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.
Episode 219 | The 10 Advantages of the Start Small, Stay Small Approach
Show Notes
Transcript
[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.
Episode 218 | Our 5-Step Process for Answering Emails, Managing Your To Do List and Staying Productive
Show Notes
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.
Episode 217 | Why You Shouldn’t Worry About Competitors
Show Notes
Transcript
[00:00] Mike: In this episode of Startups For the Rest of Us, Rob and I are going to be talking about why you shouldn’t worry about competitors. This is Startups For the Rest of Us episode 217.
[00:07] Music
[00:14] Mike: Welcome to Startups For the Rest of Us. The podcast helps developers, designers, and entrepreneurs be awesome at launching software products. Whether you built your first product or just thinking about it. I’m Mike.
[00:22] 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 the word this week, Rob?
[00:27] Rob: Well, I just wrapped up an AMA, ask me anything, on Bootstrappers.io. We’ll link it up in the show notes. But it was a lot more work than I thought it’d be but it was also pretty fun. I got questions from folks like Andrew Warner, Brian Castle. There was a lot of good stuff that came out of it and actually there were so many questions and I answered all of them, but there were a lot of the answers that I really want to flesh out, either into full-length blog posts or a full podcast episode because there’s just so much to say about certain topics.
[00:56] Mike: Very cool. So, what brought that on?
[00:58] Rob: I was emailed by the guy that writes Bootstrappers.io. He asked if I wanted to do it and I said as long as in the Bio you could include a mention of Drip. I’d never done one so I didn’t know how much work it would be or what the real impact of it would be. Turns out it was pretty cool. It was neat to see how many names of people that I recognized. Emailed us, asked questions through the podcast, that I met at MicroConf, run other podcasts. It was fun to just be involved and be doing something in public. I think I had actually mentioned in Founder Cafe, kind of my status update, I need to start doing more things in public again. Because aside from the podcast, I haven’t published a book in a long time. I haven’t been blogging nearly as much as I used to. I’ve really been heads-down, focusing on growing Drip.
[01:42] And while that’s what needs to be done right now to grow it, I want to do more things like this and just get back to the way it was. I mean, three or four years ago, I was publishing stuff every which way online all the time. I was just all over the place and I’ve since been focusing more on businesses. But I do really enjoy doing things out in public and it makes me happy to do that. I’m happier when I do it. So, I think part of 2015, that’s something I want to get back to.
[02:09] Mike: I don’t want to call it getting back to your roots, but getting back to the things that you started out doing and kind of the reasons why you started bootstrapping and kind of sharing this stories and experiences and stuff online. It’s just because it’s fun and it’s helpful for other people but most of all you just enjoy doing that.
[02:25] Rob: That’s right. Yeah, since it’s the week of Christmas, I have basically backed off on almost all of my advertising, even some of my re-targeting and there’s not a lot of action going on right now in the B to B space. So, I actually stopped publishing new blog posts on the Drip blog this week as well. I’m stockpiling some pretty good content, some ad ideas and even some videos that I’m going to be pushing live in early January. About email marketing and how to do it and all that stuff. So, just trying to get that all in line because aside from just having the content, there’s always the technical issues of how you’re going to upload it, how you’re going to present it, how you’re going to market it. And I’m trying to iron all that out and get things going, so. At this point it just feels like easing into the end of the year. Kind of how it goes every year. And then second week of January, really ramping things up.
[03:12] Mike: So, the only other thing I’ve kind of been paying attention to lately is the fact that we still don’t have a signed contract from MicroConf yet because everybody’s on vacation so we basically still have the dates as tentative, which kind of sucks.
[03:23] Rob: We’ve had the toughest time this year just getting a venue nailed down and getting a contract signed. It’s been crazy. I think this has been the worst year we’ve had.
[03:29] Mike: Yeah. I think even the first year was quicker. What was it, like the first year we went from zero to conference in what ten or twelve weeks or something like that?
[03:36] Rob: Yeah.
[03:37] Mike: Well, today’s episode is kind of inspired by Robin Warren and he wrote into us and he said, “Hi, guys. I’m responding to the request for episode ideas from the newly branded Founder’s Cafe. Every time I see some information on a competitor or even something that looks like a competitor to the app I’m developing it’s like being punched in the stomach. I know logically it’s a good thing and that it helps validate the market and now I need to work out how to compete with them. Maybe in time I’ll internalize that and my intuitive response won’t be to get deflated. To help with that it’d be cool to have an episode on competition and what to do when you discover competition or see them getting more press, or influence, or attention. Hopefully some sense talking from you guys can help bring the intuitive side of my brain into a bit closer to dealing with these events without wanting to give up.” I brought this up partly because it’s also a section I’m putting into my book which made doing the outline for this really easy this week.
[04:24] Rob: Yeah, and speaking of your book. If folks want to hear more about that they can head to Singlefounderhandbook.com.
[04:31] Mike: One of the things that have kind of come back to me and some of the customer development that I’ve been doing for the book is that people have been saying that they’re having a hard time dealing with competitors. And part of it was some of the things that Robin talked about. But a lot of the stuff has to do with things like bootstrappers tend to want to build stuff that nobody’s ever built before. Or they don’t want to be seen as if they’re copying from others, or, and I think that a lot of people have this issue, is that they don’t want to put their stuff out there because they’re afraid of other people copying their ideas. So, I wanted to talk a little bit about competition and why you shouldn’t necessarily worry too much about other people competing with you and you also shouldn’t worry too much about having to compete with other people. And I think that kind of laying some of these things out will help put people’s minds at ease.
[05:14] Rob: Yeah, I think there’s kind of a spectrum here, right? If you’re trying to build something on the side that’s really small and the market is tiny and maybe you only want to get a thousand or two thousand bucks a month and you’re kind of doing that first step of the stairstep process, then having a competitor that is way ahead of you and is executing well, it can be a real issue. So, I don’t think that competition is always a good thing especially in a smaller market like that. But assuming that’s not your initial goal or that’s not the goal that you’re trying to attack right now, then let’s talk about why bootstrappers seen to have a hard time with competitors.
[05:50] Mike: So, I think the first one is that they want to do things that nobody has ever done before. I think the downside to this is when you are trying to do something that nobody’s ever done before, you haven’t really proven out the business idea, yet. There’s no justification there that says, “Hey, there’s people who are willing to pay for this.” And I think that’s one of the downsides of trying to go into a market where there aren’t any competitors, and as I said, there’s this propensity for developers to say, “I want to green field project,” when in some cases that can actually be harder because there’s no justification there that anybody’s willing to pay for it, so you have to do that work yourself.
[06:24] Rob: Yeah, and I think there’s two sides of this. An example of doing something that no one has ever done before could be something like, coming up with some new B to C social network idea or it could be trying to build really, really good low priced software for accounting for the timber industry, right? If no one has ever done that before. And those, if there really is no other competition, it could be a real sign that either, A, the idea’s too risky, or that the market is not large enough. Now, examples of doing something no one has ever done before, that I think are better ideas or that actually have some viability, is if you said, “Okay, no one has ever done e-signatures on WordPress, so I’m going to combine those two.” Or, “no one has ever done an Eventbrite crossover with WordPress, so I’m going to build a WordPress plugin that essentially allows me to emulate Eventbrite.”
[07:13] There you’re just combining stuff, taking an idea that’s already worked and you’re moving it into a new eco-system. Into WordPress, a place where you know you can get leads and that there are channels of folks coming and looking for it. So, I think that’s a good differentiator. We’re not saying that you should never do stuff that no one has done before, but if someone has done something before and it hasn’t been delivered to a particular eco-system or you can put a spin on it but still keep it kind of B to B and true to it’s original form to where you can tap into a nice marketing channel, then it can actually be something that can work for you.
[07:45] Mike: You know, it can be more work because you have to justify the application’s existence or you may need to educate on why it is that they need it. And it’s not to say that’s impossible, it’s just that it can be a little bit more difficult. Whereas, if there are competitors there, it helps to kind of provide you that assurance that people are willing to pay for it.
[08:04] Rob: Yeah, I agree. And if you push into a brand new space and you can’t just come in and say, “All right, we make email marketing software and here’s how we’re different from the two or three incumbents that you know about.” If you can do that, you’re actually in a pretty good position. But if you come out and instead of being able to use a short phrase like email marketing software, or marketing automation software, or accounting software instead of being able to do one of those things and you have to say, “Well, we build software that helps you do this and that,” and every time someone asks you you find that you have to explain what it does rather than being able to just name a two or three word description that everybody knows, that’s where you’re really running uphill.
[08:42] Because people want to be able to link your product to something that they already know about and they want to be able to position it with something they already know about. And if they can’t do that then it is a real uphill battle, especially for a bootstrapper because it’s very expensive to educate people and to try to get them to understand what you’re building and why they should need it if they don’t already have that knowledge.
[09:03] Mike: So, the second problem is that developers don’t want to be seen as if they’re copying others. And this kind of goes back to the first one where people want to have green field ideas but they don’t want to be seen as if they’re completely ripping off and idea that somebody else had. And I don’t know whether that has to do with self-esteem because they want to say, “Oh, look how smart I am. I came up with this brand new idea that nobody else had ever done before,” and I’ll use time tracking software as an example. There’s only so many ways that you can track your time online using applications. But if you look around on the market, there’s like thirty different time tracking applications and that’s probably an understatement. They’re just everywhere. But in some way, shape, or form, they are all a clone of one another. So, the reality is that it doesn’t necessarily matter whether or not you’re doing that. It’s like are you doing it well and are you serving a market?
[09:50] But I think that’s a psychological barrier that people have is that they don’t want to be seen as if they’re cloning some other application out there. Which in my mind is actually very funny because if you look at something like Linux. It’s very widely used. It’s a clone of Unix. If you look at Apple’s OS X, it had it’s roots back in PSD. It’s not the same thing, obviously but that’s where it’s roots are. And those things naturally evolve over time. They’re not going to stay the same throughout their lifespan, so even if you’re using somebody else’s product or application or design as kind of a starting point, it’s not going to stay there. But I do think that this is one of the things that people have a hard time justifying to themselves and to others.
[10:29] Rob: Yeah. And, I think the bottom line is, especially at the scale that we’re all operating at, which is very, very small compared to the rest of the world, people just don’t really care unless you rip off marketing verbiage, or homepage headlines, or a feature by feature, or you really are stealing tactics, that’s when people start to care. But even then it’s typically only the competitor. If you’re stealing someone’s headline, they care, but no one else notices. Don’t rip off other people’s marketing, don’t rip off their feature by feature, but be less concerned in general about being seen as copying others, because frankly it doesn’t really matter that much. It’s so much about how well you’re going to execute and how you can out-market other people than it is about building a product that might be similar or close in positioning to another one.
[11:15] Mike: So, I think the third reason bootstrappers have a hard time with competitors is that they don’t want other people to steal their ideas from them. So, similar to them not wanting to take other people’s ideas, they don’t want other people taking their own ideas. And this is really just the reverse of what we just talked about. But the reality is as soon as you take your product and create a webpage for it and people can go sign up for it or download it, that can easily happen and people can go out there and take it to their heart’s content and do what they want with it. They can copy to UI. I mean there’s loads of GPL software out there that is almost a one hundred percent ripoff of various applications. As I said, it’s kind of humorous that you look at those things and that’s deemed okay, but as soon as an entrepreneur goes out and tries to make money off of something like that then it’s a big no-no. The reality is that once your product is out there, you are inevitably going to have other people copying from you and that’s not necessarily a bad thing because just because they’re copying your design doesn’t mean they’re copying all the underlining things that make your product special. And that’s really what you should be concentrating on is making your product special.
[12:15] Rob: Yeah, we’ve talked about this a lot in the past on this show, just about how you shouldn’t be afraid of talking about your ideas to people. Now, something I would not do is go publish on the open internet my entire marketing plan or something that I consider to be a real unique competitive advantage that I have. But to tell someone that I’m going to be building an email marketing app or I’m going to be building a time tracking app and even to give out some ideas of it, what’s it’s going to be or how it’s going to be different, there’s just so few people who can even execute on that well enough to be a competitor and those people tend to have their own good ideas or they have their own good things going on. They’re not going to sit around. The people that are going to sit around and take your idea and try to duplicate it tend to be the ones who want some sort of shortcut and aren’t going to follow through and don’t know UX well enough and who don’t know how to market well enough, they just aren’t really going to be that much of a competitor to you.
[13:07] Mike: So, I wanted to dig in a little bit and talk specifically about seven different reasons that having competitors doesn’t matter. And the first one is that established competitors help to justify the market. And as I said before, when you start looking at a market and you start building a product, when you find established competition and they are making ends meat by actually having a business that they’re making money from, then what that is is that’s a signal that you can use to say, “Hey, there are customers that this particular product is serving that are willing to pay for this particular product.” Now, that doesn’t necessarily translate to you being able to reach them or you being able to fully serve all the needs that they have, and it’s one of many that you have to take into account and it’s helpful to know upfront that people are willing to pay for that kind of solution as more of a data point than anything else.
[13:54] Rob: Yeah, the interesting thing is, especially if you have extremely large competitors who are doing tens of millions or hundreds of millions of dollars, they are almost always leaving behind some group of people. They’re not serving them very well. Because that’s how you grow large is by covering this horizontal space, and so if you take a mega time tracking app or a huge accounting system or an enormous email marketing system, I think we all have ideas of what each of those are, you’re always going to find people on forums, or Twitter, or just in your circle who are saying, “You know, they are not serving,” insert demographics here, “they are not serving startups very well.”
[14:33] You can use them for those purposes but there are all these verticals that you can dig into that you can serve better as a small micropreneur, solo entrepreneur, on getting started, and you’re right, the established competitor helps justify that market on a large scale. What will happen is, you can find a little niche under there that could be a couple grand a month or maybe it’s five or ten grand a month and you can sneak in under their radar and they won’t even notice it but it’s still a nice little business for you.
[14:59] Mike: So, number one deals more with established competitors but number two is specifically aimed at when you’re building a product and it’s kind of a new product and you find somebody else who’s also building the same product. It helps but it doesn’t absolutely justify that there is a market. So, if you’re building a time tracker that hooks into a very specific piece of software, maybe it hooks into OS X and it allows you to trigger it from a Macro, or something like that, if you look out there and you find somebody else doing that exact same thing but they are not far enough along that they’ve actually launched, I put this in the same bucket where as a data point but it doesn’t necessarily define the entire market.
[15:37] It doesn’t say that you’re going to be able to meet their needs and everything else. I think this is a little bit different than what you also just explained where you’ve got a large competitor where they’re leaving behind a big piece of the market where there would be space for somebody smaller to come in and take ten to fifteen thousand dollars a month. It’s a little bit different than that.
[15:54] Rob: Yeah. When I look at competition as a really small startup or solo entrepreneur I’m not scared of the large competition because as I said you can sneak in under their radar and take a much smaller piece of the market that’s still substantial for someone of our size. I am more concerned about new competitors, always, because they’re the ones that are agile. They’re the ones that are out there and hungry and doing it on the side like you are and they’re the ones that are going to be talking to probably overlapping customers or prospects that you are and you guys are going to be competing for business more than you and that giant behemoth email marketing company or whatever, time tracking, whatever it is you’re building.
[16:32] So, they definitely cause me more concern but I agree with you that, you know, it used to be that when I would see new competition enter a market, you always give them the benefit of the doubt. If they raised funding, you think, “Wow, they’re legitimate.” If they haven’t raised funding, you think, “Wow, they’re scrappy.” Almost always that’s an incorrect assumption. And that people out there launching things are just bound to fail. More often than not, the colleagues that I know who are in these markets and new competitors come in, we’ll look at them together and we’ll talk through them and almost every time that competitor winds up fizzling out within three to six months because they don’t know the UX, they don’t know how to market well enough, they don’t learn what their customers really need, and they often rely on a single feature. It’s funny, you said time tracking that integrates with Macros or whatever, that’s a great single feature to start off with and that’s a great headline to kind of get out there.
[17:21] Almost guarantee you that feature will be implemented by either larger competitors or other small competitors quickly and so you then have to figure out what’s next. If you don’t continue to evolve then you are going to lost market share and you’re going to lose it. And that’s what I see a lot of these fly by night competitors coming up doing. So, new competition as you said, it helps justify the market, it doesn’t absolutely guarantee there’s a market and while I have more concern about them than larger competitors, overall I found that they don’t tend to stick around in general.
[17:48] Mike: So, the third reason that having competitors doesn’t matter is that once having your product launched anyone can sign up for it an copy everything you have done anyway. Working in secret, we’ve talked about this before, in general is really just not helpful because the software isn’t what gets you customers, it’s the marketing engine behind it and it’s a lot more difficult to copy that than it is the product which is more or less public. There are ways to spy on your competition and see what ad words they’re going after or what keywords they’re targeting on their website for SEO and everything else, but the reality is their marketing engine or their marketing plan is probably a lot deeper than you have visibility to and the same thing with yours. Your marketing plan is not public knowledge for everybody to see. So, just because they can copy your product doesn’t mean that they can copy all of the associated things that go with it that are helping you to get in front of customers and help turn them into paying customers.
[18:40] Rob: Yeah. Some other things that are essentially competitive advantages that you build up as a snowball over time and are kind of moats that are hard to cross are things like a lot of link authority and so therefore, a good SEO juice and a high proportion or a high number of organic visitors every month coming to landing pages where you’re capturing email addresses. If you build up that engine, which has nothing to do with the product and can go unseen if people are not actually looking at what you’re doing, that is a flywheel in a half right there. And so, if you have a competitor who comes in late, even if they can take your whole product, they can’t catch up to that kind of thing.
[19:17] Another thing is knowledge of paid acquisition because you can honestly burn through thousands of dollars on a bunch of channels figuring out one channel that works and the demographics and the keywords that work for that. When you have that knowledge and your competitor doesn’t, that’s an advantage. Another one is your network. You can do joint ventures, you can get people to come and vouch for you, you can get people to do courses with you and webinars and all kinds of stuff. So, if you get out ahead of someone and you can use your network that’s another thing that’s really hard to compete with. But the product itself, in general, is relatively easy to replicate. There’s obviously are exceptions.
[19:55] Actually another thing is knowledge of your customers, and that’s one thing that I don’t want to leave out here, is that a lot of people launch products and then are selling to customers and they don’t understand who they are or why they’re buying and all that stuff. Once you have an in-depth knowledge of who your customers are and how to reach them and why they’re buying, which is all encompassed in that single term, marketing, you have a competitive advantage that a newbie coming on board, even with a half million dollars in funding, trying to launch a direct competitor to you, they will likely lose because you’re just so far ahead of them in terms of that knowledge.
[20:29] Mike: The fourth reason for why having competitors doesn’t matter is that in many cases it’s hard to imagine a scenario where there’s just one winner and everybody else loses. And if you look at major players out there. You’ve got Apple and Microsoft, you’ve got Oracle and SQL Server and kind of our space, you have much smaller companies but there are still several of them out there. You have companies like LaunchRock and Kickofflabs and Unbounce that are all kind of competing in basically the same space. And then another set. You’ve got FirstOfficer.io and HookFeed and Baremetrics and they’re all competing in the same space. And they’re all have viable products and they’re all making ends meet. So, the point is that it’s not a zero sum game where for you to win everyone else has to lose.
[21:07] There’s almost always room for more players. And I say almost with that little caveat, there are definitely places where there are not enough room, the much smaller areas where it’s really just not worth the time or effort to have multiple competitors in that space. If you’re looking to build any sort of serious business you have to examine the possibility of what happens if a competitor comes in here? And is there enough room for multiple people to play. That should be part of your consideration process.
[21:32] Rob: Yeah, that’s the important part again, right? If the market is tiny. If it’s a two-thousand dollar market then there probably aren’t room for competitors. But in any of the spaces that we’re talking about today, there tends to be room for another small competitor. And what typically happens is apps come out that is very similar to a competitor but they have one twist, they have one feature differentiation. Or maybe it’s a pricing structure, a business model differentiation. And customers who aren’t happy with that first incumbent, come and take a look at yours, and you’re going to find that some like your product and others don’t, but you’re going to find out why they like it and then you’re going to move more in that direction. The product is not stagnant and neither will your customer base be.
[22:11] You’re going to build more features for that group and you may find that you start a competitor, you know, a new landing page competitor to compete with LaunchRock, Kickofflabs, Unbounce, LeadPages and you try to differentiate in one way and all of a sudden it’s like e-commerce, providers are really using this and they like that one feature and so then you just go and you focus and you niche down on e-commerce. We’ve seen Nathan Barry do this on ConvertKit. He launched ConvertKit and the landing pages and kind of email marketing built in and he’s niched down because he’s found out that he had a lot of authors who were interested and so now if you go to his homepage the headline is email marketing for authors. And so he’s niched down. That wasn’t the original goal. Same thing happened with Drip.
[22:47] I launched it with the certain unique selling proposition and that has changed over time and I’ve entered the marketing automation space purely from customer requests. So, this stuff tends to shake itself out over time. If you get in there and you get some customers and you follow the lead and try to figure out what’s the most valuable thing for the largest group of customers that you have and you can move in that direction then you’re right there’s room for more players because you’re going to spread out anyway. You’re not all going to stay clustered in the middle of the market.
[23:14] Mike: And part of what you said in the beginning kind of leads on to number five which is that customers sometimes change products. There are times where you’re going to be able to accommodate the changes that they’re asking for but there’s times when those customers are not going to be willing to wait and those customers very well may look at the competition and decide that they’re going to switch. Just because somebody signs up for your competitor doesn’t mean that they’re not going to have a bad experience or some problem that that competitor can’t solve. That can be an opportunity for you to succeed in the long run.
[23:41] Just because somebody signs up for your product doesn’t mean that they’re not going to switch in the future. And this goes back to having enough room in that market for more than one player. The sixth reason is that different competitors can serve different market segments better. And this is generally according to their marketing. It tends to have very little to do with the product itself. It has to do with how they’re positioned in the market. So, for example, if you think about something like Constant Contact or MailChimp, you start thinking about the types of customers that are going to use those. And I think for MailChimp you kind of gravitate much more to thinking of them for bootstrap startups and much smaller companies. The reality is that they can scale up very very high and they can handle massive email lists. The same thing with Constant Contact. But Constant Contact has a, I’ll say a reputation, for working with brick and mortar businesses than anything else.
[24:29] It’s not to say that that’s true of exactly what they do but that’s a reputation that they’ve kind of established in a lot of the direct response marketing that they’ve done and working with people at a local level to handle all these different events that they’re doing where they’ll send somebody in and they’ll do an in person presentation. Invite a bunch of people in and show them how it works and what they can get out of it. It’s much more about how they’re addressing the market and how they’re presenting themselves to the market in terms of what they’re capable of delivering. And it’s about the perception of the customers. So, if you can position yourself differently then you also have an opportunity to compete against them by positioning yourself one way versus how the other company positions themselves.
[25:13] Rob: Yeah, and the way I think I want to enter this is if you are a single founder and you don’t have a lot of budget and you’re doing this on the side, I’ve always said, you want to enter a vertical first to try to serve that vertical as best you can. And then later, if you get enough momentum, spread out into the horizontal. If you ever get there. I mean if the vertical’s big enough you can stay there. I think if you have more horsepower, you have a little bit of funding or you have a couple developers who you’re working with, you have a larger team, then you can consider going into a space and being a little more horizontal, getting a lot of people using it, and then figuring out which is the most valuable. And then almost, kind of like I said, going the reverse direction of catering maybe just to authors like Nathan Barry’s doing or switching, specializing, going from just this broad email marketing into marketing automation which, I guess, not directly vertical, it is a subset of email marketing. So, you can attack it from two directions depending on the resources you have when you start.
[26:10] Mike: And the last reason that having competitors doesn’t necessarily matter is that your customers are the ones that should be driving your product road map, not your competitors. The fact of the matter is, your customers are going to be different than your competitors which means that you’re talking to them and your competitor is not. So, naturally what’s going to happen is that naturally over time your road map is going to naturally diverge from their road map because your listening to your customers. Presumably, they’re listening to their customers and if they’re following you it’s going to be very difficult for them to attract those types of people because if they’re not talking to their own customers and they’re just copying what your website says that your product does, it’s going to be an uphill road for them and they’re probably not going to last very long. But if they’re talking to their own customers and listening to what their customers have to say to them then chances are you guys are going to go in different directions. And if you do end up going in the same directions, then at least you were listening to your customers and those are the people who are driving your revenue anyway.
[27:02] Rob: Yeah, it’s pretty rare that I see two companies whose road maps are just lockstep for months or years at a time because when you are listening to customer feature requests and prospect, you know, lead feature request who are very serious about signing up and you’ve kind of validated that and they’re basically saying, “Yeah, can you do this one more thing and then I’ll sign up?” As you qualify them at that point, you’re just going to get different requests. You’re going to get feature requests. You’re going to decide to go in a slightly different direction than your competitors and I think that’s a good thing because it helps differentiate multiple products that are in the same space and while you are still competitors it will kind of broaden your differences over time.
[27:40] The only time I’ve seen competitors that are almost lockstep in terms of features, is when one competitor is basically watching the other competitor and whenever the second competitor releases something, the first one then goes and builds it. And that’s what I was talking earlier about the people who are doing it wrong in the long term are doing that. Because if none of your customers are asking for this and you’re basically just trying to be a clone of another service that’s successful, that’s not the way to find long term success, right? Over time, you’re eventually going to lose because that’s boring, you have no differentiation and you have kind of no unique selling proposition, you’re trying to duplicate someone else’s selling proposition, and again, just long term, that’s not the best play.
[28:22] So, we outlined this whole episode based on a single question from Robin Warren. Thanks for the question Robin. And if you have your own question for us and would like to see us answer it on air or turn it into an entire episode, you can call out voicemail number at 888-801-9690 or email us at questions@startupsfortherestofus.com. Our theme music is an excerpt from We’re Outta Control by MoOt and it’s used under Creative Commons. Subscribe to us on iTunes by searching for startups and visit startupsfortherestofus.com for a full transcript of each episode. Thanks for listening. We’ll see you next time.
Episode 216 | How a Single Founder Launched a 7-Figure SaaS App (with Nate Grahek)
Show Notes
Transcript
[00:00] Rob: In this episode of “Startups for the Rest of Us,” Mike and I talk to a single founder who launched a seven-figure SaaS app with special guest Nate Grahek. This is “Startups for the Rest of Us,” episode 216.
[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’re built your first product, or you’re just thinking about it. I’m Rob.
[00:28] Mike: And I’m Mike.
[00:29] Rob: And we’re here to share our experiences to help you avoid the same mistakes we’ve made. So, what’s the word this week, Mike?
[00:33] Mike: Well, I’ve been to the gym 15 times in the last 18 days.
[00:37] Rob: Congratulations.
[00:38] Mike: I actually don’t feel all that bad. It’s just like there’re certain muscle groups that I didn’t know that I had.
[00:43] Rob: Did it get easier after the first few days?
[00:45] Mike: Well, the first week was the worst, and then since then things have gotten significantly better. It’s not nearly as bad as it was the first week. I mean the first week was really rough, and even my wife said it was like the – I was only three days in, and she was just like, “I don’t think he’s going to make it.” [Chuckles]
[00:59] Rob: So, MicroConf Vegas 2015 – it looks like we finally, finally have dates. So, it looks to be April 13th and 14th in Las Vegas; and then, of course, we always have the evening reception on the 12th. So, that’s really a Sunday night, Monday, Tuesday. We have signed a contract and sent it in. We haven’t received the countersigned contract yet, but my guess is by the time this episode goes live, that we will. So, if you’re interested in hanging out with about 200 self-funded startup founders, single founders, head over to MicroCom.com, enter your email address there, and we will be selling tickets in the next few weeks. Myself and Heaton Shah are confirmed as speakers, and we have basically a full list of all the speakers we’re going to be inviting. We just have not emailed everyone yet.
[01:45] Mike: On episode 214, where we discussed Inbox Zero a little bit, Jack Jones left a comment on the blog, and he said, “For Inbox Zero, I highly recommend FollowUp Then. I tried Boomerang and others, but FollowUp Then works completely via email – no separate app or plugin to use. This means you can use it from wherever you deal with your email. It has lots of cool features, like scheduling tasks, automatically, following up with other people and automatic cancellation when someone replies. Between FollowUp Then and emailing tasks to Trello, I’ve maintained daily Inbox Zero across three businesses and my personal life coming up on a year now.”
[02:15] Thanks for that, Jack. And Tyler also said, “The two tools that’ve helped me maintain Inbox Zero for quite a while are Boomerang and TeuxDeux.” And it’s T-e-u-x-d-e-u-x. “Boomerang’s perfect for getting emails out of your inbox when you want to deal with them later, while the simplicity and automatic task rollovers of TeauxDeux have made it my top to-do and calendar app.”
[02:32] Rob: Very nice. Good tips. We also got a comment from Ben on episode 215, which was our predictions episode in which I predicted that five-terabyte cloud storage would be under a hundred dollars next year. And Ben said, “The five-terabyte cloud storage for under a hundred dollars has already happened. Microsoft announced back in October that OneDrive will be unlimited cloud storage, rolling out in the coming months. Both Office 365 plans of around 70 bucks a year or a hundred dollars a year will also include unlimited storage. And while not unlimited, my OneDrive plan was bumped up to 10 terabytes for a hundred dollars back in November.”
[03:09] So, I appreciate you pointing that out. So, either I’m a genius with my prediction and I was ahead of my time, or I’m just misinformed about present-day cloud storage offerings.
[03:18] I tried out Cascade content based on your mention and basically had them write a knowledge-base article based on a screen cast, and this is for the Drip knowledge base, where I recorded screen casts because they’re faster for me to do. But I’ve had requests from customers that they want to see a written version of those, and so far, so good. They’ve done one video and turned it around in two or three days, and so I think I’m going to send them – I probably have five or six others that I’d like to get done. But what’s nice is this allows me, moving forward, to not have to worry about writing it out myself or hiring someone. I just have someone that I can send a video to as soon as I post it, and then within a few days, get it back – kind of like getting a transcript done or something.
[03:58] Mike: Awesome.
[04:00] Rob: So, today Mike and I have the distinct pleasure of having special guest Nate Grahek on the show, and Nate is a single founder who launched seven-figure SaaS app. He’s also a lifetime Academy member. So, welcome to the show, Nate.
[04:12] Nate: Thank you so much for having me, guys. I’m kind of a little star-struck, to be honest. It’s fun to listen to you guys each week, and to actually be on the show, it’s definitely an honor. Thanks for having me.
[04:22] Rob: Very cool. Well, do you want to start by telling folks briefly who you are, what you do?
[04:28] Nate: Oh, sure. In 2012, I started a company called StickyAlbums.com. It’s a service for portrait photographers to create custom, mobile apps for each of their clients. So, a wedding photographer, an infant photographer, high school seniors – they deliver a subset, like a very simple image gallery, as a mobile app; and it becomes a marketing tool for the photographer. That’s the big problem we solve. We help photographers get more customers.
[04:56] Rob: Very cool. And is your background in development? Are you a designer?
[04:59] Nate: My background was in training and development and corporate training, and very quickly I had to learn how to do web development because all training with the economy around that time was moving to the web. We couldn’t afford to fly people in for corporate stuff anymore. And so I learned HTML. I learned Flash. At the same time, iPads were blowing up, and my boss says, “Nate, we[‘ve] got to put all training in iPads.” So, in the course of figuring out how to put other content on iPads and iPhones and other mobile devices with HTML, I was also doing portrait photography on the side and kind of had that classic, light-bulb moment – like scratched my own itch. “How can I make my portrait clients better at referring me new business?”
[05:43] Rob: Very cool.
[05:44] Nate: And I asked one of my high school senior clients – because I was giving them paper business cards to pass out to their friends, and she’s like, “Yeah, we don’t like carrying paper. What if I give you your own custom app with your face on the icon, and you can just share that with your friends?” They were like, “Oh, yeah. I don’t go anywhere without my phone.” So, that was the crux of the idea right there.
[06:02] Rob: Got it. And so you were a photographer?
[06:00] Nate: Yes. I’ve learned a lot about what it means to be a professional photographer now. I’m very much humbled, as the range is huge.
[06:11] Rob: Sure.
[06:12] Nate: The market’s huge, but the range is also pretty big, and I was definitely considering myself a rookie on that scale. The domain experience really, really was valuable.
[06:21] Rob: So, you started StickyAlbums.com in – was that 2011 or 2012?
[06:27] Nate: 2012. I launched the site and the domain, like, late ’11 and then had my first sale right in January of 2012.
[06:35] Rob: Got it. And so today, towards the end of 2014, where does your business stand in terms of revenue – whatever you’re willing to share – and team size, if any? I’m not sure if you have full-time employees or –
[06:47] Nate: Yeah.
[06:48] Rob: – contractors.
[06:49] Nate: [I’ve] got a lot of competition, so I’m trying to decide what I should share with them. They just flooded the market after I approved this idea –
[06:55] Rob: Oh, jeez.
[06:56] Nate: – and the competition’s been healthy, but it’s all good. So, within the first two years, we grew to 5,000 photographers. Everybody can do the math. It’s roughly a million dollars in annual revenue. That was a blur. To grow that quickly was pretty intense. And now the last year – so, our third year of business, we’ve kind of plateaued a little bit because of the annual, recurring thing, where we have people that are no longer photographers that were. And we’re still replacing them with new photographers at a pretty good clip.
[07:25] And then since this year, I really sat on the decision of growing the team for a while, because I’m really a huge fan of you guys’ podcast and the idea of staying small and flexible and manageable. But I knew that I wanted to grow something for photographers that was going to be around in the next five years. In order to do that I wasn’t going to be able to do it myself anymore, and so this year I invested a lot of energy in growing the team. We now have four full-time employees, including me. We’re hiring our fifth in January. We’re hiring a full-time designer I’m pretty stoked about, and then we have four other part-time employees that are contractors. So, that growth was exciting. It’s daunting to switch gears into being a manager now. A lot of my time goes to managing, but it’s really rewarding to create a remote culture where people can come to work when and how they want to. I get the unique personalities from everybody adding to a much greater sum. It’s pretty cool.
[08:22] Rob: Yeah, that’s a lot of fun. I know that feeling, too – you know, having gone from kind of doing everything on my own to then expanding. It’s good to have a team.
[08:29] Nate: Yeah, it is. It’s daunting. I’ve got two, small kids. I knew the risk involved in growing. Being a manager always takes more time than you think it does. There’s a human element you never plan for. Despite all that added complexity, it’s incredibly rewarding. Like, I got to give people holiday bonuses this year, and that’s felt really good.
[08:47] Mike: So, one of the things that you mentioned early on was that you were talking to somebody. You wanted to give them a business card, and they just said, “Oh, we don’t really like paper.”
[08:55] Nate: Yeah.
[08:56] Mike: And you kind of went down the road of saying, “Well, I could put your face on an app.” What sort of validation did you do for this idea, or did you just kind of dive right in?
[09:03] Nate: Well, it was first, like, the ‘scratch my own itch’ model where I just made these. Technically, I know I’ve got a lot of developers on the call. It’s an HTML 5 web app, so we’ve built it using some open-source and some proprietary tools. We prompt the user to save the web app to their home screen, and we populate it with a home screen icon, but it is just a website that saves offline. And so there’s huge advantages to it being that way, where it’s shared with just a link instead of it being an actual, native app. There had been other vendors in this space that have tried that model and failed because it’s too complex to try to submit that many apps to the app store. The photographer has to have their own developer license and on and on and on. There’s just a lot of complexity there that we short-cutted by making it HTML, and it’s something I figured out. I taught it myself, and I was just making these sites for my own personal photography clients. I gave them to the client, and they loved them, and it brought me new business – and so much new business that I stopped sharing them in my own business, because I knew I wanted to grow StickyAlbums – not my photography business. So, I had to stop using my [chuckles] own product because it was working too well.
[10:12] Mike: Got it. So, this is really not even an app itself. To the user, it looks like an app, but really it’s a shortcut to a website on their phone – right?
[10:20] Nate: Exactly. I can do a link, or I’ll give you guys a URL. I can post my show notes, and people can see an example of what one looks like.
[10:27] Rob: Very cool. And your pricing – it’s 19 bucks a month, 29 bucks a month; and then you have a lifetime, it looks like, that’s $699?
[10:34] Nate: That’s actually going away. The pricing page is kind of tricky. We could spend time there, if we want to, but it’s kind of –
[10:40] Rob: Oh. It’s 19 a month if it’s billed annually, 29 a month if it’s billed monthly.
[10:42] Nate: Right.
[10:43] Rob: Got it. I missed that.
[10:45] Nate: 90, 95 percent of our customers are on the annual membership, and we just find that works a lot better. People commit. Because it’s a marketing tool, we’ve learned that people who do the monthly are just experimenting, and they don’t take it seriously enough. And if they don’t see the results right away in that first month, then they don’t renew; whereas, when they bite off for the whole year, we have that whole year to engage with them and to teach them how to use the product. And they get to see results, and then they’re a customer for the long haul.
[11:14] Rob: And do you find that the sales effort up front is a lot harder? Because you’re essentially trying to get a couple hundred dollars all at once up front, rather than –
[11:23] Nate: I don’t think it necessarily make it harder. I’ve learned that using a discount code, a lot of people do sign up with a discount. And it’s that deadline. It’s a limited-time offer, and we do a lot of partner deals. So, one way or another, people need a reason to buy today. That’s the thing we’ve found, and beyond that, it doesn’t matter if it’s annual or monthly.
[11:45] Rob: Right. And when you said “it’s going away,” did you mean the lifetime membership?
[11:49] Nate: Yeah, yeah, yeah. We’re removing that.
[11:50] Rob: Got it.
[11:51] Nate: That was early on. It helped us grow big and reward some of our most loyal customers, but we’re going to take that away and bring in a two-year plan.
[11:58] Rob: Nice. So, you’ll have monthly, annual and two-year. So, you mentioned earlier that you grew to 5,000 paying users in your first year. Obviously, that’s 5,000 photographers who found you, who decided to buy. A lot of folks listening to this podcast are probably wondering how did you achieve such enviable growth. Was there one tactic? Was it a combination of tactics? What was it that gave you that hockey stick?
[12:22] Nate: It was 5,000 by two years. At the first year, I was at about 3, and then the second year we made it to 5. It’s not just one. I think the one that enabled the crazy speed was word of mouth. It was that I did a couple things really well. I treated my customers well, and then it’s that word-of-mouth referral. We had a tracking form when people first came in that says, “Where’d you hear about us?” and I would celebrate. Once a week or once a month, somebody would write, “Everywhere.” [Chuckles] Like, “Oh, my gosh. That’s so cool.” They were hearing about it from their friends, from other places, from other blogs. So, it was definitely a combined approach. But I think, more than anything, people buy when something’s been referred by somebody else that they trust.
[13:09] Rob: Right. It’s a lot easier sales process if someone’s already been referred, rather than seeing a cold ad and then having to get familiar.
[13:16] Nate: I have a theory. We do a lot of education now, too, and teaching other photographers how to do marketing themselves. And I tell them that paid advertising – I think the only time it works is when you already have a foundation of word-of-mouth referrals happening. Somebody’s like, “Oh, yeah. I heard about this cool photographer, blah, blah, blah. And Julie said she was great.” And then later on that week, you see an ad in a local newspaper. [They’re] like, “Oh, yeah. That’s right! I remember. I wanted to call Julie.” But if you just saw that ad for Julie, and nobody had told you who she was, that ad’s not going to really do anything.
[13:50] Rob: Right.
[13:51] Nate: And we found that to be true in our business, too, where our paid advertising is only icing on the cake when we have that good word-of-mouth buzz happening first.
[14:00] Rob: So, obviously, once you had a thousand or 2,000 people using it, then word of mouth is going to help. But how did you get those first few hundred users?
[14:09] Nate: I got really lucky with a – this was even when it was first Concierge. We didn’t even go to the actual builder code that was written, that is the base of the business today. I went to market without that. I went to market where I was selling this as if, when photographers were uploading their pictures, like a machine was doing it; but it was actually just me. [Chuckles] I was taking people’s pictures and building these one-off albums one at a time. I had a friend help me build some automation so I could be faster for myself on my local computer. I used to take, like, ten, 15 minutes to build each one. And now, with the app he made for me – he made this small version of an app that took it down to five minutes per album, and that let me go to market. And I did a paid blog post review, and that got us our first 15 to 20 customers.
[15:00] But then there was a site called Photo Dough; and they had, like, a Groupon for our industry. Their meteoric rise also. And so doing a deal there was perfect, because everybody knows Groupon. I didn’t have to pay to be there. They just got a cut. The timing was right. For that first three days, we did $10,000 in revenue. And, ironically, I had at the same time been shopping for developers. I’d met with three different developers, and they’d all estimated the MVP was going to be about ten grand.
[15:32] And so my wife was pretty excited. It was a fun, exciting day to refresh the web page and just watch the sales go up. And she was like, “Oh wow! When do we get some of that?” I was like, “Actually, now that we have 200 customers, I have to get this thing automated ASAP.” And, luckily, the team was able to build it in 30 days; because that month I think I built 400 websites by hand until the automated builder was done. And since then, we’ve made close to a million, I think, apps.
[16:02] Rob: Wow. Yeah, that’s really impressive. So, you definitely pulled the MVP approach – kind of the lean startup approach of just getting out there and selling something, seeing if it caught fire. And with you, it obviously did, and then you had to use human automation to get you through it.
[16:16] Nate: Yeah, it was terrifying. I risked $300 of my own money –
[16:19] Rob: Yeah.
[16:20] Nate: – and then after that, it was building with the customer money. And I was definitely nervous. I said to myself, “If this fails, I will just give people their money back and apologize profusely.” But I wasn’t ready with a mortgage and – we had just had our second kid. He was a month old. I wasn’t ready to risk $10,000 of my own money yet. I wouldn’t recommend anybody do something like that at that stage of their life. The lean startup stuff was – I wasn’t even familiar with what I was doing, that it was called “lean startup” until I found podcasts like you guys. I was like, “Oh, there’s a name for what my wife forced me to do.” [Laughs] She was like, “There’s no way you’re spending that kind of money! Figure it out – how you’re going to do it without it.” And that’s what I did.
[16:58] Rob: Very cool.
[17:00] Mike: So, it sounds like there wasn’t very much time between the time you had the idea and you realized that this really had legs. I’m curious to know what your mentality was going into it, thinking that you were going to do all of this stuff by hand versus automating it first, because I think that’s a common situation – where people run into something, and they have this idea, and they say, “Oh, we’ll, I’ll build some code,” because, naturally, most of the people listening to this are developers. And that’s what they do.
[17:25] Nate: Yeah, right.
[17:26] Mike: So, their first instinct is to write code to solve the problem. You clearly went in a different direction, and that’s one of the things that lean startup advocates – is testing the idea to make sure that it has legs before you do a lot of investment. And I’m curious to know what your mentality around that was. Or, was it just, “My wife said so”? [Chuckles]
[17:44] Nate: Yeah, right [chuckles]. The first idea was sitting around the fire – it was October of 2011 – with my neighbor, who was a developer. I knew education – right? So, I was going to sell a product. I was like, “There’s this huge market to sell informational products to photographers. I’m going to sell videos,” because that’s what I did in my day job, “teaching people how to make these HTML apps.” Thank goodness for one of my good friends now. He was like, “Dude, there’s such a small subset of people that will actually take the time. Photographers don’t want to deal with HTML. You’ve just got to build a builder for them, and it’s not that hard.” I was like, “Wow. Really?”
[18:18] So, that’s the idea. And then four months it took to flush it out. I put my energy into the marketing site so that I could validate the idea with sales. That was where I put all of my energy and then was just going to continue being the – like, the builder was just the concierge, like human labor – a model first to test it. But I quickly learned there was a lot of things that I thought I would have to build from scratch. I built on WordPress, and then I bought a membership plugin. So, I thought I was going to have to hire developers to build all of the membership stuff, too; but that was already just, like, a hundred-dollar S- – I think I used an S2 member plugin for a hundred bucks. And it let me go to market with PayPal integration right away. Within two months, I was able to put up a sales page. I knew sales was the first thing I had to show before I was going to invest more money.
[19:12] Rob: That’s really cool that that was your intuition, because obviously, with most people – developers, designers, or otherwise – the typical inclination is to build something first, to go into your basement and build it. But you obviously wanted to get sales first. Where did that come from? Why was that your number one before you built anything?
[19:31] Nate: I had the idea – right? It had worked for me already in my business. And other photographers, I had shared the – quote/unquote – “product.” They saw the finished albums that I was making. That was it. That was the MVP there. I can sell making these for photographers. So, flushing that out – that was actually the first thing. I was just getting creative in my own photography business – like, “Oh, what could I make for my customers in photography? Oh, this is cool. Oh, wait. This might be a huge market for other photographers – not just my own business.”
[20:06] And when I made the switch from making something for my own photography business to being a service for other photographers, that’s where most of the energy went into building a sales page; because I had already put in the work building the – quote/unquote – “product.” I put probably three, four months into researching what the format was, what different tools we were going to use in the JavaScript and the HTML format of the album. So, there was definitely some time there. Luckily, I think, I switched gears off of the product. I had dreams about making it amazing, but luckily my first developers that I hired – they were really big 37Signals fans, and they were good at coaching me to keep the MVP actually an MVP.
[20:52] Rob: And you had kind of a Cinderella story early on. I mean it’s kind of a rare idea that gets this much traction this quickly. I’m curious. You had to have run into some hurdles, some roadblocks within that first year. Does one come to mind that really made you pause and think like, “Maybe this won’t work”? If you don’t have one that made you think that, maybe there was a darkest-hour time.
[21:17] Nate: Yeah. I think probably the biggest challenges were personal, to be honest, like the fact that I had two children. My wife was like, “Are you serious? Now is when you want to launch a business? We have a two-year-old and a[n] infant.” So, deciding when to quit the day job was very daunting. There was so much going on, because I was still working the day job those first four, five months and coming home till two in the morning, working on building these for people. So, that was very, very taxing – to work a 40-hour day job and then come home and put another 40 hours a week into launching it. That was not sustainable. I burned bridges with friends and family in those first months so that I could make the leap and quit the day job.
[22:03] And then once I was able to quit the day job, then the challenges after that were staying focused on sales. I’ll share my revenue chart. I would have a record month, and then the next month would be like half the size. And then I’d have a record month in sales, and the next month it’d be half the size. And it repeated this pattern because I was doing support also. And as soon as I was able to hire a good support rep, that’s when we had consistent growth, because I could stay focused on sales and marketing and partnerships, and she could stay focused on engaging the customer. As soon as I would pull away – and it was good. Again, I’m glad I did that. It was good for me to stay super close to the customer and know their issues and really understand what problems I was solving and which ones I wasn’t. It was instantaneous. That’s the point I wanted to make – is as soon as I took my hand off of sales, I could see it impacted in the numbers right away. As soon as I stopped selling and marketing and building relationships with other people, sales would drop off. And that’s a constant today. As soon as I try to slow down and focus on something else, sales slow down, too.
[23:07] Mike: So, it sounds to me like you’re constantly pushing down on that pedal to make sales and marketing work for you. But aside from the word of mouth, what’s your most successful marketing channel that you’ve kind of stumbled on or identified so far?
[23:21] Nate: Yeah, absolutely. As I transitioned into this, like the marketing piece, it’s also been tempered with learning over time that there’s always more features to build. I love building new features, and the majority of features we’ve put in have come from customer requests. That’s never-ending. I could fast-forward five years, and there’s always going to be more to build. And my goal has been to make sure that we have the ability to build features, like, we still have a business to build features for. And I’ve luckily focused on sales to make sure that we just keep the lights on, I think, is what’s important. There’s a lot of other competition in our space that’s come into the space and price really cheap. They come in, and they fizzle.
[24:04] This is one story I like to share, this very humbling call. This was an early challenge. When you first launch a product, there’s this terror. I would wake up every morning, like, “Somebody else has my idea. Somebody’s going to rip this off and steal it.” And that was a pretty constant challenge. And then after six months, we had one. It would really stress me out at first, and it took me a while to really get over the early, like, “Stop being worried, so focused on the competition. Just focus on your own business and our own customer base.” And I finally got better at that.
[24:36] There was this one vendor that I stumbled across. I think he was in month two or three. And it ruined my day. I was so sad. They had so many more features. They had the HTML site. They had the app side – the native side. Their marketing video was really well done, better than what I thought ours was. And the moral of the story is fast-forward three years. I actually got an email from this company saying, “Hey, Nate, we love your marketing and follow what you’re doing. We’re actually looking to sell and wondering if you’re interested.” And I had the whole conversation really wanted to understand what worked, what didn’t; if there was an opportunity for me to buy them. They had ten customers the last three years. While they had built this amazingly robust, feature-rich solution, they hadn’t put any energy around marketing it and educating people about how to use it in their business. They wanted to recoup some of their money that they had invested in, like, contracted development. I felt terrible. I really empathized with these guys, but it’s one of these classic cases where they focused too much on building one more feature with their own dollars instead of building it with the company.
[25:44] And that comes from my commitment to my customers. I want to be around here in five years so that we still have a service to provide. And I do that by making sure we’re growing a healthy company.
[25:55] Rob: Right. And their story is the more common path – right? That’s the more common story we hear of people launching a startup – is that they err on the side of too much product rather than too much sales.
[26:06] Nate: Yeah. But it’s so counterintuitive. I was like, “Oh, we’re done.” It was one of those things where I found it on a Google search, or somebody said, “Hey, Nate, have you seen this company?” And I was like, “Oh, wow. That was fun. We’re done.” I really thought [crosstalk].
[26:21] Rob: They were going to put you out of business. Yeah, that’s actually really common in terms of competition coming up. You always think they know more than they do, and especially if you’ve been in a market for any length of time and you’re good at it, you typically are way, way ahead of them in terms of revenue, customer count and in terms of your intimate knowledge of the market.
[26:39] Nate: Right. There was an analogy I made early on that I had to relearn my mindset of what the Internet is before launching my own online business. A lot of the things I consumed online were trending things. Every once in a while, something trending comes up, and I go, “Oh, yeah.” And it feels like we all know about the trending things that are happening. We all know about Uber. And instead, what I’ve learned is the Internet is like a big room – a really, really, really big room. And you can yell about something for years, and the majority of the Internet still won’t hear you. And that is what took me some time to realize – that it’s all about getting other people to talk about you and getting your message out, because people don’t need to hear about you just once. They need to hear about you over and over again. And just because you’re yelling in your corner doesn’t mean anybody’s hearing you yet.
[27:26] Rob: Right. Wise words. So, Nate, back in May of 2012, I did my first Mixergy sometime around there. And you emailed me afterwards, and you said that you saw that I had the Micropreneur Academy, and you asked me a few questions about it. And we had a short email exchange that I hadn’t remembered when you and I reconnected later. And then in June of 2013 – so, that’s about a year later – I did a Growth Hacker TV interview, and you sent me this email, and you said:
[27:55] “Hi, Rob. I just watched your interview on Growth Hacker TV. Great stuff. It’s been just over a year since I emailed you and then joined the Micropreneur Academy. While I feel I was so busy executing that I was only able to implement about 10 percent of the full course content, the little that I did implement was invaluable. The majority of my customers are on annual plans, and with the first few months of renewals being decent, May was my first $100,000 month.’ So, you said, you know, thanks. And you felt a lot of gratitude [to] both myself and Mike for the podcast and then others who are so willing to share what we’ve learned.
[28:27] Nate: Yeah.
[28:28] Rob: That was cool. I love hearing that kind of story, because you kind of came out of nowhere. I was just like, “Whoa! Who is this guy having so much success?” And I’m curious if you recall any specific times where you may have used either advice from the podcast, or from the Academy, or stuff that Mike and I’ve shared that helped you out as you were growing.
[28:47] Nate: I think I heard you talk about the point of just execution early on – how important executing is. And when I started in the Academy, I think I downloaded all of the MP3 courses right away and just listened to them on fast mode whenever I was commuting. And the one that sticks out for me – I think you did a class on joint ventures, or marketing partnerships; and I think that’s one that’s just been probably – when you asked earlier my most successful marketing tactic. It’s just been relationships – building relationships with other people. Like Marketing 101. It’s finding a reason for other people to talk about you and what your service is.
[29:27] And so some of that was easier. It was a brand new product. And think about a blogger, somebody whose job is to educate and share good ideas to their audience. They love having something brand new and shiny to show off and talk about. So, getting my foot in the door was relatively easy earlier, but now it’s had to transition to building the partnership based on the audience that we now have. We can kind of swap back and forth, and then also focusing just on really good content, just really educating people. And I also learned the value of education, obviously, through Micropreneur Academy. It was just invaluable.
[30:05] Rob: Very cool.
[30:06] Nate: There’s a couple podcast episodes that I find myself forwarding to other early-stage entrepreneurs a lot. The first two are the product test and the founder test. It really helped. The founder test especially helped me look at my own blind spots, or my own opportunities for growth and not feel so bad about it. And through growing the team, it helped me identify key personalities I had to hire for. And one of the best lessons I’ve learned – I also was really fortunate to find a mentor in Clay Collins, who’s the founder of LeadPages. He’s here in the Twin Cities. He told me the best lesson in hiring is you want to hire early in your business people who are good at doing a thing instead of a jack of all trades. That way, you don’t have to stop and teach them how to blog, or how to podcast, or how to do webinars. If they’re already doing those things somewhere else, they can come in day one and start generating revenue for you.
[31:06] Like, my first hire was customer support. I almost hired somebody that was just good at knew photography, but didn’t know how to do tech support. And, luckily, [at] the last minute, the last person to apply – she had done customer support somewhere else. That would’ve probably broken my business had I made that wrong decision. Luckily, I chose the right person who could come in day one, and she started handling most of the support tickets, like right away.
[31:30] Rob: Very nice.
[31:31] Nate: And I’ve learned that lesson on both sides ever since. And then, finally, the episode 141, “Five Elements of Effective Thinking,” where you guys did that book review. I love – I quote that on, like, a weekly basis, I feel like: just really focusing on doubt. And I really get worried about people who are certain about things. Having the guts to question and to be skeptical – it’s so true that in politics and other areas we devalue that. We feel like somebody’s wishy-washy. But when I’m hiring, and when I’m building partnerships, it’s like a huge red flag if somebody is absolutely certain about a thing. It’s like wait a second. If you’re certain, that means you probably just haven’t been doing that for long enough. [Chuckles]
[32:14] Rob: Right – to see the nuance of it.
[32:15] Nate: Exactly.
[32:18] Rob: It’s too black-and-white. Very cool. Well, thanks for sharing that. So, those were episodes 133, 134 and 141 you mentioned. I think all of them are in our little “Greatest Hits” area of our website, and we’ll link them up as well.
[32:30] Well, thanks, Nate. We really appreciate your time, coming on the show and sharing your story. I think it’s been inspirational for folks listening. If someone wants to keep up with you on the Internet, where would they do that?
[32:43] Nate: I like wrapping all of my podcasts up as a reward for people to listen to the very end. I love the feedback of, “What part of this interview was the most valuable to you. Send me an email: nate@stickyalbums.com.
[32:57] Rob: Awesome. Thanks again for taking the time to come on the show, Nate.
[32:59] Nate: You bet. Thanks for having me, guys. It was a pleasure.
[33:02] Mike: Thanks, Nate.
[33:03] 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 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.
Episode 215 | Our Predictions for 2015
Show Notes
Transcript
[00:00] Mike: In this episode of Startups for the Rest of Us, Rob and I are going to be talking about our predictions for 2015. This is Startups for the Rest of Us: Episode 215.
[00:07] Music
[00:15] 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.
[00:22] I’m Mike.
[00:23] Rob: I’m Rob.
[00:24] Mike: And we’re here to share our experiences to help you avoid the same mistakes we’ve made.
[00:27] Rob: So we’re not predicting anything about our businesses. These predictions are like the global kind of broader world of technology and entrepreneurship.
[00:34] So for me this week after about sixty days of my Facebook retargeting ads not showing up because I was in Thailand when they changed the image size you needed, and I couldn’t get new images made in time, after about sixty-something days I finally got those working again this week – or late last week – so they’re really showing up now. It feels good to have that done because I hate it when retargeting’s not running. And while I was at it, since I had a bunch of banners made I’ve started a trickle of Facebook ads again, and I started some YouTube ads, and I figure if I’m going to do some paid acquisition and I’m in the mindset of it in optimization I may as well dive in with both feet.
[01:09] Mike: That would explain all of the ads for Drip that I’m seeing.
[01:11] Rob: Are you seeing a lot?
[01:12] Mike: No. [laughs]
[01:13] Rob: Oh.
[01:14] Mike: I see them here and there. I don’t see a lot though.
[01:17] Rob: You know, retargeting is CPM so it’s per impression whereas if it is an actual Facebook ad, then I do pay-per-click if it’s not retargeted. If you’re seeing them though since you have a Drip account you should not be retargeted. So if you’re seeing them it probably would actually cost me seventy, eighty cents if you clicked it.
[01:35] Mike: So I think I talked a couple of weeks ago about my problems with my bank. I’m actually in the process of switching over to Silicon Valley Bank at this point. So hopefully all my accounting issues are going to go away shortly, and I won’t be overcharged for wire transfers anymore. They make it so difficult to change, and then with all the new laws and stuff you have to prove who you are and actually have you fill out forms and then mail the forms to them if you’re doing an online bank now. It doesn’t matter that it’s all done electronically, they still need some of this paper stuff.
[02:08] Rob: Right. Ah, the Patriot Act.
[02:10] Mike: But aside from that I’ve just been working on mostly AuditShark demos. I spent some time looking at some of the different landing page services because things are a little bit slow now because it’s December so people are kind of busy with holidays and trying to get ready for the new year. So I’m not having as many conversations with people, but I’m starting to look at kind of what my marketing efforts are going to be looking like next year. So I tried LeadPages a while back and it didn’t really work out, so I took another look and started looking at KickoffLabs and Unbounce and LaunchRock, and I think I’m going to go with KickoffLabs for a while and see how that works out.
[02:43] Rob: Very cool. So Kyle Albert tweeted us about a year ago, and I found it in an old outline for a podcast episode as I was searching for something else, and I noticed we never responded to him. So I wanted to respond in this episode. But first a quick service announcement: if you are not connected to @robwalling on Twitter and @SingleFounder on Twitter, you are missing out because it’s like a party up in there every day. So Kyle Albert, as I said, is @kylealbert95, tweeted us a while ago and said, “Have you guys seen this? Would be interested in hearing your take on startups for the rest of us.” The article is called “The Value of Content” and it’s written by Andy Beaumont. And in essence, he started a website called TC;DR, it’s “Tab Closed; Didn’t Read,” and he stated that his preference when he goes to websites is that they don’t popup a big lightbox, right? they don’t ask him for email, they don’t popup an ad, they don’t block the content. The whole post talks about how that’s a negative user experience, and he himself just closes a website instantly if they do that out of principle. And there was a whole discussion of it, and actually Ramit Sethi weighed in on Twitter, and he said, “100% of the people who are cheering this site have never run a website & seen the analytics behind lightboxes” so he obviously comes out on the side of lightboxes.
[03:59] Obviously emotion can run wild on this because you can get on both sides of this argument and kind of make this a religious debate. My take is that it is a personal preference like anything else in selling. You can be a used car salesman or you can be someone who doesn’t sell at all. And these are the kind of opposite ends of the spectrum or you can be somewhere in the middle, and everyone has their comfort zone. And so if your comfort zone is that whenever you see a lightbox it infuriates you then that’s fine. Express your- that’s your right, right? You’re expressing your freedom of being able to close that browser tab, and that’s okay.
[04:33] What’s interesting- but I wouldn’t take that as something- as a reason to never have a lightbox on your site. Personally, I have not used lightboxes because I don’t enjoy them. I don’t think they’re the optimal user experience. However, they are the optimal way to collect emails. You will get more emails. Now then there’s debate about if the people who put emails in are as valuable as the ones who actually seek out the form, and that’s a whole other discussion. But that’s my opinion on it: is that the numbers play out that lightboxes, or something that blocks the screen, is better in terms of ads, in terms of collecting emails, but keep in mind that, you know I have this rule that I will never write copy- I will never write sales copy that I wouldn’t say to someone at a dinner party or at a MicroConf attendee party, because that’s just my personal kind of compass of how far I will go for something. And for me popping up a lightbox is a little irritating, but that doesn’t mean that I judge people or websites that do it. I personally don’t TC;DR them.
[05:28] Mike: I think that what Ramit said about the “100% of the people who cheering this site have never run a website & seen the analytics behind it” I think that there’s a great deal of truth to that because I mean if you even look at in the startup community, people who are building businesses- there are all these people who are sitting on the sidelines who have never done that kind of thing before, and they’re sitting there Monday morning, armchair quarterback saying, “This is what you should be doing, and this is what I think you should do, and this is how I think it should work,” but at the same time they’ve never gone through the effort of trying to do any of that stuff. What I tend to find is that the people who I’ll say are out there and in the trenches and actually doing this stuff have a lot less negative things to say about the things that other people are working on than the people who have never even made the attempt. I’m kind of overgeneralizing here because I don’t want to say “everybody” because there’s certainly people who take this way, way too far like the second you get onto a website, boom: lightbox. That is annoying.
[06:27] There’s definitely a way to go too far. And there’s also that wide swath of comfortability where some people will say, “I will never do lightboxes,” and there’s other people who say, “I’m perfectly comfortable putting a lightbox up there because I want people to see the stuff that I’m creating because it is valuable, and if you have any of these types of challenges I can help you, but I need to be able to get in front of you in order to be able to do that.” So it’s definitely a comfortability thing, but I think that there’s a huge range of places where you can fall on that.
[06:56] Rob: I think you bring up a really good point. You know I have that phrase “it’s easy to criticize from the stands.” And you bring up the folks who criticize a business for- you’ll get emails that say, “Oh, you’re too expensive. You should never charge that much,” or let’s say you only have annual plans. You’re definitely going to get people who call and complain about that. Or maybe you have an ad headline or image- people just always have feedback about how you shouldn’t do that. You’re taking it too far. If you ask for a credit card up front people complain. But it’s easy to criticize from the stands. It’s like the people who are complaining about those things and probably this TC;DR thing have very, very likely never actually seen what it takes to build a business.
[07:33] Mike: And I think that in cases like this you get into situations where if you are not getting the number of leads that you need, then this very well may be the direction that you go in, and if that’s what gets you to the point where you are getting the number of leads that you need, then maybe that’s what it takes to build a business. And it’s hard for me to sit here and criticize somebody for doing that. Would I do it? Probably not. But would I criticize them for their business practices around that? If that’s what’s helping them stay in business, and I’m kind of making an assumption here that they are providing value, they’re not screwing little old ladies out of their Social Security checks. So Kyle, hopefully that gives you an idea of what Rob’s take and my take on that is.
[08:12] So I think today what we’re going to be doing is we’re going to be talking about our predictions for 2015. Why don’t we start off by going back to 2014 and talk about what those predictions were and see how well we did on those.
[08:22] Rob: So my first prediction for 2014 was that Twitter would become more profitable and piss off its users in the process, but that it would be a solid opportunity for paid placement and promotion for entrepreneurs. And that didn’t happen. Twitter is still not profitable. I don’t think it’s pissed off its users with the ads it’s done. It’s actually done a pretty good job. I haven’t heard much of an uproar. I do think it’s a solid opportunity for paid placement. I’ve heard a few folks making it work. I don’t think- it’s not Facebook was three years ago where a lot of folks were in there really making money, but I still am keeping my eye on it to figure out if Twitter is going to be a good paid acquisition platform.
[09:00] Mike: My prediction was that Apple releasing a new product is a gimme. And I would say that they probably didn’t necessarily release new product, did they? They didn’t come out with the watch. They announced it, but they didn’t actually release it.
[09:12] Rob: No, and my second prediction was that Apple would release an iWatch. And I actually meant- and I really did mean “announce”- rather than release, but it’s neither here nor there. My third prediction was that concierge services and concierge onboarding would become a requirement for SaaS apps in crowded markets. I don’t know how we measure that one. I know that a lot of people are doing concierge. I was on a call today with a SaaS entrepreneur who’s adding it, and the other person on the call already has it. I hear a lot- there’s several people in the building that my company is in that have added it in the last year so I don’t know if I would go as far as to say it’s a requirement if you’re in a crowded market, but I think it’s a really good differentiator, and I think people are using it to great effect unlike they were two or three years ago when very few of us were doing it.
[09:55] Mike: My next prediction was that more high profile acquisitions will start to be turned down – kind of reminiscent of what Snapchat did. And there was one called Cyanogen. They turned down a $1 billion dollar acquisition offer from Google. The thing is I don’t know whether there were other ones that I didn’t really pay attention to. I think the Snapchat one was kind of in everybody’s faces because it was one of the first ones where it was very public that they got turned down. I would probably give this half credit because there was one, but I don’t know if there was a lot more or anything like that.
[10:27] I think this next one that I had is a little bit difficult to measure as well, but investors are going to start to pour more money into startups. Do you have an idea?
[10:35] Rob: I mean, I’m looking at annual venture capital investment amount and deal volume and both of them- this is according to a report from Mattermark.com, and they showed 2013 there was 6,208 VC deals and in 2014 there was 6,700 so that’s up 500, and in addition the actual amount of money invested in venture deals looks like it goes up about twenty-three percent between 2013 and 2014. I’d give you a point.
[11:03] My fourth prediction was that Kickstarter would have a major multi-million dollar fail. And what I meant by that was that a product would come out and get funded and then not deliver and that it would be kind of a big catastrophe for them. And I would say that did not happen in 2014. There were some smaller dollar amount failures, but I think they increased kind of the restrictions on the Kickstarter program, and if people are failing they really are trying to get the money back at this point.
[11:32] Mike: My fourth prediction was that I don’t see a clear winner in either the game console market or tablets. I thought that it was going to go back and forth a lot, and I think that if you were to look at Xbox One and PS4, I don’t see a clear winner in that scenario. I don’t know if there’s a huge difference between them.
[11:48] Rob: My fifth prediction was that Apple would continue to lose market share as history repeats itself thirty years later. And specifically, I was talking about mobile devices, iPad, iPhone, that kind of stuff. Now, the iPad has been losing market share, but it’s funny – when I actually look at this diagram – they’ve been losing it really since late 2012 so the fact that I made this prediction a year after that really isn’t much of a prediction. I wasn’t fully aware of this, but it’s noticeable. Apple’s iPad market share of global tablet shipments has pretty much been consistently going down every quarter. There’s just so many other tablets, right? Android has done a good job of getting out there and Samsung and just all the other tablet makers have legitimate tablets on the market now as well as the Kindle Fire.
[12:32] I know a lot of folks are doing that instead of the iPad. Friends that I talk to have said that iPad is just too expensive for them. Well, I personally enjoy my iPad. I know that folks have a lot of alternatives these days, and in essence the same thing has happened with the iPhone. There are just so many solid phone alternatives. There has been a pretty steady decline in that as well.
[12:54] Mike: My next one was that Google Glass will become publicly available in 2014 or early 2015, and if you go out to Google’s website you can actually buy a pair of Google Glass right now, but it’s still considered a beta product. But I don’t think it’s something that they’re intent on releasing to the general public in mass quantities like people were predicting before. I still don’t see that anywhere in the near future.
[13:19] Rob: My last prediction for 2014 was that integration marketing would pick up steam as more companies offer APIs and become more connected, and integration marketing is actually an idea that I took from Ruben Gomez of Bidsketch back in the day, and it’s where you do integrations with other SaaS apps and other companies, and then you promote the integration, and you get them to promote you to their audience. And I know that I’ve been using this quite a bit, and we did more than a dozen integrations this year on Drip. I wouldn’t necessarily say that integration marketing has picked up steam.
[13:54] I do see that everyone, every SaaS app I know that comes out has an API within a few months of release, and that’s really cool. So the ubiquity of APIs and the ability to do these integrations is a good thing. I don’t know that I would necessarily say that a lot of people have jumped on this bandwagon and that it’s picked up steam, but it is definitely working for those who are using it.
[14:14] Mike: Yeah, I’ve noticed that there are full blown companies that are kind of coming up and creating services completely around other people’s APIs just like hooking from one API to another, so that’s kind of cool to see.
[14:26] So my last two predictions, one of them was more of our listeners are going to start flying solo. And we do get emails from people from time to time telling us what it is that they’re working on and asking us to add their website information over to where we highlight some of the successes that our listeners are having. And then the other one was that targeted marketing individuals will start to become a reality, and I haven’t really seen this. I guess what I was thinking was that you would start to see more individualized ads for people. I mean being able to go down and use big data to figure out who somebody is and be able to put targeted ads right in front of that specific person, and I haven’t really seen that. And I wonder if that’s more because of data anonymity or privacy concerns or anything like that.
[15:10] Rob: Yeah, I would definitely say it’s about privacy concerns, because privacy’s been a big issue with all the big players – Facebook, Twitter, and Google, even Apple coming out and basically saying, “We sell devices and we don’t want your data” trying to talk about how you could use Apple products instead of Android products because of Google collecting all the data about it. Who knows? But I do think that’s why that hasn’t come around. Not because the technology’s not there but because the privacy concerns would be big.
[15:35] Mike: So now that we’ve kind of covered what 2014 looked like, let’s talk about 2015. What our predictions are for 2015. Do you want to go first?
[15:43] Rob: Sure. My first prediction for 2015 is that Twitter will become profitable and piss off its users in the process, but it’ll be a solid opportunity for paid placement promotions.
[15:53] Mike: I think hindsight is 20/20.
[15:54] Rob: Does that sound familiar? [laughs]
[15:55] Mike: It does sound familiar. I’m not sure where I’ve heard this before.
[15:58] Rob: This is the exact same prediction I had for 2014, and I’m sticking by it. I think it’s going to happen in 2015. They’re not profitable now. I think they’ll do it in 2015.
[16:06] Mike: My first one is that net neutrality is going to take a much bigger stage this year. I think part of the reason I say this is because right now we’re starting to see Netflix, for example, is paying service providers for higher bandwith to serve their content out to people faster. I saw a study that showed their content delivery speed has increased by fifty percent since the beginning of the year, and if you look back at what Netflix has done, they’ve made deals with a lot of the major providers that will essentially help serve their content faster. And I don’t think that that bodes well for the startup world in general. I think there’s a lot of concerns around that. I mean, it works great for Netflix, and I’m sure that the ISPs are very happy that they’re getting more money in their pockets to help pay for upgrades, but I don’t necessarily think that they’re actually going to be doing a lot of the upgrades that they maybe promised to have.
[16:55] So it concerns me a little bit that there’s also people in congress who are talking about net neutrality, and when you listen to them talk they clearly have absolutely no idea what net neutrality meant in any historical form. That’s worrisome. That’s scary, because these people are supposedly the ones who are making the laws. I mean really it’s probably the lobbyists who are putting money in their pockets, but at the same time, it’s just a scary thing to look at. So I think that it’s going to become a much bigger deal this year.
[17:20] Rob: My next prediction is that video ads – and mostly I’m thinking about YouTube ads, but I’m sure there are some other platforms that’ll have the volume – that they will be a big opportunity for cheap clicks in 2015. I think this is a green field area, and not a lot of people are doing it. It’s kind of hard to come up with a video, and there’s just not a lot of competition for it in the advertiser space right now. So I’m hearing the rumblings, and I’m starting to dip my toe in these waters as well because right now it is cheaper clicks.
[17:51] And if Google would kind of get its act together a little bit with retargeting – because the YouTube retargeting is really poor. I just want to be able to put a pixel on my website, and then if someone visits, be able to have an ad shown to them on YouTube next time they visit, but it doesn’t work like that. You’d only retarget your YouTube video if someone has visited your YouTube channel or watched your YouTube video in the past or something, and since I don’t have any presence on YouTube that is completely useless to me. But if they actually did some real retargeting like Facebook and the web allows us to do, this could potentially be a pretty big win for Google.
[18:27] Mike: My second prediction is that the number of startups in the wearables category is going to skyrocket. And I say wearables not just in terms of the hardware that’s coming out but also the number of software startups that are going to start to come out and try and offer services around integrating data back and forth between the different wearables, offering dashboarding technology and social sharing of people’s accomplishments and things like that. I think if you look at some of the apps that are out there right now like MyFitnessPal and Lose It! and things like that there is some of that stuff that is out there now, but it doesn’t necessarily integrate with as much hardware as I see coming out. And I just see a huge opportunity for people to get in there and start connecting all of the different devices. Because if you look at some of those different providers right now they work with a handful of devices, and there are a lot of devices that are coming out.
[19:16] Rob: Yeah, and wearables are blowing up. I mean I think this is already starting. We have fitness bands, a lot of people are wearing. We also have the watch, watches that are coming out. We have glasses like Google Glass with headset displays. There’s even this jewelry coming out that can do- like rings and bracelets that can do minor notifications. There’s shoe attachments that I’ve heard of that are way more accurate at being a pedometer. There’s a lot of stuff that this category is set to blow up over the next several years.
[19:42] My next prediction is that virtual reality will actually be a hit with the early adopter set in 2015. I don’t think that all of us are going to own a virtual reality headset in 2015, and the promise of virtual reality has been floating around for twenty plus years. It’s like artificial intelligence, right? It’s the promise that never seems to come to fruition. But I think in 2015 the early adopter set is going to make it work and that probably as 2016 rolls around that more and more of us will have these. They’re basically inexpensive consumer level VR headsets. Samsung just released a $200 headset. It only works with, I think it’s the Note 4 phone, but that’s kind of their first foray into it. I would consider it like a post-beta product but not quite ready for production, and they kind of want to dip their toe in the water. And I think 2015 is going to be when a lot of the legitimate VR headsets start coming out and we really start seeing what they can be used for and whether VR headsets are going to only be for gaming? Will we use them in video conferencing? You know, it’d be interesting to have a 3D view of everyone instead it’s not just these flat images. Would that be more engaging? We don’t know yet because everyone doesn’t have them. So I think there’s a lot of potential for it in the coming year.
[20:55] Mike: Well, that’ll be interesting to see with the Facebook Rift.
[20:57] Rob: Yeah, indeed. Yeah. Oculus, right? Yeah, and I was actually going to say that with my Kickstarter prediction I said that they would have a major multi-million dollar failure. They didn’t have that with the Rift because it raised the money and was delivering the product, but Facebook’s acquisition of them raised a pretty big stink, right? The question of like why did all these people back the Kickstarter if they were just going to take a billion dollars from Facebook? So that was I guess a controversy around them.
[21:22] Mike: Well, my next prediction is that Google is going to screw all bootstrap startups, and there’s absolutely nothing we can do about it. And I don’t have any details about this, I just have this feeling that there’s going to be something that they do, and it’s going to go probably much further than they’ve gone in the past, and basically they’re just going to screw anyone who’s doing internet marketing if you don’t do things the way that you want them to do them. I just don’t trust them anymore.
[21:44] Rob: What could this possibly be? They’ve already taken away all of our organic keywords, the ad rates continue to increase as competition goes up. What else could they do, Mike?
[21:53] Mike: I think that they could probably move much more towards basically forcing you to almost pay for rankings. Just the amount of data that they have and the strides that they’ve have made towards pushing people to pay for paid advertising, it just makes me wonder about when is the day going to come where they’re going to say, “Well, you know what? We’re just going to kind of flip the switch, and half the page is going to be ads for whatever it was that you searched for, and if you want to go to an organic search, you’re going to have to go to this other place over here.
[22:24] Otherwise it’s all going to be all paid advertisements for specifically what it is that you’re looking for.” I think they would be able to make a pretty solid argument that, “Well, if you search for this then clearly you want this particular type of product or this particular type of information, and there’s people who are willing to pay to put it in front of you.” So I can see them going in that direction.
[22:43] Rob: My next prediction is that we will see our first sub $100 a year consumer-level five terrabyte cloud storage service. Dropbox “ten Xed” the amount of storage they give you just a couple months ago. It was 100 gigs for a long time and they just increased that to a terrabyte, but I think we’re going to see five terrabytes within 2015, and that’ll be cool.
[23:07] Mike: Well, my next prediction is that Google Glass isn’t going to go anywhere fast.
[23:11] Rob: To think that Google Glass is not going anywhere fast is like- that’s it. I think the last nail in Google Glass’s coffin was a few months ago. It’s done already. I mean, is anybody- they haven’t done anything with it. They haven’t done any new releases, they’re not promoting it.
[23:24] Mike: I think the issue is that they’re trying to find good use cases for it. And I think there are definitely some really good use cases for it, but the problem is that they’re not mainstream uses. There’s no giant market there that I can think of that “Google Glass solves this whole slew of problems and it would be generally useful for just about everybody,” and I just don’t see that.
[23:44] Rob: And do you predict the same for the heads up display contact lenses that they are looking at? I’ve heard Google is researching this as well as some other companies. If they replace the dorky looking glasses with actual contacts so it’s much less visible, do you think that that could have legs?
[24:00] Mike: No, not really. I don’t see it happening. You still have no good way to interact with it, and that’s the problem. You don’t have a good input device. And unless it can start reading your brain waves to figure out what you’re thinking of to be able to modify– like move things around on the interface while you’re looking at it or something like that — that’d be totally different. But still that would take a pretty significant learning curve. There’s a huge amount of engineering that would need to go into that, and I don’t see that happening anywhere in the near future. So unless they come out with like a radically new input mechanism for directing or controlling these devices, I don’t think that it makes a difference.
[24:37] Rob: What if voice control got better?
[24:39] Mike: The thing is you can use voice control for your phone right now, and I don’t particularly use it. I use it when I’m driving. I don’t see most people out there talking to their phones if they’re trying to get things done. They’ll tap into it. They’ll type. They’ll use the keyboard. The software works reasonably well, but I don’t think people feel comfortable talking to their devices and asking it for information. I think they’d rather just type it in.
[25:02] Rob: My fifth and final prediction for 2015 is that we will start to see 3D printers in the houses of our early adopter friends. So I don’t think we’ll see mass adoption by the end of 2015, but I do think that our kids are definitely going to grow up seeing 3D printers potentially in our houses in the next couple years and definitely with our early adopter geeky tech friends such as myself. We’ll have a 3D printer in 2015.
[25:29] Mike: My last prediction is that cloud platforms and services are going to be generally viewed as a commodity by the end of the year, and there’s not going to be a lot of differentiation between them other than brand identity. So you’ll have the Rackspace cloud and the Microsoft cloud and the Amazon cloud, and if you take a look at the services themselves those different platforms offer you’re not going to see a whole lot of difference between them, and people are going to start associating themselves with a particular brand as opposed to going with one of them because of the specific services that they offer. So storage, queues, storing video – that sort of stuff – people are just going to use whatever cloud they happen to like the vendor of.
[26:10] Rob: Is that not the case right now? Because like when I went to look for hosting I could have gone with Rackspace or Amazon, and I picked Amazon for brand identity and because some other people were using it, frankly. But is there that much differentiation now that you think is going to change in the next twelve months?
[26:27] Mike: By “services” I don’t necessarily mean like hosting. Like Amazon Web Services, they have all these different services you can use, and hosting is just one of them. The same thing with Azure. When Azure started out it was they had hosted servers that you could use, but then they started adding in Linux and all these other distributions that you could use in addition to the Microsoft operating systems. And then they started adding in a lot of the things that Amazon had already been offering in terms of block storage and things like that. And Rackspace has kind of been doing the same thing kind of the whole time with their open stack technology. And I think that over time what we’re seeing is that the services themselves that they’re offering, at this point, they’re just competing on price. And it almost doesn’t matter which service you go through or which vendor you buy from; you’re going to get almost identical services from each of them.
[27:18] Rob: So we’re interested in hearing your thoughts on our predictions for 2015. You can tweet us at @robwalling and @SingleFounder. And if you have a question for us, call our voicemail number at 1-888-801-9690 or email us at questions@startupsfortherestofus.com. Our theme music is an excerpt from “We’re Outta Control” by Moot used under Creative Commons. Subscribe to us on iTunes by searching for “startups,” and visit startupsfortherestofus.com for a full transcript of each episode. Thanks for listening. We’ll see you next time.
Episode 214 | Our Goals for 2015
Show Notes
Transcript
[00:00] Rob: In this episode of “Startups for the Rest of Us,” Mike and I discuss our goals for 2015. This is “Startups for the Rest of Us” Episode 214.
[00:08] Music
[00:15] 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.
[00:24] Mike: And I’m Mike.
[00:25] Rob: And we’re here to share our experiences to help you avoid the same mistakes we’ve made. So what’s the word this week Mike?
[00:30] Mike: I’ve been running a little bit of an experiment lately. I’m not really a huge fan of time tracking software of pretty much any kind, but I’ve started using Toggle, it’s T-O-G-G-L. But I started to realize that I felt like I was spending a lot of time on things that didn’t necessarily matter, and I was starting to wonder where all my time was being spent. Not just with my time, but with my productivity in general. And what I found was just the very act of tracking of some of that time, and mentally calculating, okay, what category does this go in, it’s been a good experiment so far. I’ve only been running it for about a week.
[01:04] Rob: I’m a big fan of time-tracking. And ever since back in my days of consulting, you know, it becomes a habit at that point, because you have to report invoices and such. But even after that, when I was doing my own stuff, I would track my time to figure out which apps I was spending the most time on. And then at the end of the month, I used to do a dollar per hour, per app. So I would see which particular app that I owned was making me not very much money per hour and others which were making more. So I agree with you, there’s a discipline to it, there’s a little bit of an annoyance, because it feels like bean counting, but I find that the data you get out of it is more than worth it.
[01:38] And also, the fact that it makes you think about what you’re doing all the time, because you have to basically categorize that somewhere. Frankly, it’s a discipline I’ve fallen out of and it’s probably something I should look at again. I actually asked my guys, the developers I work with, to track their time, even though we’re all salaried employees. I asked them to track it and I said, I don’t need to see it, but I think it’s a good discipline for you to have.
[02:00] Mike: And I found that there’s certain things where business overhead for example, I don’t get anything out of that, dealing with financial stuff or learning about new things for the business. I don’t necessarily get anything out of it, but there’s no specific ROI for them. But I do find that I’m spending time on some of that stuff, and it’s just like, ugh, is there any way I could start cutting this out so that I can work on things that are worth more. So that’s what I found to be the most useful. And then obviously, because of AuditShark and the Academy and my consulting business, all those different things, there’s time spent there and I’m just trying to figure out how to reallocate most of it, which is pretty cool. How about you, what have you been up to?
[02:39] Rob: So I launched my startup audio documentary, it’s called “Launch.” And so far it’s received a warm reception. I’ve been pretty happy with the feedback I’ve been getting on it. You mentioned you’ve listened to part of it.
[02:51] Mike: Yeah, I’ve listened to a little bit over an hour so far.
[02:54] Rob: Got it. So you’re right at the point where we start questioning what we’re building and why and who we’re building it for.
[03:00] Mike: Yes, yup.
[03:02] Rob: So there’s some good ups and downs. I re-listened to it, just because I haven’t listened to it in a month or so. And since it went live, I kind of want it to be fresh. It’s called “Launch. A Startup Documentary.” And it’s basically a two-hour audio documentary of building and launching Drip with myself and my lead developer Derek. You can find that at startupstoriespodcast.com or you can download it at iTunes if you just search for Launch Documentary. It should come up in the top one or two. How about you, what else is going on?
[03:29] Mike: It’s getting towards the end of the year, and one of the things that I was thinking about a couple of weeks ago was kind of what I wanted to do for next year. It reminded me of a conversation that I had with Heaton where he had asked me why do I do all the different things I do, because I have a couple of different businesses and several different products. And he was asking me kind of a matter of factly, why is it that you do all these different things. I was like, you know, I like to do a lot of different things. If I work on the same thing for too long, I get bored. New Year’s is coming up, are there any New Year’s resolutions that I have. Why do I have to wait until New Year’s to start doing some of this stuff? So about probably three or four days ago, I started figuring out what I wanted to do for some month-long experiments for life and business and things like that. And the first one that I’m doing is going to the gym every single day with one day off a week for a month to see if I’m actually going to follow through with something like that.
[04:22] Rob: Nice, well, that’s a good way to build a habit if you want to.
[04:24] Mike: I was three days into it and on the third day, it was probably about 7:00, 8:00 at night, and I’m like, oh, I really don’t want to go to the gym, but I still went. It was 9:00 at night and I got to the gym and I worked out for an hour and I went home. It was definitely difficult to get in there.
[04:40] Rob: I’m curious, if Heaton was asking why do you do all the things you do, was he asking you for like what is your single motivating factor that gets you to do everything, or was he saying why do you do so many things instead of focusing on one?
[04:53] Mike: I think it was more out of just idle curiosity, you know, why do you do all these different things?
[04:56] Rob: Got it.
[04:57] Mike: It’s not often that you get asked why is it that you do what you do.
[05:00] Rob: I know. And it’s hard to find a satisfactory answer to, to be honest for me. I think that’s probably something I want to find a better answer to, is like why do you do so many things? And I have reasons I can rattle off, but I think deep down at the core, I want to really know that because doing multiple things means you don’t do them nearly as well as if you were just focused on one. And yet I’m doing the same thing right? I mean, I also run Microconf and have Micropreneur.com and the podcasts and startups and a book and all this stuff, so that’s something I actually, I’m taking a retreat here in about a month and I think that’s going to be one question for me, is whether or not I want to continue doing all these things, why I do them and if I should continue to.
[05:39] Mike: Yeah, that’s a question I have to answer for myself as well.
[05:42] Rob: So hey, have you been listening to the “How to start a startup” podcast from Y Combinator?
[05:47] Mike: I have not.
[05:48] Rob: Okay, so I mentioned it in the last episode. And it’s a Stanford course that they’re basically releasing as a podcast. And I started listening to it, and I’m maybe four or five lectures in. So far the first lecture was decent and then the other ones, it is so geared, it’s Y.C., so it makes sense. But it’s so geared towards billion dollar businesses that I’m struggling to pull things out of it that apply to bootstrappers. At this point, I’m not sure I’d recommend it to you if you’re bootstrapping, because all it’s serving to do for me right now is to distract me. In terms of, their talking about these really sexy big businesses and raising all this money and changing the world, and it gets you all excited, you know. It’s like when you watch “The Social Network” or you read the Steve Jobs biography or “Hatching Twitter,” I get super excited and I think why am I doing stuff so small? Why aren’t I thinking big? But in reality, there’s a reason that I’m doing stuff so small, and there’s a reason why I’m not thinking that big, and it’s because I value my lifestyle, and I value having time with my family and being in control of my time and all these things. And so, I think if you’re susceptible to that, to kind of the influence of listening to these things and getting pulled off your core mission.
[06:55] If you’re core mission is to really have time, income and mobility, then I would say you may not want to listen to this. Even though it’s good stuff and it’s interesting interviews. And then the last thing I want to point out today is if you haven’t stopped by startupsbytherestofus.com/greatesthits, you should check it out. We put together a page of our greatest hits. I think we’ve chosen maybe 20 or 30 and are based on download popularity, as well as our favorites. We need to update a little bit, it only goes through episode, I think 179, so we have 20 or 30 we have to cull through and choose a few out. But if you’ve only been listening for the last 50 or 100 episodes, there’s a lot of episodes before that I think you’ll definitely want to check out.
[07:34] Music
[07:37] Rob: Today, we are looking back at our goals that we talked about a year ago. So we’re reviewing our 2014 goals and then we’re going to set our goals for 2015. And I was thinking this year we can do a little scoring thing. You could say, I got on that goal, I got a zero, I got a one, if you achieved it, or I got a half point, if you kind of achieved it.
[07:57] Mike: Can we not. So my first goal was to go full-time on AuditShark. And I guess I would say that I achieved that. I did that back in, what was it, July, yeah, about five months ago. I’ll say 0.75.
[08:12] Rob: Nice.
[08:12] Mike: We’ll go with 75% if that makes you feel better about it. I would say that, mainly because it’s not a full-time income.
[08:19] Rob: And has it changed your life, full-time at AuditShark? Because a lot of people’s goals are to go full-time on their product.
[08:25] Mike: I would say my life is considerably different in a good way. But I would say it’s not necessarily because I went full-time at AuditShark, it’s because I quit consulting.
[08:33] Rob: So my first goal from 2014 was to 5x Drip’s revenue from December of 2014. And I did not achieve that. I was looking at about 3.1x of the December revenue. So I’m going to give myself a half a point. The biggest reason we weren’t able to do that was because Drip was not ready to scale in December of last year like I thought it was. And if fact, if you listen to that launch documentary, you’ll hear that we basically launched people like it, but then it took us another five months of development to really find that product market fit to where it could start scaling up. And that wasn’t really until June or July.
[09:13] Mike: Well, my next one was finish my security book. And I’d have to give myself a zero on this one.
[09:19] Rob: Did you start your security book?
[09:21] Mike: You know, I started putting one together and I probably only wrote a couple of chapters, and I just remember thinking to myself, how can I possibly put together something like this that isn’t going to be completely and utterly boring.
[09:35] Rob: To you or to the reader?
[09:37] Mike: I would say both. So yeah, I kind of bailed on that, but I did start on something called, “The Single Founder Handbook.” Singlefounderhandbook.com is going to be where I’m going to be launching that. It’s going to be more about how to build and structure a business in such a way that it’s something that you’re interested in doing long term. And I say that because I’ve talked to a bunch of people who, they’re goal was to build a business and then they built a business, and then they realized kind of after the fact that they didn’t actually build themselves a business, they built themselves a job, and they don’t like their job. So now they’ve got this “asset” that they don’t actually like coming into work and doing any work on it, but it pays the bills. And they’d like to go do something else, but they really can’t because they’re stuck in that, so it’s not like a job where you can take a couple of weeks off here and there and then go do something else.
[10:25] It’s like if you’re not working on your own business, then it’s probably tanking. And a lot of people that I’ve talked to are kind of in that position. So I’m really looking at putting together something that addresses those types of things and talks about how to structure the business so that it allows you to do the things that you want to do rather than forcing you into a situation where you have to do certain things or things go haywire.
[10:47] Rob: Cool. So my second goal for 2014 was to get HitTail back on track in the next 60 days. So that was within 60 days of last December. And if you recall, Google’s Not provided was wreaking havoc on HitTail and it was bleeding customers, because it wasn’t able to provide nearly as much value. And I did get it back on track although it took me probably 90 days, but it was a big scramble to basically get another source of data. Were now reporting from Google Webmaster Tools instead of relying on the Google query string right? Because they don’t provide keywords anymore. And that essentially got HitTail back on track. So I feel good about that one. We also rewrote HitTail in Rails this year, meaning that even if it had another problem, I could have a developer fix it instead of me.
[11:31] Mike: My third goal was to get back to blogging and writing. The goal I set for myself was 26 blog posts or email newsletters for the year. And I ran into a situation where things were kind of just going haywire within MailChimp and I kind of got frustrated with the whole thing. And I felt like it got in the way of me actually writing and posting things. I mean, I still kept writing to some extent. I’d probably give myself maybe half a point for this, but I definitely didn’t come close to the 26 blog posts that I wanted to. That said, about probably a week or two ago, I finally got everything from my blog moved out of MailChimp and into Drip. So now that all of that stuff is straightened out, hopefully it’ll make it easier for me to kind of overcome those mental hurdles associated with that. And I have started writing again.
[12:16] Rob: Yeah, this is a tough one because I admire the goal when you said it last December, but I remember thinking this is a tough one to adhere to given all the other stuff you’re trying to do as well. Writing is just a time consuming thing, and unless it’s a major driver of revenue or it’s a major focus for you, it’s hard to get a blog post out every week or two.
[12:37] Mike: This is part of the reason why I’m giving myself half a point on this is because part of this was just about writing more. And I’ve kind of channeled those writing efforts into writing in the Single Founder Handbook, not into the blog. So I’m still writing, it’s just not all going into the blog. The goal was to write for the blog and for the email newsletter, but not a lot of that’s going in there. I mean, I probably will cross promote or cross post some of that, so I can reuse some of the content a little bit, but that kind of factors into it as well.
[13:04] Rob: So my third goal for 2014 was to throw two MicroConfs with you of course, in a sustainable manner. And the sustainable manner part just meant throw two MicroConfs without spending a bazillion hours on it. And I think we definitely did that in April because we hired a coordinator named Xander who took a ton of stuff off our plates. I think we mostly did that in October because we were working with Dan Taylor on it. There were still enough stuff in the October Prague Conference that fell through that I felt like it’s not super sustainable. You and I are obviously talking about ways to improve on that. But overall, I think this one’s mostly a full point.
[13:42] Mike: So my next one was to take an extended vacation. And I would give myself a half a point on this. I did not take an extended vacation of two-plus weeks which was kind of the goal. But I have taken a week-long vacation there. And I did get some extra time in for some personal time away for my retreat back in August too.
[13:59] Rob: Very nice. My fourth goal was to re-launch micropreneur.com. And this was really more about launching the forms and getting a venue where people could continue to share and interact because if the forms in micropreneur.com were, as we said, their WordPress, and they were getting old and there was a bunch of issues with them. And we just did that here in the last month. We moved over to a new platform called Founder Café. And so far things have been going really well. Lots of discussions, and I’ve been in there every day or two interacting. So I would give this one a full point.
[14:30] Mike: My fifth goal was to make a conscious effort to improve my health. I have a very specific goal in here which was to lose 2.5% of BMI by MicroConf which was about 10 pounds. And if I remember correctly, I did do that. I would say that that’s going really well. Of course, with my month of change starting a couple of days ago with this, that would go through December, and I would expect to be able to drop some more weight and improve my health even further. But I’ve noticed that kind of since the June-July timeframe, when I stopped consulting and stopped being on the road, and stopped eating out all the time, my health has been dramatically changed for the better. And not just my physical health, but my mental health as well.
[15:08] Rob: So my fifth goal from last year was only an honorable mention. I did this very much on purpose, because before I set my goals for last year, I had to retreat and I looked at what I thought I could realistically do in 2014. And the previous four goals I mentioned is what I had down. The fifth goal I put as an honorable mention because I genuinely didn’t think I could get to it and I would have time even to start it, but that I could see it coming up in 2015 and that if I had time in 2014, it was something I would do. And that goal was to write a second edition of “Start Small, Stay Small.” And frankly, as time goes on, second edition is like a loose term, because so much has changed that it would kind of be a complete re-write. It would almost be like writing a brand new book. So I didn’t get that one done, obviously get zero points for that. But not feeling too bad about it, because I didn’t think that I would. Yeah, it’s interesting, when you write such a tactical book like that, the stuff just doesn’t stick around forever.
[16:02] What I did notice, because I went back through, and I have not picked up a copy of my book in years. And I picked it up the other day and I noticed about probably 60-70% of the info is mindset and it’s thought-process and that kind of stuff. And that stuff, I probably wouldn’t have to re-write. So it really would be where I go into the keyword planner and the super numeric stuff, would certainly have to change. So let’s dive into our 2015 goals. Looks like we each have five.
[16:30] Mike: Well, I think the first goal that I have is to run a series of life experiments. The first month of change is going to be going to the gym almost every day. But there’s some other things that I want to try as well. So for example, one of the things that I always kind of wanted to do was to become an early riser. And I know that’s going to be something that is going to take a while to do, because I am not a morning person by any stretch of the imagination. So I’m going to try and get up early every day for a month and see how that goes. Part of that is also getting enough sleep at night, and then there’s, I’d like to try maybe going vegetarian for a month. I haven’t fully worked out the entire year yet. But I just want to try a bunch of different things.
[17:07] Rob: So to summarize, it sounds like you want to try 12 different one-month experiments.
[17:11] Mike: Yeah.
[17:12] Rob: There is, if you haven’t read Steve Pavlina’s article about becoming an early riser, it’s the one, because you and I are both not morning people, and that’s the one early riser article that has actually ever worked for me. So I loved his approach. It’s a weird approach, makes you feel silly, but do it and at least for me, it worked really well. Before I get to my first goal of 2015, I have a caveat here. Typically, before we’ve done these goal episodes, I’m very certain about my goals because I’ve gone on a retreat and I’ve spent 48 hour solid thinking about it somewhere. I have not done that this year. I feel generally good about these goals, but I have not put them to the real fire test of saying, do I actually think these are all completely realistic and have I committed to these.
[17:57] But giving about 30 minutes to think about it, this is what I put together, and this is basically going to be my starting point when I start my retreat and really think though each of these. So I think it’s probably a reasonably accurate picture of what I’ll do in 2015. With that, my first goal in 2015 is to 2.5x Drip’s revenue. It’s something that I think is ambitious, but I certainly think it’s within the realm of possibility.
[18:21] Mike: One of my goals is to spend some dedicated time each month kind of looking at where I’ve spend my time and figure out how to create more systems that I can put in place that will allow me to spend less time doing those things on a continuing basis. And this kind of talks back to a little bit of what we talked about earlier, about time-tracking is I need to know where I’m spending my time in order to be able to systemize things so that I get myself out of doing those things on a regular basis. So obviously, time-tracking is going to factor into that pretty heavily, but I also need to make sure that I’m dedicating some time at the end of each month to kind of look back and say where did I spend my time, where did things go wrong, and where is it that I can become more efficient in the future by automating certain things.
[19:03] Rob: My second goal for 2015 is to get back to the point where I can choose what I want to work on and when I want to work on it. I feel like over the last year, I feel like focusing so much on Drip and growth and all this stuff, that there are times that I have to do a lot of things that I am not particularly choosing to do, but have to get done for the businesses-sake and for growth’s sake. And while I want to continue to focus on Drip, and Drip is absolutely my number one priority and I’m all-in on it, I do want to find a place where I have perhaps one more person hired and I can have them take over some of the sales, some of the marketing and the stuff that I’m kind of over.
[19:44] The stuff that I’ve done enough, that I’m not learning new stuff, that’s easy to systematize, that I’m still doing, and that I can move on to the things that are teaching me, that I’m learning from, and frankly are the things that I want to work on. So that’s a big goal for me this year, is to get back to that point, because I’ve been there. I was there for the previous two years of just doing really fun stuff most of the time and having a lot of choice on what I worked on, and I definitely lost some of that in 2014.
[20:08] Mike: My third goal is to build a better system for maintaining the inbox to zero. And what I, I think I’m like a lot of people where I use my inbox as a glorified to do list. And at one point, there were emails in there that were more than a year old. And at that point, of course, it’s just, you’re not going to do anything with that at that point. I’ve still got emails that are less than a month old in my mailbox, and those are the things that I need to figure out a mechanism for getting them out of there and on to a task list that they’re not in my mailbox. What I did realize, I got to inbox zero a couple of times, and what I realized that knowing that I had no emails in my inbox, I didn’t have to think about it. I never had to sit there and say, oh, I need to check my email because there’s all this stuff that is in there that’s on my list of things to do and I need to kind of refresh my memory about what’s on that list. But I realized that when I didn’t have anything in my inbox, I could just completely ignore it, and it was just a huge weight off my shoulders, and it was a nice stress reliever.
[21:10] Rob: When you find a system for maintaining inbox zero, you need to tell it to me, because I want to do it too. All right, so my third goal for 2015 is to host two more MicroConfs in an even more sustainable manner. I don’t know, maybe we should toss this one out. Rather than a goal, it’s like part of my plan. It’s like part of what I see taking up a lot of my time in the next year, and I kind of have to slot that out.
[21:36] Mike: Well my fourth goal is to do a better job of systemizing my different revenue streams. And I jump around a lot between the different things that I have going on. And I feel like a lot of the jumping around, back and forth, between the different products and revenue streams is that it’s too haphazard. I feel like I’m constantly jumping from fire to fire as opposed to like having cold calculations about, I’m going to do this this week and then next week I’m going to do that, and having a solid plan in place for doing things versus just jumping from fire to fire. And I think that that’s definitely something I can do a lot better with that I’m just not handling very well right now.
[22:14] Rob: My fourth goal is to launch another podcast. I think that 2015 is the year that that will happen. So keep your ears peeled. I’ll obviously be talking about that process as it goes. And no, it will not be a competitor to “Startups for the Rest of Us.” It’s not going to be Startups for the Rest of the Rest of Us in case you were wondering. It’ll be in the startup space, and I wanted to look at like mindset stuff, psychology. It could be with a certain significant other of mine who has done a lot of talks about this topic. Hint, hint, if you’ve come to MicroConf and you’ve seen my wife speak. Frankly, she is the one who started pushing it forward and she was going to do it on her own. And I said, boy, I’d really like to be part of that because I feel like I have to say on it.
[22:55] Mike: Very cool. The fifth goal that I have for this coming year, is to keep up my writing habit. And I think with the progress of the Single Founder Handbook and all the issues that have been straightened out with my email newsletter, I think that will happen. Again, it kind of goes back to making sure that I set aside dedicated time to do different things and I’m still trying to figure out how to put things on my weekly task list that in such a way that I know that I can get to them, as opposed to building a task list for the week and then I get to the end of the week and a lot of stuff is not done and get it pushed to the next week. And then you end up with this flow of tasks that have been overflowing for two, three or four weeks. And obviously at that point, you’re just overloaded and things are just not getting done the way that they need to.
[23:37] Rob: So when you say keep up your writing habit, what specifically do you hope to produce?
[23:43] Mike: I want to put out a new blog post at least twice a month. So that kind of goes back to, or at least the equivalent, not necessarily a full blog post that’s published or anything. I know, for example, that Nathan Berry was doing a thousand words a day, which as long as you sit down and dedicate the time to starting writing, then you’re fine. But I think that dedicating time every single day for me is probably not an option right now, just because I don’t have systems in place for how I’m going to be working on things, what I’m going to working on it any given day. Part of that writing habit is going to kind of go back to how I manage that process. I think that the equivalent of a couple of blog posts on a monthly basis would be fine. If I dedicated some time to put it into my Single Founder Handbook, then I would count that towards that habit.
[24:31] Rob: Got it. Well, my fifth and final goal, and this one pains me so much to say, I’m really having a tough time coming out in public with this, but in 2015, I think I might write another book. That may be the second edition of “Start Small, Stay Small.” It may be something else. I have some other ideas in my head. Writing books is such a time-consuming and painful process, but the time has come where I need to do that. I’ve hit kind of the next stage of my career since I wrote the last book, and I have so much to say, that I feel like I need to put on paper. So I don’t even make this an honorable mention and it’s going to hurt if I get to the end of next year and I haven’t done it, but especially given everything else that I’ve listed of growing Drip and launching a podcast and returning to the point where I can choose what I want to work on, fitting this one is going to be a challenge.
[25:21] 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 us at questions@startupsfortherestofus.com. And I do want to say thanks because I know a lot of people probably turned off by now. But I do want to say thanks to everybody who has emailed in a bunch of podcast topic ideas for us, those have been really helpful. So we’ll be adding those to our queues and working through them. But just to continue on, 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 and we’ll see you next time.
Episode 213 | How to Plan a Conference
Show Notes
Transcript
[00:00] Mike: In this episode of Startups for the Rest of Us, Rob and I are going to talk about how to plan a conference. This is Startups for the Rest of Us, episode 213.
[00:06] Music
[00:13] Welcome to Startups for the Rest of Us, the podcast that helps developers and entrepreneurs get awesome at launching software products, whether you’re developing your first product or you’re just thinking about it. I’m Mike.
[00:21] Rob: I’m Rob.
[00:22] Mike: We’re here to share our experiences to help you avoid the same mistakes we’ve made. What’s the word this week, Rob?
[00:26] Rob: The word is, startupstoriespodcast.com or go into iTunes and search for the word “launch”, you may need to put “launch documentary”. Two words.But this is that two hour audio documentary that covers nine months of building Drip and then we recorded an epilogue about a year later. So it’s a span of about twenty-one months of recorded audio and it’s broken down into just over two hours. It goes live today; this podcast comes out.
[00:54] Mike: Very cool.
[00:55] Rob: I’m excited about it. I spent a lot of time editing it on the plane versus on my last trip. I feel good about it. I feel like it tells the story pretty well and it’s produced. I put music in…
[01:04] Mike: That’s neat, that will be interesting to listen to.
[01:06] Rob: How about you? What’s going on?
[01:07] Mike: We have an open call for new podcast episode ideas that I put out on Twitter yesterday. So that kind of goes for any of our listeners, if you have questions that you want us to answer or show ideas, shoot us an email. We’d love to take a look at what your thoughts are and what you guys are interested in hearing from us about. After 213 episodes, it does get a little difficult to come up with new episodes every week. So we would really appreciate any ideas and thoughts you guys have and ultimately as part of this podcast is for you guys anyway. Make sure you send in your ideas and we’ll take a look and see what we can bring out of it.
[01:39] Rob: Yes, for the first time in a long time, our question coffer is very low. We just have a handful of questions, so we would like to hear your thoughts. So what are we talking about today?
[01:50] Mike: Today we’re going to be talking about how to plan a conference. I think that part of this has come up primarily because we’ve had a lot of questions about what the dates are for the next MicroConf, and to be honest, we just don’t know yet. I thought it would be interesting to discuss what goes into planning MicroConf. I know there’s a bunch of people who come to MicroConf who also listen to the podcast. I thought it would be interesting to discuss kind of the dirty details of what goes down behind the scenes to plan the conference.
[02:14] Rob: Right, and we’ve received specific questions about that. Certain people either are thinking about throwing an event or wanting to know more about what goes on and they’ve asked us. We kind of have a quick conversation with them but I think that’s the idea here is to kind of document it.
[02:26] Mike: We’re not going to be talking about selling tickets. We’re really just going to be talking about the event logistics. The short of it for selling tickets, we simply use Eventbrite, it’s very easy to use. It makes selling tickets a lot easier, but obviously there’s a whole other side to selling tickets for an event that has to deal with marketing, leveraging an audience, getting people to the event, getting them to buy into it, especially the first time around. I think that’s enough of a conversation that we’re going to leave that out this time and focus solely on all the logistics and things you need to think about when you’re planning a large-scale event.
[03:01] Rob: One of the first things you need to think about is location and dates. What’s funny is, location actually needs to come first because from a location, then you go out on a hotel search. The first thing you need to think about is how long will a conference be, and potentially how many people you’re going to have. You may not know that up front, but you kind of have to name a number. Because if you are going to have a 300 or 400 person conference, there are certain cities and airports that have a really hard time supporting that. They just don’t have the open hotel rooms. So the size of your conference can impact where in the world you can have it.
[03:35] Mike: It’s also worth looking around quite a bit because the cost of the conference itself is just one factor. You also have to take into account the cost for the attendees to fly into that location, because there’s certain cities where it’s monumentally more expensive to go to that city at different times of the year than it is to go to other cities. We chose to have MicroConf in Vegas for a lot of different reasons, but one of the big ones is the cost. It’s not just the cost to us, it’s the cost to the attendees. There’s the cost of the conference itself, the cost of the hotels, the cost of the flights, that adds up. You have to be a little bit conscious of what the total cost of coming to the conference is. It’s not just the $200 or $500 or $1000 that you’re charging, it’s also the cost of the hotel, flight and everything else.
[04:23] Rob: Like you said, we’re really in tune with that. We pay a lot of attention to it and that’s one thing we prioritize highly when we are looking at new hotels. I don’t think either of us loves Vegas that much, but it is so cheap to get to. It’s pretty easy to get to from in the US. The hotels have really good deals. We’ve looked at holding it in eight or ten cities in the US and almost all of them are more expensive or harder to get to and the total cost is more for attendees, which is why we just haven’t done it. I’d love to do it in Boston or San Francisco but the hotels are going to be $300 a night and we would almost have to double ticket prices. We haven’t wanted to do that because we’re trying to get bootstrappers there and we don’t necessarily have a bazillion dollars to throw around.
[05:04] Mike: Once you’ve got the city and hotels narrowed down, you have to start considering which hotel you’re going to go with. Part of that has to do with what dates they have available. Just because you want to have the conference on certain dates of the year doesn’t mean that the hotel is actually going to be available on those dates. If you book far enough in advance, you can probably get those dates, but it also has a lot to do with the number of people that you’re expecting to have there.
[05:29] One thing you definitely have to be careful about is not under booking it. So if you decide that you’re going to try and get 100 people there and you only get 70 or 60 there, you can really be in a lot of trouble in terms of the financial side of it if you’re not able to get that number of people there. They typically have some sort of a food and beverage minimum that you have to come up with in order for them to make certain concessions about the rooms and the catering.
[05:53] Rob: Yes, and they also – you’re on the hook for covering the room cost, a minimum number of rooms in addition to the food and beverage minimum. The first year we had MicroConf, if you recall, Mike, we were on the hook for $10,000-$15,000, might have even been more than that. We had not sold enough tickets to even come close to covering that. I remember kind of having a panic moment that we were going to be paying for a bunch of rooms that weren’t rented out and some other stuff. So throwing a conference, especially if you’re going to get above 100 people and start to get into the 120s to 170s, if you don’t sell enough tickets, it can become a real financial issue. It can cost quite a bit of money. It can be a risky endeavor if you aren’t sure how many tickets you’re going to sell.
[06:34] Mike: So when you start looking at those dates, you have to decide what days of the week you want, as well. Especially when we were looking at hosting the conference in Vegas versus in Europe, we found in Europe it was substantially less expensive to have it on the weekend, whereas in Vegas it was substantially more to have it on the weekend. For several years of MicroConf in Vegas, and I don’t think we’re going to be changing this; we hosted it basically Sunday through Wednesday. Basically, a Sunday night evening event and then Monday and Tuesday. That was primarily driven by cost and then our first year over in Prague, we hosted it on a Saturday and Sunday. I don’t think that, although it was more cost effective, I don’t think it worked out in terms of the type of audience that we attracted. You definitely have to give some consideration to the type of people you’re going to attract by hosting it on certain days of the week.
[07:21] Rob: With MicroConf, we found that people who are self employed and are very serious about launching a business are willing to either take those two days off from their salaried gig if they still have one, or from their product business because they have a flexibility to do it. So we found it has resulted in kind of a higher quality or more serious group of attendees if we actually do it during the week. I don’t know if that would be the case with all conferences, but it’s definitely something to think about.
[07:46] Mike: The next thing you want to take a look at when considering the hotel is what sorts of concessions are they making on the total price and on the services that they’re offering. Are they flexible? For example, one thing we found in Vegas is most of the hotels have some sort of a resort fee. That’s something you have to be conscious of. In some places, they’ll let you waive it. They’ll say, “Okay, if you’re not going to go to the gym and spa area, we’ll waive this for them. But if they use the gym at all, we have to recharge this resort fee.” Then there’s certain hotels where it’s absolutely non-negotiable. They will not waive that fee.
[08:18] I think the one we’re actually looking at now, they have it tied to the WiFi access, the roaming WiFi throughout the hotel. So that’s a consideration for us. We don’t want to ask them to waive it because we want everybody to have that WiFi. But again, they didn’t actually let us have it as an option.
[08:34] Rob: Yes, which is a real bummer. We found that some hotels that are not owned by big corporations, those are the ones that tend to work with us because every year it’s a negotiation. You don’t want to pay rack rate when you go to start talking about this stuff, it’s all negotiable. The ones that are owned by these big corporations are really rigid and they won’t negotiate very much. They won’t give many concessions, meaning suite upgrades for your staff based on number of rooms that are booked, or discounts on audiovisual or food and that kind of stuff. That’s all been pretty negotiable with the hotels we’ve used thus far.
[09:08] Mike: The last thing you need to keep in mind with the hotel itself is, what is the final cost to the attendees of those hotel rooms? As Rob was saying before, if we hosted a conference in Boston, the rooms are going to be $300 a night. What we typically shoot for, for MicroConf in Vegas, is anywhere between $80 and about $120. $120 I think is a little on the high side. Of course, over the course of three or four days, that’s $400 or so. Very same thing, in Boston or San Francisco, $300 a night, you’re immediately going from $400 for the whole thing to $1200. That gets a little bit out of the price range of the type of audience we want to attract for MicroConf. You do have to be mindful of what the total cost is going to be for people, because some people are going to stay a little bit longer.
[09:53] Rob: So when you’re looking at hotels, one thing you have to think about is, what event space do they have? Because we found hotels that say they have event space, what they actually have is meeting space. There’s a difference, right? An event space is something with a high ceiling where you can get a stage in with a podium and a big projector. A meeting space tends to be eight to twelve-foot T-bar ceiling and, yes, you can have a podium and maybe some small screens but it’s very different. So depending on the type of event you want to have – if you’re going to have more than I’d say, seventy-five people, you really want some type of event space. That high ceiling gives your event a different feel.
[10:28] The first MicroConf in Prague, we had it in a smaller room, and it was more meeting space. We hadn’t seen the space before the event. For me, it was definitely not as classy. It just didn’t feel as big of an event as this year’s, where we did have high ceilings, or like we’ve had in Vegas. Think about ceiling height. You definitely want an elevated stage. That’s been another one that’s made a difference. Then you want a podium on that and you want at least one very large projector screen, sometimes two, and those are pretty expensive. The hotels rent the projectors to you at an exorbitant amount. We’re like, “If you pay for two days of it, you could buy the projector?” But that’s just the way it goes. If people can’t see, then it’s a problem, so you might just have to pay for two of those depending on the shape of the room.
[11:12] Mike: That’s a really good point you brought up about the cost of some of the different equipment that you’re renting. It’s like, we could buy a projector for that cost, but at the same time we’d be on the hook for bringing it, setting it up and everything else. In addition to that, what happens if in the middle of the conference, the thing breaks? Or the bulb blows? Then we have to go out and buy another one and we have to scramble, versus if we’re using the – whatever local event company they have, they’re supplying the equipment – they typically have spares right there on hand. So you don’t have to worry about it as much. Basically it just becomes a stress factor that you don’t have to worry about. In many cases, it really is just worth it to pay the money and say, “Okay, you guys deal with it.” You don’t want to be the one who’s on the hook for dealing with all those little technical glitches.
[11:59] Rob: Yes, that’s right. I don’t think most people realize how expensive everything is if you’re going to do this through a hotel. There are other ways to do it; I’ve seen people throw conferences at universities and you can get the space for free or for a low cost, especially if you give tickets to some students there. But then you have to provide everything. You need to figure out the sound, all the meals, there’s a lot that goes into that. That’s why we do it as hotels, as well so that people can all stay in the same place. It makes it convenient, but they’ll charge you for things like projectors or coffees. Don’t they charge us $68 for a gallon of coffee? Something like that, it’s outrageous. The lunches, it’s like a buffet lunch for $50-something per person. They’re giving us the event space for free, so that’s kind of how it winds up. Be prepared, if you’re going to do this, that the budget – there’s a reason conference tickets tend to be expensive. To do it right, it is not a cheap endeavor.
[12:53] Mike: You also have to make sure that you have at least a reasonably good sound system or sound engineers on site. The last thing you want to be doing is trying to deal with the hotel sound system when it’s not something you’re familiar with, if you didn’t set it up. You really need to have some sort of an onsite event staff that’s going to be handling that aspect of it for you, because you want the event to sound nice. You want the speakers to be able to come through loud and clear.
[13:17] At MicroConf, we actually have a sound engineer who’s there all the time, where if something goes wrong, he can fix it right on the spot. There’s been a couple of times where they’ve had sound issues – where either a microphone dies on us because the batteries are dead, or we have to swap one out because it’s not working right. There’s all these different problems that can come up. They’re all little things, but they can really seriously impact that quality level or the perceived quality level of the conference. Having those people there is extremely helpful.
[13:45] Rob: WiFi is the other thing – we spend, I think between $4000 and $5000 on each conference. That’s for two days of WiFi in the venue. It’s always been worth it. We only had one year we had some scattered issues and that was a real bummer, but every other year that cost, while it feels like a lot to pay, has always been worth it when you get 150, 170 attendees and they’re all able to connect to the internet.
[14:11] Mike: Well, even that year that we had problems, they brought in another WiFi access point for us. That was something they just did on the spot. It’s hard enough to deal with a conference, let alone technical glitches. So having them – it’s almost a no brainer if you start putting on a conference of any given size.
[14:26] Rob: I think the last part about the event space itself is to realize that you really don’t want a lot of extra space in that room. You kind of want there to be an energy of that room. I’ve been at conferences where the space is like two sizes too big, right? So you have a bunch of extra space, and the energy kind of just dissipates, either straight up or out the sides. You want people to be packed in just enough so that it feels like there’s a lot of people and like there’s a lot of energy in the space.
[14:53] Mike: So let’s talk about the evening events a little bit. For MicroConf, we run an evening event every night of the conference itself. Then we have, essentially, an evening reception the night before the conference starts. I think it’s important to have something every night; I don’t think you necessarily need to be the one who organizes it, but you do want to make plans for something. You don’t want to just say, “Okay, goodbye!” Especially at the end of the conference you want to have something for them, whether that is, you’re helping people organize into groups so they’re going out to dinner and you provide them with a list of places they can go. Or, you host something for them.
[15:25] I think that it’s just important to make sure that you are providing direction for people, so they know kind of what the expectations are. I think that if you’re just leaving people to the wolves, so to speak, and letting them decide on their own, it almost feels like you’re not taking care of them. You’re not paying attention to what their needs are as part of the conference. You do want the attendees to talk to each other; you do want them to interact. So providing a venue for them to interact at an evening event is extremely helpful in terms of them just getting more out of the conference, but also getting them talking to one another.
[15:55] Rob: Right, realizing that the hallway track is always worth at least as much as the speaking track itself – the first year at MicroConf, we didn’t have an evening event planned for the third, final night. We just figured people would kind of self-organize and as it turns out, that was the year Heaten Shaw spent like $900 in liquor at the hotel gift store and we all just lined up and carried it up to Andrew Warner’s suite. That became kind of the tradition of – we at MicroConf get together every night in some organized fashion, at some prearranged meeting place where everyone to gather is a big deal. Every night, because any time you skip a night, people want to be together. That’s why they’re there, why they’re taking time out of their week and why they’ve paid for the hotel.
[16:35] Being pretty deliberate about getting people together every night of a conference is a big one, including the welcome reception the night before the conference. I think that’s really important, because getting the social energy kick started before the conference itself starts is a big deal. When you get up on stage that first day, if you’re running this conference, you’ll feel the difference. When people are not connected, it’s harder to run the conference. But if people have reconnected and you feel like it’s a cohesive group, it makes a big difference.
[17:03] Mike: One of the things that we’ve discovered with our evening events is that, ours have gotten large enough that we actually want them to be outdoors. The reason for that is that sound travels. If you have it inside and you have enough people in a room, what happens is that the sound will reflect off the ceiling and comes back. It just makes it exponentially louder and by having it outside, that sound travels up and it doesn’t come back, which is really nice. I think we discovered that more by accident than anything else. By far, every single event that was outside has been far better. I know that you really can’t do this outside of Vegas, because Vegas is basically a desert, but it makes it so much easier to be able to do that event outside.
[17:42] Along with the noise factor is having low or no music at all. In Prague, this past year, we’d had one of the evening events at a bar in downtown Prague. It was so incredibly loud that people just didn’t enjoy it. There were people who left early because they wanted to go back to the hotel and hang out at the bar there. They couldn’t hear themselves talk. That’s definitely something to be mindful of. People are there to talk to one another and if you don’t provide them with an environment where they can talk to one another, they are going to leave.
[18:09] Rob: Last couple of things to keep in mind with evening events is to buy at least the first drink for everyone. The other thing is, to serve some kind of appetizers or dessert. Even if it’s a small quantity, everyone’s not going to eat it, but just to have something to munch on lying around helps.
[18:24] Mike: Along with the appetizers, something you also have to be mindful of is that different people have different dietary needs. So there are some people who are vegetarians, vegan, gluten free or have allergies to different types of foods. You have to be sensitive to those types of things and handle them more or less as exceptions. Basically, ask people, “Are there any dietary considerations that you have?” and we follow up with them to make sure that we’re able to meet those. We work with the hotel on those things. So for lunches, for the evening event appetizers and things like that, you want to make sure you’re taking those things into consideration because it may not be important to you, but it is important to your attendees. If you show them that you do care about those types of things, they’re going to be much more willing to come back and to tell other people, “Hey, I went to this event, these guys took care of me.” We’ve actually gotten emails back very recently about the MicroConf we just held in Europe – people who have emailed us and said, “Hey, I really appreciated the fact that you guys took care of me because of this.” It was just nice to see that it was noticed.
[19:23] Rob: So let’s talk about speakers. This can be a big part of your effort is actually recruiting good, solid speakers. I was talking to Dan and Ian at Tropical NBA when I was at DCBKK and one thing Dan had mentioned, which hadn’t necessarily occurred to me before, was just how hard it is to find people who are both practitioners and who can communicate, and communicate well onstage. It really is hard to find good speakers. There are only so many of them. So our way to find those folks is to seek warm introductions. We ask people if they know someone who is a speaker or who has spoken in the past, because once you’re throwing an event that has a lot of people attending it, you can’t necessarily have beginner speakers. That’s when you start doing stuff like attendee talks or having shorter talks with the beginner folks to see who fleshes out and who is able to take the main stage later.
[20:15] Mike: Yes, I definitely think addressing the quality of the speakers and establishing kind of a minimum bar is definitely something that you want to do at a large scale event. The last thing you want to do is put speakers up there who don’t resonate at all or clearly have issues speaking in front of a large group of people, because it just doesn’t come across well. Then you get this very, very wide range of speakers and people come away from the event thinking to themselves, “Oh, well I really liked this speaker and this speaker, but these other four or five, or whatever, I didn’t resonate with them. I didn’t find what they were talking about interesting. They just weren’t good speakers.” I think you want to raise the bar as far as you possibly can, but you want to do what you can to vet them. So that includes watching videos of all the talks that they’ve done, especially if they’re not a speaker that you’ve heard before or been able to see some of their videos.
[21:03] You want to take a look at their slides and see what it is they’re talking about, if it’s something you think is going to resonate with the audience. I’ve been to conferences and spoken at conferences where they want your slide deck up front so they can essentially help you tweak it. There’s other ones where they’re essentially just let you go and you can talk about whatever you want, and they’re not going to review it. I think the best thing to do is something in the middle. You kind of give people a lot of leeway if you’ve seen other talks that they’re done and you have a good sense they’ll do a good job just based on their previous work.
[21:34] Rob: Yes, there are two things a talk needs. It needs delivery and it needs a really good talk, like actual content of the talk. Most of the talks that fail have poor content or it’s not organized well. It’s almost never that the delivery is bad. So you can watch former talks and get ideas of how people speak but if they’re writing a new talk, it’s always hit and miss. As an organizer, keep that in mind. Even if you were to line up nine fantastic speakers and everybody delivers really well, all nine of those talks are not going to be great. Someone is going to tank, at least one, every year. If you have more beginners who haven’t written a lot of talks, you’re going to have more of that happen. It’s just something to keep in mind. You’re never going to bat a thousand with this, you just have to do the best you can and get the best talks up there. Overall the conference will average out.
[22:26] Another thing to keep in mind is to maintain some kind of variety, right? You don’t want all the speakers talking about the same thing. You don’t want all of them telling stories; you don’t want all of them doing tactical; you don’t want all of them doing inspirational. It just gets boring. For MicroConf we found that this means a good mix of founders, who are typically telling their story but pulling tactics out of it. That’s the best format for a talk I’ve seen from a founder. Then we have tactical specialists, and these are people like Sarah Hatter with her tactical specialty of support, Dave Collins who really knows SEO and Joanna Weeb who really knows copyrighting really well. That’s been the mix for us. It’s been a good blend of tactical specialists and founders. If you’re running your own conference you’ll have to think about that as well.
[23:11] Mike: Another consideration is the scheduling of the speakers. You really want to have one of your best speakers go first and another go last. By having one of your best speakers first and last, then the conference starts and ends on a high note. That’s really how you want people to walk away from a conference. You want them to feel like, “Hey, this was an awesome conference.” Because they’re going to remember most things about that first speaker and last speaker.
[23:37] Another thing that we found in the scheduling – the very first year we put on MicroConf, we detailed exactly when everything was going to happen. We told people, “This speaker will be speaking from 9 to 10, this one from 10 to 11,” etc. What we found was, 15 minutes into the conference, we were like half an hour off. So at this point we don’t publish that schedule anymore. We publish the order but not a detailed schedule, because if you get off of that schedule it can be very difficult to get back on to it.
[24:06] Rob: Right, we’ve also found that putting some pretty proven speakers at the end of the first day and the start of the second day – so essentially bookending both days with really strong speakers helps, because when people are heading off to dinner for that first day, they want something interesting to talk about. You don’t want them to say, “Boy, that speaker really tanked.” You want there to be positive association and then you want someone strong the start of the second day because a lot of people want to sleep in and don’t want to come. Frankly, you want to encourage everybody to come and you want to kickoff the day with a lot of energy.
[24:37] One other thing I’ll mention about speakers is, if possible, talk to them in advance and ask them to attend your evening events. Ask them to attend the conference. It’s a big deal, and it’s a big compliment we’ve heard about MicroConf, that people can come up and talk to the speakers, that they don’t fly in and fly out to do this one hour stretch. They’re actually approachable, able to answer questions, able to give feedback and they’re around for the duration of the conference. It’s a pretty big deal.
[25:01] Mike: Another thing on the speakers is that – I think one of the best things you can do for the speakers is have a speakers’ dinner where essentially you’re kind of thanking them for the event. But you’re also setting them up so that they know what to expect at the conference, especially if they’ve never been to the conference. We host our speakers’ dinner on Sunday night before the conference even starts. That helps the speakers who are coming, because then you can set expectations for them, you can let them know what they’re likely to see, what the audience is going to be like. You can let them ask questions, and of course you’re going to want to pick up the tab for them coming to the conference.
[25:33] Rob: Right, and this has actually been a big perk for some of the speakers. We’re not able to pay our speakers, and a lot of them are important and very busy. But being able to hang out with both the MicroConf attendees but also the other power players, to reconnect with folks they may not have seen at the speakers’ dinner is a big perk. We’ve had compliments about doing it.
[25:56] Mike: So let’s talk about sponsorships for a little bit. One of the things we do to help pay for MicroConf is have sponsors at the conference. I think you really need to be very sensitive about hosting a conference where you’re having sponsors. I’ve been to some conferences where you go there and sponsors basically buy their way in to talk onstage for an hour or two at length about their product, what they can do for you and it basically becomes this giant sales pitch. We really wanted to make sure that we didn’t do that for MicroConf.
[26:25] So there’s this delicate balance we’ve kind of struck where we have the sponsors there, we definitely highlight them and talk to people about them, but we don’t shove it in their faces. We do giveaways for the different sponsors so they have the opportunity to put things forward. We’ll do giveaways in between speakers and they’re obviously welcome to come to the conference. In fact, we actually encourage that. One of the things that we do for the sponsors is that, as part of the different sponsorships, they are invited to come to the event and their tickets are included in those sponsorship packages. It’s essentially a way to say, “This is the cost of the event, but for this much more you can become a sponsor.” One of the things that we do with the sponsors is make sure that we try to get those sponsors to the event. They’re going to get a lot more out of it as a sponsor if they attend.
[27:09] Basically, we’ve priced the sponsorship levels above and beyond what it costs to come at the event. You can’t be a sponsor without getting those tickets. We simply avoid giving people the option to sponsor if they’re not also going to get the ticket. There are some sponsors who say, “Look, we just want to support the event but we can’t come so we’re going to do a giveaway. We’ll give away our ticket.” That’s fine; that’s totally cool, but at the same time we want those sponsors to come so that they do get a lot out of it, they are able to interact with people. That’s part of the value proposition that you have to provide to them. You have to have a solid value proposition that says what they’re going to get and how does your audience overlap with theirs.
[27:50] I think the last comment I have on that is making sure that you have a rate card for the sponsors so that it’s very clear cut what they’re getting and what the different packages are so that it’s not more of a negotiation. Because some sponsors will try to negotiate with you and I think it’s a bad idea to negotiate on a sponsorship side, especially in terms of price. If you lay it out in a rate card, people look at that as more of a menu and it becomes much less negotiable.
[28:15] Rob: Something’s always going to go wrong. We’ve had something go wrong every conference, including speakers canceling during the conference or the day before. We’ve had some issues with sound, music too loud at some of the venues that we aren’t able to control… all kinds of stuff is going to go wrong. You just kind of have to give into that and understand that when it goes wrong, you just do your best to fix it. We’ve actually had some of our best innovations come from a speaker canceling, because we then did some website tear-downs. That has become like a pivotal part of MicroConf and something that people look forward to.
[28:53] Mike: Yes, I think it was three or four years before I was actually speaking on the day that I was scheduled to. It’s been a running joke.
[28:59] Rob: You were always scheduled for the second day and then we always had something go wrong with a speaker on the first day. We had a flight delayed, someone who got sick and then something else. We moved you to the first day, so the night before MicroConf you were always scrambling with your slides.
[29:13] The other thing to think about is that all of this always requires compromises. We’ve named a bunch of criteria for the city, the hotel, the venue, the audio and the cost. You’re going to have to compromise on something. Pretty much every year we feel like, “Yeah, all right, we nailed the city and hotel but boy, that one venue we just couldn’t afford to get one better.” Or, the venue is really nice but the evening events at the hotel weren’t as good because they didn’t have an outdoor event. You’re never going to find the perfect package; you just have to be willing to figure out where it is you’re willing to compromise and where you’re not.
[29:48] Mike: I think one thing that’s really helped us is knowing in advance exactly how many people we’re going to be having at the event. Part of that isn’t so much the number of people but knowing exactly what our budget is to work with. If you’re always working with a moving target for the different places you’re having events or meetings or workshops, anything like that – that moving target becomes a very big challenge. But if you know exactly how many people you’re going to be having before you even get there, and you’re able to give them that number well in advance, it makes things so much easier and you know in advance if you can pay for something. You don’t have to think twice about it. You just say, “Is this good for the conference? And can we afford it?” Not having to deal with that moving number is extremely valuable.
[30:34] Rob: When you’re done running this event, you’re going to be exhausted. You need to do a couple things. One is take a couple days off and decompress and think about the conference. The other is find someone to talk about it with. Hopefully if you have a co host you’re putting it on with, you can sit down for an hour or two and basically do a debriefing or post-mortem. Figure out what you did right, what you did wrong, what you’re going to change for next year, how things went in general – I find that time to be invaluable. You have so much in your head and it’s so intense when you’re running this event that taking those hours and getting it all out on the table is very helpful for trying to return back to normal life, frankly, and normal work. I find that I pretty much won’t get any work done for two or three days after MicroConf because I’m so burned out. Because it’s kind of like the volume turns up to 11 for a few days and it’s really hard to just come back into a normal life after that.
[31:30] Mike: Yes, so you and I usually record a podcast – essentially right after the conference is over. We just kind of sit down and talk about what went on, what went right, what went wrong and I think that having two of us there helps in a lot of ways. But being able to talk about the different things that we saw and being able to get different perspectives on them. Different people are going to have different perspectives even if they see the exact same thing. If there’s more than one person running the conference with you, then it makes it easier to get those different perspectives from somebody who was deeply involved in the entire process. So I would probably recommend that you actually have somebody who was working with you on it in a major capacity. I think you and I both kind of go on vacation afterwards as well. I think last year I went out and camped out in the desert of Utah after MicroConf.
[32:14] Rob: Yes, I typically just come back home and take a couple days to decompress and maybe check email a few times. But I don’t do much work on purpose after that.
[32:24] That concludes our show for today. If you have a question for us, call our voicemail number at (888)801-9690 or email us at questions@startupsfortherestofus.com. Our theme music is an excerpt from “We’re 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, see you next time.
Episode 212 | How to Prioritize Feature Requests
Show Notes
Transcript
[00:00] Rob: In this episode of “Startups For The Rest of Us” Mike and I will be talking about what feature to build next. This is “Startups For The Rest of Us” episode 212.
[00:08] Music
[00:15] 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 you’re first product, or you’re just thinking about it. I’m Rob.
[00:24] Mike: And I’m Mike
[00:25] 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?
[00:30] Mike: Well, we got a really cool “thank you” email from a Mayo De Leon. He says, “Hi guys. I wanted to thank you for the great audio content. I tune your podcast in while on the treadmill. I’ve lost 16 pounds in four weeks just listening to the podcast and getting tons of incredible information. Thanks. And he’s the founder of Proposalware. I listen to a lot of podcasts, but I don’t think I’ve lost 16 pounds in four weeks.
[00:50] Rob: Yeah, I know. Very nice. We also got several new iTunes reviews. We’re up to 376 worldwide, most of them five-star. The first review is from Eric Stark from Sweden. He says, “With under 200 episodes under their belt, I’m impressed by the consistent high quality. Always some good nuggets of wisdom each week. We have one from R. Wilmer of the UK. He says, “Perfect timing for me, since this is something I need. So good I listen to it twice”. Then we have Chris Kodem from the Czech Republic saying, “There’s no other podcast I know of that so consistently delivers such great value week after week. Where plenty of other podcasts end up turning into a collection of tips and tricks, Mike and Rob manage to combine their own ongoing experiences as entrepreneurs, with detailed tactical advice, into a tight package that respects my time by keeping the fluff and banter to a manageable level. I highly recommend it.” So many thanks to everyone who has given us an iTunes review. If you have not, I really encourage you to give us five stars. You don’t need to write a review. And even if you are on something Sketcher or Downcast, if you review us in there it actually helps us as well. So we really appreciate it.
[01:54] Mike: Well, I spent a ton of time this past week working on the Micropreneur Academy Forums, and basically migrating everything to a new platform. Because the Micropreneur Academy was built on WordPress back in … When did we start it? 2009 or something like that? We went with Simplepress forums for the long time. Over the years its gotten kind of old, and it just doesn’t handle things very well. And then WP Engine shut off some of the full text search capabilities, which completely hosed the ability to search inside of the forums. So about a year ago we started looking around and saying “Okay. Well we really need to do something with the Micropreneur Academy itself, migrate to a new platform of some kind, or just do a major update of some kind. What we ended up doing was we ended up going out, finding a new platform. We looked at, I think, three different platforms that were on our short list, and only one of them really met a lot of our needs. So we spent probably the past eight or ten months working to try and get all of the content in such a way that can be moved over onto the new platform.
[02:50]We tested it out for MicroConf Europe and for MicroConf Vegas. This past week we, kind of, pulled the trigger and disabled all the forums on the Micropreneur Academy, moved all the content over, and then I’ve just basically been working through support issues for the past five or six days, trying to make sure everything is working and that everybody can get in. I think it’s gone reasonably well. I think there’s a lot of good comments in there, and the discussion have actually really moved forward.
[03:17] Rob: Yeah. That’s been a thing I’ve noticed. Obviously there are going to be hiccups when you gave a migration like this, with thousands of forum posts being moved to a new platform. But the fact that the number of conversations that are going on instantly increased from the time we moved over I think really says something about the platform and how much of a difference it makes in being able to allowing for conversation, allowing for good discussion. So, I’m happy with it. Micropreneur.com is still active. People can log into it. We have all of the content there, but the forum discussions themselves have now been moved into Founder Cafe, and I’m happy to call that the new home of the Micropreneur discussions.
[03:55] Mike: Yeah. So it’ll be interesting to get some of the bugs worked out. And once we can that done then we can start adding in a lot of the other things we’ve looked at, like adding a wiki, and integrating that in so that everybody can use it and collaborate on what sorts of tools are out there that they’re using, or reviews and analysis of the things that are working and not working for them. I think that will really help – just in general – the community, because it’s obviously stuff that people are going are going to suffer through on their own, but if people have already gone through that process of evaluating different pieces of software, or different services, it helps to be able to share that information. Before you could do it in the forums, but I don’t think that it was nearly as well organized as something like a wiki would be, and that’s going to be completely integrated into the New Founder Cafe.
[04:37] Rob : Right. So if you’re interested, if you have checked out the academy in the past, but left because maybe the discussions weren’t up to your liking, you might want to check it out. Micropreneur.com, if you enter your email there, we’ll let you know the next time we take a class.
[04:51]So, Gabe from “Just Add Content” sent us an email, and he wanted to give us a heads-up about the start-up class from “Y Combinator”. It’s at startupclass.samaltman.com. It’s actually a course at Stanford, and there are videos of the lectures that are only up for a certain amount of time, from what I can tell. There are notes and there’s all types of stuff. Now I actually found it in the Downcast Podcast Repo today, so I’m sure it’s in iTunes as well, if you search for “start-up class” and then look for a very simple logo that’s just, kind of, text on a black background. You can pick and choose which lectures you might want to listen to. It’s discussions from people like Paul Graham and Sam Altman, and a bunch of other influential and knowledgeable start-up folks. So I have not started listening to it yet, but I am very much looking forward to digging into this, because this is essentially something that they’re doing for their own founders, so it’s definitely going to have some good insights and tips I think will be useful to you if you are interested in this show.
[05:48] Mike : Very cool.
[05:49] Rob : Today we’re going to be talking about deciding what feature to build next, and the criteria that we use to figure out how to decide whether to build a feature if it’s requested, and then how to somehow prioritize those features. I think I should start by saying that this really is, as usual, a discussion about B2B apps. So, if you’re going to business-to-consumer you kind of need some good luck. You kind of need an amazing sense of product if you’re going to pull it off, and you don’t necessarily go based on user requests, because consumers don’t necessarily know what they want before you show it to them. I think this is really evident if you hear every person who is building a B2B app, what do they say when you talk about what features to build next? They say, “Talk to your customers.” Right? That’s the next thing you should do to guide the direction of your product. And you can’t just listen directly to what they say. You have to filter that, and you have to decide the direction you want it to take. But with B2C folks that’s where you hear the quotes like Steve Jobs saying, “It’s really hard to design products by focus group.” A lot of times people don’t know what they want until you show it to them. And I find it hilarious when people take that so out of context, and they day, “Yeah.
[06:58]That’s how you build a start-up. People don’t know what they want, and you just have to make the decision as the founder.” And it’s like, number one, you’re not Steve Jobs. You just don’t have the product sense that he does. You don’t have the experience. You don’t have the leverage and the resources and all of that stuff. Number two, unless you are doing a B2C company, whether that’s hardware or software or any of that other stuff, that advice is not helpful. I don’t know of very many, if any, B2B companies that are using that as their product direction. There’s actually this other quote that everybody attributes to Henry Ford. The quote is, “If I had asked people what they wanted they would have said, ‘Faster horses.'” Again, implying that your customers don’t know what they want, and that you should make the decision for them. My take is that that is not correct. Yes, if you want to build a billion dollar business, then maybe you need to innovate to the point that you are ahead of the curve and people don’t know what they want.
[07:54]So you should not be listening to this podcast. You should be going and building a slide deck and trying to pitch investors to raise your series-A of five million dollars, and then go try and build some B2C company. And that’s fine, but that’s really a different path. If you want to build a business that other businesses need – where you save them money, make them money, save them time – and you want to build a sustainable product in a repeatable process, then that’s what we’re talking about today is how to take incoming feature requests. Whether it’s early stage, or whether your product is far more mature and you’re still getting feature requests, that’s really what we’re going to be talking about today. It’s how to decide what features to build and then, hopefully, how to prioritize them.
[08:30] Mike : This is really about maximizing your chances of success.
[08:33] Rob : The first thing I want to tap into is trying to figure out the priority of when to build a feature. So the four questions that I think about when we’re talking about whether to build a feature, and this is in order of priority. Number one is a prospect asking for it. It’s someone who is not currently paying you, asking for you to build this feature. Priority number two is a customer asking for it. Priority number three is someone on your team – such as a developer, support, or salesperson asking for it. And priority number four is, “Do you think it will shift your product into a new market?” So, in other words, are you asking for it, but it is a little riskier. So let’s look at each of those individually now. The first one is, “Is a prospect asking for it?” So the reason that a prospect’s feature request tends to be the most important is because a prospect hasn’t paid you money yet, and their time frame is very limited. So if someone comes and says, “Hey, does your product do X?” and you tell them, “No it doesn’t, but we can build it.” you typically have a very limited time frame to get that done before they will move on to another product and decide on something else. So that’s why I’ve prioritized it high here, even above customers. And there is debate of whether you should listen to your customers to support them, or your prospects first. But in this order, I’ve put the prospect’s feature requests as number one.
[09:53] Mike: I think a lot of this is dependent on the price point and what stage you are in the company. Because the start-up that I worked at, what the sales reps would do is they would talk to people, and because the deal price points were extremely high, they would talk to people and essentially talk them into buying the software saying, “We will build this feature for you.” And they were basically promising features that had not yet been developed, or were kind of in the pipeline. And it was interesting to see them work that side of the sales angle, because they’re basically making promises that they can’t necessarily keep themselves, or depending on the back-end developers and engineers to do it for them. It was just interesting that they used that as a strategy for selling the products. It was like, “Oh, we don’t do that now, but we can. Give us a little bit to work that out for you.” But they were also dealing with time frames that were several months. So the price point there, because a higher price point product has a much longer sales cycle in it, it gives you that flexibility to do that, especially on more difficult problems that you are trying to solve, or more difficult features that you are trying to implement. If it’s a really hard problem to solve, it’s a lot harder to turn that around in a much shorter time frame, and as Rob said before, if the price point is low and your attention span from the customer is not very long, it’s going to be difficult to turn around some of those things.
[11:14] Rob: Right, and it may not be worth it, frankly. If you only have a $10 a month product, unless you really, really early on – let’s say first 20 or 30 customers – it’s typically not worth dealing in super fine detail with someone who’s requesting features. You know? You can take it and say, “Yeah, we’ll put it in our queue.” but then even to take the time to get back to them and say, “Hey, we implemented this. Are you ready to sign up?…blah…blah…blah.” on a $10 a month product, it just doesn’t justify. Like the LTV typically will not. You need just a higher lifetime value in order to be able to justify it. I think the other thing is, in my experience of doing this with my software products is, it’s worked out really well – with the higher end stuff, where it’s actually is worth working one-on-one with someone – is that when a prospect who hasn’t paid you any money starts asking you for things, try to define the finite list. The question that I use is I’ll say, “Is this the last thing that is keeping you from paying us money?” Because nothing is worse than building a feature and then having somebody come back and then saying, “Oh yeah, and then I need this other feature.” So now you’re on this constant thing trying to keep up with someone’s feature ideas in order for them to actually become a customer.
[12:23]Prospects like that – I don’t think they do it intentionally – but prospects like that are not necessarily going to be good for you. You really want to find people who are one step away from signing up, and they just need you to build one feature or maybe two, and you want to work on those people first, especially in the early days when you’re trying to get to revenue. Then you can come back and work on people who maybe take a little longer. I have someone in the queue right now who’s been thinking about it now for maybe six months, and we’ve been emailing here and there. And I know him, so it’s cool. He’s not a hard customer to deal with, but he has just been in constant thought about whether or not to move over, and it’s little by little he’s gained confidence in Drip. And the fact that I’ve kept him in my boomerang, kept him in Pipedrive and stuff, and touched base with him every month or two has eventually meant that he has come over. But it wasn’t one single feature that it took. It’s, kind of, a series that we’ve built.
[13:15] Rob: So the second priority that I have mentioned is whether a customer is asking for a feature. So the first was a prospect. The second is someone who is actively paying you money. Now the interesting things is if you have one-time software sales, then this actually becomes a lot less relevant, or it becomes a lower priority for you. Because if someone has paid you a large chunk up front, and maybe they’re paying you a small annual maintenance fee, they’re just not as valuable to you as a new prospect who could potentially land you a very large sale. With SaaS it doesn’t matter, because that money of an existing customer … In fact, with SaaS it’s actually a much more even trade, because a prospect and a customer, who are potentially paying you the same amount of money, are potentially worth the same to you – although a customer who is already paying you money could potentially be worth more. So, that’s where I was saying this priority could be shifted to where customer requests could be higher priority, but what I’ve typically found is, since switching cost are not zero with SaaS apps, that customers are not likely, if they have trust in you, they are not very likely to jump ship very easily. So as long as you are listening to customer requests and building them in a reasonable amount of time, you don’t need that tight turn-around like you do with prospects. Because a customer is not likely to say, “Well, I need this in the next week, or else I’m going to cancel.”
[14:33] Mike: Yeah. I think you bring up an interesting point there where, in some cases, it’s a difference between what type of product you have for this particular prioritization. With a SaaS customer, they’re coming back to you every month, but if it’s a customer where you sold them a perpetual license for either downloadable software, then you’ve gotten all of your money up front, and the return for you is your 20% maintenance cost at the end of the year. It depends on where your money is coming from at that point. It does make a difference when you’re trying to prioritize multiple feature requests.
[15:05] Rob: Right, and another thing to think about when a customer is asking for a feature is, “Is that customer a power user, or are they just a normal, everyday user? How much are they paying you every month?” and, “Are they maybe one of your more painful customers? Someone who may cause you trouble most of the time, and that you really wish would, kind of, go away?” There’s varying levels of the quality of customers, of how much you want to work with them, and how much they’re paying you. All that factors into where you want to prioritize features that they request.
[15:35]Then the third priority is, “Is someone on your team asking for it?” So, a developer, a person in support, or a person in sales. Typically, this will be influenced by their interaction with a customer. To be honest, I’m not quite sure why customers wouldn’t request something and people on your team would request it, but this happens to me. My support guy will email and say, “Hey, have you thought about building this?” Then I’ll say, “Why?” And he’ll say, “Well, I see customers are having trouble with this.” But maybe they didn’t know what to request, or didn’t know how to request it or something. So these should definitely be in the priority, but since it’s not something that you’re maybe going to email several customers when you’re done, and notify them, and potentially get new customers out of directly, it’s something that I prioritize as third out of fourth.
[16:17] Mike: I think these fall into a couple of different buckets. One is if customers aren’t asking for it, that’s a slightly different scenario. But when your support team comes back and says, “Hey, I think we should build this.” it could very well be that they have this cross-sectional view of all the different customers who are coming in with requests, and they can see something where one customer thinks, “Oh, I just didn’t understand the interface.” or, “This is confusing to me.” But your support rep sees that there were 50 different people who had a very similar problem in going through the sign-up process, or using a particular page, or something like that. So they get to see that, and the customer on their own isn’t going to ask for you to implement a new feature. But the support reps are going to look at that and say, “Hey, we’ve gotten a lot of calls about this particular thing, because people don’t understand how to use it, or it’s not clear. We should make some changes here to make the product better.” And that will ultimately cut down on your support costs. It’s not something anyone has asked for, but at the same time they do need that little bit of extra help.
[17:13]The other place where I can see people internally asking for stuff is to make their lives easier. So, for example, things like administrative interfaces, or the ability to log in as any given customer so that you can see exactly what it is that they’re seeing. Stuff like that is stuff that no customer is ever going to ask for, because you wouldn’t give it to them anyway. But your support team and your developers need that kind of stuff, and need to be able to do those kinds of things because it helps them do their jobs, and it helps them serve the customers. It’s interesting that you can look at this and say, “Oh, well anything that comes internally should be a third on the list of priorities – should be under customer requests.” But I think that that is not always the case. There’s definitely some flexibility here in terms of these prioritizations. It depends on exactly what it is.
[17:59] Rob: I agree, and that’s where this priority stuff really does come down to there always a big judgment call, and a gut instinct based on what the actual feature is. What I’ve typically found is that something might come internally. So, under this list it would be priority three, but then I’ve just been hearing rumblings over it from customers and from prospects, and there’s an underpinning of the request already being there. So I do think there’s a lot of judgment that has to go into this as well. [18:24]And the fourth priority is, “Do you think it will shift your product into a new market?” So this is essentially you coming up with feature ideas. And the reason that I couched it like, “Do you think it will shift you into a new market?’ and not just saying, “Does it come from you the founder?” is because spit-balling features and just coming up with new features is almost never a good idea. The only time that you should be considering generating your own features, and not just building stuff that prospects and customers are asking for, are if you think that it can push you into a new market and either widen your reach or actually get you into a new vertical. And so to give you an example of that, seven, eight months ago Drip was, essentially, a very small email marketing app. It could capture emails, and it could do auto-responders, and it could do some split testing. And then we were getting a lot of customer requests to do marketing automation. To be able to move people in and out of lists, to be able to tag them, do behavioral email and that kind of stuff. Now, I thought that those features would push us into a new market. So while those features did not come directly from me, that was a really big impetus to raise the priority of those, and to build them out. That’s what’s resulted in the spark of growth in Drip that wouldn’t have happened otherwise.
[19:39] Mike: I think for something like that you have to consider the ramifications of that – of shifting into a new market – because it has the potential to take you out of the one you’re currently in. So I think that there’s definitely some additional considerations you need to take into account when you’re deciding on something that could shift you into a new market, because you don’t want to necessarily be seen as no longer doing a particular thing. Your current customers aren’t going to necessarily care, because you’re solving their problem and they know that you’re solving their problem. But at the same time you have to be conscious of what adding some of those new features is going to say to prospects who have never heard of you before, or don’t know the history behind where you app has come from.
[20:18] Rob: So with those in mind, I have four questions that you should ask yourself when you’re thinking about building a new feature. Hopefully it will help deciding whether you should do it, and then how to prioritize it as well. So the first question is, “How many of your existing customers do you think will use it?”
[20:35]It’s always an estimate, and my estimates typically come in the form of like 5%, 20%, 50% or more, because it’s not relevant to get down to 7.5% or any type of detail like that. And this will come up in discussions pretty regularly, when we’re trying to decide to build a feature. Then, if only 5% of people will use it, the next question – the second of these questions – is, “Will a good chunk of your customers who use it be power-users?”. Because power-users are more loyal. They’ll end up paying you more money over their lifetime. So even if only a small chunk of people use it, are they going to be your power-users?
[21:13] Mike: Another question to ask yourself is, “Does the feature request fit in with your vision of the product?” This is something of a balance you need to strike. If you’re too narrow-minded and you’re not open to listening to customers and having them show you the way that they do things, then it can cut you off from implementing things that would attract a lot more customers. And I think that this is probably a problem that a lot of people struggle with, because you have this vision or this idea of what the product should look like in your head, and you say to yourself, “I know how to implement this. I know how it should be done.” Then you talk to customers, and suddenly maps that you’ve, kind of, laid out in your head get blown apart, and you have to go in a different direction. And it’s not to say that it’s going to be in a completely different direction – and sometimes that does happen – but there’s these minor alterations in course that you almost have to take in order to serve your customers better. Sometimes that can be difficult to make that transition from saying, “I know exactly what I’m going to do, and I know how to solve this particular problem.” to transitioning over to saying, “Okay, maybe I don’t understand this as well as my customers do. Let me have them show me what should be done.”
[22:17] Rob: And then the fourth question is, “Will this feature be over-extending your team’s capabilities?” What I mean by that is, we get a lot of feature requests that ask for things that are far outside of our core competency, and they don’t relate at all to marketing automation or email marketing. They are peripherally related. So it’s things like landing pages or shopping carts and payment processing and that kind of stuff. And we’ve seen some of our competitors that go out and build these things based on customer requests. So they are a conglomeration of really five or six different apps, because they added landing pages and shopping cart and all of that stuff in. But what they did is they over-extended their team’s capabilities. They basically built lower grade software. The software is not Best of Breed. So it’s not a collection of Best of Breed tools. It’s actually a big collection of so-so software tools. [23:11]So what’s happened is if you go to a Best of Breed landing page provider, and a Best of Breed shopping cart and payment provider, and Best of Breed marketing automation, and you combine those together using integrations, you can actually get a much better tool out of it. So, what these competitors have done is over-extended their teams. They’re not able to properly support the software. They’re not able to properly build enough features in it to keep up with everyone. That’s where they’re finding themselves. As the product matures, they still have a large customer base, but they’re finding themselves being, kind of, beaten on the lower end from new competitors who can come out and just build one piece of it. So, keep it in mind, if you try to extend out too far to areas which are not related to your core product – especially if you’re a really small team – that’s something to look out for.
[24:00] Mike: I feel like this supplies a lot more to established products that are trying to do new things with their products. If you were to take Mail Chimp, for example, and have them start doing landing page design so where they’re not only sending out emails, but they’re also designing the landing pages that the emails that are being sent are driving people to. It seems like that might be a natural extension of what it is that they do, but at the same time they may just not do it very well. It does shift the core focus of the developers and of the management team to a slightly different vertical, because now you’re saying, “Okay. Well, we’ve got this group of people who are sending out emails. Then we’ve got this other group of people who maybe just want landing pages, but we’re really focused on trying to get some collaboration between those two, and overlap as much as possible between the two so we can leverage one market to get into another. And that doesn’t always work out. Sometimes it’s better to just simply spin off a new product under, kind of, a new team. I do feel like, in some ways, this is a problem that applies to larger companies than much smaller companies.
[25:01] Rob: But I’ve seen it happen with the smaller guys too, because it’s pretty easy – especially early on – to get a lot of questions and requests and not know which ones to build or not. And a lot of them are going to come out of left field, especially if you have competitors who are large and already cover four or five different product spaces, like email marketing and landing pages and shopping cart. I mean, those really should be three “Best of Breed” products that are linked together. But if you have competitors that have already built all of that, then the first thing you’re going to get as soon as you start building is, “Oh! Can you do a shopping cart too?” And that alone is six to twelve months of development to build it well, and then you need an ongoing team just to keep adding new features to try to keep up with a Shopify, or a Magenta, or another cart that’s going to be really well-built. I’ve seen it happen in the smaller space. We certainly get these requests – that’s why I’m bringing it up – and we’re obviously not a big, massive company. And if we decided to go into those spaces, I personally think it would be a mistake.
We could have built a landing page provider by now. We could have built it in a month or two, but it wouldn’t be anywhere near as good as a Leadpages or an Unbounce, and the same goes with shopping carts.
[26:10]So I think the last thing to think about when you’re trying to prioritize and think about whether or not to build features is, if you do decide to build a feature, every time you should be asking yourself, “How can you hide it well enough in the user interface, so your app doesn’t become a hideous collection of check boxes and settings?” This is more basic UX stuff, but you use a lot apps – I think we all do – especially it tends to happen more in open-source, unfortunately, because I don’t know that there is someone maintaining the UX and managing that. But you see them, they’re just a bunch of settings, and you really can’t find you way around very well. That comes from just implementing everything and not really asking yourself these hard questions, of how many people will use it. And then thinking about the fact that things that most people will not use should not very visible in the UI. They should actually be hard to find. So whether you do that through having lighter text, having them being hidden until someone clicks something, having an advanced view that only shows all of the check boxes if you’re an advanced user. I mean, we have entire features that are completely hidden for all of our users until we uncheck a box in our admin area, and that’s purely to keep the product really useable for that 80 to 90% group that wants to do some basic stuff, and maybe exercise their muscles with email marketing. But the really advanced stuff, we hide it quite a bit in the UI. And I feel like that’s helped keep the core product from basically just bloating out.
[27:37] Mike: And that’s really just about establishing what the 80% of the market needs for your particular product, and as long as you can figure that out you’re addressing most of their needs. The rest of it’s a matter of figuring out, “What is not used by people very often, but some people still need it?” You know, those “power users” that need those advanced options. And I’ve used a lot of products where they have the special advanced menus for doing things, or they’ll have an interface where there’s all the basic options there, and then you can click on this link that expands this other area that will show you all of the advances options. But most people don’t need that, so they just use the basic menu.
[28:12] Rob: Yeah, and I’ve been quite surprised at the low level of usage of several of the features that we’ve built. Some pretty key features that several people requested are used by a handful of users. Now the users who use them love them, and they don’t want us to remove them from the product for sure. It’s the 80/20 rule, but it’s not even that – it’s like the 95/5 rule. It’s like just a couple percent of our people use them, but they really, really use them everyday. So that’s your challenge, right? You can’t build fifty different products for the 2 to 3% of people who use all the different features, because it would become bloatware. So you really have to spend time thinking about not only should you build the features, but then if you decide to build them, how can you keep that UI as simple and as elegant as possible, especially for new users getting started, because that’s where you don’t want to overwhelm people, during the on-boarding process.
[29:06] Mike: If you have a question for us you can call it into our voicemail number at : 1-888-801-9690, or you can email it to us at questions@startupsfortherestofus.com. Our theme music is an excerpt from “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.
Episode 211 | When to Consider Outside Investment for Your Startup
Show Notes
Transcript
[00:00] Mike: In this episode for Start Ups for the Rest of Us, Rob and I are going to talk about when to look for investment money for your startup. This is Start Ups for The Rest of Us, Episode 211.
[00:06]Music
[00:14]Welcome to Starts Ups for The Rest of Us, the podcast that helps developers, designers, entrepreneurs be awesome at launching software products, whether you built your first product or you’re just thinking about it. I’m Mike.
[00:22] Rob: And I’m Rob.
[00:23] Mike: And we’re here to share our experiences to help you avoid the same mistakes we’ve made. What’s the good word this week, Rob?
[00:27] Rob: I am putting the real finishing touches on an audio documentary about the 9-month process of kind of getting Drip off the ground. So I mentioned this in a previous episode, but then I left because I had, you know, 11-hour flights between each of them. I spent a lot of time editing, and I took 9 hours of audio down to about 2, and I added music. Then we added – we just added an epilogue this week, kind of a summary discussion recorded a year after the final recording for that. The audio documentary itself will go live on my blog. How about you? What’s going on?
[01:01] Mike: Audit Shark Version 2.2 is officially released. And I got a few comments on Twitter. Somebody said, “If you’re not embarrassed by it, you know, then obviously you launched too late.” And my reply was, “I’ve been extremely embarrassed till now. My level of embarrassment at this point has dropped from 8 to about a 6.” I’m really excited about it. It’s, you know, there’s a lot of new enhancements. Not even really new features, just, like, stability enhancements, and adding an installer, like a lot of the cleanup stuff that just never got done earlier. And then there was some, you know, some things that people have been asking for that just haven’t been there, like reporting, and the scheduler. People were kind of pointing to is objections before, and they’re just like, “You can’t do this. You can’t do that.” But I’ve got most of those major things addressed. So at this point that becomes a much easier conversation to have because I could say, “Oh, well, it’s right here. And maybe it’s not exactly what you want, but, you know, it is there.”
[01:52] Rob: Yeah, it’s tough trying to sell your product when you’re having a conversation about it and everything they ask, you’re like, “Yeah, we’re going to build that soon. Yeah, we’re going to build that next.” It’s not mature enough to support the customers you’re talking to.
[02:05] Mike: Yeah, and that’s kind of what was happening in several cases. It’s a nice feeling to be at that point now.
[02:10] Rob: Yeah, and what we’ve noticed with Drip is that we hit that point, maybe, it was somewhere in the last six months, where I stopped saying, “Yes, we’re about to build that,” and I started saying, “Oh yeah, you can do that,” and then it was like, “Oh, you can do that in two different ways depending on your preference.” And now what we’ve noticed is that – Derek was just telling me this the other day, that we get these big groups of feature requests that are kind of all very similar. And so, people come in to the app and start using it, and then everybody realizes, wow, you know, this is working. But you need reporting. Like your reports aren’t there. And so we probably within a week, we got 4-5 people requesting the same thing, and so then the next week we built reports. And then after that, it was something else. But it’s crazy how the same people kind of progress through the app and as we launch the new feature, then they all realize that this next thing is not there yet, and we have to build it. So I definitely feel like Drip has matured to a place where it has fit with a certain market, but there’s always kind of that next thing.
[03:11] Mike: Well, I think it’s good that, you know, you get that group of people that are all asking for the same thing. And then when you implement it, they ask for, they all ask for like the next thing, which is kind of identical. I mean, maybe they ask in different ways, but it means that you’ve got that, you know, that product market fit, where you’re attracting the right people of a specific type, and they all have a similar problem. So when they come in, they use it, they all need that similar feature set, which makes those future conversations with people from that particular market much, much easier to have.
[03:40] Rob: And the other part that’s nice is you start to learn who your good customers are, your helpful customers are, who request the good features and request them well, meaning they give you an idea of what they need and they ask for it respectively, and they’re willing to wait for you to build it right. They don’t need everything today, you know. And they’re not threatening to quit, or they’re not kind of being jerks about it. Like the vast minority do that. Right, every once in a while, you get a customer like that. And it is nice because when you have this group of customers who’s requesting it, it makes it a little easier to figure out what you should build next. Right, because you have a pipeline and you have basically a weighting of how important each feature is, and it does, but it makes it easier to figure what to build next, rather than when you have no customers, as we know, it’s a big challenge to figure out what feature to focus on.
[04:31] Mike: So what else is going on for you?
[04:32] Rob: Well, I listened to the book “Zero to One” by Peter Thiel. I’ve now listened to it twice and the reason I did that is because it just contains a lot of pretty deep and insightful conversations and essays. And Peter Thiel, if you don’t know, he’s one of the PayPal mafia. He’s one of the founders of PayPal and then he went on to start – so that was a business that sold for $1.5 billion to eBay. Then he went on to found another business that is also worth more than a billion dollars. But Peter Thiel is so amazingly smart that I find that I just re-listen to these chapters that he wrote and he makes comments about, you know, where the world is headed, where he thinks technology is going, how to start a company that revolutionizes stuff. And I find that even though he’s not speaking to me because I am not starting a billion dollar company. I’m not starting a groundbreaking, you know, paradigm shifting, just completely world rocking company, and I never will. I have no plans to do that.
[05:30]Even though I’m not, I still find that a lot of the stuff he says has some application to me and my business and the way that I like to think about things. The book Zero to One is about building these massive ideas and trying to revolutionize. You know, it’s like trying to fix a massive technology problem of say, not having water, not having enough food, or something like PayPal, where they’re trying to replace a currency. It didn’t actually succeed, but that was their goal. It’s having a big view and being able to live up to it. Even though that’s the focus, I still think there’s some good nuggets.
[06:04] Mike: Very cool. I think last thing for me is LinkedIn has been irritating the living hell out of me because every time I get a new connection, it asks me to go through this ridiculous process of confirming all the possible ways that I might have an email account, like Gmail and Outlook.com and Yahoo, and asking if it’s okay to like for me to log into those things so that it can reach in and suck out as much data as it possibly can. I made the mistake of letting them do it with my Gmail account. They’re like, “Oh, we don’t do anything,” and it’s just like, ugh, it’s awful.
[06:32] Rob: Well it’s weird because it’s not doing that to me, so I wonder why it’s – why it would be doing that to you.
[06:38] Mike: I don’t know. I have a paid subscription, so I don’t know if that’s it.
[06:42] Rob: Ah, yeah, I do not.
[06:43] Mike: But yeah, maybe I should cancel it. Maybe it’ll stop.
[06:46] Rob: Exactly.
[06:48] Mike: So real quick before we get started, we got a email from Niles from MicroConf Europe, and he said, “Hey Rob and Mike, thanks again for all the information and inspiration at MicroConf. It was amazing and I really enjoyed and learned from the crowd. Also, you might enjoy knowing this: the money I spent on the conference is already back in my pocket with an ROI of greater than 100% because one of my customers heard about me attending MicroConf and is paying me for a workshop to summarize everything I learned. Thanks again, and keep up the great work.”
[07:13] Rob: That’s awesome. I love to hear stuff like that.
[07:16] Mike: Well thanks, Niles. Glad to hear that that’s working out for you.
[07:19]Today we’re going to be talking about kind of a topic that came up at an ask me anything session that Rob and I tried out at MicroConf Europe. One of the questions that was asked of us was essentially along the lines of, “Have you ever thought of going after angel or VC funding, and would you ever do it?” And I thought it was an interesting question, not just because Rob and I kind of have very similar views on it, but also because I think people do have kind of a mistaken impression that, you know, Rob and I are completely against angel or VC funding in any way, shape, or form, because there are definitely cases where it makes a lot of sense to do, but, you know, obviously that’s not really our platform. It’s not what we do. It’s not our background or anything. But I wanted to do was talk a little bit about the times where we think it would be warranted to go after funding and what sorts of things that we would look for.
[08:03] Rob: Yeah, you know, and the first couple paragraphs of my book, and I said, I don’t want you to think that I’m anti-funding, I’m just anti-everyone thinking that the only way to start a successful software company is to raise a bunch of funding and to get big. And that’s really the approach we’ve tried to take, right, is that you don’t have to go that route, that it’s one possible path. And it doesn’t even need to be the path up front. Like, some people have the connections to do it from day one, to raise a big chunk of funding, and other people bootstrap until they have traction, product market fit, and they start growing, and then they raise some funding. There’s a lot of different ways to go about it. And I guess to give one disclaimer: Mike and I have never raised funding, so there’s a lot of ins and outs to it that we’re not going to dive into. There’s actually a good book by Brad Feld called “Venture Deals: Be Smarter Than Your Lawyer and Venture Capitalist.” And if you really want to know the ins and outs of venture funding, then that’s the book you’re going to want to read about nuts and bolts. What we’re going to talk about today are kind of the considerations, the things you need to think through if you’re considering not raising, raising at a later stage, or, you know, maybe raising just an angel round or a VC round.
[09:11] Mike: So I’d like to start off with, what we’re going to do is we’re going to talk about some of the situations where we think that going after funding of some kind is warranted. And when we talk about going after funding, there’s a couple of different primary levels of funding. You’ve got angels, that are kind of at the lower end, and then you’ve got VCs at the higher end. And I’ll say that the estimates range. It’s hard to give it an exact number of what exactly constitutes of somebody doing an angel investment versus what dollar amount is qualified for VCs. You know, the ranges are anywhere between like half a million dollars up to, some people say 2 million, some people say 5 million for angels, you know, and some people will say, well VCs will go down to 2 million or down to a million. It kind of depends on who it is that you’re talking to. You know, you essentially do a progression from angels at the lower end to VCs at the higher end. And then you can also have people like family members or friends do lower end investments as well. There’s different rules for those kinds of things, so we’re not really going to talk about any of the specific rules because, you know, we don’t necessarily know what those are.
[10:09] Rob: And specifically we don’t know what those are for every country in the world. And since our listenership is worldwide it would just be too hard to even try to address them even if we could comment on the ones here in the states. I think of like friends and family as kind of being the lowest round because typically if someone has no funding and they want to raise something from friends and family, it’s typically a very small amount. It might be 50 grand or 100 grand. And then angels, I consider like a professional angel someone who is investing their own money. It’s not institutional funds, but it is someone who has had a large exit or who has just a lot of cash in the bank, and they are then divvying out their angel funds, their own funds, in typically in amounts of between 10 and 50 thousand dollars per investment. And you get a group of angels all to invest at once. And these investors tend to be what you might call smart money, right. You try to seek them out in an area of expertise where you’re entering so they can actually give you advice, whereas friends and family, if you’re going to do that, frankly, it’s not something I’ve ever done, nor would I recommend doing it, but you’re not going to get much good advice from your family. And then venture capitalists of course are folks who are investing institutional money. They’ve raised money from a bunch of limited partners, they’re called, and they’re trying to put a lot of money to work at one time. And so, you know, like you said, some VCs will come down into the million dollar, you know, two million dollar range. They typically have so much money in their fund, that that isn’t even worth doing for them. And that they want to do a series A, in the let’s say, 2 to 5 million dollar range, and a series B in the 10 to 20, and then, you know. When I’m saying A and B, these are the rounds, right. Series A is your first round of funding. Series B would be your second round after angel.
[11:51] Mike: So let’s talk about some of the different situations where we think it’s warranted for people to go after funding. And I think the first one that came to mind for me was essentially a land grab of some kind is necessary. So, you know, companies like PayPal or AirBnB come to mind just because if you’re their first, then it makes it a lot of easier to stifle all sorts of competition, you know, in that particular space. It’d be very difficult to compete with the likes of PayPal or Amazon or AirBnB at this point, just because they’ve dumped so much money and investment into that that they essentially crowd out all other contenders and are able to shove them out of the market, or just outright acquire them. And it’s not to say that being acquired by them is necessarily a bad thing, but you’re not going to have this massive, out-of-the-park success that you might’ve been shooting for initially. The reason you would go after funding in the case of a land grab is because you want to grab as much of the market as you possibly can before anybody else gets there.
[12:48] Rob: Right, and these land grab businesses are the ones that are super, super risky, and maybe 1 in 1,000 works, or 1 in several thousand works, so it’s not super repeatable. It’s not reliable. There’s not a high rate of success. But if you do succeed, then obviously you can be worth 100 million dollars or several hundred million. So not particularly the approach that I espouse, and it feels to me, I’ve always thought this was much more of a lottery ticket. And frankly, if you go and try to do a land grab business and you’re going to raise funding, you need some type of team that is really good. No one’s going to fund just some Joe Schmo nobody’s ever heard of to go and do a land grab business anymore. Like, the late 90s maybe, but these days you need to have either some kind of tractions, or some kind of team or both if you’re going to go after this kind of market, and then you’re going to have to commit to moving to wherever the venture capitalist is, and that’s maybe one of maybe 5 cities in the world, where you’re going to find somebody to give you this much money. And you’re going to have to work incredible hours. You’re going to have to grow a big team. You know, you’re not going to do it with 10 employees. This is the kind of business that goes to 100 employees in a year or two, if it succeeds, and then it goes to several hundred after that. So this is the one I agree this is where you need to raise it if you’re going to do it. But if you’re going to do that, then this is not the podcast that you’re looking for.
[14:09] Mike: The next time we think it’s warranted to go after funding is that you have problem solution fit and product market fit. I think the best thing to do here is to kind of step back a little bit and describe what both of these things are for all the listeners. So why don’t you talk a little bit about problem solution fit?
[14:24] Rob: As concepts, they are very powerful. And there’s something that I use in everyday conversation as I’m talking to other founders, as well as in my own business to try to gauge where I am.
[14:35] Mike: Because in my mind, the problem solution fit is like you’ve found something that people are experiencing as a problem that needs to be solved and they’re willing to pay for it, which is slightly different than the product market fit, which is you found an audience that is willing to pay for it. Because there’s a difference between finding a couple of people who want the solution, versus a lot of people, I think.
[14:56] Rob: Right. Right. And finding a lot of people, that group of people, and being able to reach them inexpensively enough that you can actually make a profit at, is part of profit market fit.
[15:05] Mike: Yes. Yeah. Because the first part is really about the customer discovery phase. And the next piece, which is the product market fit, which is more about like validation and somewhat scaling, I think, but, you know, making sure that you got the price points and everything else.
[15:18] Rob: Right, and I think the key part with that, that you just pointed out, is problem solution fit comes before product market fit, but first you have to solve a problem, and then you have to turn it into a product, and then you have to find the market for that.
[15:31] Mike: Next, I think, if you’re going after funding, you need to know all the important metrics that people who are going to invest are going to be interested in. And you need to know them cold for your business. So you’re going to need to know like your cost of acquisition. And you’re going to need to know the lifetime value of your customers. You need to know what your turn rate is. You’re going to need to know what your profit margins are. And you can use those calculations to figure out whether or not you’re going to be able to expand the business. I mean, has it become a machine where you can put a dollar into it and you get two dollars out, because that’s what the investors are looking for. They’re looking for a way to accelerate the value of their money, and your business is the mechanism for doing that. And they want to know if they throw money into it, are they going to get more money out on the other side. And I think that that’s probably the best position to be in. I don’t necessarily know that you need to be in that position always in order to get funding. But I think that if you are in that position, you can solidly demonstrate those metrics and those numbers to them, then you’re in much better negotiating position to be able to get the most value for, you know, the equity that you’re essentially giving them in exchange for the money.
[16:32] Rob: Yeah, that’s the key part of what you said there is that you don’t always need that. You don’t always need the traction, but that’s where you’re going to be able to give away the least amount of your company for the funding that you’re raising. You know, I don’t know of any venture capitalist that’s going to write a multi-million dollar check to someone who doesn’t have product market fit. I think it’s going to be a very rare instance. It’s going to be a repeat founder who’s already had a success. It’s going to be someone with an exquisite pedigree and a great team, or it’s going to be someone who has a real in, in a market or a patent or something like that. But if you’re just coming on the scene and you’re trying to solve a problem for a group of people, you’re going to need traction if you want to be taken seriously. If you don’t want to do 50 pitch meetings in order to find your one investor. You know, if you actually want to use your time well, you’re going to need to know these numbers cold and you’re going to need, basically, to be ready to scale.
[17:20]So you know, when I was getting started, like around ’99, 2000, I thought the only way to launch software products and startups was to raise funding, and I went down that road for years. And I’ve talked about that in the past. And around 2007 is when I really kind of switched and realized that I could do it with smaller products. And at that point, I really became kind of anti-funding, and I just thought it was all a big game. And then some time in 2008-2009, I was at Businesses Software and I was talking to Dharmesh Shah, who previously before HubSpot, I’m pretty sure he had bootstrapped his first company. And so, he was talking about raising funding. Or he’d either just raised it or was talking about it, and I asked him, “Why did you do that?” And it felt like kind of a betrayal of his bootstrapper ethic. And he said, “You know, we hit a point where we saw that you can put 1 dollar in and you can get 4 or 5 out, and it was a repeatable, scalable process, and so at that point, you want to put in as much money as you can in order to get 4 or 5 times that much, much larger amount on the other end.” And for the first time, it really clicked with me, that there, especially within our B2B space, once you’ve solved the problem and you’re able to scale, there is a really good time to raise funding. It doesn’t mean you have to, and doesn’t mean you always should, but if you are going to, that is the optimal time, once you’ve hit that place where you know how to scale a business up and all you need are the funds to put it in basically just grow faster than your competition because especially with SaaS businesses, if you can climb that long, slow SaaS ramp of death, and you can build up that large customer base by having a big influx of cash, it will just throw off cash for years and years after that. And whether you raise investment or not, whoever owns part of that company is going to be doing well.
[19:04] Mike: And I think that’s a very different story from a lot of the people who are kind of coming out of college, or going through Y Combinator, where, you know, people are investing in the people and an idea, but they have absolutely no product. They don’t even have a product yet, let alone product market fit or product solution fit.
[19:20] Rob: That’s a really good point. Like, we are talking about – we’re not talking about B to C stuff, like I don’t even think that’s on our radar, right. I’m not talking about the guy who’s going to start the next Uber or the gal who wants to start the next Twitter. That’s just a totally different ballgame. We’re really talking about repeatable businesses that solve problems for other businesses, and therefore are much easier to build and more predictable.
[19:41] Mike: Right. So I think if you’re trying to find that engine that’s turning that dollar into more than a dollar, then, you know, going after funding is probably not wise at that point.
[19:49] Rob: One other thing I wanted to add here is that typically if you take angel investing, you are implying that you are going to take a Series A, round of Series A from venture capitalists, then a Series B, and enough funding needed to get to a hundred million dollar or more valuation. That’s typically implied. It’s not always. But if you plan on raising angel funding, and you do not want to grow to that size company, that is something that you would need to be very specific about with your investors up front. And some investors will want no part of that. They only want to go after the big homeruns. And others are okay to invest in companies that may get to a 7 figure or a low 8 figure valuation. And, in fact, it’s becoming more common, to be honest. I heard the term fund strapping, and I really liked it. It was from Collin at Customer.I0, and they essentially raised, I think it was around, $250,000 of angel funding with the intention of making it to profitability and not raising a Series A, B, and C. And they did it. They succeeded. Raise some money in order to get your company to the point of profitability. And so that’s not everyone’s path, but I do think that’s a viable path. And I’ve talked to a couple entrepreneurs in the past six months, actually several people who are trying to do that, and they don’t want to go down the old rabbit hole of trying to grow into a bazillion dollar company. But they just want to, they’ve found that growth engine, they’ve hit the point of product market fit, and they just need some almost growth capital to get to that next level. So keep that in mind if you are at that point because I think it’s becoming a more viable option.
[21:21] Mike: So now that we’ve talked about the times that we think it’s warranted to go after funding, what are some of the things that we would look for when we were going after funding?
[21:29] Rob: There’s kind of two terms for investors, right. There’s smart money and dumb money. And typically, smart money is from an investor who is going to bring a lot of value to you, and a lot of advice and some guidance, and maybe some connections and some introductions. And then, the pejorative term is dumb money, and that’s typically when you go to the local doctor or dentist and they have some money in the bank, and they give it to you, and they’re not actually going to help your business at all. It’s just money that you’re going to use to grow. So my hope would be, you typically want to take smart money because that’s the one where their specific experience or network of connections are going to be able to be leveraged by you and hopefully, you know, there could potentially be introductions to acquires down the line. There’s just a lot more that they can bring to the table to help your business grow faster, rather than just writing that check.
[22:13] Mike: I think there’s also some rather obvious things you should be looking for as well, such as honesty and integrity, you know, kind of a history of not screwing over people that they’ve invested in. Those are things that, you know, I think in some cases may be difficult to find. But, you know, you should be able to find a list of the different companies that somebody has invested in and be able to ask the people who they’ve invested in, you know, what was it like to work with this person? How did they help you out? Are there any places where you ran into problems or disagreements and how were those handled? Because I think you want to know that you can work with the other person. Are they going to just railroad you into decisions that are not good for you or for the business? Because at the end of the day, yes, these investors tend to invest in multiple businesses with the attempt to get money out of at least one of them that’s going to make up for all their investments, but at the same time, you don’t want to get the short end of the stick here. I mean, yes, you’re taking money from them, but at the same time, you don’t want to be in a position where they’re trying to pull money back because they need it for something else that they see is going to be much more profitable for them in the long run.
[23:15] Rob: Yes, some advice that I was given once, was not to take money from a first time angel investor, to look at someone who has some kind of track record, because first time angel investors are going to be really gun shy, and if they only have one company, they’re going to be kind of be all up in your business, right? I mean, you really do – you want advice and you want help. You don’t want someone’s who’s emailing you once a week, asking you about the status, or really trying to offer advice, or going to your website and giving you feedback on the headline or anything. Not unless you ask for it, and you consider them an expert in that area. Typically, if someone is doing a lot of angel investing, then they know the boundaries and they know what’s good for the founder and the company, and they’ll give you the leeway to kind of go out and do it on your own, realizing that you’ll come to them when you need the advice and the help.
[23:56] Mike: The next thing I think you’d look for is somebody who’s got a shared vision for the product, the company itself, and your working arrangements, because if you’re listening to this podcast, chances are really good you’re probably bootstrapping your business. And you’re going to have a certain way that you operate the company, that you work with the employees who are working with you, so maybe you have a distributed team, maybe you guys talk once a week, or once a month, or something like that. Maybe you take long, afternoon breaks, and you work in the evenings or something like that. But, at the end of the day, you want to be able to continue working in whatever way has made you successful. You don’t want to have to conform to, I’ll say, arbitrary rules about how the business should operate just because they think that, you know, you should be doing things differently. But there’s a difference between having them make suggestions to you versus mandating that.
[24:44] Rob: The folks who I’ve seen raise funding well, especially that initial angel round, they basically were very deliberate about who they invited in, and they tried to stack their team with someone who knew a lot about, you know, maybe online marketing. And someone who knew a lot about growing a sales team, and someone who knew a lot about acquisitions and selling, and someone who knew a lot about some other piece. So they actually kind of built this team, a dream team of investors, who not only gave them money, and therefore have some type of, essentially an investment in your company, but they have an expertise that they can lend. And it wasn’t a bunch of overlap. It was complementary skills. And all of these skills are something you’re going to need at one point or another if you do actually make it to profitability and hope to, you know, one day get acquired. So, Mike, you know, the original question at MicroConf Europe was about funding and it was also for us specifically, and the question was, would you ever consider raising angel or VC funding, and I’m curious what your thoughts are on that?
[25:45] Mike: I’m not opposed to it. But I think, for me, I would have to get to that point where I do have, you know, the problem solution fit and the product market fit, and making sure that, you know, as I said, I’ve got all those numbers in place and dialed in, so that I know how much it’s going to cost me to acquire a customer. And not to say that I’m at the very beginning of a growth curve or something like that because I think it’s foolish to get to the very beginning of a growth curve where you know that you’re putting money into it, you’re going to get a lot of money out of it, and maybe trying to get that. You’re not sure whether, how long that growth curve is going to last for that particular channel that you’re trying to leverage. I don’t know what the hard numbers are for me for saying, “Hey, I’m going to go get money.” I’d have to be in that situation to kind of put the parameters around it. I’m not opposed to it. I don’t agree with the stance of going out and raising money to build a company because I think that you can get a lot more leverage out of it if you have something that you’ve built and are pushing forward and you’re being successful already, versus going out and saying, “Hey, I have an idea for this, or I have some small product that I’ve built. You know, can you give me money for it.” I think those are two entirely different scenarios. But I’m not opposed to it. I just haven’t been at the point where I think that it’s warranted it yet.
[27:00] Rob: I’ve definitely entertained the idea. I think ever since 2009, when I talked to Dharmesh about it, I realized that there’s a smart point at which it is perhaps a good choice to raise some funding. I don’t like saying never, but I don’t ever think that I would raise a venture round because I just don’t want to turn my life upside down. It’s not worth giving up the lifestyle that I’ve built over the past 15 years in order to try and go for some big homerun and go for 100 million dollar exit. Because what I have already is probably what I would do if I had a 100 million dollar exit. I mean, don’t get me wrong, my life would change, but it wouldn’t be so dramatic. You know, I wouldn’t go out and buy a yacht or anything. I’m already pretty happy with the choices that I’ve made, and kind of the life that I live. With that said, in recent years especially, you know, as I’ve built apps with larger and larger markets, and especially with Drip now that I feel that it’s hit product market fit or it’s very near that, and it’s starting to scale up,
[28:04]the question became for me, not should I raise funding, but under what circumstances and terms would I raise funding? And as I started talking to some folks I trust, who have gone down this road, they said, “Why wouldn’t you do it right now?” And I said, “Because it would really impact my lifestyle.” And they said, “Well what if you could raise from people who don’t care about that?” And that, you don’t need to move. And they don’t care that you take a month of vacation. You know, there is no board, right, so you don’t lose control of your company. And you don’t give away more than 15% of your company and it allows you to grow faster, and da da da. And suddenly, it was like how interesting that it’s not an either/or question, it’s under what circumstances would you or would you not raise funding, and that’s the question that I’ve mulled over. You know, that’s kind of – it’s been on my mind for, you know, definitely the last several years. Would that be an option? So I don’t know if I ever will. I think that funding allows you to get somewhere faster. So if you want to get to that 7 figure or low 8 figure revenue mark, funding is definitely going to get you there faster,
[29:04]but it’s all a matter of how patient are you, and do you think you could get to that even without the funding. Or are the competitors in your space too far ahead and perhaps better funded, and that’s, I’m asking these theoretically, but I mean, these are the things I’m thinking through with Drip, right, because I’m in market automation now. And there are some big players, and there’s some well funded players, and there are people who are definitely ahead of us. And so I’m trying to figure out, you know, am I able to build a really solid small business without funding and will I succeed in the long term? Or do I need a little bit of help getting to a point where I’m just a bigger player in this space? So I don’t have any decisions, but, for sure, I’m not anti-funding. So it’s an interesting question.
[29:44] Mike: I mean, even at MicroConf Europe, you gave a really great answer to the question, and I was just like, “What he said.” Because I didn’t have anything to add. I mean, it was just- it was dead on.
[29:53] Rob: Right. I would say though for most people that I know, like most founders that we deal with and talk with, I don’t think it’s the right decision. I just don’t think it’s helpful. I think building a bootstrap software company and self-funding it, and all the learning that goes along with that, even if takes a while to do so, I think that’s the right choice. It really is an epic time that we live in, that we are able to do that, because even 20 years ago, it was barely possible to do that. And these days, we know a lot of people who are doing very well just building self-funded little software companies. I think that’s really amazing.
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