Episode 695 | Ideal Customers, Moving from B2C to B2B, and More Listener Questions (with Asia Orangio)

Rob Walling:
It’s another episode of Startups for the Rest of Us. I’m your host, Rob Walling. Today I’m joined by fan favorite, Asia Orangio. She and I answer listener questions ranging from finding your ideal customer, moving from B to C, to B to B, and several other topics related to bootstrapping, and mostly bootstrapping startups. We’ve continued to have a great stream of incoming listener questions. As always, audio and video go to the top of the stack, but I am getting through a lot of the written questions as well. So head to startupsfortherestofus.com, click Ask a Question in the top nav from your mobile device or your desktop, and send us a question. If you want to hear me or me and a guest discuss it on the show. 

Before we dive into that, we are running the next edition of the State of Independent SaaS Survey and Report. Through MicroConf, we’ve run the survey a couple of times, and then we decided to take last year off, because the information coming through wasn’t changing. The survey is about 40 questions. It takes less than 10 minutes to complete if you have your metrics handy. And then we take that data from what usually winds up being between 600 and 1,000 independent SaaS companies. These are bootstrapped and mostly bootstrapped SaaS companies. And we compile a report with all the key findings and helpful industry benchmarks that you don’t get anywhere else. The survey closes soon, we could really use your input. All the data is kept anonymous, and every survey response we get, makes the report that much better. Head to stateofindiesaas.com to complete the survey, and we’re going to enter everyone who completes a survey, into a drawing for a free ticket to MicroConf US 2024, in Atlanta. That’s more than a $1,000 value. 

I know it’s a lot for me to ask you for 10 minutes out of your busy day, but it really would go a long way towards making this year’s report, the best yet. We are mixing it up this year, asking different questions, and pulling out different findings than you’ve seen in the past. So even if you’ve filled out a prior survey, it’d be amazing if you could head to stateofindiesaas.com and complete it. I wanted to let know about our MicroConf Mastermind Program. If you listen to the show, you know that I talk a lot on this podcast about how important masterminds have been to my own success. But finding the right founders for your mastermind group can be very hard. Over the past few years, my team at MicroConf has successfully matched more than 1,000 founders into mastermind groups by looking at revenue, team size, strengths, goals, and several other data points, to make sure your peer group is the right fit. 

Once you’re matched, you’ll also have access to our mentorship series. A three-month program where you can connect with some great minds in sales, business development, marketing, and more. If you’re looking for accountability, honest feedback about your business, and the opportunity to make new friends that care about your company and your success, you can learn more at microconf.com/masterminds. So with that, let’s dive into listener questions. Asia Orangio, thanks so much for joining me on the show again.  

Asia Orangio:
Yeah, thanks so much for having me.  

Rob Walling:
Another lister question episode. Back by popular demand. When I go on tour, when I go to MicroConfs, people are like, “You need to have Derrick Reimer back on the show, Asia Orangio, Ruben Gamez. Just have them on all the time.” So, it’s great to have you back.  

Asia Orangio:
Thank you so much. Yeah, speaking of Ruben, I got to go back and listen to that one. That sounds like a good one.  

Rob Walling:
Yeah, Ruben. If you go to startupsfortherestofus.com and there’s a little hour glass search at the top, just type in Ruben Gamez, and pretty much all those episodes, I wind up just re-listening to. I go back and listen to a lot of episodes as game tape. Not a lot of episodes, but I’ll go back a year or two and remind myself, “Oh yeah, that was the thinking then,” or “That’s actually a neat idea that I didn’t repeat 10 times, so I probably should.” Because, until I repeat it 10 times, none of us remember it. And a lot of the Ruben episodes have really good nuggets in them. You ready for the lister questions?  

Asia Orangio:
I am. Yeah, let’s jump in.  

Rob Walling:
Let’s do it. Our first question today, is a video question from John Mark, asking, “Would you adjust your target customer for an opportunity?”  

John Mark:
Hey Ron, my name is John Mark, and I’m building an app called Balance. It’s a budgeting tool targeted at first-time budgeters. I’ve been building it slowly over the last few months. And last week, Mint announced that they were shutting dow their budgeting platform, which leaves somewhere between three and 4 million monthly active users looking for a new budgeting app. I’ve seen a lot of other budgeting apps aggressively go after these users. Being small and not having a product that’s fully polished, I’ve got MVP features in place, but it’s pretty simple. I’m wondering if I should be ramping up to try to capture part of those Mint users. 

I’ve started to do a little research and started to talk to a few people. But they’re different from my target customer base. They’re typically looking for a free budgeting app. Mint was one of the few free budgeting apps that hold in your transactions automatically. And they might be using more advanced features than Mint, that I don’t have ready yet in my platform. And so my question for you is, would you try to carve off some of those customers? Even capturing 1%, which I know is a lofty goal, would still be life changing for Balance, and really get revenue coming in the door. 

I’m on pre-revenue. I wasn’t planning on releasing the MVP until Q1 of next year. I have felt the pressure a little bit and ramped it up from people looking to potentially support a smaller company, which Mint shutting down. And so I can get MVP out there in December, but it wouldn’t be… I don’t know if it’s quite the right fit for what Mint users are looking for. So I’d be curious on how you would advise in this situation, how you might handle a large influx of users that are close, but maybe not quite what you were targeting or what you were setting out for. Thanks for all you’ve done and all the other podcasts and resources you’ve put out there, they’ve helped me a bunch. Thanks Rob.  

Rob Walling:
What are your thoughts on this, Asia?  

Asia Orangio:
Okay, yeah. So, looking at this, this is a… It’s a go-to-market question. It’s a question around, “Is it worth my time to go after this customer base?” And usually when it comes to go-to-market in general, go-to-market being the practice of, “How do I deliver my product to an audience through channels, with a particular model, that enables them to buy it?” And when I hear this question or when I hear this context of a scenario, I think that there’s a couple of things to back into. So the first is, it sounds like John Mark is not necessarily convinced that… Like he’s unsure, it sounds like, around if this Mint audience is going to be a good audience for his product. I think that there’s two ways that I would recommend approaching this. It’s tough to say if the answer is yes or no. 

My heart hard assumption is that anyone who’s using Mint for free, may or may not actually be willing to pay for something. But that doesn’t necessarily mean though that those Mint users are not possibly using something else. So for example, I’ve been a Mint user for a very long time, but I also pay for YNAB. And they both give me different sets of data that I use that’s interesting to me. [inaudible 00:07:15] about to say, I almost would rather John Mark go and actually interview Mint users and find out for himself. He could do this using userinterviews.com. One interview on the B2C side, maybe might cost him 45 bucks. Maybe he throws 25 to 50 bucks at a person, I guess like a gift incentive. So let’s say on average he’s paying $90 per interview, he could do four or five of those and get answers pretty quickly on like, “Oh, are Mint users actually good users for me or no?” 

I don’t think that we can assume. My guess is if they’re not paying for it, maybe not. But that’s how I would approach the first part of this question that he has.  

Rob Walling:
Yeah, I think that’s a really good idea, is whether… What was it? Userinterviews.com, that you mentioned?  

Asia Orangio:
Mm-hmm.  

Rob Walling:
I was imagining, given how many Mint users there are, I’m going to on Twitter, I’m going go on whatever audience I have, and say, “Do you use Mint? Please let’s do a conversation.” Now maybe you’re in a bubble now, because if you’re a developer, then there’s a bunch of other developers on Twitter and you may not get the right swath of people. But I agree. So I’m in your boat where I’m maybe even more skeptical that free Mint users are going pay anything for anything. The reason that Mint worked is because they sold to Intuit. Mint was not a profitable company as far as I know. I’m pretty sure they raised a bunch of venture and then they were earning money and then they sold to Mint, somewhere like 10, 13 years ago. Is that right? around 2010, 20 whatever. 

Had they not done that… Like, they didn’t prove out that they had a successful business model. And the reason they worked was that Intuit then engineered it and made it lead gen, blah, blah, blah. But I mean, is it that successful of Intuit shutting it down? So I’m guessing that there is a lot of, whether it’s cost… Or there’s just, is this a bootstrapable business, taking on a bunch of Mint users? I’m pretty skeptical about that. Whether I talk to them or not, just on the face of it, I’m like… I’m not a believer. 

The other thing is if your product isn’t already there… I guess I didn’t look to see what the timeframe of Mint shutting down is. But my guess is if they’ve said they’re gonna shut down and people know this, usually you want to already be there, today or last month. It’s like, “Oh, my product is a perfect replacement for it.” But if you’re talking about spending a month or two to develop, and then trying to get the word out, my concern is things move fast, and are you too late? And is there already a good alternative to where you didn’t happen to hit the puck right at the right moment, and so the angle is going to be off, and it’s just not going to work?  

Asia Orangio:
So, it sounds like you’re taking it from the perspective from news hits, to, is it even worth my time? Am I even going to match up with this curve? And it’s very likely, maybe no.  

Rob Walling:
My impression. You and I are operating on limited information, right?  

Asia Orangio:
Totally.  

Rob Walling:
We’ve thought about it, you know, a collective four and a half minutes, right? Or a maybe a few minutes before the podcast. So it is hard without all the information, to make this decision. But on the surface the way he’s describing it as a product builder trying to kind of shoot a gap in a space where he’s like, “My product, I don’t know that I really want Mint users.” I mean, he says that in his question. “They aren’t really my ideal users, but oh, they down, there’s an opportunity.” That’s tough. It’s like, is the opportunity amazing and golden, or is it something that seems cool? 

And I think what you’re getting at, I think what both of us are getting at, is probably you need more information. And you’re saying, talk to customers. I’m saying, how about this? What if I run Instagram or Facebook ads to Mint users or people who follow me to wherever it is, to target, and say, “Mint user? Concerned their shutting down? Check out…” blah. Send them to a landing page, send them to a page to book you for a call. Send them to something. See if you can reach anybody through this just to get… Because you don’t need 10,000 people. If you get 50 people or 100 people, you know that you can get into… whether it’s conversations one on one via Zoom, or whether it is email conversations or whatever, I feel like you need more information to make this decision. I’m just giving a gut feel, leaning, based on a 90-second voicemail.  

Asia Orangio:
Totally. I also think too, it sounds like the MVP isn’t out yet. And that makes me think that Mint getting shut down, creates maybe an artificial pressure. But actually, as John Mark mentioned in his message, it’s very possible that these Mint users are actually not the ideal paying customer anyway. Especially if it’s largely free folks, which he actually mentions, yeah, in his message here. Yeah, I agree. There needs to be some type of validation. You can go the route of customer discovery. So of course, you could interview Mint users directly and get a feel for that. Then there’s also, Mint aside, who would be your best paying customer anyway, which is really the area in this space I’d probably spend more time in. And then there’s the other way that Rob was mentioning, which is, you could run a campaign and test this pretty quickly.  

Rob Walling:
So thanks for your question, John Mark. I hope our thoughts were helpful. Our next question is a voicemail from Daniel.  

Daniel:
Hey Rob, this is Daniel, tuning in from Germany. Thanks for your podcast. It’s a great source of knowledge and very inspiring to me. In one of the more recent episodes, you talked about certain anti-patterns that are usually a bad idea. One of them was to translate your app, which I agree with. I do wonder if this also applies to marketing, say, educational content on my website. So, for context, I’m working on a code review app called Codelantis. This is currently just a side project for me, and my primary goal is to get in touch with people interested in this particular field. Since I’m German, I could quite easily translate selected articles myself, and this would maybe help in terms of SEO and things like that. I’d be really curious to hear thoughts on that. Thanks for everything you do. Cheers.  

Rob Walling:
So just to clarify, my understanding is, and I went to his website, it’s codelantis.com. The H1 is “Understand and review pull requests fast with Codelantis.” The website is currently in English. And so I think what Daniel is asking, is, does it make sense, since he’s German, he speaks German, for him to start translating some marketing or educational content, some blog content, into German to potentially attract people? Because it sounds like it’s a relatively small lift. I mean, I don’t know, translating a blog post feels like a big lift for me. 

But anyways, I just want to clarify that, because I was trying to figure out… In the SaaS playbook, I talk about people who they hit their ceiling of 8K a month, and then they’re like, “I’m gonna translate this into Spanish, German, French and other things.” And I’m always like, unless your market is tiny, tiny, that’s not the next step. Do the hard thing, which is market and sell. Don’t use this excuse to go… It’s a form of procrastination, right? But Daniel’s asking, “Well, I’m German, maybe it doesn’t make sense to translate some blog posts and other marketing stuff into German. What’s your take on this, Asia?  

Asia Orangio:
Yeah. Okay, so I can see both sides to this. I think my ultimate strategic question would be, is this actually your next best growth opportunity? And we don’t have all the information, we don’t know what the MRR is, we don’t know all the things. But my first… This, I don’t think is a bad idea, at least short term. It could become challenging though, because while the founder may speak German, do you want to build out a marketing team and a support team that also speaks German, and also caters to the English markets? Globalization, on the one hand, especially now with AI, is actually very easy, and at the same time, not easy at all. Because you ultimately do need other people to support this additional language. It’ll just be you in the beginning, but then, assuming you grow and you build up a team, etc. they are also going to need to be able to support this other additional language. 

But, that aside, I think, again, I really go back to, is translation actually your next best thing to do? So I would be not knowing all the details, obviously, about the product, but I would actually be looking instead at, are there other channels? Are there messaging opportunities that I have that I’m not aware of? Are there onboarding activation? There’s monetization, retention. There’s a whole other world of growth opportunity that’s not translation. However, like globalizing in some kind of way, it could be an easy thing. But yeah, but then I also think, too, how much of the market is realistically looking for this? 

So it’s tough to say, but my guess is I’m soft on it. I feel like there’s probably other opportunity that’s maybe more pertinent, and also too, it’s another go-to-market question, right? Is supporting the German language… is that something that you’re actually gonna be committed to in the long run? And I think that that’s like… You know? Three years from now, five years from now, are you gonna have the resources available to support that? I think most people don’t think about that in that way.  

Rob Walling:
I love that. Yeah, I feel the same way as you do. I think I’d probably feel a little more strongly in him not doing it. I am pretty unconvinced that this is the next best thing for him to do. And I think the number one thing I thought of, was exactly what you said. Yeah, so you’re gonna get some Germans who come and use a product and maybe pay, and you’re supporting them in German, because you’re bilingual, and then you have some English users, and so now you have to hire support people who are bilingual. And when a German speaker starts using your app, aren’t they gonna want the app translated, too? Aren’t they gonna want your knowledge base translated, too? They’re gonna want email support. You know? 

It’s not always, but to Asia’s point, in the short term, you can kind of hack around these things, and in the long term, I just don’t think it’s good decision. My gut is that if English speaking is for developers, it looks like, or development managers, and it’s like the English market is plenty big, I would spend the time on that, rather than making things complex at this point. So thanks for your question, Daniel. I hope that was helpful. Our next question is a written question. So voicemails and video questions go to the top of the stack, except I feel bad, and sometimes written questions are so old. This is from May 9th, so this is a seven or eight month old question just because the video ones keep taking precedent. So I try to stick maybe one text question in each Q&A episode just to get through a few of them. 

So this question is from Vijay, and he says, “I would love to hear any insights on how to go from B2C/freemium to B2B. How to keep small and individual users happy, they’re coming to me via word of mouth, but still sell to big companies? I started something small for my own use and made it available for free, then I added a couple more features with a B2C paid plan. Most of my users are from big enterprises and Fortune 500 companies, and happily use free features. I’m not making much money out of it. My plan is to add more valuable features and make it worthwhile for enterprises. But, for now, I’m stuck with the B2C freemium model, and I’m trying to figure out a way to go B2B. 

And based on his email address, it looks like he’s at agilebin.com. The H1 is “Improve productivity of scrum teams, using Agilebin power tools.” Asia, what do you think? This is another kind of go-to-market, isn’t it?  

Asia Orangio:
Mm-hmm, yeah. And this is interesting because when we think about go-to-market, which I like to use Brian Balfour’s framework for this. So product market, model and channel. And what Vijay is experiencing is, he created a product for a market, there’s something about the model that’s not sustaining that, financially speaking. He’s not making much money from it, he said. He mentioned freemium. And so now he wants to move from that to selling more to businesses. And that usually means… A change in market usually means a change in other aspects of your rich market strategy. 

So now we probably do need to change the product in some kind of way, which he mentioned. So I’m glad that he’s aware of, “I gotta go and build more features and make that more valuable to businesses.” So he asked the question, “How?” And I thought that was really interesting, because there’s many facets to the how. There’s the, “How do I figure out what the right features are?” Then there’s “How do I go out and get maybe the first customers of this new version of it?” Or I’m gonna put it in finger quotes of a pivot, because that’s kind of what it feels a little bit like. It doesn’t sound like a hard pivot. At least, we don’t know all the details. 

But, the how is interesting, because I think the how, it sounds like Vijay should probably go and… I know I’m probably going to say “Research” a bunch in this session as per usual, but I’d be curious about his product discovery process. So how does he discover what the product should be for these other businesses? And in that process, he will naturally come across ways of how he can actually acquire them. But I think it’s got to start with, “Well, what are we ultimately building and selling?” And then also, “Who are we selling it to?” It sounds like these businesses, but those have to get pretty crystal clear before we’re able to even figure out what channels should be in the first place. This sounds like part of discovery. This reminds me of the book, oh gosh, Continuous Discovery Habits by… is that Teresa Torres?  

Rob Walling:
Yes.  

Asia Orangio:
By Teresa Torres, yeah okay. That’s the book I would probably put in front of Vijay, in terms of answering the question of how from a product perspective. But then from a market perspective, I think that that’s going to depend very specifically on what types of companies he’s looking at. My guess, he’s going to be looking at some form of sales, like outbound sales of some kind. Probably going to be looking at Demand Gen in terms of acquisition. But from there, yeah, it’s going to depend a little bit, I think, on how he thinks about this. There are opportunities based on what agilebin.com does. This also reminds me a little bit of Dropbox and how Dropbox grew. I mean, we hear about growth loops all the time, but I’m wondering if there’s like a, this might be slower and longer, but there are likely growth loops that Agilebin could probably consider. But my guess is he probably wants money in its pocket sooner than later.  

Rob Walling:
That’s the challenge of freemium, right?  

Asia Orangio:
Yeah.  

Rob Walling:
Because it moves revenue out, which if you have kajillions in venture, you can do it. And if you’re bootstrapping and trying to quit a day job, usually you don’t want to do it.  

Asia Orangio:
Right.  

Rob Walling:
So that’s a challenge. I like the way you thought about it. Brian Balfour, he famously ran marketing at HubSpot, I believe, and now he has this… What is it, in the Bay Area? The academy he has. It’s teaching people how to market.  

Asia Orangio:
Oh, is it Reforge?  

Rob Walling:
Reforge.  

Asia Orangio:
Yeah.  

Rob Walling:
Yeah. Yep.  

Asia Orangio:
I love Reforge.  

Rob Walling:
Yeah. And Brian Balfour’s awesome. He just launched a podcast in the last few months as well. But I like your talk about go-to-product market model and channel. Those are the four. Before you said that, I was like, “I think the things that Vijay needs to think about, are how much the product needs to change, how his marketing might need to change, and how his sales operation needs to change.” Which I think right now he has no sales operation. So it overlaps a bit with what what you said. And realistically, the first question I have is, “Do you want to go after Fortune 500 companies and big enterprises?” You’re talking procurement, you’re talking sales cycles of six, nine, 12 months. I say this from second experience with 171 investments, who the majority of them do some type of sales process. 

And if you’re up for it, then awesome. But really be sure you want to do that. This is no longer an indie hacker project, once you do that. Product-led growth, as some people throw around, is much like freemium, way harder to do well than everyone thinks. And the second thought that I had is, “Does your product… Could it serve the enterprise today? Would they buy it as it is?” It’s not, will individual users use it? But, will a team pay the money for it. And pay enough money. Because the moment someone says procurement or custom terms of service, or “I want single sign on,” or “I want…” You know? Whatever. Enterprise to be able to this and that. All right, cool. Minimum, 30 grand a year. That’s it. I’m not going to go through the pain or do any of that for less than about, usually I say 25 to 35 grand a year. Minimum, minimum, minimum. Because otherwise, it’s just not worth it. And there’s only so many customers who are going to pay that. 

So that’s the thing I think I’d be thinking about. I mean, when I look at it super tactically, I think you can have a dual funnel, right? I talk about dual funnel where it’s like you have this low end funnel. That can either be free or it can just be inexpensive. Think of Castos which is podcast hosting. And they have $29 a month plans and they have plans that are thousands a month, where they do all the editing and everything. And that’s cool. He has a dual funnel, people coming in on the low end and the high end. There’s enterprise sales on the high end, and there’s not on the low end. It’s self-serve. And Ruben Gamez has this with Signwell as well. There’s the main product, e-signature, and then the API is pretty expensive. It’s a, “Call us,” type pricing. 

So you can do that. And I think Agilebin could potentially be that. But I don’t know. If you don’t already have the interest from the enterprise, you got to think, I guess it’s just as you said, it’s a cold outreach at that point. Or a warm outreach in this case, where you look at what are all the domain names on the emails I have in this free plan. Oh, there’s 10 people at Netflix, there’s seven people at Target, there’s nine at CVS. Are you now reaching out to them saying, “Hey…” That’s PLG, right? That’s what Slack has done. Is that a potential first step of just seeing if anybody responds or anybody cares or anybody’s using it enough to consider that there needs to be some type of enterprise plan? That’s probably how I would be thinking about it. The alternative is just to abandon the low-end at all, not do it to a funnel. Just say, “I’m going shut down the free plan,” or at least shut it down to new signups for now. And I’m going to double down and go all-in on enterprise, figure what to build to do it. 

I think that’s more risky, and I don’t know in the near term that I would necessarily do that. It feels like the free plan is his marketing right now. That’s the marketing channel, so he owns the leads, as Patrick says.  

Asia Orangio:
Right. And it’s… What’s the saying? “Freemium is not a revenue model,”?  

Rob Walling:
Yeah, it’s just a marketing channel. Yeah.  

Asia Orangio:
Yeah. It’s more marketing. Something else that you mentioned that made me wonder, because it sounds like the tension is really not making enough. There was something… Yeah, “I’m not making much money out of it, So my plan is to…” et cetera, et cetera. That sounds like the tension point. And what I’m also curious about, is what if you switched away from freemium? That terrifies a lot of people. It scared a lot of people. But if there’s not that much coming in, if it does not feel like it’s as big of a risk, what if you move away from freemium and figured out how to make this work on the smaller end? There’s all kinds of trade-offs for this. But it makes me wonder, do we actually have a better product than what we think we do, and we’re just giving away a lot for free, basically?  

Rob Walling:
And moving away from freemium can be undone pretty easily, because you can just hide the free plan on the pricing page, wait a month or two, keep the free plan active, don’t kick everybody off, don’t start charging people yet, and just see what happens. And maybe do reach out to your free people, your folks who are currently on your free plan and be like, “Hey, did you know the pro plan is so amazing and you should really upgrade,” and blah, blah, blah, and see if you can sell it to anybody. That’ll start giving you an indication of “Have I really built something people want and are willing to pay for?” That’s my product market fit text expander. Not just building something people want. Building something they’re also willing to pay for. And I think that’s the biggest question that I’d be asking myself these days. So thanks for the question, Vijay. I hope that was helpful. 

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Our next question is a voicemail from Fred.  

Fred:
Hi Rob. My name is Fred. I’m a long-time listener, first time caller. My co-founder and I have a bootstrapped SaaS called Worktable, which offers a PC-based platform that makes webcam play easy for trading card games. As you mention periodically, engineers often hate sales, and we’re not exceptions. Yet, I’m particularly struggling with how to approach cross-channel marketing, if that’s the right term here. We have a warm lead, which is a charitable organization that serves children with prolonged stays in hospitals. They want to help the children they serve reconnect with friends and family, and a very common request is to play physical card games. As long as we can afford the cloud costs, we aim to serve them for free. Unfortunately, the goodness of our heart doesn’t pay the bills. Our hope is that they will give us an occasional shout-out to help us recruit paying customers who can enable this to continue indefinitely. The shout-out from them, could bring thousands of times more traffic than we’ve been able to generate ourselves. 

However, I realize just hoping isn’t enough. How do I frame this in my own mind, and in conversation with them, so that we all feel I am asking them for a win-win? Thanks in advance for your advice, and thank you for the thought-provoking discussions in the podcast.  

Rob Walling:
So this one’s interesting. This is why like listener question episodes. Because people come up with just stuff that I would never think of. What’s your take on this?  

Asia Orangio:
Okay, so there’s so many layers to this one. And I think that’s why it’s such an interesting question, and just scenario in general. So this first makes me think about what growth loops exist in the business today. And what I mean by growth loop, is there is some trigger that happens that generates either an awareness or an acquisition or some quality touch point with the person that you ultimately want to acquire. So for example, the most popular one that everyone knows about is Dropbox. When you sign up for Dropbox, you… What is it? If you share Dropbox, or you invite someone else, you get more space?  

Rob Walling:
You both get more space, I believe.  

Asia Orangio:
You both get more space? Slack is another really popular one. You create your organization on Slack. First thing Slack asks you to do, is to invite your team members, and then so on and so forth. The other most common growth loop that most people aren’t aware of, but most people have, are actually marketing websites. So you create content, it attracts people, ideal people come to your website, et cetera. Hopefully they sign up. It’s a tougher growth loop, because it’s not super predictable. It’s not like a one-to-one transactional type thing, but it is technically a growth loop. And what this made me think about, was, what are the growth loops that exist for this business when it comes to the charity specifically? So, when the charity is using, I think it’s video games. Is that what this is?  

Rob Walling:
It’s called WarpTable, and I had to Google it, but it’s software that allows you to play physical card games remotely. So think of Magic the Gathering or even I imagine Solitaire, or I don’t know, I have a bunch of games. So as long as you have a webcam set up and can see the cards on the table, and your opponent is on the other side of that, and they also have that, then… I don’t know exactly what the software does, but that’s basically what it is.  

Asia Orangio:
Yeah. So this makes me wonder. Well, first the request, it’s almost like a hopeful, “I want to maximize this as much as possible. I want to make sure this generates more customers for us.” And my first thought was, “What growth loops exist in the platform today, so that way when either the charity uses it or anyone from the charity, involved with the charity, et cetera, uses it, that it creates a natural growth loop? That was my first thought. And then the second thing that came to me was, it also kind of sounded like maybe Fred might have been stuck on positioning this to the charity. 

Like, “How do I position this in a way where they’re going to see the value and want to actually invest more in this or pay for it,” whatever it is. Because, unironically and maybe also ironically, Fred is like, “We are not running a charity, but we are helping charities.” Which I totally get that. I totally get that. So this kind of… It’s like a little bit positioning, and I also kind of felt like maybe also too, Fred is like, “I’m afraid to charge for it.” Especially if the kids love it.” So I don’t know. I could see scenarios where the relationship with the charity could be worked out where the charity does lots of case studies and does testimonials and things, and kind of makes it so that they become like marketing in a way. 

But I think that there’s also potentially product/platform opportunities or app opportunities, whatever that looks like, to ultimately generate, act as a growth loop. And then I think there’s this other part that’s like the conversation with the charity about, “How do I position this in way where they’re going to hopefully get it, see value, et cetera?” There’s many layers to it.  

Rob Walling:
Yeah, I agree. The way I think about it is, the charity sounds awesome. They’re helping sick kids. And I think if you’re going to do it, yes, ask for… I love the idea of case study testimonials as marketing material. And if you ask for one or two emails to their list a year, that they promote you or something on social, what’s their biggest social channel. But I would be super specific about it. I wouldn’t occasionally mention. Like, what kind of feels right to you and not too much? Is it two mentions a year across channels? Is it three mentions? 

And then, assuming the costs aren’t big to serve these customers, I’m just… It’s PC software, so I’m assuming again, it’s not like a kajillion dollars. I would probably just go into it hoping that it broke even. And at best be like, “You know what? If this never does anything, at least I did good for the world, and at least I did good for this charity.” I don’t see a strong reason not to do this. Now, if they weren’t a charity… When I first read the question actually, because I read the transcript first, I didn’t catch that they were a charity. 

And I was like, “No, don’t do that. Don’t give away your software so they could talk about you.” But then I was like, “Oh, it serves children with prolonged stays in hospitals. Oh, I would just do that out of the goodness of my heart.” You know? And try to help them, again as long as the costs aren’t high. Anything, any marketing or any value you get out of it, to me, I think is a bonus. But I wouldn’t have high hopes for something like this. Of like, “Oh, I’m going to sell a bunch of pieces of software. “Because I think you might be let down.  

Asia Orangio:
Very, very valid point. That makes me wonder, there’s a charity, but are there other customers or users who are maybe much better fits for these asks? So it is a little bit more of a quid pro quo. But yeah, that’s a tough one. That’s a tough one.  

Rob Walling:
It is. And you do have ask yourself, if you’re trying to get a startup off the ground, as you said earlier, is this the biggest growth potential opportunity you have on your radar right now? It probably isn’t. But then we have to ask ourselves, who are we as people, and what are you willing to potentially sacrifice in terms of a time investment or in terms of some revenue, or whatever it is that you’re going to sacrifice, with the hopes of helping a charity and helping kids in hospitals, right? And so I think each of us has our own answer to that. 

Most of the time on the podcast we talk a lot about maximizing our growth, maximizing our enterprise value, while maintaining healthy relationships, right? While not driving our family and other relationships in the ground. But in this case, I think there is even that third factor of kind of broader world, and whether you’re willing to sacrifice a little bit in order to help them out. So thanks for that question, Fred. Hope that was helpful. For our final question of the day, we have a video question from Patrick on how to advertise an unknown product category.  

Patrick:
Hey, Rob. Thanks for all the great episodes. Huge fan. Steve Jobs is famous for saying that… What is it? “People don’t know what they want, until you show it to them.” This can be a really good thing, because it means you’ve got a blue ocean new product like the iPhone. The problem I’m running into, is how do you run advertising campaigns for some things people don’t know exits? My product is in the B2B SaaS space. It’s called ThreadLive. It’s an email workspace designed for B2B sales and procurement people, and project teams that are spending hours every day managing emails. We got a Chrome extension that goes right into Gmail, so you can quickly mirror emails into our platform, and then manage them like you would a file, or share them with other people. 

Anyway, our initial focus is single player mode, MVP. And we plan to introduce collaboration features in the future. We’ve got a freemium model, and then after about two months of use, we’ll be charging $20 a month. So, clearly this is a product that needs many users to be successful, so we need a low-touch model. The problem is there just aren’t a lot of people searching for something they don’t know that they need. So, what do think is the best way to contact and market to these types of users? Thank you.  

Rob Walling:
So, before I kick it to you, Asia, I want to do my famous startups for the rest of us, comments, about, please don’t use Steve Jobs or Basecamp as examples. Because, Steve… when he was 23, guess how much he was worth. $1 million. Which is actually about 5x. He would be worth $5 million. When he was 24, he was worth $10 million. When he was 25, he was $100 million. You know what I mean? And so, if you’re in that case, then use Steve Jobs as an example. If you co-invented, or, say, co-founded a company with the inventor of a once-in-a-generation device, the Apple computer at the time, then use him as an example. If you bootstrapped to nine figures in ARR, and you were one of the first SaaS apps ever, and you did a really good job executing, but also got a little lucky, as Jason Fried said on the MicroConf stage, then use them as an example. 

Otherwise, you’re not in their shoes. You don’t have the resources. You can’t. Basecamp comes and says, “We don’t do marketing, we don’t track analytics, we don’t track opens.” And so should you? Well, are you Basecamp? Keep in mind who you’re following. So I just want say that, as anytime I hear the Steve Jobs, the Basecamp, or Henry Ford’s often quoted, and I’m like, “Oh, so you’re in their boat, then.” Because no, you’re not. Most of us aren’t, and we have to grind and we have to do things a little differently. And I want to be honest, Jason Fried and DHH are TinySeed mentors. They invested in our first fund. So I’m not throwing shade at them, but I’m saying they often give advice that fits them really well and worked for them, that I think it won’t work for 999 out of the next thousand startups. So anyways, with that, Asia, you want to take a crack at this one?  

Asia Orangio:
Yeah. Oh, I’ll throw in timing as well. I think, thinking about timing, and curves and all of that, and when certain things… But anyway, okay. So this question is really all about, I’m hearing there’s messaging challenges. I’m also hearing a little bit positioning, and if you follow the April Dunford model, of course, then you know that messaging is derived from your positioning. So it really starts with pretty solid positioning, and then of course we get into messaging. The thing about customers not knowing what they want, until they have it, the thing about that statement is that customers are never going to be good product managers. They’re never going to be able to tell you what features to build or what to do. They can really only tell you what they want. And it’s our job as product managers and product owners to extract that at scale at a very high level, and also get into the nitty details of, okay, how does this actually translate into value, based off of what the customer is asking for? And how can this be translated more globally across the whole product? 

But, even when we do that, what we find is there is some narrative or story that we were telling about how this product ultimately contributes value to people. And even if you don’t have a software category that this fits into, that doesn’t necessarily mean that you’re not going to have words for how to describe this to folks. Because ultimately, customers connect the most with what their pains are, what they’re struggling with, and what they’re hoping to achieve and to accomplish. Ideally using your product. But, if we were to get break this down two jobs to be done, which is a framework for interviewing customers and really understanding what progress they’re trying to make, what we’re going to find is that customers, ultimately, once they have their jobs, they come to you, you satisfy the jobs. And then over time, the jobs change. And new jobs pop up, and hopefully your product still surfaces or satisfies those needs, and otherwise they turn. 

But, all that’s to say, though, that most customers are not necessarily looking for, “I want the absolute best CRM,” and then they go to the CRM category and they troll through… Usually it’s, “Yeah sure, I want the CRM but there’s all these other things I want about this.” And so my question to Patrick would be, it’s okay if there’s not really a category for this. That actually is the least one my worries. I’m far more concerned with how does your customer describe it, and therefore how do we now use that to inform our messaging? And that’s what we use in our advertising, that’s what we use on our website. That’s what we use to really connect with a customer who’s trying to buy this. The first part of the question, that’s where I start with. 

So the second part is really all about… So, people aren’t searching for this, because there’s no software category for this, that people are not searching for it. But going back to what I was saying earlier, my thinking around this though, is there might not be a category for this that they’re searching for, but they probably are searching for, “I have this problem, I have this pain.” And what are y’all using to satisfy this problem or this pain?” And again, this is probably gonna be long tail keyword type work, but that’s the first thing that comes to mind. I think the second thing that comes to mind, is we are making the assumption that search is going to be the first way that people discover this as a product. So I think my other question of course would be, if we were to sell this to folks, what are some other ways that people might discover this product in the context that of course they’re using it in? So, this is a… What was it? It’s a Chrome extension?  

Rob Walling:
Yep, for email productivity.  

Asia Orangio:
Mm-hmm. This automatically makes me think about what, about, oh gosh, like the Google App Store, or the Chrome App Store. Is there discovery happening through that? I’m also curious too about, what are some of the…. are we translating this into other browsers? There’s many other ways to distribute, is what I’m getting at, beyond just search.  

Rob Walling:
I like those. Yes, anding you, because I agree with those, and I want to kind of pile a little bit on. You actually mentioned early on about product, and how as product owners, we don’t build what customers tell us to build. We hear what their problems are, and then we have to translate that into a solution, right? So I did a rant on this podcast probably within the last year on a solo episode where I talked about the Henry Ford, “If I’d given them what they wanted, they would have given a faster horse.” No, you wouldn’t have. Not if you’re a good product person. Because they would’ve said, “A faster horse.” And I would have thought, “Well, I can’t make a faster horse. But, could I make a train run the same routes as a…” You know what mean? 

And you eventually get to where it’s like, “Could I make a device that…” Because they don’t want a horse, they just want a faster X. So what is that? Is that a steam powered car? You know what mean? Like, you get there. And if you’re a good product person, again, yeah, you figure it out, right? The second thing I’m thinking about… I guess I want to piggyback on what you said, of it doesn’t just have to be search. But, what you do need is a massive traffic channel. Massive, to make this work. The only companies that I know, who have made this type of low price point freemium model work, get hundreds of thousands, if not millions of uniques per month. 

Whatever that channel is, usually it’s search, to be honest. Usually it’s content and search, or they have a media company and they an audience. But there’s a possibility that the Chrome extension and App Store has enough traffic to do it. I don’t know of a single example. I was trying to think as you were talking, about a single example of anyone who’s bootstrapped a business like this. Because the ones that I know where it truly was freemium and then 20 bucks a month, are the Dropboxes. How much did they raise? A kajillion dollars. Mint.com, throwback to 20 minutes ago, a kajillion dollars. Trello, Hootsuite, Spotify. You know what mean? On and on and on. Yeah, they’re all freemium. They made it work and they have less than $20… And even think of Netflix with the free trial, and then they’re now 20 bucks, and HBO, and this and that. I know that’s content, not software. 

But, all of them, just bank accounts, vaults filled with money, with rooms of money. So if you’re trying to bootstrap a business, unless you were showed amazing traction and growth, TinySeed would not invest in this business. Because, I don’t believe that you can bootstrap it. I say that a little more confident than I am. I don’t want say 100 % never going to work. 95 % sure, this is an inviable business without quite a bit of funding. 

And it’s because you need to last. You need to last for years. Because Dropbox, remember their early numbers were like “3% of our users used it for free for a year, and then convert to paid.” And that was a pretty high number, actually. So do the math on that, 3%. So let’s say you have 50,000 free users, which is actually a lot. That’s a lot of free users who are… 50,000 active free users. So after one year, that means you’ll have 1,500 paying customers. And at 1,500, doing internet math, live on the internet, times $20 a month, is $30,000 of MRR. 

That is not a viable business, because you’re never going to get to 50,000 active… because 50,000 active freemium user, even if you’re sticky, what is that? 250,000 total premium signups? I don’t know what… you know, I’m kind of making up numbers here, but you got a big drop off here, so you got to think about this funnel. And other than just having a kajillion search visitors hitting you every month and replenishing that, I don’t know how else you do it, unless it’s to your point, one of these other channels that you were talking about. 

Those channels just have to be really wide. You don’t do this with 10,000 uniques a month. You do it with half a million uniques a month. If you do it at all, you do it with half a million or a million. So, this is where I struggle. I mean, on this podcast, I kind of have said, I don’t answer questions about two-sided marketplaces, about bootstrapping them, unless you already have one side of them. Because everybody seems to want to do it, and it’s just like, it doesn’t work. Stop, please. 

The other thing is B2C. And I know this is not B2C. You know, it’s B2B because it’s email productivity. But, the funnel is like a B2C product. And unless you’ve made this work, or unless you know what you’re doing, meaning you are Ruben Gamez or Hiten Shah, or Brian Balfour, or you’re getting mentorship from someone like that and you’re really trying all the things, just setting up the funnel in the way that Dropbox, Mint, Trello, Hootsuite, did, just setting up that funnel, doesn’t make it work. Because it’s cargo culting, right? It’s picking one thing and being like, “Oh, this works because of that.” And it’s like, no, it works because all of it was there. If any one of those pieces hadn’t worked, the business was completely inviable. 

And the thing we don’t see, is it’s a survivor bias a bit. It’s like, what about the… Again, I mentioned Dropbox, Mint, Trello, Hootsuite, Spotify. What about the 99 others or the 10,000 others that just didn’t make it, because they tried this model, and later they pivot? So, I don’t want to be the naysayer. I’m positive, Asia. I want to build people up, but this is a business, from what I’m hearing, I’m just skeptical it’s going to work. But I’m not saying it’s not going to work in any form. It’s like, what would it look like to not do freemium? Or what would it look like to charge $200 a month, or $250 a month, and only sell to enterprise. You know? What else can we tweak to make this a much more viable business? That’s probably where I would start if we were to say, do a strategy session on this.  

Asia Orangio:
This actually does make me think though of businesses that, they’re in the process of monetizing their Google Chrome extensions. So Adblock Plus, I don’t know if anyone’s using Adblock Plus, but they have within the last, I would say, six months or a year, have aggressively moved to, “Hey, please pay us.” And it is shocking, but also not. Because obviously I’m in the SaaS world, so I’m using software all the time, all day, every day. But, it is shocking how much I don’t want to pay for it, because I’m so used to having it for free. And I’m just like, “Ugh, I don’t want to have pay another thing.” You know? 

But, I almost guarantee, if this had been more, if I had the free trial, and I saw how amazing it was, and then… If I had been trained in that way, I probably would be more like, “Oh yeah, I’ll pay for this.” Usually, freemium, it’s crazy in the numbers game, but you’re exactly right. In order for that to be viable, it’s gotta be a two to 3% conversion rate into paid. And there are businesses who of course achieve this, and actually beyond. I’ve seen it. But I would say most folks are much below that.  

Rob Walling:
Most are, yeah. Most are below 1%.  

Asia Orangio:
Yeah.  

Rob Walling:
That, I see. I see quite a few freemium. There is a significant enough number of TinySeed companies or companies that I’ve advised, that have freedom plans or have had freedom plans. And I see the numbers on them, to know that yeah, 3% usually you would celebrate that. One other thought, I wanted to bring up the five stages of awareness. And I did a MicroConf talk in Europe about this a couple of months ago. I think that talk will be available for sale here soon. But, if you have never seen this diagram, you can type in five stages of awareness, Eugene Schwartz. 

And really, Patrick’s question was not about his business model, and asking me to tell him he shouldn’t do it. His question was like, if no one’s searching for it, which you addressed, maybe people are, maybe in different ways, but, if no one’s searching for it, how do you get awareness? And realistically, you have to do what you said, which is go after the problem. Because they’re not searching for a solution, but they probably do have this problem. And five stages of awareness are unaware, problem aware, solution aware, product aware, and most aware. 

In a perfect world, you cater to the last two of those, or maybe the last three. That they are looking for a solution, they know the name of your product, and they really know the space well. As you go further up that chain, so unaware and problem aware, becomes way more expensive, way more time intensive to capture them. And that’s what I was saying with this, is, based on your freemium model and your price point, you need a huge funnel, very wide. And usually, that search can be other things. 

Of course, if you’re truly just trying to advertise, then you go on Instagram. I mean, how much stuff have I bought, where I barely had a problem, or I really was unaware that I have a problem? Like the Amazon flash sale. Oh, I didn’t realize that I needed another pair of slippers, but they totally advertised to me on Instagram. Or, I bought this thing called a flexiCam, which I kind of realized I had a problem, but I didn’t realize there was a solution. 

And it’s a see-through thing where you hang your webcam down in your screen, so you can hang it over a Google Doc. PlexiCam I believe it’s called. I just saw an add on Instagram, I was like, “Oh, yeah, I do have that problem.” I had no idea there was a solution. And so they ran an ad. Here’s the thing, ads are expensive. And that’s why I said, if you’re going to try to do this with ads or whatever, you don’t bootstrap this business. That’s my sentiment, is you do have to raise buckets of funding to be able to optimize that ad funnel. And then why does PlexiCam and Amazon, why do they work? Why can they run those ads? Well, it’s because they sell a product with a decent chunk… You know? That PlexiCam is $50, $70, whatever it is. So they paid off that ad spend real quick. Patrick’s in this case, said “Well, they’re freemium for two months. Only if they’re a heavy user, then they convert to 20 bucks…” You know? 

What are we talking? Six months out, before we get payback? That starts to be challenging. And it’s going to be further than six months, because you’re going to lose a bunch. So you’re talking a 12-month payback, a nine-month payback. And as a bootstrap, you don’t have the money to keep doing that.  

Asia Orangio:
I think too, it seems like there’s an assumption that people don’t actually know about email collaboration tools. But there are absolutely shared inboxes. Front is a huge one. There are shared inboxes that are geared to specific audiences, like support, for example. But email collaboration and shared inboxes, they’re not a totally new concept. It just might be new for maybe the people he’s targeting. But that doesn’t necessarily mean that people are not solution aware. His audience, they are probably solution aware. They just don’t know that his product is in existence. And that’s a very different scenario. 

That’s actually a much more favorable ecosystem to be in. Because, what you don’t want is people who are truly unaware. Like, they don’t even know that they have a problem and this is painful for them. And those are people you don’t want to waste your time on. But it’s very possible that they actually are problem aware. They don’t know that ThreadLive actually exists. And that’s the difference between solution aware versus maybe product aware. That’s the difference. But I would argue that they probably are aware of other solutions. They’re just maybe [inaudible 00:50:58], and they don’t actually solve the problem, so they don’t don’t buy them, they don’t do them. 

But this warrants much more discussion, I think. I don’t think we can assume that they are truly unaware of solutions like this. It’s just much more likely that they’re unaware of ThreadLive, specifically.  

Rob Walling:
I like that. Yeah, I like that clarification. So thanks for that question, Patrick. I hope it was helpful. Asia Orangio, thanks for another banger episode.  

Asia Orangio:
Did we do it?  

Rob Walling:
We made it through. For folks who don’t know, you are the founder of DemandMaven at demandmaven.io. And of course you are Asia Orangio on the Twitters. Thanks so much for joining me today.  

Asia Orangio:
Thanks so much for having me.  

Rob Walling:
Thanks again Asia, for coming back on Startups for the Rest of Us. I hope your new year is going well. I hope it’s off to a great start. I’ll be talking back at you again next Tuesday. This is Rob Walling, signing off from episode 695.