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

Startups For the Rest of Us

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

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Show Notes

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

Transcript

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

[00:13] Music

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

[00:30]Mike: And I’m Mike.

[00:31] Rob: And we’re here to share our experiences to help you avoid the same mistakes we’ve made. What’s the word this week, Mike?

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

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

[00:50] Mike: Yes.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

[07:49] Rob: What about Drip?

[07:50] Mike: Yes, well–

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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