

[03:35] Rob: Nice. That’s a big milestone, man. It’s got to feel good.

[03:38] Mike: It does. It’s nice to know that going forward I’m not going to have two different sets of books, two different sets of checking accounts, two different lines of business that I have to worry about. I mean, I’ve still got some of that to begin with, but at least I don’t have to also think about, “Okay, well what checking account is this money going to go into?”. I feel like running the two businesses side-by-side has actually been a lot less helpful than I thought it would have been.

[04:01] Rob: Mmmhmm. And it’s not just the time and the decision process – that’s of course a big one – but then it’s the money of maintaining the corporations every year, of filing two separate tax returns. It seems like a pretty big win for you.

[04:13] Mike: Yeah. All of the associated overhead just of running a business is doubled because I have the two. So, It’ll be nice to kind of cut that in half.

[04:21] Rob: So the impetus for this week’s episode is that I’ve been asked about and explained my system for how I answer emails, how I manage “to do” lists, and how I stay productive at least five or six times in the past month. It’s kind of uncanny. I don’t typically get asked about this stuff, but I think since we recorded that productivity episode, folks have either emailed or Tweeted or asked in person. So I realize it’s probably time to document it in more detail, so that I can just refer folks to this episode. And I think you and I have some overlap in our processes too, and in essence, today we’re going to be walking through a five-step process to answering emails, managing a “to do” list, and staying productive.

[04:58] Mike: Cool. So let’s get started.

[05:00] Rob: So the first step of the process is to only check email once or twice a day. It’s to basically turn off all new email notifications, and then it’s to close the Gmail tab in your browser, and turn it off on your phone – so you’re not getting buzzed every five or ten minutes as emails arrive, and then only check it at a certain time. Now I check email twice a day. It may work for you to do it once. You may need to do it three times. But the idea is to not have it open, not constantly being pulled out of your flow. In addition, the times of day, I’ve heard widely debated. You know, people say, “Don’t check it first thing in the morning. Check it right before lunch and right before you go home”. Like 11 am and maybe 4 or 5 pm. I do, kind of, the opposite. I do right when I get in, because it helps set my to do list for the day. Then I tend to do it right after lunch in the early afternoon, because I find that I am not super productive in the early afternoon, and it’s a nice easy task that I can take care of. I do “time box” this when I check email, especially in the morning, because the morning is my most productive time. So I will tend to only spend about 30 minutes in the inbox, get a bunch of stuff into the to do list, and then I move into the to do list. Then in the afternoon I may not “time box” it. If it’s going to take me a couple hours to get through it, I want that to be afternoon time, where I’m going to be less productive as it is.

[06:14] Mike: I’m probably not nearly as disciplined about this as I would like. I almost always check my email early in the morning – sometimes it’s not until 10 or 11. If I get up really early, what I tend to do is I’ll check my email and clear it out, and then either close the Gmail tab, or I use a plugin called Inbox Pause. I find that helpful because it allows me to have my Gmail tab open, and it tells me flat-out at the top, “Hey, your inbox is paused.” So, if I happen to flip over there because I’m looking for that little kick that says, “Hey! You’ve got new mail.” I’ll see that right there and say, “Oh yeah. I shouldn’t be checking my email.” or “I’m not supposed to be in here because I’m not going to get anything anyway.” And sure, I can click that button, but the fact that I have to manually click that button to start getting to my email is a mental trigger, or reminder, that says, “Hey! You should be doing other things, and actually getting real work done.” So I find that helpful. I agree with you that getting things done in the afternoon is helpful. The other thing that I find helpful is clearing out email near the end of the night, because it helps me alleviate the mental strain of having the fact that there are some emails that were sitting there throughout the day, or at the end of the night, and I’m not thinking about them – which is kind of nice.

[07:26] So, if I can clear out my email and get it as close to Inbox Zero as I possibly can, I find that helpful to do near the end of the day, and in the evening. It would probably be better to just not check my email and maybe remove it from my phone, but I like having my email on my phone if I need it.

[07:41] Rob: Yeah. You bring up a good point, because these five steps that I’m using are during your workday. So if you have a regular schedule that you work – 9-5 or whatever – that’s where these steps come in. Outside of that, if I’m waiting in line somewhere, I will check email on my phone, because I consider that, kind of, found time. It is time that I wouldn’t be doing something productive anyways, and so if I can go in and check emails, and get a few replied to, get a few forwarded, and get a few deleted – that to me is actually a good way to do it. I think as long as you’re not compulsively checking your email all the time, and thinking about it, and you have that addiction thing – I don’t really see anything wrong with having email on your phone and checking it. I try my best not to check email or Facebook or Twitter when I’m with my family. I think that’s the big thing. When I’m working I want to be working hard, and when I’m playing and hanging out with my kids and my wife I don’t want to be thinking about work. Right? I don’t want to check email and have it suddenly stress me out, or remind me of something that I then can’t do anything about, so that I’m mentally shifted away from being present.

[08:45] So that’s where that balance — you, kind of, have to know yourself. But again, if I’m waiting in line and my family is not around, I’m not considering checking email and getting things done then a bad thing at all. I think it’s actually a way to be reasonably productive, instead of just standing around.

[08:58] So that was step one – was to check email twice a day. And I guess we would put the caveat in, except for if you’re standing in line somewhere and you’re on your phone. Step two, is to live by the Three Ds. The Three Ds are : to Do it, to Delegate it, or to Delete it. I’m going to start with Deleting it. So I’m not a big believer in saving things for later. In general, I don’t save many things for later. So if I’m not going to read an article now, probably 80-90% of the time I delete it. So I do get emails from Quora, emails from Growthhackers.com, emails from Bootstrappers.io, emails from Foundercafe. And they’re, kind of, showing me threads and conversations, and I’m either going to pop in quickly, comment, maybe skim something – but in general I don’t plan to read things later. That’s not the way that I work, because I find that that adds a big queue of this mental weight in the background, and something that I’m always thinking about.

[09:55] However, if you know yourself, and you do use a read later app – like maybe Instapaper or some other feature in your browser – and you do actually find time in the evening or over the weekend, and you like to have a queue of things that you’ve set up, then that’s maybe where you maybe wouldn’t delete those, right? You would put them in that queue and read them later. If I’m going to do it, I use Trello, and I wind up putting it into a side Trello board of the things that I do want to read later. I do that with FounderCafe threads as an example. If there’s something that I think I can reply to, and it’s going to take longer than a couple minutes, then I’ll actually just put a Trello item in there. But otherwise, I delete a lot of email. I get more than 100 emails a day, and I wind up deleting a lot of them. Even in the old days I probably would have kept some of these around thinking, “Boy, someday I’ going to need that information.” But I’ve found that you can typically find stuff via search, and in general, I’ve found that my productivity has dramatically increased by the fact that I’ve learned to skim, and I’ve learned to skim/read a lot fewer things than I used to. And that has allowed me to maintain a lot of productivity even though I have a lot of incoming stimuli and a lot of incoming emails. So, again, this first of the Three Ds is to Delete it. And I find that I delete very healthfully, and I delete heavily, and when in doubt I delete emails – rather than the Do or the Delegate.

[11:16] Mike: I was just going to mention an anecdote about Instapaper that I read at one point, which I’m sure I could find it, if I looked hard enough. But it essentially said that in Instapaper, if you had not read something, and it’s been more than 2 or 3 weeks or something like that – or maybe even a week – the chances of you ever going in and reading that are slim to none. And I think that the developers had written the article which basically just showed that once somebody gets to a backlog that’s more than a couple of days long, it’s almost like having a hundred RSS feeds coming in. It’s just like you can consume so much information and then have no time left to do anything else. So I do the same kind of thing that you do, but I also use UnrollMe. So anything that comes in from Quora and a ton of these other sources, I just have UnrollMe aggregate all of those. I get a single email with all of them. And I just go in and I very quickly review it. Most of the time it’s things from L.L. Bean or Amazon for various things – you know, most of them are promotional advertisements. And I don’t necessarily want to completely unsubscribe from everything, because I do want certain notifications. But having it as a single email that rolls up 20-30 other emails every single day, it alleviates the sheer volume of email that comes into my inbox. Because I can just quickly glance through quickly within that one email and kind of skip most of it. I don’t have to worry about it.

[12:35] Rob: Yeah, that’s a nice way to do it. I will make a note here that Gmail has the three inboxes with the promotional tab and that kind of stuff – social tab. I don’t do any of that, because it makes me feel like I have three inboxes to check. And I found that if it’s not 100% accurate, then I always have a doubt, “Am I missing an important email, a support email, or something I need to reply to?” And so I found myself checking all three tabs, both on the phone and in Gmail. So, me, myself, I’ve disabled all of that, and I like to have a single inbox view, and kind of do my own filtering.

[13:05] Mike: I do the same thing. I disabled that just because I didn’t like having the three different things. And I think the way you put it is probably the best. I hadn’t really thought of it in that way. You’re right, it’s like having three different inboxes. But in a way I do that now, because I have all these filters set up – I probably have like 50 different filters set up – that will take emails that come in to my inbox that match certain criteria, and just automatically apply labels to them. And some of them are marked as read, and some of them are not. So what will happen is it will end up in my list of labels on the left side in Gmail, and then it will be bolded, and it will show me the number that were sitting there because it was not marked as read yet. So I might need to go in and tweak my filters a little bit for some of them, but for the most part that works out pretty well. And in a way it kind of lend itself to that idea, where I have multiple inboxes. But I know that anything going into those that’s automatically labeled is not critical. So I can just let it go. And the nice part is that it doesn’t show up on my phone if I do that, because my phone only just goes straight to my inbox, which is kind of nice.

[14:05] Rob: Yeah. So an example of how I read through some startup news – or marketing news – this morning. I get a couple of different newsletters – like I said, Growthhachers.com, and the Mad Mark newsletter, and Bootstrappers.io. And if I have a busy morning, or I have a lot of stuff to do, I will just delete those outright as I go through my inbox. I won’t even open them. If I find that I think I might have some time during the day where I’m going to want to look at them, then I might Boomerang them back. We’ll talk about boomeranging in a little bit. But I’ll Boomerang them back in the afternoon, and I will typically timebox about 10 minutes to look through all of them. I skim through the titles and look at what’s interesting, and I open them all at once – so I’ll open six or seven tabs of anything I find interesting. Then I delete all of those emails – as you said, if you do UnrollMe they’re all in one email that you can delete, which is even better. Then I’ll go through each tab, I’ll skim through it, and I’ll figure out, “Am I going to get anything out of this?” or — a lot of these posts I find are so short anyways, that the title basically gets you to click, and then there’s nothing actually of value in them. So, I’ll go through them, I’ll figure out, “Do I want to Tweet this? Do I want to pull it into a podcast outline later?” – in which case I’ll go into the Google Doc and I’ll make a note of it for the next week.

[15:09] “Do I want to make a note in a marketing plan?” Like if there’s a new marketing approach, or it’s kind of a walk-through of like, “Here’s a new tweak to Facebook ads.” or something. Then I will actually pull a link to that and I’ll put it in the HitTail or the DRIP marketing plan. Or if it’s something else that I then want to look into in the future, I will then go put it in Trello, and I’ll say, “Research YouTube re-targeting.” and I’ll prioritize that. So what I’m trying to do is take really actionable items, very quickly, from these things that you could otherwise spend an hour reading through. So I’m trying to distill it quickly down to what action items am I going to take away from this, and not reading through a bunch of “entreporn” that you’re just looking to read some success story of someone that isn’t helpful, and isn’t going to move my business forward anymore.

[15:54] So that was the first of the Three D’s. The Three D’s again are : Do it, Delegate it, or Delete it – and we just talked through deleting it. The second one I’m going to talk about is Doing it. So any email if it takes between three and five minutes – anywhere less than five minutes – I try to handle it immediately. This is where I will Timebox things, and do the most important ones first. But I like to not handle emails more than once if possible. So if it’s just going to take a couple of minutes, and it’s worth doing – and that’s a big caveat there. I found that early on in my career I replied to everyone, all the time, any partnership opportunities. You know, you’re just trying to claw your way forward, and you’re doing any interview people ask about, or doing joint ventures and that kind of stuff. I find that now a lot fewer things move my needle, both on my personal brand side and the software side. So I’m pretty choosy about even what emails I’m able to fully reply to. I try to reply to everyone who emails and maybe say, “Hey, just not interested right now. No thank you.” is sometimes my reply. If I can do that very quickly I tend to lean towards replying no to most things, unless there’s a really compelling reason to reply “yes”. I don’t tend to spend a lot of time thinking about whether I should go forward with a partnership, because unless it’s a “Hell Yeah!” – like Derrick Sivers says, “Unless it’s hell yeah!” – I’m just going to have to say “No”. Because I have so many other opportunities going on, and the opportunity cost of even spending five minutes and thinking about it is just too much time these days. So you have to weigh where you are in your process – early in your career versus maybe later in your career.

[17:24] Mike: I think I have a bit of a harder time doing this, just because there are some things that will take me only a couple of minutes to do, and a lot of times I’ll just batch them up instead. So I don’t take care of them right away, but I’ll say, “Okay, well these three or four things, I’ll come back to them later in the day when I feel like I’m going to block off that time. Some of those things will just sit in my email box for a little bit longer than they probably should, and I do handle them more than once. I don’t know whether there’s a great way to do that. So, for example, I have an email sitting in my inbox right now for renewing part of my Microsoft Partner Network benefits. And I know that I’m going to get another one next month. So it’s like, “Do I even bother with this right now?” And a lot of times those things tend to fall much lower on the priority list, just because I know that I’m going to get another notification, and if I don’t get to it now it’s not a big deal.

[18:12] Rob: Right. Yeah, for that one particular I would either just delete it outright – if I know I’m going to get one – or I would forward it into Trello. That sounds like it’s going to take at least five minutes – or maybe more, by the time you find your login, and update your info, and do some clicks. Then you know there’s something you’ll have to read in “Terms of Service”. So I would probably put it into Trello, unless I clicked through and it was literally one or two clicks and I could be done.

[18:35] Mike: And maybe this is because it leans more towards the higher end of the five minutes – more towards the “I’m not absolutely sure how long this is going to take.” It might take five minutes. It might take me 30. And forwarding it to Trello, though, doesn’t necessarily either because I know that I’m going to get another email about it.

[18:52] Rob: So I probably would have done it by then – my stuff doesn’t stay in my Trello board very long, I mean I get it done pretty quickly. But if it was still in Trello when I got the next email I would delete that right away, because it’s already captured. It’s already in the to do list, and I’m already working out of the to do list. The Three D’s we’re talking about, I do very quickly, and I try to get out of my inbox as quickly as possible. I don’t work in my inbox. Then I will shut it down, and I move to Trello, and I start hammering all of the stuff that’s in there. So for this one, yeah, you can either do it – if you think it’s going to be less than five – I’d do it. If I have a feeling, like you said, it could be 15 or 20 minutes, I’d forward it over to Trello, archive the email – I’d label everything and archive it, it’s all with keyboard shortcuts of course – and then I would move onto the next email.

[19:34] Mike: Sure. That makes sense.

[19:35] Rob: And then the last of the Three D’s is to Delegate it. So if I can’t do it quickly, if I can’t delete it, I delegate it to one of two places. I have a virtual assistant, or I have my own to do list. So, for my to do list, as I mentioned, I used to use pen and paper, and that worked okay but it just got too complicated, so I’ve moved to Trello. There’s a bunch of other to do lists – I know you don’t have to use Trello – but the reason it works for me is because I love being able to just hit the “F” key in Gmail, type in “TRE” and it pre-populates with my Trello email address for my “to do” board. It’s all done very quickly via keyboard shortcuts. The email is gone, and it’s now at the top of my Trello board for when I do actually start doing things, I can prioritize quickly, and get on with my day and actually start being productive.

[20:21] Mike: That you try to get in and out of your mailbox as fast as possible. That’s not something that I probably tend to do, but it probably is something that I should start doing. Because sitting in your mailbox is not necessarily productive. It doesn’t really move your business forward. Unless you’re doing a lot of email exchanges with people, where you really need to do those email follow-ups. But for the most part I think that most of our businesses do not necessarily live and die through our email. It’s all of the other things that we’re doing.

[20:45] Rob: Yeah, that’s right. And obviously email can be a major time suck, you know? I find that since I can’t re-prioritize and reorder emails in Gmail that you’re constantly scanning through all of the emails in your inbox, and figuring out, “What’s the next priority? What’s the next priority?” So it’s this decision progress, it’s a scanning process – that’s what I’m trying to remove. I’m trying to do that once, through this triage – the Three D’s. Trying to get it into Trello, get it deleted, get it delegated – forwarded to a VA if they can handle it – and then try to get to Inbox Zero – I don’t always, but I get pretty darn close, and then move into that Trello thing to actually, in the morning, start to crank to real to do’s that are moving the business forward, then coming back to email later. But again, I think a big rule that I’m trying to do is get out of the inbox as quickly as possible, and not handle emails more than once if possible. Obviously, if I’ve sent something into Trello, and I have to then go back into Gmail to pull up a link or something, typically it’s in the body of the Trello thing itself – because when you forward the email it goes into the Trello card. But if not, if I do have to get back into Gmail, then I will and I go search and find the email and I’ll pick up the link. So I do maybe waste 20-30 seconds there. But it’s not as if I’m forwarding 30, 40 emails a day into Trello. By the time I’ve done my Three D’s and I’ve triaged my inbox, I’ll get my inbox almost to zero – if not to zero – and I will maybe have added three to five items to the top of my Trello list.

[22:09] You know, a helpful scheduling tip from Nate Grahek, who was on the show, he uses “Assistant.2” for helping to schedule appointments. And so I’m still using the old-school way of emailing and asking, “When are you available between 9 am and 3 pm, Monday through Thursday?” Mike, I know you use a service. What is the url?

[22:28] Mike: I use Doodle.com. So what that does is you sign up for it and it gives you a special url. Then what you do is you send that url to somebody and it links into your Gmail calendar. I have it hooked up to my Gmail calendar and my wife’s, so that any time where I’m busy, or where my wife has essentially scheduled something for us. Like if she’s got a class that she’s teaching and I have to watch the kids during the day, then obviously it’s going to be a bad time for me to try and have a meeting for that time. So what will happen is that that time will show up as busy on the calendar link I sent to somebody else. So it, kind of, aggregates the two calendars together, and when I give it to somebody I say, “Hey, choose something between these hours, Monday through Friday.” And that way it will just show up, and it just says, “Mike Taber is busy” and it gives you that time chunk. And then the person can choose several other times that they want to have a meeting with me, and then they just say, “Create a meeting request.” and it will send it over to me. Then I can just – whichever one works the best for me – say “accept”, and then it puts it on my calendar, and sends them an email, and then we’re good to go. So it’s helpful for me because it allows me to send something – because I’m busy. I think Assistant2 is a little bit different, because it helps, kind of, from the reverse angle where you know that the other person is busy.

[23:44] Rob: Exactly. It sounds like either one of those could be a good fit. I think I’ll probably consider starting one of those up. I just haven’t optimized the scheduling part of my whole process. I’m still handling my own scheduling. A couple of notes on to do lists before we wrap up this second step of living by the Three D’s. Because these are some questions – as I’ve explained this to people over the past month – they have these questions, so I want to answer them. The first is I have essentially two to do lists. I have an “A Priority” and a “B Priority”. I also have a doing and a done list. These are called “boards” in Trello, but it’s just a list of things. The reason I like – doing I never use – I like the done list because I can look back for months and see things that I have done. I can also use it – like when we sit down to make notes on what we’ve done during the past week for the podcast – I typically go to my done list of Trello and say, “What have I been working on?”. It also gives me a feeling of accomplishment, just to see that I’ve been getting things done. And at the end of a year I can look back and see how far I’ve come, and it actually gives me things to review, and say, “What did I enjoy this year?” and “What did I not enjoy doing?”. So aside from the doing and done, my “A” list is everything I’m working on, and my “B” list is basically super-low priority. It’s things like, “Watch this video someone recommended that I deemed I should watch.”, “Read this exceptional blog post.” Take care of something that is not high priority. And I only move to my “B” list when I’m fried, frankly. It’s when I don’t have the energy to actually work, and I want to learn something new, or I just want to indulge in some content. And even then, if it’s a video I use MySpeed, which is a 1.5 to 2x player – so I never 1X these videos. I mean, these are not movies. These are actually like marketing videos, or maybe a video interview with someone that I can’t get via audio, or some type of presentation where I want to see the slides, or something. Those are my main “A” and “B” lists, and the structure that I use.

[25:37] Mike: I use a combination of a couple of different things. So, like in Trello, I have an “A’, “B” and “C” tasks set of boards. And then anything I need to be doing that’s, kind of, time sensitive or critical, goes under my “A” list. Then “B” list is for things that can take a little bit more time. And then my “C” list is for things I would like to do, but I will probably not get to in the near future. And the reality is that if I put something on the “C” list I kind of know mentally that, “Hey, I’ve written this down, so that if I ever need to search for it in the future I can find it.” But at the same time, I just know that I will probably never get to those things. And it’s pretty rare for something to go from my “C” list to my “B” list. Things swap back and forth between “B” and “A” occasionally. Things do go back and forth between “B” and “C”, but almost never will something go directly from “C” to “A”. I work from my “A” list. That’s just how I do it.

[26:27] The other thing that I do, to keep track of the things that I’ve done, is that I signed up for Idonethis.com, which basically just send you an email each day which says, “Hey, what did you get done today?” All you do is reply to it. I just give it a bulleted list of all the things I got done that day, and that’s it. What it does is keep track of all of that in a calendar, and I can go back and see all of the different things I have accomplished on any given day. I find that that’s fairly helpful for helping to keep me on track. Obviously, if something goes wrong during a day, and I blow my whole day doing stuff that I didn’t want to do, or hadn’t meant to do, I just throw it into that reply to Idonethis.com and it shows up there and says that I spent the entire day doing that. But it’s also obvious that I only got that one thing done.

[27:11] Rob: Another note on to do list structure. I live by one to do list. I have all my work, my personal, my HitTail, my DRIP, my MicroConf, my podcast. All of those to do items are on a single list. Because when I used to have lists for each one, I would spend several minutes – every time I finished a task – trying to figure out which list I should start working on next. I’d skim through all the lists, and look at them, and re-prioritize them, and five or ten minutes were gone every time I finished something. In my opinion, you want to remove that decision point. You want to make it once during triage, and then you want to roll with your momentum. So I don’t like interrupting my flow with useless decisions, and to optimize productivity that’s something that I do. And I’m able to keep that “to do” list pretty short, because I don’t stuff my “A” list with a bunch of crap. I triage it pretty healthfully, and I either put stuff on my “B” or I delete it or delegate it. I’m pretty guarded about what actually gets on that “A” list, and that’s the step I think a lot of people fail at. They just want to throw everything in there and then prioritize it later. But when you have two or three hundred items on that list it’s just not possible. So even with all the stuff I’m managing, and all of the projects I’m working on, I’m able to make it work with a single to do list that manages both personal and work stuff.

[28:22] I do have multiple queues and “wish lists” elsewhere. So I have an Audible.com wish list, where I keep all the audiobooks that I want to purchase and listen to in the future. So when someone tells me about a book, or I hear about a book on a podcast, hear an author interviewed – even if I’m in the car I can use Siri and say, “Send email to Trello.” It will say, “What’s the subject line?” and I will just put in the title of the book, and then say, “Send.” with no body. That goes into the top of my Trello board. The next time I go into Trello I can very quickly go into Audible, search for it, Boom! – add it in there. I just did that today with Sally Hogshead’s new book, “How the World Views You.” I heard an interview with her last week, and now it’s in a wish list somewhere, and I know that when I’m thinking about that, next time I’m in Audible and I have some credits and I want to get a new book, it’s right there where I want it to be. Same thing with Amazon. Same thing with Netflix. Then I do have some side Trello boards, that are things like projects I want to do with my kids that I heard about or maybe some IOS apps that are teaching how to program, or some science, or something that I want to work on with my kids. I do have those here and there, but these are not to do lists. These are more like lists keeping track of interesting things that I want to revisit later, and so that kind of stuff does not live on my main to do lists, because I don’t want it cluttering up what is my next task to get done for my work or my personal life.

[29:37] Mike: Yeah. So to go back a little bit to your single to do list. When you have stuff on there, do you have like, “Hittail marketing”, for example. Or do you have things, like, “Get a blog post entry for Hittail done that says this…” and then you have like three or four other things that are related to Hittail. Is that on your main list, or do you just have the one line item that says, “Hittail Marketing”, and then off to the side you keep a separate list for all the different things that that would entail?

[30:03] Rob: No, anything on my list is super-specific and super-actionable. Because if I have “Hittail Marketing”, what does that even mean? If I feel like, “Wow! I need to do some Hittail marketing.” I might have a Trello to-do that says, “Check Hittail marketing plan, and pull two or three items into Trello to do” list. Like that would be a “to do”. Then I would go in and think about “What’s next?”, and “What do I want to do?” – I have a contact calendar now, actually, or a marketing calendar. But I would go to the game plan, I would then pull them in, and I would add the three items, and I would prioritize those. Today I have a couple of personal issues. I have to book my son in a camp and I have to send a new contract to somebody and I have to do a final read-through of a WordPress plugin page and add some content to it. So, that’s how specific things are. It’s that when I get there it is an action item. If it is a brainstorming item, then I will put it as such. Like, “Brainstorm new ideas and create them into actionable “to do’s” to loop back to the list.”

[30:59] Mike: Yeah. That’s, kind of, what I was getting at, because it wasn’t clear how you were putting those things into your single to do list. You said that there are different queues or wish lists that you have that are basically just lists of stuff. And I have some of those for AuditShark, and a couple of other things I’m working on, where it’s just, “These are the lists of things that need to get done for it.” And what I’ll do is I’ll put it on my Trello board that says, “Do this.” or “Spend time on this.” And what I do is I say, “Okay. Well, if I’m going to work on that, then I need to go over to this other place where I’ve got a list of 30 or 40 different things.” And I’ll spend two hours executing on some of those things. So I don’t keep that entire list of 30 or 40 things on my main “A” list, because it would just get overwhelming at that point. So I almost have a two-level hierarchy at that point. But not everything in there has that two-level hierarchy. Some of it is just one.

[31:47] Rob: That’s a good point. I have the same thing. I have these marketing game plans for all the different products, and so that may have hundreds of bullets in it. But you can’t have that in your to do list, because you’re not doing all of them soon. So I guess I hadn’t thought about it in those terms, but I don’t want anything on my to do list that I’m not going to get done here in the next week or so. If it’s something that needs to get done months or years down the line then it should be somewhere else. It should be in a goals list. It should be handwritten in my notebook as a goal for 2015. Or it should be – like you said – in a second-tier list of all the things that have to happen for that product that I can revisit periodically.

[32:25] Mike: Yeah, I think the difference between the way we do it is that you have those secondary lists, and so do I. But what I do with them is I work on them and then I leave them in that secondary list, and just mark them off over there. Versus what you do, is you go over to that secondary list, probably delete them or archive them or whatever, and physically move them from there into your “A” list on the Trello board, to say “This is what I’m working on now.”

[32:46] Rob: Yup. That makes sense. So the third step, after Live by the Three D’s is to Aspire for Inbox Zero, but realize that it’s not always feasible.

[32:55] Mike: How many emails are you up to right now?

[32:58] Rob: Right now, since it’s mostly a vacation week, I have 27 emails in my inbox. Today we’re recording. I’m not actually working today, so I didn’t go through this process. If I had, I would probably be down to under five emails in the inbox, and everything else would have been delegated, deleted, or in Trello at this point.

[33:17] Mike: Yeah. I’ve got 21 right now. Then there’s a bunch of them that I can definitely get rid of, but I haven’t sat down to spend the time to go through. I didn’t get a chance to really work today, because I had to take my kids to the dentist, and I had to go to the bank, and I had to file paperwork to close Moon River Consulting, and all of this other stuff. It’s just like I really just have not gotten to my email. I mean, there is a ton of stuff I could have deleted already, but there is a lot of stuff in here that I haven’t gone through that process to actually take care of all the stuff that isn’t going to take me very long.

[33:46] Rob: Right. I think that’s a good point. I don’t view email as this stressful, real-time thing – as I think some people do. They want to instantly reply to every email, and they want to get back to people within a couple of hours. That’s not how I do it. I don’t think that my schedule should be set by a person sending me an email. I don’t think that – they shouldn’t be able to get something on my to do list unless I want it to be there.

[34:07] Mike: That’s a really good point. It was a hard lesson for me to learn early on. I wanted to be super-responsive, and felt like if I was super-responsive to other people, not only would that be reciprocated, but it would also help my business move forward quickly. The fact is that it’s just so blatantly false that it’s hard to comprehend when you’re first getting started. Because those things just do not matter. There’s been emails that have sat there for two, three or four weeks before. At some point they fall off the radar and they become immaterial. They don’t matter at all at that point. If it’s waiting for three days, it can wait for a fourth. It’s not that big of a deal.

[34:42] Rob: Yup. The fourth step of five is to use Boomerang and your calendar liberally. So what I used to do – this is years ago – I used to use a “tickler file”. I don’t know if you’ve ever heard that term, but you would basically have a file that was 12 months of the year, and then you would have another multi-file in each one of those, for each of the four weeks. And if you needed to remember to do something on December 14th, then you would go to your December file and you would go to the second week, and you would place a piece of paper in there that said like, “Revisit this.” But this has become so much simpler with either Boomerang or your Google Calendar – or whatever calendar you use. So Boomerang is a Gmail plugin, and it allows you to not only send email later – which is a cool side benefit – but it allow you to take an email that you do not want to respond to today, can’t respond to today – because you don’t have the information, but you know that you’re going to have the information in a week or two. And you can just – I hit the “B” key, and say, “Next Monday, 10 am”, I hit enter and it’s out of my inbox, and it’s back in my inbox next Monday. So examples of things that I’ve done with this recently are : we’re constantly getting requests to be notified when MicroConf dates are set. We’re still trying to get a contract back from the hotel. I don’t have the dates yet, by I’m assuming that I’ll have them by next Monday. So I have like six emails now that have come in that I’ll reply to and say, “Hey sorry. Not yet. I’ll let you know.”

[36:04] And them I’m boomeranging them back to me next Monday. Now, obviously at a certain point that doesn’t scale. It gets to be too many. It never has. I’ve never had 50 emails Boomeranging back to me in the same morning. These things tend to space themselves out. Another one is, I sell quite a bit of stuff on Amazon. I just like to sell used stuff that I have. I don’t keep it around. And I’ll often be at my apartment near the beach, and I don’t have the stuff to pack it up. I don’t even have the thing that I need to ship, but that email comes in. And I know that I want to be notified of it when I get back to the house, so that I can ship the stuff. So what do I do? Well, I Boomerang that for the day – the morning of – the time when I’m getting back to the house. So those are two, kind of, simple examples. But it’s ways to keep clutter out of your inbox, and for it to come in just in time. You can also – if you don’t want to use Boomerang – just use a calendar event, right. Go in at 9 am that morning and remind yourself, “Hey, this blog post is going live.” I have like a recurring event in the calendar that reminds me “A blog post is going live on the DRIP blog. It’s been scheduled and that morning you need to schedule the Tweet, and do this and do that.” There’s some steps that have to get taken. So, that’s why step four is to use Boomerang and your calendar liberally to keep your inbox clear.

[37:10] Mike: I use Boomerang for basically the same types of things, because I’m getting the same types of emails from people asking when Microconf dates are, so they can plan around them. One of the things that Boomerang does not do is that it does not send you emails unprompted. So one of the things that I like to do – like for our Mastermind group call – we maintain a Google Document that basically outlines all of our previous conversations, and what our to do lists are for the current week, and what we’re supposed to be working on so we can discuss it next week. I actually went into Zappier and set up an email based on a schedule that sends me an email with a link to that document every Monday morning. It actually goes to me and to the other people who are in my Mastermind group. It’s very helpful, because it comes in every Monday, but we only meet every other Monday. So what happens is if I forget to go look at it, and we meet on a Tuesday night, and then the following Monday I get that email. And even though we’re not meeting that week, it’s a reminder “Hey, go check this document and make sure that you’ve at least started working on this stuff.” Because if I were to get it every other week, and I only have a day to work on the stuff because I forgot the previous week, that would obviously be fairly detrimental to my progress on a weekly basis – because I might get sidetracked. But I find that having that email come in every week helps me. But you can use Zappier to send you email notifications on a schedule to do different things. If you have a marketing calendar than that’s fine – you can have those things automatically added. But if you need emails, or anything like that, sent to you on a regular basis for that kind of stuff, I find that that’s very helpful.

[38:41] Rob: I like that. That’s a good hack. Step five is to do the work. It’s to close emails, to turn off notifications, and it’s to move into your to do lists. So, for me, it’s to move into Trello. I prioritize today – pretty much only today. I figure out what has to get done, so I don’t go through my entire to do list every day, but I skim through the top 10 or 15 things, maybe 20. I’ll move the stuff to the top, and then I start looping music and enjoy productivity. And I don’t come back into my email inbox for several hours.

[39:10] Mike: I don’t necessarily prioritize just today. I also try and prioritize things throughout the week, because there’s obviously long-term projects and stuff that you’re working on, that you know that you’re not going to be able to finish all the work on any given day, and it’s going to take several days. So, I will prioritize things a couple of days into the future. So for certain longer-term things I’ll say, “Okay. I’m going to work on it for two or three hours today, and then I’ll work on it for a couple of hours the next day, and the day after that.” But I use that primarily for those things that I know I’m not going to be able to finish in a single day, or a single sitting.

[39:38] Rob: That’s interesting. See, I would break those things up into smaller tasks. So if you had something that’s like a 12 hour task, I would actually break it up into its components, and figure out what 2-3 hour blocks it could be crunched down into.

[39:52] Mike: Yeah, this is writing for my book. Depending on how I feel, or what comes to mind when I’m sitting down to do it, I may feel like writing about a certain topic, and I may not. So that’s where I just start breaking out, and say, block off blocks of time to do this. I don’t necessarily block out specifically what I’m going to be doing during that time. It’s just, you know, “Spend these three hours working on that.”

[40:14] Rob: Yeah. I can see doing that.

[40:15] Mike: But I just, kind of, pull from the outline at that point. It’s like, I get to the beginning of that three-hour block and I say, “Okay. Go to the outline for it, and then look from there.”

[40:24] Rob: Yup. That makes sense. That’s probably how I’d do it as well. So to recap, our five steps to answering emails, managing a “to do” lists, and staying productive are, Step 1 : Check your email once or twice a day, Step 2 : To live by the “Three Ds : Delete, Delegate, or “Do It”., Step 3 : Aspire for “Inbox Zero”, but realize it’s not always feasible, Step 4 is to use Boomerang and your calendar liberally, and Step 5 is to do the work.

[40:47] Mike: If you have a question for us, you can call it into our voice mail 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 www.startupsfortherestofus.com for a full transcript of each episode. Thanks for listening, and we’ll see you next time.