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In this episode of Startups For The Rest Of Us, Rob and Mike answer a number of listener questions on topics including managing emotions, cost of an MVP, taking a business idea and more.
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Rob: In this episode of Startups For The Rest Of Us, Mike and I talk about managing your emotions, the cost of an MVP, and more listener questions. This is Startups For The Rest Of Us Episode 433.
Welcome to Startups For The Rest Of Us, the podcast that helps developers, designers, and entrepreneurs be awesome at building, launching, and growing software products, whether you’ve build your first product or you’re just thinking about it. I’m Rob.
Mike: And I’m Mike.
Rob: And we’re here to share our experiences to help you avoid the same mistakes we’ve made. Where this week, sir?
Mike: Well, just wanted to give people a reminder that today is the last day to apply for the Starter Edition scholarship and I said before, we’ve got over 25 to give away. We will link it up in the show notes, but definitely go check it out if you’re interested at all in coming to MicroConf Starter Edition. Just fill out the application, it doesn’t take more than 5-10 minutes to do, and we will have those within the next couple of days. The notifications will go out and let people know who’s been awarded the scholarships and hopefully everybody who is able to accept them. If not, then we’ll go back to the pool and go to the “runners-up” to see who else is available. Obviously, some people’s travel plans change or whatever. So, we’ll make sure that if we’re going to give somebody a scholarship, they can actually use this. It may take a few extra days.
Rob: Yup. Head over to Episode 433 on startupsfortherestofus.com for a link to that in our show notes. For me, not a ton of updates. Was on vacation and now, looking forward to some home construction being done on our house here in Minneapolis. We bought it about eight months ago and during the escrow process, an inspection picked up some anomalies in the stucco so we got a credit to have those fixed. All that’s fine except for the fact that it was supposed to take two months and it’s been like seven months of construction.
Things are getting put back together now but it just kind of wears on you and it can be loud. You and I’ve recorded in the past few months, I’m having to mute, we have to edit out things, and there’s people in my house all the time. So, I’m really looking forward to that being done. They had to replace some windows and re-stucco things. They can’t re-stucco things because it’s too cold right now, so they have to wait. There’s scaffolding and such. It’ll still be up, I’m guessing, for another month or two until it warms up. At least the inside can be completely done and all the outlets work again. They had to rip receptacles out and turn the power off on certain parts of the house.
Given that two of us work from home and we homeschool the kid, a lot of us are home a lot of the time. I think if I was going into an office, it will almost be easier because it will just be done while we’re not here. But when I’m talking to you on this podcast and then two construction workers walk in and start painting the walls, I’ll admit, it’s a little distracting.
Mike: You think?
Rob: Yeah. So I’m looking forward to that. That’s really in the kind of end-game right now. They’re just putting trim on things, and hanging blinds and such. I’m very much looking forward to getting past that.
Mike: Yeah. Having to redo anything in your house just really sucks. It’s just the worst.
Rob: Yup. Always costs more. It’s like software. Always costs more than you wanted to. It always takes longer to do than you think.
Mike: Yeah. So, what are we talking about this week?
Rob: Well, we have some listener questions. We’re going to kick us off with a voice mail. As always, voice mails rise to the top of our listener questions stack. This is a good question about the emotional side of running a startup and what to do when you make a change and it makes people angry. How to handle that?
Benjamin: Hey guys. It’s Benjamin from Philadelphia. I run a company called Commit Swimming. It’s a small SaaS app product. Recently, I raised prices and I’m looking to hear you guys thoughts on some feedback that I’ve gotten. I thought I did everything that I could to properly communicate to customers, like that the price increase was coming, why it’s happening, and what it was going to be. I also communicated clearly what it was then a couple of months later.
I inevitably would like about 1500 paying subscribers. I’ve gotten a few pretty nasty emails back on the topic and it’s one of those things that I just feel kind of down as a founder. It wasn’t like a money-grab situation. It was in order to pour more money developing features for the same customers that I’m serving. That type of emotional backlash can really take a toll.
I’m just curious to have a discussion around. I could hear Mike and Rob’s talk on what situations have you come across that made you feel like, “Oh did I do something wrong? How can I right this wrong?” and how do you deal with that internally? Another founder with all that emotional baggage riding on you, either in the sales process or in a situation with increasing prices or dissatisfied customer, that feeling that you just messed up and you disappointed somebody. How do you handle that internally and then how do you try to make it right with the customer?
I’d love to hear your thoughts, in particular, the emotional side of it? Thanks again for everything you guys do. I love your podcast, I love everything that you have done so far for the community, and I look forward to hearing your thoughts on this. Thanks guys. Bye.
Rob: So price increases huh, Mike? Nothing ever goes wrong with those.
Mike: Of course not.
Rob: That’s a good question. Obviously, we could talk about the price increase specifically, but that’s not really his question. It’s just that, what do you when people get mad. Did you do something wrong, didn’t you, and how do you deal with all that? What are your thoughts on it?
Mike: I think that the one piece of advice I have that trumps everything else is context matters here. If you were to take a few steps back and try to be extremely objective about what the situation was and what happened, does it makes sense for people to be extremely angry? The number of people has a big impact. He says he’s got 1500 paying subscribers. Well, how many nasty emails did you get from that? Was it 5 or was it 500? That’s a big difference.
Rob: Yeah. He says it was only a couple, which is an indicator, right?
Mike: Exactly. That was my point was that when he said he only got a couple of emails, to me that says that it’s probably not a big deal. That’s only partially related to his question because the question was how do you deal with the emotional side of it? My point here is that you should take a few steps back to make sure that you’re being objective about how you addressed the situation, how you brought it to them, how you let people know, and then is their response justifiable? If it was 500 people complaining, then obviously that means you probably screwed up. If it’s only a couple and even if they’re extremely vocal and extremely upset over, it’s probably not your fault.
I’ll point to an email that I got literally two days ago from Backblaze saying, “Hey, just wanted to let you know, we’re raising our prices.” They’re raising them from $5 a month to $6 a month. I literally just got done using Backblaze. To make sure that my entire machine was backed up, I’m going through and pulling down files that I wasn’t sure whether or not would be included in my end of backup that I did at home, and I’m extremely happy with it.
So when I got this email saying they’re going to increase it from $5 to $6 a month, that’s technically a 20% increase. But at the same time, I am ecstatic with that. You can raise it to $7.50 and I really would not care. I would pay you right now again. They even have a button there inside the email that says, “Hey, you can purchase an extension and essentially grandfather yourself in for the next two years at the original price that we had put forth back in 2008,” but they went through and they laid out their entire justification for it.
Again, that’s actually a little hack that I would say you can offer to them to extend their current pricing by a predetermined amount of time. If there were 5 or 10 people who emailed you and they were extremely upset about it, it has nothing to do with you. It’s about them. It’s about their situation. Whatever you did was like the straw that broke the camel’s back. It has nothing to do with the specifics of what you did or how you could have done things differently. It’s there’s probably something else going on there that you didn’t know about, you couldn’t have known about, and quite frankly there’s nothing you could have done about. I probably wouldn’t worry about it if it fell into that category.
Rob: Yeah. There are rules of thumb when doing price increases, specifically, and we’ve talked about it on the show, I had tweets written about it barely four weeks ago, and I don’t think that’s the point of this question. The point really is what you said, which is gathering context and trying to look at it rationally when it’s an emotional response that we all have because we relate to other people, we want to do well, we want to do right by our customers, and if you get even one or two really nasty emails, it can bring you down, even if you did everything right. Everything is right as you could possibly do it and communicated it well and all that stuff.
Just at any point when you make a person or some people angry, I think the things that I always remember is to number one, to apologize, number two, if it’s really a super small minority then to hold your ground. That’s something that you could always evaluate. If someone says, “Hey, I’ve been a customer for 10 years, I recommended all these people, and I use it when I teach my class at this college or blah-blah-blah,” then maybe you do make an exception.
Overall, if it’s just someone who’s just angry because you’re doing something that you need to keep your business afloat or you need to continue running your business, then you probably just need to apologize and be like, “Hey, maybe there are other options for you.” That is what I found over the years is the people who tend to get all huffy about things, get huffy about everything. They’re the most vocal ones and they’re frankly people who you would rather not have their money. I would rather have them use a competitor that can be something that you suggest to folks.
That doesn’t cover really his question which is, how do you handle it mentally and emotionally. I think there’s a few coping strategies that I’ve learned and developed over the years. The first thing is try not to take it personally. Easier said than done but really step back and say, “Look, this person doesn’t know me. They don’t know what’s going on. They’re just typing stuff. They wouldn’t say this to my face at a conference or whatever.” That’s the first thing. Second thing is get a sanity check on it. This is something I would bring up in my mastermind group. I would throw this out, “Hey, this is what’s happened, this was the email, and it was brutal.” You are going to have camaraderie. You’re going to have that community from people who are saying, “Yeah, this happened to me, too,” and then it normalizes the experience.
Let’s say a couple of times a year, I’ll get an email from a founder who’s like, “Oh my gosh. This person’s totally railing on me on Twitter about XYZ. Tell my what I should do?” or like, “Help me,” or whatever, and I will basically give them advice like, “Yup, this has happened to me. This is how you deal with it. It sucks but it happens to all of us.” If you’re doing anything interesting out in the world, you’re going to have people get mad about something at some point. That’s not a justification for pissing everybody off all the time, but once in a while you’re going to do something or say something or make a move that’s going to do it. Realize that that comes with doing interesting things and realize that it’s part of the course and it’s something you have to develop a thicker skin about.
Those are the basic open strategies and that’s probably what I would do. I would also not send flippant or rush responses. Boomerang or snooze those emails for a day to give yourself time to think about it. Don’t ruminate on it. Don’t sit there and stress about it constantly. It’s not as big of a deal as you think.
I think on the flip side is, did the person change and you have 100 people email you, like you said, Mike, 50 or 100, well then realize that you may have done something wrong and try to figure out what that is. Is it really unfair or did you just not communicate it well? Can you go back and communicate it better? Or do you need to back away? Do you need to undo it?
Intercom did this 3-4 years ago, where they were going to double or triple their prices and they grandfather for 6-12 months. People were furious and there was a huge uproar. They actually backed down and they didn’t raise their prices. Then and there, I think raise them two years later and they did the same thing but they communicated it better. It still made people mad but don’t give them an excuse to be mad. They’re going to be mad about a pricing change, anyway.
Check the boxes of grandfather if you can. If you can’t, then you really got to communicate why the product is better. There’s all these steps and mitigation to raising prices that I would do. But really, it’s with experience and going through this a few times, you just learn to not take it so personally and to try to get a realistic gauge of, anytime anyone’s mad it doesn’t mean you’re wrong.
That’s the thing. A lot of us take that on like, “Oh someone’s mad at me. I did something wrong.” That’s not necessarily true. There are people who are just mad at about everything all the time and today is their day to be mad at you for something that frankly probably is better for all of your customers in the long term. If you have more money to keep the business afloat and that build the app out and whatever else, and if no one else had an issue with it like you said, Mike, with CrashPlan, $5 to $6, you just don’t care. Netflix raise their prices a dollar, I just don’t care because it’s a good service. I’m going to keep it and I’m not going to get in this fake outrage over $12 a year.
Mike: Another strategy is, if you have objectively determined that you are not at fault and it is really the other person there, not you, you kind of step away from those things. If it’s emails that would come in, hand them to a support rep and say, “Just respond to this as nicely and politely as you can.” That way, you’re not the one who’s suffering the mental anguish over having to respond to those because honestly, you’ve got other things to deal with in the business than replying to a support email from somebody who is going to cancel anyway.
Rob: Thanks for that question. I hope our thoughts were helpful. The next question is from Rodrigo Pontes and his question is, “Should I target the manager or the company?” He says, “Long time fan, first time caller.” Actually he said first question but long time, first time. Have you heard that, Mike, on the morning DJ stuff?
Mike: Yeah, I have.
Rob: Long time, first time. Long time listener, first time question asker. “I’m a solo founder bootstrapping a SaaS web app called OneOneMeeting, oneonemeeting.com. OneOneMeeting is a note-taking app exclusively for one-on-one meetings. It allows you register meeting notes, commitments, goals, and share it between the leader and the team members. So, it’s specifically one-one-one between managers and people that report to them.”
“What should I do in my early marketing efforts? Target individual managers that could buy OneOneMeeting for their own use, or target HR executives that could implement it in the whole company? For more details, I have two paying customers that bought it for their own use and I have about five colleagues of my day job employer on a free trial and a scheduled meeting with our VP. They try to demo it and try to sell a corporate account for my whole company. I’m still at my day job, so I have limited time to do sales and in-person presentations during work hours.”
What are your thoughts?
Mike: This is one of those questions where I’m not necessarily the target market, so my advice here should be taken with a grain of salt. I think if I were to say one way or the other you should target this one or that one, the reality of the situation is I don’t really know, but what I would say is that there’s a couple of different ways I would try and find that out.
I think that the question or the point about having limited time to sales and personal meetings right now is a limiting factor, I would try to go outside of your current network and go to, as you said, the colleagues of your day job employer, go find out information from those people and try and narrow down, as quickly as possible, which of these two you should go after. Then from there, you also want to branch out and ask every single person who’s using it, if they would introduce you to somebody else who might be a good fit for it.
If you can get three introductions, that’s great. Always ask for three, settle for one, but push for that one. This is a one-to-one meeting note-taking app, so if they’re not willing to introduce you to one other person, then they’re probably not willing to actually use it to have these meetings anyway. So, I would go down that path and try to figure that out.
The other thing I would comment on is that, because it’s so early on, I don’t know if you really know what your pricing model is actually going to be yet, like individual plans versus corporate plans. I think those are kind of up the air and exactly what the pricing around those should be. I feel like it’s too early to tell. I seem to think that you need to go down a little bit further in the rabbit hole and try to figure out where it’s going to resonate and get traction before you start focusing on one or the other.
Rob: This wouldn’t normally be a clear-cut decision except for the fact he said his time is limited during the day. I think that if you go after a HR execs, they’re getting so hounded by people trying to sell them stuff, that they really are going to require a lot of hand-holding and a lot of proof to push it through.
I feel like you should go with the more guerrilla approach, like Slack and Dropbox do, where they infiltrate at a lower level in the org chart and then once you’ve got a bunch of people using it, then you ring them up and you say, “Hey, I’ve noticed that you have 10 different managers using this. You want to have good management of this, an insight, blah-blah-blah. You know, you need to get our enterprise account.”
I don’t know if that means that it needs to be free for one manager at a time or whatever. You look at Slack and you look at Dropbox, and that’s how they’re able to do that. People can sign-up essentially without a credit card and you can really infiltrate the org that way. You have to find if managers have a credit card with some type of limit on it so you could make it relatively inexpensive, but once you actually do sell their account to the VP of HR, that there would be a need to be a big step-up in price because selling a product like this is going to be hard to scale at a low price. Although if you do per seat pricing, then it should naturally scale itself because the successful companies tend to be growing anyway, and if it works, they’re going to want to add more and more of their teams on twit. I could see the whole $3, $5, $7 per seat pricing working if you can get 50-100 people at an org using it.
All that to say, if I were in your shoes, I would personally go after the managers because I think the managers are the ones that are going to get the value out of it. The person whose pain point it really solves in the most direct way and the managers are the ones that can start implementing it without a bunch of bureaucracy and approvals and all that stuff. If they can just run wild with it and prove it out, then it’s a much, much easier sale as you go up the chain. Thanks for the question, Rodrigo. I hope that was helpful.
Our next question is about taking someone’s business idea. I’m going to leave him anonymous. It’s interesting. He says, “Little background about me. I have a Bachelor’s of Science in Computer Science and Business Administration. I’ve been working on IT since 2006 as a developer and a manager. Two years ago, I worked for an online company that I found to be really interesting and right up my alley. I applied, I got hired on as a developer to help maintain and update their current website. Come to find out that their new site was never going to see the light of day due to the fact that the manager overseeing everything wanted to keep adding useless features to the site. The site was from the 90s and was written in a language that is no longer supported and it can’t support more modern features that a growing business website needs. This really bugged me so I left the company.”
“Then one day I was talking to a friend over drinks and he said I should start my own thing so I did. From there it snowballed into a reasonable product that I think I can take to market. My question is, when I started with the company, I had signed an NDA and a non-compete valid for one year after I left. That one year mark is coming up in the next week. I want to start pushing content out to get things going. I didn’t work on anything on the site while I was there and I’m not using any code or tech from the company because I consider that stealing. Everything I’ve created is 100% from scratch and of a different language and technology stack than the one at the prior company.”
“Have you guys ever had to deal with anything like this? Looking at it either my point of view as the startup or as the old company with the 1990s website? Also, I want to say a huge thanks for sharing your experiences. You guys answered a lot of my questions on your podcast.”
What do you think about this, Mike? Do you fully understand what he’s asking? He’s basically launching a competitor to something and they’re outdated tech. I don’t think he’s asking an ethical question because I think he’s going to do it. It’s more the legal side of it? Can they sue him?
Mike: Well, I think a lot of what he said seems to be different from what he’s actually asking. My understanding of what he has said was he was hired to help develop and maintain the current website of this other company and he signed an NDA and a non-compete. But then he left and he’s coming up a year later for his NDA and non-compete no longer being valid. And the products he wants to build is what the company was developing. I don’t think it’s actually anything related to the website for that company.
Rob: That’s what I’m confused about.
Mike: Yeah. That’s what I gather as the situation is what he’s building is actually what the company itself produced and that his non-compete would be wide enough to cover whatever their product was and is the product that he’s building is that, although he was hired to just work on the website.
Rob: Let’s go with that assumption because I was confused as to was it the website the product? Is it just like a lead gen company, the website is the product. There is no product behind it. You just drive ads or you do SEO and then you get people to send in form, and then you basically can sell those leads. That’s what I was thinking but maybe there’s a software behind it and he’s replicating that. What do you think here?
Mike: There’s the fine between what is legal and what’s not in which it’s impossible for us to comment on the specifics of that if we were in that situation. I have been in this exact situation. I was in this situation with AutoShark, where I basically knew that the product that I was rebuilding from scratch was going to go away at some point in the future. My thought was if I were to rebuild it, I can essentially come in and replace the product that was end-of-life.
What I found was that the fear of being sued by a large company that has the ability, the resources, and the lawyers that are just on staff already, was paralyzing. That is always going to stick in the back of your mind and you will not get away from it. I don’t know how big they are, or I don’t know what they do, or I don’t know how much of an impact you would have on them, but for me, it was paralyzing. I had a very hard time separating the business and marketing stuff that I was doing.
My situation was probably complicated because I was also still doing consulting work for them. It wasn’t really a non-compete because I was a separate company anyway but I was a subcontractor for them. So I was barred from going back to those existing companies that I’ve already done consulting work for which was installing the sort of software but then I’m also building a replacement for. Mentally, it’s very difficult to get past that.
I won’t say that the easier route is to just go on a completely different direction, but if you have the domain knowledge and expertise and you think you can execute on it better than them, by all means. Just be prepared that if you do a good enough job at some point, they may decide to come back and sue you, but they can sue you anyway. They can sue you and say, “Well, you developed this IP that we own,” and any company that you have left could theoretically make that claim. It doesn’t mean it will hold up, but that’s going to be an issue that you’re going to have to reconcile and come to terms with. Is it realistic that they can do it? Is it going to happen? It’s probably not, but it could.
Then there’s the other side of the coin where if you do a good enough job, they may decide, “Hey, it’s going to be better for us to acquire this than to continue building the thing that we have in-house.” That’s entirely possible as well. But again, it’s probably just as likely is them suing you. That’s something that you’re just going to have to mentally deal with, make a decision, and move on, because otherwise you’re going to spend far too much time thinking about it and not enough time actually working on the business.
Rob: Yeah. That’s a good point. It’s weird because this does get back to the ethical-moral conversation we had a couple of episodes ago. I think that legally, if you document everything and you really are on the right side of the law, then you should be okay in the long run. But they can still sue you and you still have to hire a lawyer to defend yourself. And you still have to either negotiate a settlement or go to court, which is very expensive, and you still have to prove all this. There’s a lot of ifs. Even if you’re on the right side of the law, in my distant third-hand experience with working at companies where lawsuits are going on, no one wins but the lawyers. The only ones that make money are the lawyers. It’s really not good to get involved in that. That’s always my thought with lawyers and lawsuits. It’s really kind of be on the right side of that.
Then there’s the side of it that I think about as an entrepreneur. It’s like, is this interesting to you to build this or will it be boring? Is it just an opportunistic view of like, “Hey, I can make some money with this,” or is it like, “No, this is actually something that I really, really want to do”?
I would caution against doing something just because you saw it work at a different company and you feel like you could build better tech than them. That’s not a recipe for success in my work. But if you have taken their success as a reason to not do customer development and not build an email list and not make sure there’s demand and not make sure that you have the credibility to do this, I think you’re making a mistake and I think you could build a product and release it to Crickets. Or it could be years and years of toil on this and does that sound fun? Just like any other product that would launch, I would ask myself, is there really a market here? Am I the one to do this? And does this sound interesting to me?
Mike: It looks like from the opportunistic nature of something like that, if it’s already in an established business, they are doing their sales and marketing and getting customers, it’s very easy to think you can replicate some of that. It’s like an iceberg. There’s tons and tons of things that go on under the covers of the business that you have absolutely no knowledge or exposure to and a lot of times, some of these things are very relationship-driven. You don’t even know it because you’re not even aware of how those conversations even happen. It’s very difficult to compete in those situations, so just be very cautious about that.
Rob: Yeah. It’s like you said, it’s easy to be inside a business, look around, see everything wrong with it, and be like, “I can do this better,” but it’s actually really hard to do better. It’s not something that can happen overnight. Just building better tech isn’t, in my opinion, going to be the key to that.
I think the other thing to think about is, you use the term taking someone else’s business idea. It’s a trip that if you hadn’t worked for them, you would just be a competitor. It’s like, did Drip take MailChimp’s business idea? Did Drip take Infusionsoft’s business idea because it competed with them? Well, no. We did our own thing our own way. We found customers, we got feedback, then we implemented features, and blah-blah-blah.
The difference here is you worked for them and you saw inside the business. There is complexity there where if you are going to compete with them that you need to get over the thought that you took their business idea. I think it comes back to what you said, Mike, is that it’s going to hang over your head mentally. Whether you think about the legal side of it or you just have this internal embarrassment or shame that you “took it/stole it” is what you’re implying, if you hadn’t worked for them, that wouldn’t be the case. If you think that you’re going to hang on to it like that and constantly think that you’ve taken this business idea from them, I would caution you against perhaps doing this. We’ll just ask you to think about it because it can get in your head.
More than half of being a successful founder, I believe, is just dealing with the mental side of things and being able to handle your own psychology, understanding yourself and not just stressing out or not putting much of a burden on yourself, not having things that aren’t true be running through you head, that negative self-talk, and this could be a source of that. In your shoes, I would really think hard about whether you can mentally get over that hurdle of thinking that potentially you took this business idea because you don’t want that hanging over your head for the next several years as you build this up. Thanks for the question, anonymous. I hope that was helpful.
Our next question is about how to approach a B2C company. This is a long email, someone summarized it. It says he’s a huge fan of the podcast, started listening about five years ago. He’s a senior developer, he’s always had the product itch, and he’s working on an app. It’s called VidHug, vidhug.com. It started as a scratch-your-own-itch project for his mother’s birthday and it’s definitely B2C. It’s low LTV. It’s non-recurring revenue. He says, “I feel like I have a mini Rob on my shoulder most days, saying ‘What are you even doing with this?!’ Thing is, I don’t really have a counterpoint for you except for a feeling and that feeling comes from talking to customers that are now able to do something they previously could not.”
So, the idea with VidHug is you can send out an email with a link and people can record basically birthday wishes or well wishes and they all get combined into this 30-second or 60-second video. If you go to vidhug.com you can see samples of these videos. If it’s someone’s birthday and then their grandkids in there, their kids in there, aunts and uncles, whatever, all recorded there and then all gets mashed up.
He said he launched it in July 2018 to Crickets. He didn’t do any pre-marketing, he got a few paying customers, didn’t really get a break until earlier this year when he’s got some organic traffic flowing from a referral in a blog post. He’s on pace to do $600 a month and that’s a funnel he can now improve. He says, “I’m also turned to build a B2B side of the business and I found a potential application of remote and distributed companies using VidHug to celebrate employees or onboard new employees. I’ve got three companies trying this out. I tried validating a separate B2B site for this, but I think it was spreading myself too thin and I’m just going to go down with vidhug.com for now.”
“The primary move forward is to focus on growing organic channels on the B2C side through SEO and referrals and also build a B2B side which would bring recurring revenue. Do you think I’m crazy for even trying this?” Just as a point of data, he has basically a free tier and then he has one that is $15. It’s a one-time thing for the B2C side. What do you think, Mike?
Mike: Well, to answer his question there actually, “Am I crazy for even trying?” The answer is yes. It’s just a matter of how crazy we all are.
Rob: Exactly. It’s just a specter.
Mike: It’s varying degree, yes. I feel a little bit early on to be trying to separate and go after both B2C and B2B. It seems like the revenue is a little bit low and I feel like the marketing channels you have to reach out to, the type of audience, the types of content that you have to build for them, the feature set, and all these other things, it feels like it creates two different businesses. I get where he said he tried validating a separate B2B site for the application and he felt like he’s spreading himself too thin, but it seems to me you’re going to do the same thing if you try and cater to a B2B market as well. Maybe not, maybe you can just integrate it with certain types of things or multiple-use for accounts, for example. Maybe there’s an obvious way to upsell people into a more B2B version of the app. Maybe that’s a way to go for that, but it does seem like it’s a little bit early.
So going back to the question of are you crazy for trying something that’s B2C? I would say no. I definitely think that there are opportunities out there for people to build B2C businesses that are solid and profitable. It’s just a matter of making sure you are methodical about how you pursue your different traffic sources, putting people in your mailing list, optimizing the product itself for revenue for getting people into it, and making them happy. If you can do those things, it doesn’t matter whether it’s B2B or B2C. You’re still going to have happy customers who are going to give you money. But that last piece of it is the key part. They have to be happy and give you money because if they’re not giving you money, you don’t really have a business.
I think that’s the challenge that most people run into with B2C companies is that your LTV tends to be much lower and you need a larger number of customers in order to make it work. There are a lot of viral components to something like this. You can email out to a bunch of people and if one person gets in there and then email 50 people, now you’re in front of 50 people instead of just one. That’s a huge viral aspect that a lot of things that try to do B2C don’t necessarily have because this has that kind of bait into it that’s an encouraging sign. It’s not the only thing I would look at but it’s definitely encouraging.
Rob: Yeah. It’s tough because B2C is just hard. It’s just a different game. With this customer lifetime value, you can’t run ads, you can’t pay salespeople. So many things you can’t do. It literally be outreach to bloggers, offering it free to bloggers, sponsoring bloggers, I keep saying bloggers, podcasters, whatever, people with audiences. Here’s the thing. If you’ve got a bunch if Instagramers with huge followings, YouTubers, bloggers, podcasters, yeah it would be possible to grow this. But it’s a completely different playbook than what we typically talk about or what you’re going to hear from MicroConf speakers, for example, or an attraction book where it really is more focused on doing a lot more B2B stuff.
You just have to ask yourself, is that what you want to do? Do you want to build those relationships with influencers and figure out how to get them to do it and then talk about it? That would be my playbook for this. Personally, I don’t enjoy that. It’s hard to do without the existing relationships, be it can be expensive response for them, it’s pretty risky, it’s not super repeatable, you just got to go one to the next, there’s just a lot to it. You got to ask yourself, “Hey, is this something that I want to do?” and if not, then I would look at the B2B side.
The tough part of it is it’s not a critical must-have thing, but I do think it’s kind of clever and it’s a fun nice-to-have that I have seen larger companies, even companies that 50 or 100 people, do special things when they onboard new people and make funny videos to welcome them or things like this. While I don’t know if they would pay for it, I think that would be a question you’d want to start having with people before you dug into the B2B side. That’s certainly a more repeatable thing but I still think there’s just a lot of risk.
I don’t see an angle here and that doesn’t mean there is no angle. Really, they’re just a feature. This is just one feature. It mashes up some video. It’s cool but it’s not as sweet a thing and it’s not something that people will use every week and rely on. It’s going to be harder. It’s not going to be the core of the HR’s workflow or the core of the manager’s workflow. It’s just a nice-to-have.
I think that’s the other thing to think about is, I had businesses in the early days that only made $1000 a month, $2000 a month, and frankly, I learned a lot from them. It was a stair step approach. I learned how to whatever, do run ads, do SEO, do display ads, do AdWords and that kind of stuff, and I took that experience with me to the next thing.
In its current incarnation, do I think VidHug can be a mid six-figure business? I don’t. It’s just my opinion, it doesn’t mean I’m right or wrong, but I don’t see an angle there as it stands today. But then again, I could have said that about Drip the month it launched because it was just an email capture form and autoresponder. Then we kept pivoting and grinding, customer developing, slow launching, and doing all the things that you heard me talk about on this podcast over the years, and eventually got it well under the seven-figure mark.
That’s the thing. As it stands today, VidHug is a cool side project and frankly I’m impressed that you’ve gotten it to $600 a month, given the price point and all that. But I think it depends on how you’re thinking about it. If you think about it as good learning and you want to build it up to $1000-$3000 a month, that to me seems doable, and it will be learning, it will be a little bit of income, I don’t know how you would ever get it past there. Maybe you’ll eventually come to a point where you see an angle to do that.
I also had a lot of businesses that never did. I had ebooks and info products. I had ecommerce site and I had small software products and I had one-time software products. All of those topped out and I could never get them past, let’s say, between $500-$5000 a month. I had several that were in that range. Eventually, I had to sunsetted them or I sold them as I moved on to bigger things.
My gut is that VidHug will will fit into that space, that role into your entrepreneurial career, there’s certainly a time and place for those, and you just got to figure out, I think, how you are thinking about it and where you want it to take you. Thanks for the question, Amir. That was a fund one and certainly wish you the best of luck as you move forward with VidHug.
At this point, we are completely out of questions. Zero questions, Mike.
Mike: Zero?
Rob: Zero.
Mike: I have a question for you.
Rob: What’s your question?
Mike: If Elon Musk actually gets us to the point of taking us out into the outer reaches of outer space, where do you think that we should go first?
Rob: Mars?
Mike: No, I mean not just outer space. Out of our solar system. Where do you think we should go first?
Rob: I have no idea. I don’t know enough about astronomy to know what’s interesting.
Mike: Well, do you know which star cluster’s the closest?
Rob: Alpha Centauri?
Mike: It is. You think we should go there?
Rob: Sure.
Mike: I don’t think so. I checked online, it’s only got three stars.
Rob: Badum-boom. There it was.
Mike: If you have a question for us, you call into our voicemail number 1-888-801-9690 or you can 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 to each episode. Thanks for listening and we’ll see you next time.
Welcome to Startups For The Rest Of Us, the podcast that helps developers, designers, and entrepreneurs be awesome at building, launching, and growing software products, whether you’ve build your first product or you’re just thinking about it. I’m Rob.
Mike: And I’m Mike.
Rob: And we’re here to share our experiences to help you avoid the same mistakes we’ve made. Where this week, sir?
Mike: Well, just wanted to give people a reminder that today is the last day to apply for the Starter Edition scholarship and I said before, we’ve got over 25 to give away. We will link it up in the show notes, but definitely go check it out if you’re interested at all in coming to MicroConf Starter Edition. Just fill out the application, it doesn’t take more than 5-10 minutes to do, and we will have those within the next couple of days. The notifications will go out and let people know who’s been awarded the scholarships and hopefully everybody who is able to accept them. If not, then we’ll go back to the pool and go to the “runners-up” to see who else is available. Obviously, some people’s travel plans change or whatever. So, we’ll make sure that if we’re going to give somebody a scholarship, they can actually use this. It may take a few extra days.
Rob: Yup. Head over to Episode 433 on startupsfortherestofus.com for a link to that in our show notes. For me, not a ton of updates. Was on vacation and now, looking forward to some home construction being done on our house here in Minneapolis. We bought it about eight months ago and during the escrow process, an inspection picked up some anomalies in the stucco so we got a credit to have those fixed. All that’s fine except for the fact that it was supposed to take two months and it’s been like seven months of construction.
Things are getting put back together now but it just kind of wears on you and it can be loud. You and I’ve recorded in the past few months, I’m having to mute, we have to edit out things, and there’s people in my house all the time. So, I’m really looking forward to that being done. They had to replace some windows and re-stucco things. They can’t re-stucco things because it’s too cold right now, so they have to wait. There’s scaffolding and such. It’ll still be up, I’m guessing, for another month or two until it warms up. At least the inside can be completely done and all the outlets work again. They had to rip receptacles out and turn the power off on certain parts of the house.
Given that two of us work from home and we homeschool the kid, a lot of us are home a lot of the time. I think if I was going into an office, it will almost be easier because it will just be done while we’re not here. But when I’m talking to you on this podcast and then two construction workers walk in and start painting the walls, I’ll admit, it’s a little distracting.
Mike: You think?
Rob: Yeah. So I’m looking forward to that. That’s really in the kind of end-game right now. They’re just putting trim on things, and hanging blinds and such. I’m very much looking forward to getting past that.
Mike: Yeah. Having to redo anything in your house just really sucks. It’s just the worst.
Rob: Yup. Always costs more. It’s like software. Always costs more than you wanted to. It always takes longer to do than you think.
Mike: Yeah. So, what are we talking about this week?
Rob: Well, we have some listener questions. We’re going to kick us off with a voice mail. As always, voice mails rise to the top of our listener questions stack. This is a good question about the emotional side of running a startup and what to do when you make a change and it makes people angry. How to handle that?
Benjamin: Hey guys. It’s Benjamin from Philadelphia. I run a company called Commit Swimming. It’s a small SaaS app product. Recently, I raised prices and I’m looking to hear you guys thoughts on some feedback that I’ve gotten. I thought I did everything that I could to properly communicate to customers, like that the price increase was coming, why it’s happening, and what it was going to be. I also communicated clearly what it was then a couple of months later.
I inevitably would like about 1500 paying subscribers. I’ve gotten a few pretty nasty emails back on the topic and it’s one of those things that I just feel kind of down as a founder. It wasn’t like a money-grab situation. It was in order to pour more money developing features for the same customers that I’m serving. That type of emotional backlash can really take a toll.
I’m just curious to have a discussion around. I could hear Mike and Rob’s talk on what situations have you come across that made you feel like, “Oh did I do something wrong? How can I right this wrong?” and how do you deal with that internally? Another founder with all that emotional baggage riding on you, either in the sales process or in a situation with increasing prices or dissatisfied customer, that feeling that you just messed up and you disappointed somebody. How do you handle that internally and then how do you try to make it right with the customer?
I’d love to hear your thoughts, in particular, the emotional side of it? Thanks again for everything you guys do. I love your podcast, I love everything that you have done so far for the community, and I look forward to hearing your thoughts on this. Thanks guys. Bye.
Rob: So price increases huh, Mike? Nothing ever goes wrong with those.
Mike: Of course not.
Rob: That’s a good question. Obviously, we could talk about the price increase specifically, but that’s not really his question. It’s just that, what do you when people get mad. Did you do something wrong, didn’t you, and how do you deal with all that? What are your thoughts on it?
Mike: I think that the one piece of advice I have that trumps everything else is context matters here. If you were to take a few steps back and try to be extremely objective about what the situation was and what happened, does it makes sense for people to be extremely angry? The number of people has a big impact. He says he’s got 1500 paying subscribers. Well, how many nasty emails did you get from that? Was it 5 or was it 500? That’s a big difference.
Rob: Yeah. He says it was only a couple, which is an indicator, right?
Mike: Exactly. That was my point was that when he said he only got a couple of emails, to me that says that it’s probably not a big deal. That’s only partially related to his question because the question was how do you deal with the emotional side of it? My point here is that you should take a few steps back to make sure that you’re being objective about how you addressed the situation, how you brought it to them, how you let people know, and then is their response justifiable? If it was 500 people complaining, then obviously that means you probably screwed up. If it’s only a couple and even if they’re extremely vocal and extremely upset over, it’s probably not your fault.
I’ll point to an email that I got literally two days ago from Backblaze saying, “Hey, just wanted to let you know, we’re raising our prices.” They’re raising them from $5 a month to $6 a month. I literally just got done using Backblaze. To make sure that my entire machine was backed up, I’m going through and pulling down files that I wasn’t sure whether or not would be included in my end of backup that I did at home, and I’m extremely happy with it.
So when I got this email saying they’re going to increase it from $5 to $6 a month, that’s technically a 20% increase. But at the same time, I am ecstatic with that. You can raise it to $7.50 and I really would not care. I would pay you right now again. They even have a button there inside the email that says, “Hey, you can purchase an extension and essentially grandfather yourself in for the next two years at the original price that we had put forth back in 2008,” but they went through and they laid out their entire justification for it.
Again, that’s actually a little hack that I would say you can offer to them to extend their current pricing by a predetermined amount of time. If there were 5 or 10 people who emailed you and they were extremely upset about it, it has nothing to do with you. It’s about them. It’s about their situation. Whatever you did was like the straw that broke the camel’s back. It has nothing to do with the specifics of what you did or how you could have done things differently. It’s there’s probably something else going on there that you didn’t know about, you couldn’t have known about, and quite frankly there’s nothing you could have done about. I probably wouldn’t worry about it if it fell into that category.
Rob: Yeah. There are rules of thumb when doing price increases, specifically, and we’ve talked about it on the show, I had tweets written about it barely four weeks ago, and I don’t think that’s the point of this question. The point really is what you said, which is gathering context and trying to look at it rationally when it’s an emotional response that we all have because we relate to other people, we want to do well, we want to do right by our customers, and if you get even one or two really nasty emails, it can bring you down, even if you did everything right. Everything is right as you could possibly do it and communicated it well and all that stuff.
Just at any point when you make a person or some people angry, I think the things that I always remember is to number one, to apologize, number two, if it’s really a super small minority then to hold your ground. That’s something that you could always evaluate. If someone says, “Hey, I’ve been a customer for 10 years, I recommended all these people, and I use it when I teach my class at this college or blah-blah-blah,” then maybe you do make an exception.
Overall, if it’s just someone who’s just angry because you’re doing something that you need to keep your business afloat or you need to continue running your business, then you probably just need to apologize and be like, “Hey, maybe there are other options for you.” That is what I found over the years is the people who tend to get all huffy about things, get huffy about everything. They’re the most vocal ones and they’re frankly people who you would rather not have their money. I would rather have them use a competitor that can be something that you suggest to folks.
That doesn’t cover really his question which is, how do you handle it mentally and emotionally. I think there’s a few coping strategies that I’ve learned and developed over the years. The first thing is try not to take it personally. Easier said than done but really step back and say, “Look, this person doesn’t know me. They don’t know what’s going on. They’re just typing stuff. They wouldn’t say this to my face at a conference or whatever.” That’s the first thing. Second thing is get a sanity check on it. This is something I would bring up in my mastermind group. I would throw this out, “Hey, this is what’s happened, this was the email, and it was brutal.” You are going to have camaraderie. You’re going to have that community from people who are saying, “Yeah, this happened to me, too,” and then it normalizes the experience.
Let’s say a couple of times a year, I’ll get an email from a founder who’s like, “Oh my gosh. This person’s totally railing on me on Twitter about XYZ. Tell my what I should do?” or like, “Help me,” or whatever, and I will basically give them advice like, “Yup, this has happened to me. This is how you deal with it. It sucks but it happens to all of us.” If you’re doing anything interesting out in the world, you’re going to have people get mad about something at some point. That’s not a justification for pissing everybody off all the time, but once in a while you’re going to do something or say something or make a move that’s going to do it. Realize that that comes with doing interesting things and realize that it’s part of the course and it’s something you have to develop a thicker skin about.
Those are the basic open strategies and that’s probably what I would do. I would also not send flippant or rush responses. Boomerang or snooze those emails for a day to give yourself time to think about it. Don’t ruminate on it. Don’t sit there and stress about it constantly. It’s not as big of a deal as you think.
I think on the flip side is, did the person change and you have 100 people email you, like you said, Mike, 50 or 100, well then realize that you may have done something wrong and try to figure out what that is. Is it really unfair or did you just not communicate it well? Can you go back and communicate it better? Or do you need to back away? Do you need to undo it?
Intercom did this 3-4 years ago, where they were going to double or triple their prices and they grandfather for 6-12 months. People were furious and there was a huge uproar. They actually backed down and they didn’t raise their prices. Then and there, I think raise them two years later and they did the same thing but they communicated it better. It still made people mad but don’t give them an excuse to be mad. They’re going to be mad about a pricing change, anyway.
Check the boxes of grandfather if you can. If you can’t, then you really got to communicate why the product is better. There’s all these steps and mitigation to raising prices that I would do. But really, it’s with experience and going through this a few times, you just learn to not take it so personally and to try to get a realistic gauge of, anytime anyone’s mad it doesn’t mean you’re wrong.
That’s the thing. A lot of us take that on like, “Oh someone’s mad at me. I did something wrong.” That’s not necessarily true. There are people who are just mad at about everything all the time and today is their day to be mad at you for something that frankly probably is better for all of your customers in the long term. If you have more money to keep the business afloat and that build the app out and whatever else, and if no one else had an issue with it like you said, Mike, with CrashPlan, $5 to $6, you just don’t care. Netflix raise their prices a dollar, I just don’t care because it’s a good service. I’m going to keep it and I’m not going to get in this fake outrage over $12 a year.
Mike: Another strategy is, if you have objectively determined that you are not at fault and it is really the other person there, not you, you kind of step away from those things. If it’s emails that would come in, hand them to a support rep and say, “Just respond to this as nicely and politely as you can.” That way, you’re not the one who’s suffering the mental anguish over having to respond to those because honestly, you’ve got other things to deal with in the business than replying to a support email from somebody who is going to cancel anyway.
Rob: Thanks for that question. I hope our thoughts were helpful. The next question is from Rodrigo Pontes and his question is, “Should I target the manager or the company?” He says, “Long time fan, first time caller.” Actually he said first question but long time, first time. Have you heard that, Mike, on the morning DJ stuff?
Mike: Yeah, I have.
Rob: Long time, first time. Long time listener, first time question asker. “I’m a solo founder bootstrapping a SaaS web app called OneOneMeeting, oneonemeeting.com. OneOneMeeting is a note-taking app exclusively for one-on-one meetings. It allows you register meeting notes, commitments, goals, and share it between the leader and the team members. So, it’s specifically one-one-one between managers and people that report to them.”
“What should I do in my early marketing efforts? Target individual managers that could buy OneOneMeeting for their own use, or target HR executives that could implement it in the whole company? For more details, I have two paying customers that bought it for their own use and I have about five colleagues of my day job employer on a free trial and a scheduled meeting with our VP. They try to demo it and try to sell a corporate account for my whole company. I’m still at my day job, so I have limited time to do sales and in-person presentations during work hours.”
What are your thoughts?
Mike: This is one of those questions where I’m not necessarily the target market, so my advice here should be taken with a grain of salt. I think if I were to say one way or the other you should target this one or that one, the reality of the situation is I don’t really know, but what I would say is that there’s a couple of different ways I would try and find that out.
I think that the question or the point about having limited time to sales and personal meetings right now is a limiting factor, I would try to go outside of your current network and go to, as you said, the colleagues of your day job employer, go find out information from those people and try and narrow down, as quickly as possible, which of these two you should go after. Then from there, you also want to branch out and ask every single person who’s using it, if they would introduce you to somebody else who might be a good fit for it.
If you can get three introductions, that’s great. Always ask for three, settle for one, but push for that one. This is a one-to-one meeting note-taking app, so if they’re not willing to introduce you to one other person, then they’re probably not willing to actually use it to have these meetings anyway. So, I would go down that path and try to figure that out.
The other thing I would comment on is that, because it’s so early on, I don’t know if you really know what your pricing model is actually going to be yet, like individual plans versus corporate plans. I think those are kind of up the air and exactly what the pricing around those should be. I feel like it’s too early to tell. I seem to think that you need to go down a little bit further in the rabbit hole and try to figure out where it’s going to resonate and get traction before you start focusing on one or the other.
Rob: This wouldn’t normally be a clear-cut decision except for the fact he said his time is limited during the day. I think that if you go after a HR execs, they’re getting so hounded by people trying to sell them stuff, that they really are going to require a lot of hand-holding and a lot of proof to push it through.
I feel like you should go with the more guerrilla approach, like Slack and Dropbox do, where they infiltrate at a lower level in the org chart and then once you’ve got a bunch of people using it, then you ring them up and you say, “Hey, I’ve noticed that you have 10 different managers using this. You want to have good management of this, an insight, blah-blah-blah. You know, you need to get our enterprise account.”
I don’t know if that means that it needs to be free for one manager at a time or whatever. You look at Slack and you look at Dropbox, and that’s how they’re able to do that. People can sign-up essentially without a credit card and you can really infiltrate the org that way. You have to find if managers have a credit card with some type of limit on it so you could make it relatively inexpensive, but once you actually do sell their account to the VP of HR, that there would be a need to be a big step-up in price because selling a product like this is going to be hard to scale at a low price. Although if you do per seat pricing, then it should naturally scale itself because the successful companies tend to be growing anyway, and if it works, they’re going to want to add more and more of their teams on twit. I could see the whole $3, $5, $7 per seat pricing working if you can get 50-100 people at an org using it.
All that to say, if I were in your shoes, I would personally go after the managers because I think the managers are the ones that are going to get the value out of it. The person whose pain point it really solves in the most direct way and the managers are the ones that can start implementing it without a bunch of bureaucracy and approvals and all that stuff. If they can just run wild with it and prove it out, then it’s a much, much easier sale as you go up the chain. Thanks for the question, Rodrigo. I hope that was helpful.
Our next question is about taking someone’s business idea. I’m going to leave him anonymous. It’s interesting. He says, “Little background about me. I have a Bachelor’s of Science in Computer Science and Business Administration. I’ve been working on IT since 2006 as a developer and a manager. Two years ago, I worked for an online company that I found to be really interesting and right up my alley. I applied, I got hired on as a developer to help maintain and update their current website. Come to find out that their new site was never going to see the light of day due to the fact that the manager overseeing everything wanted to keep adding useless features to the site. The site was from the 90s and was written in a language that is no longer supported and it can’t support more modern features that a growing business website needs. This really bugged me so I left the company.”
“Then one day I was talking to a friend over drinks and he said I should start my own thing so I did. From there it snowballed into a reasonable product that I think I can take to market. My question is, when I started with the company, I had signed an NDA and a non-compete valid for one year after I left. That one year mark is coming up in the next week. I want to start pushing content out to get things going. I didn’t work on anything on the site while I was there and I’m not using any code or tech from the company because I consider that stealing. Everything I’ve created is 100% from scratch and of a different language and technology stack than the one at the prior company.”
“Have you guys ever had to deal with anything like this? Looking at it either my point of view as the startup or as the old company with the 1990s website? Also, I want to say a huge thanks for sharing your experiences. You guys answered a lot of my questions on your podcast.”
What do you think about this, Mike? Do you fully understand what he’s asking? He’s basically launching a competitor to something and they’re outdated tech. I don’t think he’s asking an ethical question because I think he’s going to do it. It’s more the legal side of it? Can they sue him?
Mike: Well, I think a lot of what he said seems to be different from what he’s actually asking. My understanding of what he has said was he was hired to help develop and maintain the current website of this other company and he signed an NDA and a non-compete. But then he left and he’s coming up a year later for his NDA and non-compete no longer being valid. And the products he wants to build is what the company was developing. I don’t think it’s actually anything related to the website for that company.
Rob: That’s what I’m confused about.
Mike: Yeah. That’s what I gather as the situation is what he’s building is actually what the company itself produced and that his non-compete would be wide enough to cover whatever their product was and is the product that he’s building is that, although he was hired to just work on the website.
Rob: Let’s go with that assumption because I was confused as to was it the website the product? Is it just like a lead gen company, the website is the product. There is no product behind it. You just drive ads or you do SEO and then you get people to send in form, and then you basically can sell those leads. That’s what I was thinking but maybe there’s a software behind it and he’s replicating that. What do you think here?
Mike: There’s the fine between what is legal and what’s not in which it’s impossible for us to comment on the specifics of that if we were in that situation. I have been in this exact situation. I was in this situation with AutoShark, where I basically knew that the product that I was rebuilding from scratch was going to go away at some point in the future. My thought was if I were to rebuild it, I can essentially come in and replace the product that was end-of-life.
What I found was that the fear of being sued by a large company that has the ability, the resources, and the lawyers that are just on staff already, was paralyzing. That is always going to stick in the back of your mind and you will not get away from it. I don’t know how big they are, or I don’t know what they do, or I don’t know how much of an impact you would have on them, but for me, it was paralyzing. I had a very hard time separating the business and marketing stuff that I was doing.
My situation was probably complicated because I was also still doing consulting work for them. It wasn’t really a non-compete because I was a separate company anyway but I was a subcontractor for them. So I was barred from going back to those existing companies that I’ve already done consulting work for which was installing the sort of software but then I’m also building a replacement for. Mentally, it’s very difficult to get past that.
I won’t say that the easier route is to just go on a completely different direction, but if you have the domain knowledge and expertise and you think you can execute on it better than them, by all means. Just be prepared that if you do a good enough job at some point, they may decide to come back and sue you, but they can sue you anyway. They can sue you and say, “Well, you developed this IP that we own,” and any company that you have left could theoretically make that claim. It doesn’t mean it will hold up, but that’s going to be an issue that you’re going to have to reconcile and come to terms with. Is it realistic that they can do it? Is it going to happen? It’s probably not, but it could.
Then there’s the other side of the coin where if you do a good enough job, they may decide, “Hey, it’s going to be better for us to acquire this than to continue building the thing that we have in-house.” That’s entirely possible as well. But again, it’s probably just as likely is them suing you. That’s something that you’re just going to have to mentally deal with, make a decision, and move on, because otherwise you’re going to spend far too much time thinking about it and not enough time actually working on the business.
Rob: Yeah. That’s a good point. It’s weird because this does get back to the ethical-moral conversation we had a couple of episodes ago. I think that legally, if you document everything and you really are on the right side of the law, then you should be okay in the long run. But they can still sue you and you still have to hire a lawyer to defend yourself. And you still have to either negotiate a settlement or go to court, which is very expensive, and you still have to prove all this. There’s a lot of ifs. Even if you’re on the right side of the law, in my distant third-hand experience with working at companies where lawsuits are going on, no one wins but the lawyers. The only ones that make money are the lawyers. It’s really not good to get involved in that. That’s always my thought with lawyers and lawsuits. It’s really kind of be on the right side of that.
Then there’s the side of it that I think about as an entrepreneur. It’s like, is this interesting to you to build this or will it be boring? Is it just an opportunistic view of like, “Hey, I can make some money with this,” or is it like, “No, this is actually something that I really, really want to do”?
I would caution against doing something just because you saw it work at a different company and you feel like you could build better tech than them. That’s not a recipe for success in my work. But if you have taken their success as a reason to not do customer development and not build an email list and not make sure there’s demand and not make sure that you have the credibility to do this, I think you’re making a mistake and I think you could build a product and release it to Crickets. Or it could be years and years of toil on this and does that sound fun? Just like any other product that would launch, I would ask myself, is there really a market here? Am I the one to do this? And does this sound interesting to me?
Mike: It looks like from the opportunistic nature of something like that, if it’s already in an established business, they are doing their sales and marketing and getting customers, it’s very easy to think you can replicate some of that. It’s like an iceberg. There’s tons and tons of things that go on under the covers of the business that you have absolutely no knowledge or exposure to and a lot of times, some of these things are very relationship-driven. You don’t even know it because you’re not even aware of how those conversations even happen. It’s very difficult to compete in those situations, so just be very cautious about that.
Rob: Yeah. It’s like you said, it’s easy to be inside a business, look around, see everything wrong with it, and be like, “I can do this better,” but it’s actually really hard to do better. It’s not something that can happen overnight. Just building better tech isn’t, in my opinion, going to be the key to that.
I think the other thing to think about is, you use the term taking someone else’s business idea. It’s a trip that if you hadn’t worked for them, you would just be a competitor. It’s like, did Drip take MailChimp’s business idea? Did Drip take Infusionsoft’s business idea because it competed with them? Well, no. We did our own thing our own way. We found customers, we got feedback, then we implemented features, and blah-blah-blah.
The difference here is you worked for them and you saw inside the business. There is complexity there where if you are going to compete with them that you need to get over the thought that you took their business idea. I think it comes back to what you said, Mike, is that it’s going to hang over your head mentally. Whether you think about the legal side of it or you just have this internal embarrassment or shame that you “took it/stole it” is what you’re implying, if you hadn’t worked for them, that wouldn’t be the case. If you think that you’re going to hang on to it like that and constantly think that you’ve taken this business idea from them, I would caution you against perhaps doing this. We’ll just ask you to think about it because it can get in your head.
More than half of being a successful founder, I believe, is just dealing with the mental side of things and being able to handle your own psychology, understanding yourself and not just stressing out or not putting much of a burden on yourself, not having things that aren’t true be running through you head, that negative self-talk, and this could be a source of that. In your shoes, I would really think hard about whether you can mentally get over that hurdle of thinking that potentially you took this business idea because you don’t want that hanging over your head for the next several years as you build this up. Thanks for the question, anonymous. I hope that was helpful.
Our next question is about how to approach a B2C company. This is a long email, someone summarized it. It says he’s a huge fan of the podcast, started listening about five years ago. He’s a senior developer, he’s always had the product itch, and he’s working on an app. It’s called VidHug, vidhug.com. It started as a scratch-your-own-itch project for his mother’s birthday and it’s definitely B2C. It’s low LTV. It’s non-recurring revenue. He says, “I feel like I have a mini Rob on my shoulder most days, saying ‘What are you even doing with this?!’ Thing is, I don’t really have a counterpoint for you except for a feeling and that feeling comes from talking to customers that are now able to do something they previously could not.”
So, the idea with VidHug is you can send out an email with a link and people can record basically birthday wishes or well wishes and they all get combined into this 30-second or 60-second video. If you go to vidhug.com you can see samples of these videos. If it’s someone’s birthday and then their grandkids in there, their kids in there, aunts and uncles, whatever, all recorded there and then all gets mashed up.
He said he launched it in July 2018 to Crickets. He didn’t do any pre-marketing, he got a few paying customers, didn’t really get a break until earlier this year when he’s got some organic traffic flowing from a referral in a blog post. He’s on pace to do $600 a month and that’s a funnel he can now improve. He says, “I’m also turned to build a B2B side of the business and I found a potential application of remote and distributed companies using VidHug to celebrate employees or onboard new employees. I’ve got three companies trying this out. I tried validating a separate B2B site for this, but I think it was spreading myself too thin and I’m just going to go down with vidhug.com for now.”
“The primary move forward is to focus on growing organic channels on the B2C side through SEO and referrals and also build a B2B side which would bring recurring revenue. Do you think I’m crazy for even trying this?” Just as a point of data, he has basically a free tier and then he has one that is $15. It’s a one-time thing for the B2C side. What do you think, Mike?
Mike: Well, to answer his question there actually, “Am I crazy for even trying?” The answer is yes. It’s just a matter of how crazy we all are.
Rob: Exactly. It’s just a specter.
Mike: It’s varying degree, yes. I feel a little bit early on to be trying to separate and go after both B2C and B2B. It seems like the revenue is a little bit low and I feel like the marketing channels you have to reach out to, the type of audience, the types of content that you have to build for them, the feature set, and all these other things, it feels like it creates two different businesses. I get where he said he tried validating a separate B2B site for the application and he felt like he’s spreading himself too thin, but it seems to me you’re going to do the same thing if you try and cater to a B2B market as well. Maybe not, maybe you can just integrate it with certain types of things or multiple-use for accounts, for example. Maybe there’s an obvious way to upsell people into a more B2B version of the app. Maybe that’s a way to go for that, but it does seem like it’s a little bit early.
So going back to the question of are you crazy for trying something that’s B2C? I would say no. I definitely think that there are opportunities out there for people to build B2C businesses that are solid and profitable. It’s just a matter of making sure you are methodical about how you pursue your different traffic sources, putting people in your mailing list, optimizing the product itself for revenue for getting people into it, and making them happy. If you can do those things, it doesn’t matter whether it’s B2B or B2C. You’re still going to have happy customers who are going to give you money. But that last piece of it is the key part. They have to be happy and give you money because if they’re not giving you money, you don’t really have a business.
I think that’s the challenge that most people run into with B2C companies is that your LTV tends to be much lower and you need a larger number of customers in order to make it work. There are a lot of viral components to something like this. You can email out to a bunch of people and if one person gets in there and then email 50 people, now you’re in front of 50 people instead of just one. That’s a huge viral aspect that a lot of things that try to do B2C don’t necessarily have because this has that kind of bait into it that’s an encouraging sign. It’s not the only thing I would look at but it’s definitely encouraging.
Rob: Yeah. It’s tough because B2C is just hard. It’s just a different game. With this customer lifetime value, you can’t run ads, you can’t pay salespeople. So many things you can’t do. It literally be outreach to bloggers, offering it free to bloggers, sponsoring bloggers, I keep saying bloggers, podcasters, whatever, people with audiences. Here’s the thing. If you’ve got a bunch if Instagramers with huge followings, YouTubers, bloggers, podcasters, yeah it would be possible to grow this. But it’s a completely different playbook than what we typically talk about or what you’re going to hear from MicroConf speakers, for example, or an attraction book where it really is more focused on doing a lot more B2B stuff.
You just have to ask yourself, is that what you want to do? Do you want to build those relationships with influencers and figure out how to get them to do it and then talk about it? That would be my playbook for this. Personally, I don’t enjoy that. It’s hard to do without the existing relationships, be it can be expensive response for them, it’s pretty risky, it’s not super repeatable, you just got to go one to the next, there’s just a lot to it. You got to ask yourself, “Hey, is this something that I want to do?” and if not, then I would look at the B2B side.
The tough part of it is it’s not a critical must-have thing, but I do think it’s kind of clever and it’s a fun nice-to-have that I have seen larger companies, even companies that 50 or 100 people, do special things when they onboard new people and make funny videos to welcome them or things like this. While I don’t know if they would pay for it, I think that would be a question you’d want to start having with people before you dug into the B2B side. That’s certainly a more repeatable thing but I still think there’s just a lot of risk.
I don’t see an angle here and that doesn’t mean there is no angle. Really, they’re just a feature. This is just one feature. It mashes up some video. It’s cool but it’s not as sweet a thing and it’s not something that people will use every week and rely on. It’s going to be harder. It’s not going to be the core of the HR’s workflow or the core of the manager’s workflow. It’s just a nice-to-have.
I think that’s the other thing to think about is, I had businesses in the early days that only made $1000 a month, $2000 a month, and frankly, I learned a lot from them. It was a stair step approach. I learned how to whatever, do run ads, do SEO, do display ads, do AdWords and that kind of stuff, and I took that experience with me to the next thing.
In its current incarnation, do I think VidHug can be a mid six-figure business? I don’t. It’s just my opinion, it doesn’t mean I’m right or wrong, but I don’t see an angle there as it stands today. But then again, I could have said that about Drip the month it launched because it was just an email capture form and autoresponder. Then we kept pivoting and grinding, customer developing, slow launching, and doing all the things that you heard me talk about on this podcast over the years, and eventually got it well under the seven-figure mark.
That’s the thing. As it stands today, VidHug is a cool side project and frankly I’m impressed that you’ve gotten it to $600 a month, given the price point and all that. But I think it depends on how you’re thinking about it. If you think about it as good learning and you want to build it up to $1000-$3000 a month, that to me seems doable, and it will be learning, it will be a little bit of income, I don’t know how you would ever get it past there. Maybe you’ll eventually come to a point where you see an angle to do that.
I also had a lot of businesses that never did. I had ebooks and info products. I had ecommerce site and I had small software products and I had one-time software products. All of those topped out and I could never get them past, let’s say, between $500-$5000 a month. I had several that were in that range. Eventually, I had to sunsetted them or I sold them as I moved on to bigger things.
My gut is that VidHug will will fit into that space, that role into your entrepreneurial career, there’s certainly a time and place for those, and you just got to figure out, I think, how you are thinking about it and where you want it to take you. Thanks for the question, Amir. That was a fund one and certainly wish you the best of luck as you move forward with VidHug.
At this point, we are completely out of questions. Zero questions, Mike.
Mike: Zero?
Rob: Zero.
Mike: I have a question for you.
Rob: What’s your question?
Mike: If Elon Musk actually gets us to the point of taking us out into the outer reaches of outer space, where do you think that we should go first?
Rob: Mars?
Mike: No, I mean not just outer space. Out of our solar system. Where do you think we should go first?
Rob: I have no idea. I don’t know enough about astronomy to know what’s interesting.
Mike: Well, do you know which star cluster’s the closest?
Rob: Alpha Centauri?
Mike: It is. You think we should go there?
Rob: Sure.
Mike: I don’t think so. I checked online, it’s only got three stars.
Rob: Badum-boom. There it was.
Mike: If you have a question for us, you call into our voicemail number 1-888-801-9690 or you can 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 to each episode. Thanks for listening and we’ll see you next time.
Hey Rob and Mike,
Don’t if they’d be interested, but VidHug sounds like a great idea for small businesses looking for testimonials. They can invite their customers to leave testimonies then the company can use those videos for FB ads and social proof. That would B2B with opportunities to turn it into recurring revenue. Was wondering if you could pass that along, because I would pay for that now.
Just a thought I had while listening. Keep up the great work! Thank you guys!