Show Notes
In this episode of Startups For The Rest Of Us, Rob and Mike answer a number of listener questions. The topics include videos vs text, finding mastermind groups, and trials versus demos.
Items mentioned in this episode:
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 experiences to help you avoid the same mistakes we’ve made. What’s the word this week, sir?
Mike: Not much. Just the end of the year has come and gone. It’s the first week of the new year, I’ve been spending a lot of time lately working on a website redesign for Bluetick, which is about halfway done. Nothing’s live yet but I’ve been working through website design itself, email copy for the automation emails that are being sent out, and then also the website copy. Coming along pretty well. The next week or so is gonna be involved with finalizing and all that stuff, and then implementing it on the website. Once that’s all done, I’ll start doing a much bigger marketing push, I think.
Rob: That’s cool. You’re gearing up for this because you’re live and you’re trying to drive more traffic and want more of it to convert, is that why you’re focusing on this site right now?
Mike: Yes. The main focus on the site right now is because if you come to the site and you’ve never seen the product before, what I’ve heard from people is that it does not give them a good feeling of trust like, “Oh, this is a legit company,” which I totally get. If you go to the site, there’s not a whole lot there, and there’s not detail. It doesn’t even really, I guess, give you the inclination that you should reach out and contact the company or sign up for a trial account or something like that just because you go to a competitor’s website and there’s tons of information there, there’s articles, testimonials, and things like that. It just looks a lot more professional versus the Bluetick website, which to-date, I’ve relied more on word-of-mouth, and people coming in through after hearing me on a podcast or something like that. It’s just not conducive to more of a hands-off sales funnel, I’ll say.
Rob: Right, that makes sense. Yeah. It does feel, when I come to this site, bluetick.io for listeners out there who haven’t been there, it feels like a WordPress theme or like a bootstrap, kind of a basic template. As you said, I think you have good content here but it’s like you said, you don’t have the articles, and the blog, and all this other stuff that other companies that have been around longer might have, so it does seem like just a smaller operation.
Mike: Yeah. Also, it’s not real specific about exactly what it does or how it works for them. It doesn’t answer really any objections. It doesn’t really tell a story or craft one that would have resonate with whoever’s reading it. There’s a lot of things that need to go on to the site right now that are just not there. I’ve known for a long time that that stuff needs to go there, I just haven’t sat down and focused on that stuff because I really haven’t had time yet.
Rob: Well, yeah. It’s a matter of priority. It’s like you’re trying to get the code read, and then you’re trying to get the bugs fixed in, and you’re trying to scale, and then you try to get people onboarded, you gotta email the list, you gotta write this email. At a certain point, this is where I still struggle quite a bit with unsolicited advice. People used to email and be like, “Hey, the Drip website. It would be so much better if you did this.” It’s like, “I know. I know, of all people, I think about this all the time, like 20-hours a day. Yes, even when I’m sleeping.” Your unsolicited advice is actually not helpful. It makes you feel like you’re smart but people would send screenshots and say, “You should change this. Have you thought about organizing?” I said, “Yes. We have. We thought about that and either we didn’t do it very deliberately, we had a good reason for not doing it that you don’t understand because you don’t work in the business 50-hours a week. Or we have thought of it, we just haven’t had time. We haven’t prioritized it yet, and there are more important things.” That’s where I could understand where the marketing side has maybe fallen to the second or third place on your list.
Mike: It wasn’t even second or third. It was like eighth, or tenth, or something like that. My list of things to do is 10 miles long. It’s not even a mile long, it’s 10-miles long at this point. It’s just going back through and trying to figure out, “Okay. What should I really be working on next?” At this point, it’s the website. Once that stuff’s in place and once more of the marketing emails are in place and do a better job of explaining what the product does, and kind of move people through that educational side of things then I think they’d be in a much better position. How about you?
Rob: Last week, as I mentioned, I was in Florida, which was great. It was nice to get away. There was a big, obviously the polar vortex came through in Minneapolis. There were days where the highs were in the negatives, like -3, -4, and it feels like it was -25 or -30 at one point. It’s a pretty nice time to be in Florida, but I made it back, and kind of getting started again at the new year here. Not much to report on the work front just because ships and features in late December, and we’re gearing up for some new stuff now.
One thing that I just want to throw out unrelated to Startups, except for that it is a startup, is the thing that I’ve discovered in the past like 10 days that has just been life changing, it’s Instacart, do you have it where you live?
Mike: I don’t know. I’ve never used it. I’ve heard of it probably at one point.
Rob: I hadn’t either. Yeah. I don’t particularly like grocery shopping. It always takes time and especially I have to try to do with two or three kids tagging along. The fact that we live in a major city now, in Minneapolis, but really enjoyed like having Bite Squad around where I can order food and it’s delivered. But Instacart, it’s a grocery shopping app, and it’s just well-implemented, super easy to use, 1-2 hour delivery windows depending on the time of day and how busy it is. I can do my entire, what would normally be let’s say, a 75-90 minute drive, and in the snow, it’s like super cold, you don’t want to get out of your car because it’s four degrees and you’re lugging a kid with you, and I can do it from my computer in 10 minutes. It’s just freaking game changing. I’m pretty stoked on it now. I’ve only had maybe two or three deliveries so far. I’m having a tough time seeing going back to doing it the old way. It’s not expensive either. We usually did this subscription where it’s $150 for the entire year, and then, you just get unlimited. You don’t pay any delivery fees.
Mike: Got it. Okay.
Rob: Yeah, it’s a trip. If it comes to a place near you, and I don’t just look at it as a convenience, it’s a time thing. To save that time once, maybe twice a week. We eat a lot of fresh foods. I can’t just shop two weeks out. When I was in college, and I bought all macaroni and cheese, and ramen, we could shop for like three months at a time, and it wouldn’t go bad. The fresh stuff, I literally line up at the grocery store at least once a week, and sometimes twice. I just sent an order through for all fresh fruit, and berries, and bananas, and all that stuff. It’ll be here in the next 120 minutes.
Mike: Oh, really. It’s like you order and then it’s there in like two hours.
Rob: Yeah. You can select a time window, you could select the one-hour time window later in the evening or tomorrow, or whatever, or sometimes, depending on how busy it is, and of course middle of the day on what is it, Thursday, it’ll literally be here within two hours when I click Buy Now.
Mike: That’s interesting. We’ve talked about this a little bit, I think. But I used to work at Wegmans Food Markets. We implemented a system like this back in 2000.
Rob: Yup, you had talked about it.
Mike: Yeah. The difference though was that you would drive to the store and pick it up. You put everything in your cart, you shop, and then you specify like, “Oh, I’m gonna come pick it up at such and such time.” You have these like 10 or 15-minute time slots. You can just pick one and you just show up and they’d have everything ready for you. You just show up at the designated time. They’d ask your name, and that was the end of it. They’d load up your car, you don’t even have to get out of your car.
Rob: Yup.
Mike: It’s a little different though. This is also different than, what was it, Webvan.
Rob: Webvan and Peapod. Where it just tanked horrendously.
Mike: Peapod is newer. It was Webvan that ran out of business back in the day.
Rob: But Peapod did then too. I think someone bought the brand. They revitalized it because both of them raised a lot of money around ‘99-2000. But they were trying to warehouse everyday. They were trying to be like Amazon, or like a big grocery store distributor, whereas Instacart is more like Uber where they don’t own anything, yet drivers go shopping, and put the stuff in a cart, and bring it by. They just knock on the door, hand me a few bags, and it’s like, “thank you.”
Mike: It’s much more like a localized services business. More like running errands for you, although the errand is very specific.
Rob: Right.
Mike: Productized service.
Rob: I know. That’s what it is. So far, one of the concerns obviously would be like, “Well, are they gonna pick good produce? Are they gonna pick good if you order salmon? Are they gonna pick the crappy salmon?” So far, I haven’t had any issues. You can tell that they have some type of onboarding, they teach people to get the good stuff. I’m sure if you rate them poorly, like, “Yeah, the fruit was bad,” then there’ll be some issues there. I think that’s another difference is back in the day, I don’t know how much recourse you would have had with someone sending you bad fruit.
Mike: Yeah. That would have been a little difficult. The way Wegmans said it was like, they would actually have the butcher over at the butcher shop like pick up the meats and stuff for you. You knew that the people who were doing it were pretty experienced with what they did.
Rob: Right. Cool. Let’s transition into the episode here. We have several listener questions we’re gonna talk about today, and of course, per usual, our voicemails go to the top of the stack, so let’s kick off our first question. It’s about being pre-product market fit.
Harold: Hi. My name is Harold and I’m a co-founder of StackTome, a SaaS product for ecommerce retention advertisement. There are three product-market fit I’m looking for ways to get warm lead customers. I have couple of questions. When it comes to driving traffic to the site, I was wondering if you have seen educational videos instead of text content among sites like YouTube being successful. I find it more [00:10:03] traffic coming from search, mostly through content, while some content I find useful, I can’t find alternative quick videos explaining the marketing concepts. Also, what would you recommend for getting into mastermind groups [00:10:20] marketers that would be post product-market fit [00:10:24] Thanks for your always honest feedback and sharing your knowledge, I’m always learning something new each time I listen. Cheers.
Mike: I guess, to recap, and Rob, correct me if I’m wrong in my understanding to this, but the two questions that he had were essentially how should you approach developing content for the website to drive traffic? Should you focus on video, or should you focus on text, in order to gain more attention when you’re in pre-product market fit? The second one is, how do you find people to join a mastermind group with, is that right?
Rob: Yup, that’s right. To be clear about the video versus text, he wasn’t asking about conversion, he was asking about trying to drive traffic, will it rank, I think it’s will it rank better in search engines, basically.
Mike: Yeah. My understanding is that Google is still ranking video higher than text. But one thing you have to be a little bit careful of is to make sure that you’re providing some sort of transcript for it. That helps Google index the videos because otherwise, it has no way to know what is the actual content of the video, what are they saying. There are ways to provide that information to Google’s crawlers so that it will show up. The searches, that’s one thing I would definitely do.
The other thing that does come to mind though is that if you’re pre-product market fit, I would actually do outbound stuff. I would try to find and identify people who you think would be good customers and go after them, as opposed to trying to attract them and get them to come to you. Because really, that’s the situation that you want to, I guess, double down on once you know who your ideal customer is. But if you’re not at that point yet, you have to choose from outreach, otherwise you’re kind of throwing spaghetti at the wall and seeing what sticks.
Rob: Yeah. That’d be my sentiment as well. I think you can mess around with the video versus the text thing. I have heard success stories of video working better because it’s not something that everyone does. But you have to get into video, there’s like video site maps, as you said, you want transcripts. May just be better, I don’t even know if you wanna host it on your site at that point, you may just want to have it on YouTube, because YouTube videos rank really well in Google, obviously because Google prefers them over other things.
There’s a whole specialty of learning video SEO and how to rank using video. I would agree with you Mike, I just don’t think that’s necessarily worth diving down that rabbit hole, yet. Because I bet you could kill a month just learning about it and probably two to three months experimenting with it. I think there are more valuable things that you could be doing right now, even outbound stuff like you were saying. I could see running paid acquisition if you have any budget at all because you want instant feedback. You want instant customers or not. Customers or rejections, as they say.
Whereas this video SEO stuff, you’re building for the 3, 6, 9, 12-month timeframe. You wanna get to revenue faster than that. You wanna get to product-market fit faster than that. I would be scratching and clawing at anyone using a app. I just think of SEO and these types of strategies there is it’s just a longer term play. The bad thing to do, but if you limit it on time and budget, which I’m guessing you are, I wouldn’t be focusing on this.
Mike: Yeah. At most, what you just said is about the iteration cycle and being able to adjust quickly versus taking that long term approach which is valid later on. But, right now, it sounds like that’s not the way to go.
Rob: Yup. Then for his second question, it was how to find a mastermind group, and our very own Ken Wallace with mastermindjam.com is kind of our go to recommendation for folks looking to get matched up with fellow masterminders, both in the SaaS space, there are ecommerce entrepreneurs, there’s info marketers, there’s all kinds of stuff. Go to the site, you submit your name and your time zone, and a bit about yourself. I’m sure you categorize yourself in some way like SaaS or info, whatever. Then you get matched up. Ken has written an algorithm, and he also does a lot of manual stuff with it as well. There’s a small fee to getting matched up, but in my opinion, well worth the effort. There’s been a lot of successful groups that have formed out of using Ken’s service.
Mike: What’s next?
Rob: Next question is our second and final voicemail of the episode and then we’ll get to some emails that came in. This one is a question about the moral imperative of business.
Daniel: Hi Mike and Rob. This is Daniel calling in from Charleston, Oregon. Love your podcast, thanks for all the time that you put into it. Keep it up. Definitely in the want-epreneur category, tried a couple of products to myself, haven’t really seen success for me. The challenge is the golden handcuffs consulting business is too good to really make the dive deep in the product. But the question I have for you guys today is around the moral obligation of business and just to be hearing your perspective on income equality, social equality, and kind of the bootstrap startup vision is build a business and sent it to a hyper-competitive space that eventually throws off a bunch of cash. What do you feel is your moral obligation to reinvest that cash back in the community, people around you, your local geographic vicinity, and help address the growing problem of income equality. Thanks so much, bye.
Mike: I think for this question, when you’re talking about bootstrap startup, there’s actually two answers to this question, not just one. There’s an answer that is applicable before you get to the point where your business is making a fair amount of money and throwing off access capital.
There’s the second answer which is after that point. The first one is, I would say, before you get to the point where the business is throwing off that extra money that you can deploy as you see fit to do whatever, above and beyond to paying all the business expenses and paying yourself a reasonable salary and potentially giving you extra money to be able to put away the additional profit from the business at that point.
You don’t have any of that. Before you get to the point where that has happened, you’re not in a position to really do anything. I don’t feel it’s fair to put yourself in a mental state of mind where you feel obligated to do things for other people. Your real focus should be getting the business to that point and until you do, there’s really not a lot else you can do.
I think that if you tried to put other people before you, you’re just gonna run into a problem where everyone is always going to be coming before you. You’re never gonna pay yourself. There’s entire books that are written about this. I think there’s one called Pay Yourself First or something along those lines. That’s the phrase that goes with it. But until you’re there, it is not really justifiable in my opinion to attempt to do those things.
There’s a difference between spending a little bit of time helping people here and there but to make that your main focus is definitely not a route you should go down. Once you’re after that point, then the situation I think changes pretty dramatically. I wouldn’t say that there’s a moral imperative but depending on your own personal judgements and your own personal beliefs, I do feel like it is worthwhile going down that route. There’s actually a lot of benefits for you to, I don’t wanna say share the wealth or anything, but help other people because at one point, you were there where they’re at.
We could probably talk, at great length, about this but that’s the type of people you run into at MicroConf as well. I think that Rob, you probably agree with me on most of that stuff in terms of being able to help other people and the additional benefits that you get from it. It’s not really just about the money at a certain point, as long as your business is providing for you, then you can kind of do whatever you want with the money afterwards especially if you are already putting money aside to save. It feels great to be able to help other people who are further behind you because you were there at one point as well.
Rob: Yeah. I think part of this is a somewhat personal choice and I think part of it is how you view being part of a society in general or a community, maybe a better way to say it. I like the way you framed it, Mike. You can help people without going and volunteering at the local soup kitchen or without volunteering to train people how to learn computers in your local area.
You can help people by educating them on how to start startups. You can start a podcast and give content away for free that helps build this community of bootstrap founders. It helps raise kind of all of our standards of living, all of our quality of life, and it helps create jobs, and all that stuff. This doesn’t really have to come in the form that I think a lot of people think about.
My personal belief, I have always been as generous as I possibly can with my money and with my time. Since I was in college, I’ve given money to charities even when I didn’t have much money. As I started making more money, I still give quite a bit of money away each year. I have always spent a lot of my time helping whether it’s having lunch with an entrepreneur, whether it’s you and I doing the podcast for free for years, whether it’s blogging and giving away knowledge.
Yes, there are outlets, obviously, I wrote a book and I sold that for $20 a copy. You and I do host a conference but the amount of time that we have essentially given to this community far, far, far outweighs the monetary, the per hour cost or whatever that we would make, the wage we would make given all the time we’ve given away, it would not be a wise business decision to do that.
We have done some of it because it’s fun for us and some of it because, I think, you’d agree with me, I truly do enjoy giving back and helping people in the emails that we both get where it’s like, “Boy. There’s something you did,” whether it’s FounderCafe or MicroConf or the podcast, “it has changed my life and here’s how.” I receive dozens of those emails and those have a lot of impact on me. It’s a lot of mental impact. All that to say, I don’t know that I would preach that everyone has to adopt this point of view, but my point of view is that I always wanna be able to give back.
I have invested in a company in Fresno called Bitwise Industries, that is a for-profit but it’s educated thousands of folks in the local Fresno community which has a real wealth disparity. There’s a big digital divide there. They’ve educated thousands of people on how to program and how to use computers. I hired Derek out of Fresno although there wasn’t a digital divide with him. But then we hired three more people, created a bunch of tech jobs. Bitwise itself, I don’t even know how many people it is now. 50, 60 people.
There’s good to be had in a way that everyone wins. I think that’s how I think about it. I so much enjoy more funding a company like Bitwise or doing what we do with MicroConf and FounderCafe and this podcast because I feel like it’s win-win. We’re not just taking money that we earn as entrepreneurs and giving it to somebody. We’re actually starting a sustainable business. That’s what we’ve always wanted to make sure that MicroConf was sustainable, it’s why we brought Xander on so that we could do it year after year. It’s why we’ve really streamlined the podcast production because we wanna be able to continue doing it even when we have other things going on.
I think turning it in, again, I think like an entrepreneur. It’s like a person who turns systems into profit in essence. I want some of that profit to give back to whatever community is, whether it’s the bootstrap startup community, whether it’s the community I live in, but it needs to be a win for me as well in a small way. It doesn’t mean,”Oh, we need to get rich off it.” But I do think that making it into something sustainable, that’s how I’ve always thought about it.
I really like what you said about the kind of the pre-sustainable business. Because when I was scratching and clawing, I was freaked out about money, I was just trying to get whatever it was, Hittail revamped or the real tough financial year I had with Drip. I couldn’t even think about any type of moral imperative of helping other people because I was trying to take care of me and my family.
But once I get past that point, then yes, my mind is freed up. I absolutely give very generously to a lot of things, whether it’s charities or the sustainable businesses that hopefully are kind of doing some good in the world. Thanks for the question, Daniel. I hope that was helpful to hear our thoughts on it.
Our next question is from Stefan Debois from surveyanyplace.com. He says, “Hey Mike and Rob, I listen to your podcast for several years now, not since the beginning, but close to it. I really love it because it has so much actionable stuff. On one of the latest episodes, you guys talked about content marketing at the end of the episode, and I remember Rob saying he would not advice for startups to make it their number one tactic, for example, creating a blog and publishing content. But he would recommend doing something else like joint venturing with players in your field that already have an audience. I assume he’s referring to guest blogging, joint webinars, etcetera.” I’m gonna step out real quick. Two of those, guest blogging and joint webinars, correct. As well as integration marketing which I’ve talked about in the past which is where you integrate and then you both co-promote. Alright, back to his email. “It would be great to dig a bit deeper into this topic such as how exactly would you recommend doing this. If you had to start Drip or another SaaS company right now, how would you apply this given all your learnings? Thanks for your help. Keep up the great work. Stefan.”
Mike: I think one key point to keep in mind is that, as part of his question, he said, “If you had to start Drip or another Saas company right now, how would you apply this given all your learnings?” There is a point at which doing this kind of stuff is too early. You’re not far enough along where it makes sense to go down that road mainly because it’s not gonna make sense for whoever it is that you approach to do a joint webinar or guest blogs.
With guest blogging, you can certainly write articles and as long as they are relevant to the audience of the person that you are guest blogging on their site, and they are receptive to that kind of thing, then sure. You can totally do that. But when it comes to something like a joint webinar, you really can’t do that unless you have something that is tangible and benefit that is going to be given to that person’s audience, whoever it happens to be.
The other thing is what are you offering the owner of that audience? What are they getting out of it? Is it really just educating their people? Are you promoting your products or is it just an educational thing where you’re explaining how to do something or about a particular topic or a technique or something along those lines.
But again, none of this stuff you can do until after you’re at a point where you have a product that is functional and you have people who are onboarded and paying and you kind of know what your ideal audience looks like. Because otherwise, you’re approaching people that their audience may not necessarily overlap with yours.
Those are the things that I will keep in mind when trying to go down this road. Until you’re at that point, none of that stuff applies, you’re just not going to go anywhere.
Rob: Right. The thing to keep in mind is this is where it’s nice to have a nice little email list because if you are gonna do, I’m gonna say mostly stick to joint webinars and integration marketing. If you’re gonna do that and if you have a list of 10,000, 20,000, 30,000 people, for the most part, you’re gonna be able to say, “Look, let’s do a joint webinar. You email your list. I email mine.” Or you do vice-versa where you give a webinar to their audience and they give it to you. You can just trade straight across. You don’t have to mess with affiliate commissions. Just get the benefit of the traffic and so did they.
The same with integration marketing. The bigger the list you have, the better off you are in getting people interested in doing some type of joint promotion with you. If you have 300 people on an email list, it is much, much less likely that someone’s gonna wanna do a joint promotion with you.
With that said, in the early days before you can build up that list, you’re going to want to use affiliate commissions. If you do approach someone to do a joint webinar or to do integration marketing, you can say, “Look, we pay 20%, 30% of affiliate commission and here’s the link.” That’s how you’re gonna get them interested. Because then at that point, they can at least count on some type of revenue stream.
The way I did it back with HitTail, which is 2013-2013, is I looked around in the space and I looked at complimentary products, and so HitTail was a long tail SEO keyword tool. I looked at rank trackers and other keyword tools that didn’t use the same approach that we did. I, at the time, just cold emailed a bunch of them. I remember I made this list of seven or eight SaaS apps that weren’t these big behemoths, I didn’t email SEOMoz or anything.
Once that appeared to be more startupy or bootstrapped or whatever and all of them wrote back and said they wanted to do it. I was overwhelmed by that. I expected to get one out of that. I wasn’t able to do JVs with all of them. I think we were even just doing JV mailings. We were just gonna email each other’s list and kind of recommend a tool. I, of course, tried out any tool recommended, and then they did the same thing. Our lists were about the same size. We did no affiliate commissions at the time.
I’m not saying that’s gonna work in every niche but that’s something that I did. Then with Drip, when we started doing JV webinars, it was much more about relationships. That was in my wheelhouse. I just emailed people who I knew in the MicroConf space, in kind of our community. We did joint webinar I’m pretty sure with Brennan Dunn. I know we did one with Rubin for Bid Sketch. There were several others. But that was a lot easier. It depends on if you have a network in the space or if you’re going cold. But I’ve made either one work. It is something that you can do.
In terms of integrations, we start to build the integration and then create a nice landing page for it and then you email the company and you say, “Hey, can we do co-promotion?” With that, it really is gonna depend on the size. Because Basecamp and Stripe are not gonna co-promote with you. You’ll get lucky to even get listed in their directory at this point. But if you get someone who, it doesn’t have to be a tiny little company, if you get ahold of someone in marketing at even a decent sized startup, they will at least have the question of, “Well, how big is your list?” If you say, “I have 20,000 or 30,000 people on an email list.” It can raise an eyebrow. It can get you a mention. Maybe it’s just a single mention in an email newsletter they send out but they may have 100,000 subscribers. It can get some traffic toward you. That’s how I would think about doing it these days.
Mike: As a general rule, when you’re trying to find people to do these sorts of co-marketing efforts with, try not to go after somebody who has a list that’s more than twice your size or less than half yours. If you stick within that range, whatever that size happens to be, you’re probably gonna have much better results.
Because if somebody is much larger than you, they’re not going to want to do a joint marketing campaign with you unless you know who they are and you have developed a relationship with them. If they’re less than half your size then it’s probably not going to do a lot for you. That’s the thing that I would keep in mind as well when you’re trying to find people.
Rob: That’s a good point. Our last question for today is from Rusty Shackleford and he says, “Can you give me some insights on when to provide a trial versus a demo for apps that rely heavily on user-provided data? I’m developing a medical records SaaS. I’m keenly aware that it’s a waste of time for a prospective client to do a trial of my product when they would need to enter so much of their own data. Most likely, in addition to entering that data into whatever product they’re currently using. Would you suggest providing demos where I lead them through examples versus a trial of my product?”
Mike: I think of this particular case, if you’re dealing medical records and you have the objection or hurdle that somebody needs to overcome to start using your app is that they need to provide the data, I would lean much more heavily on the demos than on trials. I’d push them directly towards a demo whether that’s signing-up directly on the website or getting them onto an email list and then sending them to a sign-up form where they can sign-up for a demo, maybe ask them for information through a survey or something along those lines. Push them through that way. I would not go to trial route.
If you go with the demo route, what you can do is then you can directly address that particular problem during the demo itself and say, “Hey, we understand that in order to get you set-up, this is what you need to do. The next step after this is to decide if you wanna move forward with the product or not, and move to a trial. If so, send us this data and we’ll put it in for you.” Essentially, you’re doing onboarding for them and you eliminate that objection upfront.
You can try pushing that off to them which is really what you’re doing if you send them to a trial without you interacting with them which is going to raise that as an objection and they’re gonna say, “Well, I don’t really wanna do this,” versus if they have other things going on, they’re just not gonna do it is really what the bottomline is. Especially if they have to change whatever their current processes are versus if you talk to them, you have that conversation, get them to buy into the concept and what they can get out of the product after they start using it.
If they buy into that story, they send you that data, you take care of that leg work for them and once that data is in place inside of their app, then it’s ready for them to use. They don’t have to do all of that extra work. It just makes it easier for them to overcome that hurdle. If you don’t have a good import mechanism or good ways to just pipe the data out of other apps, it’s gonna make it really challenging to get people to go from a trial to a paid conversion. Because they’re just not gonna do the work is really the bottomline.
Rob: Yep. In general, I lean towards demos over trials. The problem is it doesn’t scale very well. As you scale up, that’s why you resort to having a trial. But relying on the customer themselves to orient and find their way around inside your app enough to understand the value, whereas you can explain that value in 10-15 minute demo, I bet in the first 5 minutes of your demo you can give more value than someone poking around inside your trial. Aside from the fact that your app sounds not complex, but there’s a lot of kind of onboarding necessary, a lot of work on their part, there’s no way I would consider letting people in for a free trial.
Mike: For some of the medical records, there’s subtle questions that people are gonna have which revolve around trust issues which you’re not gonna be able to really overcome very well with a free trial.
Rob: Right. Then they’re gonna have this account with no data in it. It’s gonna look terrible and you’re gonna have an account full of data that you can demo them. You’re gonna show exactly the value that they’ll receive. In your instance in particular, I’d definitely do demos. In general, when you’re bootstrapping and starting up, all during customer development, I recommend doing demos because you’d get so much more information from them.
If you’re still pre-product market fit, I recommend doing demos because you’re gonna find out why people do or don’t sign-up. They’re going to be more likely to get in touch with you if they decided to cancel or not get onboarded because you already have a relationship with them.
Post-product market fit if you can still do it, I know at certain points it makes sense to go with self-service trial sign-up but the dirty little secret is as much as I don’t like demos, I’d prefer to get in and dig around with an app and try it out, most people want a demo. They would much prefer someone to walk them through an app rather than try to poke around and do it themselves.
We had done a few experiments where we had just trials versus funneling people into demos and we converted the demos into paid accounts. It was like 2X, 2X the rate of just letting people get onboarded themselves even with all the help that we’re giving them via email and apps. You’re gonna convert more. People are gonna get more value out of it.
In general, I think it’s just a better way to go. There are obviously exceptions to this. There are tools like, let’s say, even like HitTail, it was a high-volume, high-return tool. It was an SEO keyword tool and people would come in, try it out here and there, and it was super easy, and at the end, it was a one-click set up. You literally just walk into something and it would pull keywords out.
A demo would be interesting but only for high-value account because some of those accounts are paying $10 a month and at that point, it just doesn’t make sense to do demo. There are exceptions to this but as a rule, I would go demo as the default and then figure out, “Well, is this one of those exceptions where I should really just have a self-service trial available,” or you have both options. That’s what Drip has today. You can still sign-up for trial if you still wanna poke around but there’s a big push of course to get people into demos because of all the reasons that I’ve stated here.
Mike: I think that about wraps us up for today. If you have a question, you can call it in 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. Visit startupsfortherestofus.com for a full transcript of each episode. Thanks for listening. We’ll see you next time.
Episode 373 | How to Craft Your Homepage with Lianna Patch
Show Notes
In this episode of Startups For The Rest Of Us, Mike interviews Lianna Patch, a conversion copywriter about how to write copy for your homepage. Some of the topics include the basic process for crafting a homepage, how much time to spend on copy, and common mistakes.
Items mentioned in this episode:
Lianna: I’m Lianna.
Mike: We’re here to share our experiences to help you avoid the same mistakes we’ve made. How you doing this week, Lianna?
Lianna: I am doing fabulously. Enjoying lots of chocolate and probably too much wine with my family for Christmas. How about you?
Mike: I did not realize there was a ‘too much wine’ level.
Lianna: I actually tweeted about this this morning because I was sitting with my laptop at the kitchen table and I said, “Oh I have to record a quick video.” My dad grabbed an open box of wine and was like, “Well, just in case you need a prop.” I was like, “Oh, either my branding is really good or I should seek therapy.”
Mike: Well, who knows. I’m not sure which side of the fence to fall on right there. I think that’s a dangerous area that we’ll just kind of avoid at the moment.
Lianna: Let’s do it.
Mike: For the listeners who are not familiar with Lianna, Lianna Patch is a conversion copywriter and also an improv comedian who helps businesses inject humor and personality into their messaging. She is the founder of punchlinecopy.com. She also runs snapcopy.co. She’s worked with companies like Copy Hackers and Autopilot. She also spoke at Unbounce, their Call To Action Conference last year. She’s gonna be speaking at MicroConf Growth Edition this year. Just wanted to say welcome to the show, Liana. Is there anything that I missed in there?
Lianna: No, it sounds really cool when you say stuff like that about me. I might just get you to record all my intros.
Mike: Thanks. The reason that I wanted to have you on the show today was to talk a little bit about crafting copy on homepages. This is kind of directly relevant to the stuff that I’m working on with Bluetick. But, I also think that you have a very unique insight on a lot of this stuff. I wanted to dive right into that and put in front of you the very first question that probably comes to mind which is what’s the first thing somebody should do when they’re kind of preparing to build the first version of their homepage or even if they’re just doing a website redesign? What should they keep in mind when they’re doing that?
Lianna: The first thing to keep in mind is what you need your homepage to do. We have this idea of homepages as the place where your visitors land. There’s no slash, there’s no landing page after the URL. It has to appeal to probably multiple different types of visitors that you’re gonna get. It has to get them to the place on your site that more specifically addresses their needs as quickly and effectively and clearly as possible.
When you’re starting to either build a homepage from scratch or redesign your current messaging, you have to start with your visitors. Who are they? Are they all the same kind of target person or are there different types of visitors? If you run an ecommerce store, maybe you have different shopper demographics. If you’re a software startup founder, maybe you have different buckets of users coming from different industries who want to use different features.
You have to start with knowing about that audience and knowing how they describe what they’re looking for and you also, on the flip side, have to know what your unique value proposition is. I can talk a little more about that. I know I just sort of went on for a little while.
Mike: Sure. Why don’t we dive into some of those things because, I think, the one thing that’s probably most confusing for people is honing in on the message that you should give to people when they show up. Because, a lot of times, people don’t necessarily know exactly who’s coming to their page or they’re trying to use it as a landing page. If you’ve got a very early product, you don’t have a lot of content. One of the issues is trying to figure out what do I put on that homepage? Who am I talking to?
Lianna: Right. The very first thing any homepage needs is that top message, probably above the “fold” on the page. The value proposition where you very clearly explain what your product or service does. If you have competitors, why you’re different than your competitors so that people know exactly where you stand and why they should choose you. It’s not a place to be saying, “Welcome to our site.” Because that’s sort of a waste of that real estate.
It’s more of a place to say, “This is X product for Y type of person who wants to solve Z problem.” You can be very specific and speak to what problem your product or service is gonna solve for that reader. They know immediately why they’re reading it.
Mike: When you’re crafting that unique value proposition, it sounds to me like – is there a formula that you can follow for, it’s not even a call to action, but the headline there like, “It’s X for so and so.” “Airbnb for this people,” or, “Stripe for this other group of people.” Obviously, you don’t wanna use exactly that and you probably don’t wanna put either competitors or other companies in there but is there a formula or something along those lines that you can use to illustrate it to people?
Lianne: That’s a really good one and a straightforward one. The insert what you do for insert who you serve and then you have sort of an optional place in the formula at the end for insert problem solved or pain alleviated. A payment solution for solo freelancers who wanna spend fewer hours doing accounting. You’re doing some of this work with Bluetick honing on how to message that differentiation because there’s some people who do some of what you do and you do some of what they don’t do. Sometimes, when you’re working on this research you can get those insights from your customers or from your prospects as they describe to you what they’re looking for. You can just swipe that language right from them if you do that research.
Mike: What are some of the other ways that you can gather research? If somebody’s early on in a product and they don’t necessarily have a lot of data from those people, are there other sources that they can go to like other websites that they can try and either buy information outright? I’ve heard people saying if you’re doing sales on Amazon, for example, obviously going through and reading what the reviews are, on Amazon is a great way to do it because you can look at competitor’s products. You’d see the exact language that people are using. But, if you’re very early on, you don’t necessarily have that. Are there other ways to gather that information?
Lianne: Great! Yeah, there are. Like you said, Amazon review mining is great even if you don’t have a product with reviews. If there are products who you know you’d be competing with, you can go through those reviews and see what people are saying and sort of start noticing if there are any patterns in the types of problems that people are having or what they’re looking for. Same thing goes for G2, for software products, G2 crowd is a good place to go through competitor reviews and also your own reviews.
If you don’t have an audience at all, you wanna interview people who you think would be your audience. Good way to do that is, there’s no way around it, just getting them on the phone if you can for 10 minutes, or better yet a video call, asking them some questions about their pain around whatever problem you’re trying to solve because they may not know that they have pain or they may not know that it is a pain that might just seem like an annoyance to them. You have to get them to talk about this problem in multiple different ways until you find a way where you could hear the emotion in their voice and you know you’ve hit on a problem and then you listen to the words they’re using.
Talking to who you think your prospects are is a great way to both a, validate your business idea if you’re just starting up, and b, understanding how to message that so they understand what you do.
Mike: After you’ve gotten the, I’ll say just the headline in place, is there a structure that you should follow for the rest of your homepage or should you focus more on the broad strokes view of what the website is? Because I think, there’s a couple of different directions you can go there. You can have a single page for your homepage that kind of does everything or you can split your website up into a bunch of different pages and then link back and forth between some of them.
One of the classic example is just having a call to action right in that hero area or the headline where they click a button and it’s ‘Take A Tour’, then there’s also things like testimonials. You explain a little bit more about what the product does or maybe you take them over to a survey or trying to get them on a mailing list. Is there a general structure that people should follow or is it really just much more dependent on how much content you have to put in and how much time and effort you have?
Lianna: I think the thing that it depends on most is how many different user types you’re gonna have visiting. If you have a single type of user, your homepage is basically a landing page. It can have one focus which every landing page should, just one single call to action. But if you have multiple types of users, and you’re gonna have dedicated landing pages for each of those users, then you need to help people find where they’re going as quickly as possible.
If I have three types of visitors and I know from doing research that 60% of my visitors are looking for apples, and 30% are looking for strawberries, and only 10% are looking for grapes, I might focus 60% of my page on apples, and make sure that the messaging, especially close to the top where most people will be scrolling, is apples, and then supplement that a little bit down the page with strawberries, and then, wherever the grape people end up, there’s a little bit of messaging for them. But we’re appealing to either the largest group of customers or the highest value. Maybe people spend more on apples than they spend on strawberries or grapes.
I don’t know why I went with fruits for this analogy but no one’s buying fruit on the internet. But that’s one way to do it. Splitting it up by the number of customers in each group. You can also segment or structure your page depending on the different products that you have and their popularity or what you wanna sell. If you want Product B to be more popular than Product A, you might position it higher up the page or spend more time explaining Product B to give it a little more chance to shine. But basically, if you have more than one focus on the homepage, it’ll behoove you to get people where they’re going, where you can give them more information about that specific thing that you offer versus giving them all the info on the homepage.
That’s one thing that I see people do a lot. They say, “Okay, we have this whole website. We have five pages and we need a link to every single page in some section on the home page.” You scroll down and you can get to the about page from the homepage. You can get to case studies. You can get to contact. You might not need all of those things on there especially if you have a top nav which you probably do.
If you’re not sure how to structure the page, this is something I often recommend, just put a little pop-up poll on the page and I always recommend Hotjar. It’s called a website poll. If it seems like someone is staying on the page or they’re scrolling up and down, and they’re looking for something, you can time this to appear after 30 seconds or so and just ask what brought you here today or what are you looking for on this page or is there something missing. Then, especially if you have lots of traffic, you’ll start to get a sense of what people are looking for and they’ll tell you how to structure that page.
Mike: One of the things that you mentioned there is the idea of focusing the content, the messaging there on what the majority of the traffic that comes to your site is. If it’s for apples as you pointed out, that’s 60% for apples, then put 60% of the content aimed at people who are there for apples. Is there a danger associated with that where the reason that you end up with that traffic is because you’ve got so much content there versus if you were to switch it, let’s say, gear it for oranges, for example, isn’t it possible – how would you find out that isn’t the reason that people are coming?
Lianna: Yeah, I think it can be sort of a self-fulfilling prophecy. If we position ourselves as being the place to go for apples (also, maybe oranges, strawberries, and grapes) then you can start to think that your whole customer base is apples. There are ways to, throughout the page, indicate that, “Hey, if you’re here for strawberries or grapes or whatever, we have stuff for you too.” You just sort of subjugate that messaging throughout. You don’t have to ignore those people but people do read so if you make sure to appeal to them maybe in a less visual or less obvious way, they’ll find those pieces and they’ll go where they need to go.
Mike: We talked a little bit about the basic structure of the site itself and a little bit about the page. When you’re focusing on the messaging specifically for the homepage, is there a guideline for how much time you’re spending creating the initial copy for it? Obviously, there’s a difference between when you’re redesigning the page or you’re just changing small sections of it but if you’re building something let’s say from scratch, how much time should you be spending on that? Could you measure it in hours? Could you you measure it in days? What sorts of rules of thumb could people use as developers? Because obviously, most of our audience is developers, it is not something they’re gonna have a lot of experience with. What should they think of in terms of building that?
Lianna: I think if you’re thinking about how much time to spend, spend the bulk of your time on the research, making sure that you have the right messages down. When you actually go to craft the copy, you should be able to pull from the research, and use the same phrases that you’ve heard from your customers or your prospects. Some parts of the copy will write themselves. When you’re reading through the page, you already have the structure, and you have a few spots filled in with the messages from your research.
You’re looking to write a copy that creates a flow down the page. You don’t have to psych yourself out about it. It doesn’t matter if you’re not a copywriter. As long as you are writing for your audience, and for your reader, and you’re writing in language that is centered around them, second person voice, ‘you are here because this is what we can do for you’, that kind of thing, you don’t have to spend weeks on it.
I think there’s no hard and fast rule about how much time “should take” but when it feels done, it’s probably done. What I like to do is when I get to a place where a draft feels done, I put it aside for a day or two, and I come back to it and read it again. Because if you stare at something, especially if you try to just bang it all out in one day, you can’t see either mistakes or areas for improvement that you’d be able to see with a quick look a day or two later. However much time you spend on the homepage copy, just give yourself a day or two, and then look at it again later, and you’ll fix a few last things.
Mike: Part of it is about inserting these artificial delays in between. It’s not about spend X number of hours on it. It’s spend some time on it and then make sure that you insert some artificial delay and then come back to it so that you get the fresh point of view after having some time off.
Lianna: Yeah. Because your brain is gonna be chewing on those things especially if you’ve gone through the research and you’re thinking about how your readers are gonna be interpreting this page. You might have a brain wave like, “Oh, actually, this headline isn’t the best way to explain this part of the product. Instead, we should say it like this.” Sometimes, you just need a little bit of cognitive processing time.
Mike: When you’re looking through these, whether it’s the initial walkthrough or you go through the process of revisiting them, what are some of the most common mistakes that you see people making on either the copy itself for the homepage or the design itself?
Lianna: Yeah. We’ve actually touched on a couple of these. The first, I would say, and I can’t believe this is still a thing, where you get to the site and the homepage says, “Welcome to blank.” You’re just like, “What? I know that I’m here. I clicked on a link or I typed in the URL to get here. I did this on purpose.” That’s a waste of space. That’s the opportunity where you have to grab your reader and say,”Here’s exactly what you’re here for.” That’s a huge missed opportunity.
The other mistake we touched on was trying to cram everything in the kitchen sink onto the page thinking that you have to have a link to every other page on your site on the homepage just in case. Instead, you should focus on probably the top three or top four most popular areas of your site, and let people who are more determined to dig do that digging in the top nav with some smaller subjugated messaging.
In terms of design mistakes from a conversion perspective, stock photos are the thing that I see just killing trust all over the place. I know it’s not easy to get real photos especially if you’re a startup and you have a small marketing budget but if you can, invest in less obvious stock photos or even avoid them altogether and take your own photos with an iPhone. That’ll go such a long way toward building trust.
Mike: I like the idea of using “less obvious stock photos”.
Lianna: Yeah. There are lots of sites out there that are geared toward that. Death to the Stock Photo’s one of them. Unsplash is around. They’re all free but if you’re going to Getty images and picking that photo of people in business suits standing around a conference table staring at an empty legal pad, then that’s just immediately gonna tell your reader that you’re not a real company, you can’t be trusted.
Mike: You did mention the idea of having three or four different main links that you focus on to take people to other pages, should those be things that you focus on in terms of trying to allow the people to self-select or are you trying to give them a story and lead them through? Because there’s a difference between trying to lead them through your website versus allowing them to self-select what things they’re the most interested in.
Lianna: Yeah, I tend to not wanna lead anybody on a journey. I want them to get where they’re going as fast as possible. The idea of self-selecting is a really good one for the homepage. We haven’t specifically talked about that, but you could say,”If you know that you have these three customer types, X, Y and Z or apples, strawberries, and oranges or grapes.” Whatever we said, you could even make it very explicit and say, “I’m a person who’s looking for oranges or I am person X or I am person Z.” Allow them to click a button that says, “Yes, this is me.” Then you take them straight to that landing page.
The copy around that section can give a little bit more information about what they’ll find when they go that landing page. But having that phrasing especially in the first person voice, the, “This is me. Yes, this is it.” Allows them to mentally confirm, “Okay, yes. I’m identifying with this and this is where I need to go.”
Mike: That’s kind of what we did with the MicroConf website where you browse the microconf.com and right there, right at the top it says, “World’s biggest conference for the world’s smallest self-funded software companies.” Then you’ve got an option. There’s two buttons there. One says, “click here for growth edition” and the other one says, “click here for starter edition.” That’s kind of the tactic we took with that because we really want people to kind of self-select in between those two groups. It’s a very definitive line between them. It’s not as if there’s a lot of overlap between them, I’d say.
Lianna: Yeah and I like this because obviously, your UVP is very clear. It’s a conference for the world’s smallest self-funded software companies. Then right away, you give people who know what they need the choice to learn more. If they don’t know, they can just keep scrolling and immediately they have ‘which MicroConf should I attend’ answered for them.
Mike: Are there other ways that you can think of to provide some sort of a self-selection option for people? Because I think you do wanna at least provide some ability for them to say, “Hey, I’m in this particular group.” I think most products have more than one group of people who would use them. Whether it’s sales executives and developers, for example, or I guess, there’s probably a very little overlap there. If it’s a project management software or time tracking or there’s lots of different pieces of software where related groups use them. Whether it’s founders or small agencies. How do you go about figuring out how to present that?
Lianna: You can describe, like you were just saying, by job role. If you know some of the major types of job roles that your users are, like software developers, sales executives. You can also allow them to self-select by pain, “My biggest challenge is publishing something every week,” “My biggest challenge is following up with my leads,” or “My biggest challenge is eating a popsicle.”
I’m not coming up with good comparisons right now but those are the two flip sides of the same coin. They’re saying either I am this type of person or I have this type of problem. You either segment them by role or by problem that they’re having which will obviously connect to a page that tells them more about how you’re gonna solve that specific problem for them, no matter what role they’re in. Does that make sense?
Mike: Yeah, it totally does. I think that’s a good example of one type of call to action. What you can focus on is allowing people to self-select but I think there’s a lot of other ones that come to mind that people will, I’ll say, try to slam all into the same page. For example, there’s things like putting people on email lists or getting people to take a tour or click here to sign-up or to start a free trial. How do you decide which ones you should focus on, specifically for the home page?
Lianna: If you have, for instance, a content offer that you geared to be applicable to multiple different types of visitors or users like an email series, then you can offer that to everybody. It depends on where in their stages of awareness most of your visitors are. Whether you’re gonna get them to sign up or take a tour.
If the visitors that are coming to your homepage don’t really know that they’re having an issue, they’re not really sure what you do yet or that you have competitors or why they should pick you, getting them to sign up for a live one-on-one demo is gonna be a really tough sell because there’s so much education that you have to do there. You can’t really do that on the homepage. Versus asking them to get on your email list or offering them something quick and free like a one page PDF is a much lower risk CTA.
You might say, “Get on my list and I’ll send you five emails to improve your sales process,” which might sound familiar to you, Mike. It just depends on where the bulk of those visitors are in their “customer journey” which is a phrase that I hate to use but is applicable here.
Mike: For the homepage, should you be focusing much more on things that are, I’ll say, less of a commitment for the person, especially if you have a very small website. You only have maybe two or three pages tops. Shouldn’t you be focusing more on the things that move people as far along as possible, as quickly as possible, or do you really need to have those extra pages that explain a lot more about what the product does?
Lianna: It just depends on whether that visitor’s gonna be ready to sign up to hear from you or to schedule something with you or whether they need more information first. That’s something that you can only know by watching your quantitative metric, so your Google Analytics to see where people are falling off the page or when your pop-up comes up, everyone leaves. But, in general, if you have more information to give, even if it’s just a two-page site, you’re better off asking them to visit that next page that more specifically meets their needs, and then asking them to take that next step. Whether it’s joining your list or scheduling a demo or whatever it is than doing it right from the homepage.
Mike: Got it. Because I’ve seen people that have a button right on the page that says, “Click here to sign-up.” I’ve seen that as a recommendation throughout the years. It almost seems like that’s too much too quickly even if you only have a two-page website. It’s really hard to get somebody to visit your webpage and then immediately say, “Oh, yes. This is for me,” and they click, and they go to sign-up. Because they wanna see more about it. They wanna get that level of trust and I don’t feel like it’s there yet with the homepage.
Lianna: It really depends. If you have your users super segmented or you’ve honed in on your targeting and you know exactly who’s coming to your site and you’ve built this, whatever it is, this piece of content or this email series, just for them, they might be ready to sign-up. But if you have a ton of different types of traffic coming and they’re “colder”, they need more education, explanation, you might wanna wait a little bit longer before you ask them for something.
Mike: If somebody’s on your mailing list, you send them a link that says, “Hey, click here to buy such and such.” They’re clicking on that link, they go over to that web page, and it’s not even your homepage at that point. It’s a landing page that is kind of designed with that particular person in mind, in that stage of the buying process versus with a homepage anybody could be visiting and you don’t have as much information about them even if you have done all the measurement and stuff. There’s still a lot of other people who could come there. If it’s the first time that they’re seeing it, they just don’t have that level of trust. It’s kind of what I was saying about you can’t jump that far that quickly I think on the homepage.
Lianne: Yeah, the other thing that we haven’t touched on yet but which I hope has sort of become clear is that you don’t wanna write your homepage for everybody in the world. Ideally, you should know pretty much who your visitors will be or who you want them to be, and then write for those people. You’re not trying to get every single person on your email list. You’re trying to get Mike and Rob and Lianna. Because we’re all interested in software development and that’s kind of your niche.
It’s okay to be more specific and that’s where clearly stating your value proposition right at the top of the page. As soon as people arrive, this is what we are, this is who we serve, and this will benefit you if you are this. That becomes so important. Because that tells people right away when they land a page, “Oh okay. This is for me or this isn’t for me.” You only want the people who say, “Okay, this is for me.”
Mike: What are your thoughts on using video on the homepage? Where there’s a short demo of a walkthrough, or just the founder of the company standing there and talking about of what the product is or video of the founder themselves talking to the person about the problems they’re trying to solve?
Lianna: I love video pretty much anywhere because there are just some people who don’t like to read, that doesn’t mean they’re gonna be bad customers or bad visitors, they just don’t wanna read. If you have content on the page that you wanna get across but you know some people would rather watch a video, put that in the video.
If you are a single founder or a smaller company, that’s a great way to humanize yourself. Just say, “There’s a real person behind this site. We’re not using stock photos and more than that, we are here talking directly to you explaining exactly what we do and how we can help you.” Video’s always a plus. I’m trying to think of a situation of which it wouldn’t be, maybe if you’re crematorially, don’t make a video. That would be terrible, sick burn.
In terms of where in the page it should be, we often see them in the hero section of the top, again because it’s a chance to say, “Real quick, here’s what we do. Click to find out.” Sometimes, see them toward the bottom too because if someone had scrolled that far, they might be looking for more information. A video might just be the thing to tip them into taking action, whether that action is signing up for the list or scheduling a demo or clicking through to the next page they need to see, that can be the last little nudge they need.
Mike: One question that comes to mind for me is how do you know when something is good enough? When you’ve got, I guess, the basic structure in place or some basic headlines or outlines of what the subtitles and stuff would be. How do you know that which you have is going to be good enough to be put out there or should you just kind of throw it out there and see what sticks and start taking measurements and stuff?
Because the trouble I think that a lot of people find themselves in is especially when they’re launching a product, they don’t enough traffic to really do any sort of really analysis like AB testing, “Oh, we had this before and now we’ve got this.” If you go from 500 visitors to 600 in a month, it’s almost meaningless. What do you there? How do you know that it’s good enough to put out there and that you shouldn’t keep iterating on it?
Lianne: Before you publish anything, you should be going through it from a structure perspective, that’s the first editing level, and this is actually the start. This is the substance of my talk at CTA Conf this year. Go through it on the structure level to make sure it’s hitting all the points your readers need to hear. Go through it on a paragraph level to make sure that the copy itself is easy to read and parse, you want it skimmable, you don’t want giant chunks of copy.
There’s a lot of formatting you can do to make things more easy to read which cuts down obviously on cognitive load for your readers. Then when you get to the line level, you’re looking to cut out anything that isn’t doing a job. Every sentence’s job is to lead to the next job. You wanna cut out anything that seems fluffy, anything that you know is just kind of in there for you because you wanted it or it’s a darling. You have to clear your darlings, as we always say.
Then you’re looking for what my good friend, Amy Harrison, calls umbrella terms. That’s where you had a bunch of super specific descriptors and you squeeze them into one. You end up with some adjectives like cutting-edge or first class or world’s best and when you think about it, they don’t actually mean anything. If you notice any of those cliché phrases sneaking into your copy, you wanna replace those with more specific, more accurate, and descriptive adjectives that give people a sense of what you do or who you are.
That’s the kind of last defense on a line level and that’s kind of what I do when it comes to punching up copy with humor. If you want, we can talk a little bit about why humor works in copy and where it should be used and that kind of thing.
Mike: Yeah, I’d love to. It’s definitely an area that I think allows people to be a little bit more expressive on their websites just because you get to inject your own personality without making the person who’s reading the copy feel like it’s a corporation. Because most people listening to this are probably running small businesses. You want at least some level of personality to come through, but at the same time you don’t wanna overdo it in such a way that it seems like such a small company that how could they possibly trust you.
Lianna: Right, yeah. There’s definitely a balance to strike. But I think, erring on side of being human, and having a personality, and being warmer does build that trust much more than trying to come off as a bigger company, and then people see through you which makes it seem like you’re posturing, and you’re kind of fake.
When it comes to deciding where to strike that balance, you want to ask yourself again how you want your reader to feel because it’s always about them. You wanna ask what’s the sense of humor of my business or my brand? Are we witty? Are we highbrow witty or are we sort of goofy and silly? Are we borderline absurd or offensive or crass? Probably, it’s none of those, because you don’t wanna offend people but different companies have different personalities. You have to figure out what feels right and natural to you. That would be your jumping off point for working in humor to your copy.
When it comes to actually doing that on a sentence level, one of my favorite things to do is use humor for comparisons. A lot of times, we lose specificity on the line level, so we’ll see a piece of copy that says, “This is the worst feeling in the world.” That’s kind of specific. People can sort of mentally apply that to themselves and know what that feels like, but that’s a chance to insert humor and specificity which is a key tenet of high converting copy, being specific. Instead of the worst feeling in the world, you might say, “It feels like showing up to school on picture day with no pants and spaghetti sauce all over your face.” Or something much more specific, and weird, and out there, and absurd.
You get that little jolt of surprise when someone gets to the end of the sentence and sees that descriptor. It keeps them interested. Hopefully, it makes them laugh a little bit and it gives them a much more concrete image to grab onto than just saying, “It’s the worst feeling in the world.”
Mike: Yeah. Giving them a concrete image is kind of what I was thinking. I was thinking giving them a visual thing to kind of key-off as opposed to like, “the worst feeling in the world” that’s going to be different for each person. But everybody can kind of visualize what showing up to picture day with no pants and spaghetti on your face is gonna be like.
Lianna: I don’t know why I grabbed those two. I think just because my niece was eating spaghetti earlier today and I was like, “Wow, you are a mess.” Obviously that’s the place to dig into your research again. Because if you know what the worst feeling in the world feels like to your specific customer base, then use that as an image. Play on that.
Mike: I think that kind of goes back to your previous guidance about figuring out how to evaluate the copy at a line level and get rid of some of those filler words like saying actually or really bad or takes a long time and things like that. You can get rid of those and use that specific example.
Lianna: Be a little bit hyperbolic, like you said, takes a long time. How about something like ‘takes a million years’. Obviously, it doesn’t take a million years, but it’s the casual cadence that we tend to use in our conversations. People tend to exaggerate. When website copy does that too, it flips that switch of, “Oh, a real person wrote this who understands my problems.”
Mike: Awesome. We’re kind of running a little bit short on time here but is there anything that you wanted to add or leave the listeners with?
Lianna: The only thing I would say is that if you are now taking a critical look at your homepage copy, and you’re thinking, “I could be more specific with my value proposition where we explain who we are or I could be more specific in getting people to self-select in each call to action,” then you’re probably right. Take a look and see if there’s anything you can change and give it a try because you might be pleasantly surprised by the results.
Mike: Awesome. Well, if people have questions for you, what’s the best way for them to follow up with you?
Lianna: They can find me on Twitter, @punchlinecopy. I am relentlessly on Twitter. It’s kind of bad.
Mike: I assume that’s probably the one and only best place to find you.
Lianna: It’s a pretty good place to find me. I’m at my website. I’m on Facebook, sort of, but Twitter is the best place for sure.
Mike: Got it. Okay, great. Thanks for coming on the show, Lianna. I really appreciate it.
Lianna: Thanks for having me, Mike. This is super fun.
Mike: If you have a question for us, you can call 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.
Episode 372 | Our Goals for 2018
Show Notes
In this episode of Startups For The Rest Of Us, Rob and Mike do their annual goals episode. They revisit goals from 2017 and rate how they did as well as look ahead at goals for 2018.
Items mentioned in this episode:
Rob: And I’m Rob.
Mike: We’re here to share our experiences to help you avoid the same mistakes we’ve made. What’s going on this week, Rob?
Rob: Well, when this episode airs, I will be with my family in sunny Florida. We’re planning to hit Legoland and spend a few days at the beach. It’s gonna be a nice time to kind of warm up a bit. It’s supposed to be highs in the single digits here in Minneapolis during that week, so it’s nice to get out away from it, get warm. We actually enjoy Legoland a lot, not just our kids, but I don’t know if you’ve been there, but I enjoy it even as an adult.
Mike: Yeah, I haven’t been to Legoland. We’ve gone to Florida a couple of times for Disney World but I haven’t gone to Legoland yet.
Rob: Yeah, I like it more than the Disney stuff. Less hectic, it’s a little bit less expensive and it’s more building things rather than kind of idolizing characters. I mean there are characters in it but they’re so much about creating things and being constructive. I think that resonates with me as a maker and with our kids as well. Like I said, it’s lower key, there are some rides in there and there’s stuff to do but it’s not like volumed turned up to 11 like I feel – a lot less crowded – I feel Disney is.
Mike: Yeah. The other thing I found with Disney is, like you said, it’s very crowded but also getting to everything is just rather difficult. You kind of have to hone in on the things that you want to do and you’re gonna end up waiting for pretty much anything anyways.
Rob: Right. The park’s so big. The parks are separated. On and on, we had never been to Disney World. We went last year, and I was kinda like, “Yeah, I don’t know if we’re gonna come back. That may be the last time.” Disneyland is fine, it’s a lot smaller but it’s still crowded, and you have the long lines. Legoland, to me, is much more calming and relaxing experience. How about you? What’s going on?
Mike: Well, over the last 20 days, because we’re recording it’s the 21st of December right now, but I’ve had 20 Scotch Whiskeys for my advent calendar. So far, the Glenfarclas and the Peat’s Beast have been the best ones so far, but there’s several other runner ups that are pretty good, been a lot of fun. Interesting so far. There’s some of them that I actually really did not like but most of them I would say, are middle of the road and then there’s a couple that I really liked, and then there’s a couple that I really just did not like.
Rob: That’s super cool. You wake up every morning and have that with your cereal?
Mike: I put it in my cereal.
Rob: That’s awesome, yeah.
Mike: No, I usually have it at the end of the day.
Rob: Yeah, that makes sense. Other update for me, I’m listening to the book by Tim O’Reilly. It’s called WTF?: What’s the Future and Why It’s Up to Us. I’m kinda struggling with it. I thought it would blow my mind and so far, I feel mired in kind of theory or just academic thought and I’m hoping that it picks up because I like Tim O’Reilly. I like his writing, he’s a futurist, he sees things before they happen. He’s the guy that named Web 2.0 because he saw what the movement that was happening. I know there’s good stuff in here but I’m about maybe a fifth of the way, maybe 15%, 20% of the way through the book. I’m kinda struggling with it so I’m hoping it gets better because I really wanna make it through. I don’t wanna quit the book.
Mike: Are you listening to the audio book?
Rob: I am, yep.
Mike: I’m surprised that the audiobook is not as, I’ll say, riveting. I mean, business books are not riveting to begin with. But it’s interesting that even the audio book, you think that the pace will be pretty good and it’s not, it sounds like.
Rob: I’m 1.5, no, I think, I’m actually 2X it too. I think a small part of it could be that I was listening to it while I was shoveling, moving some snow out of the driveway. I don’t know. I was paying attention to it but maybe not enough. It’s one of those things where I’m questioning just cause I know how sharp Tim O’Reilly is and how much of his writings have…. Kinda like is it me or is it this book, is the question I’ve been asking. I’ll try to remember to update folks once I’m all done with kind of a final verdict.
Mike: Got it. The only other thing that’s going on for me at the moment is I’m working on a scholarship program for MicroConf Starter Edition. If you’re listening to this and you’re interested in becoming a sponsor for a scholarship ticket or if your company’s interested in just sponsoring MicroConf, drop me an email sponsors@microconf.com and we’ll talk about it. I’m just kinda hacking things together this year. But trying to put something together in place that we’ll be able to kind of reuse moving forward and make things better year over year.
Rob: Yeah, because sponsoring a scholarship is a big deal. It makes an impact on someone who typically can’t otherwise afford to go. We’ve had several people do this now to great success. We can get some people coming to MicroConf who, I think, really get a lot of value out of it but are just early enough in their entrepreneurial journey that they otherwise wouldn’t be able to make it.
Mike: Yeah. We’ve been doing scholarships for probably the past four, five years, I think, at this point. But it’s always been on a very small scale. This is kind of a concerted effort to take things to the next level and not just involve the people who approach us or just hand out scholarships on their own but to involve corporate sponsors and kind of expand the reach of the program a little bit more formalized, I don’t know. I think it’ll turn out to be really interesting. It’s just a matter of how is this actually going to work. There’s a lot of logistics to kind of straighten out. I had a lot of good conversations with people and answer some, I’d say, some difficult questions so far. It’s looking good so far.
Rob: Awesome. What are we talking about today?
Mike: Well, today, we’re gonna be going through our goals for 2018 and to kick us off, we should probably talk about our goals that we set back in episode 318 for our 2017, and see how we did on those.
Rob: Right. Every year we like to do our goals episode where we visit the old ones, look ahead at the next year, and then we also do our predictions episode which we did a couple of weeks ago. How about you? What is your first goal for 2017?
Mike: Well, my first one was to log at least 100 days of exercise this year. I would say that – are we giving ourselves points like one out of five or one of out four on these?
Rob: Seems like one to five scale.
Mike: I would say on this one, I’d probably have to give myself about, I’d say I’d go with a three. I logged about 50 days worth of exercise, and if you remember, I had a partial tear on my rotator cuff, basically four months of that, I just really couldn’t go to the gym. Between my back and my shoulder, there was just no way I was gonna be doing anything. Even with that I still got to 50.
Rob: Good for you.
Mike: How about you? What’s your first one?
Rob: My first one was to not start any new projects in 2017. It was to run the three MicroConfs with you, to continue shipping the two podcasts that I do, to continue working on Drip and to just take a break from the chaos that have been my life when I set this goal, the acquisition had only closed five months or later. I was still reeling from that, looking ahead at 2017 as basically like a rest year or recovery year from just the hard work and the stress and the chaos of growing Drip and then through the acquisition.
I had one exception that I indicated was that I would consider being second author on the Zen Founder book which is now launching very soon. If you go to zenfounder.com/book, you’ll see a landing page there, and you can get on the launch list. It’s turned up really well. It’s called The Entrepreneur’s Guide to Keeping Your Shit Together, How To Run Your Business Without Letting It Run You. Sherry did the vast majority of the work but I was involved with writing some copy in it and then contributing a few stories to the book.
I, on this one, give myself a five out of five. That’s not too hard given that part of this was a non-goal that I didn’t want my perpetual restlessness push me into starting something new. But I feel like I did accomplish this just like I set out to do.
Mike: Awesome. My second goal was to make Bluetick profitable including my time. Let’s see here, if I had to give myself a grade on this one, I’d probably give it a two out of five. I definitely did not make it profitable including my time but it is profitable. I feel like there’s at least some level of credit there especially given that it started at basically zero for MRR at the beginning of the year.
Did that public launch back in August to September timeframe, spent the last couple of months working out issue with getting people onboarded and working out various, I’ll say, problems associated with the onboarding process and getting people connected and making it so that they get that value upfront as opposed to much further down the road. I still don’t feel like it’s at a level of like three or four because I just don’t think that I got far enough.
Rob: My second goal was to do one to three angel investments and I give myself a five on this. I was trying to remember exactly how many, but I think, I did three. Yeah, I did three. A couple of them were subsequent, follow-up rounds in existing startups that I’m invested in. Then, there’s at least one new one. I think I kind of accomplished this and it was fun.
I think I don’t have this as a goal for 2018 not because I don’t wanna continue doing investments but I kinda wanna be pretty choosy. I always have been pretty choosy about the businesses that I invest in. I’m kind of just taking them as they show up on the radar. If I hear about them at MicroConf or hear about them on a podcast or someone approaches me. I think it makes a lot of sense for me to do it but I’m not going out seeking. It’s not like some active goal anymore I have.
I think it’s 11 angel investments that I’ve done so it’s not an inconsequential number. I think two or three of those are already out of business which is how it should be. But yeah, I’ve really enjoyed the angel investment and to be honest the best part is that I’m able to live vicariously. I’m still involved in a startup and I can still talk to the founder and I can offer advice. I can be involved in this business but I don’t have to run it day-to-day. That’s been the fun part of it.
Mike: My third goal was to blog publicly at least every two weeks so it’s a total of 26 blog posts. If you recall, I think about three or four months into the year, we’ve gotten together and we kind of pointed out like, “Hey, this is probably not realistic.” Because I haven’t done it so far and it wasn’t something that was really going to make me towards my main goal which was really making Bluetick profitable. We essentially canned that but then in August or September when I did that launch, I did a 21-day video series. That right there is pretty close to having that completed even though I basically canned it several months before. Should I give myself a five on this or are we not just not gonna count it?
Rob: I don’t know. It’s kinda like a ‘not applicable’. Goals changed a few months in. I remember when you first mentioned this I was like, “Really? Are you sure you wanna commit to this?” Then a few months in it was like, “You need to focus on Bluetick. The revenue source.”
My next goal was two days of exercise per week. I definitely accomplished this especially once I learned, through Sherry actually, I learned about the High Intense – Is it High Intensity Interval Training, HIIT? It’s just what I always struggle with is I don’t have a lot of time and I often don’t have the extra time to gear up and run out to the lake and run back because kids are here in the house and I’m watching them. There’s just complexity with me being able to work out. The fact that I can throw on a YouTube video and just get my heart rate way up and be exhausted in 10 or 15 minutes in my own house while my kids are playing legos upstairs, it really changed the game for me.
In addition, I was also riding my bike to and from work three days a week which is five, six miles each way, it’s was a great 22-minute workout each way. Pretty much hit this with flying colors, exceeded it actually, so I give myself a five here. I had many weeks where it was three and four days of exercise per week. I competed for nine years in track, I ran the hurdles, and I competed against people who went to the Olympic trials. We were legit. I trained 30+ hours a week almost year round. Once track ended, I realized that I actually don’t like running.
It was always about the competition. It was the competition and the team that I liked. But I didn’t liked running itself so I struggled to get out there and run even though I used to run a mile warm-up, mile cool down. Then do two miles of intense 400-interval training, just stuff that you would throw up after practice, it was super intense. But exercise is not something that I have ever enjoyed doing in a non-competitive basis. This is probably the first time in a decade or more that I’m actually kinda keeping up with some type of a regimen.
Mike: I guess with that stuff in mind, why don’t we dive in to our 2018 goals? Do you wanna go first?
Rob: For sure. First goal for 2018 is to write a VR program that allows you to roll around on a mattress of Bitcoins. How did this get in here? Are you messing with my list again?
Mike: Maybe a little bit.
Rob: That’s a good one, Mike. I like this.
Mike: I had that idea when I was writing down my goals on our outline. I happened to see some advertisement for some sort of a VR Helmet or VR Goggles or something like that. I was like, “Oh, Bitcoins’ a rage right now. VR is the rage. Why not throw them together?” The part of the advertisement was also the dual-end lightsabers with the VR Helmets.
Rob: I’ll tell you what. This Bitcoin mattress thing, that could make you a thousand-aire overnight.
Mike: Yup. Definitely.
Rob: A thousand-aire idea. My first goal for 2018 may sound odd when I first say it but bear with me on this one. My goal is to be in fewer meetings each week, to get my meeting count to basically under ten hours a week. This is not a symptom of being acquired. It’s a symptom of growing the team, whether I was independent or not, I would be in a lot of conversations. I’m pivotal to a lot of decisions that happen and as the team has grown, I’m called into more and more things to lend my insights, my opinions.
I’m often brought in and I almost feel like a consultant who has knowledge of the space and knowledge of the history of Drip and ‘we wanna run this by you’ and I have another unique insight. Right now I’m in a lot of meetings, don’t enjoy them. I really think back to when we were 5, 8, 10 people, hover at any of those points and we just had so few meetings and I really enjoyed it. Parts of that was to my detriment, to be honest. I think that some of the folks who worked remote, they would’ve preferred to have more kind of Facetime but just the way that we’re running Drip was be heads down and create the product.
I’m working to get some things in place to decrease the number of meetings I’m in right now. I don’t think they’re gonna take hold for a couple of months, part of it is hiring someone. I’ve already hired a senior director of product who started maybe three months ago who’s taken a bunch of responsibilities off my plate. I’m looking to just kind of fire myself from other positions that require me to spend a lot of time in conference rooms.
Mike: On my side, I actually have two carry over for goals that I wanna put on there. First is log in 100 days of exercise this coming year and then, the second one is making Bluetick profitable including my time. Those I definitely wanna carry over. In addition to that, my first goal is to read at least one business book every two weeks. I think this is more of to kind of get back involved in learning things because, I feel like I’ve stagnated to some extent.
I’ve had my head down for so long on various things that I’ve probably kinda lost touch a little bit with a lot of either things other people are exploring and obviously I don’t have the time to do everything myself so I think that just finding time to carve out, to explore ideas from other people would be helpful to me, not just from a personal growth standpoint but also in helping to grow Bluetick.
Rob: That’s interesting if you have some particular topics or a particular topic that you kinda wanna start with, let me know because I have literally this list I went to where I read hundreds of business books in the past 20 years and especially recently I just do a lot of Audible. If you have specific things you’re looking for, I can certainly make recommendations. I suppose you could also ask our listeners here if you have a suggestion of a good business book that you’ve read in the past 12-24 months, maybe send it to us at questions@startupsfortherestofus.com and we may even mention it on the show.
My second goal is three days of exercise per week. It’s just upping the game from last year to the level that I’m at now. Like I said, I think with the fact that it’s pretty convenient for me to do right now, I’m hoping, kind of crossing my fingers, that I’m not cursing myself by upping the goal. I do have a tendency to achieve a goal, and then increase it the next time, and eventually make it too much, more than I wanna commit to or whatever, and then I just say, “Ahh, I’m gonna stop exercise altogether because I’m not achieving it.” My goal’s to not do that.
Mike: My second goal is to hire somebody to take over Bluetick development. The downside of this when I think is that it really is heavily contingent upon making Bluetick profitable including my time. Because, unless I get to that point, it’d be really hard to hire somebody. But I also recognize that doing the development for it is just so incredibly time-consuming, and it’s not just the time itself but it’s the mental energy associated with it because there’s all these little things that you kind of have to keep in your head. When I switch over to do other things, it’s really difficult to focus on them or concentrate on them. Even when I’m able to do that, if I have to go back to the development side of things, I’m really almost starting over again because of all the different things that I had in my head at that time.
I’ve noticed this with a couple of different major pieces that I’ve been working on where I had to go back and kind of relearn how certain things work. I struggle to do that just because sometimes so much has passed between when I stopped working on that piece and when I started working on it again. I think that just having somebody dedicated to working on the development side of things is really gonna help out.
Rob: Just as you make Bluetick profitable, you’re going to make it not profitable again by hiring someone?
Mike: Yeah. That’s kinda what I’m thinking.
Rob: Such is life as a founder. I think getting the development off your plate will be a huge win for you this year. It would allow you to focus on the things that frankly you should be focusing on more. It’s like development is, what’s funny is, we come up as developers, and we wanna build products, and then when you get to the point where you’re building it you’ll realize, “Ha, development is not, a, not the most important thing, and b, it’s not driving revenue the way that so many other things will.” That’s obviously where you find yourself.
Mike: Yeah. That’s really the problem is that there’s so much development work to get done but it doesn’t directly drive revenue. I can definitely see when, different periods of time, where I pull the focus off of marketing and go into development and I could see the revenue growth level off or decline. That’s just what’s going to happen because I can’t do both at the same time because it’s really hard.
Rob: My third and final goal for 2018 is to ship something. I’m not exactly sure what it’s gonna be yet but I’ve been laying low for 18 months like I said. 2017 was supposed to be a rest year to recover and 2017 was not a rest year on the personal side. Number of health issues, and extended family, the chaos with two new kids joining the family a few months ago. You can go listen to zenfounder.com if you want all the details of what went on there.
But it was a very hard year so I don’t actually feel rested yet. I don’t feel like shipping anything now. I plan for the first part of 2018 to hopefully continue to be a restful period because it has now for about four weeks. It’s been pretty calm and I’m starting to feel a little more relaxed and I know that once I do that kind of clear the mind, that I’ll start to think about something that I wanna ship about.
I don’t know if it’s gonna be consistent blog posts, if it’s gonna be a book, if it’s gonna be a new podcast, if it’s gonna be a course of some kind, or a software, or something. I really doubt it’s gonna be software just because I keep saying that Drip was my last one and I still think that’s true. I’m guessing it’s gonna be one of these other things or maybe it’ll take a form that’s completely different, but that’s my goal. Ship something in 2018 aside from the three conferences, the two podcasts, and a bunch of…
Mike: Partridge and a pear tree.
Rob: Exactly.
Mike: Well, you like to fiddle with stuff too. I can definitely see you just diving into stuff to kind of try and figure things out and then suddenly a product kinda springs out of it. I can see that happening too.
Rob: Yup. I can totally see that. I’ve been fiddling with stuff for months. No product ideas yet or no desire but I do feel like that could happen. I also, to be honest, as I’m doing more investments, and asset allocation, and even dealing with collectible stuff like comic books and such. I’m running across websites where I’m like, “Ahh, I should probably just own this website because I could do it so much better.” I would improve this, and this, and that. It’s profitable and there’s a revenue stream I want. It’s pretty old and they’re not maintaining it. That’s where my mind gets going.
It’s like boy, maybe shipping something actually means acquiring and rehabbing something that I’m kind of doing for a hobby/investing. But it’s in a space where I also have a personal interest and it wouldn’t be to acquire it and rehab it to turn it into some huge money-making thing although that would be an element of it, but it would be because I also actually enjoy, like you said, tinkering with things. I would definitely include something like that, buying a little tool on the side and improving it, shipping something because it would be quite a bit of focused effort to get that done.
Mike: Yeah, because it would be easier to acquire something and then either repurpose it or grow it as opposed to building something from scratch. I could definitely see you go down that road instead.
Rob: For sure.
Mike: My last goal for this coming year is to speak at six or more conferences or events this coming year. This is more of a personal growth side of things because I know I enjoy speaking but I also feel like it’s an area where I could do better at and I think that just practicing more is gonna help me do that. Then the other side of it is to help me to focus my communication a little bit better.
There are certain times where I could just be long-winded or over communicate. Some of that is just a matter of me wanting to make sure that somebody else has all the facts but over communication is something of a detriment sometimes just because then it leads into providing facts that are irrelevant or not important to the person that I’m speaking to. I think that doing the additional conference talks will help me to focus in just my ability to hone the message based on who I’m talking to and just writing talks in general helps you to do that.
Rob: Are you gonna cheat and speak at both Starter and Growth and Europe so that three of them are knocked out by your own conferences?
Mike: Well, that’s a good idea.
Rob: Because the hard part is, well, one of the hard parts is just getting noticed and getting on the docket of conferences. Writing the talks is also a lot of effort but you’ve done that enough. That’s cool.
Mike: I only have two scheduled so far at the moment. I hadn’t really thought about kinda cheating that part.
Rob: I know, I know. That’d be pushing it. If you’re out there and you’re interested in Mike speaking at your conference, drop us a line at questions@startupsfortherestofus.com.
I think that’s a pretty cool goal, man. I know that I’ve done this in the past where I’ve spoke a lot in one year and it really does condense your learning and it kinda gets you over the plateau of, I think if you speak once a year or twice a year, you just don’t get enough repetition in a short enough time frame to get better at it, I think this is a good goal if you can swing it.
I would also think about if you wanna become a become a better speaker, there’s a couple of really good books that I’ve read on how to craft talks. One is by Carmine Gallo, I think that’s how you pronounce it, it’s like The Presentation Secrets of Steve Jobs, I’m pretty sure. He kinda talks about how Steve Jobs would craft presentations. Carmine Gallo also wrote Talk Like TED: The 9 Public-Speaking Secrets of the World’s Top Minds, it’s kinda like how to do TED talks. I think I’ve listened to both of those. The other one I would recommend, and I am recommending these because they’re all in Audible and if you’re gonna read or obviously get physical copies of them, and if you’re gonna read 26 books, these may be some good ones that kinda kill two birds with one stone.
The other author I like is Nancy Duarte and the book that I read which may not be in Audible because it’s so visual is called Resonate: Present Visual Stories that Transform Audiences. She also wrote Slide:ology you may have heard of. But I really liked Resonate. It talks a lot about how to craft presentation by telling a story.
Mike: Yeah, those are great recommendations. That’s definitely an area that I’m gonna be doing research into and try to figure how to craft a better message and put together better presentations and things like that. I think you are absolutely dead on about the fact that like if you don’t do it often enough in a year, it’s very easy to kind of lose the experience and develop a little bit of rust, I’ll say.
Rob: Those are our goals for 2018. If you have a question for us, call our voicemail number at 888-801-9690 or email 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.
Episode 371 | Launching to $4K in Monthly Revenue with Laura Elizabeth from Client Portal
Show Notes
In this episode of Startups For The Rest Of Us, Rob interviews Laura Elizabeth from Client Portal about the launch of her WordPress plugin and getting to $4K monthly revenue.
Items mentioned in this episode:
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.
Laura: And I’m Laura.
Rob: We’re here to share our experiences to help you avoid the same mistakes that we’ve made. Laura Elizabeth, it’s wonderful to have you on the show. Thanks for joining.
Laura: Thank you, wonderful to be here.
Rob: I wanna give folks a little bit of background as we dive into your story. For those of you who are listening, Laura is a designer, a writer, a speaker, and a cross stitch addict. What exactly is cross stitch?
Laura: It’s sewing. It’s where you saw in little crosses and you make it beautiful.
Rob: Yes, I’ve seen that.
Laura: It’s very therapeutic. It’s very fun.
Rob: When Laura is not teaching developers how to design, she has a site called Design Academy, it’s a course that’s coming out soon, designacademy.io, or working on her client management product which we’re gonna dive into pretty deep today. It’s a WordPress plugin called Client Portal. You can find her writing, speaking, or watching Star Trek. Which Star Trek? There’s five of them.
Laura: Voyager or Next Generation, usually.
Rob: There you go, perfect.
One of the reasons I wanted to have you on is because a year ago, you were consulting full time and over the last year, you’ve launched Client Portal, that’s client-portal.io, if folks wanna check it out. It’s a WordPress plugin that helps freelancers and agencies interact with their clients and manage their projects. You launched that, it’s now doing about $4000 in monthly revenue. You were telling me before we started recording that it basically, almost single-handedly, has changed the value that you are able to bring to clients and it has allowed you to charge a lot more money and take on fewer projects. Can you talk a little bit more about that?
Laura: Yes. This is something that I really wasn’t expecting. I launched my first product which was Client Portal. It was really only ever meant to be a side project that I was doing. It quite quickly actually became my full time gig. What ended up happening was I was sharing all this stuff about Client Portal. I was sharing how I was doing my email course, how I was getting really good conversion rates and all this stuff. It made my design work, my freelance consulting work, much more valuable. Suddenly, people were far more willing to pay me a lot more money to do consulting work.
What was really good is I could then start actually picking and choosing what projects would I be working on. I went from having sometimes five to seven projects on any one time, having five to seven projects is actually why I ended up making Client Portal, to only taking on about two or three in the last year. I’ve only been taking them on because they were particularly fun to work on or something like that. I really wasn’t expecting how much valuable making a product and selling a product is going to make me as a consultant.
Rob: That makes a lot of sense. I think there’s two facets to that too. One is you start to develop almost a personal brand or it’s people associate – they see a product, they see that it’s successful, they see that it’s well designed. Then they find out that they can hire you to help them with a product, this is a no brainer. It’s a portfolio that speaks for itself. I think that the second aspect to that is you talked about you were doing this in public. You were talking about it on Twitter, you were talking about your process, and you said that a number of opportunities have come out of that, of people kinda coming out of the woodwork. You wanna tell us about, you mentioned a joint venture that you have done recently.
Laura: That’s really been, I’d say, probably the biggest thing I’ve learned this year, is the importance of really building in the open, sharing things in public, and it’s something that I still don’t actually feel very comfortable doing because when I post things on Twitter, I post things on Facebook saying, “Hey, look at what I’m working on.” It feels a little bit one-sided, “look at me” type of thing. I’m a little bit uncomfortable doing that but it’s actually been, probably, one of the best things that I’ve done for my business.
To give you an example, I was recently building the UI for an app called Write Message. I was posting everyday in the Write Message Facebook Group screens that I’ve been designing. I’d post things about the features that were happening and just sharing previews to its customers about what’s coming, and I got an email from Robert Williams who runs Workshop saying, “Hey, I’ve been following what you’ve been doing in the Facebook group. I really like the designs for Write Message, by the way, how’s Client Portal going for you?” We started this email exchange and we actually ended up doing a joint program where I did my client onboarding email course to his list and we sort of split the revenue 50-50 when we did the pitch, and we’ve actually got a webinar for January where we’re gonna do it again, launch to his list of about 10,000 freelancers.
Robert was someone I’ve had on my radar to reach out to because I thought his audience would benefit from Client Portal. I had no idea that he even knew who I was. Me just sharing the design that I was doing for Write Message, which is completely separate to Client Portal, ended up actually him coming to me and starting the conversation about pitching and launching to his list. That was a really cool thing that happened from just sharing things, building things in the open, and just talking about what I’m doing even though it makes me a little bit uncomfortable.
Rob: I think, a lot of us as creatives, and I include designers, I include a lot of entrepreneurs, and obviously developers in that. I think we’re introverted and/or don’t wanna be showy, don’t wanna feel braggy. I’ve often felt that way as well. I totally sympathize with that. But I think breaking through that a bit and getting stuff out there, that’s one of the hard things about shipping your first product. If you take us back to building Client Portal, and then the day or the week you launched it, what was that experience like? How did that feel emotionally, and then what was the ride like?
Laura: It was a bit of a whirlwind. Client Portal was something that I made for myself, like I mentioned, I had a lot of client projects on at one time, and I really wanted something to help keep those in sync and just somewhere that clients could go to see where we’re at with the project and seal the deliverables without having to email me, and me having to find the files and send them to them.
It was something I made for myself, just a really simple dashboard. I went to Double Your Freelancing conference and I was doing a talk on how to work remotely with clients. I very, very briefly mentioned that I made this little dashboard for myself. What happened was after the conference, Brennan, the organizer, went around the room and said, “What’s the number one takeaway from this conference? What’s the number one thing you wanna go back and implement?” Over 50% of people said, “Laura’s Client Portal was a eureka moment for me. This is exactly what I need in my business.”
I have never intended to sell Client Portal and that was really what made me think, “Okay, maybe I should sell this thing.” It took quite a long time for me to get the courage to do it. I had a lot of fears, which I imagine most people have, what if no one buys? Or what if, worse, people buy, and then they say, “This is rubbish. I want a refund.” I’m publicly humiliated. I was really worried that was gonna happen. I was like, “Why would someone pay money for this little thing that I made?” What I did was, I already had an audience of developers, and a lot of them were freelancers anyway. That was for Design Academy which, I think, we’ll talk about in a while which is a course for teaching developers how to design. Brennan said he will launch, if I made Client Portal into a product by, I think, Black Friday, he’d include it in his Black Friday deal. I literally had a week to make this into something that I could sell.
Where Client Portal was, at that time, it wasn’t too sellable. It was literally just an HTML template. It wasn’t a WordPress plugin, and I’m not a developer, there’s no way I could have made that happen without hiring someone. What I did was I tidied up the HTML template a little bit, I created some documentation, I put up a really, I’d say kind of bad but just a really amateur looking landing page. I had that done in just a few days. This was my validation to see whether this product would actually sell.
I launched it to my list. Brennan launched it with his Black Friday deals. Over the course of three days, it made just under $10,000 which was insane.
Rob: That’s what I was gonna say. Didn’t that blow your mind when you saw that?
Laura: It was crazy. I was thinking if I make three sales, I’m gonna be happy. I just couldn’t believe it. I was still nervous, I was still thinking what if people used the product and they don’t like it? But really, I wasn’t selling the product as it was. I was saying you can buy the HTML template now, I’ve put together documentation on how you can use it, but what I’m gonna do is over these next few days is I’m gonna open up sales and I’m gonna close them again and I’m gonna use the revenue to pay for the development of the WordPress plugin. You’re essentially just pre-ordering a WordPress plugin.
That’s basically how I ended up launching Client Portal. It was a pretty wild ride. I do often think back and wonder whether if I haven’t had the opportunity of Brennan saying, “I’ll include this in my Black Friday deal if you can get this done by Friday,” whether I would have talked myself out of ever selling it. That thought kind of scares me a little bit because then I would not be here right now. I’m very, very happy with how it’s going.
Rob: It literally changed the path of your professional career. It leveled you up from freelancing to products which I imagine is something you’d wanna get into for a long time. There’s so much to be said from that story. I imagine that when you were first asked to speak at Double Your Freelancing, did you have some second thoughts and thought to yourself imposter syndrome, what do I have to teach people, I really don’t wanna get up there, and I’m scared, but you decided to do it anyway?
Laura: Yeah, I did. It was kind of interesting. I was very unstrategic when I first started putting myself out there. Like I said, I was freelancing and it seemed like every successful person I saw was doing something, they were writing a lot, they had a blog, they were doing guest posts, they were going on podcasts, they were speaking at conferences. I kinda thought, “Oh, I should probably do that too.” I’m not quite sure why but I feel like this is gonna come in handy in the future.
I started doing that. I started writing on Medium and I was sharing the stuff I was writing on Medium. An editor from Site Point saw my writing and said, “Hey, I really like your writing style. Do you wanna guest post on Site Point?” I was like, “Yeah, sure.” I guest posted on Site Point. Then, somebody from a conference saw my guest post on Site Point and said, “Hey, do you wanna speak at our conference? I really liked your guest post here.” I said, “Sure.” I spoke at that conference and it just kind of snowballed from there. Suddenly, people were coming to me and asking if I wanted to speak at these different conferences. But I really had no reason other than it just felt like something that I should be doing for me doing that.
It all sounds quite accidental and in a way, it was. But what I think is really interesting is, and what I’m actually really happy about is that I was putting myself out there and not necessarily knowing exactly why I was doing it but I was just testing things. I was just wanting to see what could possibly happen and what could possibly come of it. Just by doing all of these experiments, I was speaking at Brennan’s conference talking to freelancers, I had nothing to sell. I didn’t know I had anything to sell to freelancers at that point. I didn’t even know Client Portal was gonna be a product. But I did it anyway.
Then, something came out of that so I’m really glad that I didn’t wait until I had something to sell before testing the waters with these different mediums because I think that’s probably one of the really big reasons, probably, the biggest reason that Client Portal took off so quickly. I say took off, I know $4000 a month might not be what a lot of people would aim for, and may aim a lot higher. But for me, it was really life changing. I really credit that to just putting myself out there early rather than waiting until I have something to sell.
Rob: Yup. There’s a lot of lessons from your journey. You were willing to kind of get over the fear and put yourself out there and do things in public. You said yes to every opportunity that came up, it sounds like. That’s something some people aren’t willing to do. It’s hard to do at first because you’re scared and then each opportunity just lead to the next thing, and the next thing, and this whole bizarre series of events that again, have essentially changed your professional career. I don’t know if it goes too far to say it’s changed your life, but I imagine that your life looks a lot different today than it did 12 months ago.
Laura: Yeah, it definitely does. Having the freedom to be able to work. When I was a freelancer, I could always when I wanted to technically. But I did have people checking in with me, people who needed things by a certain date. My life’s a lot less time-restricted now. I feel like I’ve got a little better work-life balance. I can do things that I really enjoy like cross stitch, Star Trek in the middle of the day if I want to, not that I do that very often. But I can which is really nice.
Rob: Look at independence or freedom on three axis. There is mobility or location, there is income, being able to make more money, not necessarily just based on more hours worked, and then there is time which means during the day or like you’re saying, you have the flexibility of time. When I first became a consultant, I thought I would have all three of those. As it turns out, I had income and mobility. But the time thing really bothered me. The clients wanted to be able to talk during the day. It was always like, “No, I actually, I need this time to be a creative.” Totally hear you. I think that’s something that a lot of folks trying to get into products actually seek.
Laura: Yeah, it definitely works. One thing for me is I found that for some reasons, I work really well on weekends. I don’t know if it’s because my email isn’t going all the time or Twitter’s a bit quiet. I work so well on weekends and during the week, I don’t work very well at all. I usually take off Tuesday or Wednesday or something like that.
Back when I was doing client work, I really couldn’t do that because I’d be having to check my email every hour or so to see if they needed anything. Similar to you, I didn’t feel like I had as much freedom as I thought I would when I was doing consulting. That’s really the big draw to products for me.
Rob: Yep. Another lesson I feel like we can take away from your experience there is that Brennan giving you that deadline really forced your hand and kind of forced you to ship something which I think a lot of us resist. There’s this resistance to shipping because of all the fears of failure and all that stuff. But you shipped something, and you were creative with it. You couldn’t get a WordPress plugin built in seven days and so you just pre-sold it which I think is a genius move. To give folks an idea of the pricing of Client Portal, it’s a WordPress plugin, it’s $199 for a single site license and then it’s $399 for unlimited sites.
After the Black Friday stuff, what did the next couple of months look like? How long did it take you to find a developer to get it developed? When you delivered it, what was the reception like? Take us through the timeline a little bit.
Laura: After I launched it, it was a little bit underwhelming. The launch went really good and I thought, “This is it. I’m in products. This is amazing. I can fire all my clients.” Not that I would really want to do that. But I thought I’ve done that. What really happened was after the launch, I started looking for a developer. I found a fantastic developer who’s still working for me and for Client Portal today. I just found her by going into different Slack groups. I can talk a little bit about the process of hiring a developer if you’re interested but what really happened was I got the plugin developed, I was sending it to existing customers. My focus was really on existing customers because these people have paid me money. They didn’t know who I was and I was really grateful.
I wanted to make sure they had a product that was good as quickly as possible. But then I sort of opened the doors to selling Client Portal again. Because I didn’t have that urgency, because, I didn’t have ‘this is closing in three days’ and the price is never gonna be as good as it is right now because essentially you’re putting your faith in me making this WordPress plugin. Sales just didn’t happen. Nothing happened for quite a while. I was working on freelance projects and I wasn’t doing much for Client Portal. I knew there was opportunity.
I really needed to think about, “Okay, what do I do now?” What I ended up doing was I decided that I wanted to start putting myself out there again. I decided that I needed to start going on podcasts. I needed to talk about things like freelancing and just talk about remote working like I was doing at the conference because the conference talk that I did ends up being quite a good pitch for Client Portal. I thought, “Okay, I need to do that.” But I don’t wanna just sell them Client Portal. I need something else so I created an email course, it was a five-day email course on how to onboard your clients. I put a lot of effort into it because I see a lot of people making email courses and I‘ve taken a lot of them. Often, they feel a little bit rushed. I really wanted my email course to be valuable whether they actually bought Client Portal or not, so I put a lot of effort into that.
When I launched Client Portal with the Black Friday deals, what worked really well was having that urgency. I wanted to put that urgency in my email course. What happens is every Tuesday, I essentially have a sale for Client Portal. Anyone who’s in my email course on Tuesday, once they’ve finished the email course, I’ll open up a window saying, “Okay, from Tuesday until Thursday, you can get a 30% discount for Client Portal.” I do that and that kind of gets me back the urgency and it means that my goal then is to get people into that email course.
I tested this email course a lot. I’ve got it to the stage where it converts really well. I posted a tweet about it a while ago, I can’t remember the exact numbers but it’s got a really high conversion rate. What I realized was, “Okay, now I need to get people into the email course.” What I do is I go on podcasts, I’m trying to speak at conferences but actually, I’m typically leaning more towards podcasts just so I don’t have to travel as much, talk about freelancing and then I say, “Hey, if you wanna know more about my process, I have this email course, you go to clientexperiencecourse, I think, .com and then you sign up there to the email course,” and then you get pitched on Client Portal.
That’s worked really well for me. That’s probably been a really good thing that I’ve done to keep that urgency that I got from the initial launch. It means that I don’t feel like I’m constantly selling. The only thing I’m selling is getting people into a free email course which I don’t feel too bad about because I am confident that the email course is helpful.
Rob: Right. That’s a good way to do it, it’s to put your best foot forward. Basically, you’ve created a course that some people might sell as a tripwire course. You put so much time into it and have built this thing that when someone takes it, they’re blown away by the quality of it. You were correct with the URL, clientexperiencecourse.com, it’s aimed at agencies and freelancers, for organizing their client projects and a process for interacting with the clients.
Laura: Yeah, exactly.
Rob: It sounds like you have so many of the building blocks of what makes a product person successful. You obviously have the design background. Your design on all of your sites, lauraelizabeth.co, designacademy.io, and Client Portal, really, really sharp designs and just really, really well put. Copywriting is really good. Now, you’re modelling the entrepreneurs that have come before you that one of the things that so many of us say is, email, email, email, and you see the value of building that email list. To have something that’s repeatable like that that you have created, by repeatable, I mean, you’ve kind of started to build the flywheel. As long as you can get people on the course, they’re gonna buy Client Portal, and if you have other stuff that’s then related to that such as Design Academy, I know it won’t be relevant for your entire audience because it’s really aimed at developers, but then you have all these related products. You have this whole ecosystem that you can really offer a ton of value and more value than people are paying but it becomes kind of a system. You’re not just floating out on your own trying to run Google AdWords to some page somewhere. You have credibility and you offer value upfront and then you show that you offer stuff that’s such high-quality that for people who need what you’re selling, it’s a no-brainer.
Laura: Yeah, exactly. I think the ecosystem thing is a really good point. That’s pretty much where I’m taking it next. I’m trying to figure out how I can make everything that I’m doing, I’ve got things in a lot of different places. I still have my consulting and I have my Design Academy, I have Client Portal. I’m kind of working out how I can make this into something that I can cross sell between different people.
For Design Academy, I think around 30% of my Design Academy audience are freelancers, it would be relevant to them. Most of them are in-house designers so Client Portal wouldn’t necessarily be relevant to them. But me knowing that 30% of my Design Academy audience are freelancers, it means that I can cross sell Client Portal to them. Now, I don’t have all these systems in place yet but that’s sort of the next step where I’m taking it, to try and figure out how I can link everything so it’s not as sporadic as it feels right now.
Rob: Sure. Another lesson that I’m taking out of this conversation is something that I screwed up in the early days, 2005 to 2008 as I was building and acquiring products. It’s a mistake you are not making, and you are building products that have shared audiences. At one point, I had ten websites and products, and web services, and really almost none of them shared the same audience. It was designers, people getting married, there was a wedding site, and I’m trying to think what’s the other one, people interested in bonsai trees.
Laura: Duck boats.
Rob: Yeah, duck boats. It was random stuff. You’ve built stuff with overlap so you can build that ecosystem. I like your headline at designacademy.io, it says, ‘Design principles for developers taught in a non-pretentious, non-bullshitty way.’ Did you come up with that?
Laura: Yes. It’s based on a frustration, it’s actually a frustration that I had and I know a lot of developers share. When I was learning how to design, I really struggled and took me so many years to get to a level where I thought I was half-decent. I found all design teaching to just be so unhelpful but so pretentious. It all sounded really good but putting it into practice was just virtually impossible. It sort of came out of my frustration of that. Most of my freelancing clients were developers who had this issue where they wanted to, I was working on a project with developers and they always had side projects going on.
One thing I’ve learned about developers is they’re very creative in that they always have tools that they’re building and they always have stuff that they’re doing. Where they really feel held back is their ability to design. They really love good design but they don’t necessarily wanna become a designer. But they want enough knowledge to just make it so they can create their side projects and have them look decent and maybe sell them, and maybe once they’ve been selling for a while, they can then reinvest some of that money into actually hiring a designer.
Really the goal of Design Academy is just to teach developers enough design knowledge to be dangerous without turning them into a designer.
Rob: Very nice. Laura, you mentioned that you actually have a discount code for our audience if folks want to get a discount on Client Portal?
Laura: Yes. If anyone’s interested in checking out Client Portal, you can use the discount code ‘startups’ and get 30% off which is the same discount as I do in my email course.
Rob: Sounds good. That’s client-portal.io. Laura, I’d like to switch it up and do something we’ve never done before here on Startups For The Rest Of Us, a lightning round of bizarre questions. You could do it?
Laura: I’ll give it my best shot.
Rob: It’s gonna be awesome. Alright. These are quick answer questions. First one. What is something that is really popular now but in five years, everyone will look back on and be embarrassed by?
Laura: Chatbots.
Rob: Chatbots. If animals could talk, which would be the rudest?
Laura: Flamingos.
Rob: In 40 years, what will people be nostalgic for?
Laura: Oh, I don’t know. People are nostalgic about television right now, live TV. I don’t know. Mouses. Mice, the plural to the mouse.
Rob: You don’t mean the little animals, you mean the computer?
Laura: I hope not. Yes, I do.
Rob: Last one. What’s the most ridiculous fact you know?
Laura: I was looking at interesting facts the other day. Can I Google it? I don’t know. I suck at lightning rounds.
Rob: No, I pulled really hard questions. That’s the fun part.
Laura: I have one on the tip of my tongue. I was literally on Reddit last night and I remember seeing something about something that was really – I was on ‘Today, I learned,’ that Reddit thread, and they have a gazillion things.
Rob: I figured, knowing you, having hung out with you a few times, I figured you would have something, I don’t know, some weird thing about pixel kerning, or what is it, font kerning or something like that.
Laura: Yeah, possibly.
Rob: Anyways.
Laura: Possibly. But, I’ll think of a bunch and then I’m just gonna be emailing you which, perhaps, for the next year.
Rob: Oh yeah, that’s great. This was definitely a curve ball so I appreciate you participating in the lightning round there.
Laura: No problem.
Rob: That wraps us up for the interview. If folks want to keep up with what you’re doing, is it Twitter, Dribble, what’s the best you think?
Laura: I’d say Twitter, it’s twitter.com/laurium. It’s where I’m most active.
Rob: Sounds great. I expect I’ll see you at another MicroConf here soon?
Laura: Yup, we’re going to Vegas. The Growth one, I think. I’m looking forward to that.
Rob: Very cool.
Laura: If you have question for us, call our voicemail number at 1-888-801-9690 or email 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. Visit startupsfortherestofus.com for a full transcript of each episode. Thanks for listening. We’ll see you next time.
Episode 370 | Our Predictions for 2018
Show Notes
In this episode of Startups For The Rest Of Us, Rob and Mike revisit their predictions from 2017 and score how they did. They also make new predictions for 2018.
Items mentioned in this episode:
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 Mike.
Rob: And, I’m Rob.
Mike: We’re here to share our experiences to help you avoid the same mistakes we’ve made. What’s going on this week, Rob?
Rob: I was reflecting on the past couple of months and I feel like I’m coming out of kind of a rough patch. If you go over and listen to Zen Founder which I believe came out last Friday, Sherrie and I talked through some personal stuff that is going on, you already know about this, I talked a little bit about it at MicroConf Europe.
I realized that kind of stuff like, you can become the frog in a pot of boiling water, where just slowly you descend into stress and chaos and, as I’ve come out of that, I was just looking back and thinking how thankful I am for so many things right now, and how, I guess, thankful I am that I am not where I was a month ago. Coming out of dark times, it was both personal stuff and even at work — I don’t know.
You hit a certain point, some months, some weeks are just hard and it’s hard to wanna show up everyday, and it’s hard to deal with whatever it is. The cues haven’t backed up for a while but there’s just stress building a software company, and running a big team, and hiring people. I don’t know. Other than that, that’s what’s been going on with me. I was just thinking about it today I’m like I really feel positive and excited and I’m like really happy right now and it’s such a contrast to what I was feeling even three or four short weeks ago, and part of that was getting away. Was going to Europe, even running MicroConf Europe wasn’t stressful. It was super. I had a great time there, I was there with my kids, and Sherrie joined us. When I came back, the reentry week was tough. But aside from that, I feel like things are on the upswing. Hopefully, heading into the end of the year and beginning the next, it can continue to feel that way.
Mike: I have to laugh at myself every time I hear that analogy of the frog and the pot of boiling water because I’ve used it myself but if you look into it, that’s actually not true. If you put a frog in a pot of hot water and you slowly turn up the temperature, it will jump out. It’s not that it doesn’t realize it, but it’s a great analogy because it makes sense to everybody.
I think that’s kind of, I’ll say, par for the course, like everybody goes through that on occasion. It sucks to be there. The contrast between where you hopefully end up eventually is quite striking I’ll say. It’s nice to be able to kind of move past that.
Rob: I think move past it and then be better equipped to recognize it early and deal with it as best you can because these are always going to happen. Whether it’s one week every couple of months, whether it’s one month every couple of quarters. You’re just gonna have these down times. If it’s high-stress time, like you’re negotiating the sale of your company, or you’re in a super high growth, or there’s a competitor that’s pissing you off and trolling you, this can be constant for months. It’s trying to figure out how do I go on this journey and deal with hard things and not let it poison the rest of my life, or negatively impact the rest of my relationships, and just go and have fun?
Mike: That can be hard, especially if your income is tied so much to your business and your business is the cause of your stress. There’s almost no getting away from it at that point. It’s not like its a 9:00 to 5:00 job where you can just go and clock in and at the end of the day you can just walk away and all the problems are not yours to deal with it. It intrudes on your life to some extent.
Rob: Absolutely. This relates back to the listener question we had last week, where he says, “My emotions are tied to my business. How do I get away from that?” And our answer was kinda like, “Well, you do the best you can but it’ll probably always will be.” That’s my short answer to that. How about you, what’s going on?
Mike: My oldest is playing basketball right now and they had to do a fundraiser. It was interesting because as part of the fundraiser, they’re basically just standing outside the store and asking people for donations. I took him aside at one point, after he kind of gotten the hang of it and basically asking people for money, and I was like, “Here, let me teach you the art of the upsell here.” Kind of worked with him for a couple of minutes and I was, unfortunately, not paying attention because I was working with one of the other kids at the time when he actually did it but he upsold some woman on a hug to get some extra money for a donation.
Rob: That’s cool. That’s awesome. Bravo!
Mike: I was told by the coach, she’s like, “He did it flawlessly.” Perfect execution and everything. He listened. Followed all the advice and everything, and he only did it three times. It wasn’t like we were there for an hour and a half, and he didn’t do it all the time. He only did it three times but everytime it worked. It was really good.
Rob: Like father, like son. I’ve seen you.
Mike: I sold lots of hugs…
Rob: I know you did. “Buy this software product and I will give you a hug.” Cool.
For me, I also had this interesting experience in the past week, I often talk about we’re always hiring because the app is growing quickly so the team’s growing slowly which is good, that’s how we like to do it. We found a candidate who came highly recommended and we met with him and he was the right fit, good personality and everything. But as we move forward in the actual kind of hiring and negotiation process, it quickly became apparent that yellow flags started creeping out and there were little things. He’s asking for more money than he should get because he was transitioning careers, transitioning from this role to that role. He’s asking for the same salary that he had at this other thing that had five years of experience in and is basically coming entry-level junior for us.
Then, he wanted a title that was actually quite a bit above, that implied he had years of experience and he actually has three months or something. That’s a really interesting one. Then there were two more things but it just kept unfolding. He went from being this amazing candidate to being, I use the word I’m disenchanted as these things keep coming. To his credit, he has two other companies that are interested in him so he’s probably gonna wind up getting everything he asked for and that’s great. But it showed me, there was particularly the specific way he handled a few things showed me that he was, it wasn’t just a negotiation, there was a bit of high-maintenance, demanding or entitlement I think is probably the right word. It struck me that that alone is a deal breaker, even though he checked all the other boxes. He’s either a “hell yes” or he’s “no.” He quickly became not a “hell yes” as these things unfolded.
Mike: Yeah, that’s kind of disappointing. I guess I’d say the process isn’t complete yet or I don’t know fully whether you kind of went through and offered him the job or passed that point. It’s easier or better to find those things out in advance as opposed to after they’ve started working or even a week or two down the road. Sometimes, you don’t find out for six months but those problems can come up at any time.
I remember somebody who I had interviewed at Pedestal Software and there was another team that had actually interviewed him and they’re like, “We think he knows his stuff but we’re not sure. Can you come help us out?” I went in and basically grilled him on all this UNIX stuff because the other team didn’t have as much experience with it. I grilled him, I remember going back to the management team and I was just like he knows his stuff but he is kind of a jerk. you don’t want to hire him. That was the bottom line and they’re like, “Okay, let’s hire him.” I’m like, “Wait a second, he’s gonna be a pain the in ass to work with.” And he was, it sucked.
Rob: I’ve had that happen before. At high growth startups where they’re like, “Does he have technical chops?” “Yes, but I don’t want to work with him” “That’s okay, we can manage that.” They didn’t put me with him but the engineers who worked with him didn’t like it at all. I was like, “This is interesting.” This is 14 years ago. I remember being like, “I don’t think this whole funded thing is for me,” because if that’s what we’re doing, I’m not gonna like my job here.
Mike: Right.
Rob: In my opinion, you need to like the people who you work with because you spend too much of your life at your job so whether you’re hiring them yourself or they’re just people, if you work at a big company and other people are hiring, if you don’t like your coworkers, I think you need to get out of there.
What are we talking about today?
Mike: Today, we are gonna be going through our predictions for 2018. To kick us off, we probably should take a look back at our 2017 predictions and see how we did before we start making other wild ass guesses.
Rob: Indeed. And that’s just what these are, wild ass guesses. Every December, and we’ve done this for many years, I’d say five or six at this point, I went back and listened to a few of our old predictions and it’s pretty funny. Pretty funny how the world changes. Keep in mind that when we can, we make predictions in the startups space or in the tech space but these are not limited to just startups. We like to have fun with this episode. It’s more about entertainment than it is about these are areas to start a business in.
Next week or in the next couple weeks, we’re gonna be doing our goals episode where it is truly your and my goals that we set for 2017. We’ll review those and then we’ll look ahead at our goals for 2018. Those will be obviously, there’s some personal ones but there’s also startup business specific ones. But, for these, you know, again, there are some tech related and then others that are just kind of fun ones to think about, talk about.
Mike: With that in mind, let’s dive right in. My first prediction for 2017 was that health insurance rates are going to become a much bigger issue for self funded companies and I would say, what are we doing with our scale of like is it 1-100 or 0-1 or 50/50?
Rob: One to five?
Mike: One to five, I guess.
Rob: Yeah. Five is like “nailed it” and then one is “completely missed.”
Mike: Alright, one to five then. I would say on this one, I got a five.
Rob: In the US, specifically.
Mike: Right.
Rob: Because the US’ healthcare system is so messed-up, especially for small companies. Well, just for everybody, it’s messed up.
Mike: Yup. I’ve been hearing people over the past three or four months where at the beginning of the year it wasn’t so bad, I don’t think, and then as the year has kind of progressed, as people start to renew their insurance, I’m hearing people say that in some cases it’s double or triple what the rates were previously, the previous year. It’s kind of gotten out of control. I don’t know what people are doing about it. I’m glad that I renewed back in April, but at the same time, I’m going to have to renew next April and I’m kind of afraid of what is going to end up happening.
Rob: Yeah, I agree. I’m happy. It sounds weird to say I’m happy that I’m working for someone else, that I don’t have to deal with this. Essentially, Drip/Leadpages handles this for me now. I don’t have to administer it. They, like a typical employer with good funds, they cover most of the expense. I know it’s gotta be super expensive for them to maintain that. My first prediction for 2017 was there will be another high-profile acquisition in the bootstrapped space. My idea was that it wasn’t going to be someone that sold their app for 3-4X multiple of net profit but that it was gonna be another kind of Drip-esque acquisition where someone that we know in the MicroConf spaces that acquired by a big startup.
Mike: How did you do?
Rob: As far as I know, this is a one. I don’t know of an… Do you know of anybody in our space that got acquired?
Mike: I know of some but nothing at that level.
Rob: Yeah. Maybe a two or something. I was on the lower end of being right. I had the impression that, or I was thinking that there would be a kind of a bare acquisition in that but it really did not happen.
Mike: If I remember correctly, you did say on the episode last year that you didn’t have any inside knowledge, it’s just what you thought was going to happen.
Rob: Yep, that’s right.
Mike: My second prediction was that the SaaS bar is going to continue to be hard to reach which is obviously very generic but I kind of couched it by saying that startups are gonna start offering a service as a first base approach followed by implementing the SaaS once they figure out the process in order to be able to offer those services at scale.
Rob: It’s the product as consulting first and then turning into SaaS. I think when you said this prediction, I said, “Isn’t this already happening?” This was Brian Casel’s talk in October of 2106, was about productize service moving to SaaS.
Mike: Craig Hewitt went on this road with Castos as well. The idea there is to really make it easier for people to host their own podcast and they do a lot of this stuff internally with PodcastMotor where they do all the editing and everything else but they basically turned that productized service into more of a SaaS product and offer additional things which is more of a self serve model then the productized services which is done for you. I would say those two are the things that I would say come to mind, but I don’t see too many others. I probably have to give myself a two, possibly a three, but I wouldn’t say that this was as accurate as I thought it would have been.
Rob: I’m sure more people are doing it. I know Brain Casel has his productized course and I’m sure he knows other people doing it through that but you and I just haven’t necessarily heard about them or been around them.
My second prediction for 2017 was that start up crowdfunding will fizzle out. Lower end startups will use it but the best startups will continue to use their networks, AngelList, and that kind of stuff. I’m going to give myself a four on this because I don’t know if it fizzled out as much, it just has not really taken hold very well. It just hasn’t had the impact that I thought it would of people being able to buy small chunks of equity on accredited investor, non-accredited investors being able to buy small chunks of equity. I thought that it would have this big kick early on and then like I sad fizzle out. It kind of didn’t. I think that there have been several platforms that have launched to facilitate it. It’s kinda shoulder-shrug right now, like wait and see. Mostly if I removed the fizzle out, I was probably a five. “Crowdfunding won’t really do much,” if I had phrased it that way, it would be much more accurate. Was that your sense as well or you think I’m misreading it?
Mike: I feel like that there was an initial inclination that was going to happen, that people were going to do it a lot. Non-accredited investors were gonna be able to throw money in and start funding these companies. I don’t think that the types of businesses that were maybe brought before them were attractive enough for them to say, “Yes, I’m gonna throw my money in.”
Rob: Cool. That makes sense.
Mike: My third prediction was that more small scale entrepreneurial meetups are going to be starting around the world, and that the entrepreneurship for small-scale businesses is going to pick up steam. I probably don’t have a lot of data to back this up. I would say that I’d give myself a four out of five on this. I heard recently that FemtoConf over in Germany just recently sold out. Congratulations to those guys.
Rob: Wait, what?
Mike: Did you not hear that?
Rob: Oh, sold out. That was interesting. I took sold out as not selling all their tickets but selling the conference to someone else. I was like, “What?!”
Mike: Oh, no. No.
Rob: Did you hear that shock in my voice? Okay, sorry. Keep going.
Mike: No. Sold out as in sold all of their tickets. I feel like that’s going to become not really the model but more prevalent over time as people, like start these really small meetups and then grow it. I think last year’s FemtoConf was only about 10 or 15 people and then they went from 10 or 15 to I think around 30 this year. I just think that there’s gonna be a trend in that where you get these really small meetups that start out tiny and then they start to grow just because of the audience that they build and they’re growing off their success as opposed to trying to build something where they get like 100, 200, or 500 people to it the very first year that they start. It’s really just stair stepping their way up.
Rob: Congrats to you guys. My third prediction for 2017 was that there would be a 20% or more correction in the US stock market. On a scale of one to five, I give myself a zero. Have you heard this expression, “I’ve predicted five of the last two bear markets.” That’s essentially what I’ve done here. I think like all of us, things seem overvalued, but everyone’s been saying this. I know someone who pulled all their money out of the stock market in 2013 or 2014 and they have missed tremendous amounts of gains. Timing the market is so, so hard. We all think we can and it’s always a little bit later, you can’t quite outlast the market in terms of the irrationality of it going up or going down. I would probably say this will happen in 2018 but I’m not going to cheat and use that prediction again. I was dead wrong.
Mike: I thought you were going to say the 20% market correction was going to be upwards instead of downwards. I thought you were gonna…
Rob: I should have. It corrected from it’s low. It corrected upwards. My fourth and final prediction for 2017 was that the first consumer purchase package would be legally delivered with a man drone somewhere in the world and I believe, if I recall, that I made this prediction it was late November, early December, and it was within a couple of weeks that this happened. It was even before 2017. Is that your memory?
Mike: I think that’s correct. I think that happened before the year started. I think we were debating about whether or not you got credit for it because it was not in 2017.
Rob: I would give myself a five on this one even though maybe technically it should have happened two weeks later for it to be in 2017. We should call this our predictions from between right now and the end of the following year.
Mike: You’re just trying to get credit for that one.
Rob: Alright, let’s dive into our predictions between now and the end of 2018.
Mike: What’s your first prediction, Rob?
Rob: Hey, wait! I didn’t even type this one. Let me read this one. Rob will buy a bunker in the Swiss Alps, establish a micronation with his 11-year old son as the benevolent dictator. How did this show up in our outline, Mike?
Mike: I don’t know, I have no idea.
Rob: I think that’s a really good prediction.
Mike: Must have been the elves.
Rob: Messing with my predictions. That was a joke prediction. Please don’t hold me to it. What’s your first one?
Mike: Mine is there’s going to be an economic downturn. I think that it’s probably going to be, I don’t wanna say that it’s gonna be major. But I think that it’s gonna be substantial enough that people will notice. It’s not gonna be like 2008 where the entire economy crashed but I do think that there is going to be that, you kind of called it for last year, the 20% stock market correction, I feel like that’s gonna be this year. I think that it’s going to be driven kind of by a lot of the factors around healthcare, at least in the United States, and various policies that are kind of going into effect. I don’t see like a sustained economy is going to be moving forward this coming year. There is bad stuff on the horizon.
Rob: I want to get more specific with this because when I think of the phrase “economic downturn,” I think of the economy as multiple factors. You could say is that a stock market correction, is that a recession which implies a lack of growth of businesses which don’t necessarily, it often causes a stock market correction, but the two can be non-correlated. That typically also leads to unemployment. And then there’s the housing market which I see as a separate thing.
There’s three or four different things; unemployment, GEP growth, stock market, and housing. In 2008-2009, they all plummeted, but in 2000, the housing market took a little hit but it wasn’t that bad. What do you mean when you say economic downturn? Let’s define it and then let’s update, so we know next year, whether you are accurate. If it’s any one of those four, it’s a pretty broad prediction. But if you’re saying its like three out of four or something…
Mike: I think it’s going to be a couple of them. One, I think there’s going to be a lot of small services businesses that end up going out of business partly because of regulation but partly because they’re just not going to be able to make ends meet. They’ve got other things to adhere to in terms of tax laws, health insurance, and things like that. I think that’s going to have a pretty big impact on them, along with all the legislation tied to the healthcare industry. I think that’s going to have a pretty bad impact on them as well, just in general, you will see a lot of small-services companies end up going out of business.
Then that’s going to lead to unemployment which impacts a lot of other things. I don’t think that the housing market is really gonna go down very much. It probably will stay relatively the same. It’s certainly is not going to be a big growth area. Then what was the last one that you said? Oh, the stock market. I think that it will level off a little bit but I don’t think that it’s going to go down.
Rob: I’ve updated your prediction with a few bullets that kind of captures that so when we come back next year, we can measure it correctly.
Mike: What’s your next prediction?
Rob: My first prediction, the Swiss Alps bunker one, is not going to come true. I think 2018 will be the year of non-institutional startup funding. I think this has already begun. We’ve seen more and more angel investments coming out. The more I get involved with this, the more I realize the power of money that comes from angels, rather than going the traditional institutional route. Jason Calacanis’ book, Angel which came out a few months ago, it was really good. I think some people will probably dive into it from there.
Crowdfunding, this is maybe my opposite of my prediction for 2017, but I do think that crowdfunding will continue to build some steam. The ICOs are a bit dubious as to whether they’ll stick around. But I know that’s a big push right now, people are trying to fund startups using ICOs. Through those three avenues, I think it’s gonna be easier, and even more prevalent, and become a more common thing for people to invest in early stage startups. I think it will become easier as a startup to raise non-institutional funding. This is kind of tied to fund strapping a little bit. It will be easier to fund strap because of that. Fund strapping being raising a small round of funding without the intention of the implied series A, of having to then go to institutional money in 18 months but to actually become profitable with that initial round.
Mike: My next prediction kind of revolves around in app purchases. One thing that I’ve heard talk off is about legislating that. Mainly because when Star Wars Battlefront 2 came out, there was complains about how much the game costs, and then the fact that inside the game, you could go in and you could purchase basically, a loot crate and you had a chance to get certain items but you are not guaranteed to get something specific. The rationale people were putting forward is well, that’s actually gambling because you’re buying a chance to get something that may or may not be valuable and it is being presented in such a way that that fits the definition of gambling.
I don’t think that we’re going to see legislation around this. I think that there’s a lot of talk about it. The companies that are behind these types of games are smart enough to be able to avoid that kind of stuff because they’ve got the legal teams to both defend them and point them in the right direction and say, “You should or shouldn’t be doing this. Here’s what we can get you out of and here’s what we can’t.” I don’t think that there’s going to be any actual legislation around it but I do think that you’re going to see gaming companies come to better definitions and I would say be a little bit more careful about how they’re putting those offerings together for those in app purchases.
Rob: My second prediction for the year is that artificial intelligence/machine learning will continue to be marketed as the next big thing in terms of enterprise SaaS and even small and medium size SaaS and software, but once again, it will not deliver in 2018. By not deliver, what I mean is it’s being touted before it can really provide value for most people and most businesses.
One of the big issues is especially with machine learning, you need such large datasets to actually train the algorithms. I see these SMB tools saying, “We’ll use our machine learning to help you do…” That’s over promising and I think it’s gonna burn people out on it. I’ve already had conversations with a guy who used to run a big ecommerce store and he’s like, “We’ve been sold artificial intelligence for 15 years and it’s still not as smart as me sitting down and whatever, building out a funnel or a campaign.”
I think there’s danger of it becoming a complete marketing fad. I do think that eventually, this stuff’s gonna work and it’s gonna be genius. There’s examples of it. We use what I call artificial intelligence to detect spammers when they come into Drip based on behaviors. We have all these signals we look at and we auto-flag and our accuracy is really high. We’ve developed that algorithm over the last several years and I know that there are other startups that do this internally. This stuff can work. There’s just certain approaches that you need to take to it. We have stuff that we’re already thinking about inside Drip like, “How could we automate this? How could we make this smarter?” People have been saying it for many years, it’s not there yet, and some people will actually do some intelligent things this year. Hopefully, we will release something, but it’s not going to be the promise of everything’s done for you, and you just sit back and press one button and all your marketing is essentially automated, which is what so many of people in the mar-tech space are claiming.
Mike: I think that’s a difference in the bounds of the problem too. For example, detecting that somebody is coming in and going to be sending spam, or is a fake account that signed up, and their intent is to do that. There are certain patterns that you can recognize very easily because there’s only so many things that you can do or that can be done in the app. You can do time-ins around when one request happens versus when another. It makes it easier to scour that and kind of detect whether or not somebody’s doing that. Versus in an ecommerce, how do you predict whether somebody’s gonna come back and buy something else, or how do you predict the best thing to upsell them to. That’s a lot more of an open-ended problem with no real bounds versus, “Is this person going to be a spammer? Yes or No?” Does that make sense?
Rob: Yup, totally does.
Mike: I think that the two things are very different. I totally agree that enterprise companies are being sold to this type of stuff and it just doesn’t work.
Rob: Yep. How about you? What is your last prediction?
Mike: My last prediction is actually about Uber and it is that Uber is not going to regain the ground that they have lost. Lyft is a lot smaller than they are, but I think that because of all of the, I’ll say, political fallout and loss of goodwill towards them – not that they probably had a ton of it to begin with, but I think that they have really lost a lot of the leverage points that they probably had. They’re going to have to work harder to do the same things that they were able to do last year, and the year before. Just because of the fall out from the allegations of misconduct and all of the internal stories that have come out of how badly they’re treating people. I just don’t think that they’re going to recover as well as they probably think that they are. Like I said, the big problem is it’s going to take them a lot more effort to do the same things that they were able to do last year with substantially less effort.
Rob: When you say not regain the ground they’ve lost, do you mean in the valuation? Because, as of this writing or as of this recording, their valuation is like 30% lower based on a round that they have to raise from SoftBank. I think Uber’s burning $1 billion a month. It’s a lot of money. Is that much money?
Mike: I don’t know.
Rob: It’s a lot of money. Yeah. They’re in a place of having to raise capital and with this kind of tarnish on them, and they’ve lost their CEO, SoftBank offered them 30% less than the previous round. Are you thinking that in terms of evaluation or you’re thinking in terms of market share? I know we don’t know their market share for sure but there are estimates and such and they have taken a big time hit with people deleting their app altogether.
Mike: Yeah, that’s more what I’m thinking. Market share, because we don’t have the actual numbers, it’s gonna be a little bit difficult to, I’ll say, measure that in a year. When I say that they’re not going to regain the ground they’ve lost, as in the people who have deleted their app will probably not reinstall it unless they have no other option. I don’t think that they’re going to win those people back even if the company changes its tune and goes out of its way, I’ll say, to overhaul their culture. I don’t think that they’re going to win those people back which will have an impact on their market share and their ability to grow as a company.
Rob: Sounds good. My third prediction is that there will be an enormous crash in Bitcoin’s valuation. Right now it’s on a huge rise, but long term I am still bullish.
Mike: Wait, didn’t it crash three days ago?
Rob: It crashes every few days but it comes back. I’m saying more of, I don’t wanna say sustained crash, but if you look back over its history a couple years ago, it built up into the 400, 500, 600 range and it crashed and it was down for a year, just fumbling around. Maybe even more, it might have been 18, 24 months. It’s kind of bumping around and around a few hundred and then there’s this more recent rise. I’m a person, I’m long Bitcoin. I own several Cryptocurrencies and not in small quantity either. It’s not like I bought one. I’m kind of keeping my eye on it and it’s tough, this is similar to my prediction of the stock market correction.
I think the way Bitcoin is going up right now is like no mania that we’ve ever seen, the volatility is just crazy. I do think that the next 12 months, that is likely to end. I of all people would be ecstatic if it didn’t, if it kept going up, doubling, tripling. Bitcoin has had a 2100% return in the last year. That’s kind of tough not only to sustain but even sustain the current valuation. With that said, long term, even as I sell some of the Bitcoin as it gets really high and my assets get way out of allocation, or out of the percentages that I like. I’m certainly not exiting those positions at all because I think I’m long Bitcoin and I’m long cryptocurrencies in general.
As you look out 5 and 10 years, it’s kind of like being here at the advent of the personal computer, the advent of the internet, the advent of smartphones. Bitcoin and crypto in general is this movement and long-term is going to stick around even after a crash. If we think about the 2000 Dotcom crash, there was all this hype around it from ‘94 from the IPO of Netscape, ‘94-’95, all the way to 2000, and then everything crashed, and people said, “Boy, Dotcom, those internet sites, they’ll never amount to anything.” Now, here we are. The biggest companies in the world essentially either came out of that or have something to do with that. If you had just been long the whole time, you’d have to wait through that decade-long trough, essentially, when it all bottom-dropped out of it. I guess I see there could be a similar frenzy around Bitcoin and other Cryptocurrencies, where there will be a big crash, but long term it will be a viable store value or a way to move money around.
Mike: I think the volatility of it is kind of a big turn off to me. I saw a tweet earlier today from somebody who said, “I bought a USB cable from Newegg with some Bitcoin ones. Feel free to ask me sometime and I’ll show you a $3500 USB cable.”
Rob: So funny. That’s the thing, I don’t think Bitcoin is a currency. I think cryptocurrency is a misnomer and I view it much more as a store value in a way to get money out of a situation… I view it more as gold. I wouldn’t go buy bread with gold. I wouldn’t go buy USB cable with gold and I won’t do it with Bitcoin either. I do believe it’s a great way if your currency is going crazy and this happens every several months to just get money out of my currency because the government won’t allow me to exchange it for US dollars, that’s much more stable, and I don’t want to see this hyperinflation. People are dumping their money into Bitcoin or into other cryptos. It’s a great way to, I shouldn’t say great, but it is a way people are using to not lose all the value of their money during this currency crisis.
And then you look at when Brexit happened and there was this uncertainty. When there is economic uncertainty, obviously, there’s a lot of volatility in Bitcoin. It’s been lucky enough to keep going up. It’s a way that if you had a hundred thousand dollars in the bank, or I should say a hundred thousand Argentinian pesos or whatever, hyperinflation hits and it’s 100% a weak inflation, you can’t go buy $100,000 worth of gold because everybody goes and buys it and they’re trying to get stable assets. But you can go buy $100,000, in theory, of Bitcoin quickly. That’s been one of the ways that people have seen these big rises.
Mike: Do you think that long term digital currencies will replace gold as the asset to go put your money in for stability?
Rob: No. I think they will both co-exist because gold has just been around too long, it does have a small amount of value in manufacturing, some amount of value in jewelry, but more than that, it’s just that we’ve all agreed that it’s worth something. I don’t think any time soon everyone’s gonna agree that it’s not and agree that crypto is. I don’t think that it’s realistic but I do see that it’s just another asset to hold. That’s how I did asset allocation or I do asset allocation. That’s how I have money in all of these things, all amounts divided between them, although my cryptocurrency is no longer a small amount. I kind of laugh because it’s a good problem to have when it goes up, but it also completely jacks your plans when you’re like, “Oh, I don’t actually want to own. I don’t want that much of my networth to be tied up in something that’s this volatile.”
With that, my fourth and final prediction is that cryptocurrencies will be regulated by several large governments. There’s already been statements from the US government about what Bitcoin is but there is no SEC oversight of Bitcoin exchanges. There’s a bunch of regulation that could be in place. I don’t know that it will happen in the US government, I know it’s happening in smaller governments. I think that this will be the year where government really starts stepping up and putting legislation or more regulation in place to get involved with cryptocurrency and get out ahead of it to make sure that for whatever reason, they pass regulation, they’ll be doing that. They probably would have done it this year but large governments move slowly and I think they’re all waiting to see what happens. I don’t think that it’s going away anytime soon, this will be the year that things will really ramp up.
Mike: I wonder if any of that legislation is gonna be based around security standards. Banks have security standards that they have to comply to. There’s been no shortage of stories of these cryptocurrency sites that have gotten hacked and they lose millions or tens of millions of dollars. I can totally see some government agency coming out and saying, “Hey, in order to be able to trade in whatever the digital currency is, you have to follow certain security standards in order to be able to do it.” I think it’s gonna take them a few years in order to be able to nail down exactly what those are. They’ll sit in their committee for like a year or two at least before they get to any sort of concrete implementation guidelines.
Rob: When they’re first announced, it might be a big negative hit to Bitcoin and the crypto valuations, “Oh no, government’s gonna get involved.” Then long term, it could feasibly make it more stable or it could make it less likely to get stolen from marketplaces. It’s hard to predict what it will do. I think there will be mixed reaction to it.
Mike: Yeah. It depends on whether they legislate it or decide to back it as they do bank transactions. Because with banks, it’s federally insured versus Bitcoin it’s not. If it’s a digital currency and it all gets stolen, it’s the government going to step in and say, “We will back this up to $250,000,” or whatever, but my suspicion is no, they’re not going to go down that path.
Rob: That wraps us up for today. If you have a question for us, call our voicemail number at 888-801-9690 or email 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.
Episode 369 | Staying Motivated, Improving Onboarding and More Listener Questions
Show Notes
In this episode of Startups For The Rest Of Us, Rob and Mike answer a number of listeners questions. Some of the topics include dealing with contractors, improving conversion from trials to paid, and time management.
Items mentioned in this episode:
But before we dive into the intro, Mike, I have a question for you.
Mike: Oh, boy!
Rob: Why doesn’t McDonald’s sell hotdogs?
Mike: They have, actually.
Rob: Really?
Mike; They’ve done a bunch of experiments with selling hotdogs. I think I’ve seen them in Texas but I’ve also seen them in other places where it’s certain times of the year. They’ll just test it out to see whether it’s going to work or not. It’s usually just like a limited edition item. But they have tried it, I know that. And now you know.
Rob: 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 built your first product or you’re just thinking about it. I’m Rob.
Mike: I’m Mike.
Rob: Really?
Mike: I had something on my throat.
Rob: What happened with your throat? We’re here to share our experiences to help you avoid the same mistakes we’ve made. Oh, this is a good week for the intro.
Mike: Perfect, yes.
Rob: I realized something because I was flying to and from Europe and I downloaded just some older episodes, in the 200s, I just wanted to check out what we were talking about back then. The intro was different. It was like building software products or something, instead of building, launching, and growing. I think I like our new one. For a long time, it was just developers building software products, and now it’s developers, designers, and entrepreneurs. For sure our audience has expanded over the years. It was just kinda funny to hear it and for it to trick something, click something in my brain and I’m like, “Ugh, that’s not the intro.”
Mike: Yeah, definitely. Things have changed over time but it is interesting sometimes going back and reviewing things that you remember from a long time ago. It definitely is a different tone or connotation with it. Actually, Benedikt mentioned something about the fact that he was thinking about MicroConf Europe and how over time, his view of the conference has changed but also, he has changed as a person after several years of coming to MicroConf just based on the things that he’s learned, the things he has done. Although the conference, in many ways, stayed the same, he has changed and evolved.
Rob: Yeah, that makes a lot of sense. Thanks for bringing him on, by the way. It was a bummer week. You and I couldn’t discuss MicroConf Europe but I felt that you guys did a really good job of covering the topics.
Mike: Yeah, we ran a little bit out of time at the end there. We didn’t get the chance to cover end of the attendee talks which all of them were I thought were fantastic, but it would have been nice to have a little bit more time to dive into those.
Rob: Sure. That’s my updates for the week, I guess for the past few weeks, because I haven’t been on the show for a bit due to the travel. Really was going to Lisbon and I really enjoyed getting to know Lisbon. It’s a very livable city, obviously a lot more relaxed than Barcelona. There’s not as much there in terms of museums and sites to see but we really enjoyed it. We got a great little Airbnb. I was there with my kids and a nanny and we were just hanging out doing some travel. It was a lot of fun. Then, I did MicroConf Europe obviously, then met Sherrie in Rome the following week. We all hung out there for an additional week.
I just got back in town about six or seven days ago. It’s good be back in the States but travel’s always fun. It expands your mind. I found myself being way more creative and seeing things with new eyes. This is my second time back to Rome, really the whole family’s second back to Rome. It was neat to see our kids seeing the Colosseum, seeing these museums, and these sites, and remembering and talking about the last time we were there.
Since they were older, it was so much easier. I think it was three or four years ago we took them, the youngest was three or four years old and I just remembered it was hard and it was tiring, this trip was not that. It was so much more. They’re really good at travel now because they’ve done it a few times. Even on the long flights and the time change, it was a seven or eight hour time difference, they just handle it now. It was a really good trip. It was a really relaxing two weeks and I didn’t know if it would be, you’re travelling with two kids, and a nanny, and sometimes the wife, and sometimes not. There were multiple plane flights, there was a six-hour layover in Canada and we were all off time and we got tired at times but overall, it was such a worthwhile thing to do.
Mike: Awesome! Our kids today are much better traveller these days than they used to be but we still don’t travel too much, I don’t think. We went to my sister’s house for Thanksgiving, and that’s a five-hour drive or so but it’s not too bad. We spent about three days there and drove back.
Rob: How about you? What’s been going on?
Mike: Well, my wife got me a scotch whiskey advent calendar for Christmas.
Rob: Oh, man! Best gift ever!
Mike: Yeah, so that starts tomorrow, which I’m very excited about.
Rob: An advent calendar for those who don’t know, it starts in December 1st and there’s a little door that you open each day and it’s supposed to count you towards Christmas. The original advent calendar were pieces of a nativity scene which is the birth of Jesus. You open it and you built the scene over the course of the month. But now, there are lego advent calendars, chocolate advent calendars, and I had not heard of a scotch one but that is gonna be awesome. Every morning, you’re gonna open up and drink scotch with breakfast, is that the idea?
Mike: I was gonna wait until the evening. But, the others…
Rob: Probably…
Mike: There’s 24 different ones in here.
Rob: Oh man, that’s gonna be good. Are they like the little airplane bottles?
Mike: They are like little 50 milliliter, or actually, I think 30 milliliter drams. It’s about a shot or so. It’s just a regular size but you know, there’s 24 of them in here and I saw the list of them and a lot of them are things that I’ve never tried before. It will be really interesting to try some of them.
Rob: For sure. 30 milliliters, Mike. That’s a third of a shot for me.
Mike: Well, I know. It depends on your hands.
Rob: Cool. Today, we are gonna be answering a slew of listener questions. We actually have four listener questions left over from MicroConf Europe. They’re not listener questions, they’re attendee questions.
You and I did a Q&A session at Europe and we asked folks for questions in advance and we ran out of time to answer them all. Maybe we’ll start with those and then go into our store of questions.
The first question is from Mark and he says “Rob, have you thought about integrating Drip with CRM platforms? Something like Salesforce, MS Dynamics, other more enterprise things. Often, a simple UI is missing the error.” We have discussed it. We do integrate with Pipedrive, with Close.io, we have a basic web-to-lead with Salesforce where a new subscriber comes in and you can just push them into Salesforce. I think we have Insightly as well, so we do have some CRM integrations.
There’s a couple things to this question. One is what do you mean by an integration? Do you just mean when they hit a certain lead score, you can push them into your CRM? Because we already do that with several systems. But if you mean a full two-way integration where it’s syncing up the data and tags and all this stuff, that kind of stuff is extremely, extremely complicated. The Salesforce alone would probably be about nine months of business development and partnership and development work. A huge amount of effort. That is one reason why I have not done it.
Another reason is our core market is not people with sales teams. That’s a whole other problem that other tools solve. We focus on people who are driving digital commerce, it’s like ecommerce, people who are selling things online, or if you take credit card online, we definitely work with SaaS apps and ecommerce sites and info marketers. Once you have a sales team, it’s less in our core competency and it’s not something that we really wanna double down on or spend the time on at this point.
Mike: One of the reasons this type of question comes up is because once you put your product out there and people start using it, they’re going to use it in ways that you didn’t necessarily envision, and you make changes to accommodate what seem like reasonable requests, but they start down a path of allowing people to do things that the product wasn’t necessarily designed to do from the very beginning. You just didn’t have the vision in it for it. To give you a prime example of that, which is in Drip, you’ve got the lifetime value that you can assign to somebody and that’s built right in. I wouldn’t say it’s front and center, but it is right there, kind of a standard option. That translates back to a CRM where you say, “Oh, what’s the lifetime value of these particular people?” It starts people down that path. It leads to questions like this, like how do you do the full two-way sync integration between Drip and whatever CRM that you have.
I think you have a great answer for it which is really trying to focus on what the things are that you do best and leave the other things to somebody else because you don’t want to try to be everything to everyone.
Rob: Yep, you have to focus.
Our next question is from Johannes and he says, “Hey, at the breakfast this morning, we discussed driving traffic either through side projects, and that was part of what Alex Yumashev had talked about which is kind of engineering as marketing. It’s building a tool that you launch on a weekend that does something; a website creator, an SEO creator, and then use that to drive leads, or through blog posts on subjects close to your product but not mainly about your product. Questions came up about how to convert these visitors into paying customers. What is you experience there and do you have any good advice?”
What do you think, Mike?
Mike: I wouldn’t say that I have any specific experience with taking side projects like that and trying to drive traffic. For context, because not everybody was there to listen to Alex’s attendee talk, but he talked about how he had built a number of side projects and then through those side projects had linked back to his main business website, and ended up getting traffic to his main website and converting those people into paying customers down the road, just by virtually the fact that he’s doing a lot of stuff in the open source community and people can browse that and they end up back in his website.
You have to treat is as something like a landing page or a lead generation mechanism as well. If people are there for a particular project, and that is in some way related to your primary product or set of products, then you have to think about how would you get them to basically buy into the commercial offering that you have. Is it related? Is the side project something that is tangential? Is it like a limited form of your main product? There’s a lot of variability there based on what the side product actually is versus what your main business does. Thinking about those things, and then using it as more or less like a landing page or launching area where you get those people over to your site, and whether it’s a specific landing page you have, maybe giving them additional resources on your website, get them on your mailing list. That’s really an entry point into your sales funnel is what you’re looking for. That’s probably the best approach for that. What do you think, Rob?
Rob: Yes, it’s all about if you’re driving people, his question is specifically if you’re getting people to these blog posts or getting them to the side project, how do you then convert them to paid? It’s all about email. It’s all about getting their email address, typically these side project things ask for an email upfront before they can use it, or you give them some results, and if they enter their email they get the rest of it then they’re on your list. There’s the WP Engine website speedgrader, there was the HubSpot website grader which I think was like SEO stuff that Dharmesh built, you had to enter emails for those. It was a nurture, education, and then it gets you through to become interested in using the product ultimately.
Mike: Right. I was actually thinking of it from a standpoint of you have a project on GitHub and it’s an open source offering versus what you had just mentioned, most of what Alex’s talk was about. The online tools that are free, engineering is marketing at that point, and you are absolutely right. You need to get that email address.
Rob: Our next question is from Paul and he says, “As a founder, I found my emotions get entangled in the success of my business. Any advice for emotionally distancing yourself from your business so you can make decisions more rationally?”
It’s obviously a longer answer but my short answer is go to zenfounder.com, listen to the podcast, click Contact Us link and talk to Sherrie Walling. That’s my quasi-joking answer but it’s actually a learned skill and someone who’s good at it can teach you. What do you think, Mike?
Mike: I agree with you that it is a skill. I have a hard time buying into the idea that there’s one set of things that you can do and those set of things are gonna work for everyone. Just based on who we are, our backgrounds, what sorts of things we’re interested in, and how involved we are mentally in our business and whether or not you are able to shut that off easily is gonna greatly impact the things that will work for you and what won’t.
It’s just like exercise for example. Some people have a really easy time getting up and going to the gym, other people don’t. Same thing with going to sleep at night or a variety of other things, whether it’s weight loss or what have you. There are different things that are going to work for each person, and there’s probably a lot of experimentation that you’re gonna have to do to figure out what those things are that work for you. You can get ideas from other people but that doesn’t mean that everything you hear is gonna work for you or is gonna work as well for you as it did for them.
Rob: This is really hard. This is the age old question and it’s one that I think every founder probably struggles with. I know that I did and I still do. I never quite was able to completely conquer this. I don’t think anybody has. That’s part of being about a good founder is that you care a lot. I used to joke, well half-joke, when my apps are unstable, I’m unstable and say things like my happiness is based on my MRR growth and while that isn’t totally true, it was…
Mike: There’s a lot of truth there.
Rob: There’s a little more truth than I would care to admit. I do think it’s learning, it’s becoming self-aware, or being able to gauge when you are really stressed out and then asking why. I’ll tell you what I do. What I’ve learned is that when I’m stressed out or when I’m angry or when I’m frustrated, I stop and I say, “Why do I feel this way? Is it something real or is it something that is fake, that is manufactured?” Someone said something stupid on Twitter that pissed me off, or someone is attacking this, or someone said something negative about my product and it hurt my feelings, and then I say, “That is a very real thing, but do I need to still be thinking about that now or is it time to let that go?” This all sounds very simple but this is how I cope with it and then I will totally be done, I’m gonna be done with that thing and I’m gonna make myself feel better. It’s actively thinking why do I have this stressed out feeling?
Also, a lot of people swear by it, I don’t do it but I did do meditation when the acquisition talks were going on because I probably have never been that stressed in my entire life. I would sit in the parking lot and I would meditate for four or five minutes each morning. It’s just listening to your breath and being aware of what’s going on with you rather than having your mind race about other things. That would help me get centered going into the day. I know that a lot of people swear by that. There’s a lot of different skills.
Deep breaths is something else I’ll do. I’ll sit there for 30 seconds and take three or four deep breaths if I wanna calm myself down in the moment. These are all small things that I do when I’m actively stressed. Trying to disconnect to yourself from the business as the original asker was asking is you don’t want it to trainwreck you when things go sideways, but it should impact you in some way. You care about that a lot, it’s kind of like losing a game that you’re really interested in. You’re playing soccer, or you’re playing chess or whatever and you’re really into it and then you lose the game. You should be a good sport about it but I personally believe that you should be pissed off too because I’m a competitor. You’re playing the game to win, that’s why I play games. If things are not going great in your startup, that you should feel a little stressed out, but it’s finding the balance of not feeling so stressed out that it just dictates your day-to-day mood based on your MRR growth or whatever.
Mike: That is probably the more common issue is being too invested in the outcome versus the journey along the way, as you’ve mentioned, that ties a lot back to the financial aspects of it. It’s really hard to disconnect yourself from it when things are not going well or not as well as you would like, really.
Rob: Last question from MicroConf Europe and then we’ll get into some other questions, is from Alex. He said, “Do you have any advice on time management as a solo founder? Is it better to dedicate to specific skills, like marketing, for example?”
Mike: Going back to my comments about the fact that different things for managing your emotions are going to work differently for different people. The same kind of advice generally applies here as well. Doing stuff on individual days is gonna work for some people, just doing time blocks, for example, is gonna work for other people. I do think that there are certain types of tasks that you need to do that timeboxing within a day is not necessarily going to work as well. For example, programming tasks or anything where you really need to get into deep focus and be able to spend a fair amount of time in order to make good progress on it, those are things that you can’t spread throughout the day. You really need to be able to schedule those things better. That’s the fundamental piece of time management is being able to figure out when you’re going to be effective at certain things and when your decision-making skills are just totally shot and you really need to flip over to something else.
Rob, we’ve talked about this in terms of managing your glucose levels throughout the day. It seems like an optimization but being cognisant of when you are better at certain things that other times of the day is extremely important.
Rob: Yeah, we’ve covered this on the podcast and we’ve had guests. We talked about the timeboxing approach that some people use, there’s a couple of guys at my work that do that, they swear by it. I have to done it when I’m derailed. I do it as a short term fix to get me back on track if I’m unmotivated or I’m struggling to figure out what to do.
Personally, time management for me is about priority management. If I know what I should be working on and then what I should be working on next and I don’t have to evaluate that every time I finish a task, I’m highly efficient. What derails me is if I finish something and I look around, and I go through my email, then I go to Trello, I wind up going to Amazon or Twitter and then I look around and I don’t know what the hell I’m supposed to be doing and that’s where I lose, that’s where I mismanage my time, is if I don’t have these clear-cut priorities. Like you said, if I do have the clear-cut priorities and it’s the morning hours when I happen to be most productive between let’s say, 8:00AM and noon or 9:00AM and 1:00PM, then that’s it, that’s where I’m killing it. I try to push all of my meetings to afternoons, I try to push all of my calls to one day per week because those are distracting and interruptive for me and it doesn’t allow me to do deep work.
Alex’s question is is it better to dedicate specific days to specific skills like marketing for example. I think if that works best for you, then you should do it. I don’t think I ever did that. I don’t think I’ve ever blocked stuff off like that, like a whole day just for marketing then a whole day to just do development, but it was because when I have, let’s say I have this Trello board of 20 tasks, one was to whatever, go in and fix the forgot password thing that broke, and then the next one is to go start a Facebook Ad campaign. For me, that’s not a hard context switch if I finished one and then I move on to Facebook. I didn’t feel like I had to stuff all the marketing stuff on one day, it was just about which priority it needed to be. If I was switching back and forth between tasks when they’re undone, then there’s the big switching cause. But if I’m actually finishing and moving onto the next thing, I don’t feel like I need to separate the disciplines to different days, personally. But your mileage may vary for yourself.
Thanks again for the questions, guys. I’m glad we were able to get through the last four here on the podcast. Our next question is not actually a question, it is a thanks to us from a Nathan. He says, “Thanks for all the motivation. Thanks for the show, it’s been really motivating to get me started on my journey into the world of startups. I haven’t released a product yet but I’m working on building a public reputation and a mailing list. I just released a plugin for the Craft CMS which I use to run my personal site because I couldn’t find a good way to add events and tag emails to my Drip account for people who filled up my contact form. Releasing something even though I’m not selling it directly feels amazing. Can’t wait to release even more things in the future.” Thanks so much.
Mike: Thanks for that, Nathan! I find it interesting that the first thing you did was integrating it into Drip, especially given the other question about CMSs and you integrating with CMSs from MicroConf.
Rob: That one was CRM actually.
Mike: Okay, yeah, you’re right. You’re right. Sorry
Rob: Different TLA, three-letter-act.
Mike: Yup.
Rob: Alright, our next question is about how to take over duties from your contractor, it’s from John Hollows. He says, “Howdy, I started my SaaS at the time when I didn’t know much about frontend development but I was focused on backend data handling and product decisions. I hired a contractor and it’s been great but it’s become a roadblock to development. I can’t update the frontend without sending him a Slack message and waiting a few days for a reply.” That’s a bummer. He says,” I’ve gotten good enough that now, I can do it for myself. Could you cover how to manage scaling down or letting go a contractor? I foresee requesting things to be more documented, then gradually taking back ownership of different aspects while giving him modular work, like creating a frontend module that handles the new feature. Thanks and keep up the great work.”
What do you think?
Mike: I think this is an interesting one just because a lot of people find themselves in this situation, whether it’s for financially-related reasons or because somebody just isn’t working out. They want to basically take over control or responsibility for the things so they can move faster. This I think is a really common problem if you’re early on and you’ve got money to spare and you’re hiring people and maybe they are not putting the time because you, obviously, don’t have enough money to pay them full time but at the same time, you’re beholden to their schedule. Even if you want to move faster, you can’t necessarily do it. I think that it’s just a very common situation that people find themselves in. The key to this is not to be put in a situation where you have to go back to them afterwards and start asking for documentation and start cleaning things up, and putting things in order so you could transition from one person to another, that person being them and transitioning it back to you. One thing you can do is you can go through yourself and start understanding it.
If you really are gonna take it over, then you have to understand it to begin with. You going through and doing some of that documentation work yourself might be at least a good start but you also want to put together a framework or a process for how the documentation should be put together. What sort of processes need to be put in place or documented so what when you get to a point and after you’ve taken over and you’ve been doing it and you need to shift onto something else, and you need to take this and hand it off, then you’ve got all the documentation put together and you’ve been keeping it up-to-date. If you get everything documented and then you take it over and do stuff for six months or a year but you don’t maintain the documentation, you’re gonna be back exactly where you were when you first took it over.
It’s important that the stuff that you’re putting in place are things that you are going to continue doing as part of the process and you are not opposed to doing them because if you don’t, it’s just gonna fall apart for you later on.
Rob: The way I would approach this, I’m gonna assume you have a good relationship with your contractor. You’re gonna have to judge if you tell the contractor totally honestly upfront, “Hey, I’m gonna look at taking over all the dev work. Could we start by having you create some documentation and have you walk me through the thing to get me up-to-speed, and then I’m slowly gonna take it over, over time, over the next three to six months. And let’s just transition it.” If he can do that, great. Most of the contractors that I’ve worked with have no problems with that.
If you think that the contractors is gonna be a pain in the ass about it then you can take a different tactic and let him or her know that, “Hey, I’m gonna be taking over some of the front end development work. I just find that I have more time and I wanna do some blah blah blah…” You don’t really say that you’re gonna basically be letting him go in six months. You could also say, “We may be thinking of bringing more contractors or other people and I really just want some documentation, could we put together some documentation and then walk me through it.” It’s pretty standard stuff as a contractor, I would totally expect someone to come to me and say this. You’re thinking process here that you’re gonna want some documentation, you’re probably gonna want a walk through, you’re gonna want to slowly take over more, slowly shrink the contractor’s sphere of ownership, and then eventually just take over all the work.
My guess is if the contractor is pretty good, you’re always gonna have some lower priority stuff that can wait a few days. Then there’s the high priority stuff but if the contractor saw it and knows the code-base and has delivered for you, I bet that by the time that you get to a place where you’re doing all the frontend work and you’re doing the, I should say, the high priority stuff that needs to get done quick, that you’re gonna have enough lower priority stuff that still needs to get done that you may want to actually keep the contractor around, whether it’s the amount of hours that they’re doing now or fewer, it’s always good to have another resource to help out with this stuff. There could be a lot of truth in this statement of, “I wanna learn this so that we can share the burden rather than you taking over everything.” I hope that helps. Thanks for the question.
Our next question is from Tim, it’s about improving conversions. He says, “I’ve been tracking signups across the board and about 50% of the people that come onto my pricing page follow through to signup and they use the app. However, the number of converting paying users is very low.” He has a trial obviously, he says, “I’m talking under 1%.” His trial to paid is under 1%, I’m gonna assume with a 50% signup rate of people who visit the pricing page that he is not asking for credit card in advance of the trial. “Can you point me to a resource I can use to take the first step to tackling this problem?”
Instead of pointing him to a resource, Mike, why don’t we just become the resource?
Mike: He has two different products here. One of them is called Article Insights and the other one is SEO Content Machine. I don’t know which one he’s specifically referring to. It’s probably a little bit difficult to drill directly into those. But there’s two approaches that I would take.
One is to take a look at the people who have converted and ask them why they started paying, what was important to them, maybe analyze how long they stick around and see if their lifetime value is extremely low for what you would expect, maybe you expect them to stick around for three months or six months and they’re staying around for a month or two. That’s a warning sign that either they’re signing up for something and they thought that they were getting something else or it’s just really not delivering the value that they thought they were gonna get out of it.
The other thing is you can go and start talking to those people who have signed up but if you put an offer in front of them, for example, after seven days that they could convert into a paid account, ask the people who didn’t why they didn’t or what were the biggest turn offs to them. Whether you ask them to respond to an email or get on a call with them. If you can get on a call with them, great, but I understand that a lot of them are probably not going to. But if you’ve got 99% of them who were not converting into paid then you’ve got a lot of opportunities to get them onto a call. It’s really about understanding what it is that they thought they were signing up for and what value they thought that they were gonna get, what their position is. Are they just kicking the tires, is the reason you have really high sign up rate is because they’re just tire kickers and it’s free so they figured, “What the heck, I’ll throw my email address in there,” or is it that they actually had a business problem that they were trying to solve and that’s the part that you’re really trying to get at is what are the pain points that they’re actually trying to solve and does the product actually deliver those things. Or is it that you think that it does but the reality is that their situation or problem is a little bit more tangential than your product delivers on.
Rob: Yeah, I recommend checking out a talk that I gave back in, I’m guessing it was 2013 at MicroConf. It’s gonna be on Vimeo. It’s called How to 10X in 15 Months, or it might be How I 10Xed in 15 Months. It’s basically the story of acquiring HitTail and then 10x-ing the revenue. Some part of that had a pretty noticeable impact was getting the trial to paid numbers way up. I did that using email sequences, event-based emails that would hit people up if they didn’t get onboarded, and then I’m trying to think, I should have had in-app stuff, I don’t know if I did, but that would have been another one. It’s just about getting people onboarded. I think your approach, Mike, of talking to people has gotta be the first step just to try to assess why are people not doing it. I do think that adding email reminders is going to absolutely have a pretty substantial impact, even before you know why people getting onboarded versus not getting onboarded. I still think email will have an impact if you’re not sending any today. That’s where I would start.
I enjoy these kinds of problems because it’s like you know that you’re a lot lower than you should be and it’s just a puzzle. How do you get that 1% up to 3% or up to 5%. Even 5%-15% for no credit card, it’s somewhere in there. Maybe it’s even 5%-20%. You should be able to substantially increase this and it’s just figuring out where the break is. If you can fix that, this is how you scale a business. This is where you go from trudging along, growing at a $100 or a couple $100 a month to suddenly really, really being able to hockey stick this thing if the numbers are right.
Our last question for the day is from Alex Sommerfeld and he says, “Hey, Mike and Rob. This one if more for Rob. What do you think about the newly-launched Drip service from Kickstarter?” D.rip is the service.
In essence, what’s interesting is it’s not actually a launched product that Kickstarter launched. It was a startup that started after Drip. Drip, basically, we worked on code in 2012, we launched in 2013, and I think it was some time in mid to late 2014 that this company called Drip launched and it was a music social network and it was a startup that raised a bunch of money and they bought the drip.com domain name because I couldn’t afford it, they bought it from a squatter. Once I saw that they owned it, I remember telling Derrick that I’m just counting and counting the months, 15-18 months they’re gonna be out of business because it’s a music social network, the odds of it working are just miniscule. You typically raise funding for 15-18 months of expenses.
Sure enough, sometime in, don’t quote me on this, it was sometime in 2015 they basically went under and I actually contacted their CTO and their CFO, all of the people involved and eventually was talking about trying to buy the domain name but it turned out that Kickstarter had basically just acquired the assets of Drip, of that social network, and some reason either didn’t buy the domain name or I don’t know if they didn’t want to or if it didn’t come with the package, or what happened.
The drip.com at that point got separated from this music social network but Kickstarter acquired the assets and I don’t know what the assets of it, if it was a team of people or if there was any type of software. But in essence, they turned it into a Patreon competitor. That’s what it is. Kickstarter is launching a way to do subscription-giving to support creators.
This name has been around for a long time in bizarre context. The end of the story is my Drip got acquired by LeadPages and we bought the drip.com domain name, maybe four or five months ago. Now, if you go to drip.com, it’s our website, all our email addresses are now using drip.com, I don’t know how I feel about it. It sucks to have two things and the exact same name, you can’t trademark that name drip because it’s too generic. I should’ve tried to do that back in 2014-2015. It is what it is. There’s gonna be some confusion. We have the .com, I feel like that’s a win, it all depends on how given that we are not competitors at all. Drip does seem to just be, that word and phrase, is being used in marketing and it’s being used in juts to mean something that is released over time because that’s what this is. It’s subscription, it’s payments to creators over time versus dripping out email over time. I don’t know, I have strong opinions on it, I’m not terribly offended by it. I wasn’t super happy when they launched three years ago but I’m over it just because they’ve been around, I’ve watched the whole thing play out. You have other thoughts on it?
Mike: It’s interesting that the color schemes and everything else are extremely similar. Drip, where you work is LeadPages, it’s capital D, they’ve got a lowercase D and their I is upside down but other than that, it just looks very similar.
Rob: Yeah, when you think of of drip, you’re gonna tend to use blue, so we both used blue and startup blue is a common thing anyway.
Mike: Yeah, I don’t know. I can foresee there could be a lot of confusion, to be honest, which sucks. As many domain names as there are, there’s only so much you can do.
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.
Episode 368 | Improving Your SaaS Onboarding Emails
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Show Notes
In this episode of Startups For The Rest Of Us, Mike interviews Alli Blum about how she helps convert prospects into long-term customers in SaaS onboarding through email. They talk about the three phases of SaaS onboarding, the marketers perspective, the product approach, and more.
Items mentioned in this episode:
Transcript
Mike: In this episode of Startups For The Rest Of Us, we’re going to be talking about how to improve your SaaS onboarding emails. This is Startups For The Rest Of Us Episode 368.
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 Mike.
Alli: And I’m Alli.
Mike: And we’re here to share experiences to help you avoid the same mistakes we’ve made. How are you doing this week, Alli?
Alli: Fantastic. How are you?
Mike: I’m doing great. Welcome to the show. Wanted to introduce you to everybody. I guess that I’d say your background is in copywriting but really, the gist of what you do is you help people convert prospects into long term customers in their SaaS onboarding emails. You’ve worked with a bunch of different high profile companies, I’d say, like KISSmetrics, and CrazyEgg, and MixPanel, and Autopilot. Seems like the plethora of companies that people look up to and are well known. Just want to say great to have you on and we’re going to be talking today about how to improve people’s SaaS onboarding emails.
Alli: Thank you very much. I am so excited to be here. Yeah, I’ve had the opportunity to write for some of those fine publications that you just listed. My background is that I have worked with technology companies from a lot of different places. I knew I wanted to start my own product based company, right now I’m doing service based business. I started looking around the research that you do when you’re just getting started at learning about startups and I saw Startups For The Rest Of Us and I learned about MicroConf. I just thought, oh, I think this is like a thing I want to get near to and learn more about but I was too chicken to actually come close to you. But when I finally started getting the courage, I looked and I wanted to meet people, I looked at who was attending MicroConf. I was just like, I would just email them and say, “Hey, I want to know more about what you’re doing.”
Mike: That’s awesome. It’s nice to see that the MicroConf Community is having an impact on people and we’re always looking for ways to expand that. This past year obviously, we expanded into the Growth Edition and the Starter Edition. If you’re looking for tickets, any of the listeners looking for tickets, you can get on the mailing list over at microconf.com and tickets are going to be publicly available the next couple of weeks. By the time this episode comes out, we’re pretty close to that.
I guess with Alli’s intro in mind, one of the things that we’re going to focus on today is the different techniques that you can use to improve your SaaS onboarding emails because that’s your focus point at the stage of your career, Alli. Wanted to have you on the show and educate our listeners a bit about how they can improve their onboarding emails and what the specific steps that they can take to walk through the process of improving those. Like anything else in your business, it’s an iterative process. You’ll go through it once and then you’ll come back to it and revise and repeat. I think that you have a unique perspective and that you’ve done this for a bunch of different people whereas most people listening to this will probably only have done it for one or two apps, yet you got a much wider range of experience that I think will be really helpful to listeners.
Alli: Cool, yeah. One of the things that I’m excited to talk about is if you’re listening to Startups For The Rest Of Us, you may have just launched, maybe getting ready to launch, you may have been around for a couple of years. Depending on where you are, there’s a little bit of a different approach that you may want to take to make sure that your onboarding is actually doing what you want it to do.
Mike: There are different phases to the onboarding process. Why don’t you talk a little bit about the three different phases where people might fall on the spectrum?
Alli: Excellent. The first phase would be when you have no automation at all. This would be if your app is very new or if your app had more of a consultative sales process before moving into a self signup process. At this point, you may not know too much about what makes people fall in love with your app, you may not even know too much about who the folks are who are coming into your app. This early stage, your goal is to get as much of that information as you can to talk to as many people as you can and really get a feel for why they’re signing up for a trial, why they’re starting to use your app, what are they trying to get out of it and who are they.
You take the same approach at later stages. After you’ve been around for a little while, you may have already started to introduce some automation. You may want to have a welcome email, you may have a couple of emails that go out to tell folks about features they can try during their trial but you may not have a full automation process or a full set of sequences designed to actually turn your trial users into paying customers.
And then once you’re at that stage where you’ve done a lot of hard work, where you’ve got everything automated, everything is triggered by specific events as opposed to time triggers, then you might be getting ready to be at a point where you really want to start optimizing and testing different things out, seeing what you can, seeing if you can get to a point where you’re bringing as much juice out of your trial as you can.
Mike: Those are the three basic phases of the onboarding process where people will probably fall, who are listening to this. You either got no automation, you got some minimal automation, or I’ll say complete automation that’s much more advanced. Everything is done through triggers or events or what have you.
A general process that I think people will go through when they’re looking at implementing these, regardless of which of those three phases you’re currently at, is to look at your current onboarding emails and try to identify the shortest path, they’re trying to get a customer to recognize value and figuring out what steps they need to take. And then for each step, write an email that takes them through the process of achieving that stuff.
We talked a little bit offline, you actually had some rules for this piece of it. We’re just giving a basic process now, I thought it was really interesting that you had three different rules that applied to writing the individual emails. I wanted to go through those real quick.
Alli: Yes. Many times you’ll see, if you sign up for SaaS trials or if you’re sending out emails yourself, you’ll see emails are general, and they’ll say here’s a welcome guide or read some cases studies or don’t you know we have video tutorials? What I don’t like about emails like this is that they actually introduce quite a lot of work for your reader, they have to stop and figure out what they’re doing, why they’re here. That’s why I have these rules for writing. It’s about getting that hidden work out of the way so that people who see your email can just figure out what to do and then do it.
The first one is called the Rule of One, it’s a conversion copywriting rule and it means or it states that you should write your copy for one reader, and you should get them to do one thing. You may send out an email that says here are the six tips you need to do to get started. Instead of that approach, I would recommend saying here’s the one thing you need to do to get started. This is something that a lot of folks may think oh, well if you have more calls to action in there than maybe some of those more likely to click on something for sure, but there’s a lot of data that doesn’t support that claim. I think it’s on marketing props, there’s a study where Whirlpool eliminated all the calls to action from their emails except for one and they saw 42% increase in clickthroughs. Getting rid of everything from your email and just having one clear call to action is rule number one.
Rule number two is to make sure that call to action is measurable. When we say measurable, that means we want someone to be able to know when they’ve done it. If your call to action is for someone to upload a video or to invite a team member, these are concrete actions. When you’ve done it, you know you’ve done it.
What would be a call to action that’s not measurable is something like explore my account. It’s a little bit less well defined, folks come in may not know when they’re done exploring their account, if they’ve even achieved anything. It introduces that work where they have to figure out what to do.
Then the third thing is to make sure that your call to action is something meaningful. Really, that the whole email is meaningful. We want people who are reading our emails to say, okay, yes, I need to do this. Instead of sending an email with a call to action, and we were talking about this offline that says something like submit or login, something that’s pretty boring. No one’s life ever improved because they clicked login. You’re going want to talk about what is going to happen as a result of doing whatever it is the thing that you’re doing.
Instead of login, maybe it’s invite the team member. If you want to take it even one step further, less of a call to action and more of a call to value, you could say, “Cut the time you spend on support tickets in half.” Made that one up off the top of my head, it’s probably not the best example. The reason I shared this is to show that you want to make sure you’re communicating why someone should do what you’re asking them to do. Because people have a zillion emails in their inbox, they’re going to ignore yours unless you give them a reason to do anything about it. Three rules, rule of one, make your call to action measurable and make it meaningful.
Mike: Awesome. I think that applies to not just emails that you’re writing inside your onboarding sequence but you can also generically apply that to marketing copy on your webpage or landing pages. There are lots of things that cross applies too. Again, we’re going back to the basic process for iterating on your email sequences. The first one was identifying that shortest path, second one was for each step writing the email, and then for the third step is to take a look at that. If they don’t take the actions on the follow up to remind them to take, usually this involves some level of events and automation. You’re typically not going to get here without some level of automation whether you’re using Zapier or a timed trigger that you can interject and stop. You’re just not going to be able to keep up with it after 5 or 10 people are involved in your onboarding process.
Then the next step is to measure the results of those emails and make sure that people are moving or progressing through your sales funnel. There’s a lot of different tools you can use, you can implement custom database tables or use tools like MixPanel or KISSmetrics, Intercom, Drift. There’s lots of things that do that but it’s really about making sure that you have the information to go back through and iterate for that process and make it better.
What I want to talk to you today about was that there are different perspectives for improving that process. There are three that you had talked to me about. The first one was the marketer’s perspective. Can you talk a little bit about what the marketer’s perspective is and why people tend to use this?
Alli: When you’re talking about a trial, and then the messaging that you’re doing in a trial, one way that you can think about this and one way that a lot of folks will think about the trial is part of a marketing funnel. You have your content marketing and your outreach marketing and you bring people to your site and then you get them to opt in and sign up for a trial, then they’re in the trial, and then you’re retaining them once they’ve upgraded. It’s one step in this funnel toward keeping long term customers.
If you’re a marketer, you might say okay, if the trial’s not doing what I want it to do, the way that I describe this problem is that I have a leaky funnel. Something is happening in my trial where people are not staying around. If you’re a marketer, you’re going to approach this problem like a marketer. You’re going to say okay, why are my conversion rates so low? Am I getting the wrong people into my trial? Am I not targeting the right people? Is my messaging somehow not what my target prospect wants to hear? Is the problem that my web copy is out of date that my content marketing is wrong, there’s a mismatch between who I’m talking to and who I want in my trial? Marketer’s perspective is about fixing a broken part of your funnel.
Mike: Awesome. In most cases, this assumes that your sales funnel is I’ll say either long enough or you have enough people going through it that it makes sense to look at that and try to find optimizations. If you’ve only got 10 or 20 people going through a month, it’s hard to look for optimizations with lower numbers, just because you can’t really get a good sense of what is statistically significant or not.
The second approach you talked about was the product approach. I think the product approach is probably one that I hear the most about because pretty much everyone is doing it, they’re saying how do I draw attention to the different things. Talk a little bit about the product approach when it comes to the SaaS onboarding funnel.
Alli: Oh my gosh. Me too. I hear this. Every SaaS founder that I talk to, who has a problem with their onboarding, they say, “We have so many features, how do we get more people to try all of our features during the trial?”
Mike: Why do you think that is that they want everybody to try out all the different features?
Alli: I think it’s because many of these SaaS founders who I spoke to, who like I said come from the MicroConf Community, they’re building features that people ask for, they’re building features a lot of times because they have done research and they have figured out that this is a real pain and their feature addresses that pain. They build the feature and the folks that have it, folks that are using the feature are enjoying it, and it makes sense that you would want to solve other people’s pain. Why wouldn’t you want someone to try out everything that they can do in your app. It’s going to make their lives so much better.
I think people approach it from the right place, so to speak, people really want to help. The only problem is that that’s not always, I have found, what people want to do when they come to your app. Even people who are very aware of what they want to do with your product, maybe they know the exact features that they want, they still don’t need to see all the features, at least during trial.
Mike: Yeah. They’re there to use your app because they want to solve their particular problem, not because they want to use every feature, whereas the developer tends to be more focused on, hey, I created this new feature over here, you should come check it out or you should use it. And making assumptions about the reason why some of their customers are falling out of the sales funnel is because they’re not using that feature or making assumptions about what the value is that people are getting out of it versus understanding what the customers really looking for and what would make them successful and what things they actually need to do in order to be successful.
Alli: Exactly. So much of this has a lot to do with who’s coming to your app and what category you’re in, and the stage of awareness that most of your buyers are. I like to think about categories that are really saturated as most of their prospects are likely to be switchers. If you are using, for example, a proposal software as a freelancer and something goes wrong and you don’t like it anymore and you want to switch to another one, you already know basically what you’re looking for and there might be a single feature that you need. But during your trial, you don’t need someone to bombard you and say, did you know we could do payments, did you know we could convert currency, if the only feature that you need is version control. If you are that feature focused buyer, you’ll go figure out or you’ll ask someone if this feature is available a lot of times.
Mike: I think it’s not just about the feature, it’s just about the fact that they are in that mindset of I want something else and I want to find something to solve this specific thing which is the reason I’m switching from somebody else, versus somebody who has searched for a pain point that they had and they are so early on in the buying process that they’re not at the point where they’re not willing to put their credit card down versus somebody who is just like you described, they’re willing to put their credit card down because that new product has that one feature that they really need.
Alli: One of the things that I think is really interesting is that in that level of awareness where people, in copy writing we might call it most aware with a high level of intent, someone is aware of their problem, they’re pain aware, they know that solutions exist, so they’re solution aware, they’re product aware, they know that your product exists, and then they’re most aware. They know your product is where, they know that you are a good candidate for solving their problem.
And then if they’re most aware with intent, that’s the dream buyer. If you have what they’re looking for, then they’re going to find you. But most people aren’t that, we do not have the luxury of being able to write for people who already know that we are the right fit for them. As marketers, copywriters, product managers, SaaS owners of any kind, we have to be ready to help folks along the way and say okay, this is what you are most likely to want to do. We’re going to help you figure out how to use this app to get you where you need to be. That’s when we start to get into that third perspective that we are talking about.
Mike: Which is a customer success approach. I guess the general way to phrase the customer success approach is that you’re looking to identify what the success milestones are for somebody coming onto your product and how can you help enable those for the prospects. I think this is what we’re going to really drill into so that people can get some actionable takeaways for this. The first question that most people are going to have to try and answer is what success milestones could there be? You talked a little bit about this before but can you elaborate on that a little bit? I think it’s probably going to be different for each product.
Alli: It’s totally different for each product. It’s different for each product and it’s different across categories. Mike, are you at a stake yet where you know what your customer’s success milestones are for Bluetick?
Mike: I have some idea of it. I would say I don’t have 100% confirmations but there are certain things that the customer has to do in order to provide value to them. The first one is that they need to connect their mailbox, if they don’t connect their mailbox then obviously they’re not getting any sort of value from the products. The second one is that they need to set up email sequences. If you’re not sending emails, the product doesn’t give any value. And then third one is you have to have contacts loaded into the system to send the emails to. And then the fourth one is obviously you have to actually send the emails.
Really, the most important one is getting them to the point where they send the emails and the value that can be measured is that when they start getting replies from those automated emails that are going out. There’s a way to measure that and then there’s those progressive steps leading up to that which they don’t do any of those then the number at the end is going to be zero. But once they get through those initial set of things, then there’s a way to measure how successful they are as they’re using the product.
Alli: That’s really cool. What I’m curious about, it sounds like the moment where people are most likely to say oh, okay, I need to keep using Bluetick, is the moment when they get that first reply, that second reply to an email that’s been sending out as part of an automation, is that what you’re observing?
Mike: Yeah, that’s it. I have customers who will sign up and then they start sending the emails out. And then after even just a day or two, they start seeing that they’re getting responses and they know that it’s working. If somebody didn’t respond, the system would follow up for them and they don’t have to worry about it. That’s exactly right.
Alli: It’s really awesome that you have that insight because Bluetick is still a very young app. I think one of the things that some apps are naturally predisposed to have these built in success milestones where you have to do a couple of things that are not that difficult in terms of the cognitive load that you bear while you’re doing them. You have to write the emails and that’s pretty tricky. But you have these clear success milestones and the measure of success is also very clear. People who are signing up, setting up their inbox, getting their contacts, sending the sequences, and then getting those replies, that’s a very clear measure and that’s great when you’re able to do that.
Mike: But that’s really a close feedback loop where there’s no real, I don’t want to say no other options but that’s the result of the product itself. I think that it’s much less clear when you have something that does any sort of analytics. I think you and I talked offline a little bit about Wistia and the process that they had gone through to increase their onboarding experience and make sure that people are successful.
If I remember correctly from reading an article, somebody just said that one of the things that they looked at was making sure that people were looking at their analytics inside of Wistia. They’d upload a video and invite a team mate and look at the analytics. Looking at analytics does not necessarily mean you take action on them. It depends on how you view that as to whether or not that’s a real milestone. How much of a milestone is it? If you went to the page and then you clicked away, does that count? Or you have to come back to it several times? I think it’s very subjective at that point. Not everything, I think, falls into a neat bucket like the process that I outlined for Bluetick does.
Alli: I think you’re absolutely right. If only every app had as clear and straightforward a feedback loop as Bluetick, make my job a lot easier.
Mike: What is it that you would recommend if somebody’s in that situation where you’ve got some customers that are coming on board and you might have an idea of what your success milestones could be, but you’re not sure. What are some of the couple of things that you could do right away to try and figure out what those milestones are or whether or not your assumptions about them are correct.
Alli: The first thing that I would recommend, it’s kind of asking yourself a series of questions. The first thing that I would say is okay, do I know who’s using my app and are all the people who use my app using it pretty much the same and what does that look like. That’s the first question. Is everyone here using the app that we have the same, and if not, how are we going to start talking to everyone the right way?
Mike: Would you recommend starting with that as a question of what the size of their business is or are there other things that you can think of that would be better suited for that type of self segmentation or is it just size of business is a great place to start and then dig in from there?
Alli: It depends. It always depends. It depends on what your category is and what those main factors might be. Ideally, you’re in a place where you are starting to have some insight that these differences may exist. You may, for example, notice that 30% of your users just never click invite a team member. They just never do that one action. That’s a very telling piece of information where team size may be a very large variable.
Mike: Going back to what you’re talking about, the product approach where one of the reasons that that may fall down is if you’re trying to get people to use the invite a team member but if they don’t have team members, they’re not going to use that. Of course, writing those onboarding emails, trying to get them to use it is never going to work because they don’t even have team members.
Alli: Yes. I sign up for apps all the time because I want to see what their free trial emails look like. A lot of them are apps that I plan on using. If the first thing they ask me to do is invite a team member, I kind of just assume it’s not for me, it’s not a product for a solopreneur because I don’t have a team member that I need to add. You’re right. The product based approach will frequently say we have our products, let’s make people use it, and the customer success approach would be like okay, who are our customers and how do we make them successful?
Mike: Right. You’re really just personalizing the features that you’re offering them based on the problems that they’re facing and they’re trying to solve. It’s just personalization of your software for them.
Alli: Exactly. Yes.
Mike: Once you’ve gone through the process of self segmenting people a little bit, what’s the next step? How should you go about finding more information about them? Because I think there’s only so many questions you can ask in self segmentation emails before you have to go onto the next step. What would that next step be?
Alli: Yes. The self segmenters are good to start off because they can be automatically triggered and you can keep collecting that data while you’re diving into the harder data which might be lurking in your KISSmetrics account, in that quantitative user behavior based data. What are people actually doing? This is really challenging to make sure that your data collection methods are labelled correctly, set up correctly, but it’s a matter of sifting through a massive amount of data and saying what are people doing right before they sign up for a paid plan? If the question you’re answering is why don’t more people upgrade, then look at what people who have upgraded have done.
One of my favorite places to look is inside your support ticketing software. I love looking at what kinds of question people are asking while they are in their trials. One of my favorite little tip is to look for phrases that follow the phrase, “So that.” So if someone’s asking you a question and they’re saying how do I configure my invoice with an automatic payment link ‘so that’ I can accept international currency, or how do I upload my video in a small file format ‘so that’ I can share it in email.
Then, you’re starting to get some data on why people are coming to your app. What is the real problem that they’re trying to solve? If it’s the video example, you have a video that you need to email to someone, emailing a video is like an impossible task if you do it as a file, how do you help someone who wants to do that, figure out how to do that. One of the things that Wistia does really well is incorporate that into both their email onboarding but also into their in app UX messaging.
Mike: All this stuff, what you just talked about is really ways to be sure that the assumptions that you’re making previously about what the success milestones are are valid. I think that looking through the support emails, specifically after where they say ‘so that I can do whatever,’ that’s fantastic, I’ve never heard that one before.
Alli: When we do review binding as copywriters, you can do it in product development where you go out and you find the pains and the crispy-sticky language, you find what people are looking for and you find out why they want to do it. Getting into the idea of the ‘so that’ is one of my favorite, favorite copy tips because it helps you just get that one level deeper. Because we’re all emotionally human creatures with wants and needs that we don’t always articulate. This is one of the reasons why we look for that ‘so that’ because we don’t want to make any assumptions about what someone is asking us for help with. If someone says I need to be able to do XYZ, you can help them of course and you should, and that’s great. If they also tell you why they want to do it, that’s gold.
Mike: All of this information is intended to help you build out the emails sequences around those success milestones but how do you know when you have enough data to get started? Does it take 5 or 10 data points or do you need 80 or 100? It feels like there’s not really a hard statistical significant number that you can look at because this is all gut feel to some extent?
Alli: That’s a really good question. When you start noticing patterns, when you notice that the folks that you talk to share the same functional role or they have the same need, they tend to do the same things or they have the same questions, that is a point when you are ready to dedicate your time to your onboarding.
Mike: It is really about looking at the patterns and when you start to recognize them and you start hearing the same things over and over again, that’s when you shift modes over to starting to automate things in your emails versus continuously analyze the data that’s coming in, right?
Alli: Yeah. I think never stop looking at the data. The more close relationship that you can have with either that quantitative user data of who does what, stuff that you can put into a graph or a chart, and that qualitative data of what people are saying and when they’re saying it. But the more that you can maintain that relationship with the data, especially during onboarding, the more that you’re going to be able to push those free to paid conversion rates up to a quarter of percent here, a little bit here, and that’s how you start to get to those high rates.
Mike: I think in terms of the pattern recognition, every brain is a different engine and you start to see massive differences between two things. Part of gathering this data allows you to see the differences between what different customers are doing. As soon as you start to recognize, hey, this customer segment over here is much larger than the second one over there, then you start focusing on one versus the other and it makes it easier to make those decisions because you have the numbers in front of you.
Alli: I agree.
Mike: Once you have this qualitative data and you believe those success milestones are, the next step is to coach people around those milestones and steer people towards them. What is the default that people tend towards if they don’t do that? What are the mistakes that people make instead of actively going after those things and intentionally doing them, what’s the default that people do?
Alli: Yes. There are so many mistakes. The default that I see is on the first day, you get a welcome email from the founder and a welcome email that says, “Here is a guide to get setup.” Or, “Here is a list of all of the places you can get support; our blog, our video tutorials, our 7 tips, our 13 minute video.” And while it is great for founders to send out those emails, while it is great to tell your users where they can get support, it is much better to say, “Great! You just signed up. Here is what we need you to do next.” The alternative to sending out emails that show your users what they should be doing while they’re onboarding is really just sending them useless information. It’s the equivalent of an email blast to everyone you know that says, “Hey, we have a thing.” Or, “Here is a new feature, look at it.” It just drives me crazy because these are apps that in many, many cases are very user friendly, in many cases are very helpful, they address a real pain, but these emails come through and they just get in the way and they make it so much more difficult to get started than it needs to be. They just introduce so much work.
Mike: They’re really just not helpful, is what you’re saying.
Alli: They’re not helpful. It’s like if you show up to a store and someone says, okay, can I help you find anything? You say no thanks, I’m just looking. And then if you show up to a store and someone says hi, would you like to try on our new jeans? But you’re there to buy a vase. They never asked you who you are or what you’re there for, they never made any attempts to help you get started or figure out what you want to do. This isn’t the best analogy.
Mike: I think it’s a great one. Because it’s exactly why I use Amazon.
Alli: Yeah.
Mike: Because I just don’t want to be bothered. I don’t want to go into a store and have them try and sell me some stuff that I just absolutely have no interest in. I think it’s a very great analogy.
Alli: I’m sure there are times when you are looking for something specific that maybe you haven’t bought before or you haven’t been able to track down where you need someone’s help and you’re grateful for their help. But if you walk into the store and they ask you if you want help with something that’s not the thing you came there for, then you just leave or you go some place else.
Mike: I think that’s partly a function of them either having some sort of quota and at that point, their help is about them, it’s not about you. It’s not about what they can do for you, it’s about what can I do to meet our goals or our internal needs or this product needs to be sold. Let me see if I can direct people to it. I think that’s the fundamental issue.
Alli: Yeah. It really, really is because the difference between the product approach and the customer success approach, even though neither of those are strictly a sales approach, the product approach is very self centered, this is what I have to show you. Do you want to come look at it? As opposed to I think this is what is going to help you get through what you’re trying to do here.
Mike: I think there’s a big difference that you can just objectively notice when you sign onto a software product where the onboarding itself is extremely well put together and well thought out, and is helpful versus the ones where it just meanders along, it doesn’t really direct you through to the things that are relevant to you. It’s very clear when you see those two things side by side, but I think when you’re working on your own products, it’s very difficult to be a little bit more objective about that.
Alli: The biggest take aways that I would say, I would hope anyone who’s working on their onboarding walks away from this, how can I learn more about who’s using my app? How can I learn more about why they’re using it? And how can I learn more about what they’re doing that makes them successful.
The approach that you take to do that will depend on where you are in terms of the kind of data you can access. Early on, you may spend more time talking to people, interviewing them, continue to do that as you get more and more data in terms of user behavior and also that support ticket information to really round out your understanding of how people are using your app during the trial.
And then once you’re starting to really notice those patterns, that’s a sign to really dedicate more time to this and start implementing those sequences in your onboarding that get people to really coach them around those success milestones. Instead of taking that product approach of saying okay, let’s look at everything. Really taking that approach of saying how can I help people be successful. What do they need to do first, what do they need to do second, how can I help them do it?
Mike: Awesome. I think that’s a great place to leave off for the listeners. What’s the best place for people to follow up with you or find you after the episode or if they want to ask questions?
Alli: My email address is the best way to reach me. It’s alli@alliblum.com.
Mike: Alli, thanks so much for coming on. I really appreciate having you.
Alli: Thanks for having me, Mike.
Mike: If you have a question for us, 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.
Episode 367 | MicroConf Europe 2017 Recap
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Show Notes
In this episode of Startups For The Rest Of Us, Mike and Benedikt Deicke give a recap of MicroConf Europe 2017. They go through the speakers and give you their key takeaways and highlights.
Items mentioned in this episode:
- FemtoConf
- SaaS Guidebook
- Stagecms.com
- Benedikt’s Twitter
- Hidden
- FE International
- Trustshoring
- Balsamiq
- Podcast Motor
- GrowthHackers
- MOO
Transcript
Mike: In this episode of Startups For The Rest Of Us, we’re going to be talking about MicroConf Europe. This is Startups For The Rest Of Us Episode 367.
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 Mike.
Benedikt: And I’m Benedikt.
Mike: We’re here to share our experiences to help you avoid the same mistakes we’ve made. What’s going on this week Benedikt?
Benedikt: I’m good. We had a nice time at MicroConf Europe in Lisbon. Weather was definitely nicer than it is back home in Germany so I really enjoyed myself.
Mike: Awesome.
Benedikt: What about you?
Mike: I almost missed my flight home. Actually, I almost missed my flight to MicroConf just because I was running late and I ended up parking in the wrong parking garage, I thought I was going to the international terminal. For whatever reason, the flight to Lisbon didn’t fly out of the international terminal. I don’t know why but it’s just a weird thing that they did with it.
And because of the terminal that I was at, I think it was Terminal C in Boston, there’s no direct way to get to that terminal. You basically just have to walk completely across the parking garage and through the middle of it, and then there’s a place where really it’s only designed for cars to go so I had to walk through that. It was kind of a nightmare getting there. And of course, as I said—
Benedikt: It sounds like it.
Mike: Then I almost missed my flight home. They cancelled my ticket like five minutes before I got to the desk for whatever reason. They had to rebook it and I had to run through the entire airport. Long story short, I’m glad that I actually got home.
Benedikt: You got your fresh air of exercising this week?
Mike: I did. I could probably log that as a short run. They tell you how long it takes to get from one area of the airport to the other. It’s like 12-18 minutes or something like that. I ran the entire way.
Benedikt: That definitely counts as exercise.
Mike: Welcome to the show. You’re on this week in place of Rob because our schedules got all messed up and typically, Rob is on to do this with me for the recap but his travel schedule just got messed up. Maybe we’re just too optimistic for this. We thought we’d be able to get a recording and it turned out we can’t. I wanted to have you on because you were at MicroConf. You’ve been to MicroConf several times in the past. I think it’d be good to get your perspective about this MicroConf in relation to some of the previous ones and just kind of walk through some of the different takeaways of the speakers.
Benedikt: Sure. Let’s get to it.
Mike: To give people a background actually about you a little bit first, you’re the co-founder of FemtoConf and you also have a SaaS Guidebook that you’re working on which teaches people how to build a SaaS which you can find at saasguidebook.com. I think a lot of that is based on your experience building Stage CMS. Is that correct?
Benedikt: True. That’s totally true, and also working with freelancing clients. That’s basically a topic that comes up more than once.
Mike: What else do you have going on these days?
Benedikt: The main thing right now is basically FemtoConf, the conference I’m running together with Christoph Engelhardt, who’s famous for doing MicroConf Europe recaps. Unfortunately, he wasn’t at the conference this year because he got a [00:03:15]. Shout out to him.
Mike: Congratulations, Christoph.
Benedikt: We’re basically doing a smaller version of MicroConf, hence the name, in March. We’re currently in the midst of organizing that. Tickets are on sale.
Mike: There’s only a handful of tickets left, right?
Benedikt: Yeah. That’s basically five or six tickets plus sponsorship tickets. If you don’t get a regular ticket, maybe consider getting a sponsorship ticket. We really appreciate that. That’s my main focus at the moment.
Mike: Awesome. When is that?
Benedikt: First weekend of March. I think it’s March 2-4. It’s in Darmstadt, Germany, very close to Frankfurt airport. There’s actually a bus going there, 30-minute bus ride and you’re right in front of the hotel.
Mike: Cool. I’ll be speaking there. Patrick Campbell from Price Intelligently will be there as well. Then you’ll also have Claire Suellentrop. Who’s the last speaker?
Benedikt: Aleth Gueguen was an attendee last year. She offered to talk about the new privacy law coming up in Europe. I’m both interested and kind of scared about that one. But I’m expecting it to be a great conference.
Mike: Awesome. Let’s talk right in and give people a recap and talk about some of the different takeaways from the different speakers. The first one was Craig Hewitt. He kicked us off. Craig is from Podcast Motor. He talked about the four biggest risks to launching a SaaS application and how to overcome each one.
What I really liked about his talk was at the end, he gave this SaaS risk checklist which basically listed off a bunch of different risk areas where a SaaS or even honestly, like a product in general, might run into. Things like the product market fit, product quality, the team itself, risks associated with making sales, market size, capitalization, and then competition and the business model itself.
I really liked the way he created that story arc where he presented it like these are the risks associated with building a SaaS and then he extrapolated that and gave people a broader sense, like these are all the risks that you are going to run into when running your product or building up your business and they may impact you in different ways based on the decisions that you make.
Benedikt: That was a really interesting talk. I always like Craig’s style of giving talks where he basically has stories and then pulls out lessons learned from that. That’s always quite good.
Mike: He’s in the middle of building out their own SaaS product called Castos which is for podcasters. He’s in the middle of identifying some of these risks and trying to overcome them. It just made a lot of sense for him to talk directly to the audience about that just because as I said, one, he’s in the middle of it, and two, it’s always nice to start off the conference with a story that’s relatable, one that resonates with most people and it gives them kind of a basic understanding of what’s going on in other people’s businesses and be able to relate that back to them.
Honestly, the whole atmosphere of the conference is typically defined by that first talk. I think Craig did a really, really great job with setting the tone for the rest of the conference.
Benedikt: Definitely. I totally agree. Next up was Paul Kenny and he talked about sales tactics for small businesses. His main thing was basically telling everyone to record their sales calls and then afterwards listening to them because when you listen to your own call, you identify parts of your conversation with a potential customer where your future’s hazy or it sounds wrong, then you could basically take down notes and improve on that.
That was his main point. But he also gave a great basic structure on how to do sales calls. That was a five-step process starting with the preparation even before the call, so taking down notes of who you are going to talk to, what businesses they are in, what potential problems they might have, stuff like that.
When you actually call them, he tells you that you should present your credentials, tell your customer or your potential customer who you are, what company you’re calling from, so they get a basic idea. Next, show them that you actually came prepared and why they should talk to you. Also, send them a benefit of what’s in there for them when they actually continue the call with you.
When they agree to continue the conversation, make sure you profile them. Do a lot of open-ended questions, learn a lot about them, what their actual problems are, what different solutions they might be looking at.
One thing I really like was get an idea about their personality, how they would approach buying something and then adjust your strategy of selling to them so that if they’re really careful and have a lot of objections, make sure you basically tackle all of them and give them a feeling of security. You adapt to their style of buying.
After that, when you actually build your case of why your product is the thing they should be buying, use whatever you learned in that first few minutes of talking to them and asking questions to personalize what you’re telling them about your product to their specific use cases and problems so they actually see it. Basically, you have the solution in their mind of what will it be like using your product.
Of course the last thing he really wanted to make a point about is inspiring action. You shouldn’t end your call saying, “Did you like that? Okay, cool. Talk to you some time.” But actually, ask for a sale, ask for a demo or some sort of next action, whatever may apply in the specific sales call you’re doing.
Mike: I think one of the things I noticed was there was kind of a general undertone in his talk that really, what you’re trying to do as a salesperson, we really don’t have very many sales people talk at MicroConf but I think Paul does a really good job at teaching and education people about how to do sales, especially entrepreneurs. The underlying theme there was really to treat the people on the other end of the call like they’re a real person. Just interact with them, show that you actually care about who they are. He pointed out that if you are faking it, it’s very obvious to the other side.
You may not think so, but it is very clear when somebody is just faking interest in the stuff that you’re discussing whether it’s about your kids or a sports game or something along those lines. You have to treat them like a human being. People respond in kind to that sort of thing.
Benedikt: I think you managed that as a side note to basically not think about the call as a sales call but as a call to help the people or the potential customer with the problems they’re having. I think that helps setting your mindset or bringing your mindset into the right direction.
Mike: I think one of the reasons why Paul resonates so well with the audience was just because he’s not, I’ll say, the prototypical salesperson that you would expect. He’s actually a sales coach. He coaches people on how to be better at sales. He spends a lot of time listening to calls and identifying structure of conversations and providing guidance and education to people about how they can do sales better.
I really like the point that he made which is you don’t have to be that extreme extrovert in order to be good at sales. Everybody across the entire spectrum can be good at sales, it’s just a matter of intentional self-improvement. Part of that is going back to your sales calls and listening to them and making sure that you’re looking for places where you can improve. If you’re not doing that, then you’re probably not getting any better at it over time.
Next up, we have Dave Collins. Dave has spoken at a couple of MicroConfs in the past. I think he’s been to eight or nine and he spoke at probably six or seven of them. He talked about how Google is smart in certain ways but extremely dumb in others. It really comes down to the search engine itself and the fact that the vast majority of what they are searching on is based on text. As you start drilling down into longer tail keywords, the text that you need to provide to Google in order to give them better context of what it is that you’re talking about, you need to get better and better at it and kind of walk through some of the different steps that you can take inside the Google search console and how to do some keyword search and how to use different tools to check some of those keywords.
It was a fascinating look at the technical core of what makes Google operate and how it makes some of the decisions that it makes when it’s crawling your website and giving you different rankings. The one thing that I really took away from his talk though was that when you’re building content for your website, you should be making it for people and not for the spiders.
Most people know about SEO in terms of looking at the keyword analysis and keyword stuffing kind of comes to mind which is when you have a keyword that you’re trying to get a page to rank for and you put that keyword into the page a lot in order to get Google to notice that keyword. Humans recognize that and the Google spiders are a little bit dumb when it comes to that but because the human factors there, if somebody comes into your website and they see too much of that, they’re going to say, “Oh, this isn’t for me,” and then they’ll leave and then they’ll go to the next result, and then Google notices that. It’s just fascinating to look at the underlying implementation of how Google does their search engine.
Benedikt: Another thing I really like about his talk was that SEO doesn’t necessarily need fancy tools. What I really liked was this example he had where you basically put in whatever keyword you’re optimizing for and then scroll down on the search results and look at what Google says as suggestions like people also search for this and this. Use that as a resource to find keywords you can optimize for. That was really helpful.
Mike: Our next speaker was Jane Austin. Jane’s the head of design and UX at MOO, moo.com. If you’ve ever ordered business cards, you’ve probably seen them at some of the different entrepreneurial meetups or conferences that you’ve gone to. She runs that design group over at moo.com. Why don’t you tell us a little bit about what her talk was?
Benedikt: Her talk was basically about design thinking in large organizations. I feel like I wasn’t really able to apply all of what she told to my business because I’m just me and maybe a freelancer.
I really like two things about her talk. One was the way they structure their teams. They call it quad-style teams or something like that, basically forming them with product guy who’s doing the productization, shaping the product, and an experienced designer responsible for validating the needs and the value propositions and also doing the actual design work. Then someone from technology who’s actually implementing this stuff and creating a sustainable and scalable product.
Then they had an HR Delivery coach that basically takes care of the team and facilitates the delivery and keeps them happy. That was one thing I really liked, especially when I did consulting, that’s usually a good formula to build a great team that actually is able to deliver in a fast pace.
The other thing I really liked was what she called the 2 ½ Diamond approach. Apparently, the Double Diamond approach is a thing from design thinking. I didn’t really know. But it’s basically a three-step process. First, you are doing ethnographic research. It sounds a little bit similar to what Amy Hoy’s doing with Sales Safari where you basically don’t want to ask questions to your potential customer but just observe them in their natural environment and then figure all the problems they might have.
Then it’s following up to that. You basically start collecting problems that might be worth solving like building up a huge list of things you could possibly do. After you collected those, you basically curate them and define them and narrow down until you settle on one solution you actually want to build. That’s what she calls the Build the Right Thing phase.
After that, after you settled on one thing you want to build, test the Build the Right Thing phase, where you basically start exploring different ways to actually implement whatever you’re doing like doing prototypes and stuff. Once you have a huge list of ways to go, again narrow down on the one thing you want to do and how you want to do it and then as soon as you’re able to ship something small and then build up from there in small increments.
That was the two things I really liked, especially the 2 ½ Diamond approach. I think that’s really also applicable if you’re not like MOO. I think her example was from The Telegraph where she worked on mobile applications, stuff like that. I think that really applies to a small company and some bootstrappers as well.
Mike: I totally agree. If you’re not familiar with the Double Diamond approach, there’s essentially four phases of it but it can really be boiled down into two main stages. The first diamond is really stage one which is making sure that you’re doing the right thing. You discover and define what it is that you’re trying to do.
Stage two is making sure you’re doing things the right way. You’re developing and delivering whatever the solution is. And then the extra half that she had tacked onto it was shipping things in small increments to make sure that you’re closing up that feedback loop so you’re not spending three months, six months on something only to find out that you really weren’t doing the right thing. You may have thought you were, but you’re not.
Getting that external feedback coming into the process sooner rather than later, it makes things move faster and it guides you in the right direction quicker because then you don’t have as many deviations that you need to correct.
Benedikt: Next stop was your talk.
Mike: Yes. My talk was pretty close to what my starter edition talk was in MicroConf Vegas in the spring but I did change things up a little bit just because I knew that the audience was going to be a little bit different. But really, it boiled down to making sure that you are analyzing the data that you’re getting and asking the right questions to make sure that you’re not going in the wrong direction. Questioning the data sources; the thing that I had mentioned several times during the course of my talk was how do you know that you know what you know?
That just is a fancy way of saying how can you be sure that the information that you have is accurate and that you’re going to be basing your future decisions off of that? If it’s wrong, you could be making the wrong decision because you didn’t fully analyze that information to make sure that it’s correct to begin with. If you have faulty assumptions, you’re going to make decisions because of those faulty assumptions.
I also talked quite a bit about the growth of Bluetick and walked through exactly how I went through the validation process, different questions to ask, questions not to ask or to ask in a different way because of different pitfalls that I had run into. I picked probably the biggest one that I have found over the years that is the most helpful to ask is when somebody asks you for a feature and is questioning you whether that’s in a sales scenario or as part of the validation process.
The one thing that I ask them is, “Is that important to you?” Because a lot of times, they will say no and you have just saved yourself several weeks or months of effort building something that they just wanted to know about whether or not it was something you are thinking about or going to support.
Benedikt: That was a good one. I totally wrote that down because I’ve been there and I’ve done that. I really know that this is a helpful thing to do.
Mike: Next up was Peldi. Peldi opened up day two of the conference. He talked about how they scaled engineering at Balsamiq. He had a lot of different tools that he talked about during his talk, things like HackerOne which offers a bug bounty program so you can essentially create a sandbox where you specify how much you’re going to pay for people to identify bugs in your software. And then after a certain predefined time period, then they can come out and publish their findings on that particular bug if you haven’t fixed it by then.
But really, it’s a way to give you the ability to access sort of a hacker network that will look at your product and try to poke holes in it. And then when they find them, they’ll let you know as opposed to just putting your product out there and letting that happen on its own.
I did his suggestion about using this and making it private so that it was invites only because as you said, when you get to a certain scale, as people come in and if they see that you’re listed there publicly, they’re just going to start trying to hack your actual application. Make it private, wait until they come and say something to you and say, “Hey, by the way, did you know about this? This particular bug or vulnerability?” Then, you can invite them to it and cut down on the amount of people trying to hack your application all at once.
Benedikt: I really like that one. Also interesting was the fact they’re mostly using static websites, tools, marketing website and stuff, that was really nice to hear. Another tool that I got out of the talk was Convox which seems like you just put a configuration file into your code repository and it takes care of automating infrastructure setup. That seemed really useful. I really have to check that out sometime soon.
Mike: There’s a bunch of tools that are like that. I’m not familiar with Convox but there’s things like Puppet and Chef that really allow you to automate the underlying stuff behind your infrastructure. As long as everything is going through your source control, you can essentially redeploy your entire environment just using a set of scripts more or less, say the Shaft scripts or Chef scripts that deploy your servers and the applications inside those servers and configure everything where it’s supposed to go but I have not heard of Convox before.
Benedikt: I’m definitely going to check that out. Also, one thing I think you mentioned was don’t rely on unproven companies especially if it’s plumbing for your business. I think the example they had was Stormpath. They were using it for the new Balsamiq cloud setup as the authentication provider and user management. Apparently, they shut down shortly before they wanted to launch. We got lucky on the one but that really hones in the lesson of don’t rely on unproven companies because they might go out of business and be gone with all your user data or whatever it is in your case.
Next up was Mojca Mars. She talked about Facebook Advertising basically using social media as a sales funnel. She had a really good process, and a very actionable process about how to approach that. Basically, she recommends setting up a three-step funnel where you first do Facebook ads, targeting a cold audience that’s ideally based on a lookalike audience you generate by adding the Facebook pixel to your website and it would analyze the traffic going there and the users visiting your website and then extrapolate from there into a much broader audience of people that don’t already know you.
The first step is to advertise to those people and basically just provide some value linked into a blogpost you wrote about an interesting topic that might be related to them, whatever it is, just provide value. Don’t go for the hard sale right at once but show them that you care and that you are an expert in your space or whatever.
After that, they basically get tagged by Facebook using the Facebook Pixel. Then, you can retarget them and use a lead magnet like a checklist, a book, a course, whatever, to get them basically into the next step. Only as a third advertising campaign, actually ask for a sale. She really explained that funnel quite a bit.
Mike: I really liked her talk. I got a lot out of it in terms of the actual sales funnel that would work on Facebook because I’ve tried Facebook ads in the past. I’ll say I’ve had some limited success but it’s not something I’ve spent a lot of time trying to figure out. One of the things that jumped out at me that makes a lot of sense in retrospect but I’ve not really thought too much about it was the fact that trying to push people too far too quickly through your sales funnel is not going to work.
She said that that’s actually one of the more common reasons why Facebook ads fail, it’s that you’re trying to push them through and you expect that it’s going to convert to a sale or directly into a lead right away and that’s not the case. It’s usually that you’re just trying to get them to your website. You’re just trying to get them to interact with the ad in any way, shape or form and then the retargeting efforts after that is really what helps to bring them into the sales funnel.
There’s going to be some level of drop off there between step one and step two but the retargeting is really what does it for you, it kind of filters out the people who are idly interested versus the ones who are actually interested. Those retargeting ads are what will bring them back and move them onto where you’re putting them into your lead funnel and asking them for email addresses, then push them to a point to ask for a sale.
Benedikt: Two other things that stuck with me was she said that video apparently works very well. Apparently it’s good enough to just take your phone and do a quick video. You don’t have to do like a fancy production or something. Just record yourself talking about some valuable topic and use that as the first ad in your funnel.
The other thing was apparently right now, long form posts work a lot better than short ones. When you add some description to the post, make it a long one.
Mike: It wasn’t just to make it a long one, it was give them an explicit reason as to why they should listen to you and the situations that you have run into. When you’re explaining the inside of the advertisement, you say, “Have you ever done this, and it didn’t work?” Or, “Have you tried this and it failed utterly?” As part of the rest of the content, you’re offering a story about the solution that you came across.
That’s why they buy into it. It’s because they see that and they’re able to put themselves in that position to say, “Yeah, that’s me.” That’s when they’ll click on it as opposed to as you said, the really short ones that are much more like an advertisement that you would find on a blogpost or something like that.
Benedikt: It kind of goes back to what Paul Kenny said in his talk like the structure of a sales call, it might actually work as a structure of the Facebook post as well. I kind of have to think about it but it sounds similar.
Mike: The next speaker was Andrus Purde. Andru was the director of marketing at Pipedrive. He helped them scale it up to something like 50,000 customers or something like that. It was some extremely high number. He was with them for a very long time. His talk was called From Hand to Hand Combat to a Bond Villain: The Evolution of a SaaS Marketer.
He talked about the different stages of how they evolved the sales and marketing team for Pipedrive and progressed from the point where stage one was really just hand to hand combat. It was kind of the analogy that they used for their marketing efforts and how they did things.
Stage one was just learning how to do things and then stage two was scaling those things up where they learn how to do Facebook ads or SEO, or content marketing and things like that. They took their toolsets and they scaled them up. By the time they got to stage three, they recognized, “Hey, we need teams behind these different efforts because we’re doubling down and they’re working well but we need more people and more resources behind them.”
Stage four was deploying those tools out in mass to large numbers of people and then being able to scale up those marketing efforts. It was really fascinating to look at how you grow a marketing team from virtually nothing to a full blown marketing team where you have different people in positions and responsibility for different parts of the sales pipeline or the marketing pipeline and how those things feed into one another based on the type of marketing that you’re doing and the different channels.
Benedikt: One thing he had in his slides was the Two Hedgehog Growth Model. I think it’s especially useful early on. He basically told us that you just do two things, get referrals and [00:27:19]. I really like that analogy.
Mike: If you’re not familiar with the Two Hedgehog Model, I’ve seen articles about this over on growthhackers.com. It’s just a way to basically say there are only a few different things that you should be focusing on in order to grow your startup. If you’re trying to do too many things, then it’s going to make things difficult.
If you focus on only two things and do them very well, for example if you’re making sure that your customers are giving you referrals and that people are able to find you for relevant keywords, then you essentially have your priority sorted in terms of being able to establish repeatable sales growth within the business.
But if you start trying to focus on three things or four things, or five things, you become too disjointed and you’re really not going to be able to focus enough on any of them in order to be able to make a difference. A lot of people spin their wheels when they get into those situations just because they’re not doubling down enough on something to make it work.
Benedikt: The last talk on Tuesday was Ed Freyfogle talking about building and serving a global SaaS customer base. He basically told us how they are doing it in their company. I think it’s called OpenCage or something like that. They mostly do geo calling services. What I really liked was that he basically laid out, “Hey, we do this, this, and this.”
I’ve got a lot of things out of it. Especially one thing I liked was how they present themselves on their About page where they basically hide the fact that they are just two people by not saying we’re a small team but just presenting the management team. It was a nice approach to do that.
Also, one technique he presented was to do interviews with people from local communities in different countries. In their case, they’re heavily relying on OpenStreetMap community and just started interviewing people from different countries about their activities and their OpenStreetMap community. That helped them get backlinks and be talked about and stuff like that.
Mike: I think the biggest thing that I took away from Ed’s talk was their focus on the little things, making the user experience better. For example, in certain data sets, they localize the data to where it’s being requested and who’s requesting it as opposed to just having, “Here’s the data,” and you have to interpret it in any way that you feel is appropriate. But the reality is that if you help the customer and present it to them in a way that’s helpful directly to their needs in their situation, then you’re better off.
That’s really just a matter of not just doing the right thing for the customer but going a little bit above and beyond what the customer would probably expect and what they’ll probably get from other vendors. Because their company is called opencagedata.com, it provides geolocation services based on longitude and latitude and tells you what the city and state is.
The specific example that he’d given was in certain countries, the format of the address is going to be different. It might be that you have the address and you have the numeric address and the street name. In other cases, it’s the other way around or in some countries, you may have a couple of different things all on one line. They do what’s necessary to provide all of that information, do all of that work for the customers so that the customer doesn’t have to figure it out for themselves because otherwise, they would.
Then things get weird where if you’re saying city and state, the example he showed was on Twitter, it said Berlin, Berlin. The reason for that is because Berlin is both a city but it’s also a state. It looks weird when you would see something on Twitter that says it was posted in Berlin, Berlin. It’s not natural. But if you look at it, it obviously looks wrong but the computer has no idea. They do the things that need to be done to make it look presentable.
Like I said, it’s the little things, the icing on the cake, that make it just simple and easy to use. Honestly, a bigger example most people would be really familiar with is Stripe. Stripe does those types of things to make your life easier. You don’t notice them until you’ve tried other things and they’re terrible and then you use something like Stripe and you’re like, “Wow. This is actually not a bad experience. It’s quite nice.” And the bar is not that high.
Benedikt: That’s true. I also like the example he had with offering libraries for your API, they’re an API business basically. Offering an API, you can integrate with them. He told us that offering libraries and programming languages is really like a traction channel for them. I don’t remember the name of the program he mentioned. But it apparently is some very niche language that is not widely popular but by just having a library out there makes it a go to choice for geo coding for that particular language. That was really a good trick.
Mike: Benedikt, you’ve been to a couple of MicroConfs in the past, what was your impression of this year as compared to previous years of MicroConf Europe?
Benedikt: I think the conference in general was pretty similar. Of course the location changed which was nice because I always enjoy visiting these cities and walking around the day before, doing some sight-seeing. In part of the hotel, I think I like the one in Barcelona a little bit better but in the end, I’d go to my room and lay in bed and sleep so it doesn’t really matter.
As always, the hallway track was probably the best thing about the conference. It’s always great to meet new people and also catch up with friends from previous years. That’s what I really like about MicroConf, just the community.
Mike: Awesome. I think it’s a recurring theme. We have new attendees this year, it just seemed like person after person kept telling me like, “Hey, this is a fantastic community. I love talking to these people.” It’s great to hear their stories and what they’re working on. Most of the people I have talked to are like, “I can’t wait to come back, it would be awesome to see where other people are at.” And then also be able to share where they had moved their business based on conversations with them and things that they learned in MicroConf that year.
Cool. Before we wrap things up, I do want to say a special thanks to all of our speakers. I really appreciate them taking the time out of their busy schedules to come talk and also to all of our sponsors. We’ll link them up in the shownotes. I think it’s really important to mention every single one of them and say that the conference would not be what it is without both our speakers and our sponsors, not to mention, all the attendees because the attendees are really what make the hallway track.
Rob, myself, and Zander cannot do that, make the entire hallway track without everybody else there. With that, I also want to say thanks to Zander. Zander is the one who’s in charge of all the logistics. I know he doesn’t want to detract from the experience that people are having with a thank you to him. But I think that everybody really appreciates all the hard work that he puts into it and it shows. It’s really a testament, what he does.
Benedikt: Absolutely. Zander’s amazing. Just at the registration where he basically pulls up your nametag even before you reach him, it’s amazing. I don’t know how he can remember all the many names. I’m super impressed by Zander’s work.
Mike: Excellent. Well, thanks for joining me, Benedikt. Like I said, I’ll link up to a couple of different things that you’re working on. If anyone’s interested, go to femtoconf.com. Definitely check that out if you are able to get a ticket at this point. If you have a question for us, 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.
Episode 366 | Building an MVP as a Non-Developer, Gaining Traction with Stair-Stepping, and More Listener Questions
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Show Notes
In this episode of Startups For The Rest Of Us, Rob and Mike take a number of listen questions on topics including bootstrapping an MVP as a non-developer, gaining traction with the stair-step approach, and more.
Items mentioned in this episode:
Transcript
Rob: In this episode of Startups For The Rest Of Us, Mike and I talk about building an MVP as a non developer, gaining traction with stair stepping and answer more listener questions. This is Startups For The Rest Of Us Episode 366.
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: And I’m Mike.
Rob: We’re here to share our experiences to help you avoid the same mistakes we’ve made. Mike, I have a question for you before we start the episode here. What is the lamest and/or most embarrassing domain name that you have ever purchased?
Mike: Lamest and most embarrassing, I don’t think of any that I got that were embarrassing. I’d say probably the lamest was dotnetforumsoftware, I think it was.
Rob: It was like dotnetforumsoftware.com?
Mike: Yup.
Rob: I don’t remember offhand but I had some when exact match was such a big deal and the dashed exact match was not as good but almost as good, I had some horrendous, like five and six-word dashed dotnets. It’s like business-credit-cards.net or something like that. It was when I was hacking a lot of SEO stuff and just trying to figure out how to rank stuff. Most of those wound up being AdSense sites that made back their initial investment and then not much more because Google updates came along but there’s probably some pretty embarrassing names in the boulevard of broken dreams there.
Mike: Yeah. I can definitely think of a bunch that I don’t remember whether I’ve registered them or not but they were kind of non starters because they were either hard to pronounce or could be very difficult for people to hear it and associate a domain name with it. They were just bad ideas. I think one of them was bitclinic.com or something like that. I don’t think I ever registered that one but there’s a whole list of them that I came up with and they’re just disqualified for a number of different reasons.
Rob: Especially once you start hosting a podcast, or doing public speaking, or going on interviews, you realize how important the pronunciation and the ability to spell something in one way that there’s no ambiguity over which version, if you’re using a homophone or whatever, which version of the word that you’re using.
Mike: Yeah, God forbid you register penisland and try to sell pens because that’s just not going to work out.
Rob: Penisland, did you do that?
Mike: No, I didn’t but I remember reading somebody who did.
Rob: Got it. Cool. What’s going on with you and Bluetick this week?
Mike: I’m still working on that code refactoring that I started on last week or was working on last week and it’s just turned into a nightmare. I was going through a bunch of changes and I made them and then a lot of my unit tests failed and then I had to start digging to figure out why and then realized that there’s some architecture changes that need to be made so there’s code refactoring. I’m like, “Oh, this is way more complicated and way more involved than I thought it would be.” A lot of it is because there’s stuff that’s buried in the code that I learned it all like a while back and then left it out of my brain for a while and it was just brain dumped and I’ve forgotten most of it.
Now, I’ve had to go back and research some of the stuff and say, “Okay, how does this actually work again?” Because like I said, it’s going to be kind of re-factor and re-architect so it just makes it difficult.
Rob: Yeah. This is to give yourself a multi user capability. Is that right? Like folks can have multiple logins and pay per seat?
Mike: Yup.
Rob: Cool. This sounds like something that’s pretty important especially based on our conversation last week. This is nice expansion revenue to get from folks who are using it. You’ve had this request a lot along the way and I know that you’ve avoided building it because you knew there was going to be some complexity around re architecting things.
Mike: Yeah. It wouldn’t be so bad except that a lot of the services layer is all hard coded for the user account. All the database changes and stuff are in place, the services layer is all really tied to either the user or the account at this point so that’s still reasonably good at this point but the problem is that authentication mechanism on the frontend, I’ve got to pass the account information up and down the stack, which if I could kind of separate that out and use it like an object to pass in as opposed to a user ID. It would make things so much simpler and it’s not that simple right now.
Rob: Yeah, it’s a bummer. It’s hard to do something you know you need to do but then it takes longer than you want it to. This is where the founder impatience kicks in of like, “I want to be moving faster but if I rush it, I’m going to cut corners and then I’m going to regret it later.” So how do you deal with that? I know the feeling, man. This is the time to hammer it out as quickly as possible. Drink a lot of caffeine and listen to some death metal.
Mike: I forgot when it was, it was earlier this week but I was looking at the stuff that I had to do and I’m like, “Man, I really should be switching over to doing the marketing stuff.” And I was like, “I know if I do that, then I’m basically leaving this half done and it’s going to take me longer to get back through it.” As you said, it’s got to be done right the first time. I figured I’d just pile through and made the conscious decision to just continue on it.
Rob: Alright. From my end, since I’m hopping on a plane tomorrow, I don’t have many updates this week. I’ve been wrapping up some loose ends and I’m actually talking about hiring plans for next year and just kind of looking. It’s November now and it’s starting to be time to look ahead and project growth, both revenue and usage growth and stay ahead of scaling. We’re looking at what hiring is going to need to be required in order to do that. That’s been an interesting exercise and one that I have not done so thoroughly in the past.
Our growth has never been this fast now that we’re in this venture funded engine. I have to be a little more deliberate about it because if we wait until we have issues, if I wait until we’re understaffed or if we wait until we start seeing performance problems and it’s too late because it takes months to fix these so I’m trying to think three, four, five months out right now. That’s been, I wouldn’t say fun because I don’t particularly enjoy it but it has been enlightening and I think a necessity if I want to feel relaxed and chill and have a good time next year.
Other than that, we have a lot of five star iTunes reviews. We have 550 reviews in worldwide iTunes repo. Most recent one was on October 9th. It says, “Tons of practical tips and lessons.” It’s from [Honey Maura 00:06:24] in Canada and he says, “I’ve been listening for about four years now and I love what Rob and Mike share each week. I’m hooked. I’ve been following Rob’s stair step approach since launching several premium WordPress plugins first and a few months back launching my first SaaS. Thanks for all you do.” He’s with repurpose.io.
If you haven’t left us a review, you don’t need to leave a full comment. We do appreciate it. Just going into iTunes, Stitcher, Downcast, Overcast, or whatever you use to catch your podcast as it may be, hopping in there and hitting the five star rating would do us a great favor.
Today, we’re going to be answering some listener questions. It’s funny there’s a whole theme going on. A lot of it is like I’ve launched. Now what? It’s kind of the theme of today. Maybe not every single one but there’s three or four here that are asking guidance post launch.
Our first question is from [Yan Wustland 00:07:13]. He says, “Hi Rob and Mike, thanks for the great show. Like everyone else, I have to praise your excellent work with the podcast. I feel I have a classical developer problem. I am a solution looking for a problem. I started with web development and then I continued to the iOS, Android, and Mac development. I like the stair step approach and I’ve been launching single products targeted towards web developers like myself, more specific to the niche of Laravel developers.” He has a link here. It’s eastwest.se/apps.
“So far, I’m selling a couple of licenses per week but it’s nowhere close to paying my bills. I have got a great response from the Laravel community and customers but I feel I have to make a move. Their expectations at Mac app should be cheaper than a WordPress plugin and most of my customers who are developers seem to dislike monthly subscriptions. I have a lot of ideas for new products but all of them are centered around MacOS, which I’m passionate about, where it feels a lot harder to justify recurring subscriptions. Without all the details, what advice would you give?”
He laid out some options and we don’t have to stick to these options but I’ll lay them out here. “Number one, continue with one time products and learn more about marketing. Number two, this is not the right place to be and I should try to come up with another product and then find product market fit. Eventually, the right idea will come up. Number three, bite the apple and try to introduce annual plans in my Mac apps with the risk of making customers angry. To me, all the possibilities are a bit paralyzing. How do I know which is the right one to go for? Again, thanks for the great podcast.” What do you think, Sir?
Mike: I’m looking at the website. One thing that I’ve noticed is that the apps themselves seem like they’re a little bit all over the place. There’s this thing called F-Bar which is for managing Laravel Forge Servers. Another one is git-ftp deploy, which is for ftp deployment and then there’s like a radio player and then plugs of the world, which is your guide to sockets and plugs for iOS. These different apps or utilities are all over the map in terms of what types of problems they solve so it makes it difficult to do the marketing for them because there’s no overlap between them.
I think I might go down the road of looking to see if you could just sell off a couple of these outright to somebody else and have them take them over and then focus the efforts on building a small suite or a tool set of different things that you could sell individually and then have a bundle option. If you really are getting a lot of interest from the Laravel community, then that’s a great option in terms of being able to raise your lifetime value for those customers because then that bundle option’s going to give people the ability to pay you more.
They’ll feel like they’re getting the deal on it because individually, these products might cost $100 but if you give it to them for $70 or something like that, then it’s a better deal for them.
Rob: I want to jump in here. What I’ve noticed in looking through his list of apps is the top two, one is like you said, the Laravel Forge Server and the other one is git-ftp deploy. Those two he charges for. If you click through, one is $15 and the other is $20. Everything below that, which is a radio player and a timer and crush cockroaches, a game, it doesn’t appear like he charges for those. Maybe when you click through to iOS, they’re $1 or $2. But I mean these are definitely really small utilities almost.
One thing I would say just for organization’s sake is on the website, on his apps page, I’d probably have a heading that says tools for developers and then other stuff I’ve built. Because I bet my guess is he’s making a lot more money. He said he’s only selling a couple of licenses a week at $15 to $20, so it’s not that much money. Maybe a low end car payment in a month. He’s probably making the vast majority of his stuff from this top two if he’s making any from the lower ones at all.
I agree with you. I think the folks are starting to focus on people who are willing to pay something. Even if it’s $15, $20 a month, I think that’s probably a decent first step.
Mike: Yeah. I didn’t get that far because I was trying to go through. When I browse, I usually will right click on a link and then go to the next one and right click on it so that I can open things up quickly in different tabs. The way that the website works is if you right click on something, it actually browses to it. There’s no way to open up those links in a different tab so I honestly didn’t get there. It was annoying.
Rob: That makes sense. I guess as I think about this, it seems like when I look at the three options, he laid out basically keep doing what you’re doing and build more products or start doing totally different things, try to launch a SaaS app or something or launch annual plans. It seems to me the third one is the easiest to test, launching an annual plan. If you pushed it out for one or two weeks and everybody’s angry and nobody pays it and sales plummet, or do it for a month. If it doesn’t work, it’s easy to undo this. To go back to people and give them a refund or just say, “We’ve abandoned the annual plans and now you just get it for good just like everyone else does.”
I would try that with one or both of the apps and realizing that you will get some complaints but if suddenly, you see more sales or you feel like you’re going to make money with that in the long term, I don’t think that’s a bad way to go and it’s easy to test.
The real problem there is even if you test that, if you’re only selling a couple of licenses a week, then you’re not going to see any fruit from this for another year until they come up for renewal. Really, you’re not doing anything to grow your revenue in the short term. I think one of the big issues is something that he pointed out is that utilities in the app in any app store, they’re a commodity in essence and you really can’t charge that much for them and so, they have to have wide appeal and you have to sell a lot of them in order to make any type of money at it.
I think it’s a tough space to be in. The other drag about it that’s a trip is selling through the Mac App Store means you have this instant, easy distribution. That’s a good thing. The bad thing is you’re really not learning much about marketing because you’re not building a website, building an email list, nurturing people, running ads or blog, doing content marketing or whatever it is that we want to talk about marketing a product. If you don’t have to do that, you can but you don’t have to do that if you’re in these app stores.
One of the benefits that I found in the stair step approach is you’re not just gaining revenue and you’re not just gaining confidence, you’re not just gaining money, you’re gaining experience doing things with these smaller products. Even the folks who do WordPress and they put them in the repo and then they have an upsell to a free version, they have to learn how to write nurture sequences and how to write good copy and how to build an email list.
There’s other things that they do that I think the app stores, while they’re a good starting point and including Themeforest in there, anything that you post into, that pays you a commission but has all the distribution, it is a nice thing to get started on the side. But to grow that to the point where it supports you is hard because the prices are low and even if you get to the point where it supports and you compile all your hours, you’ve really missed out learning a lot of things that someone who is slogging away, building WordPress plugin or an ad on the Shopify and he’s doing more traditional marketing, I think we’ll learn that.
I don’t have a really strong recommendation here but I do feel like if you can’t market these through other channels, because if you only get one or two a week through the Mac App Store, then obviously there’s just not that many people searching for it in there. Do you go market it elsewhere?
Whatever it is, whatever they purchase, you talk about it in forums or you go on podcasts or whatever, you have a message you’re going to use to promote it, you try to do those to grow sales or do you perhaps get into a space where there’s a little more margin and you can launch products that are at least $50 or $100. Having a lifetime value of $50 or $100 is still a pretty tough gig but definitely it would be a step up from these $15 and $20 sales.
When you’re selling something that’s this cheap, distribution has to pretty much be free. You really need to rank number one or top three in Google or rank high in an app store or in YouTube or in Amazon or in one of these places where people just find you because you just don’t have enough money to really do any type of paid marketing. That’s definitely the challenge here.
One of the things you can think about is you’ve built something that people want or at least there is some sales here and there, you may want to think about doing some of these deal a day sites, they have developer deal a day site. I know you have to cut your prices and it wouldn’t be a sustainable thing but it could be an interesting short term influx of cash that can help motivate you to build that next thing.
I think if I were in your shoes, given what’s going on, I don’t see any easy way to grow these existing products. Nothing jumps out at me aside from doing some of these deal things, which again is a short term thing. Personally, without knowing all the details, I would probably start thinking about a way to launch something else that has just a higher lifetime value, whether that’s a one time or a recurring thing, that just leaves a little more money to do some of these other marketing approach and try your hand at them.
Mike: A couple of things that come to mind is try and pursue an affiliate channel of some kind. There are lots of websites out there that just have dozens and dozens of products or actually, probably tens of thousands of products on them where people can go through and identify what products that they want to push as an affiliate on their own site. It’s hard to get noticed in those so you would probably want to pick and choose different people to approach for that.
If you have a set of customers who keep running into a particular problem that your software works really well to solve, then approach in like the vendor’s, whatever that platform is of that application and trying to get in the door as an affiliate and say, “Hey, bundle this other application, whether it’s your git-ftp deploy or your F-Bar,” that would be a good way to get in front of those people and provide yourself with an additional channel.
Rob: I like that idea. I like that. It could be worth pursuing as well. Find another JV channel, basically, to go through. That’s cool. Thanks for the question, I hope that was helpful.
Our next question is another one from Saphia and he had sent a question a couple of weeks ago. Subject line is we may have built [00:17:04]. He says, “I’m a big fan of the show. I’m still binging my way to the backlog since I discovered it. Thanks for the great advice. I’d like your opinion on something. My co-founder and I, first time founders, have been building a SaaS app for about a year, part time, based on an idea that he had as a business coach. Essentially, the app recreates a process but moves it online. It’s one he’s been successfully charging for offline for a number of years and it solves the problem of lack of clarity and difficulty onboarding new employees in a flat organization.
Our landing page has collected more than 500 emails. The feedback we get on blog and social media is generally super positive. People seem to be very eager to try the product. Now, we have an MVP that we launched with about 10 leads as a free trial for a few weeks. All the feedback is very positive. None of them have yet paid for the product. It’s a flat rate of $99 a month per team. Some have logged a few bugs in quick win features that I’ve deployed in a matter of days. How would you approach this? Should we go down the list of 500 prospects and another 10 leads? Should we focus our attention on the current 10 and get to the core of why they’re not paying? How do we know if we have problem-solution fit and most importantly, if there was a problem in the first place. Could it be that we built a cool looking product that is just nice to have? Am I too impatient? How long does it take to close a sale in the B2B world?”
I’ll let you take this first. At the am I too impatient, it’s like yes, we all are. You can be searching for product market fit for 6, 9, 12 months. This can take a really long time. I would definitely give it a little more time but why don’t you weigh in, Mike, on maybe what you would do next.
Mike: Welcome to the club of impatience. I don’t think that that ever goes away. Nothing will ever go as fast as you want it to or you won’t scale as quickly as you like. In terms of what to do next, if you’ve got a list of 500 people and you’ve only gone through 10 or so, I might look at those 10 a little bit and start asking those people questions. It sounds like maybe either haven’t asked them questions or you’ve asked a couple of people and maybe they didn’t get back to you but you really don’t have enough information right now to go off of.
What I’d be careful of is burning through that entire list of 500 and just trying to on board all of them and get to the point where you’re not getting enough information to make a good decision about what to do next. I think one of the issues that I ran into with Bluetick was that when I was putting people onto the system at first, I didn’t do a very good job of defining what a success card here was and what the next steps were for people and what the timeline was.
I feel like the timeline was probably the most important thing and I was the worst at that. I basically said, “Hey, try this out and let me know when it’s providing value and at that point, then I’ll start charging you.” That absolutely didn’t work. When I turned around and I decided to put a time pressure on it, that’s when people made the decision.
I think part of that was due to the fact that it just took so long to get to that point where, I don’t want to say put my foot down but I drew that line in the sand and said, “Okay, either you’re in or you’re out.” It’s very easy to just let things slide. If you go back to this 10 and you really can’t get answers from them, that’s fine. Just go to the next 10, that’s okay again. You’ve still got 480 more people.
But set clear expectations with them about how the process is going go, how long they’re going to be able to test things for, what you’re going to do if a bug comes up. You can explicitly tell them like, “We will pause the billing, for example, for x number of days.” Or however long it takes us to get that particular issue fixed. If they come to you and there’s a problem, push their trial out by a day or a week or whatever, if that’s how long it takes you. If it’s going to take you six months, obviously, then I would say move on because that’s not going to be beneficial for you and it’s probably not a good fit for them at that point.
But you can essentially iterate through probably 5 to 10 times and you’ll get through 50 to 100 of those people and you’ll find out a lot of information about what is working and what’s resonating with them and what’s not.
Another thing I would do is when you’re going through the on boarding process, don’t let them do it themselves, walk them through it. Get them on board, walk them through signing up with their account, get on a video call with them and watch them do it and watch where they have problems because that’s where you’re going to learn the most from. Having them tell you after the fact is just not going to be very helpful. You want to watch them struggle and watch what they’re doing.
That’s what I did with Bluetick, was watch people sign up for it. Every time they had a problem, I wrote it down. Even if they just looked around on the screen and they weren’t sure where to go next, I wrote it down because that’s a problem. Because when I’m not there to guide somebody or answer a question directly, how are they going to figure it out on their own? If I don’t see that that’s a problem or you don’t see that there’s a problem on that on-boarding area, you’re not going to be able to figure it out especially just by looking at statistics and data from Mixpanel or Kissmetrics or whatever, those things are not going to tell you what’s wrong.
Rob: That was a really good answer. Tell me honestly, did you rehearse that before this episode in front of the mirror?
Mike: No, I did not but I thought about that a lot.
Rob: It was really good. You called out basically handholding and watching people use the app and see where they stumble, you called out digging in with the 10 current ones and not jumping ahead and digging as much as you can into finding out why they’re not paying and setting expectations properly. And then only when you’re convinced that it’s not going to be a fit for them or that you can’t get the answers, then go to the next 10 and then you talk about doing that 5 or 10 more times, which might take months and months.
Remember, I called this the slow launch of Drip where we got our first paying customer in June. There was early access. They weren’t paying yet. But by the end of maybe June or July, I think it was our first payment. We didn’t launch to our big list until November. It took us five months of essentially this exact process of I was letting people in 5 and 10 at a time, looking at where they were succeeding, where they were failing, where they were getting value and doing that. This is the playbook, man. I think you captured it really well.
Sophia, I won’t just say that’s what I would do but that’s what I did and that’s what Mike did. You’re following the path and I think the answer to the question of are you too impatient is yes but we’re all impatient so don’t feel bad about it.
Our next question is from Sameer. He says, “I’m launched but I’m discouraged. What are my next steps?” He says, “I built dcaclab.com for teaching electronics. I feel schools all over the world will love to use it. In fact, some schools already use it but I still am not making enough income to leave my 9:00AM to 5:00PM job. I’ve done everything I can. I’m still pushing forward towards freedom. The most recent thing I’ve done is add a blog to the website so I could start adding content to get more traffic and hopefully more sales. It’s very hard work and I’m working by myself. How would you encourage me to keep going my website? Alexa global ranking is 338,000 and I feel tired. I’m interested in hearing from you on how I can keep strong and not give up.”
What do you think, Mike? Should he keep strong and not give up? I guess it depends on how much progress he’s made, right? It’s like if he has one paying customer and he spent a year, then he probably should give up, maybe.
Mike: It’s hard to answer with the data that we have. I think you have to figure out whether or not you’ve actually got traction. I think we’ve talked about this a little bit in the past but one of the things, and I heard somebody talk about this on a podcast as well, I can’t remember who it was, but they talked about the fact that if you launch a bunch of things, it’s a lot easier to see where the outliers are as opposed to launching let’s say three products and none of them do well. It’s hard for you to see what the outlier is, where things go really, really well and you recognize that.
If I remember correctly, it was somebody who I’d been talking to, Paul Graham, about that where they just didn’t know what success looked like because they didn’t have a very objective opinion. It’s just like, “Oh yes, get as many people as you possibly can onto the system or the platform and grow as quickly as possible.” You’ll know when you’re doing well and you’ll know when you’ve got traction and some success with it.
Unless you get to that point, you really don’t have a good understanding of what that actually looks like. If you don’t have any of those successes, it’s very difficult to be objective about your own situation. That’s how I would look back at the stuff that you have done and talk to other people who have put apps out there and have gotten some level of traction or progress with it and ask them to evaluate the different things that are in your business versus maybe theirs. Even if they’re only a little bit more ahead of you.
Let’s say that they’re making $1,000 a month, they can look at their own statistics and how they got to where they’re at, versus the things that you’re doing now and what you’re getting and let you know where the different problem areas are. There’s not going to be a silver bullet here but it will help point you at least in the right direction.
In terms of the app itself and the direction that I would go to towards trying to get more traffic and more sales, the name itself dcaclab, I get it. It’s direct current alternating current. But if you’re not really into electronics, you’re not going to really understand that. That’s not necessarily the point but the average person may not quite understand the subtleties of the difference between them. If you play with home electronics kits and stuff like that, unless you’re an electrical engineer or have electrical training of some kind, you really don’t completely understand that. It’s not going to come to you like if you’re searching for it on the web like dcac. That’s just not going to come up.
The SEO perspective is probably going to be a little hard. I’m not saying change it. It’s just something to think about. But this screams to me something that you could go to Kickstarter with. People in our age bracket are probably the most likely people to help fund something like this because they want to teach their kids about electronics and how alternating current works and how direct current works and how you can build little pieces of a large robot and experiment with those types of things. It just seems to me like that would be a great channel to go after to try and expand not just the horizon of what the number of people that you can reach but also to get an influx of cash. You could do a heck of a lot more with it.
There’s a lot of information out there on how to do a good Kickstarter and I’m not going to say that it’s easy because I know people who’ve done it and have made lots and lots of money from it or brought in lots of money but you also have to be able to deliver on it. Getting yourself to a certain point where Kickstarter really works well for you, you also have to do a lot of pre marketing in order to essentially accelerate it and pour gas in the fire once you do get it on Kickstarter.
The similar things that come to mind is you could go the route of trying to get into government funded channels like directly into public education, public schools, or even private universities or private schools, but those seem to me like the channel is going to take you a heck of a lot longer in terms of the timeline to develop and I don’t know how much time you have to put into this or even how much energy you have left to do it because it sounds to me like you’re at the end of your rope.
Rob: That’s a thing. Selling directly to schools or universities would be the money fad here in terms of the big contracts. It can make a difference. But it’s like one to two years sales cycles because they budget way out and you gotta convince them it works. I got to be honest. Just looking at the screenshots and I just watched a little video. It’s a pretty sleek tool. It really does look like a circuit board. I think you use it right here on a web browser. It’s interesting here.
It’s one of those tough markets of individuals probably aren’t going to buy it in terms of like, “I wouldn’t buy this for my kids because I might buy a coding class or something. It’s only $42 a year but I just don’t know. They’re not doing enough circuits right now.” You’re just going to get onesie, twosie sales. What you want to do is go after groups like schools, universities, even public, private, all that stuff but that’s just that enterprise sales cycle and so it becomes a challenge.
I like the advice that you laid out. I think that if you have almost no traction, if you literally have a couple hundred dollars in revenue, it might be time to just walk away, sell it on Flippa. You have built something here that has some value but it probably couldn’t sell through a broker if it’s that small. If you have at least say $25,000 a year in revenue, it may have to be profit actually, then you can approach a website or an app broker.
If you really are burned out and just struggling to get past there, that’s not a bad option, then you’ll find that you’ll leave out with a little bit of cash in your pocket and feeling refreshed. That’s something I’ve done a number of times so I know firsthand how that feels to keep an app around longer than it should and feel guilty about it because you’re not committing the time and you feel like you’ve invested a lot of stuff and you have this cause fallacy and you want to keep building it and you don’t know when to stop. I’m not saying that you should stop but you do need to listen to those feelings if you feel like you’ve just been pushing a boulder uphill and you haven’t really made any progress.
I kind of have a question mark in my mind, whether a blog, which is what you mentioned, has an x marketing channel is the right thing. I think if there’s a lot of SEO terms, there’s long tail, people searching for this kind of stuff, then maybe I wouldn’t do it for six months without some type of noticeable ROI. I might do it for a couple of months and of course, the hard part there is you have to need time to build this snowball there.
AdWords isn’t going to work here. Facebook Ads, probably not, given the low lifetime value. There’s not a ton of options aside from the places we’ve talked about before, which are the joint venture deals of is there anyone anywhere who’s bundling these things together. Is there anyone who has an audience that would be interested in this? Like a blog or that you could pay a big 40% affiliate commission to get the nice one time hit. What other free channels are there? Are there forums? Are there discussions? Is there a stock exchange for electronics? I’m almost sure there is. Can you become active in there and you don’t just hit there and pitch your thing, that you answer the questions because you haven’t seen a lot about circuits but you answer questions and then your profile has the links in it.
There are ways to do this. This is not like a high growth market. It’s not something that you’re going to hit a hockey stick by tapping the right thing. It is just going to be a slow build and if you’re interested in it and you still want to push it, then do that. If you’re not, then I would think about launching the next thing because you obviously have some skills to be able to launch this one.
Mike: Something else that came to mind as you were talking was what about building a course around teaching somebody how to use electronics and then bundling a one year subscription of this, or three months, or six months with it. That way, you’re really selling the course but this is kind of an augmentation of that course. That seems like a good idea.
Rob: Yeah. I pay quite a bit of money for my 11-year old who does coding courses. I buy those courses online and then he goes through them and he builds minecraft models and all that stuff. If there is a way to make this interesting, parents are likely to buy things for their kids. That’s an interesting market. It’s not an enterprise sale but it is a way, like you said, they’re going that B2C kind of Kickstarter path, selling the course with this bundled as a Kickstarter or an Indiegogo or something. That may be the best idea we came up with today regarding this business in particular.
Thanks for the question, Sameera. I hope that was helpful.
Our last question for today is about bootstrapping an MVP as a non developer. It’s from Rusty. He says, “I have an idea for a SaaS application. I feel like I have a great in, in an industry that I’m familiar with. However, I’m not confident enough in my abilities as a programmer to actually code a viable product. What’s the most financially viable way for me to get a demonstrable demo of a product up and running without having the personal ability to code it?
Mike: I think the first step is to take it from beyond having a great idea in an industry to talking to people and get in either commitments or actual presales from the people there to give you the confidence that go into that without having a development background and being able to know that you can essentially program your way out of any technical problem that you run into.
It is probably the place to start because if you can get those commitments and have that confidence that people are willing to pay for it and you’re able to find enough of those people, then that’s really the next step. It seems like a clear way to try and figure that out. If you do get that confidence, especially if you have let’s say $20,000 in pre sales, you can take that proof of presales and go to a developer and have a much higher chance of being able to convince your average off the street developer that hey, let me work with this other person or a partner and I’ll either do it for free or do it for a really low rate in exchange for equity or whatever in order to be able to latch onto this business that clearly has some legs to it.
Because what you’ll run into if you go to a developer and say, “Hey, I’ve got this great idea. I’d like you to build it for me.” I can tell you what’s going to happen. They’re going to say, “Haha, no. I don’t think so.” Unless they’re just not any good at it because there’s too many developers who’ve done that too many times and they’ve gotten burned. It just does not work out because the technical side of this is not the problem. The problem is the business side of making sure that you can get in front of enough customers on a repeatable basis. If you can prove that upfront, then you can move on towards actually building the product itself.
But I don’t think that there’s a lot that you need to do in order to even just put something in front of people who you’re talking to. I did Balsamiq mark-ups for Bluetick and that was all I needed in order to get presales. I would recommend having those conversations first and then going to the process of showing them what it might look like and then after that, if you can get them to buy into it, then move on to actually building a prototype until you get to that point where they say, “Yes, I’m willing to pay for it.” Or, “It’s a problem that I have that I need to solve.” It doesn’t matter. You can build all the prototypes you want but you could very well just be building the wrong thing.
Rob: That’s a playbook sort of recap. Have more conversations, have a bunch of one on one conversations. You can go out and you can look in forums and you can look in wherever folks who you’re trying to sell to hangout. If you have any inn in the industry, you already probably know a bunch of people in that industry. Talk to them, describe the idea in as much detail as you can and say, “It’s going to be $100 a month to whatever you think the pricing will be. What do you think?”
If they say yes, then say, “Awesome. I’m going to go build mock ups and I’m going to come back and show you. If I build this product, are you willing to pay that?” And then they’ll say yes or no. Once you get enough people and you really have an idea of what you want to build, like Mike said, make the mock ups. Balsamiq is a great tool. I think today, it’s like sketching and vision but you don’t need to get too fancy with this.
When you come back to them and you say, “Here’s what it is. Here’s what it really does.” They’ll have questions for you. Then you make a decision. If you get a bunch of people ordering and you get the validation, like Mike said, you can go to a developer or if you have savings, you can feel a little more confident that perhaps this thing will work and maybe you go and hire a developer, which is a whole other podcast episode. A lot of challenges there but you can hire someone to build it and essentially hire a cofounder or you could go down a different path.
If it’s a service that can be mocked up and handled by hand like by yourself or by a virtual assistant with minimal software, maybe no software at all like can you mock this thing up, have a fully functional version with Google Forms and Zapier and you copying some kind of a spreadsheet and manually sending emails through Gmail or MailChimp or manually crunching data in Excel spreadsheet, instead of an app actually doing it, then maybe you don’t even need a developer to get to the next step, past the mock-ups.
The next one is, “Okay, now I’m going to do this for you.” I don’t know what your service is so that’s where this part’s hard. But it’s like if you’ve committed that you’re going to bring 20 leads a week to lawyers or to real estate agents, it’s like, yeah you want to build a software to do that ultimately. But now, just get on a phone and generate the leads. Run the AdWords and generate the leads. If you’re going to do SEO analysis on something, then yes, you’ll want a computer to do that eventually. But for now, just do it yourself. Do it manually and develop the algorithm and send them pen and paper in essence. Send them that Excel spreadsheet that is super low tech and see if they’re like, “Oh my gosh, it’s amazing. I’m getting a ton of value out of this.” Or if they’re like, “Yeah, the results really aren’t as interesting as I thought they would be. They don’t necessarily need to, in a lot of cases, actually use a software to get the value that the software will ultimately provide.
That’s kind of your either or. They are depending on the idea. If you can’t do that and that is possible in more and more niches than you think and with more ideas than you think. But if that’s totally not possible, then yeah, you do go down the train of trying to build a prototype/mvp. Those things don’t have to be the same, but in this case, they essentially would be.
Mike: Thanks for the question, Rusty. I think that about wraps us up for today. If you have a question for us, 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 and we’ll see you next time.
Episode 365 | The Real Impact of Revenue Expansion
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Show Notes
In this episode of Startups For The Rest Of Us, Rob and Mike define revenue expansion, talk about how it differs from revenue growth, why it’s important, and ways to increase it.
Items mentioned in this episode:
- Baremetric Article
- Price Intelligently Article
- Geckoboard.com article
- FemtoConf
- Mixpanel
- Kissmetrics
- Bluetick.io
Transcript
Mike: In this episode of Startups For The Rest Of Us, Rob and I are gonna be talking about revenue expansion opportunities. This is Startups For The Rest Of Us episode 365.
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 built your first product or you’re just thinking about it. I’m Mike.
Rob: I’m Rob.
Mike: We’re here to share our experiences to help you avoid the same mistakes we’ve made. For this week, Rob, tell me the two most recent non mainstream board games you’ve played.
Rob: I played The Legend of Drizzt board game which is this $65 behemoth massive thing with these figures in it. It’s set in the D&D world. Drizzt is a character who’s been in a bunch of books, fantasy books by R.A Salvatore. It is pretty cool. It’s a simplified version of D&D in essence, you don’t have all the rules and the mechanics but it’s a lot quicker because you can play around in an hour.
I back a lot of games on Kickstarter so I could probably name five that are super not mainstream. There’s one called Mint Mint Tin Apocalypse. It was $2 or $3. It is literally a mint tin and then a couple wooden meeples and then some six sided dice. It’s cool because it takes 10 to 15 minutes to play and it takes 5 or 10 minutes to learn. It’s a long term, you’re gonna play all the time. When I know we just have a few minutes, you sit down and you can just hammer it out. It’s fun and it’s super cheap.
Mike: Aside from the board games, what else is new?
Rob: From the time this podcast airs, I will be wheels up to MicroConf Europe two days later. I’m excited to get to Lisbon. We’re gonna have folks speaking like Peldi Guilizzoni from Balsamiq, Andrus Purde who is the former head of marketing for Pipedrive, now has his own company called Outfunnel, we have Craig Hewitt from Podcast Motor, Mike Taber from Bluetick, Mojca Mars, a Facebook ad expert. We have several other speakers. I’m excited to get there and see some folks that we maybe haven’t seen for years as well as meet the new attendees who are coming for the first time.
Mike: On my end, when this podcast comes out, there will be an announcement for the tickets that will be available. I will be speaking at FemtoConf over in Germany in the spring. I believe it is the first week of March, it’s March 2nd to 4th. It’s over the weekend, it’s Friday, Saturday and Sunday. The tickets are actually going live the day that this episode goes out. If you head over to femtoconf.com, I’m told that they should be available, if they’re not it’s not my fault.
Rob: Aside from the fact that we like Christoph and Benedikt, I really like that they have the Drift right on their homepage, femtoconf.com, ladies and gentlemen. What are we talking about today?
Mike: For today’s episode, we are going to be talking about revenue expansion opportunities. I’ve been thinking about this a little bit just because it’s been on my radar for Bluetick to look at different ways that I can either rework the pricing or find other things to expand the revenue opportunities for Bluetick. I started looking into some of the different ways that that could be done but it also gave me the idea for this particular episode. We’re gonna be talking about revenue expansion.
Revenue expansion is different from revenue growth which typically comes from new customers. Expansion revenue is any revenue that is generated in excess of whatever the initial purchase price that the customer agreed to pay. If they signed up for $30 and they’re paying $30 a month, that’s great, that’s considered a new customer. It becomes expansion revenue if they move from a $30 plan to a $50 plan or to a $100 plan or if they add more users or purchase other services or other products that you have.
There’s a bunch of different ways that those types of things factor into it. The bottom line is when you’re defining expansion revenue, it’s really additional revenue that comes from your existing customer base that you would not have gotten otherwise.
Rob: The holy grail of running a SaaS app is having enough expansion revenue that you have net negative churn. I talked about this a few episodes ago. In essence, you always think of churn as lost revenue because of people cancelling. You can get to the point where if people are naturally upgrading to higher tiers as they use your product.
A good example of this is being ESP where as you add more subscribers, you naturally bump up every few months if you’re having any kind of success, you start paying more, that can be more, that amount can be more than the amount of revenue you’re losing because of people cancelling. When you see that effect, it’s called net negative churn. I’ll say it’s rare, it’s becoming more popular, strong word.
I’m seeing and hearing about it more as people catch onto how incredible it can be as a flywheel for growth because having low churn means you can grow at a certain pace. Net negative is super charge, it’s a completely different trajectory. If you’re lucky enough or smart enough, or both, to stumble into a business where people automatically have expansion revenue like ESP, I think web hosting if you do it based on maybe traffic or the number of sites.
I’m trying to think of other areas, Wistia for me. We had a small plan and we just keep adding videos and we’ve gone up. It’s not super often, maybe once or twice a year, we wind up going up. Mixpanel and Kissmetrics, they go based on number of events. As your website ramps up, you naturally go up the scale. I guess Help Scout or any types of support software where it’s a per seat, that’s a big one.
Per seat expansion is a big one because as a company has more success with their product, they are likely to either bring more people in because it’s working. What if they already have employees, they’ll add more seats or they’re likely, if they’re a startup, we went from 2 employees to 8 in the span of about 18 months. We just needed to add more people to all of our systems.
There are opportunities for some natural ways to get expansion revenue and to try to get to that Holy Grail as I’ve said, net negative churn. I hope I didn’t steal your thunder, I was going off the top of my head. Did I totally decimate this outline with that diatribe?
Mike: No, just the first little piece of it. We’ll link up in the show notes a couple of different blog articles specifically about how new recurring revenue is different from expansion revenue which is different from churn revenue and how those can combine to create that negative churn effect. Those blog articles, some of them are from parametric or Price Intelligently and then there’s also another one from geckoboard.com.
You already talked a little bit about why it’s important because it relates to negative churn. The bottom line here with going after revenue expansion is that it helps to offset your existing churn because, as Rob just said, when you’re losing people just on a regular basis, you’re going to lose people on a monthly basis or quarterly basis, whatever it is, that your billing cycle tends to be on. That helps to offset that.
It’s easier to get more money from your existing customers because presumably you’re keeping them happy, than it is to acquire new customers, it’s typically a lot more expensive to acquire those new customers. We talked about these acronyms like CAC which is cost to acquire a customer, that number tends to be substantially higher for a new customer than it is to get expansion revenue from existing customer where you’re doing some cross sell or upsell or you’re asking them to opt into this other thing.
It’s a lot easier to do those things because you already built that trust. When they’ve never purchased anything from you before, they’re much more reluctant to take that first step because they’re pretty sure that it’s going to take up time. It’s not that it’s not valuable to them but they’ve got other things that they’re doing in addition to paying attention to your product and other things that it can do for them. There’s only so many hours in a day for them to focus on the things that they need to do. That adds one more thing to their plate.
Let’s dive into some of the different ways that you can increase revenue. The first one, Rob alluded to this where some of the examples he came out were Mixpanel or Kissmetrics or hosting providers where as the customer becomes more successful, they use more of your services and by virtue of that, they start paying you more because they’re using more of the resources that you offer. This is essentially increasing their consumption.
There’s another way to look at it, which is to decrease the friction that it requires to use whatever that is as well. Some examples that come to mind are Apple’s iPod or the Fire TV from Amazon. Those things make it a lot easier to download music or to purchase movies or rent movies. Those devices make it a lot easier for you to consume them and to consume them at a faster pace. Those are some examples of that.
If you go over into the physical products world, this occurred to me a while ago, I’m sure somebody has talked about it at some point, if you remember going to McDonalds back in the 90s for example, the straws were insanely small. If you ever went and got a milkshake, it took you forever to drink the milkshake because the straw was so small. You go to McDonalds now, the straws tend to be substantially larger. They’re probably six to eight times the size that they used to be and put through a lot more liquid in there and drink it faster.
That leads you to increasing the rate of consumption, it also leads to larger portion sizes as well. As a consumer, you have to be careful but as a producer of whether it’s content or digital assets or something along those lines, if you can increase the rate that somebody is using your product or services by decreasing the amount of friction, that’s almost the same thing as being able to deliver more.
Rob: Another example that McDonalds was I think a pioneer of, we’ll talk a little bit later but that is cross-sells. When you’d order a burger, what was the famous saying, “Do you want fries with that?” We’re trying to encourage you to do that, and then they had meals. I remember, I’m old enough to remember, when you go to McDonalds and there were no meals. You order a hamburger and then you order french-fries and then you order a drink if you want that.
They started packaging the meals to do exactly this, increase consumption of overall amount of food. You could also call it a cross-sell. This of course can backfire on you, it’s very unlikely to happen to one of us running this small business. Remember that movie Super Size Me, it was a look at how bad McDonalds’ food was. That was the name of it, it was a take on.
You used to pull up to McDonalds and you’d ask for the meal deal, big mac meal deal and they’d say, “Do you wanna supersize that for $0.99?” You’ll get an extra-large drink and an extra-large fries or something like that. That was another way to increase consumption, it was an upsell in essence. A lot of people did that. There were complaints of you’re encouraging people to eat bad food and blah, blah, blah, the politics of it or I guess the morality or ethics of doing that aside, odds are you’re not selling unhealthy food to folks.
You are probably doing something like selling software, selling info products or ebooks. If people use or consume more of them, you can encourage them to do so, then that’s gonna help you increase your bottom line.
Mike: The next one is the very issue on that which is increasing the number of seats that people are using. Not every product is going to have a pricing model that’s going to be able to support this but there are certain cases where a per user model makes a lot of sense. There are ways to incorporate other people unto the team in an environment where there’s your customer or consulting companies that they use, whether they have contractors. Those people may need user accounts.
You do have to be a little careful with this because, as I said, the type of product that you have, you can easily end up in situations where people are just sharing an account and you’re trying to sell a single account for $50 and two accounts for $100 or maybe a slightly reduced price of $90. They won’t go for it because they’ll just decide, “We don’t need that, we’ll just share the account between these people. It’s not that big a deal.”
Just be aware that sometimes it’s an option, sometimes it’s not but there are opportunities to put people into a software package and other ways, other roles inside of it or other responsibilities which give them maybe different options or different features.
Rob: There is actually a really good rule for this on how to decide if your product should be seat based. This is hard and fast, I know lot of time we say, “This is a guideline.” I actually believe that you should not break this one either way. If someone logs into your software with their login, do they see something different than if they login as someone else? A good example of that is Mailchimp or Drip and ESP.
If you and I share an account and we both login with our own logins, we see the same thing, there really isn’t anything different. The only difference is if I were to login as you and do an export, you’ll get notified, you know any exports done but the minimal stuff. If I login to a CRM system or into Bluetick as me versus you, it’s a completely different inbox, completely different list of customers, completely different list of tasks.
The CRM always charges by seat because that’s their upsell and that is the differentiator. It is a minority of products that can charge by seat. Just ask yourself the question, “Does someone/should someone see something different if they login as a different person?” Trello is another example. If I look at my Trello account versus yours, they’re totally different. If we had a business account with seats, you should absolutely charge by seat.
I do see people make the mistake, you mentioned this, of trying to charge by seat when they don’t have the differentiator and then you just get one seat and then save it with everybody because there’s no difference, it doesn’t make sense. It feels to people like you’re being disingenuous if you did do that. I can’t imagine an ESP charging by seat.
There are some marketing automation platforms that charge by seat because they have CRM built into them. Infusionsoft, ActiveCampaign are examples of that. they do have per seat pricing. I’m almost positive if it did not have that CRM view, they would not do per seat stuff.
Mike: The next option for increasing your revenue is to have different upsells. These could either be a higher tier of an existing product or it could be add-ons, it could be additional integrations to give people access to, it could be plugins. There’s a variety of different options that you could give somebody that provide additional functionality on the base level package that you could use as an upsell opportunity.
If you’re using these, you can either have bundle deals on your website where you’ll just say, “Here’s a package deal. It’s $100 for these X things.” Or you can say, “Ala carte, you can get each of these if you want, each of these five but it’s gonna cost you $30 per piece if you’ll buy them individually. Buy them as a bundle, you can get them for $100.” That bundling is also an option for an upsell.
It doesn’t seem like it is but when you start looking at who the types of people are that are buying those things, chances are good that they’re not gonna use all five of them in that particular example. They’re gonna use maybe three or four but the package deal is appealing to them because they have in their head that, “I might use these things down the road.” Even if they don’t use them now, they may have an intent to use them later.
Whether they do or not is immaterial but you can get them to purchase that package deal whether or not they’re gonna use it especially if you position it as a good deal for them.
Rob: This is very different, there’s upsells. It’s different between info products and software. Upsells are very natural and tend to make a lot of sense with information. If someone’s gonna buy a book from you then you upsell them to the videos or you upsell them to a 30-minute console or some interviews you did, that’s pretty natural.
Software can be more of a challenge, it can take more effort. You can always upsell training, really hardcore training. You don’t just want documentation to be upsold, you want that to be free. Something that actually gives someone a mindset view or an architectural overview that they would normally have to pay for, there is that line of you look at pricing of segment.com, their tiers are less based on usage and much more based on the integrations that you use.
I’m sure they know that someone integration with Salesforce tends to have bigger budgets and a lot more value out of segment than someone not doing that. Zapier, I think it’s the same way. There are certain things that are locked behind higher priced paywalls. Drip tends to be that in these apps that integrate with a lot of things because they know if someone is using Drip, they’re probably a more sophisticated marketer, they probably have a larger list, they probably have a bigger budget, that type of stuff and they’re gonna get a lot of value out of these tools.
This takes a lot of thought. The hard part about this is knowing what to lock behind these feature gates and doing it incorrectly is pretty easy. I’ve seen it swing both ways and I do think that if you find one of these other paths where your expansion revenue can be based on number of seats or it can be based on number of subscribers or contacts or it can be based on number of events, there are certain things to fit in, storage size, if your Amazon has three, then go with those.
Probably stay away from trying the feature gate right now, feature gating meaning you can’t get this feature unless you go up a tier, you pass through this gate by paying more money. If you don’t have an obvious way to use one of those obvious numbers that everyone else is using or makes sense for your product, then yes, you do need to seriously start thinking about ways, how do you build tiers when you don’t really have an easy one number like seats or subscribers or contacts to look at?
Mike: That’s actually a really interesting discussion topic just because I think that people look at those features and say, “What should I put in here as a feature gate to create these different pricing tiers?” I remember when Segment used to feature gate based on which integrations you were doing because presumably if you were using Salesforce, you had the money to pay for Salesforce. Clearly, you had money to pay more for a segment license. I think that they’ve shifted their pricing model and you don’t have to do that anymore. When you sign up, they have three tiers.
Rob: I was just saying that they did, I was mistaken. Zapier still does that, Segment used to.
Mike: They used to do that, they don’t do that anymore. I think it’s partially because they got to a point where they were far enough down the road that they had the ability to dedicate somebody to take a hard look at those things and see whether or not they mattered. Having the conversation with the customers to try and find out what the more optimal pricing model was for them.
Rob: They do it now on monthly track users, empty use they call it. It can be dicey, although with Segment that makes sense. How many users are you gonna track in a given month? That’s actually pretty easy to get an idea, you can think of how many either customers or how many website visitors unique in a month. Other times you’ll see like Amazon has pricing like this where it’s number of elastic compute units. What does that even mean? It’s something that is not defined anywhere.
I’ve seen things based on events and it’s like, “I don’t know how many events I’m gonna have in a month. How am I gonna know that?” Kissmetrics and Mixpanel have that problem of trying to define what these things are.
Mike: Even Segment has that problem because the empty use that they advertise, that is for the number of tract users coming to your site, not necessarily the people logging in. It’s not your team. If your website suddenly gets a ton of traffic from Reddit or Slashdot or something like that, you could easily blow through that very quickly depending on the company. You could either end up in a world of trouble with a giant bill or they could say, “We’re gonna turn this off, we’re not gonna allow you access to the rest of this data unless you pay for it.”
Rob: Something that Segment is – I’m looking at not the pricing grid at the top but they have a breakdown of what the differences are between the plan limit levels. Without knowing what their internal data looks like, they both have empty use, that’s monthly tract users, plus they have seats, the lower end only has 1 seat, and the team one has 10 seats. I’ll go back to my question, if I log into Segment as you versus me, do I see something different because as far as I know, you don’t. I actually think that’s probably not a good idea.
They have sources which is how many sources are you going to connect to Segment. The developer panel has two and then all the others have unlimited. Maybe that one is harder to say right or wrong. When you’re first starting out, you don’t have the trust of the market, you don’t have a brand name, you look at people like Segment or Intercom or MailChimp or Drip, we have the luxury of having a brand name and people are actually seeking us out.
We can raise our prices and we can do more complex pricing schemes because people are willing to come and use a tool that they trust and a lot of people are talking about. In the early days, this was with Drip as well as Intercom as well as your tool today, I’m speaking to a listener there, you don’t have the luxury of being able to have super complex pricing because no one’s gonna wanna bother with it because you’re probably struggling to try to get people to come and try it out and try to use it.
I would go extremely simple and I would go for one of these numbers, per seat, per subscriber, per contact or something else that’s very noticeable and easy to figure out until you get to that critical mass. You’re gonna know it by the fact that people are gonna start telling you, “Boy, you should raise your prices, you’re too cheap.” Or you’re gonna look around and say, “I haven’t raised my prices in a year, I need to rethink this.” You should have pretty good flywheel growth by the time you get to that.
Drip is now on its fourth version. We have versioning for pricing. We’re on our fourth version of it in four years. We haven’t done it every year on the dot but we actually did it three times in the first probably year and a half or something and then we really haven’t done any restructuring of pricing since then. Do try to keep it simple in the early days and don’t try to copy companies that are way further along because they have the momentum and the flywheel and the brand and you don’t have that yet. You don’t wanna make this mistake of confusing people.
Mike: Everything that we just talked about is really adjusting your licensing model in order to create more opportunities for upsells using those pricing tiers. Another option that you have that’s available to you is offering some annual plan, whether you offer upfront or you offer it a couple amounts down the road after somebody has started using your product and he’s getting comfortable with it.
Maybe there are certain trigger points where you say, “Let’s offer them an annual plan or a special discount upgrade for three month upgrade. Try this out, the platinum tier for free for 30 days or 90 days.” There are different ways that you can position that and pitch it to people. What you’re trying to do is you’re trying to increase that overall revenue from them so that it decreases the number of times that they’re gonna have to sit down and think about, “Do I really wanna continue paying for this?”
I think Leadpages used to do that really well with their webinars, if you attended a webinar, you could signup for Leadpages account and they would pitch you on a two-year plan. For two years, you are probably not going to go look for another landing page provider because you have this account. Unless it’s not doing what you needed to do, you’re not gonna go look for something else because you’ve already purchased it.
Rob: One of the big benefits of annual plans, especially when you’re starting out is you’re tight on cash. To get someone to pay for 12 months of service in advance, even with a discount, that cash is invaluable. If you can figure out a way to get someone to pay you for that full amount of service and you’re doing any type of paid acquisition, you are gonna be in a great spot. Basically spend a dollar, get $3 or $4 right away. It is a flywheel, it allows you to then acquire more people faster.
It’s pretty incredible, the power of being able to get annual. That’s why you’ll see pretty hefty discounts, 20%, 30%, 40% on annual plans because the cash is just so important to startups in their early days.
Mike: We mentioned this next one several times throughout the episode, it would be cross-sells. If you have other products that you have to offer, cross selling them after somebody has purchased the first product if there’s another one that relates to it or integrates with it, if there are signatures that you can identify with the customer that would indicate that they would probably be a good fit for this other product that you have, then there’s obviously ways that you would wanna interject yourself into a conversation with them to put them in an email campaign or have somebody call them and say, “Would you possibly be interested in taking a look at this over here because we think that this would help your business as well based on what you’re doing and what we’ve seen other customers get in terms of benefits and the similarities between the customers.” That’s another one.
I’m gonna move on from that. The next one is services and customizations. I think this one is a key piece that most software people overlook because we’re trying to build software companies. Our natural inclination is to build a software and sell people software, but the reality is sometimes people need a little extra help, whether that’s onboarding assistance or they need you to do something for them whether it’s a productized service.
There’s lots of different pieces to your application, it’s not just signing up for and plugging in a credit card. There’s usually a lot of other things that the customer is gonna have to do in order to get the value out of that particular product. Because you have all the insights and the backend knowledge and the main expertise for that particular product, you can do those things a lot more efficiently than the customer can.
You can create a service that is going to use your product on their behalf to achieve whatever the goal is and now you’re able to do a lot more because you can dig into the guts of it. If something is not gonna work the way it’s written, you can find ways around it, you can import things directly into the database if you need to and then make the software do it so that you can deliver on that service that you’ve promised them.
They’re more likely to purchase those services because it provides a lot more value to them by having it as more of a done for you service rather than they signup and it’s self-service because that’s most of what SaaS applications are, most of them are self-service versus a productized service where you’re hiring somebody to do something or deliver some sort of value or output. That’s what you’re paying them for, you’re paying them for the output. With SaaS, you’re paying them for the license to use that tool for the duration of them paying for it but they still have to do the work.
Rob: I think there are two aspects to this. You said services, it’s like the productized service. There’s a second aspect which is customization. It’s going to be like if someone came to us, actually we’ve used this with DotNetInvoice all the time. It was downloadable software you run into your own server, it was like self-hosted Fresh Books, a simpler version of that. People would buy it and say, “I don’t want this this thing added,” more like yeah, we’re not gonna build that feature, we’ll pay you to add it.
At first it was like, we’ll charge you $150 an hour and then we moved up to $200 an hour because we just really didn’t wanna them. It made some money but it was a hassle. Consulting, if you wanna be in that business, go do it, it’s lucrative in the short term but if you wanna build something long term, it’s hard to mix those kinds of businesses because they’re two different businesses, serving clients, offering deadlines, doing the contracts.
What if they’re not happy with it, what if they request changes, that’s a type of business. Building your own software product is another type. You’re not gonna move forward full steam on your software product if you’re busy doing a bunch of consulting gigs. The problem is the consulting gigs are like the quick hit, it’s like the crack cocaine where you get the $5000 or the $10,000 because someone wants you to do something.
Of course you’re gonna run off and do that but that revenue isn’t worth nearly as much because it’s dollars for hours. You’re not spending that time marketing your product and building features that other people will use. Even the market itself speaks, if you were to go raise venture funding or you were to try to sell your company even through a broker or you were to go public or whatever, any type of valuation, software recurring revenue is gonna be 3X to 7X your revenue multiple.
Consulting revenue tends to be in the 1X, maybe 2X if you’re lucky. It is a third to a fourth as valuable on the open market because it’s just how these things work. I think you have to be really careful about taking the quick hit or the quick dollar because it is gonna slow you down. If you’re super desperate and you really need the cash, there’s times when it’s not an absolute rule, there’s times when you might need to do this but I advise founders against doing this if it all possible.
Mike: The last item on our list for revenue expansion opportunities is to have an affiliate offer. This could be in the form of a direct product that you are offering that is a third party product that you are getting a commission from or it could be a referral. If you have a good relationship with a provider and there’s a subset of customers that you know need something that you’re probably not going to do it but you have a good relationship with somebody who does provide that service or that type of product, then you could setup an affiliate relationship with them where you will refer customers over to them where you’ll get some commission or kickback or finder fees, something along those lines for referring them over.
You could also do this for free, I know that there are people out there who like those types of things and they’ll just say, “Here’s some free business because I know that you’re gonna take care of them and I don’t really want anything from it.” Those opportunities are available as well, you can probably find people who will do the same thing for you. I think it’s much more common to have some sort of an affiliate relationship setup so that there is a specific dollar amount tied to it or percentage. It makes it easier for you to quantify how much work and effort it’s going to take you.
Rob: If you have other ideas for revenue expansion that you feel like we missed in today’s episode, feel free to come to startupsfortherestofus.com, Episode 365. Post a comment or email us at questions@startupsfortherestofus.com. That wraps us up for the day. You can also call our voicemail at 888-801-9690. Our theme music is an excerpt from We’re Outta Control, it’s by MoOt used under Creative Commons. Subscribe to us in iTunes by searching for startups. Visit startupsfortherestofus.com for a full transcript of each episode. Thanks for listening. We’ll see you next time.
