Episode 502 | Accelerating Growth and a Failed Product Hunt Launch

Rob: Welcome to episode 502 of Startups For the Rest of Us. If you guessed that I am your host, Rob Walling you guessed correctly. This week, I talked with Benedikt Deicke from Userlist, and you’ll remember I spoke with his co-founder, Jane Portman, about six or eight months ago about their progress growing their startup. Since I spoke with Jane, Userlist has become part of TinySeed’s second batch, our 2020 batch and we talk a little bit about that today in the conversation.
Before we dive into that, if you’ve checked out the kinds of companies that TinySeed is investing in, and you’d be interested in investing in TinySeed and effectively diversifying your investment across many, many early-stage B2B SaaS companies with traction, and to see the companies we invested in in batch one and two with our first fund, you can just head to the homepage, tinyseed.com and you’ll see all the links there or you can hit this tinyseed.com/latest and we have a list of our second batch that we just announced.
The types of companies we invest in are bootstrapped cash-efficient. They’re the types of startups that you hear me talk about and espouse on Startups For the Rest of Us, and that you run into at MicroConf and other events that cater to those of us who are building ambitious yet sane startups. If this is an asset class you’ve considered investing in and you’re an accredited investor, TinySeed is a nice way to do that, because of the automatic diversification you get across many B2B SaaS companies with traction instead of having to seek out all that deal flow and do all the due diligence and all the research yourself, you can instead rely on us to do the legwork for you. Tinyseed.com/invest if you are interested.
Just a little more background on Benedikt, before we dive into the conversation, Benedikt is the co-founder of Userlist. It’s at userlist.com, and their headline is behavior-based customer messaging perfect for your SaaS, so they have email and in-app messages. With that, let’s dive into our conversation.
Benedikt, thank you so much for joining me on the show.

Benedikt: Thanks for having me.

Rob: It’s great to have you. It’s your first time on the podcast?

Benedikt: It’s my second time.

Rob: Oh, you and Mike did MicroConf Europe Recap.

Benedikt: Yeah, a couple of years ago.

Rob: That’s right. I think I was with my family in Europe taking a vacation after MicroConf Europe and you came on and of course, Jane Portman, your co-founder has been on at least twice, and she was on about six or eight months ago, talking about your journey together, building Userlist, and of course, we’ll talk through that today a bit. I wanted to start by asking you about Help Founders.
It’s at helpfounders.com, and folks who are listeners to this show know that, in essence, it’s free advertising for early-stage SaaS products. We have donated a few slots to Help Founders and folks have heard a couple of the ads essentially that I’ve read and there are fewer ads, and it’s more of me talking about the product. I actually had met one of the founders of the products through MicroConf Connect. It was cool, but I’m curious. What was your motivation and Jane’s motivation behind starting that initiative?

Benedikt: To be honest, it was mostly Jane’s idea, entirely Jane’s idea. It was her first response to this whole pandemic coming over us and causing problems for a lot of founders, and we just wanted to do something to help out with the stuff we can do. Both Jane and I run podcasts, so it felt like an easy decision to just give shoutouts to fellow founders in our podcasts and just help the community that way.
Luckily, once we started reaching out and promoting this idea, a lot of other people like you joined with their podcasts, and I think at some point, we had more podcasts or more slots on podcasts than actual products. I’m not entirely sure what the numbers are right now, but the support we got or the support Jane got with this was amazing.

Rob: That’s something I love about this community of bootstrappers, makers, whatever we want to call them. That the founder community that we work in is, in general, just a very positive community. I think that comes from doing hard things, and knowing that putting things out in the world is pretty hard, and the generosity that I think you saw where you have more ad slots than Startups asking for them is pretty cool.

Benedikt: That was definitely an exciting part, and so far, I think it’s going well. People are getting shout outs. Some podcasts do really amazing jobs like doing real in-depth teardowns, more or less of the products, and the product ideas. It’s even more than just ad spots, at least on some shows.

Rob: I want to change it up and talk about Userlist. Userlist is behavior-based customer messaging, perfect for your SaaS. That’s the headline on your homepage. It’s basically emails and in-app messaging for SaaS apps behavior-based. A competitor of customer.io. You and I had chatted a little bit offline briefly about how it helps to couch in a person’s mind who’s listening like, what is this product similar to?
You guys have been working on this for several years now, and I know that growth has started picking up for you, but that in talking to Jane, again on the podcast several months back that it was really slow early on that it was slow getting going. Did that surprise you how long it took you to go from starting to build to $1000 of MRR?

Benedikt: It was definitely slower than we expected, but I feel a lot of that has to do with just how long it takes to actually build a product like this with doing consulting on the side, and basically doing this part-time. I’m sure if we were able to fully focus on it from day one, it would have been a lot faster, just because we didn’t have too many other things going at the same time, but then again, who knows? This is only a one time experience and not sure, maybe I’m wrong about it, and it would be slow.

Rob: It is pretty typical, especially both you and Jane were doing it on the side while consulting, is that right?

Benedikt: We had to pay our bills in the early days like the product doesn’t pay. With consulting on the side, you only get maybe a day or two of focused work on the product, especially on the technical side. Implementing the hard stuff makes it really challenging with just one or two days per week, then having a longer break, trying to get back into it, trying to remember what you did last week, what’s the plan to move forward, what changes are still missing, and stuff like that. Since we were able to go full-time earlier this year, we move a lot faster with everything.

Rob: I always struggled with that when I was still building on the side of whether to try to carve out a day a week. I really didn’t have the luxury at the time of carving out two days but carving out one day a week or whether it was evening hours and some weekend hours. Of course, in the evening and weekends, I was tired or I didn’t want to be doing it. I wanted that to be out having fun, but if I carved out the day a week, it’s exactly what you said.
You’d lose the context, the mental RAM of loading all the entire code base and everything, all the objects up in your head, the model, and then it’s like, well, I only have like six or eight hours to work on this, and then it’s six days—five days gap—until the next time, and it’s really, really cumbersome, and that’s where I think the difference between an early hypothesis of TinySeed was getting folks who are trying to do this part-time and get them to full time.
Even in the first batch, and especially in the second batch, most of the founders were already doing it full time. While that hypothesis has held in a small way, it’s not the main focus of what we’re doing anymore, but I do feel like that step from part-time to full-time focus, if you can work 15 hours a week on it versus 45 hours a week, it’s not three times more productive. I think it’s 5–10 times more productive because all of your focus is there. All of your mental RAM is devoted to it and you can just keep it loaded up constantly.

Benedikt: Even on the days where you’re working on the product test, there are so much other stuff going on in the background that just takes focus away. Just being able to focus on one thing for the entire time is just super valuable because it just removes all the other background tasks and responsibilities you have with your clients. That makes it easier to execute on the product.

Rob: Your growth has picked up. Why do you think that is?

Benedikt: I think what helped is that we launched our in-app messaging feature and recently launched our new $9 startup plan. I think that lowered the barrier for some people to try the product and get started using it, even when they’re still in early stages. Previously, we had the lowest plan of $49 a month and I feel there’s still a reasonable price point but for someone who’s just starting out, it was a little bit too much.
We wanted to offer a better deal for small people similar to where we are and provide them with a product that they can integrate early and start using to send messages to their customers. I think that helped, the numbers show that since we launched that plan, we get more trials and more trials to convert, especially into the small plan.

Rob: You feel it’s working so far?

Benedikt: Yeah. I think it’s working so far. It’s still below our goal, but the time horizon for that is still two months out. We wanted to reevaluate after two months, three months, and I’m confident that we’ll get there.

Rob: Right, because the danger obviously for listeners is, if your current lowest pricing plan is $49, and you’re going to introduce a $9 plan, (1) you can cannibalize some of your existing MRR for people who are who qualify for that $9 plan who are already your customers, and (2) people who would come and would have signed up for $49 sign up for your $9 and so you’re basically dropping your average revenue per customer, and that’s the danger of it. What do you think about that?

Benedikt: Our hope to limit on the starter plan on the new $9 plan is 100 customers, and we hope that people in that range are more willing to pay for a $9 plan than they are for a $49 plan. Ultimately, I hope it’s more people who are willing to sign up instead, and those who would have signed up instead and now are paying less than they would have before.

Rob: That’s the thing, 100 customers, so that’s 100 contacts, 100 people, 100 email addresses, and if you’re running a SaaS app, and you have 50 customers, if your average revenue per user is $1000 a month or something, wow, that’s a $600,000 a year business, but a lot of the SaaS (I think) that’s probably signing up for this when you’re under 100 customers, you’re still pretty early stage.

Benedikt: I think I agree but that’s also one of the challenges with our pricing is one customer of our customers is valued a lot differently depending on their business model. If you’re running a premium business, then one customer or one user in Userlist isn’t worth much, but maybe it’s an enterprise business that just needs 50 users to be super profitable, then when using Userlist is worth a lot to them. That makes it hard, but so far, I feel this is a good middle ground.

Rob: We struggled with that running Drip, too. It’s a similar thing. We’d have a blogger with 600,000 people on their email list, and they didn’t have that much revenue. They didn’t make that much revenue off of each person, so they were worth $1 amount less and then we’d have a consulting agency with 500 contacts or 1000, but each contract was worth $30,000, $40,000, $50,000 to that agency, and we shrugged their shoulders and said the only way to get around this or to figure out how to get more value-based pricing is to not just have it be a number of subscribers. It didn’t introduce feature gating where I knew the agency wanted integration with some Salesforce or they wanted integration with some tool that only the agents will be using and that the blogger would not use.
If we were to go, we didn’t wind up going down this path, because it just wasn’t worth the time. There were more important things to work on, but that’s how we would have done it is implemented a feature or two, and then put it in a gated, whether it was an add on of $100 per month to have that integration or whether it’s just a separate tier that you’d have to be. If you wanted the most value of an agency, that’s how I would think about it.

Benedikt: We considered this when we launched in-app messages. Basically, the idea was let’s just launch in-app messages on the larger plan, I think starting at $99 per month, but ultimately we decided against it because it felt a little bit against our ethos or motivation to build a tool for people like us, and then artificially limiting an essential feature or somewhat essential feature felt the wrong way to go. It makes more sense when the actual features are only valuable to a certain type of customer, but within that message, it felt like it was the wrong way to go.

Rob: Speaking of the in-app messaging launch, that was just a few weeks back, and you would talk on your podcast about you and Jane focused on launching it on Product Hunt, but it didn’t quite go the way that you wanted. You want to talk listeners through what the goal was, I guess, to get a lot of exposure and what went wrong there?

Benedikt: The plan, as you said, was to get a lot of exposure, especially outside of our audience, because we have a mailing list and we send regular updates to the travels on our mailing list, our customers, our Twitter followers, and stuff like that. I think most of them were probably aware that we were building this and working on this because frankly, it took a long time and we’ve been talking about this for months now. The plan for the launch was to make a little bit of a splash and get it noticed outside of our communities and our audiences, and the plan was to basically launch it on Product Hunt on that day, send an email to our mailing list, announcing it linking to the Product Hunt page.
I tried to get a lot of eyes on the Product Hunt posting and a lot of AdWords there, so it would get on the front page and rank really well. It gets a lot of AdWords and stuff like that. The problem is that it didn’t happen. We posted it and sent the emails, tweeted about it. I guess a lot of people in our audience saw it and uploaded it, but it wasn’t enough to get us on the front page, and then the popular category for the day. That essentially meant that nobody else saw it, or very few people outside of our audience saw it. That was a little bit sad because it didn’t work out.

Rob: Was it like you put all your eggs in one basket, the Product Hunt basket and it didn’t work?

Benedikt: Yeah, absolutely. All of our communication around the launch was focused on our Product Hunt page, even in our Google Analytics stats for our website, there’s no way to notice the launch. There’s no spike in traffic, nothing. We put all our eggs in the Product Hunt basket and that didn’t work out. In a way it was a little bit of a failure, to be honest.

Rob: That’s a bummer. It’s always an experiment to do that. We each face that dilemma. Anytime we want to do a launch, it’s like, okay, we’re going to post it to Product Hunt. Do we send everyone there? Do we send some people to our landing page and some people to Product Hunt, and some people to Hacker News? There are a lot of moving parts. There’s a lot of gut feeling of let’s try it out. Here’s the thing. If it had worked, you would have gotten a lot of exposure. Just because it didn’t work doesn’t mean it’s the wrong decision. I think that’s something to think about.

Benedikt: That’s true but next time I probably at least link to the website as well, in the emails and stuff like that. Just be deliberate about also, using other platforms properly. For example, post it on Indie Hackers. We did that but also linked to the Product Hunt page. We just did a bad job at promoting the launch outside of Product Hunt. In hindsight that was a problem.

Rob: It could have had a little bit of link diversification is what you’re saying?

Benedikt: Yeah, link to the website here and there, and then maybe have a little banner on the website that links back to Product Hunt or something like that.

Rob: That’s cool. I used to describe you as, hey, it’s userlist.io because that was your domain name, but you bought the .com six months ago or whatever, and you paid a few thousand dollars for it. I think you said the price on your podcasts. Do you want to talk us through? Obviously, the thought process is because the.com is awesome and now your name can just be Userlist rather than everyone saying Userlist.io, but was that a risk for you guys? Did you feel it was a lot of money to pay? Do you think it’s been worth it?

Benedikt: It was a lot of money to pay but I think it was worth it. It’s so much better.

Rob: What was the price?

Benedikt: It was $4000. I think in the episode with Jane, I think you talked about this a little bit as well. If listeners want to get to full details on the negotiation stuff like that, they should probably just go back there.

Rob: I probably should have mentioned this episode earlier. We talked about Jane being on the podcast, it was episode 471 of the show called, Fighting to Gain Traction in a Crowded Space, and we do talk about just about a bunch of other interesting stuff that I’m not going to rehash here, but you had a third co-founder and how you guys work through that.
I’m curious over this to this 2½ years, what’s been the funnest part? What’s been the best part for you where you think, man, this is so cool?

Benedikt: Getting it into the hands of the first customers, the first beta customers, and seeing them use the product and get some value out of it. That was definitely something exciting, and seeing the product work in reality and not just on my development machine, my test setup. That was definitely exciting. Once we launched the launch of the product on Product Hunt went really well. That was also exciting. Joining TinySeed was also a cool milestone, to be honest.

Rob: I want to talk about that in a second because we’re essentially five weeks into batch two that you’re in, but a little more than that we’ve been in the Slack channel. I want to touch on your experience there. Before we do that I’m curious what one or two things have been the hardest for you? You can either take us back to a moment where you were shaking your head like this is terrible or just talk more generally.

Benedikt: The hardest part was definitely staying focused while we were still doing this on the site, keeping up the momentum, and making meaningful progress while also doing a lot of other stuff. That was definitely hard, and I also remember late last year, there was a phase where a lot of stuff was going on. I think it was shortly after we applied to TinySeed, and for some reason, during a couple of weeks, customer support was just really tough. There were a lot of requests by customers and also a lot of very hard support tasks with people asking us to review basically their entire setup.
Answering one of those tickets took well over an hour just to browse through their account, understand what they were doing, figure out all the edge cases. It just was a lot, and it was really tough on me, and I felt in that week or those two weeks, I felt I’m burning out. I can’t do this. I can’t do this anymore, but eventually got better, and since then I’ve been a little bit more deliberate about not having notifications for every single support ticket that comes in just to not get distracted by work stuff when I’m actually not working in the evenings and things like that.

Rob: It’s really hard in those early days because you’re trying to make every customer super happy, and what becomes completely not scalable later, is spending 60–90 minutes on a support ticket, but in the early days, I remembered us doing it as well. I’ve done it with multiple products where I’m going above and beyond because you’re scraping and clawing, not only for every customer to keep them around, but you wanted them to just have that wow moment and you want them to tell other people about your product. In order to do that, you have to sometimes do things that feel ridiculous when you say them out loud. It’s an hour on a support ticket but that was probably worth it. They’re probably a customer for life.

Benedikt: Yeah. Also, at this stage, we’re still learning so many things about how people use the product, so it’s also valuable just from a product development standpoint just to dig in and understand what people are doing with the tool. We still do that. When the need arises, we really dig in and try to understand the problem and analyze what’s going on, but I don’t get notifications for every single email in our support […] anymore.

Rob: I think there’s a moment in every product’s lifespan, and it’s typically fairly early on where it’s like, okay, I need to disable the email I get every time a credit card is charged because when you have five customers and they charged across a month, it’s like, oh, it’s no big deal. When you have 100 or 1000, it becomes ridiculous. That’s a cool milestone, and that’s the other one. At first, hey, we’re getting one support ticket a day or three a week, and then suddenly, it’s like, well, we’re getting three a day, we’re getting five a day, and that’s a good sign that things are moving in the right direction, but you have to figure out a balance there.
Very cool. TinySeed I hinted at that earlier, as I said, in your introduction, Userlist is, of course, a TinySeed batch two company for the 2020 batch. I’m curious. You and Jane, why did you decide to apply? What did you hope that you would get out of TinySeed?

Benedikt: I hinted that a couple of times and the answer is definitely focus. This was the main reason for us. We decided to go full-time in January and made that decision even before applying to TinySeed, but it was clear that we’d only have a runway of six months or so. Applying to TinySeed allowed us to extend that runway by a little over a year and just be able to focus on the product throughout this entire year and not worry about anything else.
Of course, we didn’t know it back then but now with the pandemic, it’s really, really nice to not have to worry about getting a new consulting gig, finding new work, and stuff like that. We got lucky there, I guess.

Rob: Pandemic was unexpected for a lot of us but it’s interesting to hear, because obviously, I said earlier, hey, our initial hypothesis two years ago, when we started it was to get people working full-time. You were effectively already doing that, but it’s an extension of the runway. In a way, it still fits that initial hypothesis just giving you more time to focus full-time, and I think that’s going to be valuable for you all.

Benedikt: It really works out that way for us in our particular situation. We honestly thought about applying for a batch one, but back then decided against it. Back then we were still three founders and I think you invested a little bit less money than you did this time. Back then it didn’t make a lot of sense in terms of we wouldn’t be able to pay the three of us salaries that would allow us to just focus full-time. Back then it didn’t make sense but this time, just being two founders and getting a little bit more money, it has absolutely made sense.

Rob: That makes a lot of sense. We’ve just made minor tweaks from batch one to batch two. I think the terms were virtually identical. Except for that for additional co-founders, we upped the amount. We increase the amount that we give. That’s cool to hear that that made a difference for you. You’re five weeks in technically to the batch but we’ve all been in the Slack channel now for a few months. Any surprises for you?

Benedikt: No surprise so far, I guess. Nothing big at least. It was an exciting day. We all join the Slack channel and discover that well-known faces and friends in the batch. There are certainly fun parts and a surprise. Other than that, I am really enjoying it so far, especially the weekly calls, with small lectures by you and Einar. Those have been really, really good. I’m also a little bit sad that we didn’t make it to MicroConf US didn’t happen because we were supposed to go there, meet everyone. That didn’t happen, but the replacement online retreat that Tracy came up with was really enjoyable. Even though it was like three hours on two days, which is a ridiculously long Zoom call. It was still a lot of fun.

Rob: It was such a bummer for everyone. There are worse things happening. It’s hard to complain, but that was one of the biggest disappointments I’ll say, around the pandemic was not being able to have the MicroConf here in Minneapolis and not being able to get together both with MicroConf folks but also all of you in TinySeed.
All right, sir. Thank you so much for coming on the show. I think we’re going to wrap up here. If folks want to check out what you’re working on, they can head to userlist.com, and of course, the Slow & Steady Podcast you released with Brian every week and @benediktdeicke on Twitter.

Benedikt: Go to the show notes and click on the link. It’s easier.

Rob: I won’t spell his name out. Very cool, man. Thanks again for coming on the show.

Benedikt: Thanks for having me.

Rob: Thanks again to Benedikt for joining me today. If you want to invest in companies similar to Userlist we are working on raising our second fund at tinyseed.com/invest. Next week’s episode I’m hoping to do a Q&A episode, so if you have any questions for me or our potential guests I will bring on, please send them to questions@startupsfortherestofus.com and of course voicemails go to the top of the stack. I believe we only have one maybe two voicemails right now, so it will likely get answered next week if you send a voicemail in, but text questions are always welcome as well. Thanks for joining me today. I’ll see you next time.