Marketing budget allocation

Rob: In this episode of Startups For The Rest Of Us, Mike and I discuss allocating your marketing budget, minimum SaaS documentation, and we answer more listener questions. This is Startups For The Rest Of Us episode 380.

Welcome to Startups For the Rest of Us, the podcast that helps developers, designers, and entrepreneurs be awesome at building, launching, and growing software products, whether you’ve built your first product or you’re just thinking about it. I’m Rob.

Mike: I’m Mike.

Rob: We’re here to share our experiences to help you avoid the same mistakes we’ve made. What is the word this week, sir?

Mike: Well, if I had a way to put an emoji in here, I’d put a sad face in because my new website is not live yet. I was expecting it to be done.

Rob: Yeah. It’s been a couple of weeks since we recorded last.

Mike: I handed the things off to a designer and he was working on it and then some stuff came up and he wasn’t able to finish it on the previously proposed schedule. Completely understandable stuff, completely out of his control, but I’m a little disappointed when things get pushed off a little bit. Still plugging forward and hoping that things will be pushed out and live within the next week or so anyway.

Rob: Got it. Next podcast episode I will give you a bunch of crap if it’s not live.

Mike: Yeah, sure. You can evaluate the design and I can tell you to go to hell.

Rob: “Hey, Mike. I would tweak these three things. Boy, that’s really an odd color,” and you’re like, “Dude, stop. It’s all done. I’m going with this.”

Mike: I like fluorescent orange.

Rob: Yeah, that’s funny.

Mike: I’m just kind of in a holding pattern right now waiting for that to get all squared away so that I can kind of launch some other marketing campaigns and see how things go.

Rob: That’s cool. It’ll be nice to get that. I’m excited to see it because we talked about it a couple of episodes ago. Your current site doesn’t do the product justice. I’m interested to see what it looks like. For me, I was in San Francisco last week at SaaStr. I will admit it, I liked it better this year than last year.

I’ve only been to two SaaStrs and my general appraisal is they’re way too damn big, way too big. They say that they’re 10,000 people there and it feels like more than that. I really think they should a, sell fewer tickets, and b, there’s this big emphasis on bring your whole team, so half of the people you talk to it’s like, “I run marketing for this startup. I am in support.”

Nothing against that but I don’t get a lot of value out of that. I wanna be with other founders or I wanna be, if it’s a marketing conference, I wanna be with people in marketing. But it’s this really broad swath of people. I find the lack of focus and the size to be detrimental to the conference. I think it would be better but I think the point there is different with MicroConf where it’s highly focused content, and we try to get the people together.

A lot of people were just there to network and business meetings. It wasn’t even hallway track conversation it was like, one guy I saw in the lobby, I’m trying to think. I think he recognized me or he recognized the Drip name of or the other. He said, “Yeah, a long time Drip user. I just lined up seven meeting a day. Here, I don’t go to any of this sessions.” There are people who came and did just that which I’m sure is fruitful but it’s an interesting way to view the conference. We had, I participated in about four or five meetings over the course of the three days myself.

Mike: I use to go do the Symantec and Altiris conferences out in Vegas and it was the same type of thing. There were people who would go solely so that they had easy access to people to line up meetings one after another. That was the only reason that they went. They didn’t go to any of the sessions or anything. They just go there to talk to people.

Rob: Yes. With that in mind, again, I went to somewhere between three and five meetings so I did miss a few sessions but with that in mind, my learning this year were that the panels, panels in general, not just at SaaStr, I’ve never seen a panel that’s any good. They’re always gonna be watered down and even if the topic is super intriguing, they’re just not well done.

That’s one of the reasons we don’t do panels at MicroConf. I think we’ve done one panel out of the 14 or 15 MicroConfs we’ve run. We set it up very specifically and we gave everybody a heads up and asked them to be super tactical but I just started avoiding the panels early on in the conference, the SaaStr conference. I was only going to the solo where it was one person, because I knew that they would have slides, and they would have thought through a premise, and be making a point, and having an opinion.

That’s what I really enjoyed about it where I saw several talks that were good. They were like, I’ll say, MicroConf quality with a high bar with a lot of – from experienced people like a former  product leader at box.net, as an example. You know that she has a lot of experience and knows what she’s talking about.

Mike: Yeah, I’m with you. I’ve never really seen panels work out very well to the point that they’re interesting and you get any reasonable takeaways from them. I wonder if that has a lot to do with, I don’t think it’s just the format, but I also think that it’s a matter of trying to give everybody either equal opportunity to talk or I think another contributing factor is the issue of having questions that aren’t necessarily, I’ll say, as well prepared as a talk.

Because if somebody’s up on stage, they’ve given their talk generally a fair amount of thought behind it, have a story arc or something like that. There’s background, they can do lead ins to different pieces of the story but with a panel, you can’t do that at all. It’s very difficult to establish rapport and create some sort of an arc that people can follow.

Rob: It’s a good point. We’re touching on some things that could be fixed. I was talking to Jason Cohen, he was there, he did a talk and then he and I were hanging out, talking. We were having this exact conversation and he suggested, “You know what? If you instead made it a debate, it would be way more interesting.” It’s a panel but it’s essentially a debate and then I said, “Wow, but then don’t do three-person panels, just have two.”

Can you imagine Jason Cohen, Hiten Shah up on stage? “Alright, I want one of you to take the side of bootstrapping, one to take the side of raising funding, and then we’re gonna go through six topics.” We’re gonna say, “Alright, how does this impact hiring? Go.” And the two of them debate. Then, “How does this impact how fast you can grow? Go.” Just run through these topics. That, I was suddenly intrigued by.

Mike: Yeah, that is something interesting. As soon as you started mentioning that and saying that you’re gonna have two people like Hiten Shah and Jason Cohen up on stage and kind of debating something, I was like, “What happens when they agree on something?” Well, yeah, you have one of them take opposing sides, that makes more sense.

Rob: You have to set it up in advance to either that even if they don’t fully believe it, they just do it. Folks who are on the debating team or have done debate, you just have to do that. You sometimes have to debate something, you have to be on the side that you don’t agree with or you pick issues that you do know that they’re on the opposite sides of. You and I could debate things like…

Mike: Who’s gonna win an arm wrestling match?

Rob: Who’s gonna win an arm wrestling match, inbound and outbound email, because you’re outbound and I’m inb–anyway. Coming up with things off the cuff is not my strong – this is why I prepare talks.

Alright, we’re gonna answer some listener questions this week. First question is a voicemail. It’s about allocating your marketing budget. This question comes to us from our very own Craig Hewitt, the founder of PodcastMotor, and Seriously Simple Podcasting.

Mike: And Castos now.

Rob: And Castos now. “Hey, Rob and Mike. This is Craig Hewitt from the Rogue Startups podcast. I had a question for you guys today about how you would think about allocating marketing. Say you have $1000 month you wanna spend on marketing for a SaaS tool, how would you think about allocating that money for different things like content, or SEO, or paid acquisition, and let’s say that it’s a relatively young SaaS product that is, say, below a few thousand dollars a month at MRR. Interested to hear your thoughts on how you would approach this problem and if you have any specific answers that you think would be kind of best practices. As always, love the show, thanks for everything you guys do.”

Mike: I think this is an interesting question because the parameters of the problem here is that you have $1000 for the month and what marketing activities do you prioritize for your business or how do you go about evaluating them. I think, in some ways, the question is almost misphrased because not everything is going to have a dollar cost associated with it, especially if you’re bootstrapping and you’re early on, and you are able to do things yourself.

For example, if you’re doing SEO, there is not really a dollar cost associated with that. It’s actually more of your time than anything else versus if you’re doing paid advertising where clearly, there is a budget that you have to set aside, and you have to be able to do that or if you’re paying people to write articles, but at the same time, you can also write those articles yourself. It’s a question of resource allocation, not necessarily just dollars. There’s the time of yourself for doing it, and then there’s the money associated with those things, and then there’s the output of that. How much are you going to be able to reach people? How broad is your reach going to be after you spend the money and the time?

I think that that’s probably the most important thing to focus on is what is your reach going to be based on the resources you have spend. If you spend half your time for the month and you’re able to get 10x the reach, then if you were to spend $1000 or even $2000, then you’re going over your budget at that point, but you’re not gonna be able to get to as many people. I would look at it in terms of reach and then refine that over time because you’re probably not gonna get it right in the first month, you’re probably not even gonna get it right by the third or fourth month. You’ll be able to narrow it down and you’ll be able to start eliminating different options.

But I would probably focus on most three different things in any given month, and then at the end of every month evaluate them against one another to see how far of a reach did you get, and was it qualified. Did you reach the right people? Because if you’re not reaching the right people, and you’re not getting to a scale that you need, then it means that that channel or whatever it was that you were trying is basically worthless. It doesn’t do anything for you.

If you get in front of them and you are doing it at a rate that is, I’ll say reasonable, it’s gonna depend a lot on what your channel is because 1% in one channel could be, you should expect 50% in another. But as long as it’s reasonable, then I would essentially double down on that, and refine it, and optimize it.

But if you can’t get anywhere close to what is reasonable based on what objectively other people are telling you that they’re seeing in their industries, then I would switch to a different tactic and see if that one works out because it’s gonna be different for every type of business, every type of product.

Rob: Yeah, the way I would think about this is it’s actually an approach that I used to do. Well, I did it for HitTail and did it for Drip, and I saw Noah Kagan doing something similar but better. It’s basically take a Google spreadsheet or an Excel spreadsheet and write out all your marketing approaches, and then try to guesstimate how many trials you think or visitors you think you can drive from it.

You put the cost, estimated level of effort for hours whether that’s for you or someone on your team is doing it, and then you just try to sort them, you come up with a simple algorithm, just sort probably by impact unless there’s something that’s substantially more and more effort. You just want pure volume of trials, or new customers, or revenue, however you wanna measure that.

Early in the SaaS apps career, assuming you have product market fit where people are using it, paying for it, return is low, all you’re trying to do is find marketing approaches that work. You’re very likely, for small SaaS app, you’re gonna find one, maybe two. You’d love to have 10 but it’s gonna be one or two that’s gonna have the most impact over time. I like to think of them, there is short term, there is long term.

The short term ones are doing a joint venture mailing where you email your list – I’m gonna say podcast because we know that Craig runs Castos which is a podcast hosting and let’s just assume that that’s what he’s looking at. You’d find either a podcast blog or someone who does a podcast about podcasting, ask them to mention it, and you would also mention their podcast too to your audience or something like that. That’s a little bit of a quirky way to do it but you get the idea.

Maybe there’s another podcasting SaaS that helps with recording like ZenCastr or something and you do a JV with them where they email your people and you email yours. Then there’s just straight up affiliate stuff. That’s where you can approach people and just say, “Look, I’ll pay you 30% perpetual or 20% perpetual topline revenue from anybody you refer. Here’s your link.” See how many people will do that. There’d be podcast advertising.

The reason I keep coming back to podcast is because your audience’s podcast hosts are most likely to listen to other podcasts, and so you can just start buying spots on those podcasts that are talking to other content creators. There’s paid ads which these days I’m gonna say is Facebook. AdWords is gonna be very unlikely, it’s just gonna be too expensive for you to get to work although you could try it, outbound email. These are all the short term things.

When I say short term, they can work for a long time, but they can give you a short term boost. They’ll instantly, if you do a JV mailing, boom, you’ll get much customers that day, hopefully, you do. Then you have to do another one every month in order to make it work. Then there’s these longer kind of flywheel things, stuff like SEO, content marketing even, I’ll say, guest post is kind of in the middle there. Guest posts can get you a one-time shot but they also build up SEO overtime.

You may wanna do both but honestly, if I were in your shoes, and I were just getting started, I would go for a bunch of the short wins because when you’re doing, I don’t know Craig’s revenue, but I’m gonna try when Hittail was doing $1500 or $2000 a month, all I wanted to do was get it to $5000 or $10,000 a month. I didn’t care if it was unsustainable, or the marketing approaches completely didn’t scale at all.

As soon as I got to $5000 or $10,000, I had so many more options. I can hire better people, I can hire more people, I had huge budget than the market. I wasn’t constrained to the $1000. I didn’t have very high expenses so I had $5000 or $8000 a month to market this thing. Now things really open up for you. Then you can start doing multiple. “Alright, I’m gonna get a blog going with landing pages and blah, blah, blah.”

I have to admit, if I was marketing a podcast hosting service, I love the idea of – you know where all your customers are. They’re all in the iTunes store. It’s like the best deal ever, to be marketing to that audience. It’s not a huge audience but you know where they all are. You know that the business podcast and any kind of for profit podcast that takes advertising is making money.

There’s a lot of hobbyist podcasts talking about whatever, dungeons and dragons, movies, or whatever, that’s more like a B2C sale. You’re gonna want to stick to the more popular ones and you’re gonna want to stick to certain categories that common sense is gonna tell you, “These people have money and they’re gonna be willing to pay for it.” That would probably, to me, be the very first thing I do is either have VA scrape or write a scraper because you know all the iTunes pages are all on the web, in the browser.

Hopefully Craig hasn’t already come up with this. It’s like some secret sauce thing but I’m totally giving it away but I’m just coming off the top of my head and thinking how I would begin to approach it. Maybe I would test some paid advertising but probably not before I did outbound email, joint venture mailings, trying to get some affiliates to work with me, and even joint venture webinars are interesting, I don’t know if that one’s gonna work in this space but to basically latch onto someone else’s audiences and be like, “Hey, let’s either do a webinar to each other’s audiences,” or you say, “Hey, can I do it to your audience Mr. Podcaster? You fill the seats and I’ll give you cut of whatever the people buy.”

I realized that’s a long answer but that’s how I would think about it and with $1000 a month, I would, like I said, I would test things until something works because that’s something working buys you the luxury of being able to do multiple things at once. While I was testing, I would really stick to one thing at a time, and I would hustle, and I’d learn everything about it that I know. I’d read up on it and immerse myself in it for one to two weeks of just consuming content about it, and buying the Udemy course, and watching the MicroConf talk, and talking to XYZ expert about it, calling them up on clarity, paying them their $3 a minute that they need. Once I’ve figured I have my head around it, I would just dive in deep.

This is what I did with HitTail back in 2012, I think it was. I just picked the topic that I thought would work and dove into it. I spent one to two months just hammering on it. If it didn’t work, I moved on to the next one. The ones that did, they made that up. They made it so that I was able to grow it as substantially as I did.

Great question, Craig. I appreciate you sending that in.

Our next question is another voicemail. It’s about what documentation you might need for a SaaS. “Hi, Mike and Rob. Thanks so much for your podcast. It’s been so useful over the years I’ve been listening to it.

My question today is around documentation. What do both of you think you need, a standard, to run a SaaS online business? I’m looking for things like a test document to do routine tests on new releases, for example, checking everything is still working, documentation on service, processes, service definitions, the list could be endless. But I’d really like to hear from you in terms of what you think you need structurally, in terms of documentation set to operate, to run your businesses. Also, what was required, do you think, for selling businesses well or would be seen to be required by someone looking to invest or purchase your business? Thanks for this again.”

Mike: I think there’s actually two questions here. One is what is the documentation you need internally to run the business and then the second one is what do you need to have in place in order to sell the business. I think that there’s two answers to that. It can be on completely opposite extremes.

In order to run the business, at the very least, again this may depend on how complicated your business is, but there are businesses that are run with everything in the founder’s head and that’s really all they need because it’s small enough and it makes enough money. There’s not a lot of things that they need to do on a day-to-day basis that are gonna be things that they’re going to forget how to do. Then as your business gets more complicated and as you add more people into the business, that’s where you need to start documenting things and having things, processes written down so that whoever you bring in to help you out, they can follow those, and you don’t have to micromanage them because that’s really why you’re bringing somebody into the business is so that they can do things without you having to do them yourself.

Some of it is for scalability purposes of the business, some of it is just you don’t have enough hours in a day, but all of those things need to be documented so that you don’t have to still be involved in those things that you’re hiring somebody else to do. When you get to the point where you’re selling the business, that’s probably where there’s gonna be a lot more documentation that’s going to be needed so when somebody comes in to take over the business, they are going to be able to pick up the business and run without you having to be involved.

Again, this is a little bit more advanced. If you’re gonna be there for the next year or two, it’s probably not as big a deal. If somebody is acquiring your business and you’re required to be with them for the next 18 months, or 24 months, or 36 months, whatever happens to be, that’s probably less important but it still probably needs to be done at some point along the way because they don’t want to run into a situation where, let’s say, you stepped out on the street, you got hit by a bus and killed, they bought this asset that they don’t know how to leverage and you continue to make money from, that’s a very valid concern for the acquirer.

But if it’s something small and it’s very simple to run and operate, you’re probably gonna need less documentation. There is that slide and scale and it really depends a lot on your business complexity, revenue, number of employees, and overall risk tolerance, I’ll say.

Rob: Yeah. When I think of internal documentation, which is what we’re talking about here, I think of two types; I think of processes, non-technical processes, “This is how you do a marketing campaign.” Or, “This is how you check support. This is how you respond to these,” kind of a Wiki type thing. Then I think of kind of the technical docs           of if stuff goes down, this is how you repair it, this is what the architectural schema is like in the end points and stuff.

Again, that’s all internal. If you have an API that’s external, you obviously need to document that but let’s just keep internal docs in mind. For internal processes, I never created documents until I was ready to hand it off to a person. If I was doing it myself, I did not spend the time. That has always worked. It’s just like in time documentation. Often, the way I would document it is I would bring the person on it and say, “Alright, here’s your job, it’s to check sporty mails and respond to these. Please look through the history and see I’ve responded, and I’m gonna throw together a Google doc, or I would throw together a Screencast.” And then I’d say, “Can you turn that into a Wiki? So that if we bring a second person on, then you can train them using the materials.” I have put the burden on the person doing it. I delegate that to them to create the processes.

This is just the way I do it. This is way more time-efficient for me. I don’t enjoy creating the processes. If you do, then by all means, you can do it. It’s gonna be better than the person creating it themselves. But for me, I’m trying to get stuff done in the business and I don’t wanna spend a bunch of time writing a bunch of stuff up for technical documentation.

If you’re a single developer and you’re working on it, I would veer very much on the side of less documentation purely because a lot of us came from these enterprise backgrounds, I was coding in Java, and .net, and doing these big consultant projects, and we had to document everything, you don’t wanna do that for your startup. It’s a waste of time. Until you’re bringing more people on and trying to get them ramped up, and even then, even these days where it’s as complicated as Drip is, we basically have a GitHub Wiki where we have articles written by internal developers on different subsystems, and then we do have these things called Runbooks. I’m not sure if you’ve heard this term but it’s a developer term, kind of a DevOps term to describe how to run a system.

If you get a page that something is down, if you got a text that something’s down, you go to the Runbook for that subsystem and it’s supposed to tell you how to troubleshoot and how to do things. Those are valuable. We did not have those until we were at probably 8-10 engineers. It didn’t feel like we did it too late, it didn’t at all. I’m glad we have them now but it wasn’t like we were running around for years with our hair on fire because we didn’t have this documentation.

With that said, Derrick was more stressed out than I would’ve liked and that he would’ve liked because we didn’t delegate this stuff soon enough, and Derrick  was on call for years. It was too much. That is how the one regret is it would’ve been nice to have some Runbooks early on. But to document a system, extensive, detailed system documentation falls out of sync so fast when you’re in a startup, and not doing waterfall development, like we did 10 years ago. I would go very documentation light until there comes a time when you need it and then you can document it. That’s a good question. Thanks for sending that in. I hope that helps.

Our next question is from Eoin from Bitesize Irish Gaelic. He’s a developer and he has a question about hiring a developer to write code. He says, “Hi Mike and Rob. What are your thoughts on hiring a developer contractor rather than doing my own development? Do you generally see more leverage in stepping away from development? I’m thinking of Michael Gerber’s book, The E Myth Revisited. I lean towards not being a developer/technician,” as he calls it, “in my business.

Having said that, there’s time and energy involved in hiring and delegating, and on Odesk, a good developer can be $40 an hour. Admittedly, what probably muddies the water on my question is I like development. I’ve had a few developers working on my projects over the years and it’s hard psychologically to let go of the development to someone else. I found the best flow to be developing new features for my webapp, that’s not to say I get great satisfaction from trying to work straight to growing up the business, this really is my life’s work. Possibly, a better way for me to ask the question about it is how can I train my thinking to allow myself to get out of the way of my business’ growth?”

What do you think, Mike?

Mike: Well, there’s obviously definitely opportunities to hire somebody as a developer and pull yourself out of that particular role. As long as you hire the right person, that can be awesome because it will remove you from the heavy lifting of writing the code day in and day out, and having to flip back and forth between things like marketing activities, and sales activities, and then going hardcore into the software development, and then diving into customer support.

The ability to replace yourself in one of those areas that requires a lot of mental overhead is, I won’t say priceless, but there’s a lot of value in being able to do that. That said, I would also ask the question what is it that you are probably the best at? Is it writing code? Is it going to be that for you? Or are you much better at doing marketing activities? I would kind of make the conscious decision about whichever one of those roles you provide the most value for, you take on that responsibility and probably stay there.

It’s not to say that if you’re a developer you can’t learn marketing or that you’re not gonna be any good at it. But what is is that you enjoy doing, what is it that really kind of excites you, and drives you forward everyday. Because if you like diving back into the coding and you do it constantly, it’s gonna be difficult for you to step away from that and hand it over to somebody else and let them make all the difficult decisions.

You can, in some cases, stay heavily involved in the development side of things, if you wanna switch over to marketing, if that’s your passion, but I will say that it’s difficult to do both heavy marketing activities and also be heavily involved in the product architecture side of things especially if it gets to any level of complexity. It’s gonna be difficult. I would just keep those things in mind but it’s a balancing act.

There’s no one right way that’s going to work in every situation. It’s really about what is going to work for you and what is gonna be less distracting for you because if you’re in the middle of an email campaign, and you’re thinking, “God, I wish I can go in and fix this code,” for example and then you start doing it. You’re actually hurting yourself even if you have somebody else there who can do it and they are tasked with that.

You’re basically hurting the relationship or the parameters of the employee-contractor agreement by taking things over and doing them. Because then, it’s gonna feel to them like, “Oh, this person doesn’t trust me,” or “I’m being micromanaged.” Then you introduce yourself to a world of other problems that you had no idea that you were gonna run into.

Rob: Yeah. And to add one more piece of information, because we often shorten emails people send, and I skipped one paragraph. He said, “I run this business while working a full time job and I have a family. I spend around 45 minutes per day on ‘rock activities’.” Means developing new features, analyzing customer survey, planning new price points, like doing really solid stuff. Then another 45 minutes managing part time employees and generally trying to keep up with his inbox.

He’s very, very time constrained. That’s another data point. I think I’ll speak to his situation and then I’ll speak more generally. I think given his situation, it sounds, given that his time is so constrained, this is when I start to think about hiring help. At first it was VAs, then it was contractors even though I could write the code, and really enjoyed writing the code, with only 45 minutes a day for rock activities or big rock activities. I would seriously think about trying to find a good developer.

I think that’s the thing is he’s saying, “How can I train my thinking to allow myself to get out of the way?” It sounds like he already knows what the right answer is in his situation. I think that, assuming that the webapp features and having more of them are gonna help the business grow, and that there is enough competition that is warranted because sometimes, that’s not the case. Sometimes the app is good and it just needs marketing in which case I wouldn’t hire a developer, just let the app sit there, it’s a single feature, and it has a product market fit, and you just need to dump marketing into it, then go do that.

But if you really do need on-going development to continue acquiring new customers and/or compete with competitors, I would heavily, heavily lean in this situation towards finding a good contractor. I’m glad he suggested a $40/hour contract because I think at $15/hour, it can introduce a lot of headaches because you find kind of less experienced people and they can write crappy codes.

So yes, there is a hurdle, a mental hurdle to get over, I think I’ve repeated it to myself over and over, “Is this hassle worth it if it grows the business and allows me to quit my job?” What is your number one goal here? Is it to quit your job? Is it to have enough money to live on from your business and what’s the fastest way to get there? It’s probably, in this case, assuming you do need to develop features, it’s gonna be hiring someone.

I would also look, everyone else has done this, I shouldn’t say everyone else but a lot of people have done this. I made this work on a shoestring budget and almost exactly – [inaudible 00:28:47] you’re talking about, and so have many other people. Hiring developers when we were developers and it felt weird, and yes, you micromanage it first. You just figure it out.

As entrepreneurs, we tend to have growth mindsets, we tend to be somewhat flexible even if we don’t think we [inaudible 00:29:01] the code, and eventually you will, I think, feel better about it.

More generally when people ask this question, I kind of say, “What do you really wanna do? What’s gonna make you happy? What is your goal here?” My goal early on was to quit consulting and quit my job. That was more important to me than continuing coding even though I really, really liked to code.

For me, the quickest way to get there was to buy webapps or to pay contractors to build things because I was working 8-10 hours a day. I was booked full time, billing $100, $150 an hour, it didn’t make sense for me to take days when I was earning that money and go write something when I can hire someone back then for $20/hr, that was decent. That was my number one goal. I was willing to sacrifice writing code even though I loved it. Some people are not and that’s okay.

I listen to the Art of Product podcast with my co-founder Derrick and Ben Orenstein who a lot of folks know from MicroConf and Thoughtbot. I’m pretty sure at one point he said, “Yeah, if I’m gonna do a software product, I wanna write the code. I don’t wanna get out of it.” That’s okay. You can totally do this. You look at what Derrick did. Derrick still wrote a bunch of the code on Drip, or all the code for the first year.

In that case, he found essentially a non-technical co-founder in me. For Ben, I would just say okay, go into the business. But that can strain on you. You can do whatever you want. You’re just gonna have to move a little slower which is fine. You’re probably gonna have to contract out to do other things that normally I would tell you to do, like being the Chief Operations Office, handling and helping with support, and hiring.

If you’re really in the code, you need to be shielded from that. You’re gonna need to find somebody that can help shield you. Build a simpler product because you can’t build, and market, and do sales, and do all these things for a bigger product if you’re not gonna delegate the code. It’s gonna be a challenge for you long term.

But there are people that do it. Peter the CEO of Teamwork, he still writes some code. I’m sure he would admit that it’s probably not the best use of his time at times with a 100-150 person company, but he enjoys it so much that he still wants to be part of it. I think there’s leeway here but best practices, what I would advise, what I think maximizes your chance of success, and will get you there faster, is to stop writing code.

But I totally think you can succeed while still writing code if it really, really is what you wanna do, and you love it. I’ll add one final note. I still write code on the weekends. I wrote some crappy PHP script a few weeks ago just to scrape some websites and hit some APIs because it’s fun, for no other purpose and to do it. Even though I don’t do it for my job, I do have the freedom now to kind of do it for fun and really enjoy it.

I think we have time for one more question today. This one is about digital marketing and whether it works for B2B SaaS. This is from Alistair Scott from riskmemo.com. He says, “What’s the best marketing channels for B2B SaaS business? Is digital marketing such as Facebook, AdWords, etcetera, a viable technique for a B2B SaaS business or is it too broad?”

I don’t know if he’s talking about digital marketing or paid advertising because Facebook and AdWords are really more paid advertising. “My app will be ready to market in a couple of months, and I only need to target a specific role in a company, the person responsible for health and safety. I’m getting very promising feedback from people within my network but test digital marketing campaigns as a smoke test haven’t been successful. Your thoughts are much appreciated.”

Mike: I think this is a really hard question to answer because there’s so many variables involved in doing what appears to be just paid advertising which I think that’s what he’s referring to when he says digital marketing because there’s lots of other forms of digital marketing.

You could write ebooks for example. I’ve seen companies who write ebooks and then they publish it on Amazon and use that as a marketing channel. Now that’s digital marketing, but at the same time, you could also argue that it’s not necessarily marketing because you’ve got a book that you’re selling but you could say that’s a product, it’s a revenue stream. But at the same time, if you have a longer term goal of converting to people who are buying the book into customers of your SaaS application, and the book tells them how to do it, but your SaaS does it for them, then in theory that’s a marketing channel for you. It’s digital marketing.

I would differentiate between those two and say that digital marketing can absolutely work but it really depends on the specific implementation of it. In terms of doing paid advertising, it’s hard for me to say. I feel like there are certain types of industries where paid ads are simply not going to work. It’s not because they can’t work, it’s because the ROI does not work. The numbers themselves don’t make sense. If you have to spend $50 to get a customer and their lifetime value is only $30, yes, you can spend money and acquire those customers but you’re losing money every single time so you can’t sell at a loss and make it up on volume. It’s not gonna happen.

Rob: You make it up on volume.

Mike: Yeah, you can’t do that. I mean, you can but you’re gonna go broke. That’s the bottomline. You can try to spend your way out of it and maybe it’s possible that you have to do that in the short term to figure out something that you can tweak and optimize because your first cuts at it are not going to probably work out very well. You’re still learning what to do, what things work, what the software does, and how you target different types of people, and different companies. There’s a learning curve associated with it.

You’re not gonna be the best at it when you first go out there and try it but eventually over time, your costs are going to go down because you’re gonna get better at it, and you’re gonna be able to outperform your competitors, and get in front of the right people. That said, even after you have all that, it still may not work out financially because you’re still losing money on it. It could be that there’s other things that you have to do aside from paid advertising. But I think that if you’re selling a B2B SaaS product, in most cases, doing online marketing in some format, is probably going to drive revenue for you especially if it’s a low touch sales process.

If it’s high touch, the digital marketing may bring awareness, but you may very well have to do outbound campaigns, and cold calling, and direct marketing, and things like that. I would combine it if that’s the case but this sounds to me like this question’s really aimed directly at how do I do digital marketing to make it successful.

Rob: Yeah. The answer to will this work is I don’t know until you try it. That’s what I would do. I would think that your odds are gonna be…

Mike: Well, it sounds like he has tried it and it hasn’t worked.

Rob: Yeah, I guess you’re right. Here’s what I would think. Facebook, I can’t imagine it working for this. I don’t think you can get someone’s title from Facebook. Can you, in the ads? I don’t know what their segmentation is like these days.

Mike: I don’t know. I don’t think so.

Rob: Here’s the two things I would try for this; outbound email and LinkedIn advertising. Yep, LinkedIn advertising because you can then target based on someone’s title, their job title. You can title regions and all that stuff. Then outbound email, because then you just go somewhere, find a list, outbound email or calling, whatever it is. Because then you can find the list of people. It’s cold calling in essence but at least you know that they are the role that you need if it’s that specific.

I could see toying around with some AdWords because you don’t necessarily need someone to be the role but you need them to searching for something that implies they need your software. The problem with that is it’s gonna be too expensive. I don’t know any AdWords keywords anymore that are possibly affordable unless your LTV is just through the roof. Those are the two things I would try. Facebook, probably not. AdWords, probably too expensive. Thanks or the question. I hope that helps.

Mike: I think that about wraps us up for today. If you have a question, you can call it into our voicemail number at 1-888-801-9690 or you can email it to us at questions@startupsfortherestofus.com. Our theme music is an excerpt from We’re Outta Control by MoOt used under Creative Commons. Subscribe to us in iTunes by searching for Startups and visit startupsfortherestofus.com for a full transcript of each episode. Thanks for listening, we’ll see you next time.