Episode 456 | Launching a 2nd Product + Revisiting Freemium with Ruben Gamez

Rob: Welcome to this week’s episode of Startups For the Rest of Us. I’m your host, Rob Walling. Each week on the show we cover topics relating to building and growing startups in a way that’s organic and sustainable and that works around your life. We’re ambitious founders, but we don’t sacrifice a life in order to build our startups. These are not the typical Silicon Valley Startups where fundraising can be a goal in itself and where people build slide decks instead of building businesses.

In this week’s episode, I have an in depth conversation with Ruben Gamez. We talk about the new app he’s building, Docsketch, in the electronic signature space. But more importantly, we look back at the 10 plus years that he’s been bootstrapping. We look at lessons learned, how he’s learned to make better decisions, how he’s meticulous and disciplined, and how that leads to him being able to make repeatable progress and being able to have repeatable successes. This is Startups For the Rest of Us Episode 456.

Welcome to Startups for the Rest of Us, the podcast that helps developers, designers, and entrepreneurs be awesome at building, launching, and growing startups, whether you’ve built your fifth startup or you’re working on your first. I’m Rob. I’m with Ruben Gamez. We’re here to share our experiences to help you avoid the same mistakes we’ve made.

The first email I received from Ruben was in January of 2009, which is more than 10 years ago, and he was asking about something I had written up, a few essays about acquiring software products. From there, he and I struck up a friendship. He had been reading my stuff for a while and wound up being one of the first four or five members of the membership website that I launched called The Micropreneur Academy that was teaching software developers, really teaching engineers how to market.

This is back in the day just as SaaS was starting to become a thing and Ruben was an early success story. He hustled and as I said in the intro, he was meticulous, disciplined, and just shipped stuff every week, even though he was working a full-time job in “managing managers who manage developers,” as he used to say. What I’ve always respected about Ruben is his analytical nature, but he has the gut instincts of a founder, and he’s someone who you know that no matter what the chips deal him, he is going to succeed at what he’s doing.

Today, in the interview, we talk about both his first product which is called Bidsketch and it started as proposal software made for designers, and he later expanded it to creating professional proposals as a horizontal play. We talk about trying to upgrade that from Rails 2.0 to Rails 3.0 and all the technical headaches that went with that in the six months of essentially wasted engineering time. And we talk about his new app that he’s running in tandem and building that in tandem with Bidsketch. It’s called Docsketch and it’s an electronic signature app. We talk about his AppSumo deal and why he decided to do that and his whole thought process of whether to do that or not. We dig into free plans at marketing first before building a whole bunch of stuff.

Ruben doesn’t do a ton of interviews. He doesn’t do conference talks, even though I ask him every year to speak at MicroConf. Every time you hear him talk, you will hear someone who’s been doing this a long time, someone who’s had substantial amount of success, and someone who’s really thought through these issues. I thoroughly enjoyed talking to Ruben today about the ups and the downs and the sidewayses of being a bootstrapper for more than 10 years, and I hope you enjoy this interview as much as I did. So, let’s dive in.

Thanks so much joining me on the show today, Ruben.

Ruben: Thanks for inviting me.

Rob: You and I talk every few weeks and have for several years, so it’s fun to get on the mic every once in a while. You have several popular Startups For the Rest of Us episodes, actually. You have the one about beating plateaus. There was one where you and I just talked about metrics. Remember where you’re doing trial-to-pay and all that? To the listener, if you go startupsfortherestofus.com, search for Ruben Gamez.

He has been on the show several times, but today I wanted to dig into stuff you’ve been working on for quite a while, Ruben, both in terms of your new app, Docsketch, but also the decision process. You run a bootstrap SaaS app for 10 years which very few people have done that. Most people sell, or they shut down, or they move on, or they find a CEO to run it or whatever, and you’ve been through a very long journey in it in a short amount of time. Ten years running a SaaS app is like 50 years in a lot of other business.

Ruben: Yeah. It’s funny you say 10 years. In some ways it doesn’t feel that way and in other ways it does.

Rob: I know because so much has changed when you think back to your very first homepage and what that looks like, or your early demo videos, or what pricing felt like back then. There’s so many things have changed and yet, you have Bidsketch. Folks who want to check it out, it’s bidsketch.com, and it’s a successful SaaS app that has employed you and your whole team. You have a team of four or five people?

Ruben: Yes. We’re hiring more people right now, so rebuilding in that process. We could talk about that a little bit later.

Rob: The first thing I want to ask you about that’s interesting is when you first launched Bidsketch, it was proposal software made for designers and you targeted the design space. It was a vertical proposal app and it caught on really well. Then a few years later, I don’t remember how long it was, you went horizontal. The headline stay as, “Create professional proposals in minutes.” You’re going after anyone who would send a proposal, any type of freelancer, contractor, agency or whatever. What led to that decision? You really did the land and expand which is a playbook in MBA speak or whatever, but you came across that organically and made that decision to expand.

Ruben: I’m trying to even think about why I chose designers to start with. I think it had to do with the amount of keywords for people searching for proposals related to web design or just graphic design. That helped me make that decision. Later on, we’re just getting customers that weren’t that, and we were getting people asking us, “Does it work for my business?” There was nothing in there that would prevent them from using it successfully for the business.

There were a lot of different signs that made it clear that we should move beyond designers. Plus, the market just for designers was too small. It was maybe a good starting point, still not sure about that. We could have just started where we ended up later, but I didn’t know back then if that was a good idea.

Rob: I was going to ask if there was any regret or if you feel like it was a mistake to start small and then go horizontal, or if you should have just started horizontal, or do you think really matters?

Ruben: At least for the app that I had at the time, there weren’t any proposal apps. So, we were creating that category. It probably didn’t matter as much for our product at that time.

Rob: Since you’ve built Bidsketch back in 2008–2009, it was written in Rails 2 and then you upgraded to 3 or you built it in 3, if I recall. You went through a painful year or so of trying to rewrite it in Rails 4. If I recall, you had a tough time finding Rails 3 developers and maybe patches weren’t coming out for it anymore. This was just 2–3 years ago, you were doing this. It’s a real struggle, I remember. Can you talk us through that? Why did you make the decision and what was the process there to try to get it rewritten?

Ruben: We actually started in Rails 2 and it’s still in Rails 2 now, which is crazy.

Rob: Oh, that’s what I forget. I say 3 because that sounds old enough, but you’re right.

Ruben: 3 is the thing we wanted. We were eventually trying to get to 4 at the time. We were like, “Okay. We can’t jump straight to 4. We need to go to 3.” From what I understand, going from 3 to 4 takes some work, but it’s not the end of the world. Going from 2 to 3 is, if you have a really mature app with a lot of code that’s been around for a while, that’s a beast and that’s what we were trying to do.

Rob: You had the bulk of your team working on that for, was it a year? Is my memory correct?

Ruben: It was maybe like eight months or so. A lot of developers working on just that and at the same time I was working on the design side. Just going back a little bit, the decision to upgrade had to do with us hitting plateaus and like you mentioned, there’s that episode that we did about plateaus and stuff. We hit three or four plateaus at different stages of growth. I don’t remember exactly what they were, but we did things like change pricing, 10X our content strategy, just different things to break out of each plateau at each time.

I got pretty good at breaking out of plateaus, but now what I know or what I feel is that if you’re hitting that many plateaus, fundamentally, there’s a problem there that needs to be fixed. We were hacking out of the plateaus for a year or two of more growth, but there was a bigger issue. Part of it was just going back and trying to figure out, “What’s going on here, how can we just stop doing this, and fundamentally fix what’s wrong?”

We did a lot of customer interviews, a lot of analysis of the data that we had, did over 100 jobs-to-be-done interviews and using the Switch framework. Switch framework has to do with when somebody switches away from a product to your product or when somebody switches away from your product to something else, during onboarding and people that canceled. You can imagine people getting people on the phone to do 30–45 minute interviews. Once they’ve canceled, it isn’t that easy, so we bribe them with Amazon gift cards, like $100. In theory, you don’t need that many, but we were interviewing a lot different segments and trying to find patterns and stuff.

After all that, we came up with three things that we could do. One of them was go upmarket enterprise, which the majority of the funded startups that were going into the proposal space were doing. They start off like we would and then just wasn’t big enough and they would go upmarket. The other one was just better served as a couple of specific segments within our market, build out better team features, agency features, go deeper in that direction. Then the third was just sell more to our existing customers. They were using products that were related. That’s why we built up Docsketch later.

The first thing that I decided to do was basically build out version 2 of Bidsketch and go with option one—better serve a segment of our market that would pay more money, that would stick around and all that stuff. But out existing product was lacking some features and to add these features and to change how it did the main thing that it did which is create proposals, we had to use new technology and hiring developers that could work with that was really hard.At the time also, Rails 2 was really old and everything was just hard because of that. We had a bunch of technical bet and we were in a bunch of code. If we were going to rebuild core parts of the application, that was a big project and we just needed to add a whole bunch of unit tests and all this stuff. We spent six months going in that direction, adding unit tests.

About that time, I saw a talk, it was DHH from Basecamp. This had already been out for a while, but I had just caught onto it, just watched it, and he was talking about how they made a mistake by trying to do the same thing that we were doing. It really gotten my interest. I watched the whole thing and basically what he was saying was that they had a very hard time. He spent six months to a year trying to make Basecamp into the next version of Basecamp. He just talked about it in terms of trying to make a chair into a desk or something like that. It was really hard. It just didn’t work and they abandoned it and started from scratch.

I watched that night and I thought, “Hmm, I think we can do it.” Of course. We kept going for a little bit longer, but I kept just thinking about that. So, I went back and I was looking at how much progress are we making. I started doing some forecasting and estimating, given our pace, that the entire team is working on this. It would have just taken way too long. We made very little progress, so then I just decided to abandon that effort.

Rob: How was that, when you decided to abandon? That must have been a really tough choice for you. What was your emotional state like once you made that decision or as you were making it?

Ruben: It’s always tough because you spend so much money with so many people working. It’s tough on several different levels. You don’t want to fail at something and just be like, “Oh, this was a really big mistake.” A couple hundred thousand dollars maybe in salaries. I didn’t calculate it out still to this day. It’s probably pretty expensive.

Rob: Too painful.

Ruben: Yes. Just a lot of developers working on it for eight months or whatever it was exactly. That’s a ton of money to just say, “Nope. This didn’t work out. Let’s do something else.” It’s tough from that perspective but also for the team. You have the team working on just this one thing and you really sell them on, “This is the direction. This is what we need to do.” Then, having to tell them, “No, this is not going to work. You should do something else.”

Rob: That’s got to be hard. When you talked to the team, did you do it on a group call? What was their reaction?

Ruben: It was on a group call. I don’t remember the specifics, but I remember that they took it much better that I thought they would. I think they were burnt out.

Rob: They were probably relieved.

Ruben: Yes. There was a little bit of relief, basically.

Rob: That’s crazy. Probably some relief for you, too, to make the decision as hard as it is. You let go of the sunk cost, right? The sunk cost was all the time, the money, and your ego of like, “Well, I made a bad call here.”

Ruben: Exactly. Before I actually had that call, it was tough just thinking about a lot. Then after the call, it was just a relief. It’s like, “Okay.” Once you make the decision, once you know you’re starting over, it’s different.”

Rob: Yeah. Wipe your hands together and say, “What’s next?” you turn your sights. That brings the question, now you are building Docsktech. Was it an immediate realization of, “I want to build an electronic signature app”? Or was it, “We’re going to build like how they do Basecamp, 1.0, 2.0, 3.0. They are all project management. They are all just approached differently. Did you think of doing Bidsketch 2.0 that would essentially be proposal software as well and complete with yourself in the sense that Basecamp did?

Ruben: Yeah. That was the next thing. It’s like, “Okay, maybe we should just build this from scratch.” We actually started doing that and spent about six months doing that and realizing that we had to make it backwards compatible and all the stuff. That’s years of work-arounds, codes and all these stuff. This is crazy. This is a lot of stuff.

Rob: So it’s a new code base, but what was the backwards compatibility? Was is like the data model or something? To import in one direction, you needed to adhere to certain standards?

Ruben: We have a feature that allows people to create proposals from scratch using HTML and CSS, so there was a lot of that, just making that old templating system work with whatever we were building, trying to make everything fit. There were just many, many examples of this. This one was a little bit shorter, it was maybe four to six months where it just felt like, “This was going to take years. I think we should go with option three,” which was basically sell more to our existing customers and better serve them.

This was the creation of the electronic signature tool, our new app, Docsketch. It felt like this one’s way easier, this one’s much smaller, doesn’t have that many features. We’re not doing a bunch of what-you-see-is-what-you-get design, development and all that stuff. You are uploading files, your over link fills, sending them out, getting documents signed. Let’s go in this direction.

We stopped again. There were a couple other reasons. Our progress was super slow with the new rebuild of Bitsketch because the team had a Rails background but not a React background. We decided to build this version 2 in React and we started to do that, but they we’re so inexperienced that as they we’re learning more, they were like, “Oh, let’s rewrite this or restart this. Oh, this is the wrong way to do that.” That was not good. They just slowed everything down even more.

Rob: Do you wish you hadn’t built in React or if you were going to do it, you need developers who were verse to it.

Ruben: Going back to that point, the better decision on my end would have been, we either build it with what we know and what we are good at, which was Rails, or we need a new team that is very experienced in React and what the direction that we’re going in.

Rob: That would be a really hard call to make, to fire most of your development team or I guess you would keep someone around maintain Bidsketch, but that would have been a tough call.

Ruben: It would have, but we wasted a lot of money because I didn’t make that call back at that point. Even when we started with Docsketch, it was also like, ” Okay, let’s do this in React. We know way more. We have six months of experience,” which is not a lot. Having a background and managing what development department a lot of developers. This is all the stuff that I’ve come across and had known. For some reason, I just made decisions that, now thinking about it, don’t really make a lot of sense.

I’ve gone back and really thought about that a lot and worked on improving both my decision-making and my ability to change and switch earlier once I recognize that we’re going in the wrong direction.

Rob: Here’s the thing that I have respected about this journey that you have taken, is that you shoot through let’s say 14 months, 16 months, 18 months, whatever of two false starts. It was to upgrade the app and then to rewrite it from scratch. It was super brutal, painful, irritating, but you did it anyway.

During that time, I remember asking you, “Are you impatient? Do you feel stressed?” And you kept saying, “No, I’m not stressed. I just want it to move faster.” But it didn’t seem to bother you the way it would bother me. I would have been super stressed and anxious. There’s just so much. I have such a tough time standing still like that. You’ve said you do, too, that you have a tough time standing still, but what does that feel to you and how did you deal with it? Most of us in our product ownership career, we’ll never stand still for 18 months or however long you did. It’s a real anomaly like how did you manage your own emotions around that?

Ruben: I think part of it has to do with me just being optimistic about my ability to do things successfully, number one. Number two, having spent so much time doing things like SEO, where you have to make these bets. It’s not like ads. You can run ads and immediately as soon as you put money into it you know that it’s working or not.

With SEO, you’re going months without any sign that it’s working a lot of times. Then eventually it starts working and I’ve done that so many times where I’m used to grinding for long periods of time. I was really thinking about this the other day, which is probably a bad thing where having grown up just feeling uncomfortable for a lot of my childhood because of being in bad situations, bad neighborhoods, bad everything, and just having this constant feeling like I’m working towards something and it’s really […] right now, but I know I’m going to eventually get out of it, so it makes it so I can deal with that a little bit better nowadays, but maybe it’s a bad thing.

Now I’m focusing on setting up these trip wires beforehand. Before a big effort, I set an expectation or a deadline or something that lets me know, “Okay, if we are not here at this stage, then either I’m going to take a really close look at stopping, or changing what we’re doing, or something, instead of enduring and grinding.”

You said many times that if I have a lot of patience and a lot of people say that about me, but I don’t feel that. I feel very impatient a lot of times and I don’t remember where I heard this, but that when there’s this mismatch of what you feel about yourself and what other people think about you, that has to do with the mismatch between your internal dialogue—which makes a lot of sense—and your actions.

Internally, I maybe saying something like, “We need to move faster. This sucks.” But externally, I’m projecting maybe something else and just continuing.

Rob: Show up everyday, shipping, getting it done.

Ruben: Right. Getting it done. There are a lot of things that just take a lot of time. I’m good with making progress when it comes to things like that.

Rob: Yeah, it makes sense. Folks want to hear more about your background. You mentioned it earlier, there’s a cluster of episodes that are really popular of the Zen founder popular podcast where Sherry interviewed several founders of their origin story. Yours is episode 25 and you go through a pretty in-depth story of your upbringing which is shocking to a lot of people and is just super interesting tale to hear, how you grew up, and how you came to start your own company.

I want to get into Docsketch, but I have one more question before we do that. Did it ever cross your mind to sell Bidsketch and just start fresh with a new app or was your plan C was to sell more things to the Bidsketch audience? Was that too compelling to make you consider selling it?

Ruben: I don’t think I ever seriously thought about selling Bidsketch because even if you think about how I started Bidsketch, I started Bidsketch when I had a full time job. I just like the approach a lot better of not starting from scratch like some people who quit their jobs and they do their new thing.

I think I would be stressed if I sold it and I had a bunch of money in the bank, but that money was going down and nothing was coming in. For me that’s different and I’m not sure why.

Rob: I’ve been there and I did the same thing. I had HitTail, I didn’t sell it, and then started Drip because I didn’t want the bank account going down every month. I was trying to run it on the side and have it throw off cash and […] the asset because then you can have your foot on two islands. You don’t have to swim to the other one and you can do it. That makes sense.

I’ve been impressed with how you approach the process of building Docsketch, not from a technical point of view, but just the thought process you went through. You started with the marketing and in this day and age, obviously you want distribution first and you want a channel, but you were way ahead of it. Before you had mock ups, before you guys had really started digging under the code, you had this whole plan of how you were going to build up this momentum and this marketing engine. Can you talk about how you were thinking that through?

I’m specifically thinking, obviously about the organic, like you are really good with SEO, but also there’s this whole thing about free plan and getting people to use something, any type of tool first and then turning that later into a Docsketch customer. I really think that, that would be interesting for folks to hear about.

Ruben: Building an electronic signature tool was basically starting from scratch. Before building it out, I just spent some time figuring it out how am I going to get customers because I’m not sure how much I’m going to be able to leverage the Bidsketch audience and I don’t want it to completely depend on that either. This is a much bigger market. Much bigger market like DocuSign is the biggest company in the market and they are at $600 million a year maybe more. They’re way more signature electronic apps in that category. There were a lot of things that appeal to me.

Freemium is being done by a couple of them, so I also wanted to play around with freemium and add some viral traffic and stuff. The first thing that I did was just look at, okay if we are starting from scratch, do some analysis in the organic traffic side, what are people searching for, what’s there?

Okay there’s a lot of traffic that we can get. A lot more than the proposal category. Then look at what the competitors are doing, not just look at what where they’re getting traffic, where’s it coming from, but I also did interviews with a bunch of DocuSign and HelloSign customers and this was targeting them with Twitter ads, sending them to a survey. If they were a recent paying customer, bribing them with an Amazon gift card.

Also, going to review sites and just analyzing everything that people liked and didn’t like about each of the competitors, creating a document with all that information, trying to figure out where are the gaps, what type of product would we need to build to position ourselves favorably in this market, and how can we do it in a way where some of the traffic that opportunities that I see, we can flow into a product. That was the high level of the whole process.

Rob: A couple things that you touched there. I find it fascinating that you’re going on a free plan especially with one of the very popular essays on my website from August 2010, was a guest post from you called Why Free Plans Don’t Work. I just think it’s hilarious that nine years later, you are actually going all in on a free plan. You want to talk about how your thinking changed?

Ruben: Back then, I did freemium with Bidsketch for about a month. It was a very short amount of time and with freemium, that’s just too short to know whether it’s working. It wasn’t until later that I realized a bunch of these things. Then, I didn’t know how freemium worked and what types of products would be best for freemium products.

Looking back, some of the reasons why it didn’t work for Bidsketch and for many of the proposal apps that I’ve tried—it hasn’t worked until this day—is because the markets is okay, but it’s not that big. The time-to-value is too long. People have to create documents, set them up, design them, and copying content. That just takes way too long. Ideally, you would have a much shorter time-to-value, like with Docsketch, you upload people’s documents, add some fills, send them off, that’s it, you’re done. Big difference.

The market is really big with Docsketch. It’s perfect for that. You did have a bit some of the viral stuff going on with the proposals, but given that the market is small, that you would need a lot more volume for it that work, it didn’t make sense.

But looking at Docsketch, the electronic signature space just has a lot of the things that will help a freemium approach work. In the early days, really you will make more money not doing freemium. That’s another thing about Freemium. It’s oftentimes a longer-term bet and like content marketing, a lot of things build that up.

Rob: That makes a lot of sense. It’s an advanced distribution tool. It’s not a pricing strategy, it’s a marketing strategy as people say. It’s something that, in your early days, when you’re trying to bootstrap and get to $8000–$10,000 a month, you can quit your job. I do think freemium is detrimental. It’s a long-term play and you have the luxury now with having this other app that is funding you and your whole team, that you have a long-term horizon to play with.

Ruben: That makes a big difference. The situation I was in was totally different. That time, I needed revenue as fast as possible. Now, the strategy that I ended up going with free trials or getting people to pay up front first is really good; worth well for that. Being in that situation is not […] for trying out freemium.

Rob: Yeah, and you spent quite a bit of time getting pages out there with organic traffic to it and the product is quasi-launched now. I feel like you’re soft-launched, but you’re not doing heavy marketing.

Ruben: Yeah. Officially, it’s open now. This was the deal, a couple months back we did an AppSumo deal. I wanted to leave it in early access when we did the deal, but they required that we open it up and let people sign-up and pay before we do the apps, which makes sense. They don’t want to be selling something that’s an early access. We did the deal. Lasted a long time, it was very different from when I’ve done it in the past. It was like three weeks.

Then I put it back into early access up until a couple of weeks ago to where I opened it back up. I felt like we have enough features at this point and we’re getting a lot more traffic. It’s just ridiculous to be an early access with the amount of traffic that we’re getting and not trying to take advantage of some of that. Last month, it’s getting more traffic than BitSketch. In a few more months, at that pace, it’ll double what we’re getting there. The strategy is different.

Rob: It’s such a larger market, right? That’s how I view it.

Ruben: It’s a much bigger market. There’s just a lot more opportunity there. I just know more now than I did back then. I’m having an easier time executing on that part.

Rob: Stair-step approach. Small SaaS up to a big one. I like it. Talk about the AppSumo deal. I actually get asked relatively frequently from folks who run a SaaS app and are considering an AppSumo deal but don’t know how to think about it and don’t know if they should do it or not. The revenue share is not huge. I believe it’s 70-30 or 80-20, where you as the founder get 30%; you get the smaller of the two. It’s really quite a cut that they take. How did you think through that because it sounds like from what you’ve told me it was the right choice for you. Why was that?

Ruben: I feel like it was a really good choice for me. Given my context of doing freemium right now and still being from a positioning standpoint, we’re not focusing on any one segment yet, even for marketing. Leaving it open, trying to learn, and see where are the most valuable customers, so that we can focus on that. The more volume we get, the more different types of companies we can get using the products, the more learning we can do the better. Then we’ll just figure out who the best types of customers we should go after are, and maybe chain positioning or maybe just put our marketing efforts in there.

AppSumo, I just saw it as a way to get a lot of different companies using the product and a lot of them that were using existing products, like DocuSign in getting a lot of feedback from them. There’s a tricky part to it when it comes to getting customers from these deal sites because a lot of the feedback that you get is just not good. You have to be very selective as far as who you’re listening to.

The framework that I use for this was anybody who’s seriously using another product and is paying a decent amount of money for the other product—they have a team of 10 people and they’re paying a couple of hundred dollars a month to use an existing product, and they’re very motivated to switch—those are the people that I’m going to listen to a lot more.

We found out that there’s some really very valuable segments that we hadn’t encountered yet through the deals. That was helpful. We got some very good feedback. Since they were highly motivated to switch because they got such a good deal and they were spending a lot of money with the existing tools, they were willing to tell us what’s really important to them before they switch, like, “Okay. We want this snap. This one thing as the thing that we really need to switch.” That helped.

Rob: Super important to have that. Those learnings are valuable and they’re hard to get in the early days of the product.

Ruben: They are very, very hard to get. Also, I almost think of them as freemium users because just looking at the stats for the amount of documents that they’re sending. They’re sending a lot of documents a month because people who get documents see that they’re sent through Docsketch, there’s some of that viral stuff going on that helps us. That helps us with word of mouth, that helps us in a lot of different ways.

It doesn’t work too well with companies that have really high support per customer. That was another thing. With Docsketch, it’s just a low support app. We can get a bunch of people here, that’s another reason why we could do freemium and it’s not that big of a deal. I know a lot of other SaaS founders that they’re in the hundreds of customers and they need a full team of support people. Between Docsketch and BitSketch, we’re serving thousands each. One person’s fine when support person, not a problem for everybody.

Rob: I’m envious of that. Certainly with Drip, we were one of those where we need a lot of support people because it’s a big complicated product. It can do a lot, but as a result, people have a lot of questions.

Ruben: Right, and Drip is a really good example. I’m not sure I would do an app […] for that. I would have to design it very carefully, but I probably wouldn’t do it because you have expenses of how much it costs each email to get sent out there. It’s just not the right type of product for that.

Rob: Yeah, and that’s the thing. Just like with freemium, AppSumo is something that can work for you, but you need to know the criteria and you need to be smarter about making the decision. It’s not an always yes or an always no. It sounds like you got a lot of learnings from it, you got good feedback, certainly there’s some SEO help there because you’re going to link to from some places.

Ruben: Yeah. You get branded searches, they shoot up a lot, and that helps on the SEO front.

Rob: And some cash out of it. Typically, if you have a successful AppSumo deal, you can make tens of thousands of dollars that comes to you and that can be a game changer that allows you to hire that next developer or put more money into some type of spend.

Ruben: The average they said was somewhere like 2500 buys. Given the average payments and all that stuff that they do, that’s more likely above $30,000–$35,000 somewhere in there.

Rob: Dollars for a company that’s running the deal.

Ruben: Yeah, after AppSumo gets their cut and all that stuff. So, that helps. You can’t count on that. It’s just a one time thing. In my mind, there has to be a lot of other benefits besides the cash.

Rob: That’s right. To start closing us out here, someone might be listening to this thinking, “Wow, you’re nuts to go after such a competitive space.” It’s huge, but in terms of a lot of potential customers, I can throw a rock in hit an electronic signature app. One of the advantages that you have is you’re good at organic. Frankly, you’re just good at marketing. You’re good at copywriting, you’re good at testing and looking at all the things.

Let’s assume you can out market some of them, or all of them to a certain extent in different areas. You know you can get channelling, get people in. But there’s this other thing that you really looked at pretty carefully and I feel like you’ve been very deliberate about it and it’s figuring out a point or two of differentiation.

It’s something I find a lot of founders don’t think about enough, they either want to build something completely novel, in a completely new category which is very, very hard or they will exactly replicate another tool. I find that both of those are very hard ways to go. And if I were a beginner, for SaaS app, I would try to build a tool and figure out one or two key points of differentiation. Bill in an existing category in a sense like email marketing software or electronic signature which is what you’ve done.

How did you think through the differentiation? What are your one or two points where you think you’re really differentiated from HelloSign, DocuSign, and all the other myriad of tools?

Ruben: This evolved over time. We had a couple of pretty good ideas and things that some people are excited about, but then either the technical side just wasn’t going to work out and wasn’t going to be as smooth as we thought it was going to be. I had to look at building out features that wouldn’t help us stand out and change that about three times for different reasons. But we didn’t go too far into it. It was just like, “Okay, I think I found something. Let me run some screenshots, get some feedback, or things like that and then see if this is something we want to move forward to.” And then after just getting some feedback, doing a little bit of testing, realizing that, “Hmm. This is probably not the way to go.”

One of the ideas had to do with giving better guidance to people who are filling out the documents on the other side. It was fresh, new, and people got excited about it. Everything looked good about that, but then, when it came down to the sender would have to do a little bit of extra work, nobody wanted to do a little bit of extra work. The thing was just not going to work, that type of positioning.

Really, it just came from looking at all the products that are out there, the ones that people most know about and then finding out what don’t people like about these products. Some of that research took place in T-2 Crowd and all the other review sites that are out there where you can find just tons and tons of reviews. This is going through hundreds of reviews, putting them all on the spreadsheet, categorizing them, figuring out what the patterns are there, and beyond that interviews with people that are paying for these products.

Like I said, there are a lot of different ways of doing that. We leveraged the BitSketch email list a little bit for that, but then we also just did add some call to people that we didn’t know, bribed them with some Amazon gift cards and all that stuff, and just finding out where the opportunities were.

We found a few areas and the next step was, “Okay, what could a few solutions that are positioned a little bit differently, what could they look like?” Nowadays, our positioning is more focused. We’re not completely there, but we continue to move in that direction. A lot of attention is paid on the uploading and setting up document side for these electronic signature tools. Our focus, and where we continue to add features and make it better is on the recipient side, on the people that are receiving the documents, making sure that they are able to fill them out faster, and making sure that they have a better experience that what’s out there.

Rob: Yeah. Your headline is ‘Sales documents signing that cuts turnaround time in half.’

Ruben: Right. From a position […] standpoint, the benefit going back to the user is that because we’re focusing more on the recipient side, they’re going to get their documents back faster.

Rob: That’s good. When people are zigging, everyone’s zigging, and you’re going to zag. That is such a nice differentiator where it’s just not a single feature. We have this one feature that […], our whole focus is this other thing and as long as that resonates with enough people, you’ll own that positioning, you chew away at that corner of the market.

Ruben: Yeah, but at the same time we may learn that there’s something that’s more valuable for us to focus on and build out and position ourselves in a different way and if we learn that, we’ll change again.

You did a really good job of this with Drip. I remember when you start off with little widgets and you changed from that to just marketing automation which was way more valuable. This is a mistake I see a lot of people make is that they’ll get stuck on their initial thing. Right now, we’re positioning that way, but we’re losing the position that way. We’re open to seeing what’s more valuable.

I feel like a lot of people just stop listening. They just feel like, “Okay, this is what we are, this is what we do, and that’s it. If it doesn’t work, what’s wrong?” and they don’t revisit some of that fundamental stuff, some of the core stuff.

Rob: Something I really like and I’m impressed with as I watched your entrepreneurial journey in the past 10 or 11 years is you’re super meticulous and you’re disciplined. That’s what this whole story as we talk through it with the transition to Docsketch. You made hard decisions, but you did them with a bunch of research and you’re meticulous in figuring out that it was the right choice. Then, when it was the right choice, you had the discipline to make the hard call.

This is the same thing, this positioning. You have been meticulous about figuring out this is the right way, you’re going to be disciplined to stick with it until you get another answer and when you make that choice to change it, it would be the right call, at least given the information you have.

What that all leads to is, there are certain founders that I’ve watched become successful, that I question if they could do it again. Maybe they got a little lucky with something. You’re not one of them. You’re going to do it twice and you could do it five times if you wanted.

You look at David […], Jason Cohen, Heathen Shaw, Dharma, we could list the people who have done it over and over again and there is something about them. Maybe they’re not specifically meticulous and disciplined—that happened to be your trait—but those are the traits that mean that you could do this at will, you just figure out the space, you would experiment, you put in the time, you don’t look for trails, whether […], you use the data to make the best decision you can, and then you push forward. It means it’s just repeatable and you could do it over and over.

That’s what I hope folks listening to this interview take away.

Ruben: Thanks. That’s a big compliment. I do respect people a lot, that are able to do it multiple times. That’s one of my goals, is just to basically learn how to do that for myself. It’s important, or maybe not. Maybe if you get lucky and it’s a really big hit, who cares? You can make a lot of money and sell it, it’s not that big of a deal.

Rob: Yeah. Funny, when I say getting lucky, I’m not thinking of anyone in particular, honestly. I just know that there are folks where it’s like, yeah, I got really early to a space and then they struggle after that or whatever. In any case, we’re at about time. If folks want to keep up with you, aside from hitting docsketch.com to check out what you’re up to today, where they can keep up with you online?

Ruben: Probably Twitter. I know you love Twitter.

Rob: That’s my favorite.

Ruben: @earthlingworks on Twitter, just Ruben Gamez. That’s probably the other place to keep up with me.

Rob: Sounds great, man. Thanks again for coming on the show.

Ruben: Thanks for the invite.

Rob: It’s always a pleasure to talk with Ruben. He’s been on the show a few times. If you Google his name at our website, you’ll find those episodes. If you have any feedback for me, I’d appreciate if you leave a comment, send an email, the questions@stratupsfortherestofus.com or tweet it out because I’m investing more time into the podcast at this point, and I’m being very deliberate about trying to change things up a bit while Mike is on hiatus. I’m just curious to know if it’s working, if it’s impacting you, if it matters, if it makes a difference, because obviously, we’ve had a format for 449-ish episodes and that is something that we can go back to really easily and it takes a lot less time, but I’m curious if there is more value in the new approach that I’ve been taking with it.

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