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In this episode of Startups For The Rest Of Us, Laura Roeder joins the podcast to answer a number of listener questions on topics including managing annual subscriptions, being a non-developer founder, and more.
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Rob: Welcome to this week’s episode of Startups for the Rest of Us. I’m your host, Rob Walling. This is a show where we talk about building ambitious, yet sane startups. This week, I had a great time answering listener questions with Laura Roeder from MeetEdgar. We talked through questions about managing annual subscriptions, going low price versus high, being a non-developer founder, and we talked through more listener questions. This is Startups for the Rest of Us episode 473.
Welcome to Startups for the Rest of Us, the podcast that helps developers, designers and entrepreneurs be awesome in building, launching, and growing software products. Whether you’ve built your fifth startup, or you’re thinking about your first. I’m Rob and today with Laura Roeder, we’re going to share our experiences to help you avoid the mistakes we’ve made.
Welcome back to the show. This is the show where we focus on indie-funded and self-funded startups, folks who want to do interesting things, are ambitious, and want to build themselves a better life, but also want to build companies that grow. Starting a company is hard. Having this community of people who are going through the same thing that you are, having that sense of belonging, knowing (a) that it’s possible but (b) that there’s a place where we can all hang out and just get each other, and where you don’t go in and explain what you do and everyone looks at you funny, there’s a tremendous amount of value to that. That was a big reason why we started this podcast almost 10 years ago, back in 2010.
Startups for the Rest of Us has many episode formats. Sometimes, I just have conversations with folks, do interviews. Now and again, we do founder hot seats. But one of my favorite episode formats is listener questions. We’ve answered a tremendous number of listener questions over the years. We’ve had a lot of episodes on this. It’s just the gift that keeps on giving, because it’s a time for listeners to participate, and to hear what other folks are going through, and to hear the thought process of a couple of founders typically who’ve been there and have done some things, and it’s not that we’ve been through everything that they asked about, but you can at least hear that thought process of how we would approach it. And over the years, we’ve always receive positive feedback about this episode format.
Before we dive in, I want to let you know that at MicroConf, we are making an announcement next week. It is by far the biggest announcement that we will have made since we launched the event nine years ago. It is coincidental that the 20th MicroConf is going to be on April 20th of 2020, so the 20th during the 20s or whatever, but that’s not the announcement. I’ve obviously already mentioned that MicroConf Growth and Starter are in Minneapolis in late April of 2020, but if you’re not on the MicroConf list, I encourage you to go to microconf.com, enter your email, and we’ll loop you in as soon as we have the info. It really is pretty spectacular and you probably know me well enough by now to know that I’m not trying to inflate the importance of it.
Today I answer questions with founder Laura Roeder. If you don’t remember Laura, I interviewed her in episode 451. She runs MeetEdgar which is a social media management SaaS app and in 451, we talked about stellar growth, platform risk, layoffs, and powering through roadblocks. It was a really, really good interview and Laura knows her stuff. I have a ton of respect for her. Honestly, I always love getting on the mic and just chatting with her. Super fun. I had a fun interview at 451 and I had a great time talking to her today and hearing her insights and her take on some of your questions. Without further ado, let’s dive in.
Laura Roeder, thank you so much for coming back on the show.
Laura: I love the Startups for the Rest of Us. I cannot stay away.
Rob: Awesome. I am so stoked to have you on to answer some questions. You’ve actually submitted questions in the past, so it’s cool to have you on the other side of the ear bud, so to speak. We have some good questions today. As always, voicemails go to the top of the stack. I curated some questions that I think you should have some unique insight on. Let’s just roll right into the first voicemail which is about being a nontechnical founder and how to make good technical decisions.
Mack: Hi Rob, this is Mack from the UK. I’ve got a question, I’m looking for advice for a nontechnical founder. How can I avoid getting called out by poor decisions from the technical team or just not knowing about the consequences of some of the technical revisions that gets made to create their software? Any advice would be great. Thanks.
Rob: This is an interesting question, Laura. As a nontechnical SaaS founder yourself, I’m curious what your initial take is on it.
Laura: I would first like to take umbrage with the phrase non technical founder. I mean obviously, I know what he’s referring to. Nontechnical founder means that you are not a developer and I’m not a developer. But I always think it’s a little funny because I’m like, “I run a software company.” It doesn’t seem quite right to call me nontechnical, but this is a very real problem for all of us who are running software companies and are not developers because obviously, you are not intimately familiar with a really core part of what your company does.
I guess the first blanket advice for this is that, you really need to have a person in that CTO role who you trust 100%. I think this goes for any leadership role in your business, but it’s especially important in this case, because you’re not going to be able to provide so much oversight. Anyone can look at a customer service email and say, “Okay, that was not how we want to answer,” but you really can’t read code if you’re not a coder. I think that’s just step one is, make sure that you’re willing to put 100% faith in the person in that dev leadership role.
Rob: That’s what I was going to say as well. Even if you aren’t at the place where you can have a CTO. The fact that he used the phrase, “How do I not get called out,” does your team not trust you or do you feel like you have to make decisions that are out of your league? That’s an interesting turn of phrase. It implies that the team calls him out for making technical decisions, but are you making decisions you shouldn’t be since you’re not a developer? I would dig into that. I think having a CTO, or the senior dev, or somebody that really is making decisions in the best interest of the company, is a huge deal.
Laura: I think it also brings up that you shouldn’t try to pretend to be anything you’re not. If people are calling you out, does it mean that you’re pretending you know things that you don’t know or maybe making decisions that would be better for other people in the company to make? I think it’s just important to be unafraid to ask really stupid, really basic questions until you understand some of these core concepts related to writing code.
You can decide how much you feel you need to know. For me, I feel like I’ve been through this process recently big time with our finance team, understanding all the financials of the business. I just asked our finance person over and over and over again. Sometimes I’ll literally read a book. I read a finance book recently. I just wrote down questions for her in the margins and then I’m like, “I want you to read this book too and we’re going to have a call together. I’m going to ask you all of my questions about the book.”
I think that’s a great thing to do for technical questions as well. You need to be open with your team about what you know and don’t know and I think it’s important for you to work with the type of person that is very patient and very understanding in explaining things to you. Within reason, you don’t need to understand every detail. There are a lot of concepts that are probably unfamiliar to you that you do need to understand at least the basics of how “the sausage gets made.”
Rob: I like your example because as a founder, you don’t need to know every single thing about bookkeeping, accounting, and finance, but you should probably know enough to be able to ask the right questions. I feel the same way running a software company. I don’t think you should be able to code everything in a SaaS app, but maybe it’s worth going through a code where the code camps or maybe it’s worth on the side taking you to make classes.
It’s easier than ever to learn and have just a really basic level of coding knowledge such that, yes, you’ll never be able to make architectural decisions, you won’t make the senior level things, but you can at least relate to, “Oh, this is what code is. This is how it works. This is what it’s like to write a bug,” and spend four hours and not realizing that it’s the semicolon. That’s a lot of what it is. I think having that cursory knowledge and being able to then ask the right questions is what you’re touching on and that’s what I like about it.
Laura: Yes.
Rob: You don’t like the term non technical founder. If you’re a developer and you’re writing the code, then you’re like a developer founder, is it a non-developer founder, is there a term that you prefer rather than nontechnical?
Laura: I guess maybe just say founder and then when you’re explaining later your side of the business, because you also don’t call like you just a developer founder, but I’ve never heard anyone actually say that.
Rob: I was just making up a new term to try not to say technical and non, because typically it’s technical and nontechnical are the two terms people use. I was just trying to think of a different way to say that because you’re right, running a SaaS app, yes, you may not write code but you are more technical than most people we know just because by nature of being in it. It is a misnomer.
But if someone wanted to differentiate between Derek and I when we started Drip, he was literally in a code every day and I was literally not in the code every day. I don’t know how else you differentiate that or what phrase we could come up. I don’t feel nontechnical founder as pejorative. I don’t feel like it’s a negative. Does it have a stigma? Do you feel like it does?
Laura: I actually think it does have a little bit of a stigma because I’ve heard developers use it in that way before. We’re not as cool of a founder if you’re not technical.
Rob: No, I think that’s lame.
Laura: That is lame.
Rob: That sucks. I don’t use it that way but if it gets that connotation then yeah, we need to figure out another phrase for it. Cool. Thanks for the question. I hope that was helpful.
We’re going to bounce into our second question which is also a voicemail. It’s about a founder who’s launching a second SaaS app. They’re nearing launch and he’s concerned about potential lawsuits.
Thomas: Hello, this is Thomas from Austria. I listened to the show for a long time and wanted to tell you that it’s really great content. I love following along your journeys and also hear stories of other people in similar situations.
To my question, I founded a SaaS company three years ago. It provides an invoicing solution for small independent car repair shops. It’s doing pretty okay. I can live off it and it’s slowly growing, so I’m happy with that. Half a year ago, I founded another company with a partner and we are building a software to compare prices for car parts.
Now that we want to go to market with the software to the suppliers, the […] of us are trying to fight us pretty hard. I think we have to go to court several times. There is not really a legal problem with fetching the prices because we do it locally on the customer’s computer and they’re not going through our systems, but still they can make our lives very miserable if they pulled us to court all the time.
Now, I’m not really sure how to go along. My partner really wants to push through that and he’s sure that it will work out. I’m also pretty sure that it will work out in the end, but I’m not sure if I am the right person to spend my next one, two, three years fighting big companies. I wanted to hear your thoughts on that and maybe what you would do in this situation. Thank you.
Rob: Thomas also wrote in and he said that he wanted to clarify that he hasn’t spent any money on the price comparison project, and have a small private investor, but in essence, he has only invested his time so far. I should preface this with we’re not legal experts, we don’t give legal advice, obviously, but it’s more of, “Hey, if I were in your shoes, how would I think through this?” This is an interesting situation. I’m not sure it’s one I’ve heard before. What do you think about this Laura?
Laura: The way I think of it is just, there are pros and cons with every business, every business model, and it’s really smart to go into a business with your eyes wide open about those pros and cons. From what I understood from his message, this is a likely threat, not a certain threat. He suspects that there is going to be lawsuits. He has a good reason to believe that’s going to happen or it could not happen at all. It makes me think of with my business MeetEdgar, we are entirely dependent on the social networks. You can listen to my interview on this podcast on Startups for the Rest of Us. I talked about a big problem we had because of that, but all businesses have upsides and downsides.
For me, I know that I’m in a space where I’m totally dependent on these partners that I have no relationship with and that can do whatever they want. That’s a big downside to my business. The big upside is that I’m building on Facebook, Twitter, and Instagram. Obviously, very popular tools, so lots of users. I think that he just needs to know this going in and maybe it’s something that you budget for.
It’s good not to be scared of it. It’s good to go in and say, “Okay, I know that this will likely happen. Maybe we have some money set aside for it. Maybe we’ve already figured out who our lawyer is so they can jump right in and we won’t be surprised,” spending a few months just trying to find a good counsel.
To me it doesn’t sound like a deal breaker, because it might not even happen at all. Like you said, you have to know that that is a battle that you could be fighting and you have to know that that’s something that you want to sign up for.
Rob: I like the way you’re thinking about it. I think these unknowns, like if you’ve never received a cease and desist, or you’ve never been sued, it’s super scary. You don’t you don’t know what that entails. I got sued by a patent troll about probably five years ago, but it was literally a blanket. It was about a troll. Someone who sued 100 people at once for having online invoicing software is what it was. It was just this crazy, he sued everybody that does online invoicing because it was a ridiculous patent. I got to be honest, I was super scared the day I got the email.
Then I quickly realized I could talk to a lawyer and someone was just like, “Yeah, this just isn’t that big of a deal,” and we have these stigmas against things. Lawsuits can be a big deal. They can be expensive, but your point of it’s almost like try to demystify, or de-risk, or just get more familiar with what this might look like. Typically, if you were to launch something like this, you’re not going to get five lawsuits the next day from five suppliers. It’s probably going to be weeks, months, and then they’re going to grumble and they’re going to have to call you or send you an email, and then you might get a cease and desist.
It would be a long process and maybe like you said, you set aside money to either have a lawyer, whether it’s to go to court or whether it’s to try to negotiate settlements. There’s a lot of options here and I think this comes back to expertise. As a nonlawyer, you should know how to ask the right questions, but you’re not the expert in how they should all go down. There’s folks who can give you advice if you find a good counsel.
I think the biggest question for me is, is this a big idea? Is this a seven-figure idea or an eight-figure idea that’s worth going through all of this for it or is it something that’s going to generate $5000 a month? In which case personally, it doesn’t sound like it would really be worth it. I mean maybe I would launch it and if it’s doing a couple thousand dollars a month or $5000 a month and you start getting cease and desist, well maybe that’s the point where you’re like, “Okay, I guess I’m going to pull the plug on this,” maybe that’s the best decision because it just doesn’t make enough money or maybe that is your defense of, it doesn’t make enough money. Go ahead and sue it. It’s not worth anything.
I think that’s really the question I’d be asking, not is it worth it, but is the idea big enough? Do you think the company can be big enough to make it worth fighting for?
Laura: I think it’s also worth a quick Google. I think he said he’s in Austria. He didn’t say if the business would also be dealing with Austrian suppliers. America is very litigious, most of Europe is not, you can’t just file random lawsuits about anything the way you can in America. If this were my business, you can figure out a pretty good amount just from educating yourself on the internet. Would the suppliers have any case? If they wouldn’t, that’s also just going to make the whole thing much more unlikely.
Rob: Yeah. Thanks for the question Thomas. I hope that was helpful. Depending on what happens, I’d love to hear an update on how you move forward.
Our next question is about pricing and whether to try to go for more customers with lower pricing or vice-versa. It’s from Winslow Moore and he says, “I’m a huge fan of your podcast and all you guys do. I found you guys at the end of last year when I was going through a bit of what I’m doing in my life and I’ve learned so much. I’ve wanted to reach out for a while, but haven’t because my current product under development isn’t SaaS, it’s just an app. A recipe book app to be precise.” I’m assuming it’s a mobile app.
“Development is nearing completion and I’m wanting to make a landing page to gain some interest. Before I do, I’d like to figure out some pricing scheme options and I’m hoping you can give some advice. Here are my main ideas. Number one, make the app free with ads,” he listed pros and cons, “Number two, make the app freemium with paying to unlock X recipe storage. The third is to make it cheap like $1, and the fourth is to make it a subscription like $1 a month or $5 a quarter. Again, I know this isn’t something you normally answer questions on, but if you feel adventurous, it would be appreciated.” What do you think?
Laura: I feel like I have some news that he’s not going to like to hear. I’m trying to let him down gently. This is one of the most crowded spaces you could possibly enter. There’s so much recipe content on the internet. So much of it is excellent and so much of it is free. None of the models that you outlined gave a compelling reason for someone to pay. You just said like a recipe app, maybe they’ll pay $1, maybe they’ll pay a subscription. I think you just need to rethink your starting assumptions or maybe there’s something you didn’t tell us, because there are reasons that people could pay for some recipe or cooking service.
I know a SaaS business that does meal plans for people. You put in all of your detailed dietary requirements and they spit out really specific meal plans, shopping lists, and there’s a whole app and a subscription around it. They have a business doing that because they’re meeting a specific need in the market that is related to recipes. There are businesses related to recipes and food, but just recipe app, I don’t think is really one of them.
Rob: I like the way you’re thinking about it because if you were to niche way down and, like you said, build custom meal plans, that’s something you can’t get for free, or it’s really hard to do at a good quality or vegan meal plans or Paleo meal plans. There are ways to think about it. I’m guessing everything I just named is already done to death. Even if he has, let’s say, he builds not just content and he builds an app that actually has functionality that people are interested in. A $1 a month, you need a thousand customers to make, and doesn’t Apple 30%, I think, so you’re really making $0.70 on that. You need a thousand customers to make $700 a month. That is a tough business.
Even with apps store distribution, you would really need to know apps store SEO. I mean you to rank in the top whatever, top five, four or whatever term that has enough volume to do it. This would be a pure search play in my opinion, because at $1 a month, even for lifetime value is $10, $20, $30, $40, you can’t run ads, you can’t hire sales, none of the standard models work. It’s purely a spray-and-pray and it’s, “I need to have enough free traffic,” so you need virality, or you need organic discovery through a search engine. Really, none of these pricing models are easy.
Laura: I’m going to go out and say they’re not viable. I think it’s polite to say that they’re not easy, but they’re really only viable if you have some way of getting that mass, which is possible. Maybe you’re like, “I’m going to raise a ton of funding and I’m going to be the number one recipe destination on the internet.” Someone has to be that. That’s not an impossible thing, but it’s going to take a ton of money to get there or you’re like. “I am the number one SEO ninja on the app store. No one can do apps store SEO better than me and I also probably have a bunch of money or some money to put behind it, so that’s how I’m going to get there.”
I just think you need to really look at how does mass work out to make this a viable business and what’s my strategy beyond just like, “Well, I hope a lot of people find my recipe app in the app store.”
Rob: And even if you’re building a SaaS app, let’s say, just in general, what’s the general rule? The lower your price point, the higher your churn, the harder it is to grow. This is not in every case, but it’s in 95% of cases. That’s why so many SaaS apps, the playbook is, you go out, you underprice yourself because you just don’t know any better or you don’t value what your built and over time everybody goes up market. It’s a very common playbook.
The reason is if those customers as you go up market tend to churn less, they tend to be more sophisticated, less support, there’s just a bunch of plusses with it, but you often can’t start out at those high price points because your product is not worth it at that point. It doesn’t provide the value and it takes you time to get product market fit with that audience. Then move it up market.
Laura: That’s all B2B stuff, also, everything you’re saying. We’re talking B2C, so I don’t think there’s really even a big market to go to for an app. There’s more expensive consumer services but, I’ve never heard of an expensive app. Maybe it’s a thing, people have done everything. Now I’m curious. Is there an app for consumers that cost $800 a month and is a lot more high-end looking than the other app? I don’t know.
Rob: I’ve never heard of one. I bought a $25 app the other day. It wasn’t a subscription, but it’s a teleprompter, that goes on my iPhone, that listens to my voice. It’s the only one that turns the microphone on and as I speak, it teleprompts automatically. To me that was worth $25, but really, am I a consumer? Because I bought it for business purposes. I bought it for these videos I’m recording. I’ve also bought $20 app a couple of years ago. It was before where you can pair an iPad as a second monitor to your Mac. It was software that did that. Again, there was only one or two of them and I did the best one. It wasn’t a subscription and I would’ve been less likely to pay a subscription for either those to be honest.
Laura: Yeah, those are really tough models, too, where they’re only making $20 one time.
Rob: Right. Thanks for your question, Winston. Sorry for the bad news, but I hope that was helpful. I’m curious, if you love recipes or somehow love that space, then dig in and figure out that maybe it’s not a $1 app, maybe it is a website that you acquire from someone to get a traffic source and you build just a web app into there. I mean, there are other options in the food and recipe space, that I’m sure there’s opportunity and I would say don’t get locked into trying to pick up pennies really is what $1 a month it’s like.
Laura: I didn’t actually say the name of the one I was talking about. It’s realplans.com if you want to check that out.
Rob: Awesome. Our next question is about recurring payments and it’s from Gavin Esplan. He says, “I’m in the planning stage of a small daycare management app. One of the main features will be setting up recurring payments between the daycare providers and their customers, who are parents or guardians of the kids. I also need recurring payments for the providers to pay me. I’m a professional web developer, but I’m not sure which system, like Stripe, would be best to accomplish this. I’m leaning toward Stripe, but it’s probably because it’s the one I’ve heard of most. I’m not sure what other good options would be out there. Do you guys have any recommendations?” What do you think, Laura?
Laura: Well, there’s an easy part and a hard part to his question. As far as him taking payments from customer, I say yeah, Stripe is great. We use it. We like it. Go for it. The other part where your customers take payments gets a lot trickier because your customers need to have something like Stripe or PayPal, but they need their own individual accounts and then are you helping then set that up? Then there’s your customer stuff that has to be complied with or do they already have their accounts? I just want to point out there’s a trickier question within the question.
Rob: Stripe Connect is for marketplaces. I think it’s for this instance. I’ve never used it, but I know folks who’ve set up market places and use it. This isn’t technically a market place, so that’s where I’m not sure if the terms of service would apply to him having 20 or 30 day cares using it and taking payments or if the Know Your Customer stuff would pass through to him. Do you have any interaction with Stripe Connect?
Laura: No, I’ve researched it a little bit for a different project and the hurdle that we came up with is that this similar model, they still have to have their own Stripe account which Stripe helps facilitate. We thought that might be confusing and challenging for this customer to set that up which I imagine daycare centers might have the same or they might have their own payment system already that they’re using.
Rob: Yes I would head to Stripe Connect and at least research it because that’s the one that I’ve heard the most about when you’re in this type of situation. Again, not saying it’s going to work but I think that’s where it starts. In my opinion, Stripe is number one in this game. They kill it. They make it easy and if you can make it work with them, great. To me, by my rules, if for some reason I couldn’t you Stripe, I would look at Braintree. I think they’re the number two in our space for doing this stuff.
Obviously, it doesn’t sound like he’s funded. I’m guessing he’s bootstrapped listening to this podcast. If you look at Gumroad, as an example, became a processor themselves. That is a possibility. There’s a lot of red tape and regulation. I’m guessing, one of the reasons I heard Gumroad raised their money was that they had to go to banks basically and have a bank say, “Okay, we’re cool with you being a processor.” If you’re some bootstrap person working at your garage, that’s unlikely to happen. It’s probably not an option for you now, but in the longer term hopefully, you don’t have to do that, but that would be a parachute option, I think. Thanks for the question, Gavin, hope that was helpful.
Our next question is from Ash Yadav, and he’s looking for thoughts on joining an early stage startup just after graduation. He said, “I just cover the podcast, I’m going through one episode at a time. They really informative and enjoyable. I recently graduated with a degree in EECS,” Electrical Engineering and Computer Science, I think, “then joined an early stage Internet of Things startup. I want to ask what are some tools, courses, workshops, et cetera, I can look into to get more comfortable with the industry lingo.
As I recently graduated, working in a two person team right now, there are times when I have to talk to clients or talk to people who are much more experienced than me and sometimes I feel left out. I don’t have industry project management experience, an MBA, or the entrepreneurial experience to be fluent in business lingo. For example, this might sound silly, but someone recently talked to me about beta sites and I had no clue what beta sites were. Luckily, I was able to figure it out while we chatted in made it out alive, but I fear I’ll be in a similar situation again.”
You almost certainly will. I remember my first job out of college and I didn’t understand anything. Thanks that’s a great question, Ash. Interested in your thoughts, Laura.
Laura: I think the first thing, Ash, is that someone asking questions is a huge sign of intelligence, not the opposite. Everyone knows that you’re young, everyone knows that you just graduated from college. When you ask those questions like, “What’s a beta site?” instead of pretending that you know and then maybe being way off base, it’s actually going to make you look much smarter, eager to learn, and capable than just pretending that you know stuff. Hopefully, most of the people around you feel the same way that I do. I don’t think you should be shy about asking questions. Even if it’s something that you feel is really basic, that you feel a bit embarrassed about.
We all we’re born knowing nothing. No one knew the term Internet of Things until the first time they heard it and then someone explain it to them. No one is born knowing any of those stuff. I think people should do this anytime in their career. We were talking about this earlier in the podcast about learning and asking questions, asking more questions. For me, the answer is less about courses and more of just having the attitude and the mindset that asking questions is a wonderful thing and that’s how you learn.
Rob: Yeah, when I graduate from college and had my first job, I thought I needed to know everything. I felt weird about asking questions and I thought it was a sign of weakness. I pretty quickly learned what fixed it for me is I worked with this one guy who is really smart and he was senior and he knew bunch stuff. In meetings, someone would say a concept and I remember being like, “Oh, I know what that is,” and he would say, “I don’t know what that is. Can you define out for the group?” and I was like, “Whoa.” Everybody respected him.
That showed me that it was okay to ask a question like that. It was such a good model for me and I think the thing to keep in mind is you’re going to ask a lot of questions up front, but it’s not going to be like that forever, because you’re just going to learn enough. First, you’re going to learn 20% and then 60% and then you’re going to get to the point where you’re 80 or 90% fluent in all the lingo. That may take three months, it may take six months, but at a certain point, you’re not going to ask as many questions.
You still want to ask questions, but you’re going to be seen as more of this mid-level or senior and you’ll get to the point where you don’t have to do it all the time. For me, if I was trying to learn about a new space, I don’t know much about IoT (Internet of Things), just what I’ve heard on Tech podcast, so if I got a job at one, I would probably be in a similar boat. I would dive deep in the IoT podcasts and some IoT audio books. For me, I do a lot of audio just because that’s my thing. For you, maybe it’s Kindle or maybe it’s paper or whatever I would use Google a lot. I will try to get the lingo from the podcast or the books in advance and then every time I heard something I didn’t understand I would Google it. You’ll be shocked, there’s only so many terms in any space.
In SaaS, it’s an app and there’s MRR and there’s LTV and it sounds like there is infinite, but if you listen to the show for probably 10 or 20 episodes, you’re going to hear 90% of the terms that we all use. If you’ve defined of those and committed them to memory, that’s great training for trying to get up to speed faster.
Laura: Yeah, I love that advice. I was thinking just the other day I actually Googled the term “test case.” It came up in my company flat, they’re talking about test cases and I was like, “You know, I’m assuming I know what that means, based on some context, but I’m actually not sure that I know what a test case is. I just Googled it and I read about it and I figured it out, right in front of a nontechnical founder thing.” This is a skill that you want to have throughout your career and like Rob said, luckily, it will get certainly easier and you’ll have to do less Googling as time goes on.
It’s something to embrace to make sure that you’re not making assumptions, make sure that you are on the same page which is why it can be good to ask things like, “Okay, this is this is what I mean when I say test case, is that what you mean,” because those types of miscommunications come up all the time.
Rob: That’s a really good point. Probably once a week, I Google an acronym. Oftentimes, it’s something someone posts on Twitter and it’s like a colloquialism that I just don’t know. I mean maybe a year ago it was TBH and I used TBH the other day. I was talking to my 13-year-old and in conversation out loud, I was like, “So TBH, blah, blah, blah.” He’s like, “What does that mean?” and I was like, “To be honest.” He’s like, “Oh my, you’re such a nerd.” But I find myself Googling this on what does this mean and then there’s like seven different definitions and you have to take it from context. Don’t feel like you’re in over your head, Ash. I think we all are. Just because someone has been doing this for a few years doesn’t mean that they know everything about it. Thanks for the question. I think it’s a good one.
Wrapping this up for the day, our final question is from Zee and it’s about managing subscriptions. He says, “Hello. Big fan. What recommendations do you have to manage subscriptions that come both via credit card and check? As the business is growing, I want to make sure I’m not missing out on things as people renew their subscriptions. For example, we make a credit card payments through Braintree.” I think it means they accept credit card payments through Braintree, but they also have people that pay via check annually and they handle stuff through PayPal.
To set the context, when I first read this, I thought he was saying, “We have a bunch of SaaS subscriptions, how do we keep track of those?” But he’s actually saying they accept payments in a bunch of different ways, some of which are annual. He says, “We then use QuickBooks for all the accounting. We want to be sure we don’t miss out on annual fees.” Laura, have you had to deal with this?
Laura: No, I haven’t.
Rob: Is it all credit card with EDGAR?
Laura: Yeah. I mean, we would just say, “No, thank you.” if someone wanted to buy with a check, but I know that in some industries, you can’t do that.
Rob: Yeah we did this with Drip. Let me think. After we get acquired by Leadpages, we were using Stripe, they were using Braintree. At a certain point, we started accepting PayPal and they were doing these larger annual contract values. You get you get a 12-month subscription that is $20,000 and really that’s an invoice check situation. Frankly, you don’t want to pay the $600 processing fee, the 3%, but also the companies, bigger companies as you said that’s the way it works
The way we did it, like the very first one, is it literally went into an Excel spreadsheet or maybe it was a Google Docs that we all had access to and we’re like, Okay, note to self, calendar reminder,” and it goes into a Google Doc. In the next month, we need to build some type of system. Then we just went into our existing billing code, and we tweak some things to say, “Oh, this is a check and so and so needs to be reminded.” It sends off an email to this AR (accounts receivable) at this certain thing. We hacked it together. That took one day or two days of development work, but in the moment we were able to accept the check.
We knew there was a calendar reminder in case everything went haywire. We went back and it was like this just in time MVP implementation of something. I’ve been gone from Drip for two years now. I’m guessing by now, hopefully they built even a better system. I think there are a bunch of ways to do this and that they’re trying to build a gold-plated version from V1 is not necessarily the best way to do it. If you only have one or two customers paying you that way, you just don’t need that much infrastructure.
Laura: Yeah, I don’t have anything on this one.
Rob: All right. Well Laura, thanks again for coming back on the show. It’s so good to chat with you. Folks who want to keep up with you, you are @lkr on Twitter, that’s a great three-letter Twitter handle, I’m so jealous. If folks want to know what you’re up to with Edgar, they can head to meetedgar.com. Anything else you’d like folks to check out?
Laura: I would just like to say that people used to be a lot more impressed by my Twitter handle, I feel like you can tell that Twitter’s on its way out because I used to get a much bigger reaction. You threw in a little comment which was very polite of you, but I missed out on having a cool Instagram handle. My Instagram is @laurakroeder, I can’t even get @lauraroeder, I had to throw my middle initial in there. I’m just like feeling a little old that I missed the Instagram thing and no one cares about my Twitter handle anymore. That’s my closing comment for the show.
Rob: That’s amazing. Thank you so much. I guess I should go register an Instagram handle, is what you’re saying. That’s how old I am.
Laura: Yeah. Get on that.
Rob: Thanks again, Laura. I hope you enjoyed today’s episode. Next week on the show, Mr. Brian Castle from Bootstrapped Web and Process Kit is coming on to talk about just the brutal year he had in 2016 and 2017, overcoming a 40% decline in MRR, and we walk through his trials and tribulations, dig into frankly some struggles, some victories and failures, and it’s a good interview. Also I hope you’ve been checking out TinySeed Tales on Thursday mornings. That season wraps up here in the next week or so.
I would love to hear your feedback or input on that. You can email me directly questions@startupsfortherestofus.com, you can Twitter DM me, or if you have great things to say, obviously, just go into Twitter and let me know. I appreciate it. Should we do it again? I’ve started working on season two doing some interviews, but if you like it, if you will listen, if it’s a good fit for you, please let me know. If it’s not, that’s cool, too.
It was definitely an experiment. As I’ve said when we announced that this is by far the most time and money I’ve ever invested into an audio project. It’s TinySeed tales, because TinySeed was able to make that happen. If it’s worth it and it’s providing value, then we’ll keep doing it. If not, we always have more good ideas we can implement, so I can obviously but my focus elsewhere.
You heard a bunch of questions answered today. If you have a question for the show, you can leave us a voicemail at 888-801-9690 or you can record an MP3 and WAV, an Ogg Vorbis, an AIFF, send us a Dropbox or a GDrive link to questions@startupsfortherestofus.com.
I tweeted something out a couple weeks ago and I said if I were starting a company today, these are the tools that I would use. I just listed it, it was a five-minute tweet tops. I just listed a bunch of things and look through them, made comments and spit it out. It’s like one of the most popular tweets I’ve ever done. These things are both fine and infuriating, where you spend 20 minutes trying to craft something and like six people care about it and then you do something like this that is just off-the-cuff-flippant and it gets all these traction. I think it has 150 retweets or something at this point.
The funny thing is just the opinions about Dropbox versus GDrive versus Box. It was like, “Why not that? “ It’s personal preference. There’s feature parity. These things are not so different from one another, it’s really a personal preference, unless there’s some individual, sneaky feature somewhere that somebody has that you really need. For the most part, these things are all equivalent, but I think a lot of preference comes into it as well as pricing and stuff.
Anyway, I digress. Our theme music on the show is an excerpt from a song called We’re Outta Control by a band named MoOt, it’s used under Creative Commons. You can subscribe to this podcast, and you should, by searching for startups in any pod catcher you have. To be honest, new subscribers is a big ranking factor in iTunes. If you’re listening to this and you’re not subscribed, even if you just listen to it on the web or you somehow download it through an FTP script that you coded up years ago, it would be super cool if you would open iTunes and just hit the subscribe button because it does help us rank higher. It helps us get more reach and it helps us reach more people.
If you haven’t been to startupsfortherestofus.com in a while, we have full transcripts of all of our episodes within a week or two after they air, we […] the audio live is that, number one thing in transcripts just take time to get done. We get a decent number of helpful comments on the site too, so if you have a comment on an episode, you can obviously tweet to me @robwalling or you can come to the website itself startupsfortherestofus.com. Check out the fancy new design we put in place a couple of months ago. Leave a comment, drop us an email through the contact form. Thank you so much for listening today. I’ll see you next time.
Welcome to Startups for the Rest of Us, the podcast that helps developers, designers and entrepreneurs be awesome in building, launching, and growing software products. Whether you’ve built your fifth startup, or you’re thinking about your first. I’m Rob and today with Laura Roeder, we’re going to share our experiences to help you avoid the mistakes we’ve made.
Welcome back to the show. This is the show where we focus on indie-funded and self-funded startups, folks who want to do interesting things, are ambitious, and want to build themselves a better life, but also want to build companies that grow. Starting a company is hard. Having this community of people who are going through the same thing that you are, having that sense of belonging, knowing (a) that it’s possible but (b) that there’s a place where we can all hang out and just get each other, and where you don’t go in and explain what you do and everyone looks at you funny, there’s a tremendous amount of value to that. That was a big reason why we started this podcast almost 10 years ago, back in 2010.
Startups for the Rest of Us has many episode formats. Sometimes, I just have conversations with folks, do interviews. Now and again, we do founder hot seats. But one of my favorite episode formats is listener questions. We’ve answered a tremendous number of listener questions over the years. We’ve had a lot of episodes on this. It’s just the gift that keeps on giving, because it’s a time for listeners to participate, and to hear what other folks are going through, and to hear the thought process of a couple of founders typically who’ve been there and have done some things, and it’s not that we’ve been through everything that they asked about, but you can at least hear that thought process of how we would approach it. And over the years, we’ve always receive positive feedback about this episode format.
Before we dive in, I want to let you know that at MicroConf, we are making an announcement next week. It is by far the biggest announcement that we will have made since we launched the event nine years ago. It is coincidental that the 20th MicroConf is going to be on April 20th of 2020, so the 20th during the 20s or whatever, but that’s not the announcement. I’ve obviously already mentioned that MicroConf Growth and Starter are in Minneapolis in late April of 2020, but if you’re not on the MicroConf list, I encourage you to go to microconf.com, enter your email, and we’ll loop you in as soon as we have the info. It really is pretty spectacular and you probably know me well enough by now to know that I’m not trying to inflate the importance of it.
Today I answer questions with founder Laura Roeder. If you don’t remember Laura, I interviewed her in episode 451. She runs MeetEdgar which is a social media management SaaS app and in 451, we talked about stellar growth, platform risk, layoffs, and powering through roadblocks. It was a really, really good interview and Laura knows her stuff. I have a ton of respect for her. Honestly, I always love getting on the mic and just chatting with her. Super fun. I had a fun interview at 451 and I had a great time talking to her today and hearing her insights and her take on some of your questions. Without further ado, let’s dive in.
Laura Roeder, thank you so much for coming back on the show.
Laura: I love the Startups for the Rest of Us. I cannot stay away.
Rob: Awesome. I am so stoked to have you on to answer some questions. You’ve actually submitted questions in the past, so it’s cool to have you on the other side of the ear bud, so to speak. We have some good questions today. As always, voicemails go to the top of the stack. I curated some questions that I think you should have some unique insight on. Let’s just roll right into the first voicemail which is about being a nontechnical founder and how to make good technical decisions.
Mack: Hi Rob, this is Mack from the UK. I’ve got a question, I’m looking for advice for a nontechnical founder. How can I avoid getting called out by poor decisions from the technical team or just not knowing about the consequences of some of the technical revisions that gets made to create their software? Any advice would be great. Thanks.
Rob: This is an interesting question, Laura. As a nontechnical SaaS founder yourself, I’m curious what your initial take is on it.
Laura: I would first like to take umbrage with the phrase non technical founder. I mean obviously, I know what he’s referring to. Nontechnical founder means that you are not a developer and I’m not a developer. But I always think it’s a little funny because I’m like, “I run a software company.” It doesn’t seem quite right to call me nontechnical, but this is a very real problem for all of us who are running software companies and are not developers because obviously, you are not intimately familiar with a really core part of what your company does.
I guess the first blanket advice for this is that, you really need to have a person in that CTO role who you trust 100%. I think this goes for any leadership role in your business, but it’s especially important in this case, because you’re not going to be able to provide so much oversight. Anyone can look at a customer service email and say, “Okay, that was not how we want to answer,” but you really can’t read code if you’re not a coder. I think that’s just step one is, make sure that you’re willing to put 100% faith in the person in that dev leadership role.
Rob: That’s what I was going to say as well. Even if you aren’t at the place where you can have a CTO. The fact that he used the phrase, “How do I not get called out,” does your team not trust you or do you feel like you have to make decisions that are out of your league? That’s an interesting turn of phrase. It implies that the team calls him out for making technical decisions, but are you making decisions you shouldn’t be since you’re not a developer? I would dig into that. I think having a CTO, or the senior dev, or somebody that really is making decisions in the best interest of the company, is a huge deal.
Laura: I think it also brings up that you shouldn’t try to pretend to be anything you’re not. If people are calling you out, does it mean that you’re pretending you know things that you don’t know or maybe making decisions that would be better for other people in the company to make? I think it’s just important to be unafraid to ask really stupid, really basic questions until you understand some of these core concepts related to writing code.
You can decide how much you feel you need to know. For me, I feel like I’ve been through this process recently big time with our finance team, understanding all the financials of the business. I just asked our finance person over and over and over again. Sometimes I’ll literally read a book. I read a finance book recently. I just wrote down questions for her in the margins and then I’m like, “I want you to read this book too and we’re going to have a call together. I’m going to ask you all of my questions about the book.”
I think that’s a great thing to do for technical questions as well. You need to be open with your team about what you know and don’t know and I think it’s important for you to work with the type of person that is very patient and very understanding in explaining things to you. Within reason, you don’t need to understand every detail. There are a lot of concepts that are probably unfamiliar to you that you do need to understand at least the basics of how “the sausage gets made.”
Rob: I like your example because as a founder, you don’t need to know every single thing about bookkeeping, accounting, and finance, but you should probably know enough to be able to ask the right questions. I feel the same way running a software company. I don’t think you should be able to code everything in a SaaS app, but maybe it’s worth going through a code where the code camps or maybe it’s worth on the side taking you to make classes.
It’s easier than ever to learn and have just a really basic level of coding knowledge such that, yes, you’ll never be able to make architectural decisions, you won’t make the senior level things, but you can at least relate to, “Oh, this is what code is. This is how it works. This is what it’s like to write a bug,” and spend four hours and not realizing that it’s the semicolon. That’s a lot of what it is. I think having that cursory knowledge and being able to then ask the right questions is what you’re touching on and that’s what I like about it.
Laura: Yes.
Rob: You don’t like the term non technical founder. If you’re a developer and you’re writing the code, then you’re like a developer founder, is it a non-developer founder, is there a term that you prefer rather than nontechnical?
Laura: I guess maybe just say founder and then when you’re explaining later your side of the business, because you also don’t call like you just a developer founder, but I’ve never heard anyone actually say that.
Rob: I was just making up a new term to try not to say technical and non, because typically it’s technical and nontechnical are the two terms people use. I was just trying to think of a different way to say that because you’re right, running a SaaS app, yes, you may not write code but you are more technical than most people we know just because by nature of being in it. It is a misnomer.
But if someone wanted to differentiate between Derek and I when we started Drip, he was literally in a code every day and I was literally not in the code every day. I don’t know how else you differentiate that or what phrase we could come up. I don’t feel nontechnical founder as pejorative. I don’t feel like it’s a negative. Does it have a stigma? Do you feel like it does?
Laura: I actually think it does have a little bit of a stigma because I’ve heard developers use it in that way before. We’re not as cool of a founder if you’re not technical.
Rob: No, I think that’s lame.
Laura: That is lame.
Rob: That sucks. I don’t use it that way but if it gets that connotation then yeah, we need to figure out another phrase for it. Cool. Thanks for the question. I hope that was helpful.
We’re going to bounce into our second question which is also a voicemail. It’s about a founder who’s launching a second SaaS app. They’re nearing launch and he’s concerned about potential lawsuits.
Thomas: Hello, this is Thomas from Austria. I listened to the show for a long time and wanted to tell you that it’s really great content. I love following along your journeys and also hear stories of other people in similar situations.
To my question, I founded a SaaS company three years ago. It provides an invoicing solution for small independent car repair shops. It’s doing pretty okay. I can live off it and it’s slowly growing, so I’m happy with that. Half a year ago, I founded another company with a partner and we are building a software to compare prices for car parts.
Now that we want to go to market with the software to the suppliers, the […] of us are trying to fight us pretty hard. I think we have to go to court several times. There is not really a legal problem with fetching the prices because we do it locally on the customer’s computer and they’re not going through our systems, but still they can make our lives very miserable if they pulled us to court all the time.
Now, I’m not really sure how to go along. My partner really wants to push through that and he’s sure that it will work out. I’m also pretty sure that it will work out in the end, but I’m not sure if I am the right person to spend my next one, two, three years fighting big companies. I wanted to hear your thoughts on that and maybe what you would do in this situation. Thank you.
Rob: Thomas also wrote in and he said that he wanted to clarify that he hasn’t spent any money on the price comparison project, and have a small private investor, but in essence, he has only invested his time so far. I should preface this with we’re not legal experts, we don’t give legal advice, obviously, but it’s more of, “Hey, if I were in your shoes, how would I think through this?” This is an interesting situation. I’m not sure it’s one I’ve heard before. What do you think about this Laura?
Laura: The way I think of it is just, there are pros and cons with every business, every business model, and it’s really smart to go into a business with your eyes wide open about those pros and cons. From what I understood from his message, this is a likely threat, not a certain threat. He suspects that there is going to be lawsuits. He has a good reason to believe that’s going to happen or it could not happen at all. It makes me think of with my business MeetEdgar, we are entirely dependent on the social networks. You can listen to my interview on this podcast on Startups for the Rest of Us. I talked about a big problem we had because of that, but all businesses have upsides and downsides.
For me, I know that I’m in a space where I’m totally dependent on these partners that I have no relationship with and that can do whatever they want. That’s a big downside to my business. The big upside is that I’m building on Facebook, Twitter, and Instagram. Obviously, very popular tools, so lots of users. I think that he just needs to know this going in and maybe it’s something that you budget for.
It’s good not to be scared of it. It’s good to go in and say, “Okay, I know that this will likely happen. Maybe we have some money set aside for it. Maybe we’ve already figured out who our lawyer is so they can jump right in and we won’t be surprised,” spending a few months just trying to find a good counsel.
To me it doesn’t sound like a deal breaker, because it might not even happen at all. Like you said, you have to know that that is a battle that you could be fighting and you have to know that that’s something that you want to sign up for.
Rob: I like the way you’re thinking about it. I think these unknowns, like if you’ve never received a cease and desist, or you’ve never been sued, it’s super scary. You don’t you don’t know what that entails. I got sued by a patent troll about probably five years ago, but it was literally a blanket. It was about a troll. Someone who sued 100 people at once for having online invoicing software is what it was. It was just this crazy, he sued everybody that does online invoicing because it was a ridiculous patent. I got to be honest, I was super scared the day I got the email.
Then I quickly realized I could talk to a lawyer and someone was just like, “Yeah, this just isn’t that big of a deal,” and we have these stigmas against things. Lawsuits can be a big deal. They can be expensive, but your point of it’s almost like try to demystify, or de-risk, or just get more familiar with what this might look like. Typically, if you were to launch something like this, you’re not going to get five lawsuits the next day from five suppliers. It’s probably going to be weeks, months, and then they’re going to grumble and they’re going to have to call you or send you an email, and then you might get a cease and desist.
It would be a long process and maybe like you said, you set aside money to either have a lawyer, whether it’s to go to court or whether it’s to try to negotiate settlements. There’s a lot of options here and I think this comes back to expertise. As a nonlawyer, you should know how to ask the right questions, but you’re not the expert in how they should all go down. There’s folks who can give you advice if you find a good counsel.
I think the biggest question for me is, is this a big idea? Is this a seven-figure idea or an eight-figure idea that’s worth going through all of this for it or is it something that’s going to generate $5000 a month? In which case personally, it doesn’t sound like it would really be worth it. I mean maybe I would launch it and if it’s doing a couple thousand dollars a month or $5000 a month and you start getting cease and desist, well maybe that’s the point where you’re like, “Okay, I guess I’m going to pull the plug on this,” maybe that’s the best decision because it just doesn’t make enough money or maybe that is your defense of, it doesn’t make enough money. Go ahead and sue it. It’s not worth anything.
I think that’s really the question I’d be asking, not is it worth it, but is the idea big enough? Do you think the company can be big enough to make it worth fighting for?
Laura: I think it’s also worth a quick Google. I think he said he’s in Austria. He didn’t say if the business would also be dealing with Austrian suppliers. America is very litigious, most of Europe is not, you can’t just file random lawsuits about anything the way you can in America. If this were my business, you can figure out a pretty good amount just from educating yourself on the internet. Would the suppliers have any case? If they wouldn’t, that’s also just going to make the whole thing much more unlikely.
Rob: Yeah. Thanks for the question Thomas. I hope that was helpful. Depending on what happens, I’d love to hear an update on how you move forward.
Our next question is about pricing and whether to try to go for more customers with lower pricing or vice-versa. It’s from Winslow Moore and he says, “I’m a huge fan of your podcast and all you guys do. I found you guys at the end of last year when I was going through a bit of what I’m doing in my life and I’ve learned so much. I’ve wanted to reach out for a while, but haven’t because my current product under development isn’t SaaS, it’s just an app. A recipe book app to be precise.” I’m assuming it’s a mobile app.
“Development is nearing completion and I’m wanting to make a landing page to gain some interest. Before I do, I’d like to figure out some pricing scheme options and I’m hoping you can give some advice. Here are my main ideas. Number one, make the app free with ads,” he listed pros and cons, “Number two, make the app freemium with paying to unlock X recipe storage. The third is to make it cheap like $1, and the fourth is to make it a subscription like $1 a month or $5 a quarter. Again, I know this isn’t something you normally answer questions on, but if you feel adventurous, it would be appreciated.” What do you think?
Laura: I feel like I have some news that he’s not going to like to hear. I’m trying to let him down gently. This is one of the most crowded spaces you could possibly enter. There’s so much recipe content on the internet. So much of it is excellent and so much of it is free. None of the models that you outlined gave a compelling reason for someone to pay. You just said like a recipe app, maybe they’ll pay $1, maybe they’ll pay a subscription. I think you just need to rethink your starting assumptions or maybe there’s something you didn’t tell us, because there are reasons that people could pay for some recipe or cooking service.
I know a SaaS business that does meal plans for people. You put in all of your detailed dietary requirements and they spit out really specific meal plans, shopping lists, and there’s a whole app and a subscription around it. They have a business doing that because they’re meeting a specific need in the market that is related to recipes. There are businesses related to recipes and food, but just recipe app, I don’t think is really one of them.
Rob: I like the way you’re thinking about it because if you were to niche way down and, like you said, build custom meal plans, that’s something you can’t get for free, or it’s really hard to do at a good quality or vegan meal plans or Paleo meal plans. There are ways to think about it. I’m guessing everything I just named is already done to death. Even if he has, let’s say, he builds not just content and he builds an app that actually has functionality that people are interested in. A $1 a month, you need a thousand customers to make, and doesn’t Apple 30%, I think, so you’re really making $0.70 on that. You need a thousand customers to make $700 a month. That is a tough business.
Even with apps store distribution, you would really need to know apps store SEO. I mean you to rank in the top whatever, top five, four or whatever term that has enough volume to do it. This would be a pure search play in my opinion, because at $1 a month, even for lifetime value is $10, $20, $30, $40, you can’t run ads, you can’t hire sales, none of the standard models work. It’s purely a spray-and-pray and it’s, “I need to have enough free traffic,” so you need virality, or you need organic discovery through a search engine. Really, none of these pricing models are easy.
Laura: I’m going to go out and say they’re not viable. I think it’s polite to say that they’re not easy, but they’re really only viable if you have some way of getting that mass, which is possible. Maybe you’re like, “I’m going to raise a ton of funding and I’m going to be the number one recipe destination on the internet.” Someone has to be that. That’s not an impossible thing, but it’s going to take a ton of money to get there or you’re like. “I am the number one SEO ninja on the app store. No one can do apps store SEO better than me and I also probably have a bunch of money or some money to put behind it, so that’s how I’m going to get there.”
I just think you need to really look at how does mass work out to make this a viable business and what’s my strategy beyond just like, “Well, I hope a lot of people find my recipe app in the app store.”
Rob: And even if you’re building a SaaS app, let’s say, just in general, what’s the general rule? The lower your price point, the higher your churn, the harder it is to grow. This is not in every case, but it’s in 95% of cases. That’s why so many SaaS apps, the playbook is, you go out, you underprice yourself because you just don’t know any better or you don’t value what your built and over time everybody goes up market. It’s a very common playbook.
The reason is if those customers as you go up market tend to churn less, they tend to be more sophisticated, less support, there’s just a bunch of plusses with it, but you often can’t start out at those high price points because your product is not worth it at that point. It doesn’t provide the value and it takes you time to get product market fit with that audience. Then move it up market.
Laura: That’s all B2B stuff, also, everything you’re saying. We’re talking B2C, so I don’t think there’s really even a big market to go to for an app. There’s more expensive consumer services but, I’ve never heard of an expensive app. Maybe it’s a thing, people have done everything. Now I’m curious. Is there an app for consumers that cost $800 a month and is a lot more high-end looking than the other app? I don’t know.
Rob: I’ve never heard of one. I bought a $25 app the other day. It wasn’t a subscription, but it’s a teleprompter, that goes on my iPhone, that listens to my voice. It’s the only one that turns the microphone on and as I speak, it teleprompts automatically. To me that was worth $25, but really, am I a consumer? Because I bought it for business purposes. I bought it for these videos I’m recording. I’ve also bought $20 app a couple of years ago. It was before where you can pair an iPad as a second monitor to your Mac. It was software that did that. Again, there was only one or two of them and I did the best one. It wasn’t a subscription and I would’ve been less likely to pay a subscription for either those to be honest.
Laura: Yeah, those are really tough models, too, where they’re only making $20 one time.
Rob: Right. Thanks for your question, Winston. Sorry for the bad news, but I hope that was helpful. I’m curious, if you love recipes or somehow love that space, then dig in and figure out that maybe it’s not a $1 app, maybe it is a website that you acquire from someone to get a traffic source and you build just a web app into there. I mean, there are other options in the food and recipe space, that I’m sure there’s opportunity and I would say don’t get locked into trying to pick up pennies really is what $1 a month it’s like.
Laura: I didn’t actually say the name of the one I was talking about. It’s realplans.com if you want to check that out.
Rob: Awesome. Our next question is about recurring payments and it’s from Gavin Esplan. He says, “I’m in the planning stage of a small daycare management app. One of the main features will be setting up recurring payments between the daycare providers and their customers, who are parents or guardians of the kids. I also need recurring payments for the providers to pay me. I’m a professional web developer, but I’m not sure which system, like Stripe, would be best to accomplish this. I’m leaning toward Stripe, but it’s probably because it’s the one I’ve heard of most. I’m not sure what other good options would be out there. Do you guys have any recommendations?” What do you think, Laura?
Laura: Well, there’s an easy part and a hard part to his question. As far as him taking payments from customer, I say yeah, Stripe is great. We use it. We like it. Go for it. The other part where your customers take payments gets a lot trickier because your customers need to have something like Stripe or PayPal, but they need their own individual accounts and then are you helping then set that up? Then there’s your customer stuff that has to be complied with or do they already have their accounts? I just want to point out there’s a trickier question within the question.
Rob: Stripe Connect is for marketplaces. I think it’s for this instance. I’ve never used it, but I know folks who’ve set up market places and use it. This isn’t technically a market place, so that’s where I’m not sure if the terms of service would apply to him having 20 or 30 day cares using it and taking payments or if the Know Your Customer stuff would pass through to him. Do you have any interaction with Stripe Connect?
Laura: No, I’ve researched it a little bit for a different project and the hurdle that we came up with is that this similar model, they still have to have their own Stripe account which Stripe helps facilitate. We thought that might be confusing and challenging for this customer to set that up which I imagine daycare centers might have the same or they might have their own payment system already that they’re using.
Rob: Yes I would head to Stripe Connect and at least research it because that’s the one that I’ve heard the most about when you’re in this type of situation. Again, not saying it’s going to work but I think that’s where it starts. In my opinion, Stripe is number one in this game. They kill it. They make it easy and if you can make it work with them, great. To me, by my rules, if for some reason I couldn’t you Stripe, I would look at Braintree. I think they’re the number two in our space for doing this stuff.
Obviously, it doesn’t sound like he’s funded. I’m guessing he’s bootstrapped listening to this podcast. If you look at Gumroad, as an example, became a processor themselves. That is a possibility. There’s a lot of red tape and regulation. I’m guessing, one of the reasons I heard Gumroad raised their money was that they had to go to banks basically and have a bank say, “Okay, we’re cool with you being a processor.” If you’re some bootstrap person working at your garage, that’s unlikely to happen. It’s probably not an option for you now, but in the longer term hopefully, you don’t have to do that, but that would be a parachute option, I think. Thanks for the question, Gavin, hope that was helpful.
Our next question is from Ash Yadav, and he’s looking for thoughts on joining an early stage startup just after graduation. He said, “I just cover the podcast, I’m going through one episode at a time. They really informative and enjoyable. I recently graduated with a degree in EECS,” Electrical Engineering and Computer Science, I think, “then joined an early stage Internet of Things startup. I want to ask what are some tools, courses, workshops, et cetera, I can look into to get more comfortable with the industry lingo.
As I recently graduated, working in a two person team right now, there are times when I have to talk to clients or talk to people who are much more experienced than me and sometimes I feel left out. I don’t have industry project management experience, an MBA, or the entrepreneurial experience to be fluent in business lingo. For example, this might sound silly, but someone recently talked to me about beta sites and I had no clue what beta sites were. Luckily, I was able to figure it out while we chatted in made it out alive, but I fear I’ll be in a similar situation again.”
You almost certainly will. I remember my first job out of college and I didn’t understand anything. Thanks that’s a great question, Ash. Interested in your thoughts, Laura.
Laura: I think the first thing, Ash, is that someone asking questions is a huge sign of intelligence, not the opposite. Everyone knows that you’re young, everyone knows that you just graduated from college. When you ask those questions like, “What’s a beta site?” instead of pretending that you know and then maybe being way off base, it’s actually going to make you look much smarter, eager to learn, and capable than just pretending that you know stuff. Hopefully, most of the people around you feel the same way that I do. I don’t think you should be shy about asking questions. Even if it’s something that you feel is really basic, that you feel a bit embarrassed about.
We all we’re born knowing nothing. No one knew the term Internet of Things until the first time they heard it and then someone explain it to them. No one is born knowing any of those stuff. I think people should do this anytime in their career. We were talking about this earlier in the podcast about learning and asking questions, asking more questions. For me, the answer is less about courses and more of just having the attitude and the mindset that asking questions is a wonderful thing and that’s how you learn.
Rob: Yeah, when I graduate from college and had my first job, I thought I needed to know everything. I felt weird about asking questions and I thought it was a sign of weakness. I pretty quickly learned what fixed it for me is I worked with this one guy who is really smart and he was senior and he knew bunch stuff. In meetings, someone would say a concept and I remember being like, “Oh, I know what that is,” and he would say, “I don’t know what that is. Can you define out for the group?” and I was like, “Whoa.” Everybody respected him.
That showed me that it was okay to ask a question like that. It was such a good model for me and I think the thing to keep in mind is you’re going to ask a lot of questions up front, but it’s not going to be like that forever, because you’re just going to learn enough. First, you’re going to learn 20% and then 60% and then you’re going to get to the point where you’re 80 or 90% fluent in all the lingo. That may take three months, it may take six months, but at a certain point, you’re not going to ask as many questions.
You still want to ask questions, but you’re going to be seen as more of this mid-level or senior and you’ll get to the point where you don’t have to do it all the time. For me, if I was trying to learn about a new space, I don’t know much about IoT (Internet of Things), just what I’ve heard on Tech podcast, so if I got a job at one, I would probably be in a similar boat. I would dive deep in the IoT podcasts and some IoT audio books. For me, I do a lot of audio just because that’s my thing. For you, maybe it’s Kindle or maybe it’s paper or whatever I would use Google a lot. I will try to get the lingo from the podcast or the books in advance and then every time I heard something I didn’t understand I would Google it. You’ll be shocked, there’s only so many terms in any space.
In SaaS, it’s an app and there’s MRR and there’s LTV and it sounds like there is infinite, but if you listen to the show for probably 10 or 20 episodes, you’re going to hear 90% of the terms that we all use. If you’ve defined of those and committed them to memory, that’s great training for trying to get up to speed faster.
Laura: Yeah, I love that advice. I was thinking just the other day I actually Googled the term “test case.” It came up in my company flat, they’re talking about test cases and I was like, “You know, I’m assuming I know what that means, based on some context, but I’m actually not sure that I know what a test case is. I just Googled it and I read about it and I figured it out, right in front of a nontechnical founder thing.” This is a skill that you want to have throughout your career and like Rob said, luckily, it will get certainly easier and you’ll have to do less Googling as time goes on.
It’s something to embrace to make sure that you’re not making assumptions, make sure that you are on the same page which is why it can be good to ask things like, “Okay, this is this is what I mean when I say test case, is that what you mean,” because those types of miscommunications come up all the time.
Rob: That’s a really good point. Probably once a week, I Google an acronym. Oftentimes, it’s something someone posts on Twitter and it’s like a colloquialism that I just don’t know. I mean maybe a year ago it was TBH and I used TBH the other day. I was talking to my 13-year-old and in conversation out loud, I was like, “So TBH, blah, blah, blah.” He’s like, “What does that mean?” and I was like, “To be honest.” He’s like, “Oh my, you’re such a nerd.” But I find myself Googling this on what does this mean and then there’s like seven different definitions and you have to take it from context. Don’t feel like you’re in over your head, Ash. I think we all are. Just because someone has been doing this for a few years doesn’t mean that they know everything about it. Thanks for the question. I think it’s a good one.
Wrapping this up for the day, our final question is from Zee and it’s about managing subscriptions. He says, “Hello. Big fan. What recommendations do you have to manage subscriptions that come both via credit card and check? As the business is growing, I want to make sure I’m not missing out on things as people renew their subscriptions. For example, we make a credit card payments through Braintree.” I think it means they accept credit card payments through Braintree, but they also have people that pay via check annually and they handle stuff through PayPal.
To set the context, when I first read this, I thought he was saying, “We have a bunch of SaaS subscriptions, how do we keep track of those?” But he’s actually saying they accept payments in a bunch of different ways, some of which are annual. He says, “We then use QuickBooks for all the accounting. We want to be sure we don’t miss out on annual fees.” Laura, have you had to deal with this?
Laura: No, I haven’t.
Rob: Is it all credit card with EDGAR?
Laura: Yeah. I mean, we would just say, “No, thank you.” if someone wanted to buy with a check, but I know that in some industries, you can’t do that.
Rob: Yeah we did this with Drip. Let me think. After we get acquired by Leadpages, we were using Stripe, they were using Braintree. At a certain point, we started accepting PayPal and they were doing these larger annual contract values. You get you get a 12-month subscription that is $20,000 and really that’s an invoice check situation. Frankly, you don’t want to pay the $600 processing fee, the 3%, but also the companies, bigger companies as you said that’s the way it works
The way we did it, like the very first one, is it literally went into an Excel spreadsheet or maybe it was a Google Docs that we all had access to and we’re like, Okay, note to self, calendar reminder,” and it goes into a Google Doc. In the next month, we need to build some type of system. Then we just went into our existing billing code, and we tweak some things to say, “Oh, this is a check and so and so needs to be reminded.” It sends off an email to this AR (accounts receivable) at this certain thing. We hacked it together. That took one day or two days of development work, but in the moment we were able to accept the check.
We knew there was a calendar reminder in case everything went haywire. We went back and it was like this just in time MVP implementation of something. I’ve been gone from Drip for two years now. I’m guessing by now, hopefully they built even a better system. I think there are a bunch of ways to do this and that they’re trying to build a gold-plated version from V1 is not necessarily the best way to do it. If you only have one or two customers paying you that way, you just don’t need that much infrastructure.
Laura: Yeah, I don’t have anything on this one.
Rob: All right. Well Laura, thanks again for coming back on the show. It’s so good to chat with you. Folks who want to keep up with you, you are @lkr on Twitter, that’s a great three-letter Twitter handle, I’m so jealous. If folks want to know what you’re up to with Edgar, they can head to meetedgar.com. Anything else you’d like folks to check out?
Laura: I would just like to say that people used to be a lot more impressed by my Twitter handle, I feel like you can tell that Twitter’s on its way out because I used to get a much bigger reaction. You threw in a little comment which was very polite of you, but I missed out on having a cool Instagram handle. My Instagram is @laurakroeder, I can’t even get @lauraroeder, I had to throw my middle initial in there. I’m just like feeling a little old that I missed the Instagram thing and no one cares about my Twitter handle anymore. That’s my closing comment for the show.
Rob: That’s amazing. Thank you so much. I guess I should go register an Instagram handle, is what you’re saying. That’s how old I am.
Laura: Yeah. Get on that.
Rob: Thanks again, Laura. I hope you enjoyed today’s episode. Next week on the show, Mr. Brian Castle from Bootstrapped Web and Process Kit is coming on to talk about just the brutal year he had in 2016 and 2017, overcoming a 40% decline in MRR, and we walk through his trials and tribulations, dig into frankly some struggles, some victories and failures, and it’s a good interview. Also I hope you’ve been checking out TinySeed Tales on Thursday mornings. That season wraps up here in the next week or so.
I would love to hear your feedback or input on that. You can email me directly questions@startupsfortherestofus.com, you can Twitter DM me, or if you have great things to say, obviously, just go into Twitter and let me know. I appreciate it. Should we do it again? I’ve started working on season two doing some interviews, but if you like it, if you will listen, if it’s a good fit for you, please let me know. If it’s not, that’s cool, too.
It was definitely an experiment. As I’ve said when we announced that this is by far the most time and money I’ve ever invested into an audio project. It’s TinySeed tales, because TinySeed was able to make that happen. If it’s worth it and it’s providing value, then we’ll keep doing it. If not, we always have more good ideas we can implement, so I can obviously but my focus elsewhere.
You heard a bunch of questions answered today. If you have a question for the show, you can leave us a voicemail at 888-801-9690 or you can record an MP3 and WAV, an Ogg Vorbis, an AIFF, send us a Dropbox or a GDrive link to questions@startupsfortherestofus.com.
I tweeted something out a couple weeks ago and I said if I were starting a company today, these are the tools that I would use. I just listed it, it was a five-minute tweet tops. I just listed a bunch of things and look through them, made comments and spit it out. It’s like one of the most popular tweets I’ve ever done. These things are both fine and infuriating, where you spend 20 minutes trying to craft something and like six people care about it and then you do something like this that is just off-the-cuff-flippant and it gets all these traction. I think it has 150 retweets or something at this point.
The funny thing is just the opinions about Dropbox versus GDrive versus Box. It was like, “Why not that? “ It’s personal preference. There’s feature parity. These things are not so different from one another, it’s really a personal preference, unless there’s some individual, sneaky feature somewhere that somebody has that you really need. For the most part, these things are all equivalent, but I think a lot of preference comes into it as well as pricing and stuff.
Anyway, I digress. Our theme music on the show is an excerpt from a song called We’re Outta Control by a band named MoOt, it’s used under Creative Commons. You can subscribe to this podcast, and you should, by searching for startups in any pod catcher you have. To be honest, new subscribers is a big ranking factor in iTunes. If you’re listening to this and you’re not subscribed, even if you just listen to it on the web or you somehow download it through an FTP script that you coded up years ago, it would be super cool if you would open iTunes and just hit the subscribe button because it does help us rank higher. It helps us get more reach and it helps us reach more people.
If you haven’t been to startupsfortherestofus.com in a while, we have full transcripts of all of our episodes within a week or two after they air, we […] the audio live is that, number one thing in transcripts just take time to get done. We get a decent number of helpful comments on the site too, so if you have a comment on an episode, you can obviously tweet to me @robwalling or you can come to the website itself startupsfortherestofus.com. Check out the fancy new design we put in place a couple of months ago. Leave a comment, drop us an email through the contact form. Thank you so much for listening today. I’ll see you next time.