Show Notes
In this episode of Startups For The Rest Of Us, Rob and Mike talk about how to stair-step into a new audience. They define what the stair step approach is, ways to get into a new market, and how to utilize your existing strengths on your new audience.
Items mentioned in this episode:
Transcript
Mike [00:01]: In this episode of Start Ups for the Rest of Us, Rob and I are going to be talking about stair stepping into a different audience. This is Start Ups for the Rest of us, Episode 283.
Welcome to Start Ups for the Rest of Us, the podcast that helps designers, developers and entrepreneurs be awesome at launching software products, whether you’ve built your first product or you’re just thinking about it. I’m Mike.
Rob [00:24]: And I’m Rob.
Mike [00:25]: And we’re here to share our experiences to help you avoid the same mistakes we’ve made. How you doing this week, Rob?
Rob [00:28]: I’m doing pretty good. I got an interesting little hack that I heard about on a podcast where if you’re sending your new trial signups into Slack — like we send it into a signups channel so we can see whose signing up. If you’re already doing that, you can wire [Zappier?] up to essentially monitor that channel and pull a domain name, or an email address, out of the Slack chat and then push it into FullContact, and it gets the information so you can actually figure out, ‘Hey, does this person or company have a lot of Twitter followers? Do they have big social media presence? What’s their LinkedIn bio and their Twitter bio?’, just to get more information about them. It was surprisingly difficult to set up. It seems like it should be pretty easy because [Zappier] tends to be pretty easy to use, but there was a bunch of finagling I had to do to get it set up. And then, in the end, it seems to work for less than half the trials that come through and actually retrieve any information from Full Contact. So, it’s an interesting hack if you have an hour to set it up and you’re interested in finding out more about folks who are signing up and can do a lot of follow up. But, to be honestly, in the end, I’m a little disappointed with the amount of effort I had to put into it and the results that I’m getting.
Mike [01:34]: Yes, I’ve looked into those services before and it seems like that, in a way – I’ll draw an analogy with something like ReportOf – where ReportOf seems to gather some of the information from LinkedIn as well, and I don’t know how well FullContact is able to do that? I think there is probably a huge discrepancy between people who are using their work email addresses for their social presence on Twitter or Facebook or wherever, versus people who are using their personal email addresses inside of LinkedIn and you’re able to kind of match that up. A lot of times, people will add in their work email address, for example, into LinkedIn because then it makes it very easy for other people they know, or work with, to find them. I think ReportOf is owned by LinkedIn now, if I’m not mistaken?
Rob [2:19]: I think you’re right. Yup.
Mike [2:21]: Yes, so they probably have all the tools and stuff they need to be able to get that information, versus something like FullContact which is probably a little outside of the box.
Rob [2:30]: Right.
Mike [2:29]: But that’s cool. I think these types services where they’re able to gather additional metidata about people based on their email addresses is nice to have when it works. But obviously, when it falls down it’s a little disappointing.
Rob [02:45]: For sure. What’s going on with you? You have a deadline coming up in the next couple days.
Mike [02:47]: Oh yes, hard at work trying to get all the code out the door. There’s a few–I’ll say minor–sticking points we’re still trying to work around, but I’m pretty sure that we’ll be able to finish this off in the next couple of days and hopefully get it in the hands of our first beta customer that is outside of the four walls of my office, and hopefully see what happens.
Rob [03:05]: There are always a few minor sticking points two days before launch, so no one would be surprised by that.
Mike [03:10]: You mean, getting 90% of the work done so you can work on the other 90 percent?
Rob [03:14]: Exactly. Exactly. Well good for you.
Mike [03:16]: We have an interesting question that actually came in from [ArmonMesic?] and it’s actually a little bit on this topic. He says, ‘ Hi guys, really like your show. You’re providing so much value, and after listening to an episode, my motivation is always going up. I’ve got a question for you. I’m launching my first product, and right now I’m sending cold emails to people. Do you have a suggestion of how I can track open rates on individuals? I didn’t find an easy way to do it. Thanks for any help in advance.’
I’ve done this before; there’s a couple of different tools that you can use. One of the things that I’ve used before is Sidekick–and there’s a Chrome plug in for that, and they, I believe, have a free plan which allows you to just see who is opening emails and who isn’t. But actually, your question actually leads a little bit more towards what I’m actually working on now with BlueTick, which is not only tracking how many people are opening those emails, but whether or not you’re getting replies to them and then managing that follow-up process beyond it. Hopefully that helps to answer your question. I would probably start with Sidekick, see if it does what you want it to do. There’s other options out there that kind of operate in this space though, and there’s probably a dozen of them. But hopefully that at least gets you on the right track.
Rob [04:17]: Yes. The other two that I’ve seen are Tout, which is at toutapp.com, and YesWare. I think Tout is web-based. It’s a full web interface. And then YesWare integrates with your Gmail account. Those are other ways you can trap opens on cold emails. So one other thing I wanted to toss in. Last week I mentioned listening to ‘Masters of Doom’. I found out this week that there’s not a sequel to it, but there is a book called ‘Prepare to Meet Thy Doom’ and it’s basically a collection of magazine articles. Most of them were published in Wired and maybe some gaming magazines. And it’s actually a collection of different stories about gaming. So there’s a 10 or 15 minute version. I’m listening to this. I’m sure you can buy it, and it’s 10 or 15 pages, band the audio version there’s one of Flappy Bird. There’s the story Atari. There’s a really good story of Gary Gygax, the inventor of Dungeons and Dragons. Then there is an update around 2004 – 2005 with the guys from ID Software. I just discovered this. It was published maybe six months ago, so if you have listened to ‘Masters of Doom’, or read it, and you’re interested in more like that, the same author has published a book called ‘Prepare to Meet Thy Doom’.
And then on another front, I’m listening to the Snowball audio book again, and that’s called ‘The Snowball” It’s the story of Warren Buffett, and it’s a very thick book. It’s a biography, but it’s was as-told by Warren Buffett to a writer. He said he’s never going to write his autobiography, so he wanted someone else to do it. I found this book fascinating in terms of someone who had this unique talent, this unique advantage. And he really, really likes financial reports, and he figured out how to read them better than anyone else. And then he figured out his investing philosophy and the dude just showed up every day for like fifty years, and he calls it “the snowball”. He just built the snowball over the course of that time, and started with a tiny little bit of cash and managed — I think it was parents and friends when it started, and he just built it up, built it up; a fascinating story of being in it for the long haul, and then playing long ball and looking out decades in terms of building wealth, instead of being in a big hurry for it.
Mike [06:15]: Yeah, I’ve caught bits and pieces of his story over the years, and it is kind of fascinating the way he started out with virtually nothing and then he decided to move away. I think he moved out to Omaha and then I’m pretty sure he moved from New York, if I remember correctly?
Rob [06:30]: Yeah. I think you’re right.
Mike [06:31]: It was just like people would say, ‘You’re crazy for leaving New York, because this is where everything happens!’ And he was still able to manage the business and do everything from a completely different location. And he hasn’t really changed his habits. He doesn’t live in this extravagant house. He runs business in order to play the game. iIt’s not because he wants money or needs money. It’s just he likes it.
Rob [06:52]: Yes. That’s the cool part. I like when folks who are in it for the long haul, and who have this one outlier trait, just double down on that and stick with it for so long. When that turns out well it’s a cool story to hear. And what I’ve heard is–I haven’t read the physical book – but there is an unabridged and abridged audio version, and I’ve heard that the abridged version is just fine. Because even the abridged version, I think, is like 20-something hours. I think the unabridged version may be like 35 hours. Personally, I’ve listened to the unabridged and I don’t feel like I missed anything. And folks who reviewed both of them said that the abridged was just fine. So what are we talking about today?
Mike [07:30]: Today what we’re going to be talking about is a thread that came up inside of Founder Cafe, which is our private-user community. It was a question about how to stair step into a different audience. So, essentially going from an existing business that you have that serves the particular niche, or a particular audience, and trying to leverage that audience, or the things that you’ve learned, into a completely different audience. And I think that there’s a bunch of different reasons that you might want to do this, but let’s do a recap approach to what the stair step approach looks like.
Rob [08:02]: Sure. So, the stair step approach is something that I developed over the course of several years. Eventually, I published a blog post on it, and did a talk on it. If you go to — we’ll link this up in the show notes – but it’s at softwarebyRob.com, or you can search on my name plus “stair step”. It’s not been mentioned in a couple of books, and people quote it in articles and stuff. The idea is that I’ve laid out these three steps–and you could call them stages or whatever, but it’s steps of your entrepreneurial journey as you’re trying to launch a product. I have a couple different versions of it, but the one I’ll really stick to today is the one about launching software products. Step one is really thinking about launching a software product with a one-time sale and a single sales channel. So, think about a WordPress plug in or maybe a mobile app, a Magento add on, even an E-book–yes, I realize that’s not software, but that kind of stuff. And you have a single sales channel, which is typically going to be like the WordPress.org plug in repository, or it’s maybe SEO, organic traffic, or maybe the Amazon store or the Android app store; YouTube; you really optimize and you learn that single channel, and the idea here is to get experience and to get some money under your belt and really just learn the game. Step two is to just repeat step one. Because the thought here is that you’re doing step one on the side, right, while you have probably a full-time job or you’re doing consulting. Step two is to repeat step one multiple times until you own your time. So you have multiple plugins. That’s an example; you can have multiple plugins, you can have multiple e-books, you can have e-commerce sites, or whatever it is. The reason that you just repeat those is because you’re just trying to get more experience and trying to get better at all aspects of it, like the copy-writing and the marketing, and once you have multiple then you have the diversification that you’re going to feel okay about quitting your job, and you’ll also have a lot of experience. You’ll have experience on multiple fronts. It’s you’re a single channel, it’s building a product, it’s launching a product, it’s copy-writing, all this stuff. Once you get to step two you also have a bit of experience, you have a lot of time, you have a bit of money coming in. So then you begin moving to step three if that is something that is interesting to you, and that is basically a recurring sales; typically, in our space, that would be SAS. And the reason I have these three steps is because you don’t just want to jump into SAS on day one and try to build it, because it’s complicated, it’s very competitive, it’s hard to do on the side; there’s a number of reasons, you don’t have the experience. Since SAS is competitive a lot of people will out-market you and out-build you. So, step three is to launch that SAS app and get the golden ticket, which is recurring sales.
Mike [10:23]: So now that we’ve talked a little bit about the stair step approach itself, let’s talk about why you would want to do this. Why would you want to move into a completely different audience, especially when you’ve already worked so hard to build up one or several small products such that they are making a full-time income for you. I think the first one is boredom. I mean, some people just get bored with working on the same thing and they get to a point where the money is not insignificant, and they don’t want to lose the money, but, at the same time it’s not it’s not necessarily bringing in the level of revenue that they want it to. So they look around and they say, ‘Well, I could probably do something better or bigger and in a different market, but where I am right now is probably not going to get me there.
Rob [11:05]: Yes, and this is really common. Especially if you’re starting with a step one idea, they tend to have a natural plateau once the sales channel is tapped out. Let’s say you’ve built something for pet sitters, or just a small niche–salons or barber shops or something. Obviously. those niches can be large, but the amount that you can reach through online marketing means is fairly small in those instances. That’s at a point where you should probably start thinking, ‘Huh, is there a larger market online that I want to reach online that I want to switch to for my next step.
Mike [11:36]: Another reason that you might want to switch is that higher lifetime values for your customers might not even be possible in a particular niche. That comes around a lot from products where there’s this one time sale or I would also say in the WordPress business as well. There are a lot of plugins where you can get the one-time sale and it’s not a stretch in order to be able to do that, but getting people to pay on a recurring basis for WordPress plugins right now is, I would say, a little bit difficult. It’s really not common for WordPress plugins to have a subscription model of any kind. I have seen them, I have paid for them myself, but it’s not common. And, for certain types of customers, they’re just simply not willing to spend a lot of money. So what happens is your lifetime values for those customers tends to be low, and it’s very difficult to increase it without going down the route of bundling, or providing completely different products that possibly overlap.
Rob [12:32]: Yes, I think there are a lot of reasons why high lifetime values aren’t going to be possible in certain spaces. If you think about lifetime value, if you have a subscription business then the lifetime value gets higher the longer people stick around. And if you have a one-time sale product, then you really need to either increase the up-front price–and there’s always a natural limit to that. Again, coming back to the example of pet sitters, they just aren’t going to be willing to pay $500 up front for a piece of software, It’s very unlikely. Their price point is going to be more like a consumer or prosumer. Photographers, I would say it would depends on if they are truly a professional studio running a studio. or if they’re, kind of, doing it on the side, that’s another niche that a lot of folks go after, and they are pretty price sensitive. So the lifetime value in these niches can have a cap. Now if you have enough volume, and if there are a ‘bazillion’ of them online, then the LTV has less of an impact because you can just get so many folks signing up, but that’s pretty rare. It’s a pretty rare niche that you can come in and find enough people that a low LTV, in essence, will work for you because then you have to go after the organic traffic, and you can’t do much in terms of paid marketing in that instance.
Mike [13:38]: Let’s talk about a couple of the really bad reasons for switching. You and I discussed this offline a little bit. Trying to come up with a absolute ‘This is a bad reason for switching’ was a little bit difficult. I think the best one that we came up with was the idea that the grass is always greener someplace else. So, if you’re looking around, and you’re looking at your product and you say, ‘Well this is difficult, and I think over there if I try and develop a product in this market with these particular types of people it’s going to be easier.’ I think that that may probably be the most, or I’ll say the worst, reason for trying to switch into a different audience. But at the same time, if you double down on the things that you’re doing now, in many ways, that is a competitive advantage, because it’s going to be difficult for other people to get into your market and replicate the things that you’re doing. So it kind of cuts both ways, which makes it difficult to come up with a lot of reasons that are just absolute and say this is a bad reason for switching. But there are a lot of places where there’s multiple caveats. For example, if you think that another company is going to come in and shush you out of a particular market. Let’s say your product is reliant on Twitter APIs, or reliant on data from Google. There’s this idea of a perceived threat from them doing something that is going to shut you out, versus how likely that is to happen. I mean, if all of your revenue is based on that one product, they have the ability to shut you down and it looks like they’re headed in that direction then it could just be out caution that you say, ‘Well, let me go and do something else in a completely different market so that I don’t have to worry about this problem.’ But, at the same time, you have to weigh that. It’s not a ‘this is absolutely going to happen’. You do have to take those into account, and there’s mitigating factors there.
Rob [15:19]: Yes. I think that certain people – and hopefully you know who you are. Certain people have the personality where they like to start a lot of things, and when things get hard they jump to the next thing. And I think that’s, kind of, what you’re kind of saying with ‘the grass is always greener’. Some folks are good finishers, some folks are good starters. But I think if you have the tendency to jump around, that’s probably a bad reason to just bail on something. If you feel like you haven’t stuck around to grow something to fruition, and you keep bouncing either from idea to idea or from market to market, that’s probably a bad reason. With that said, there are a lot of good reasons that we have outlined here with higher LTV’s, not an ability to grow, difficult market to reach. There are some good reasons to be doing that. I think a good example of this is what Brian Castle did. He had RestaurantEngine, he had Hotel Propeller, and he built and grew those things, and he put in the time, and he grew them for years. And he hit a point where he realized, ‘You know, I have a lot of skills. I now have an audience and a new space.’ He had the podcast and the blog and such. And he, in essence, moved on to AudienceOpps, and that has grown way, way faster, and there’s a number of reasons for that. But he wasn’t jumping around. He wasn’t bouncing from one idea to the next. He had put in his time, he had learned a bunch. That was really, kind of, a step one idea for him, and now he’s moved on to where his AudienceOpps is growing a lot faster, and it’s already larger than the other two combined. I think that’s an interesting case study of thinking about stair stepping your way not only up, but kind of a horizontal move into a different audience as well.
Mike [16:51]: So let’s talk about some of the options for moving into a difference audience. I think there’s three basic mechanisms for going into a different audience. The first one is to move an existing product that you have horizontally into a different market vertical. Essentially you are using the same technology but you’re marketing it towards a different user base. So there’s a couple of different places where you might be able to do this. So if you have a CRM package that is for web designers, you might say, ‘Well, let me try and take this and repackage it a little bit and put a spin on the marketing, and I’m going to market it towards software developers or freelancers, or something along those lines. It’s a slightly different market, or maybe even a radically different market, but the majority of the technology base is going to stay the same. Most of what is going to change is your market positioning, how you do your customer development, gathering the language that they’re using, and the new website that you’re probably going to use for selling that product.
Rob [17:48]: There’s obviously advantages to doing this. I mean, there’s less technical heavy lifting you have to do. You don’t need to build something from scratch. Faster time to market, because your software is already built, in essence. You need to make tweeks to it but you have the bulk of it. The negatives to this are it is a completely new market. You’re going to need to start from scratch. You’re going to have to do customer development. You’re going to have to build a support pipeline and the website from scratch. It could also be really confusing for some customers unless you pick a completely new name with new domain, and in that case, you are looking behind your SCO, your organic inbound links and your reputation, your brand. You leave a lot of stuff behind. So it depends on if you take the code base and move it over, or if you actually shift everything. Because if people are reading every article that’s saying, ‘Hey, this is CRM software for XYZ audience’, and they come there and it’s for a difference audience, that could be confusing. But, all in all, there is this old marketing saying that says, ‘Try and avoid selling a new product to a new market.” What you really want to do is you want to sell a new product to an existing audience that you have, or you want to sell an existing product to a new audience. But doing new to new is really bad. So this is a way to counter that; to take this existing product and migrate it into a new audience.
Mike [18:57]: And that leads us directly into the second one, which is to buy an existing product. This cuts down on your time to market, because there’s going to be less inherent risk with a business that already exists and is paying customers. But the downside of something like this is it does tend to be expensive. And the growth of that business can be something of a gamble, because you don’t have a good handle on what those customers want or what they asked for. You didn’t develop the product with them, so you don’t have a history of what those conversations looked like. You were essentially starting a lot of that marketing from scratch. So similar to the previous product where you’re taking the existing one and moving it to a different market, if you’re purchasing an existing product, hopefully it has some level of overlap with the existing customer base that you have, or the existing email marketing list that you have. But that’s not always going to be the case, and sometimes when you’re buying products you have to take what you can get. It’s something of a lottery when you’re trying to identify a product that’s out there, that’s available and on the sales block, or even if you’re making unsolicited offers to the people who have a product out there which seems to be neglected. You can make those offers. They may or may not take them. But obviously it’s something of a lottery when you’re trying to find a product that is going to overlap with your existing audience. Sometimes you don’t have a choice and you end up going into a completely different audience regardless of what it is that you’re actually looking for.
Rob [20:19]: Yes, and this has historically tended to have been my approach. I’ve acquired a lot of products, a lot more than I have built and launched from scratch. I like the model because, as you said, it does cut down that time to market. It reduces risk, assuming that you do have an audience that was already interested in it, and you do have some type of product-market fit. But these days it is getting more competitive the more folks learn about the opportunity to buy. And so I still think it’s a viable option, especially if you’re in the position where you do have a little bit more cash than you have time. A lot of our consulting friends, or folks who are doing well in their careers, are in exactly that position. So if i was where I am today – as someone who is 41 years old – and I was doing a high-end consulting, and I didn’t have time to build a product, I still would buy one. That would still be my approach for upping the stair step given the situation.
Mike [21:11]: And the last option for moving into a different audience is to create a completely new product from scratch. Obviously, the pros of something like this is that you start with a completely clean slate. You don’t have any previous baggage, there’s no previous customer support problems you have to deal with. But obviously, the downside is that because it’s all green field you’re building a new product from scratch and it’s going to take longer than you think it will. You’re not only just building the product itself, but you’re building an entirely new business from scratch. So there’s probably a lot of things that you’re going to have to learn, not just about the customers but about the space itself, the competitors, all the stuff that goes with it. It’s not just the technology stack and all of the code and the product itself. It’s all of the customer development as well. Which you’re going to have to deal with that stuff anyway, regardless of the previous options you chose. But with creating a new product, it’s going to be compounded by all the technical stuff you have to worry about as well.
Rob [22:05]: And this comes back to what I said about how you really don’t want to do this too many times in your career. When you’re first starting out, you tend to have to sell a new product to a new audience, because you don’t have a unique or unfair advantage that you can utilize. But, if you can help it, try not to build a new product in a new niche where you don’t already have some reach into it, because that is when it takes literally years to get that snowball pushing up the hill.
Mike [22:29]: So now that we’ve talked a little bit about some of the different ways to get into a different audience, let’s talk about how to leverage the existing strengths that you have. The first one is that some of your existing business processes that you’re already using for your other products can generally be duplicated. These types of processes include : how you handle your support, and some of the software development mechanisms and processes that you have in place. Many of the marketing processes that you have in place. So if you’re doing something like marketing Monday, and you have a checklist of things that you go through on a weekly basis, a lot of those things can be reused and just copy-pasted and then tweeked. So it really helps you to move things forward much faster than if you were to try and create them from scratch, because creating them from scratch is going to be extremely time consuming and a lot of times you don’t need to. You can already take the things you know and that you’ve used before and tweeked, and I wouldn’t say perfected, but I would spend a lot of time and effort making better for your existing products, and then translate them over onto the new product and the new audience, and just tweek the things that need to be tweeked. You don’t need to start from scratch for a lot of those things.
Rob [23:36]: Another way to leverage your existing strengths – your existing knowledge – is that a lot of tools, especially marketing tools, they tend to overlap from one business to the next. So an example is if you’re using Drip to send an email, and you already know how to use it, then when you move into this new audience, you can use it. If you’re pretty good at running AdWords and making those profitable using Facebook ads, using Twitter ads, that’s something that you can absolutely leverage because those are “can-be” audience agnostic. Now, you’ve got to make sure you have reach into that audience on that platform, but that’s definitely something you can use. And tools–like [Kismetrics] and [MixPanel?] and [Intercom] and all that staff, it’s like, well, why would you reinvent the wheel? You already have knowledge of them, you know how to use them, and you know that those work for you. So, just moving those into that new space would be worthwhile.
Mike [24:18]: The next way to leverage your existing strengths is to remember that your network today is bigger than it has ever been in the past. You know people today that you didn’t know when you started, and you should not hesitate to ask those people for help. Now, whether those people you’re asking for help are people that are colleagues, or existing customers, or prospects that you have on your mailing list, you can ask those people questions. You can use those lists to help generate questions and help identify additional opportunities that may be in either related or unrelated spaces. So if you’re looking to move into a completely different market, that doesn’t mean that the people who are currently on your list don’t have those types of problems. Let’s say that you’re serving web designers, again, as an example. Well, web designers may overlap in some way with software developers; they’re people who have both sets of skills. So if there’s a subset of those existing customers, or people who are on your list who may have a problem that you’re trying to target, definitely go talk to those people and try and engage with them to ask them questions about what it is that they need, and whether or not they’re currently paying for specific services, are they happy with them, what other products they use? Use those as customer development opportunities, because you already have the list. You’ve done the hard part of getting those people on your list. Make sure that you’re leveraging that.
Rob [25:35]: Odds are pretty good as well that you have practice being a manager, and delegating, probably outsourcing. As we know, if you’re going to be leveling up, you need to take on more responsibility, and the ideas are probably going to be larger, perhaps more competitive, perhaps more complex. And the better you’ve gotten at outsourcing, delegating and essentially being good as a manager – like having skills and being productive at that – that’s totally something you’ll carry with you from niche to niche, even if you decide to move.
Mike [26:08]: And that actually lends itself to using your existing base of contract or outside help that you’ve leveraged for assistance on your existing products. If you hired someone as an SCO as a contractor, if they worked out, definitely go back to them and use them for the new products that you’re trying to leverage into the new audience. There’s nothing that says that you can’t use those same resources for a new product that you’ve used, and have worked for you, in the past. That said, if they did not work out, or if things weren’t going well, you could also use this as an opportunity to find somebody else for a completely new market, without necessarily hurting people’s feelings as well, if you have personal relationships that you don’t want to burn.
Rob [26:45]: Another way to leverage existing strengths, I touched on earlier, but it’s essentially your marketing skills. If you’re SEO skills, PPC skills, content marketing, email marketing, if you’re a speaker and know direct sales, etc., They all lend themselves to certain types of businesses, and I think something to keep in mind here is not to pick that next niche or that next business because it’s interesting. Pick it because your existing competence in these marketing spaces gives you an advantage. So you can actually be deliberate about choosing that next idea, or that next market, based on skills that you’ve already developed and whether or not they’re going to work in that new market.
Mike [27:22]: Something else you can do there is to use that experience to actively avoid any businesses, or markets, or audiences, where the learning curve for it seems exceptionally steep. You are already starting over with a new audience. You don’t want to make it harder on yourself solely for the prospect of making it harder on yourself. There’s no good reason to do that if you don’t have to. So if there are places where your experience, or the relationships that you have, are going to give you the ‘ins’ into that particular market or audience. Make sure to use those, and to avoid the places where it’s going to cause problems for you
Rob [27:58]: Another tip to keep in mind is to take a long-term view. This is obviously going to take a long time, and any time you switch – whether you’re launching a new product or whether switching markets – it’s going to take a long time. And if you’re doing both, it’s going to compound and it’s going to be even longer than you want it to be. So take a long-term view and make sure it’s a direction that you’re going to enjoy, and it’s not something you’re trying to do to get out of your current situation, like we talked about earlier. If it’s just a ‘grass is greener’ mentality, then you’re signing yourself up for a lot of work. This is not something you’re going to be able to just pivot into in a month or two. This is months and months, if not multiple years, depending on how complex the idea is and the market you’re trying to penetrate, and how much of an audience you actually do have in that new market. So think about it long term and don’t just, ‘Ah, I can turn this thing around in 90 days and have this new product and it’s all going to be great.’
Mike [28:46]: And I think the last strength that you can leverage when trying to when trying to move into a new audience is to leverage your experience with the existing products and do not forget the basics of what got you where you are today. There’s all these things that when you look in a new market it’s very easy to forget where you came from, or the things that you learned very early on, or just gloss over certain details of how to do the basics of SEO, and how to optimize different parts of the sales funnel, or email marketing funnel, or anything like that. Don’t ever forget that those things are the pieces that got you to where you are today, and those are generally transferable from one product to the next just because the process of developing a product tends to be the same. The markets are different. The actual context of the marketing and the copy writing and all that stuff is different when you get into the details. But generally speaking the process tends to be very, very similar.
Rob [29:39]: Well 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 Out of Control’ by MoOt used under Creative Commons. Subscribe to us on iTunes by searching ‘start ups’ and visit startupfortherestofus.com for a full transcript of each episode. Thanks for listening and we will see you next time.
Episode 282 | The Long, Slow SaaS Ramp of Death
Show Notes
In this episode of Startups For The Rest Of Us, Rob and Mike discuss the long, slow, SaaS ramp of death. They define it, tell you how to recognize it, share their own experiences with it, and give tips on how to get out of it using tactical and mental coping mechanisms.
Items mentioned in this episode:
Transcript
Rob [00:00]: In this episode of “Startups for the Rest of Us,” Mike and I discuss the long, slow SaaS ramp of death. This is “Startups for the Rest of Us,” episode 282.
[Theme music]
Rob [00:18]: Welcome to “Startups for the Rest of Us,” the podcast that helps designers, developers and entrepreneurs be awesome at launching software products, whether you’ve built your first product, or your just thinking about it. I’m Rob –
Mike [00:26]: And I’m Mike.
Rob [00:27]: – and we’re here to share our experiences to help you avoid the same mistakes we’ve made. What is the word this week, sir?
Mike [00:32]: Well, we’re making a final push to get all the development work done for Bluetick before the end of next week because, obviously, at the end of next week, right after that, MicroConf starts up. So, we’re trying to get everything out the door and just doing some testing on different things, making sure people can use it end-to-end; and then, hopefully, by the end of next week, I’ll be able to start onboarding people a little bit in advance of the intended release date; or, at least the private release to the early-access people. I’ll start onboarding people, and I do have a volunteer to be the first person on it. So, I’ll start working with that person, and we’ll go from there.
Rob [01:05]: That’s exciting, man. How does it feel?
Mike [01:06]: Good. There’s obviously little jitters about, “Well, I know that some of this code is” — I wouldn’t say it’s janky or anything, but probably hasn’t been tested a lot. I think there’s a big difference when you’re first rolling something out versus something that has gone through thousands or tens of thousands of iterations and you know that it’s pretty solid, and that it’s got a lot of the edge cases taken care of. But because I’m reading mail from people’s mail servers, like the iMap protocol, there’s a lot of edge cases. So, there’s all these things where things could go wrong. And I went through over a hundred thousand emails in my own mailbox, so I’ve mined those out and got all the edge cases out of there; but who knows what else is out there, you know?
Rob [01:54]: Oh, yeah. Once you get into this stuff, kind in the wild, where you have emails; or, you have data that may not be as well-formatted as, quote-unquote, “in a laboratory,” or in unit tests that you might write, there’s always going to be edge cases. We’ve seen such crazy stuff with Drip, whether it’s on the reply-tracking side, or just something wants is to send. You send tens of millions of emails a month, and suddenly you’re just going to find edge cases. So, I would guess that right off the bat, you’ll catch a few as new folks sign up, and then there’ll be a nice lull where you’re okay. Then once you hit scale, where you start really doing a lot of iMap stuff, you’ll probably see even more weird edge cases. Like, emoticons or emojis won’t work, or there’s just tweaky stuff that different mail servers do.
Mike [02:29]: Yeah, then there’s also places where, in the RFCs for the iMap protocol, there are ambiguities, and different mail servers handle those things differently. Some will follow the letter, and some will just ignore what the RFC says. So, there’re places where, for example, you’re not supposed to have nulls in certain places; and there are emails that do it, and they just ignore the protocols. Then especially when you get into things where people are sending spam, for example, or you’re looking in a spam folder and saying, “Okay. Well is there an email in here that got miscategorized that we want to validate whether or not someone replied to it?” Any of those could be really screwed up just because who knows where those things came from, or what mail server they could have originated from? They could’ve even just come from a Perl script or something like that. Who knows?
Rob [03:16]: Yeah, I like to think of it kind of like if you had code raw JavaScript without a jQuery, right? All the browsers handle things differently, and there’s all these edge cases. And ten, 15 years ago when we did code bare-bones JavaScript, it was such a hassle. There is no jQuery equivalent for mail servers, and you have to deal with all the nuances and the product differences and, as you said, the ambiguities of the spec.
Mike [03:38]: Yeah. We’re already separating out some of the code where we are trying to identify what the mail server is in order to start handling some of those edge cases just because we know that this particular case is handled very well in this mail server, and this other mail server just simply doesn’t handle it at all.
Rob [03:55]: That is the worst! The worst is when you start having ‘if’ statements, and they’re, “If mail server is XYZ…” Aw, that’s terrible, man.
Mike [04:02]: Yeah.
Rob [04:02]: Well, it’s good to hear you’re still on track, and excited to hear an update once you have that first early-access person in and then when you get to your milestones of getting five or ten people in there, using it. First paying customer – it’s all coming quickly, man.
Mike [04:16]: Well, technically, all of them are paying customers at the moment.
Rob [04:20]: Oh, nice, nice.
Mike [04:21]: Everyone who is on my early-access list of these initial sixteen people, they’ve all paid me for it. So, it’s really just a matter of making sure that it’s working for them. Obviously, if it doesn’t work or it can’t work for them, then I’ll issue refunds as needed; but everyone that I’m putting on it over probably the next six weeks or so is essentially a paying customer already.
Rob [04:439: Right, but when I was saying “coming on board,” I meant subscribing –
Mike [04:44]: Oh, yes.
Rob [04:44]: – because they paid you up front for the privilege of early access, and that’s obviously cool for both sides; but at a certain point, you’re going to have to prove enough value that they’re willing to pay that every month. And that time will come once they’re using it. Cool.
We have a whole slew of new iTunes reviews. I won’t read them all, but Jerry Weir from Luxembourg said, “A great show. Value in every episode. If you’re at all into starting your own business, alone or on a team, you shouldn’t miss out on ‘Startups for the Rest of Us.’”
We have [Prof.?] DuChamp from the United States. He says, “Listen, or miss out. You choose. If you’re doing anything related to startups, you would be plain silly to not listen to this podcast. Mike and Rob do a really good job of explaining the minutia of building your platform. It’s not about interviewing the biggest names in the industry, or even talking about trending topics. They get into stuff that really matters.”
So, thanks, guys, for the five-star reviews. We got seven or eight other new ones, 475 worldwide so far. If you want to help us on our push to get 500 worldwide reviews in iTunes, please log in and give us a five star.
Mike [05:42]: A few minutes ago, I mentioned that we were working on getting Bluetick finished before we MicroConf, and one of the things we’re doing this year is that – we usually do giveaways for a lot of the different sponsors; and then as part of “Startups for the Rest of Us” and the Micropreneur Academy, we give away a couple of different things. This year, we’ve just decided to give away an Amazon Echo, so that’ll be one of the grand prizes from Micropreneur Academy this year.
Rob [06:05]: When the Echo first came out, I almost bought it. I think it was, like 99 bucks if you were in the early access program, and I decided not to because I kick-start so much stuff as it is, that I have stuff laying around my house and stuff that I’ve given away, or sold, or whatever; and I just didn’t really want another device. But there’s buzz building around this thing, and I’ve heard that it’s really cool. You have one, right?
Mike [06:25]: Yes, I have one. It’s very interesting. There’s a lot of different voice commands that you can give it. I ended up on a mailing list. I don’t know whether it was part of registration process or anything like that, but what they’ll do is they will email me as they start adding new features, and they’ll tell you in the email, “Hey, say this to the Amazon Echo, and it will start responding to you in this way or that way.” Or, you can play games with it. They’ll tell you about new games that came out, or new things that they’ve integrated into. There’s a few, different, other devices you can get that will automate different things in your house. You can integrate it, I think, with Nest at this point, but there’s also other thermostat controls that you can use. Then there’s a device that you can plug into your car, for example; and because your car is probably close enough to your house to get Wi-Fi and connect through that. You can ask Echo information about your car based on what it is feeding back through that interface. So, there’s a lot of other devices that they’re working on, but in and of itself, it’s pretty interesting the types of things you can do with it. My kids will use it for a few different things here and there, too.
Rob [07:24]: I think Amazon is sneaking in the backdoor, and I they’re going after, eventually, the home automation market. Right? I think they’re going to try to be the hub for all of that, which was not apparent when they first launched this. I thought of it as more of a media device and a to-do list management device and a timer or something; but it seems like they’re making inroads. I guess with – as well as the speaker and the voice recognition work, that it’s getting legs. I’m hearing people talk about it, so it’s on my wish list right now. I would guess I’ll be getting one in the next month or two. All I really want – I want to be able to set a kitchen timer verbally, without having to use my hands. I want to be able to start a Spotify playlist, start Pandora, audible books and put stuff on to-do lists. If I could do all that verbally, and it was seamless, and it worked almost every time, it’s a no-brainer for me.
Mike [08:08]: Yeah, I’d say the voice recognition is pretty good in it. There was a few times where it will obviously fall down. If you happen to say a name, for example, then it will just pick it up. Or, if it even thinks that you did, then it will try and interpret whatever it is that you said. So, there’s obviously those types of issues, but you’re going to get that with any device, I think.
Rob [08:26]: Yeah.
Hey, I’m listening to the book “Masters of Doom” again. The last time I listened was probably a couple years ago, and it’s a story of id Software. It’s John Carmack and John Romero, who built Doom and Quake and Wolfenstein 3D; and I can’t get enough of this story. This is either the second or the third time I’ve listened to it and, to be honest, I just kicked it on. I was going to listen to the first ten or 20 minutes, just to refresh my memory of some things; and I’m three or four hours in now. It’s such a compelling book, and it’s one of those complete outlier stories where they just happen to hit a few, big changes in videogames and computer games. They hit the cusp right in the late ’80s, early ’90s as PC games are just starting to come into fruition. They were also working 90-hour weeks and loving it. There were a lot of extenuating circumstances. They were kind of the perfect age to do it. They weren’t older with families and kids and everything, so there’s reasons that what they did resulted in the success that it did. Nonetheless, the story is so compelling and well-told. It’s just fun to go on the ride with them.
Mike [09:25]: Very cool. Yeah, I still have that on my list of things to check out at some point, and I just haven’t gotten to it.
Rob [09:31]: Yeah, it’s purely a fun startup read. It’s obviously not a true story, but it’s not something that you’re going to take away actionable business tidbits or anything.
Mike [09:39]: Right, and that’s probably why it hasn’t really made it up the top of my list yet.
Rob [09:43]: Totally. Yeah, you’ve got other things on your mind.
So, today we’re talking about the long, slow SaaS ramp of death. This top came from a thread in Founder Café, which is our private membership community. We asked for topics for the podcast, and someone said, “I’d love to hear you guys talk about the long, slow SaaS ramp of death. What is it? Did you experience it? How do you recognize it? How do you get out of it? Tactical, as well as mental coping mechanisms to help you get through it would be interesting.” Two or three people chimed in about elements they wanted to hear about, and so I figured we’d start. We’d define it. We’d talk about what it’s like to experience it, how you recognize it, some ways to basically cope with it, both tactically and mentally.
Mike [10:20]: Yeah, I first heard this term several years ago at the Business of Software conference, and it was a talk given by Gail Goodman, who was the CEO of Constant Contact. I think Constant Contact got recently acquired by somebody for – I don’t know. It was a billion dollars or some ridiculous number like that. She talked about the very early days of Constant Contact and how, when they launched, they weren’t getting a lot of traction, and the growth was incredibly slow. They were one of the – I wouldn’t say the first SaaS company out there, but they started back in I think it was around 2000 or something like that, and that’s about the time where her talk picked up. She showed an example of what the growth was like, and it was a very, very long ramp of very low growth. Of course, you know over time that the growth compounds, but it seemed like the growth levels that she was expecting were significantly lower than what you would expect for a SaaS company.
Rob [11:19]: Yeah, and since they were so early in the SaaS space, they had a hard time even convincing people to use web-based software. Everybody wanted to download the stuff on their desktop. As a result, the growth was lower than you would see today, but the interesting thing is that this concept of a “long, slow SaaS ramp of death” resonated so much with everyone who has ever been involved in a SaaS app; because although the pitch or the slope of the ramps these days may have a sharper curve because we can grow things faster and people are more used to paying for SaaS, it’s still stands that we all still feel this. So, even if Gail talked about a specific growth rate, and nowadays we can do five times that, or ten times that, it still feels like a “long, slow SaaS ramp of death” if you compare it to people who are starting consulting firms or productized consulting firms; or someone who maybe gets a hit, a mobile app in the App Store; or, someone who’s doing big enterprise sales and doing those that are 100,000, 200,000 a pop. They can start and grow a business. All those can start and grow a business a lot faster than SaaS. SaaS is essentially the tortoise in the race, right, where it just plods along, plods along, and it grows. The particular growth rate isn’t what’s important here; it’s that it will always feel slow. That’s really why this phrase resonated with so many people. It’s very, very rare that someone’s not going to feel this if you’re starting a company.
Mike [12:41]: I think that’s probably an important point to come on and talk a little bit about – is the fact that it’s always going to be slower than you want or slower than you expect. I think that’s part of a human inclination to want more; or, to just want something to be faster, or better; or, to expect that you’re going to do better than you’re currently doing, because there’s always higher expectations that you put on yourself, rather than those expectations that other people are putting you.
Rob [13:08]: Yeah, we’re all impatient. We’re entrepreneurs, and that’s the point, is that we don’t like systems that don’t make sense, and we don’t like things that move slowly; and that is what makes us founders. That’s what makes us start things, to try to change things; and we want to change things now, not in six months, not in two years. Unfortunately, SaaS apps take a lot longer than we want them to. I was trying to think of any exceptions that I can think of in recent memory of actual SaaS apps that have had such steep growth curves that the founders might not feel that they went through the “long, slow SaaS ramp of death,” and I can only think of a couple. One is Slack, and Slack is one of the fastest-growing SaaS apps in history, as far as I know. I think Xero is another one. They raised $170 million. According to a recent podcast I heard, they are claiming to be the fastest-growing SaaS app, so maybe those people don’t feel that way. Also more within our community, I think Buffer has grown very quickly; and Laura Roeder’s Edgar, they all had good growth curves. I wonder if you went and asked Leo from Buffer, though – Leo or Joel, to be honest – if they felt like early days didn’t have a “long, slow SaaS ramp” – because now they have traction, right? Now they have a name and that mini brand that Jason Lemkin talks about, which we’ll discuss a little bit later. But, the early days of getting that boulder moving up the hill, I think, is always going to feel like the “long, slow SaaS ramp of death.”
The problem is that this feeling is exacerbated by the massive success stories that surround us, because we hear these outlier success stories. We hear and we see Buffer’s metrics and Laura Roeder talking about Edgar getting to 100k and MRR in five months, or however long it took. And, frankly, while those are great stories, they are Cinderella stories. They are one in a thousand, or one in 500. They’re very rare, and they set your expectations to unrealistic levels. Same thing with Peldi in the early days launching Balsamiq. He had great success. It took off like a rocket ship, and he got to a half million dollars. It wasn’t a SaaS app, but it got to half a million dollars in revenue in the first year. I remember someone signing up for the Micropreneur Academy right after that and saying, “Yeah, my goals is to get to half a million dollars in my first year.”
[15:12] We had to say, “Whoa, whoa, whoa. No, that’s completely out of the realm of possibility.” Not literally out of the realm, because it could obviously happen; but it’s just not going to happen. Peldi hit just such this unique culmination of things: right place, right time, right idea, right person. Everything matched up for him, and I would say the same thing for the Buffer guys and for Laura Roeder with Edgar and for Slack. Of the thousands or tens of thousands of startups that have launched in the past few years, there’s literally a handful that have had that.
So, I think the idea here is don’t let these unrealistic expectations make you think that you have to be growing as fast as everyone else, because it’s not the case. Hundreds and thousands of other startups are growing a lot slower than those other guys. They really are outliers. We can be happy for them, and we can look to see what they did to succeed and try to adopt that, but we can’t have the expectation that our startups are going to grow like theirs.
Mike [16:03]: Well, the other thing to keep in mind is that it’s more about what is right for you and what’s appropriate for you and what you want to get out of it. Just because you have this idea in your head that you could grow the startup extremely fast or extremely big in a very short time period, the other question that I don’t necessarily think that most people think about is, “What is the cost of doing that?” And I don’t mean the cost in dollars. It’s what’s the cost on your mental sanity, your health, your relationships and all the other stuff; because unless you’re running a high-growth startup that you have investors that you report to, that you really need to be able to show massive growth in order to even justify your own existence – if you’re running your own business, the only person you actually have to answer to is yourself. So, I think there’s a different matter of the expectations and scenarios for a lot of these things as well.
Rob [16:53]: Another part of this question that the original poster asked – he said, “How do you recognize the ‘long, slow SaaS ramp of death’?” My sentiment is that you’re just always going to experience that. That’s the default, right? It’s going to be the rare, rare outlier case. And you’re going to know if you’re not experiencing it, because things are going to be blowing up like crazy, and you’re going to be growing 50 grand a month in MRR or something. Then you’re not really experiencing it. But, to be honest, I don’t personally know a SaaS founder who hasn’t felt this as they’re going through it; because no matter how fast you’re growing, you always want to grow faster. Today, if you don’t have a SaaS app, or you’ve just launched, I bet you’re thinking, “Boy, if I could grow at a thousand dollars a month, that would be amazing.” But as soon as you get there, then you’re going to want 2,000, and when you get to 2,000 a month, you’re going to want 5,000. It’s really the arrival fallacy, right, of you’re never going to be happy with it. It’s always going to feel like you’re on the “long, slow SaaS ramp of death,” so I think recognizing it isn’t even an issue. I just think accepting that it’s going to be there is the way to go.
Mike [17:49]: With all of that said, there are some things that you need to keep in mind in terms of being able to cope with that, and what we’re going to talk about now is some tactics for coping with those particular feelings of either an inadequate growth rate, or you just aren’t getting to where you want to go as fast as you want to be.
The first tactic is to try and establish some sort of virality around your product. I don’t necessarily mean go out and try and identify some mechanism for making sure that your product is in front of every, single possible person it could be in front of. It’s more about trying to find ways that you can scale the app using mechanisms other than yourself or the things that you’re doing. So, when you talk about virality in general, what you’re usually talking about is other people talking about your product on your behalf so that you don’t have to do it, so that you don’t necessarily have to be present for every conversation. You don’t necessarily have to be driving every little bit of traffic. If there’s people talking about your app, then, in essence, what ends up happening is that you benefit from that traffic. So, whether it is other people writing up articles about your product, or you doing a podcast tour and talking about the product, essentially you’re leveraging other people’s networks and other people’s influence. What that can do is that can help drive growth for your app without you being directly involved in all those various aspects of it.
Rob [19:08]: Yeah. True virality is really hard to get into a product, and try to fit it in retroactively is not easy. Very, very difficult. You tend to have to design the product itself around a viral loop. So, thinking about something like, when you sign up for Facebook, how they ask you to invite friends and that you really can’t get much out of it until you’ve invited those friends. That was an early viral loop. That’s been overdone so much that it doesn’t work as well as it used to, but people first started doing that, it was pretty clever. Even having a “powered by your app’s name” link in something that is customer-facing, so we have the “powered by Drip” link at the bottom of our widget. MailChimp has “powered by MailChimp” at the bottom of their emails, of their free plan. I think Hotmail did that in the early days, where they had “powered by Hotmail,” or something like that; and that really helped drive a lot of viral growth early on.
So, the idea here is that your “long, slow SaaS ramp” is always going to be there, but the way to make it more palatable so you can deal with it is to have growth; because growth really does solve most problems. I think I should couch this. We’ve said this many times, but you’re really not going to grow until you find product-market fit. You have to build a product that people really, really want. Then grow from there. The first step is to basically find product-market fit as quickly as possible. During that part, you’re going to have just a flat growth curve, pretty much. It may take you months. It may take you longer than that, but that’s going to be the really hard part. Once you have product-market fit, growing is a fairly repeatable and scalable process. There’s a lot more detailed and specific information about growth than there is about finding product-market fit, because finding product-market fit is so much more about art than it is about science; whereas, growth is a lot more about the science of it. So, getting this growth going is what can help you feel better and get you out of the long, slow SaaS ramp. Obviously, baking virality – that could be an entire podcast series just doing that, but that’s one thing to keep in mind as you’re getting started.
Another tactic that works pretty well is to target a community of users that has strong word-of-mouth; they talk a lot online. An example of a community that doesn’t do this is folks who own construction businesses. They may talk once a year at trade shows, or they may talk amongst themselves with industry trade publications; but the word-of-mouth for your product is not going to be strong until you have the vast majority of that market. Whereas, in the designer community, or the agency community – the consultants, the SEO and marketing consultants – or, the founder community – all these communities, they have really strong word-of-mouth because they’re always constantly sharing with one another what they’re up to, new tools they’re finding. Just picking an audience can be a big part of helping you grow faster. Because, again, if I build accounting software for construction firms, versus accounting software for startups, I’m going to be so much more likely to get that early strong word-of-mouth with the startups, because they’re just talking to each other more often. And so, this won’t cure your “SAS ramp of death,” but if you really do build an amazing product – you can think about how Zen Payroll and Zenefits came on the scene, and they targeted startups first. Then once they got that strong word-of-mouth and the mini brand, then they were able to spin that up into faster growth.
Mike [22:16]: One of the interesting pieces of what you just said about targeting communities that have a strong word-of-mouth is that this is an area that I think a lot of people discount, or don’t think about when they’re first looking at building a product, because they’re more interested in the problem itself and how they can solve it and how they can do better than the other things out there. They don’t necessarily think a little bit further down the road about, “How are people going to find this?” “Is there going to be either a viral loop that I can tap into, or an existing market of people that are going to be easier to get in front of than other people?” “Are these people talking to one another?” What you just said about the word-of-mouth – I hear a lot of people saying, “I’m going to go after the real estate market,” or, I’m going to go after the attorneys market, because they’re under-served, and their software is terrible.” I’m not saying that either one of those things is an untrue statement, but at the same time, if you completely discount the fact that a lot of these people don’t necessarily talk to one another outside of those trade shows on a yearly basis, then it makes getting that word-of-mouth growth loop very, very difficult.
Rob [23:20]: Right. We’re not saying that you can’t grow without these things, but these are the higher-growth approaches. These are things that are not content marketing and paid acquisition. Those are great, standard, long-term approaches. SEO is another one. Those are your standbys. Those are your blocking and tackling, right? You’re going to implement those, and that’s going to get your growth curve going over time; but you will ride on the long, slow SaaS ramp if all you’re doing is content marketing, paid acquisition and SEO; because that stuff just takes a long time to do. Right? There’s this phrase “grinding it out” that I think about. A way to try to short-circuit that and not feel like you’re grinding it out as much is to use one of these faster-growth approaches. And that’s virality. That’s targeting the community with strong word-of-mouth that we’ve talked about.
Another one is to try and get to a million dollars in ARR as soon as possible. I realize we’re all trying to do that, but there’s this thing called a “mini brand.” I think this term was coined by Jason Lemkin from SaaStr. I really like his stuff. He basically says once you hit a million, you will tend to have this thing called a “mini brand.” You’re not a brand that everybody knows, but you’re a brand that enough people know that you will just start having strong word-of-mouth even if you didn’t have one before. You’ll start having an audience and fans, even if you didn’t have one before. That’s actually when it gets easier to grow, once you cross into the seven-figure range, because you’re just on the lists. When the people write the blog posts about the “Ten Best XYZ Accounting Software,” you’re on every one; because once you hit that rate, you have enough users that people are talking about you, and you just have a footprint. That’s another kind of hack – is to get to that point and to get enough customers using you that people are just naturally talking about you.
Mike [24:54]: The last hack that you can use to leverage a higher growth rate is to look at an audience or a community that you might already have access to, so whether that’s one that you’ve built yourself or one that you’re familiar with or involved in. You look around at a lot of these stories about people who have a really high growth rate. “Oh, I posted on Reddit or Hacker News, and I got 300, or 400 subscribers on the first day for my app.” They talk about these large growth rates. It’s because they were already plugged in. If you’re not plugged into that particular network, then it’s very difficult to just walk in and on day one you have the credibility from people to be able to attract that type of user base or that community. A lot of times, if you’re not already involved in that community, they have no idea who you are. So, when you approach them from the outside, they say, “Oh, well, you’re just self-promoting and self-advertising, so I’m really not interested in listening to what you have to say, because you’re not here to benefit the community. You’re here to benefit yourself.”
So, if you’re already involved in some of those communities, look to those to tap into; but if you don’t, again, you can also build your own audience. You can build your own community over time before you get to the point where you launch. And having that built-in audience before you launch can be really, really helpful, especially if you’re targeting that audience with your product. If there’s not a lot of crossover or overlap between what your product does and the community, it’s not going to be very helpful. It’s very similar to a lot of these stories you hear about entrepreneurs who have these massive audiences. It doesn’t have to be a hundred thousand or a million people. It could just a mailing list of a couple thousand people that are following them on their blog. A lot of times, what you find is that when they launch a product that’s not applicable to that, they might get one, or two, or five sign-ups out of it; but they’re not going to get the hundreds or thousands that you might expect if they had 20 or 30,000 subscribers.
Rob [26:44]: Yeah, and it’s interesting. Obviously, being part of a community is one thing, but it’s so much more valuable to really have your own audience, to basically have your own email list where you’re communicating with people. The hard part with that is, as you just said, you can have a mailing list of 20,000 people who were listening to you talk about design, or entrepreneurship, or something. Then if you actually go and launch a product, like a SaaS product, especially, it’s going to be really hard to get them to buy from you. It’s not just going to happen magically. I’ve seen it happen over and over where people have personal brands, and they have a sizable email list – let’s say 15 to 30,000 range – and they start a SaaS app, and it just doesn’t resonate because: a) you didn’t have a product-market fit from the start; b) if you haven’t already been selling these people something, directly – aside from info products, because info products are exceptionally easy to sell to audiences – but if you haven’t really had a specific brand name in a specific space – Laura Roeder is actually a good counter example to all this, right? She did build an audience, and they were buying from her. They were buying social media training from her for years and years, so she was selling really solid stuff. Then she essentially launched a tool to do exactly that. Everything she’d espoused, she launched a SaaS app called Edgar that does all of that. That was such a perfect fit, and it’s such an example of how to do it.
Rather than having that blog where you have, “Alright, designers and entrepreneurs are buying stuff from me about how to launch products,” and suddenly you just go and launch your SaaS app that isn’t a SaaS app that helps people launch products. It’s a SaaS app that does their accounting, or helps them do – I don’t know – landing pages. I’m just trying to come up with ideas here. You will get a few who sign up, but since it’s not directly in line with everything you’ve been talking about, your uptick to your own audience is going to be a lot lower than you think, unless it’s directly in line. So, I think having an audience can be super powerful, but it can also leave you to have higher expectations than you should, of how many of those will actually convert. When we were launching DRIP, I valued the leads that I got through Facebook ads and through organic traffic and through these other means, podcasts that were higher than my own audience; because I knew that, while I would get some hardcore folks who wanted to use Drip or to use a product that I built, I knew that the conversion rate on my own list – my Software by Rob list – would not be as high as these other traffic sources that had come truly to see the product and to get the value proposition that I was preaching.
Mike [28:58]: I do want to clarify one, little, tiny piece of that because we glossed over it: the fact that what we’re saying here is not that you can’t use your own personal audience that is unrelated to find specific people, or to mine it for people you can use very, very early on in the process to make sure that you’re building something that people want, and that it’s something that they need, and that they’ll pay for and all that stuff. What we’re really focusing on here is the fact that that list is not going to be as applicable for high growth rate. It’s not that you can’t use it for a lot of the early customer development and stuff like that. That’s absolutely what you should be using it for and what you can, and it works really well. We’re just saying that you’re probably not going to get giant growth rates out of it is all.
Rob [29:41]: That’s a good point. Exactly. That’s what you should use it for, is the early days, getting to product-market fit. But once you tap that list a few times, you’re done. You’re not going to keep growing from it.
All right. So, let’s dive into the last section here. We’re going to talk about some mental coping mechanisms, because there’s obviously a lot of stress that goes along with this, and there can be frustration when things aren’t growing quickly. In fact, if you go back and listen to my MicroConf talk from last year, I talk about how frustrated I got after we watched and just kind of plateaued between 7 and 10,000 MRR, and we weren’t able to get past it for another four or five months, till we actually found product-market fit and started growing. So, I have a few tactics here of ways to get you through that and some thought processes to think about it.
The first one is just to have realistic expectations from the start. Realize that if this is your first-ever SaaS app, it’s going to grow really slow. You’re going to make a lot of mistakes, and don’t look at the examples that we mentioned above of people who grew really fast. Look at examples of people in your community, whether it’s the MicroConf community, Founder Café community; and ask what realistic growth rates are. I can tell you that when you’re at a thousand MRR, and you’re growing at a few hundred dollars a month, that’s a perfectly realistic growth rate, and you should actually — I won’t say you should be happy with it, because you should never be happy with anything, right? As a founder, you want to be pushing it further, but that is not a terrible rate if you’re just trying to figure out your early marketing approaches. So, 10, 20 percent growth when you’re doing a thousand or 2,000 bucks a month isn’t very much, right? It’s a few hundred dollars a month. And while you shouldn’t be striving in these early days to kick it up ton 50 percent or 100 percent growth month over month, and while that is totally possible, that’s not something that you should expect or be disappointed if you’re not achieving. I think that’s something that gets people stuck – that they see these outsize results, and their expectations are not realistic.
Mike [31:25]: One of the points that Rob just made about having realistic expectations from the start of it is that a lot of times, you’re still really trying to figure out what that product-market fit looks like. Early on, you don’t have it. Chances are really, really against you that, out of the gate, you have product-market fit and you know exactly what it is that people want. And even if you do know what people want, sometimes it’s difficult to put it in words that resonate with those people. And those are two very, very different things. Just because you’ve built what they want and what they need, it doesn’t necessarily mean that it’s easy for you to convey that to people in a way that makes it easy for them to not only understand, but to attract their attention. So, keep that difference in mind and understand that when you’re going through this process, a lot of it is about figuring out exactly what those things are that resonate with people, because those are the things that are going to drive your growth. It’s not having the best product, or the product that hits all the check boxes that somebody has. It’s about being able to relay that information to somebody in a way that attracts their attention.
Rob [32:27]: The next tactic I have for mentally dealing with this is to have a mastermind group. This is advice we give a lot, but that is going to be something that’s going to be able to give you a sanity check on your growth. I think that’s probably the third tactic I’d mention – is to get a sanity check on your growth, whether that’s through your mastermind group, looking at normal SaaS metrics, just asking around, asking in Founder Café. Look at normal growth for the vast majority of these apps, not these one-in-a-thousand outliers.
Mike [32:55]: The next coping mechanism is to celebrate some of the different milestones that you meet, whether that’s a thousand dollars a month, or $5,000 a month, or even if it’s just those numbers in total, in aggregate. One of the episodes previously, in episode 268, we talked about setting annual goals; and one of the recommendations was to concretely define some different milestones and make sure you celebrate them, whether that’s going out to dinner some night, or buying yourself something. Just make sure you’re setting aside time to pay attention to those milestones and realize that each one of those is a stepping stone on the way to something bigger and better, because obviously you don’t go from a dollar a month to a $100,000 a month overnight. It just simply does not happen. That said, you do have to be mindful of the different steps that you’re taking along the way, because there are going to be a lot of those steps.
Rob [33:46]: I think lastly, take some time to reflect. Look back six months, 12 months and compare your revenue to this month’s. It’s surprising how you can get to a point where it feels normal to be at X revenue a month or X growth rate per month; but if you look back even just a few months, you were way less than that. You forget the progress you’ve made, and you forget how hard you’ve worked to get where you are. So, this isn’t celebrating milestones as much as it is just look at how far you’ve come and think about the work that you’ve put in and the results and the benefits that you’re reaping from that, and just celebrate and be happy with that. Then, the next day wake up and be pissed off at how slow you’re growing and try to do five more marketing approaches, because that is the roller coaster of doing this. That’s the roller coaster of startups, and it’s the roller coaster of SaaS, for sure.
Mike [34:31]: Yeah, and I think it’s important to look back at that past revenue, because chances are really good that – especially if you’re not making a full-time living from your app – that most, if not all, of the money that you’re making from your app you’re probably putting right back into it. So, you look at your bank account, and it hasn’t changed. Or, maybe it’s even lower than the previous month because you spent all of the money that you made this month, plus all and then some of the money that you made the previous month. So, it’s very difficult to just look at the dollar amount in your bank account and recognize what your accomplishments actually are. You really need to go back and look and compare your revenue over time in order to get a better understanding of that, because you probably are spending as much money as you possibly can in order to drive that growth, and it’s not obvious through just looking at that bottom line in your bank account where that growth is, or even that you have growth.
I think that wraps us up for the day. If you have a question for us, you can call it in to 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 on 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 281 | Tools You’ll Need for Your Bootstrapped Startup
Show Notes
In this episode of Startups For The Rest Of us, Rob and Mike talk about tools you’ll need for your bootstrapped startup. They discuss the different options to choose from pertaining to the pre/post revenue stages of your business.
Items mentioned in this episode:
- Conference Notes Podcast with Mike Taber
- Gusto
- MailChimp
- Drip
- BlueTick.io
- Ontraport
- Infusionsoft
- Quickbooks
- Less Accounting
- Baremetrics
- Google Webmaster Tools
- Clicky
- Mixpanel
- Kissmetrics
- KickoffLabs
- LeadPages
- Skype
- Google Hangouts
- Join.me
- GoToMeeting
- WebEx
- SproutVideo
- Vimeo
Transcript
Mike [00:00]: In this episode of Startups for the Rest of Us, Rob and I are going to be talking about tools you’ll need for your bootstrap startup. This is startups for the rest of us episode 281. Welcome to Startups for The Rest of Us, the podcast helps developers, designers and entrepreneurs to be awesome at launching software products, whether you’ve build your first product or you’re just thinking about it. I’m Mike.
Rob [00:24]: And I’m Rob.
Mike [00:25]: We’re here to share our experiences to help you avoid the same mistakes we’ve made. What are you doing this week, Rob?
Rob [00:29]: I’m getting excited for MicroConf. It’s just a couple of weeks out in Las Vegas and we have a pretty cool speaker lineup I’m excited about. A lot of new names this year, names that folks may not have heard of but that either you or I have seen speak elsewhere or we have been highly recommended by MicroConf attendees that we trust. There’s folks like Claire Liew from Know Your Company who did a Believe at BoS Lighting Talk. We have Amir Khella from Keynotopia who has spoken in several places and Scott Nixon from Happy Herbivore recommended him and I’m excited about his story the more I talk to him on Skype. A lot of people haven’t heard the story Keynotopia but it’s pretty fascinating. We have Tracy Osborn from WeddingLovely and Patrick Campbell from Price Intelligently and of course Des Traynor from Intercom, which is cool. There’s several others and some names that you’d recognize as well. It’s cool because I feel like it’s a bit of a sleeper year in terms of brand new big name folks. I’m excited about the possibility of the quality of these talks that I think people will come across with.
Mike [01:30]: I think it’s interesting how at some conferences you look at the lineup especially early on and either you are attracted to it or you really notice it. There’s a bunch of standout names that you’ve heard before and they’re high profile names. I totally agree with you. A lot of the names we have on the docket this year are not probably as well know but the speaking quality is still there, the stories are still going to be interesting. It will be great to see how things turn out this year and what comes out of that.
Rob [01:59]: I think of it in terms of Joanna [Wylde?], when she first spoke at MicroConf, she was an up and comer at the time in this space. Brandon Dan was at the time. He first spoke; it was like four or five years ago maybe. It was a while ago. We’ve had several folks like Josh Pigford was still running PopSurvey. Samuel [Hullick?] before he was doing – there’s a lot of folks who are now more prominent in our space, who have graced the stage before they were big names and that’s how I feel about several of the speakers here. I have a feeling that they will be becoming well know partially from taking the stage at MicroConf. You get some name recognition there. There’re headed on that trajectory and I think we’re just helping them along. How about you? What’s going on?
Mike [02:42]: A couple of days I signed out what I hope is going to be my final to the people who have prepaid for Bluetick before I start on-boarding them in the next couple of weeks. Right now we’re testing and trying to work out some of the different kinks and the application and make sure that the basic usage scenarios and the basic workflow that people will go through to use the product are in line with not only expectations but everything’s working and we’re properly handling everything. A few minor issues here and there and we’re dog-fooding it internally but it’s looking good so far.
Rob [03:13]: You’re deadline that you’ve set for that is April 1. Is that correct?
Mike [03:17]: Yeah. Unfortunately, there’s a lot of things that play into that unfortunate part of it but at April 1st obviously is April Fool’s Day and it wasn’t intentional. It just happened to be Friday of – I think I counted out a certain number of weeks that was either 12 or something like that. I said, “Okay, I want to have it done by this time,” and that it just happened to be the day. It’s also two days before MicroConf.
Rob [03:38]: I know. You picked that day before we scheduled MicroConf, I think?
Mike [03:41]: Yeah. I did. That’s not exactly true. We knew what the dates were going to be for MicroConf but it was leading up to it. It was like I just did the calculation and I thought to myself, well, it would either be the 12 weeks or I could try to rush things so I’d have to do it in less time, which I didn’t think was all that feasible. I knew that I’d have to start cutting things and making concessions or whatever. If I pushed it, I would have to push it by probably at least two weeks. It’s just because the way that MicroConf fell. It’s like, “Well, I’ll try and get it done before hand.”
Rob [04:13]: But you’re on track right now?
Mike [04:14]: Yeah, so far. There’s still two and a half weeks to go. By the time this episode comes out, it will be a week and a half.
Rob [04:19]: That’s cool. For folks who don’t know what Bluetick is, what’s the one or two sentence explanation of what it does?
Mike [04:27]: It’s essentially a sales automation tool that allows you to follow up with people in an automated fashion. The system follows up for you so that you don’t have to, as opposed to other tools like Boomerang or followup.cc. You can have them ping you and remind you that you need to follow up with somebody but this will do it on your behalf so that you don’t have to. Obviously there’s very distinct places where you would use it in your sales workflow but the idea is to help move somebody from one stage of your sales funnel to the next.
Rob [04:59]: Very nice. As for me, I’m on the Drip front. February was a good month. In fact, in [?] it was the best month we’ve had of growth and that followed up the launch of workflows in January. All the trials or some of the trials converted then and that seems to have kicked us up to a next stage of growth which is good. We also, coincidentally, didn’t have anything to do with that growth but we hired two people in the past couple of weeks. I’ve been trying to hire a Senior Rails Developer since November, December and it just happened that we happen to find him right towards the end of February. We also figured out we needed another person in customer success, hopefully, it’s the last hiring that we’ll be doing for a while because it is time-consuming and not necessarily – the goal of drip is not to have a lot of people. We’re not going for headcount, like funded startups are but it is nice to have finally because those were open loops. They were continually in my trailer board to find a person to help with this and find the next developer and stuff. Now that that it is closed out, it feels good to have that behind us and we can all move faster, able to handle the workload, get more features built and more people on-boarded. Things are going good.
Mike [06:03]: Earlier, we were talking briefly about MicroConf. James Carbary from Sweet Fish Media had me on the conference notes podcast that you can check out. We’ll link that up into the show notes. He was interviewing me about MicroConf and what the takeaways were from MicroConf 2015. We talked a little bit about that and if you’re interested, we’ll link that up in the show notes.
Rob [06:22]: Sounds good. What are we talking about today?
Mike [06:24]: Today what we’re going to be talking about is some of the different tools that you’ll need for running a bootstrap startup. We want to talk a little bit about what’s reasonable, what’s not and essentially how to allocate your money in your startup. The major focus here is mostly on tools, not necessarily things like the cost of doing business and getting insurance or office space or other physical things that you need to run your business or maybe computers of whatever. What we’re really trying to do is focus on the things that you’ll need to use on a monthly basis. That cuts out a lot of those different things I’ve just talked about but we’re also actively cutting out things like software tools because depending on your tech stack, that’s going to, pretty dramatically, between different startups. We decided to avoid that as a matter of choice.
Rob [07:11]: Software development tools. The actual stuff you need to build software like maybe source control on your editor and if you need Microsoft licenses to IDEs and stuff like that. But we will be talking a lot about software that you need subscription to SaaS apps and stuff like that.
Mike [07:25]: Exactly. We also divided these into two different phases, I’ll call them. The first one is a pre-revenue and the second one is post-revenue. In the pre-revenue, we’re going to be talking about some of the different tools that you’ll want to look at or some general guidelines that you can follow in deciding which tools you use for your business and then there’s also the post-revenue stage, where we talk a lot about the different categories or classifications of tools that you might be interested in using for your startup and what some of the different options are.
Rob [07:54]: Cool, let’s dive in.
Mike [07:55]: In the pre-revenue stage, the emphasis here is making sure that your business has enough money to get through to the point where you have a source of revenue for the business on ongoing basis. If you spend, let’s say $100,000, to try and get your startup off the ground but you only bring in $5,000, then clearly that business is not probably going to fly. The idea here is to spend as little money as possible yet still get your products out the door so that you can make more money, so that you can feed that back into the business. But if you’re spending far faster than you’re able to acquire money, chances are really good that that business is just never going to go anywhere. At that point you’re probably better off finding a different business to use, a different product to offer, a different service to offer. In this case, in general what we’re looking at is the idea that if you’re spending more than $50 a month for any individual tool or any individual service, then you might want to take a hard look at that and figure out is that really necessary for your business pre-revenue.
Rob [08:55]: A good example of this is a tool like a Mixpanel or a CaseMetrix that start around 150 bucks and obviously there’re free plans and stuff but if you were start paying for them. I haven’t installed either one of those when I bring out a pre-revenue product. Once you get 1,000 or 2,000 in revenue, it becomes easier to justify spending that kind of money. There’re great insights you can get out of that software. But if you install that for months and months and you don’t have enough revenue to pay for it, that one always feels like an iffy proposition. All these comes back to how much money do you have to start the business because let’s say you raise an inch round. This probably doesn’t apply to you as we said in the title. We called this ‘Tools You Need for Your Bootstrap Startup’. These guidelines may apply less to that. If you’re self-funded and you do have 20, 30 grand in the bank that you’re using to get this thing going, that could also be an exception to this.
You may want to use faster. If you recall when we were building and launching Drip, I had other apps that were able to bankroll it. We wanted to move faster. We did spend more money than maybe these guidelines suggest. If you truly are working a day job and launching something on the side in your nights and weekends, a good guideline is about a $50 topper for any individual tool or service that you’re going to use. Getting started on day one of your writing code, the only couple of things that I can think of that are absolutely critical, aside from your development tools, are some web hosting and payment processing. A lot of other stuff you can get by with [?] essentially with the free stuff like the Google Analytics and the Webmaster Tools and the basic things, especially as a one person shop, which will probably be at this time. There’re a lot of tools that have a free plan for a single solo founder or a single user. You’re going to want to take advantage of those in this early stage.
Mike [10:46]: Another example or a very specific example of one of those things is being able to collect e-mail addresses and signing-up for $200 e-mail marketing platform when you don’t have any revenue and you’re really not getting enough traffic to drive to that to be able to collect those e-mail addresses. You can get by with a free MailChimp Account, for example. That will, at least, get you started. You don’t need to spend a ton of money on these tools especially when the free plans will suffice while you’re trying to figure out whether that business is going to work at all. The second guideline for a pre-revenue company is to not spend more than $200 a month across all of the different tools that you’re using. The idea behind this is that if you are really launching something on the side and let’s say you’re a fulltime employee at some place else, you’re just doing this on the side, it can be difficult to go through all of those tools and pay attention to all of them or give them the attention and care that they need in order to make them work for your business.
Chances are you’ve got a lot of other things going on, you’ve got all the development going on, you’re still trying to figure out what that market looks like. If you really have that many tools that you’re looking at, chances are good that you’re probably not focusing on the right things. You really need to be talking to the customers and spending a lot more time in those areas and building what it is that they want as opposed to trying to use all these different tools to optimize something when, quite frankly, you don’t have the traffic or the level of interest or attention from people that you really need in order to get to make that optimization work.
Rob [12:16]: I think that’s a good point, that tools can and will be a distraction if you want to chase down the next shiny object. It’s like stop breathing product on and parker news and looking at all the shiny new marketing SaaS or development SaaS that’s coming out. Focus on you building what you have instead and just use the basics like we’ve already said. Hosting, payment processing, maybe a landing page provider. That’s probably about it. I’m thinking back to Drip. We had revenue from other products that were being able to back it. But we had hosting; I had WP Engine Account for the blog and the knowledge base, payment processing and maybe one or two other things but it was very minimal. We’re talking on a recurring basis. What we’re not talking about here, let’s dive into the exceptions. It’s still with pre-revenue. We have three exceptions. One of them is paid ads. That’s not what we’re talking about at all here. We’re talking about tools on a recurring basis.
Paid advertising to gather information or you get in front of people is an exception to this because I believe that spending money to learn things is so valuable at this pre-revenue stage. Ideally, you’ll be able to run a reasonable test for about $100 to $200 per test. Long term, as it gets bigger, some tests may require several thousand dollars before you try to scale it up. That’s not what you’re trying to do at this point. You’re trying to find cheap clicks, split test value propositions and learn more and build a small list and that kind of stuff. For a few hundred bucks, you should be able to do that. This will let you figure out what you’re doing right and what you’re doing wrong so you can leverage that information as you’re building the product.
Mike [13:51]: The second exception here is also the legal or accounting fees to get set up as a business. Quite frankly, you can get by without setting up a full blown corporation or doing any of that stuff before you even have a product that’s out the door. You can do a lot of things and depending on who you’re working with, whether your CPA, you may be able to write off a lot of those development costs once you have gone down the path of getting an official corporation or officially filing a DBA or something along those lines. A lot of things, you can just backdate those. Again, you have to talk to your CPA about how that would work for your business. But the reality is a lot of those costs are minimal anyway, especially in the long term of your business. Over the course of your business, you’re probably going to be spending hundreds of thousands of dollars and not being able to write off $1,000 or 2,000 from the very beginning is probably not going to break the bank for you.
Rob [14:45]: We’re not lawyers or CPAs obviously but I will tell you that every business that I’ve started and every product that I launched, I have pushed off the legal and the accounting stuff as long as I possibly could. In terms of accounting, I may have done the book-keeping using tools like Xero that we’ll talk about later or Less Accounting. But the legal stuff of actually getting that as corp set up or whatever it is, the LOC, it all depends on your risk tolerance. Boy, I’ve always tried to push that off as long as possible because if you don’t have revenue and you’re spending money and time setting all that stuff up, you’re detracting from your ability to grow. The third exception, in this preliminary stage, is contract labor. If you’re hiring work, you’re hiring folks, let’s say on UpWork or even just contractors through your network, it is harder to do this one on the cheap. You can find cheaper people but you’re going have to spend more time managing them and correcting their work in general.
Realistically though, there has to be a limit on these contractor cost. If you’re seeking 20 grand in the product development for something that doesn’t have any customers or pre-launch lists, you’re probably going down the wrong path. But if you have interest, you have that launch list and you’re in communication with people, that gives you the confidence to spend more and more money. When people come and ask, we’ll often get the question of like how much does it cost to build a mobile app or how much should I pay to build my SaaS MVP or that kind of stuff. The loose range that I typically throw out is 5 to 10K and obviously it depends on what you’re building and how much software development and management experience because that dictates the level and the seniority of the developer you’re going to be able to hire, which is going to impact the cost of it and all that.
But if you have a lot of marketing skills and you have a list and you know what you’re doing then of course, dropping a lot more money than 20K might make sense. But if this is your first time and you’re doing on nights and weekends, you really need to keep a tight constraint on these things and especially in the early days. I was in the single digit thousands. That was my comfort level of how much I would drop before I would get someone in and at least paying me something for the product.
Mike [16:50]: I guess what those things said about the pre-revenue stage. Let’s move on to post-revenue. One of the differentiations here that I feel like we really need to make is the fact that when you’re talking about a pre-revenue business, there’s a very finite time window during which that pre-revenue period is sitting. It’s easy to look at a lot of different examples of those types of businesses because it’s all in this very tightly defined range. When you’re talking about post-revenue, that could mean anything from one dollar a month to a million dollars a month. Most of the time when we’re talking about our listeners or the audience that we’re referring to is generally businesses that operate up into the five, six or seven figures a year. With that kind of stuff in mind, it’s also very difficult to generalize and say, “Well, you should only be paying $25 or $30 a month on this particular thing because depending on whether you’re closer to $1,000 a month or $100,000 a month, you may be paying significantly more based on the requirements for your business. Most of the guidelines in prices that we’re going to throw out are entry level but you could also extrapolate those a little bit because some of them are based on per-user pricing and you may have one user or you may have 15 or 20. Those prices can fluctuate a little bit but will at least give some guidelines around starting points.
Rob [18:09]: Let’s kick it off with probably the most important tool for a startup that’s obviously going to be doing stuff online, it’s your hosting. This cost is going to depend a lot on your app, your infrastructure requirements but I like to ballpark between 50 and 200 bucks a month. This is post-revenue so this is when you’re not on shared web hosting anymore. At this point, you’ve beefed up and you have some type of virtual machine, whether it’s on Rackspace, on Amazon EC2 or you’re on a Heroku instance, that’s when I feel your post-revenue, you feel more comfortable outsourcing some of the management of this and paying a little more to get a couple of servers, at least, to have high availability and good performance. I think that a decent ballpark, when you’re ramping up is between 50 and 20 bucks a month.
Mike [18:57]: I think that $50 to $200 a month could also be per server as well. If you have 10 servers, you might be paying $2,000 or $3000 for the servers that you have. It comes down to what your app is. Something else that falls under this bucket is whether or not you’re running your sales website at the same place as your app is. Those are two probably different things. You might run your sales website on WordPress and have it hosted at WP Engine. One site of a WP Engine is going to run you $30 a month but you can also upgrade your plan to the next level, which is $100 a month. These are round about numbers but they do give you an idea of what the starting points look like and what’s reasonable.
Rob [19:40]: In pre-revenue you can be – a lot of stuff have launches on shared hosting for 20, 30 bucks a month. As you get towards launch or maybe after you get 5 or 10 people paying you for it, then you move to this better hosting basically where you have your own servers. If you’re a hardcore developer and you have a little bit more money in the bank, you probably going to start with this level of the 50 to 200 bucks. It’s a bummer when you’re sitting there coding for four, five months and you want to have a landing page up and you’re paying 50 or 100 bucks a month just to do that. That’s never made much sense to me.
Mike [20:12]: The next category is payroll. If you have gotten to the point where you are post-revenue and let’s just assume you’ve even gotten past the post-revenue part, you start to go fulltime; one of the things that you need to look at is payroll. I’ve looked at payroll providers over the years and tried out a couple of different ones. The one that I settled on recently was Gusto. They used to be called Zen Payroll but they changed their name about five or six months ago. I have no idea what the rationale behind that change was but they did change it. Something like this should probably run you around $40 to $50 a month. Some of the larger, I would say more entrenched players, that if you’re not eligible for Gusto based on where you live, you might have to go with someone like [?] or Paychex. Those are U.S. based companies. I don’t know what the options are in other countries but either one of those is probably going to run you anywhere from $50 to $75 a month. What I have noticed about those types of companies is that they have a tendency to quote you a price and then they will tack on additional fees for doing things like, “Oh, we’re going to over-night your paperwork so that it’s there on pay day.” It’s like, “Well, everything’s direct deposit. I don’t need you to over-night it,” but they’ll do it anyway and it’s an extra $10 or $20 per pay period and that’s how they do that. It can get pricy, which is why is why I gravitated much more towards Gusto because it’s just a flat rate. Everything’s taken care of on line. They also take care of 1099s for you so you don’t have to worry about that as well, especially if you’re going through contractors that are outside of a platform like UpWork.
Rob [21:47]: Don’t do your payroll yourself. That’s insane. I’ve known some small businesses that do that and there’s no reason to do that anymore. I used Paychex for several years. Eventually, their payroll started having a lot of errors. They did a really good job early on and it was great. I think I was paying about 100 bucks a month and it was totally worth it and then more and more errors as we scaled up and it was all via phone. It was like you could have some reports online but it was junky. You couldn’t update anything online so I would have to be on the phone all the time and it doesn’t work into my workflow. The fact that Gusto, formerly Zen Payroll, is fully online and is as good as they are. They’re cheap. It’s like 24 bucks a month and then 5 bucks per employee and it’s unlimited payrolls or something. If you’re one of two people, it’s in the 20s or 30s. This is a no brainer.
Mike [22:30]: They recently updated their pricing too. They went up a little bit.
Rob [22:34]: Oh, did they?
Mike [22:34]: Yeah.
Rob [22:34]: Did they grandfather us?
Mike [22:35]: I don’t know. I’m grandfather, I think.
Rob [22:39]: The next category is video hosting. Obviously you’re going to have some demo videos. You’re going to have some marketing videos. You’re just going to have a need for videos as you scale up even a little bit. YouTube is free but you have so little control and the player is not very nice. It’s not very attractive I should say. At the end of your video, they pop up 20 related videos that are from other people. It takes you out of what you’re doing. It’s not very professional. To me, again it’s post-revenue. As soon as you have some revenue, you’re going to want to go with someone like Wistia, which is about 240 bucks a year or Vimeo, which is 200 bucks a year or SproutVideo, which is in that range. They might have a $10 or $15 a month plan because you’re going to get so much more control. You’re going to get better metrics. A lot of them have e-mail capture built in, where you can gait a marketing video at a certain point or a valuable video that you want people to watch.
You can feature-gait it to where in essence they have to enter an e-mail to get past that. That can go directly into a provider like a Drip or MailChimp or something. This is when I hadn’t really thought of earlier on because it slipped under the radar. But as soon as we had video that needed to appear on our website, which is SSL, we could only use a few providers. Since I didn’t want to use YouTube, it became expensive pretty quick. I remember we started off with a $20 plan and then by the time we had a few videos it was up to 50. I pay either 100 or it might be a little more than that like 120 a month to Wistia because of the volume of bandwidth and the features. We needed some specific features that are feature-gaited up to that point. It’s not outrageous for sure but when you can start at 20 bucks a month, it’s a pretty good way to go.
Mike [24:18]: I will point out that I think both Wistia and Vimeo have free plans that you can get on if you want to get started with those services on day one. If you are pre-revenue, you can use those services obviously if there is feature-gaiting. If you get to a point where you’re scaling and you’re using a lot of bandwidth or there’s other features that you want to be able to use, you may have to start paying for it. But again, the pricing isn’t completely outrageous either. The next category is e-mail marketing tools. By e-mail marketing, really what I mean is capturing e-mail addresses from people and being able to send out bulk e-mails. A lot of different tools fall under this bucket; MailChimp, AWeber, Constant Contact, those types of tools. The idea here is that you want something that is going to allow you to send out mass e-mails to your mailing list.
Rob [25:06]: This is actually one of the others that if you’re pre-revenue, this was the other thing that we had. I talked about hosting and payment providers. E-mail marketing would be the other one. In the very early days, if you’d collect e-mails and send a broadcast once in a while, MailChimp is not a bad tool for that. It’s only once you segment the list and try to do anything of any complexity that you might run into problems and need to outgrow it. That’s when you move into these e-mail marketing automation tools, which are going to run you 50 bucks a month and up. That’s like a Drip, [?] and Infusionsoft and when you’re post-revenue, this is a necessity. It’s rare that you’re going to grow and scale on a basic e-mail marketing tool that doesn’t have the automation stuff baked into it.
Mike [25:47]: The next category is cash management software services. In virtually every case if you’re looking for any sort of book-keeping software, I would go Xero. They have an online subscription. You go out there and it’s very easy to use. It generally follows accepted best practices for accounting. If you know anything about accounting, you can do anything that you would probably need to do inside of Xero. There’s also other options out there. QuickBooks Online is probably the big player in this particular space. They do have QuickBooks Desktop Edition. There’s also other tools out there like Less Accounting and Outright. There’s other ancillary tools that I would probably put underneath this category such as Baremetrics or FirstOfficer.io, that allow you to analyze the incoming payments. I might also throw PayPal underneath this and I would also put something like FreshBooks or Expensify for doing invoices and receipt tracking. Generally speaking, most of those tools should not cost you very much, $20, 30, 40 a month at the most for each individual one. Being able to know how much money is coming in and how much is going out is going to save you a ton of time at the end of the year especially if you’re post-revenue and you have to start tracking how much did I spend? How much did I make? How much can I write off? All the reports and stuff that you need out of that. If you don’t have it tracked, it can be very difficult. If you have a very simple business, you can do it in Excel. But once you start getting complicated with anything, you get lots of transactions. It’s hard to track all that stuff outside of excel.
Rob [27:16]: We live in the golden age of starting a business. The fact that you can get all the power of the tools you just mentioned and you don’t need to install a server because it’s all SaaS and you can pay, like you said, 10, 20, 30 bucks a month for these, is just amazing. 10 to 15 years ago it was so much of a hustle, you install desktop software and then you had to back the files and the desktop software wasn’t very good. When you change computers, you had to try to remember to get the files. It was so much of a hustle. This is a much better approach. The next category, we have it as two items but I’ll lump it into one. The first is Website Traffic Analytics and the next one after that is Advanced Analytics. For just basic analytics, Google Analytics is great, Google Webmaster Tools, Clicky, which is at getclicky.com is 10 bucks a month. Those show you your unique visitors and aggregate data.
These are a no brainer for getting started and you should have them if, for nothing else, to have the historical data, you should have these installed. The advance side is going to be a tool more like a Mixpanel or CaseMetrix and that can often give you a per visitor insight. You can identify people and know what individuals did. You can analyze funnels with more advanced precision and all that stuff. They have free plans but they get expensive quick. It goes from free to 150 a month. For business generating even a few thousand bucks, it’s probably worth it because the insights you can pull out of that on how to optimize your funnel are a big deal. It’s scaling up if you’re doing 20, 30, 40 grand a month. You should be using one of these tools
Mike [28:42]: The next category is dashboarding software, which if you are running a business and you have a lot of different tools, sometimes you have to go to multiple tools in order to find a lot of different KPIs or Key Performance Indicators that you’re looking for. Sometimes it’s more helpful to have a dashboard of some kind. There’s different options out there like DigMyData or Cyph. There seemed to be more and more of these types of tool popping up all the time. What I find is that I like the idea of having a dashboard and being able to look at that data at a glance. But what I find is that if I see some piece of data that I want to drill into, I then have to go over to the tool anyway. Having a dashboard itself probably doesn’t do a lot for me except for give me the ability to publicize some of that data to other people on the team. If you’re just using it for yourself, if you’re a one person company, my guess is dashboards are probably not going to help you very much. They look nice and they sound great in theory but as a business owner, you’re probably going to be digging into that data anyway.
Rob [29:39]: Landing pages is another category here. That will cost you, let’s say, between 20 and 50 bucks a month. There’s KickoffLabs, LeadPages, Unbounce, Instapage. There’s a lot of players in this space. ClickFunnels is another one. It’s funny because I never used landing pages when I was hacking away solo on everything because I would just copy to HTML and I’d modify it and I’d do all that. But now that we’re working on a team and we’re moving fats and there’s a bunch of people doing stuff and we have a marketer who, just fulltime, is running experiments, it helps to have something where you can just crank out a landing page in 10 minutes and not have to worry about deploying and having it in source control and is it on the main website or is it WordPress and do I have a plug in. it is simpler to have one of these providers. You’re mileage may vary and each company may do it differently but I have definitely been sold on the value of using one of these landing page providers, if for nothing else, for some of the templates are nice. The speed of implementation, the speed of iteration has accelerated by using one of these platforms.
Mike [30:38]: The next two categories, I’m lumping these together but they’re both sales tools. Essentially you have your basic entry level CRMs. These will run you $10 to $20. Sometimes that’s per user, sometimes it’s just a flat rate. This is for a basic CRM or a basic sales tool of some kind. In this category I would put things like Pipedrive, Highrise or Zoho and many of the basic sales or CRM tools like that. The next level up, once you start to get a lot of information in there and you start to do more advance things or you want to do any sort of automation, it’s almost very similar to e-mail marketing, where you’ve got basic e-mail marketing and you’ve got the advanced stuff. In the advanced category for sales tools, you’re probably looking at $50 and up per user. I would say that Bluetick falls into this category. You’ll also find tools like Salesforce or Closed.io. The basics of most of these tools is that it helps to automate or improve your sales process and because of the increased efficiencies that those types of tools provide you, they do cost quite a bit more.
Rob [31:39]: Our next category is demo software meaning software that helps you give demos to your potential customers. Some free options are things like Skype, Google Hangouts, join.me, all of which we tried at Drip and they all had one hang up or another. They’re other unprofessional or a lot of people aren’t on Skype or you have to get approval from their username in order to contact them. It just feels like you’re running a junky service. We have since moved on from those. GoToMeeting and WebExpo have free plans. I haven’t used either of them but I know they’re popular. We’ve settled on Zoom which is 15 bucks a month per user. It’s working out quite well. There’s a lot of tools available for this. You just want to find something that is A, professional and B gives you a lot of control and allows you to demo whatever you need and frankly you may also want the user, depending on whether if you’re also using this sometimes for on-boarding or some high end support, you may want the user to be able to share in their screen and that’s a nice benefit of a tool like Zoom and GoToMeeting. These should be in there. They’re anywhere from free up to about 15 to 20 bucks per user, depending in the features you want. You can find something that’s like $50 per user per month. You should be able to get by with 15 to 20 range.
Mike [32:51]: Now that we’ve talked a lot of those different categories, we want to talk about two different exceptions that we came up with for this. The first one is that in general spending money to learn something is worth the investment. You’re looking at a specific channel and you’re spending money there to try and figure out whether you can use that channel to acquire customers or you’re trying to learn things about your audience. It’s very difficult to give guidelines about what specifically you should be spending on these things because if you are making $1,000 a month, clearly you don’t want to be spending $1,000 a month on your advertising or $10,000 a month on your advertising to learn something. But if you’re bringing in $100,000 a month, spending $10,000 to try and figure out whether or not a particular channel is going work for you to acquire customer, that could be justified. It’s difficult to provide specifics in this particular area because of that but we do want to point it out as something of an exception to this. It’s hard to give guidance about exact numbers for that.
Rob [33:48]: It’s also hard to give guidance. Your pre-revenue is a pretty finite space and there’s not a lot of room there. You can be specific about it. Post-revenue is anywhere from a dollar a month up to hundreds of millions a month. It’s hard to give all of these ballparks. Generally, we’re talking about businesses that are doing up to in the seven figures a year. Once you’re in the eight figures, a lot of stuff changes. With that in mind, the other exception to all of this is headcount. Salary for one employee is going to eclipse everything in this list combined. But we just wanted to talk about tools today and the software tools that you would need to get started up.
Mike [34:27]: We’re running a little short on time here but we do want to live you guys with two tips in general about looking at the different services that you’re using in your business. The first one is that you should buy tools that do the job that you need done not tools that you have seen other successful people or businesses using. A lot of time just using that particular tool that somebody else is using isn’t going to make you as successful as they are. It’s more about how you use the tool and what jobs you’re accomplishing with them as opposed to the tools that you’re using.
Rob [34:54]: The other tip I’ll throw out is to buy what you need now not what you’re going to need in the future because otherwise you’re going to be paying for something that you can probably upgrade to at the point when you need it. There’re some minor exceptions. If you think about a Mixpanel or CaseMetrix, the more historical data you have the better. Unless you do have a lot of budget that dropping 100, 150 bucks a month from the very start is a dubious proposition if you’re trying to bootstrap a startup. In general, the best advice is to buy what you need now and not something that you think you’re going to need in the next six months. That wraps us up for today. If you have a question for us, call our voicemail number at 8-8-8-8-0-1-9-6-9-0 or e-mail us at questions@startupsfortherestofus.com. Our theme music is an excerpt from ‘We’re Out of Control’ by MoOt, used under creative comments. Subscribe to us on 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 280 | The Productivity Project with Guest Chris Bailey
Show Notes
In this episode of Startups For The Rest Of Us, Rob interviews Chris Bailey, author of The Productivity Project. They discuss aspects of the book and Chris shares some of his personal experiences with productivity techniques both successful and unsuccessful.
Items mentioned in this episode:
Transcript
Rob [00:00]: In this episode of Startups for the Rest of Us, I interview Chris Bailey, author of ‘The Productivity Project’. This is Startups for The Rest of Us Episode 280. Welcome to Startups for The Rest of Us the podcast helps developers, designers and entrepreneurs to be awesome at launching their software products, whether you’ve build your first product or you’re just thinking about it. I’m Rob.
Chris [00:26]: And I’m Chris.
Rob [00:27]: We’re here to share our experiences to help you avoid the same mistakes we’ve made. Mr. Chris Bailey, thank you so much for joining me today on the show.
Chris [00:34]: I am honored. Thank you for having me.
Rob [00:36]: For folks who don’t know, you are the author of a book called ‘The Productivity Project’ as well as the man behind alifeofproductivity.com.
Chris [00:44]: That is me.
Rob [00:45]: I first heard about you on Unmistakable Creative Podcast that Srini Rao hosts. He raved so much about your book that I had to check it out. I’m really glad you have it up on Audible. That’s how I consume almost all of my material. To be honest, I’m really not a fan of productivity books in general. The reason I don’t like them is because I feel like they tell me the same thing over and over like don’t multitask and other stuff, get up early, exercise.
Chris [01:13]: That’s just bullshit. I don’t know if I’m allowed to swear but it’s such BS getting up in productivity.
Rob [01:18]: I know and I wanted to get into that in the interview. That’s what I liked about it, is that I bought it on a lock because Srini raved so much about it. I was probably a chapter in and already I realized, “Oh, man. This is the change in my game.” I started taking notes frantically. I have a Mosca Notebook that only when stuff is really that I want to take with me, I write in this notebook. I already had a bunch of notes scribbled. This was about two and a half weeks ago maybe three weeks ago I started listening. I have a bunch of things that I have adapted and adopted from it. That’s saying a lot because as much information as I consume, I don’t tend to necessarily move as much into my daily routine. Your book has already had an impact on me. I’ve talked about it on this podcast a couple of weeks ago. I wanted to have you on the show just to talk through a few of the things because I feel like you experimented on yourself and that’s the cool part of this, right?
Chris [02:07]: Yeah.
Rob [02:07]: You don’t come off as some expert who has this theory that everyone should follow. You basically say, “I tried this. I failed a bunch of times but some of it worked and here’s what I found.”
Chris [02:16]: I’m personally not too big a fan of those people. That was one of the things I found in this productivity project, is a lot of people call themselves gurus. That’s a good sign by the way. When somebody calls themselves a guru or my pet peeve is a thought leader. When somebody prescribes themselves as a ‘thought leader’, that’s a pretty good sign that they’re not. You hit on one of the things that I think is crucial about productivity tactics is that spending time reading about them is great. They’re entertaining. You can look at productivity porn as long as you want but if you don’t make all that time back and then some, you’re basically just wasting your time. The idea behind the productivity project was to spend a year and experiment with everything that I could find under the sun that had to do with my productivity to see if it helped me get more done or get less done and whether I actually earned that time back. So much of the stuff out there simply doesn’t.
It’s this productivity porn of becoming busier or just doing more instead of achieving more. It might sound corny but I have this idea that productivity isn’t about how much we produce. We can produce e-mail all day long and not accomplish a single thing. We could spend all day on Twitter and not accomplish a single thing. What we’re left with though, at the end of the day, the residue of our day is what we accomplish. That’s what productivity is all about, I think.
Rob [03:40]: Yeah, well said. I have some notes here and one of the points that you make in the book is you say, flat out, most productivity hacks didn’t work. Most of the things you tried didn’t work. Do you have a theory on why that is?
Chris [03:51]: I think because the idea of so many changes is way sexier than what you have to actually do to make the change happen. Waking up earlier is one of my go-to examples as something that just doesn’t work. It depends on your situation because if you have a family, kids, maybe waking up at 5:30 will help you in your productivity because it will give you this bubble of clarity and focus after you wake up. But it depends on what your life is like. The studies out there, at least, show that there is zero difference in socio-economic standing between somebody who wakes up early and somebody who wakes up late. It’s what you do with the hours of your day that matters. You think of the idea of being an early riser that wakes up at 5:30, waking up at 5:30 to meditate, get a cup of coffee and catch up on the news and social media and start a writing ritual maybe. A lot of people have a sepia tone fantasy of what they want to do and what they want their life to become.
It’s so easy to focus on that fantasy instead of what you have to actually do to make that change happen. Everybody on the planet wants to become a billionaire and get a six pack but in the moment, you want nothing more than to play hooky and grab a cheeseburger. It’s the idea of these changes that is so much more attractive than what you have to actually do to make them. That’s another thing. You got to make that time back but you also invest energy and willpower into investing in your productivity. There’re big costs to investing in your productivity which is why it’s so crucial to figure out whether a change is worth making in the first place.
Rob [05:33]: You conjecture in the book, you say, “I believe that I’ve made a 10 X improvement from any of these productivity acts because it takes time and will power to manage and implement.”
Chris [05:42]: Oh, yeah. It’s so easy to look at the idea instead of the cost or something.
Rob [05:46]: In the book, you talk about how you, yourself, tried to become an early riser and didn’t really work for you. I’m a night owl like yourself. My wife is an early riser and I have this phrase, when she gets up at 5:30 and does all these stuff and I say, “The smug superiority of the early riser.” It didn’t work out for you. Why was that? Is it body clock thing? What do you think?
Chris [06:10]: I think it is. We all have different chronotypes, which is how our energy naturally fluctuates over the course of the day. One of the things I did for this project was I conducted research with all the books and academic journals I could get my hands on. I talked to the biggest productivity experts out there, big in reputation not in physical size and I also conducted these productivity experiments on myself where I used myself as a test tube to experiment with things like working 90-hour weeks, watching 300 Ted Talks in a week, becoming a total slob for a week and gaining 10 pounds of muscle mass living in isolation. Getting up at 5:30 was one of the first experiments I conducted. I struggled with shoehorning this habit into my life for three months. After that, I learnt a lot about habit formation along the way if that one. After I had finally done it, I had this routine that productivity dreams were made of or at least I had imagined they were made of.
But then I realized that I absolutely hated the ritual. I had to go bed at 9:30 in order to get a full night sleep, which I absolutely hated. It was either that or struggle through the next day on a low tank of energy. One of the crucial findings I made from this experiment is that just as not all tasks in our work are created equal. We accomplish a lot more doing certain things like engineering a new product or working on a report for whatever it is that the highest return [?] the new job are than we do checking e-mail, social media or attending a meandering meeting of some sort. Just as not all tasks in our work are created equal, not all hours of the day are created equal. Depending on our chronotype, which is when we’re naturally wired to have the most energy, we have varying amounts of energy depending on the hour of the day. The go-to example that a lot of people use for this is if you’re a morning bird, you’re going to have a crazy amount of energy so your wife has a crazy amount of energy at 5:30 in the morning or at least more than what I consider clinically sane in humans.
People like myself and yourself, we have more energy late at night and so we bring more energy to what’s in front of us later on in the day. A change like waking up at 5:30 might not necessarily work as well for people like us. But we can take advantage of this idea, though, that our energy fluctuates over the course of the day. One of the main findings from the productivity project was that everything I researched, throughout the year of productivity, fell into better management of one of three categories; managing my time, attention or energy. The better we manage all three of these ingredients, the more productive we can become. It’s so easy to look at time and this is what we’ve done for hundreds of years. When we work in an office-type environment, it’s simply not as important as it once was. When one person brings twice the amount of attention to their work and they shut off distractions and they can focus deep around their work, they’re going to become more productive, than somebody who is constantly distracted and can’t focus, and accomplish more in the same amount of time.
Energy is the same way. If you don’t burnout at one in the afternoon and instead you cultivate having a lasting energy level throughout the day, likewise you’re going to be able to bring more of yourself to your work so you don’t burnout. When you rejuvenate your energy levels by taking more frequent breaks and doing tactics along those lines, you bring more energy to your work which allows you to accomplish more in less time. Managing your energy is a crucial thing. That goes to when you’re naturally wired as well. Another one of the experiments I did shortly after waking up at 5:30 every morning was charting how much energy I had every hour on the hour for three weeks. Every hour I had an alert on my phone telling me, “Chart how much energy, focus and motivation you have right now.” I charted those and I found that between the hours of 10:00 a.m. and noon and 5:00 and 8:00 p.m. in the evening and onwards, I had more energy than any other hour of the day.
That was when I brought the most energy to what was in front of me. The more important tasks I worked on during that time, as an example writing for my website, doing tedious research or after that writing this book, the more I accomplished in the same amount of time. This is a central idea I think it’s crucial to think about when it comes to your productivity is that productivity isn’t just time anymore. If you don’t cultivate your energy properly, you’re going to burnout. Your productivity will be short. The same is true with our attention. You probably know this better than anyone. Attention is the rarest commodity that we have but it’s not the most limited commodity that we have. Time is. Because it’s so rare, when we cultivate more attention to bring to what’s in front of us and spend it intelligently, we can get that much more done. Man, that was a long answer. I’m so sorry.
Rob [11:02]: No, that was a good one.
Chris [11:03]: You got me going. That was like a trigger question.
Rob [11:06]: You touched on two things that I was going to bring up. This is really good.
Chris [11:09]: This is good.
Rob [11:10]: Probably my favorite concept from the book, one of my strongest takeaways was your framework of time, attention and energy because most books are more about managing time. I’ve always seen, in my work career, there were two things is what I’d imagine it had. There was time and energy. I would strategically use caffeine and other things to help me have the most energy when I needed. But I was missing an element and that’s what I liked about your book. Everything you said lined up with my experience and then added to it and gave it deeper understanding of topics I didn’t quite have my hand on. Adding that third element of attention made me realize why, when I get a bunch of e-mails, if someone’s saying, “Hey, I just need five minutes of your time,” that doesn’t sound like a lot. It’s not the time that’s the hard part. It’s the switching the attention.
Chris [11:54]: I find this way. One of the things I do more and more is speaking around the book, around productivity, around whatever the hell people want me to speak about. It’s weird that people want me to talk at all. I find that if I give a half hour talk somewhere, that’s a half hour of time and that’s a half hour of energy. But I’ll worry about that talk for days leading up to it. It takes days of attention to just do that one talk. It’s an idea like switching to e-mail. E-mail is the pain-point that so many people have. We might not spend a ton of time on e-mail over the course of the day but when we switch between e-mail and every other context of our work 30 or 40 times, which is the average for most people according to Rescue Time, I believe the number is 41 times a day, that’s 41 times than when we have to perform a conceptual shift from one element of our work to another. We never perform that shift productively because it takes energy, willpower, so many things for our minds to switch from one context to another. That’s why you have some days where you repeatedly check your e-mail where you don’t have much to do and you’re exhausted by the end of it. It’s because you burn so much mental juice switching between these different contexts.
Rob [13:09]: Touching on that, during your answer, you mentioned but didn’t name the Biological Prime Time which is your concept of where you stopped consuming caffeine and alcohol for three weeks and you tracked which hours of the day were your, what you call your BPT. Now I’m assuming you must structure your work schedule to do your high energy high attention work around those times. Is that the idea?
Chris [13:35]: For sure. We’re talking, right now, in the middle of my Biological Prime Time. I’m having some [?] to boost. It allows me to bring more of myself to the elements of my work that are more important, like talking to you right now is more important than a lot of the things I’m going to do later on in the day. Why not schedule your day around when you have the most energy? Productivity, at the same time, is so often a process of understanding our constraints. If you work for the men or any one of these things, you might have more constraints than someone like you or I would. But still when you do have that flexibility, it’s crucial to not squander it. Biological Prime Time, by the way, I don’t want to take credit for that term. It was coined by Sam Carpenter who wrote a book called ‘Work the System’ I believe. This was the golden nugget I took away from that book is this idea of thinking about it in those terms.
Rob [14:31]: I’ve read that book but I didn’t remember that term so I’m [?]
Chris [14:35]: Credit where credit is due.
Rob [14:36]: Indeed. Right within, I think it’s the first chapter of your book. You do challenges during the book. It’s not every chapter but where it’s appropriate where you say, “Look, put the book down, grab a pen and paper, spend 10 minutes and do this.” Your first challenge is called The Values Challenge. You ask the question, “If you had two extra hours in everyday, in every work day or in everyday period because you’re more productive, what would you do with that time? Sit down, think about that and write it out.” What’ the importance of answering that question?
Chris [15:08]: It’s thinking about what you want productivity to do for you. Everybody has a different purpose for productivity. Some people see it as a way of doing more and more and cramming more into the day. But I see it as a way of making more times for the things that are actually meaningful to me. In a typical day, I like to think I’m pretty productive. It would be a surprise if I wasn’t productive after dedicating a year of my life to improving that side of myself. On a typical day, I do my work in six or eight hours; before investing in my productivity, that would have been 16 hours worth of work. I see it as a way of doing everything I have to do in less time so I have more time for the things that are actually meaningful to me like spending time with loved ones outside of that. I’m a pretty big nerd like I would imagine you are and a lot of the audience is. I like soaking in cosmology lectures. I’m learning to program. I totally suck at it right now but I’m putting my [feelings?] out for that.
If anybody knows any good resources, I don’t want to get flooded with stuff. If you want to e-mail me on or two places to learn that, just anything that takes my curiosity throughout the rest of the day. I see it as a way of carving out more time for the things that are actually meaningful. Those challenges, by the way, I’m not a fan of challenges after chapters of a book. I decided to put these in there because they prime your mind to think about ways of implementing the tactics in the book. They’re very simple and they reduce what I talk about in the individual chapters down to something that you can action at the end of them. What do you think about challenges at the end of chapters? What are your thoughts?
Rob [16:51]: I tend to ignore them and skim over them. In your book, I did maybe two or three of them, which is saying a lot because I tend to do zero of them.
Chris [17:01]: Me too. I wrote the challenges for people like you and me who don’t do challenges.
Rob [17:09]: The way I’ve been summarizing your book to people and you can correct me if this is an incorrect summary. What I basically say, “Look, this guy took like 100 productivity hacks and approaches and tried them out on himself over the course of a year and then he basically wrote a book about the 20 or so that worked for him.”
Chris [17:28]: Yeah. That’s a good way of framing it. What I really did is I looked at all the productivity books, the research, the neurological books out there, books about the brain and workplace performance. I also conducted these weird experiments on myself to tell some stories along the way so it’s not boring as hell. I looked at all of that stuff and thought how did these – I think they were more than 100. I’ve never actually counted with everything I experimented with. There were a few hundred things, there must have been, that I tried out; keeping sticky notes everywhere from finishing stuff I had to get done, all these different organizational systems for managing my work and my life and compartmentalizing everything. This is about the 25 things out of those hundreds that actually work and most importantly that actually stuck with me because change the idea of something can be so powerful. But, again, you have to actually do it for it to work. I like that idea.
Rob [18:29]: That summary of it?
Chris [18:30]: Yeah. It’s a good summary.
Rob [18:31]: Cool, even though it’s hundreds instead of a 100 but for some reason I had remembered the number 100.
Chris [18:35]: You just got to put the number u a little bit, make it sound a little bit more impressive. He experimented with tens of thousands experiments.
Rob [18:44]: One of the things you experimented with that I really liked because this is something I’ve long held, it’s like a value, is you tried working 20 hours a week and then your tried working 90-hour weeks and you compared your productivity and you found …
Chris [18:58]: It was about the same.
Rob [18:59]: About the same but you said it was a nominal increase in productivity in your 90-hour weeks. Why is that?
Chris [19:07]: The thing was I felt so much more productive and I think it was because –
Rob [19:14]: Working the 90-hour weeks you did?
Chris [19:15]: Yeah and it was because there was no guilt that sipped into my work. I think so often the less guilty we feel about our work, the more productive we feel. Guilt works hand in hand with busyness. It’s an idea I’ve been thinking a lot about. When you have more work to do than you have time to do it in, the natural incline is almost to dedicate more time to your work instead of more focus and energy and leave those by the wayside, burnout, multitask and try to take on too much stuff. It doesn’t work in practice. Working 20 hours a week, when I looked at how productive I felt, I felt four times more productive in the 90-hour weeks. I felt like I had accomplished that much more. But when I looked at how much I actually accomplished in those weeks; that was the most surprising lesson I discovered from the project by far. I only accomplished a bit more working 90 hours a week. I think it was because of two reasons.
The first is because of Parkinson’s Law, which says that our work tends to expand to fit how much time we have available for it. This is why you feel like you’re living at capacity in your home life but then the new season of House of Cards or orange is the New Black comes out and you suddenly, this magical 10 or 15 hour window opens up over the course of a few days and you find time to watch the entire season. It’s because what we do tends to expand to fit how much time we have. Our work is no exception. I did the same amount of work, it’s just that I expanded and wasted so much more time in the 90-hour weeks. I also didn’t manage my energy properly. A deadline is one of the most powerful things on the planet. Everybody on the planet knows this. Let’s say it’s Monday and somebody tells you, “Dude, you just won an all expenses paid trip to Australia but it leaves tomorrow evening.”
Chances are you would find a way to do most of the week’s work in those one or two days so you could accomplish as much as you need to in order to get on with the imposed deadline. Our work hours are the same way. The 20-hour weeks were the exact same way because I shrank how long I worked for in general, I forced myself to expend more energy over that shorter distance of time so can get it done and it filters down to the individual tasks in our work too; if you have a big project to write, code or whatever it might be. If you, instead of scheduling an entire afternoon to do that and burning some time and attention on Twitter, e-mail and all these different things, you schedule a one and a half hour block of time and you force yourself to stop at the end of that. You’ll force yourself to expend more energy over that shorter distance of time so you can get everything you need to do done. Managing and shrinking how long we’ll work on something for is also a gateway to managing our energy in that way too.
Rob [22:14]: Nice. My most recent blog post I published is called ‘How to Force Yourself to Ship (Even Though it’s Hard)’ and it’s all about how at Drip, the company I run, we don’t set many deadlines but we did have to set one for a recent feature we launched and it just kicked us all into high gear. I’m definitely a believer in that.
Chris [22:35]: Shrinking how long you do something for, it’s a way of imposing a deadline on yourself, whether it’s for a task or your work in general. This is why; I think it’s in Sweden that they’re going to a 30 or 35-hour week. If you have people who are motivated, that’s going to work because they care enough about their work to expend more energy to get it all done. They’ll waste less time. If you have people who aren’t that motivated, chances are they will just slack off for 30 hours.
Rob [23:03]: You mentioned that research suggests that the ideal work week is between 35 and 40 hours?
Chris [23:09]: Yeah. That’s what the research seems to suggest. This is not to say that crunch time doesn’t work because it absolutely does. When you work consistently long hours, your productivity after a few weeks begins to fall off a cliff and become obliterated. It’s not that one 90-hour week is terrible for your productivity because if it’s once a year, it’s really not. Sometimes projects have to ship; sometimes you have to work insane deadlines. But most of the time if you work consistently longer than 35 hours a week, your productivity is going to begin to plummet. That’s a side note, a little Ted debate on working hours. As a rule, people usually work fewer hours than they think they do. You can get this insight when you track your time. One study, I have it here in front of me because I’m weird like that. People who claim to work between 60 and 64 hours a week actually work an average of 44.2 hours; from 60 down to 44.2. People who claim to work 75 or more hours, they actually average 54.9. There’s often a huge gap and it’s because when we think we work longer hours, it’s as if the world needs us twice as much. So often we work fewer hours than we think we do.
Rob [24:32]: Yeah, that makes sense. One of the other things that I took away from your book and I actually started and put my name right away was this rule of three daily tasks or three daily accomplishments. Earlier on with your research, you said on your website that you have this stats page where you tracking how many words you had written that day or how many – you’re trying to quantify it and you realize that was focusing on efficiency and that was a mistake. You started asking yourself, “Did I get done what I intended to do today?” That was your new measure or productivity. I feel like the three daily tasks ties heavily into that. You want to talk a little bit about that?
Chris [25:09]: Yeah. Intention lies at the heart of productivity. This deliberateness, I would equate productivity on so many levels with deliberateness. Being more deliberate about what we spend our time on in general, everyday or every hour in the case of working more mindfully in the moment because it’s in the moment, like we were chatting about earlier, that we want to have a six pack and we also want to grab a cheeseburger. If we can bring the idea of deliberateness down to the moment, that’s where the magic is made as far as productivity is concerned. The idea of managing everything you want to spend time on, it’s something so many people talk about. But so many of the systems out there won’t make you care about what you have to do. The best rule I found for that is, as you’re probably well aware of, it’s almost stupidly simple how easy this idea is. That’s where its power lies; is in inserting these intentions each day.
The idea of the rule of three is this; at the beginning of the day, you fast-forward to the end of the day in your head and then you ask yourself, “By the time the day is done, what three main things will I want to have accomplished?” Those become your primary focus throughout the day. The idea behind it is that it only takes a few minutes, first of all, which makes it so powerful. You don’t have to spend hours organizing everything on your plate. It allows you to insert this intention because it’s hard to remember what’s important throughout the day. When everything hits the fan over the course of the day, these serve as the guiding light for what you want to accomplish over the course of the day. My three, as an example today, I am writing six articles for my website. I am putting together a list of all the places I’m speaking at to coordinate them in one place. My goal is to finish making two talks. It’s a lot of work. It doesn’t include everything, like it doesn’t include our chat right now, the other miscellaneous [poparia?] of the day.
It includes the three main things you want to accomplish. It aligns what you work on over the course of the day, not to what you have to do, like a task list does, but what you want to accomplish when the day is done. That’s really what you’re left with. It works because it’s in that deliberateness that you decide not only what you do and not only what is the most important to spend your time on but also what you don’t spend your time on. You take the time to separate what’s important from what isn’t. I mentioned earlier that productivity is so often the process of understanding the constraints that we have. Some days they’re stocked with meetings. You’ll have less freedom and flexibility to determine what you actually need to accomplish or want to accomplish. By taking the time to understand those constraints, you can become more deliberate about your work over time. At first when I implemented this rule, I learned about it from J.D Meier, who’s Microsoft’s Director of Business Programs.
A lot of people have talked about it before. It was his book ‘Getting Results the Agile Way’ that turned me on to this idea. At first I way overshot the three things and so I would say, “I’m going to write 1500 words today,” and I would write 3000 or 4000 or I would undershoot them. The next day I would say, “Okay, I’m going to write 5000 words,” and I’d write 2000, just as a very simple example. Over time, you begin to settle into this place of understanding the constraints that you have. How much time, flexibility, energy, focus and attention you’ll have, how often you’ll have to switch between these different contexts so that you can get a grip of not only what you’re going to accomplish but how much potential you actually have to do that.
Rob [29:06]: As I said, this is one of the things that I’ve adopted and it’s helped me focus on something I should have been doing anyway. When you say, in the book, it is such a simple thing, thinking of the three things you want to get done in each day. I think you said to do it for the entire week as well.
Chris [29:22]: Yeah, I forget that point. That’s a pretty big point.
Rob [29:26]: Yeah I know.
Chris [29:26]: I do it and I should have been cued because I have the three weekly things I intended to accomplish right above that on the big ass whiteboard in my office. The idea is every Sunday I usually do this. I set the three main intentions for the week. The three daily ones won’t always fit into the three weekly ones but often times they do. It reminds you of what’s important throughout the week when you’re carving out those daily intentions too because that’s the process. You figure out what’s important in general but it’s on a weekly basis that you set these very short-term milestones that fit into those ideas. It’s on a daily basis that you execute on them. It’s on a moment by moment basis that these challenges come up with actually working on them which is why ideas like single-tasking, stop multitasking and shutting off distractions can be so powerful.
Rob [30:23]: It seems to me that the idea of this rule of three on a daily basis rule, rule of three on a weekly basis and shutting off the multitasking and all the alerts and stuff. It’s not that they take time to do but it requires deliberate discipline and it’s almost like a certain level of attention and energy that you have to devote, which is step back, clear your mind and say, “What three things do I want to accomplish today and this week?” That’s the hard thing to do, I found. I find that it takes energy and attention to do that. My mind tends to want to resist that and wants to flip into my e-mail inbox because as you called it, that’s the Netflix of the work world, right?
Chris [31:02]: Yeah. That’s why it’s crucial to do it at the start of each day. You only have so much willpower throughout the day and once that’s depleted, your productivity, your focus is toast and you’re going to be working on autopilot. It’s important right at the start of the day, before you jump in to do these things because that’s when your energy is the greatest. That’s when you have the most cognitive juice because you haven’t burned too much glucose in your brain from working on other stuff too.
Rob [31:29]: I think that’s one of the points that I took away from your book; is that these things, like the low return tasks you call them, which are the checking your e-mail, checking Twitter or Facebook or all that stuff that beckons to you that feels productive, that fires with [?] your brain, it’s quite unproductive in general.
Chris [31:51]: I would challenge people if they want to try out the tactics that we’re talking about. Let’s be honest, most people aren’t going to buy the book so let’s make this conversation as valuable as we can. Try these things out but observe how much they allow you to accomplish compared to how you were working before. That’s where the money is mad because these tactics become self-reinforcing once you realize how much more they let you get done over the course of the day. The rule of three is great gateway one to start with. If you start by defining the three daily intentions that you have and then observe whether you actually accomplish them, how you’re working differently, how your working towards those three things, it will become self reinforcing. You can make the connection between getting more done in less time and the tactics that you’re experimenting with. One of the worst things you can do, and this is what I found in the productivity project, is blindly accepting blanket productivity advice because you’ll fall into so many traps, pitfalls and so much stuff that frankly doesn’t work.
I would say that more things don’t work than the things that do. I tried to pick the best ones but maybe not all of these will work for you too. Maybe you’ll resist them more than you’ll feel comfortable with and so you don’t end up doing it. That’s cool too. But when you look at the difference in how much you accomplish when you do the tactics and whether or not you get the time back that you spend reading about these things because that’s where productivity becomes crucial. I think that’s so important.
Rob [33:26]: I would agree. If you’re listening to this, the way I’m approaching the book is not to take all 25 of these and try to integrate them into my work life or my personal life for that matter. I read through it and I took away things that I felt like would work for me, given what I do on a daily basis, my personality, what I know about myself. The notes that I took instead of all 25, it looks like I have 9 or 10 that I feel like are really going to jive with me. I’m not trying to adopt all of them at once. I’m tackling two of them to start with. It’s the five minute meditation in the morning and embarrassingly pretend to do that in my car in the parking lot once I get to work and I just sit there.
Chris [34:05]: That’s cool. At least you’re now driving then.
Rob [34:06]: Yeah I’m now driving. I clear my mind. The fact that it’s only five minutes has made it an easy one or me.
Chris [34:13]: This is a good tip to give people. When you want to make a change, find how resistant you are to the ritual. If you say, “Okay, I’m going to really try and meditate,” and then you meditate, I’m going to say, “Okay, I’m going to mediate for half an hour each day.” Eventually you’re not going to have half an hour or you’re not going to feel like doing it for half an hour and the habit is going to just collapse in on itself. You can combat this though by shrinking how long you’ll do something for until you don’t fell that resistance anymore. You say to yourself, it works for going to the gym, meditation, going of a walk around the neighborhood, for pretty much anything. You say, “Okay. I don’t feel like meditating for half an hour today. Could I do 25 minutes?” The thought of it still puts me off, “What about 20 minutes?” It’s getting better but, “What about 15 minutes?” Getting better, “10?” Yeah, I can meditate for 10 minutes. You meditate for 10 minutes.
When you get to that 10 minute mark, because you’ve overcome that initial resistance because things are never as intimidating in practice as they are in ideas, chances are you’ll want to keep going. The same is true for the gym, going for a run, for pretty much anything; doing your taxes, cleaning up the basement. By overcoming that initial resistance, you can keep going after that. So many other things are intimidating that we want to do. When we shrink and be kind to ourselves in the process and we’re not a total hard ass on ourself for trying to make our life better, we can do that much more and make them stick.
Rob [35:45]: Indeed. I like the way you couch the meditation. I’ve never been a meditator, never really been done it. Your instructions were just be aware of your breath. That’s it. Nothing more complicated than that. You can set a timer for five minutes. Close your eyes. All you want to do is think about your breathing and you’re trying to clear you mind. As thoughts come in, like distractions and such, which they will, don’t judge them. Watch them pass through you like you’re on a freeway overpass, I think, is what you said. Watch them just float away and let them go to the next thing.
Chris [36:15]: Because that’s what you realize when you start to mediate, is that no thought is permanent. No sensation in your body is permanent. No emotion is permanent. That’s what I find entertaining while meditating. You find the weirdest things entertaining after a while. It obviously doesn’t take much to entertain me. I find these emotions that come up in meditation to be so informative in a weird way because I’ll go through a period of boredom and then I’ll go through a period of restlessness and then I’ll be really worrying about something or other that I have to do or a big talk that I have to give, whatever the hell it might be. Then I’ll go through a period of happiness. You experience so many emotions but every time you do, you simply refocus on your breath. It sounds stupid, doesn’t it? Meditation is so stupid in practice because of how simple it is. You’re focusing on your breath. What could be the benefit of that?
The research out there is conclusive around how helpful meditation can be for us. I don’t want to come off like I’m a hippy like, “I have a business degree and I’m more into productivity than anything and so meditation should be the furthest thing from my interest.” The research that’s been conducted around how we manage our attention shows that in an average moment, we dedicate 53% of our attention to whatever is in front of us. We basically leave half of our attention on the table. I don’t really have to talk about this because it’s obvious and everybody’s experienced this. We’re trying to work but then we remember that we forgot to close the garage door when we left in the morning or we begin to worry about what we have to do next or we begin to think, “Oh, crap, I have to focus on this now,” or we begin to worry or we get distracted. Because of all these things, most of which are internal, we only bring about half of our attention to what’s in front of us.
What the neurological research and the attention research around meditation shows is that we can up that number. Instead of brining 53% of our attention to what’s in front of us, we can bring 63% and then 73, 83, 93. I don’t like the word ‘efficiency’ especially as far as productivity is concerned. It reduces the idea down to something’s that really cold and corporate and it’s all about a spreadsheet. There’s no better word to use. If you have two people, let’s say the average person who brings 53% of their attention to what’s in front of them and then you have somebody who brings 93% of their attention to what’s in front of them. The second person is going to accomplish twice as much in the same amount of time. They’re going to get eight hours of work done in four hours because they manage their focus that much more intelligently. This goes to the idea that our work benefits from all the attention and all the energy we can possibly bring to it.
We used to work in factories doing simple and repetitive work that didn’t take much brain power. But when we moved from the factory to the office, suddenly instead of making widgets all day, we could show up hangover if we really wanted to, we could be distracted all day long, we could chat with people all day long and still crank out those widgets. When we went from the factory to the office, suddenly our work benefits from all the focus, attention and energy we can possibly bring to it. This idea – and you can tell that I get a bit excited by it. Excited might be not even a generous term. The idea that building up how much attention we can bring to the moment is something that belongs in a cave in India with some skinny iyogi meditating all day long. It’s bullshit frankly because our work benefits from that focus. One of the things that turns people off about meditation is that that the process is so simple it seems like you’re wasting time. It does take time to meditate but you get those five minutes back 10 times over throughout the day because of how it allows you, not only de-stress, which allows you to bring more calmness, more focus to your work. It also allows you to bring more of yourself to your work, which is a crucial.
Rob [40:33]: That’s a good way to say it. A lot of us focus on time management, blocking out our time and making sure that we’re being fairly efficient with things so that it doesn’t expand. That’s one of the three aspects. The second is energy. I always think about that as maybe turning on some music loudly or using caffeine strategically, which I’ve done for years. The third piece that I hadn’t really sunk home with me until I read your book is that there’s this third element and it’s this attention/focus. That is what you’re talking about here. If you’re able to clear your mind and get a harness, get a hold on all the threads going on, you can improve that third element. With all three of those in check, that’s when you’re absolutely your most productive and when you’re going to get the most done in a day.
Chris [41:16]: Exactly. It seems so simple, right? You just sit. It doesn’t matter where you sit. You don’t need a fancy meditation. You can do it on a chair if you really want to; just observe your breath. That’s it. Observe its [?], its flows. I like to focus on the sensations in my nose. The thing about meditation is that you attention always wonders off. That’s what it does. That’s the way your brain is wired. We’re wired to perceive threats in our environment. We’re wired to think of any mental threat that might come up and be distracted and derailed by that. But we don’t have many sabre-toothed tigers walking around us anymore. Instead, we stresses of the office. We have to bring more focus to the work that’s in front of us. The idea is that every time your mind wanders off to thinking about something else often times like any fantasy. It will wander to any and every fantasy, threat whatever you can think of. It will go there.
The idea is that whenever it does, you gently bring it back to your breath. I like to laugh a little bit at myself at how much my mind wanders off. You can’t be hard on yourself when it does. Gently bring it back and see it as the natural tendency of your mind. Every time you bring that attention back, the neuro signs behind meditation show that it heightens your executive functioning. It heightens the amount of control your brain has over itself. You might think like, “Doesn’t my brain already have a ton of control over itself?” But it doesn’t. You’ve probably experienced that feeling where you’re trying to fall asleep and your mind won’t shut off. There is the mind that’s always churning and always working away and won’t shut up and shut down for the night. But then there is the part of the mind that looks at the brain – maybe I’m sounding like a total hippy now – your mind observes your brain doing all these stuff. You can step back from your thoughts, de-clutter them a little bit, make them a bit calmer and allow them to not get the better of you. I fall asleep very quickly these days, often times within minutes. I’m usually not all that tired when I go to bed. My mind is calmer than it used to be.
Rob [43:36]: Mr. Chris Bailey, your book is ‘The Productivity Project’. Your website is alifeofproductivity.com. You have any other ways you’d like folks to keep in touch with you?
Chris [43:46]: Those are the two main ones. I always hate being selly about these stuff that I do.
Rob [43:51]: No, don’t sweat it.
Chris [43:52]: On Twitter.
Rob [43:53]: All right, what’s your handle?
Chris [43:54]: @wigglechicken.
Rob [43:56]: That’s nice.
Chris [43:58]: The business one is at @aloproductivity.
Rob [44:01]: Your book is available of Amazon and obviously it’s an audio book on Audible, which is how I’ve consumed it.
Chris [44:06]: Yeah, anywhere fine books are sold.
Rob [44:08]: Indeed. Thank you so much for taking the time to come on the show, Chris.
Chris [44:12]: Thanks for having me.
Rob [44:13]: If you have a question for us call our voicemail number at 8-8-8-8-0-1-9-6-9-0 or e-mail us at questions@startupsfortherestofus.com. Our theme music is an excerpt from ‘We’re Out of Control’ by MoOt, used under creative comments. Subscribe to us on 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 279 | How Google’s New Search Results Will Affect You
Show Notes
In this episode of Startups For The Rest Of Us, Mike interviews Dave Collins, SEO and internet marketing expert about Google’s new search results. They discuss how these recent changes will affect small business owners and what you should be doing to stay up to date.
Items mentioned in this episode:
Transcript
Mike [00:000]: In this episode of Startups For The Rest Of Us, I’m going to be talking to Dave Collins about how Google’s new search results will affect you. This is Startups For The Rest Of Us episode 279.
Welcome to Startups For The Rest Of Us, the podcast that helps developers, designers, and entrepreneurs be awesome at launching software products. Whether you built your first product or you’re just thinking about it. I’m Mike.
Dave [00:25]: I’m Dave.
Mike [00:26]: And we’re here to share our experiences to help you avoid the same mistakes we’ve made. How’re you doing this week, Dave?
Dave [00:30]: Hi. I’m fantastic. Thank you, Mike. How are you?
Mike [00:33]: I’m good, good. So I want to give you a quick introduction everybody. If you’re not familiar with who Dave Collins is, Dave is a SEO and Internet Marketing expert from Software Promotions, and he’s a frequent MicroCom speaker. He’s been doing this since 1997 or so?
Dave [00:48]: Yeah.
Mike [00:48]: Which is a really long time. I think I was still in college, and probably many of our listeners had not even gotten to college yet. So just to make you feel old there.
Dave [00:56]: Thanks very much.
Mike [00:57]: So I guess to get started with, let’s take a little bit of a step back and talk about some of the recent changes that have come up that Google has pushed out. First of all, why does it feel like everything is always changing in the world of SEO?
Dave [1:09]: So really it depends on who you ask. Every SEO question, that’s how the answers always start, so we can’t be proven wrong. But everything’s changed. It’s very, very fluid. Google has to keep moving and redefining the goal post.
It depends how cynical you are. Personally, I believe that Google keep changing everything, basically to provide their users with the best experience. But this isn’t with their interest in mind. It’s perverse. It’s with their interest in mind. As in, if every time we go to Google we don’t find what we’re looking for, there’s a limited number of searches that we can carry out before we start thinking about looking at Yahoo or Bing or DuckDuckGo or wherever. So there’s this constant cat and mouse game, in a way, between the people who are trying to trick Google, and the people who’re trying to manipulate the results, and Google who absolutely don’t want to be manipulated.
Mike [02:05]: I can’t imagine anybody trying to manipulate the Google search engine results.
Dave [02:09]: No, must be some sort of, I don’t know, science fiction type of thing, but there’s nothing to gain. Why on earth would someone want to do that?
Mike [02:16]: Right. So let’s talk about a little bit of recent history. What’s happened over the past couple of years? Obviously there’s been various updates. Most of them have been named like Panda, and things like that, that have come out, and for the most part, it seemed like these changes were good. It seemed like what they were trying to do was they were trying to identify the people who were trying to game the results, and modify things such that they would get rid of those people, or at least remove those people from the search engine results by identifying them in certain ways. Clearly they mishandled some of that, and there were certain people who got dropped completely, and then got added back in after some complaints and everything. But they at least had some basic ideas of what it is that they were trying to accomplish. What else has gone on recently that we need to be looking at?
Dave [02:58]: The trend. It all goes back, in a sense, is cat and mouse. That in a sense, days gone by, Google more or less came up publicly and said, “One of the ranking factors that we take into consideration might, for example, be how many websites link to you.” So all these scammy SEOs all over the world got very excited. A whole industry was born, and up to a point it’s still running, of products and services that will simply get you links.
So then Google changed the rules a little bit and said, “Well, actually, it’s not all links. It’s more about the quality of links.” But people didn’t listen. So then, they effectively said, “Okay, if you have too many really horrific links pointing to you, we’re going to penalize you. We’re going to slap you. And it hurts.”
So this game is constant and ongoing. People have a theory, “This makes a difference. Doing X results in an increase in traffic.” Everyone does it. Google stamped down on it. So they’ve stamped down on links. They’ve stamped down perversely on over-optimization. So depending on how you look at SEO, I looked at it as helping Google understand the content of your website. So if you do too much of helping Google to understand your content, you get penalized for it. And yeah, it’s ongoing. But the most recent of all is what we’ve seen in the last week or so with the total change with what’s happened to the ads on the right-hand side of the search results.
Mike [04:27]: So really, what we’re talking about is this giant cat and mouse game between people who are trying to game the system, and Google, and the rest of us who are caught in the middle of it, where there’s a lot of us who aren’t necessarily trying to game those search results, but because we’re caught in the middle we’re affected by them. So it seems to me that that’s part of the reason why Google is doing this. It’s not to directly hurt us or help us. It’s because they want to make the search results better, and they’re trying to basically fight these types of people who’re doing these gray hat or black hat strategies that they are not comfortable with and they don’t like. Are there any other reasons that they’re doing it?
Dave [05:03]: Well, all things lead back to profit when it comes to Google, which will surprise absolutely no one. So there are two things they’re trying to do. They’re trying to give us better results, which in turn feeds that profit. And they’re also trying to make more money out of people who are clicking on the ads, which is obviously where most of their revenue comes from.
But you touched on a really, really important point. That this whole idea of collateral damage, that you today don’t need to have done anything horrible black hat to get hit by one of these penalties. Like I said, Google redefined the rules of what’s good and bad. They don’t just move the goal post. They completely, sometimes, make them invisible and put them in different ends of this stadium. But you don’t need to have done anything wrong to get slapped. It’s just that, a, you might have inadvertently done something that Google have now decided, after the fact, is not a good thing. Or you might actually just be collateral damage. You’re caught up in it, and you’ve not actually done anything wrong, but Google have decided for whatever reason, you fall foul of their invisible unknown rules, and you take a hit, and it can be devastating.
Mike [06:10]: There’s a term that gets thrown around a little bit called, “The Google Slap,” which is essentially, somebody looks at your site and says, “We’re going to basically ban you from Google search results.” Is that different than this type of collateral damage that we’re talking about, where they’ve just changed the rules and you happen to be affected by them, versus they went in and they said, “We’re taking you out”?
Dave [06:30]: Yeah, there’s very much a difference. What they both have in common is when you see that your Google organic traffic has fallen from 120, 150 a day to 1 or 2 a day, irrespective which rule you’ve broken, or which type of penalty you’re experiencing, it feels the same. But they are very different. So in your Google Search Console – what used to be Google Webmaster Tools – you can see a “manual penalty”. And that’s exactly as the name implies. If Google have decided, for whatever reason, for instance, you have far too many horrible links of low quality this or that purely to manipulate them, they’ll apply a manual penalty, which is more or less someone in Google typing it into the Google PC – if they use a PC – and basically saying, “We don’t’ like this site. Let’s remove it from the listings.”
The other type is they change the rules, they roll out a new filter or a new algorithm, and you just fall. It’s not that they’re penalizing you, it’s just that they may have decided that your website isn’t as relevant for the people searching for these terms. So instead of, let’s say, having an average position of three or four, you’re suddenly on page two. So you’re going to plummet. But you’ve not actually been hit by a penalty, but you are very much a victim of these changes.
Mike [07:49]: So how much of this is based on their own self-interest, versus them wanting to help people be recognized for providing good content and providing great links out to the community?
Dave [08:01]: So, in a way, it all goes back to the same place. If Google provide you with a good user experience that means you’re going to continue using Google, which means that you’re going to click on some of these ads and they’re going to make more money. So they’re all very much interchangeable. But nowhere have I ever heard anyone from a senior position in Google saying that in some way they’re motivated, or driven, by the desire or the wish to make the world a better place. I’m not sure. I think Reddit used to have some sort of goal about making the world a better place, or making the world less sucky – something like that.
So Google’s great aspirational goal was – in days gone by – “Don’t be evil.”, or “Do no evil.” I can’t remember the exact wording.
Mike [08:45]: It was, “Don’t be evil.”
Dave [08:46]: “Don’t be evil.”
Mike [08:46]: They don’t still subscribe to that is what you’re saying?
Dave [08:48]: Well, it seems to have vanished. It’s a big company. There’s a lot of data, and it’s quite tricky to find references nowadays. But I’ve always thought of all the goals to set yourself, I have all sorts of personal and professional goals. And actually a little bit of me wants to make the world a very slightly better place by raising my children to be nice, good people with good values. But having a goal to do no evil, don’t be evil, what is that? They’ve drawn a line between bad, very bad, and evil. So they can do something bad, or they can even do something very, very, very bad. But they’re not going to quite cross that line into pure evil. So as we discussed earlier, does that mean murder, an act of just killing one person? That’s very bad, but not necessarily evil.
So if that’s what you’re about, if you were at least in the early days driven by not being evil, surely they could’ve set the bar a little bit higher?
Mike [0:09:47]: You would think. You would think.
Dave [09:48]: There’s room there, isn’t there?
Mike [09:50]: I suppose yeah, you’re right. There is definitely a little bit of room there. I don’t know how much.
So with all these changes that are going on, as I said before, it seems like the people are trying to do the right things, and trying to at least pay attention and help Google and provide them some guidance around what your website is doing and how it’s laid out and things like that, but not be overly helpful, because quite frankly, most of us just don’t have that kind of time on our hands. How is it that we’re supposed to keep up with changes like this? Are there resources that we can use? I know that Mark Cutts puts a bunch of stuff out, but it’s hard to stay up on top of all of that stuff. And there’s obviously tons of different websites that you can go to that are doing nothing but constantly talking about different tactics that you can use, and different strategies. But is there any resources out there that you can use – newsletters for example – that just, kind of, distill things down a little bit for you?
Dave [10:42]: So, again, you’ve touched on a really good point that – for want for better phrase – “normal people” don’t have time for this sort of thing. And even if you do — let’s say next week as an example, you carve out three hours and you’re going to do SEO. So Monday morning 9:00 till 12:00, you’re going to do SEO. It’s written in the diary, in the calendar. Well, once you get there, the very first thing you’re going to think, most likely, is, “Where on earth do I start?” And if you go searching for what people are saying, the SEO industry has no shortage of; let’s say, “opinionated people with questionable values”. Let’s put it that way. So a lot of people are going to say a lot of things, but the signal to noise ratio is absolutely horrific.
So Google have a whole load of amazing resources. I already mentioned Google Search Console. This is free. You just set it up. It takes a minute to set up, and it’s way better than a whole lot of SEO tools that actually a lot of people pay for. Then they also have no shortage of their information and resources for webmasters. Only a month or so ago, I think, they issued their latest webmaster guidelines. Trust me, this is not a document that you want to be reading. It doesn’t help.
But there is again – I’m going to be off Google’s Christmas card list forever by the end of this – but there’s a certain level of hypocrisy, because I always feel that up to a point, Google are kind of saying, “Don’t optimize. Don’t do SEO. We’re brilliant. Our spiders and robots and our coders, developers, we are brilliant at figuring out what’s on your site.” But then they also give you some information, and it’s like every time someone from Google opens their mouth and says something -=- you mentioned Mark Cutts who’s been out of that side of Google for quite a while – but they had the Mark Cutts version too. Every time he says something everyone quotes and it goes back to that cat and mouse. People go frantically to change this, or add this add-on, or put this in their agenda, or look into the latest thing, and it doesn’t really end.
There’s some really good information out there. There’s SearchEngineLand.com, which I think they do daily email summaries. But there too, to be honest, there’s so much speculation in the world of SEO, so much, that it’s really hard to find a trusted source.
We got a newsletter called Google Demistifier. It goes out every Tuesday, only covers one topic, and we try to be completely biased, because we’re looking at a lot of data, a lot of people’s accounts, so we get a good idea for what’s out there.
But doing SEO is incredibly difficult today. It’s become a lot more complicated. It’s become more time consuming. And I think probably a fair number of people who listen to this podcast will relate to the fact it’s pretty scary doing SEO, because we have this fear of, “If we do this and Google don’t like it, what’s going to happen?” And I think that’s part of the problem for the industry, or for the area of SEO that we all face. But I do believe that nowadays we’ve got to the point where you can’t sit there and do nothing anymore. You actually have to more or less proactively start doing this, even if it’s scary.
Mike [13:57]: Now one of the things you mentioned there was the Google Search Console, which is not the same as the Webmaster Tools.
Dave [14:03]: It is the same. They just renamed it, just to confuse people a little bit.
Mike [14:08]: Because it looks completely different than the Webmaster Tool.
Dave [14:11]: They’ve done it up. You see if you log in to Webmaster Tool, it just redirects you now to Search Console.
Mike [14:18]: Oh, I see.
Dave [14:18]: They’ve done it up. It’s a seriously useful resource. It’s quite incredible the information they give you.
Mike [14:22]: Got it. Got it. Okay, because yeah, that makes a little bit more sense. Because when you do log in – I have come across that page before, and it obviously lists out a bunch of different web properties that you have, but it’s not necessarily showing you things that you have not verified through your DNS records, for example.
Dave [14:41]: Exactly. It’s not a be all and end all. But there is something so useful in there, which there’s a section in the Search Console called HTML Improvements. And ultimately, what HTML Improvements is, is Google pointing at your website and saying, “This is what we would suggest you fix on your website.” So there’s a lot of hype and there’s a lot of misleading information, but when Google basically say, “Fix these five issues on your website, because this can only help your SEO,” in my opinion, that’s worth paying attention to.
Mike [15:15]: Got it. So we’ve got things like some of the different Webmaster Tools, the Google Search Console, the newsletter that you guys have, but a couple of other resources that we just talked about – we’ll link some of those up in the show notes. So those are some of the places where a small business owner can go to at least learn some of these things. Now let’s talk about one of the main things that we really came onto the show to talk about, which was, what are some of the recent changes that they have done? What are the biggest changes that Google has made recently that is probably going to affect most of the listeners here?
Dave [15:46]: So this is something that’s happened just in the last week – very, very recent. And basically what they’ve done is they’ve taken away all the ads, all the text ads that are on the right-hand side, that were on the right-hand side. They’re gone. This is obviously on the desktop; mobile is a completely different ballgame. But on desktop, there are no longer ads on the right-hand side. Before, they were up to three ads on top, while now they have up to four ads on top. Usually it is four ads on top. And up to three at the bottom. So what this means is when you carry out search on Google, instead of seeing the standard couple of ads at the top, organic listings, and all down the side the actual paid ads, it’s totally, totally different. It looks different; it feels different. I’m actually pretty amazed, in a sense, by how little fuss has been about this. This is, in my opinion, the biggest change that I’ve seen Google roll out, ever, since possibly – maybe since introduction of AdWords. Maybe it’s even bigger than that. And it’s going to affect, not everyone, but almost everyone.
Mike [16:49]: So we’ve talked a little bit before about why Google has made some of the previous changes. Are there any specific reasons why they made this particular change?
Dave [16:57]: Well, obviously, it’s all speculation, but the only possible incentive that I can see for Google displaying four ads at the top instead of potentially no ads at the top is revenue. I can’t see any other reason whatsoever. It’s certainly not about quality of the results that are shown, because as we all know, we’ve all experienced searching something in the ads that we click on aren’t necessarily relevant to what we’re looking for. So this is not a quality update. This has to be driven, in my opinion, solely by revenue.
Mike [17:31]: So we talked a little bit before about a lot of us being collateral damage. What are the downsides to this particular change that they’ve made?
Dave [17:38]: To be honest, I don’t want to be all “doom and gloom”, but there are a lot of negatives. So what we’re now seeing is potentially 11 ads on the first page’s search results is now at best it’s 7. That’s going to have a major impact; more than half of them at the top. And it’s safe to say that, with time, those top four slots are going to start costing a lot more. But ultimately, if have an ad with an average position of eight, that’s on page two. And you can probably – it’s safe to assume most people don’t even get to page two when they’re looking for something. They refine the actual search. So that’s one thing.
The actual organic results – the SEO results, if you like – they really got pushed down. So the typical format, if you carry out search at Google, you now see four ads, you see the knowledge graph, which is effectively Google scraping websites and just pasting that information in, that can still be on the right-hand side. But quite often it’s below the ads that you have, ads knowledge graph.
And on a recent blog post that I wrote I took a screenshot of the search results for things to do in London. And you had four ads, a load of knowledge graph information, and right at the bottom – this is at pretty high resolution on my monitor – at the bottom there was one single organic listing being shown. And sure I can scroll down the page, but if I’m going to find what I’m looking for, why would I? There’s all sorts of theories out there, but ultimately no one knows what’s going to happen. But this is definitely going to have an enormous impact on SEO, and I don’t think it’s going to be positive.
I think the biggest ramification that we’re going to see is some AdWords account holders – if they’re especially with let’s say low margin products or high competition, or both – they’re going to be squeezed out. They’re going to be squeezed out by companies with budgets that actually can justify, make sense, or perhaps they’re just oblivious to how much they need to spend for these top four. And I think that’s going to hurt them quite badly.
And the other negative I can think of is I can’t see how this is actually going to be positive for the user, for the person going to Google and searching. I just can’t really see that happening.
Mike [19:55]: So it doesn’t sound like there’s any reasons for Google doing this other than basically making money. It’s not really because it was for the end user experience. It was basically because they want to make more money from this. And obviously, us as website owners, we are in an unfortunate position where Google has such power over the traffic on the Internet that there’s really just not anything that we can do about it, except just deal with the aftermath of it. We’ve talked about a lot of the downsides for us. Are there any upsides to this change that they’ve made?
Dave [20:24]: Yeah, there definitely are some positives, definitely. I think one, I think when you advertise on AdWords, you’re going to see hopefully some more meaningful and accurate average positions. So the days before these changes where you could get three ads at the top and let’s say seven or eight ads on the side, adding fourth position could be the very top at the right-hand side and that could actually sometimes be more effective than being in position one, two, or three, because you appear to be the top. So number four could most likely do better than positions two and three. So that gets a whole lot simpler, because now we know top four means exactly that. There is no right-hand side. There’s going to be better clarity there.
I also think – potentially, it’s all theory – there may be more consistency in ads as well; that they’re starting to look more familiar. Things like the side links aren’t jumping out, so that sort of evens things out a little bit.
Definitely, if your ad in position four for the most part, you’re going to be happy. Then there’s also – I should’ve mentioned this already — the other thing that could be on the right-hand side, as well as the knowledge graph – in other words the Google scrape – Google shopping ads are showing up on the right-hand side still as well. So if you’re using Google shopping ads, you’re probably going to see quite a significant increase, and you’re probably going to see that working quite well for you. But I have my own issues and reservations with Google shopping. But yeah, it’s not all bad.
Mike [21:56]: Right. But again, most of these push people down the path of spending money with Google in order to get to some of those top rankings, with the exception of those situations where you end up in the long-tail search results, and you happen to be at the top. But you’re still going to be below paid listings at that point.
Dave [22:14]: Exactly. So irrespective which viewpoint you take, and which stance you take, it seems every direction you look it’s all about an increase in revenue.
Mike [22:24]: Right, right. So based on that, where is this headed? Is this the only change that you can see them making in the near future, or are there other things that they’ve, kind of, announced that they’re going to be rolling out in the near future that are things that we need to pay attention to, and take a look at, or at least be aware of?
Dave [22:41]: So all of this is very new. So right now, there’s some noise about this on, for instance, the WebmasterWorld Forums. And some people are seeing an increasing click-through-rate, for instance. Some people are seeing a decrease in cost per conversion, which is all very well and good, but it’s all new. So it doesn’t mean anything. New behavior isn’t the same as what you’re going to expect to see in four, five weeks, six weeks down the line. So Google are in no way putting their feet up on the desk now and saying, “We are now done. Our goal to not be evil, and to maximize our ad revenue is complete. We’re finished. Everything’s done here. Now we’ll just let the internet run itself.”
There are some predictions being made already, which is beyond insane, but no one knows what’s going to be ahead. But one thing that’s guaranteed, Google are not going to – first of all, they’re not going to finish to try and maximize their ad revenue – which I don’t have any problem with. They’re certainly not going to finish trying to provide better organic results, so that we find what we’re looking for, so that we keep coming back to Google.
And you see that touches on the aspect of this that I, personally, find most interesting. This is the first update that I’ve seen by Google that’s actually left me scratching my head wondering, “Aside from revenue, why would they do this?” I wrote this in this blog post that they wrote about it. This is the very first time that I actually started to do the unthinkable, which was look at options like Bing. I actually went to Bing and DuckDuckGo, because there’s already – for some searches – it looks like the results are very ad-heavy. And they are. I can’t even imagine what it’s like at a low resolution, where really you are only going to see ads on your screen without scrolling the mouse. And we’re all lazy. We only scroll the mouse if we have to.
So as we touched on when we were discussing this, I have to wonder how many people are going to want to go to a search engine when the results that they see are primarily dominated by ads. If they keep going in this direction and become mainly, if not solely, ads that are on display, I can’t see people wanting that experience. I mean, would you?
Mike [24:59]: No, probably would not.
Dave [25:00]: No. It’s a strange, sort of, future that they’re potentially carving out for themselves. But I do have faith in Google that they’re smart people; they will have thought about this. I’d love to hear Google’s response. But, yeah, I’m completely baffled and I’m pretty much certain that what’s ahead of us is more change. I can’t overstress it. It won’t even be the first move in something. It’s not even really starting. It’s all rolling out. It’s all new.
I think another interesting aspect of this brings it more in line with the mobile experience. So for a while now, you could have four ads at the top of the mobile result. You know, search on your mobile phone. And I think, again speculation, but I think it’s very much about this convergence of devices that there are blurred, more blurrier maybe, blurrier lines between desktop, PC, smart phone, tablet, laptop, and so on. And I think Google want to give this consistent experience across all devices. So I suspect, I do think that’s probably part of it. But, again, it all goes back to profit.
Mike [26:08]: So, I guess we’ve talked a lot about what they are currently doing, what they have done, what it means for us, but we haven’t really talked about the one issue that I think is probably most important to the people listening to this is, what is it that we should be doing? Because obviously what we don’t want to do is sit in the middle of that game of cat and mouse between Google and people who are doing black hat SEO tricks, and end up – we don’t want to spin our wheels, we don’t want to do things that don’t matter – but we want to maximize our time and the return on the investment in that time. So what do we do?
Dave [26:40]: So the first thing to do, I think, is if there’s ever been a good time to put SEO and Google on your – let’s say, take it off your “to-do” list and put it on your actual radar – so this is something you start to pay attention to. Now is a really good time. I’ve heard a few people express this, sort of, helplessness along lines of, “Well, if organic is going down there’s nothing we can do about it.” But I’m a big fan – a big believer – in staying informed. And I think more than ever we have to stop paying more attention. We need – especially if you’re spending on AdWords – you really need to pay very close attention to, for instance, average position. Which I think a week or so ago, before this change, your average position was an indicator, but not as important as a lot of people thought. Whereas now it’s vital. If you’re consistently getting your ads in average position five, it’s very, very safe to say you’re going to see a huge drop in performance, and you’re going to have to market his informed decision whether it’s worth doing what you can to either try and get the ad higher by, in a way, gaming the system, getting a better quality score, or if you’re actually going to simply pay for it to get in that top four.
So, more than ever, you’re going to have to know your numbers with your AdWords accounts. And same with SEO. I can’t even begin to guess right now what effect we’re all going to see in our organic data, other than, say, it’s going to be very big. But the one thing I definitely want to know is I’d want to know what’s happening. I’d want to know if my organic traffic is dropping, by how much – if that’s a really vital channel for me.
If I’m a business and, let’s say, I don’t know, organic traffic accounts for 60% of our traffic and let’s say 50% of our sales, it could be time to diversify into other channels, and start spending a bit of time – maybe money – in some of the other options. But it’s really about being informed. And I think one strategy that will actually work for both – for AdWords and organic – is long-tail keywords. I think these are a potential – I won’t say a life-raft, but let’s say a lifebelt – in that, AdWords for instance, you’re not going to have as much competition with the long-tail keywords. So these are the keywords that aren’t so obvious, that aren’t getting quite as many searches as the big obvious ones, but add them together and they can be very sizeable. So I think in AdWords, long-tail keywords could be a very good strategy right now, because you’re going to have less competition meaning, you can make sure that you’re in that top four throughout.
And long-tail keywords’ always have been a good SEO strategy, but bearing in mind that the SEO results are getting squeezed down right to the bottom of the page, I think more than ever this has to become a more or less a standard SEO strategy from now. Well, I won’t say forever, but from now until the next major update.
Mike [29:36]: And just to be clear, one of the things that you’ve alluded to, but didn’t directly call out, is that there’s a very big difference between what your ad placement ranking is – whether you’re third or fourth position – versus your search engine result ranking. Those are two entirely different things, and you would monitor them entirely differently using different tools.
Dave [29:53]: Yeah, absolutely. There’s a huge – it’s almost impossible to pin down the differences, they’re so many – but it’s most simple obviously for AdWords you get to decide if you want to go up, either tweak the system or spend more. With SEO, sadly, it’s never quite that simple.
Mike [30:11]: So essentially, all the things that you’ve talked to boil down to what amounts to four different things that we need to be doing. First one is to monitor the placement of your ads and keywords. Are you number one, number four for ads – or in terms of your keywords – are you on the first page or are you on the fifteenth page? So that’s the first recommendation that we can take out of this.
The second one is monitoring your traffic levels, and making sure that you know where they’re headed based on other things that you’re doing. The third one is using the Google Search Console to identify things that you need to do on your website to either fix usability issues, or improving your search presence. Because Google will tell you directly what it is that you have to do. And then the last one is to really just stay, at least peripherally, informed about what’s going on, either using your newsletter, or the WebmasterWorld Forums or a variety of the different things that Google has provided. Is there anything else that you want to add to that list?
Dave [31:06]: Yeah, I’d say and the other thing is hidden number five is most businesses have SEO on their to-do list. In other words, we all mean to get round to it at some point, but there are always more pressing things to be done. And I think we’re now are at that time where it’s become, I’d say, pretty close to mission critical. It doesn’t mean you need to invest ten hours a week. We don’t have ten hours a week. But if you can be keeping an eye on this, and if you can just schedule 30 minutes a week – just to keep an eye on these things – and at least respond to the most pressing issues, in my opinion, that’s seriously time well-spent.
Mike [31:41]: And that could be something incorporated into “Marketing Monday” of all days.
Dave [31:44]: Absolutely. Exactly. Or Mocking Wednesday.
Mike [31:48]: Well, thanks for coming on, Dave. I really appreciate you taking the time to step in and help our listeners understand a little bit better some of the changes that they’re going to be seeing from Google, or what Google has already rolled out.
Dave [31:58]: Thank you very much. I love the show and I’m delighted to be here again.
Mike [32:02]: And if you have a question for us, you can call it into our voicemail number at 1-888-801-960, 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 on iTunes by searching for “startups” and visit StartupsForTheRestOfUs.com for full transcript of each episode. Thanks for listening and we’ll see you next time.
Episode 278 | How to Build and Launch a Membership Website
Show Notes
In this episode of Startups For The Rest Of Us, Rob and Mike share their experience and give insight on steps to validate, build and launch a membership website. They also give tips on how to decide whether a membership site is the right platform for your idea.
Items mentioned in this episode:
Transcript
Rob [0:00]: In this episode of Startups For the Rest of Us, Mike and I talk about how to build and launch a membership web site. This is Startups For the Rest of Us, episode 278. Welcome to Startups For the Rest of Us, the podcast that helps developers, designers and entrepreneurs be awesome at launching software products. Whether you’ve built your first product or you’re just thinking about it. I’m Rob.
Mike [0:26] : And I’m Mike.
Rob [0:27] : And we’re here to share our experiences to help you avoid the same mistakes we’ve made. What’s the word this week, Mike?
Mike [0:31]: Well I’m pleased to report that I’ve got a end-to-end deployment process in place for Bluetick, so the April 1st deadline that I’ve been shooting for is looking good right now.
Rob [0:41]: That’s only five weeks away. You’re still on track?
Mike [0:44]: Yeah.
Rob [0:45]: April 1 is the day that you’ll expect, or that you’ll hoping to have a couple early access people in, is that right, five to ten of them?
Mike [0:50]: I mean it kind of depends on exactly how the development process shakes out in terms of getting them on before that date or afterwards. But I want to have everything ready to go by then, and it may just take some time to put everybody on there, but that’s the goal to shoot for at the moment.
Rob [1:06] Cool. Glad to here you’re still on track, because we’d originally talked about that a couple months ago, about that deadline. These things change over time and you’re still on track. That’s good news. So the day after this podcast airs is Jason Calacanis’ launch festival in San Francisco and I will be there, or I’m planning to be there. Although I booked something in Airbnb and I tried to book it and the person never got back, and then said maybe. So I may be there and like sleeping on the street, but I have a ticket to the launch festival and I’m planning to be there, I guess, even if I have to drive. My brother lives about an hour away, even if I have to stay with him and drive in each day, I’ll do that. So if you are at the launch festival tweet at me or DM me or something and I’m trying to set up a little gathering of bootstrappers, or folks who listen to this podcast. I don’t know that it’ll be as formal as a dinner, but probably just a meeting place at a bar or something to get together and chat.
Mike [1:58] : Cool. Well about an hour ago you and I had just finished up a worldwide call for the membership Web site that you and I run called FounderCafe, and we very nearly rolled it into today’s podcast, to do a live podcast. But you didn’t bring it up until after the call was over.
Rob [2:13] : Yeah. I know. It would have been interesting. We’ve never done a live podcast in front of an audience with a chatroom and all that stuff. But this, of all topics, like you said, today’s topic would have probably been a pretty good one to do it. Maybe next time. I was a little hesitant because we’ve never recorded in anywhere but Skype, and we know how that works and it’s repeatable and predictable. And this would have been an off the cuff, hey, let’s just record ourselves in Google Hangouts and hope we can get the audio out later.
Mike [2:37] : Yeah. And I’m sure that there’s tool out there that allow you to do that, but that’s a risky thing to do.
Rob [2:42] : To basically record a whole episode and then not know if it’s going to turn out technically very well. Last thing, for me is, there’s an epic post that Zach on my team wrote. It’s up on the Drip blog, we’ll link it up. But blog.getdrip.com, you’ll find it in the top few of the listings. Zach wrote this epic tear down of Derek Halpern’s email launch. He recently launched a course called, I think it was called “7 Figure Courses”, and he just hammered through this thing. It’s like awesome. He analyzed every email in the series, and talks about why it works, and analyzes specific sentences, and then offers a checklist download at the end, just a bunch of stuff. It’s 3,000, words or 3,500, I mean it’s huge. It might even be longer than that and it’s got a dozen screenshots and stuff in it. This is one of the best tear-downs I’ve seen in a while of an email launch sequence. And while you don’t have to obviously use everything and all the mechanisms that Derek Halpern does, this takes a look at why each of them works and could allow you to potentially take the same ideas and thoughts and put them into your emails.
Mike [3:42]: I saw that. That’s a fantastic post. If you have any questions about what sorts of things should go into an announcement like that, or a lead up to something that you’re launching, there’s a lot of really great ideas in there that you’re probably implementing at least some of them, but I would be hesitant to say that you’re implementing all of them, because there’s a lot of really good things in there. Some things I looked at and said “Oh, I got to try that.”
Rob : [4:05] So today we’re tackling a big topic, and this was requested in a thread inside FounderCafe. And FounderCafe is the membership web site that Mike and I run where we gather bootstrappers together and built on DISCUS, which is a forum and discussion software. We have conversations, we ask, answer questions and just kind of everybody engages. We also do calls periodically; Google Hangouts where people can ask stuff in a chatroom. Try to do it monthly but they wind up being once every probably month or two. When I asked for topic suggestions for the podcast, this topic today about how to build and launch a membership web site, was requested several times. And so we wanted to cover it, because we know that there’s a lot that goes into doing this – to validating and building and launching a membership web site – but we definitely have had experience, and we’ve actually launched the Academy several years ago, the Micropreneuer Academy, and then essentially moved the platform from WordPress to a third party SaaS host for that, and then recently moved it again, this time into DISCUS in order to focus on the interactions with entrepreneurs. And we also did a re-branding at that point from Micropreneur Academy to FounderCafe. So we have experience on a lot of realms of doing this. Certainly this is not something that we’ve done dozens of times, so I wouldn’t claim to be a membership web site expert. But we have taken some hard knocks on this, and I think we have some insight to lend on it. So I’ve broken this down into three main categories or topics. The first is how to validate, second is how to build, and the third is how to launch. And so there’s a bunch of different sub points under each of those. The first piece about validation is one that I think that folks may overlook. And it’s to ask yourself this question, “Does this topic that you’re thinking about, or that you’re an expert in, does it warrant a full-membership web site? Does it warrant someone paying you every month or every quarter to have access to content and potentially discussion? Or, is a video course or an eBook a better way to go – something that’s a little more static, and that doesn’t require, A, all the work, but, B, all the audience engagement and all the effort of getting an entire membership Web site set up.
Mike [6:15] : Yeah. And I think the way that you can ask yourself that question – that probably phrases it a little bit better than just saying “Which one of these should I do?” – is that you evaluate the reasons why you are looking to build a membership web site. So if you’re looking at that and saying, “I want to do this because I want a recurring source of revenue. ” that’s the wrong way to look at it. What you really should be looking at it from is the perspective of the customer, the person who’s going to be a subscriber to your community. So if they look at that, and you can put yourself in their shoes, and you can say, “Yes, this is not only providing value, but it is providing more value over time.” And I think that that’s the real key here as to whether or not it should be something like a membership site – where it’s a recurring subscription fee – or something that is a one-time fee. And I think the differentiator there… I was listening to, I think it was Scott – I can’t remember the guy’s last name – Farquhar from Atlassian. He was speaking at Business of Software, and he answered this question about, “how do you decide whether something should be a recurring subscription fee, or whether it should be a one-time fee?” And his answer to that was pretty compelling. It was, “Does this provide more or less value over time? And if it provides more value over time, then you can justify a subscription fee. But if the value that it provides over time goes down, then it should be a one-time fee, so that way they get all their value upfront, and then they walk away.” And that’s very similar to this in determining whether or not you make it into a course or an eBook, or you have it into a membership web site that people would pay for on a recurring basis.
Rob [7:45]: And one concrete example of this is, I had a friend several years ago – I think it was maybe four or five years ago – and he was really doubling down on building a personal brand around recording awesome screencasts. Like how to do a really good product demo, how to tell a story, and how to it all with a screencast. And he had a whole approach that he used and was really good at it and was getting paid by Fortune 500 companies several thousand dollar – I don’t know, it was like ten grand or 15 grand to record these demos. And so then he started blogging about it and, I think, was kind of writing an eBook, and he was thinking that he was going to do a membership site around this topic. But the more we got into it and discussed it, he said, “You know? It’s like you learn some things, and you learn these tips and tactics, and then you can go do it, and then you’re done. And a lot of people either only record one of these screencasts over time, or maybe a couple, and you can learn a lot from just an eBook or even just a video course, I think, which is what he wound up doing. But you didn’t need, A, ongoing content that was updated, or, B, discussions; forums with people interacting, because there wasn’t really a community built around it, and there wasn’t necessarily a need for that ongoing value, to tie back into what Mike was just saying. I think an interesting way, in terms of actually validating, if you decide, “Okay. I am working on something that I think people would want ongoing support with, and there’s new stuff coming out that I want to provide new content on.” I think there’s a couple interesting ideas in terms of validating it. One is instead of launching as a full membership Web site, is to try to push something out on Udemy, or Udacity, or Teachable, and just do a simple video course, and see how much uptick you get, and who’s interested in it, and then you gain, kind of, a broadcast capability to those people. So if you do sell a few thousand of your video course to them, later on there’s a likelihood that you could use that as an audience, that if you’re going to go off and build something else you could potentially promote to them. I don’t know about the terms of service with those sites, and if you did promote that if that’d be a problem, but it’s an interesting idea if you’re starting from not a large audience to, kind of, prove the concept and figure out boy, “How hard is this content going to be to create.” and “How much time do I have to spend.”, is this worth it, and are people interested in it? Because I think without an audience that’s something that you could consider. My advice though would be you really don’t want to launch a membership web site without some type of an audience, like whether you have a blog or a podcast, or some type of email list that you’ve build up over time. Because starting from a cold stop, I’ve never seen anyone do that. Because a membership web site is not an eBook. It’s not something that you can sell on some merits. It’s very hard to do that, I’ll say. Getting someone to spend 20 or 30 bucks on an eBook is one thing, if you’re providing the reason to do it and have a good sales letter. But trying to start a membership web site where you’re going to have people interacting on forums and you don’t have a community built in advance can be really, really hard to do. When I talk about this Udemy, Udacity, Teachable, etc. approach, I’m thinking more that you do have some type of audience, even a smaller one, that you can send to those courses and promote them, and if no one buys them then you know you’re probably off the mark with the whole deal. But if there’s a lot of uptick and they are popular, then you can use that to level up. I mean, I do view it as a stair step approach of maybe building email lists and then stair-stepping up to just an online video course, and then considering whether or not you want to level up to an actual, essentially a subscription product like a membership Web site.
Mike [10:54]: Yeah. When I think back to how we started the Micropreneuer Academy – and I don’t want to set it up as saying it’s an anti-example to what you just said – but I think that there’s a caveat with what we did, which was we, kind of, started it from scratch, but there were people being fed into that from our blogs and from social networks. But in addition to that, we weren’t just selling a community. There was also the course content that was associated with it, and that course content was regularly coming out. So the forums were, kind of, half of that membership web site, and then the other half was courses, which we eventually made a decision to move away from course content. But that’s one way that you could potentially build up the community there. and hand hold it until it gets to the point where it’s a little bit more self-sustaining. So maybe that’s one approach that somebody might be able to take.
Rob : [11:41]: You know. when I was getting the Academy off the ground I did have enough of an audience to get it going because I had 25,000 RSS subscribers at the time. That and four bucks will get you a latte at Starbucks. But it wasn’t an email list, like if I had 25,000 email subscribers it would have been so much better. I think I had hundreds of people on an email list at the time, because I hadn’t realized the power of email at the time. This was probably 2009, I think. 2009, 2010 timeframe. I did have that RSS audience and that was what kickstarted it. Without that I don’t know how I would have done it. And we’ll talk a little bit more about it in the building, but I had seeded the forums and gotten a few people in there from that audience. And if you’re going to have forums you need to have people in there interacting, or else it looks like a ghost town. And right away I was able to sell a hundred people to get inside the Academy from the start, and then that was, essentially the impetus. Because if you’re not able to kickstart that really early on, you’re going to have an issue with feeling like a ghost town. That’s only if you decide to do forums. Now there’s a decision that comes up, we’ll talk about a little bit, about whether or not you want to do that or just offer content. Another interesting example – and this is the first time I’d seen it done, but in terms of validating a membership web site concept – was Adrian Rosebrock from PyImageSearch, and he validated it using Kickstarter. And we’ll link over to that, but it’s the PyImageSearch Guru’s Computer Vision membership community, basically. He posted it up there, but he had an email list and he built it up and he launched to that list for them to go kickstart the thing if they were interested. And what they were buying was the first three months or the first however many months of their membership to that thing, and he got past his goal, well, well past his goal, and was able to, essentially, get some cash out of it upfront to justify building it. In essence, I think his goal was $2,500 and he wound up getting about $35,000 in backers. So that was obviously a really nice validation that the idea had some legs. But again, he didn’t start from no audience. He did have an email list that he utilized very well. We actually did a case study of him because he used DRIP to do it. And if you search back through the DRIP blog you can find out what he did, and how he did it to basically, to get the kickstarter funded.
Mike [13:45]: So as Rob just said, the first stage is to essentially validate the idea. The second one is to build it. And at the very beginning of building you have to make some decisions about exactly what it is that you’re going to be building, and what you’re going to be doing for your customers. Are you going to have just forums? Are you going to have just content? Are you going to be doing both? Doing both is a heck of a lot of work. If you’re going to be building content, content can take a long time to build. Back when Rob started the Academy, and just to give a quick timeline here, when the Micropreneur Academy started it was actually just Rob. And that was for probably what, was it three, four, five months, something like that?
Rob [14:22] : Somewhere in that.
Mike [14:23]: Yeah. So I. kind of, signed on board after that point because Rob was overwhelmed and needed some help with it. So he looked through his Rolodex and I ended up on the shortlist and we basically worked out how that was going to work.
Rob [14:35] : You were my fifth choice, Mike.
Mike [14:37] : I was your fifth, excellent.
Rob [14:38]: No, you weren’t. Man, to talk about overwhelmed. I was working 20 to 30 hours a week just hammering out content. I’ve never created so much content as I was there. And I felt like I just could not keep up with how much content I had committed to.
Mike [14:53]: I can’t even imagine how difficult that was, because even when I came on and I started building content, that was a heck of a lot of work. Basically we split it down the middle at that point. I was doing half and you were doing half, but I can’t imagine doing double that for three months beforehand.
Rob [15:11]: It was a bit of work.
Mike [15:12] : But basically what we were doing is we were building content, and Rob would build – I forget what it was we started out – like we were doing two lessons each per week, or one lesson each per week, and every single week we would push out new content. But in addition to that we were also helping to nurture the community, and interacting with people on the forums and just asking people questions. So it was a combination of building the content, talking to people in the community, maintaining the forums, and then in addition to that, doing marketing for it as well. So it wasn’t really a trivial amount of work. There was a huge amount of work because we were doing both things. We were generating the content at the same time. And I think that if you go back to the very first step where we talked about validation, if you were deciding whether or not you’re going to do a membership Web site or a video course, or an eBook or something like that, depending on how long it takes you to build one of those things is going to dictate how much work it’s going to be down the road for you. So you do have to make some decisions about what you want to offer people and what it is that they’re going to find valuable.
Rob [16:12]: Yeah. I think in a perfect world, if you’ve created a nice base of content already – like you’ve written a book, or you’ve written an eBook, and you’ve gotten people on the same page with kind of shared base of knowledge, then launching a membership web site that was just forums/a community around that topic, and you guys have that shared vocabulary from whatever it is that you’ve wrote that everyone’s been reading, that, to me, is the easiest way – or maybe the best way to do this. Because it’s very natural for someone that if they’re getting value out of a community, and it’s high quality, for them to consider paying for that on an ongoing basis every month. It’s less so with content, because at a certain point you tend to run out of good content. And the content, I think, could be sold almost separately as a way to, again, get everyone on the same page and, I think, there’s this phrase that “people will come for the content and they stay for the community”. This is kind of a common phrase people throw out with membership web sites. And I think that’s true. I think that being able to train people, and offer advice and that kind of stuff with an actual curriculum, is helpful. But I think the idea of being able to perpetually create content to keep someone around month after month and year after year is a really tall order, because eventually the topics, you just run out of interesting topics that you haven’t covered already. Now an exception to this is if your membership web site, or a content producer more like Mixergy, where you’re doing interviews, then yes, there is an evergreen, perpetual thing that you can do, and you can just do a few more interviews and spit them out. But if that’s not it, and you really are the personal brand and, it’s your thoughts and your content and your take on this that makes it unique, I would lean towards trying to put enough content together that people really dig it and you can either sell that as its own thing, and then offer the community as an add-on rather than focusing on trying to have both content and community tied up in the same thing. And I think, looking back, that’s something I probably would do differently with seven years, in essence, of hindsight on the Academy. Back then the only membership web sites I knew did both, and it was A, too much work for one person, and B, in the long run I think that focusing more on the forums and the community would have probably been a better approach.
Mike [18:19]: One of the things that we did early on was that we took a look at how many people were inside the Academy. And we were probably about 16 months into creating content, and we looked at that and said, “Well, how many people who are joining this month are going to see the content that we’re creating from the 16th month?” And that question made us go back and take a look at stuff and start thinking about churn rates and things like that because we were charging people every single month. And what we realized was that we were putting the same amount of effort into the content 16 months after we started that we did in the first month and the second month and the third month. So there really wasn’t exactly a good ROI for that. So what we did was we compressed a lot of that content back down, and we said “Okay, we’re going to make this into a course, and our billing mechanism was just, “We’re going to charge for 12 months of the course, and if you wanted to buy it all upfront you could do that. We’d make some special offers along the way, about three or four months in.” But you could buy the whole course for, I think it was like probably $500 or $600, something like that. But that was it. So even doing that though, like when we were selling it to people, we had a roadmap of all the different content that we wanted. And that’s something else that I would highly recommend doing upfront as part of this. If you’re going to go the route of content, know exactly what it is that you’re going to build along the way so that you can make things lead from one into another, and you can decide, “Okay. This lesson, or this module, is going to be there in week 17, or month three or something like that, and then the next month you’re going to follow it up with X. And if you have all of those things laid out – whether you use Trello or a spreadsheet or anything like that – lay them out so that it really is, kind of, a course, so that things build on top of each other like Legos. So that way you’re building, kind of, a foundation and you’re moving up from there. I guess that applies more probably if you’re doing like a drip content of any kind. So you’re dripping that out over time. But early on, if you’re building all the content, you don’t have all the content built so you kind of have to drip it out. Having that roadmap upfront and in place on day one is really going to provide, not only you a lot of value because it tells you exactly what you need to do moving forward, but it’s also going to provide you some marketing materials that you can provide to the people who you’re onboarding.
Rob [20:31]: Yeah. That’s a good point to bring up, is when you’re building content for a site like this, if you do decide to actually build it into the site, and not do this kind of more standalone or one-time product, and you’re going to build stuff along the way, then I would do exactly what you said, which is basically have an outline for maybe three months, maybe four months, but only build the first couple of weeks – maybe two to four weeks worth of content – because if you don’t know if the idea is going to fly, and you haven’t done extensive validation or you still have doubts, you don’t want to build months and months worth of content. Because if it doesn’t fly then you’ve wasted that. You can, instead, build the first few weeks and then you drip it out over time, and as the frontrunners – the first people who sign up, make it to that next week – you can basically turn it out right before they arrive at that point. And that can create some helpful deadlines, to be honest. I remember feeling stressed about it, but it forced me to create a lot of, what I consider, it’s the most content and some of the best content I’ve ever produced, was in that six to twelve month timeframe when I was just running week to week. Now, it was exhausting and I couldn’t do anything else, and that’s all I did pretty much full-time, except from just managing the little software products that I have. But I think that was a nice motivator. Now in retrospect, would I ever do that again? Probably not at this point, because it just was so hard, it was so much time and it was so much work. So something that you have to weigh when you’re thinking about this, do you want to include content in your membership web site?
And the last piece I’ll throw out is if you decide that you are going to have a forum piece, and again that’s typically the piece I hear about that keeps people coming around is that community aspect, start to think through how you’re going to have a plan to spur conversation. Both to get people onboarded, because if someone’s never posted to the forum they’re much less likely to ever post to it. So you want to get them in, get them introducing themselves. It’d be great if there was beyond introducing, there was even another one that was a question about you, what’s your business? or something like that. Then having a weekly discussion topic that the people can come back to week after week, I think is another thing to think about. And if you can hire a community manager that would great. Or if you’re going to handle it yourself, that’s something else to do. But forums don’t tend to grow and thrive by themselves. They tend to need some nurturing along the way.
All right. You’ve validated, you’ve built it, now the thought is how are you going to launch it? That’s your last step before everything really starts. Your last step before everything starts. I’ll say it again, I can’t imagine launching a membership web site without an email list of at least a couple thousand people. I don’t know how you’d do it without an existing audience, because trying to run ads or trying to just do it without this base of people would be very, very hard. So with that said, build the list first. You got to build up your content producing chops if you’re going to do this, or you’re personal brand and your audience. And then you’ll want to launch to them. And I’ll talk in a couple minutes about how to do that with email. But before that, one of the ways to prep the inside of your membership web site is if you do have forums, you have to let some charter members – or founding members – inside early to basically populate those forums. You want to seed them with some questions and some discussions. With the Academy I think I let four or five people in. I called them charter members. I don’t remember, I may have comped them all lifetime, but I don’t know that you need to do that. If people are really interested you could just give them 50% off as charter/founding members. It depends on the situation you’re in, and how desperate you are for them. But getting these folks in early and getting them participating will be a big win for you to have something in the forums when people arrive. Even if you only have a dozen or two forum topics when someone gets there.
Mike [23:59] : Yeah. This is really, really important because the last thing you want to have when people log in is to have that community be a ghost town. So there’s a couple of different ways that you can do that. One thing that we’ve found that worked really well was to let a bunch of people in all at the same time. And what that does is it tends to create sort of momentum for people to introduce themselves, and they see, “Oh, this other person introduced themself. And then a second person and a third person.” And then suddenly they feel like there’s a lot of people who are also new, just like them. And I think there’s different ways to approach that particular problem, but essentially what you’re doing is your creating conversation starters, so people can see what other people are working on, what they’re doing, what they’re interested in, and start asking questions. And that’s really where the value of the community comes from is people talking to one another and providing other conversation starters. “Oh, I see that you’re in this part of the country. Where are you? I used to live there.” So those types of things are probably not directly important to the type of product that you’re building this community around, but it is extremely important for having that sense of community because it gives them something to talk about. If you have nothing to talk about, there’s no community.
Rob [25:09]: Yeah. And that cohort approach of basically not letting people in all the time, but letting people in in groups, serves both the approach of getting folks in all at once both, so they can get something out of it, but so that you can manage that whole process. We found it being much more beneficial to have 25, 30 new people all at once, rather than have them trickle in over the course of a few months. And the nice part if we’ve also found that it increases conversion rates, because people are focused and more ready when the time comes, rather than just signing in to check out what it’s like.
Mike [25:40]: Yeah. And maybe you should explain that a little bit, because that really boils down to doing a launch. Because what we were doing when we had the cohorts was we would draw a line in the sand and after a certain date, let’s say the first Tuesday of the month or something like that, we would say, “Okay. Let’s take everybody who signed up over the past 30 or 60 days and send them through this launch sequence.” And that’s essentially going to be this new cohort that comes into the community. So we found that that was very effective. We did, too, some testing around allowing people to just sign up whenever they wanted. There really wasn’t the pressure for them to say, “Oh, well, I can only do this now. Or if I want to do it a week from now I won’t be able to, I’m going to have to wait another month or two months or something like that.” That really helps drive some of the people in and say, “Okay. Let me make the decision now, as opposed to just pushing the decision off and then never really deciding because they said I can do this at any time.
Rob [26:32]: And in terms of your launch, like Mike just said, you are definitely going to want to launch with a series of emails. I’d say four or more emails. I went into this in my book, and we, of course, talk about it inside the Academy. We’ve probably talked about it on the podcast before. There’s a lot of info about this. You could go back to the Derek Halpern post that I talked about just a few minutes ago, about the tear down we did on the DRIP blog. You’ll see that sending a lot of emails tends to – as long as you’re doing it tastefully – will tend to produce better results, and it’s not just this one launch email, but it’s building up some anticipation. You can do it in a classy and really respectful way, and offer tastes of things and talk about what it’s going to be, and try to flesh out the idea of what this is really going to be so that people get a picture of it in their minds, and you’re not trying to basically sell someone on signing up to a membership web site in a thousand words. Which is, essentially, if you’re just going to do it in one email, is what you’re trying to do. So you’re really going to spell out the benefits, everything that will be part of the experience, and talk about what it’s going to offer for them. And so, setting up that series of emails is something that you’ll do in the initial launch, and then if you do decide to do cohorts, like we have traditionally done, then you can basically modify those just a bit and use them to then launch to the groups every month or every two, as you open the doors.
Mike [27:48]: Another decision you have to make about your launch is how you’re going to charge people. And this boils down to essentially the frequency. Are you going to charge them monthly? Are you going to charge them quarterly? Are you going to charge them just one time and it’s going to be unlimited or lifetime access? It, kind of, depends on the type of site that you’re running. If you have just forums, then it’s probably best to do something quarterly or annually. And what that does is that allows you to get them out of the mindset of “I’m going to try this out for a month or for two months.” Because the fact of the matter is they’re probably not going to get a lot of value out of it in 15 days or 30 days. So what you really want to do is push them much more towards a quarterly or annual plan of some kind. That doesn’t mean that it needs to be $3,000 or anything like that. I mean you could charge $50 or $100 either a quarter or per year. It depends on what it is that you’re building this community around. But the point still stands. I mean, you have to make a decision about whether or not you are going to be charging monthly or quarterly basis. Going back to the other side of it, if you’re providing content plus forums, then I think that you can move much more towards a monthly plan. Especially if you’re dripping out content over that time period. You could presumably build a community site where you have content that everybody gets access to all the content on day one, and then they have access to the community. But if they come in there and they say, “Oh, let me spend my 15 or 30 day free time period in here. I’m going to consume all the content and then I’m going to quit.” That defeats the purpose of having that type of arrangement. In that case you might say. “Well, I can go through and I can say it will be $400 to join and this is what the content is. And then over here I’m going to charge separately for ongoing access to the community.” So those are both different approaches that you can take in terms of how you’re going to be charging them. But it really depends a lot on the type of content that you’re charging further access to.
Rob [29:43]: Yeah. The point here is that most people tend to wander in and out of forums, right? They’re not in them all day or everyday. So one month you may get busy and you don’t use the forum, and if you’re getting billed for it every month, you’ll look and say, “I’m not using that. I’m not getting value out of it.” and cancel it. But if someone’s going to be getting reasonable value out of it, they’re going to get some value out of it every quarter, let’s assume. They’re probably not going to go six months and then get value out of it. The odds are it’s going to be every 90 days or something, they’re going to get a nice little hit from it. And so that’s the idea here is to try to match up the billing cycle with the value cycle of what someone’s receiving. So there’s a lot to talk about on this one, but I would agree with what Mike said here, that if you’re doing forums only, I would always lean towards quarterly. That’s the model I’ve seen working. But you could definitely do annual as well. I know you’ll have to ask for more money. You’re going to get more failed credit card charges, because they’re going to fail between there. You’re going to get more charge backs if you do annual. You have all these things that can go wrong. But I think those are probably the best way to go. And then if you’re releasing a ton of content then monthly you are providing them a lot of value, and I think it’s easier to justify that.
And then I think the last topic we have time to cover today is churn. Membership Web sites have tremendous churn compared to SaaS apps, because a lot of them are information and they’re not necessarily critical to a business’ success, or a person’s success doing something. And so they tend to historically have churn that is a lot higher than maybe a mission critical SaaS app that someone’s using. And I’ve talked to several – I’d say a couple dozen membership web site owners – and the average lifetime on membership web sites can be as low as between three and six months, which essentially means you’re churning out – you might have a 30% or a 20% churn rate where you’re losing that many people each month during that time. Some ways to think about this are to try to look at where you lose most of your people, and think about whether there’s something you could offer folks to stick around, and to try to find out why they are churning out. Like if they say, “The content just stops being good after month four,” then think to yourself, “Okay. So should I just give away the content because people are valuing that so much? Give it away to everybody and then just make the forums the piece that keeps people there?” Or if folks say, “I just didn’t have time to use it.” then maybe are you putting out too much information? Are you overwhelming people? Or, if everyone cancels after month four or month five, do you want to consider maybe pitching them at month two or month three with something that’s like, “Hey, we have a pretty reduced-price annual plan that can keep you around for the whole year, and it’s half the price of if you’re going monthly.” And then if someone’s on the fence or in doubt then maybe they upgrade to that plan. So there’s some different ways to think about it and a way to reduce the risk for the customer, and to also try to head off, or eliminate, some of the cancellation reasons that folks might be having. Because there’s a lot of reasons, of course, to cancel your membership if you see it coming in every month and you’re not getting value.
Mike [32:36]: This is something that when you’re first starting a membership site, can be really difficult to figure out, because you’re looking for trends in your churn, and every single month things are changing. And as months go on, you’re entire platform is changing as well. So you have to, kind of, look back with a bit of a critical eye and say. “Okay, what is it that changed?” And this is where having cohorts of people can be really helpful, because if you’re tracking those cohorts of people into your community, then you can say, “Okay, these people that came in in the first month, at what point down the road do they typically churn out.” And then the people who came in the month after that, what point did they churn out? Is your churn rate going up or down for each of those cohorts? And what is changing in the background? Are you adding content, are you moving content around, or are you improving anything? And as Rob said, are there pieces of content that you’re providing to them that are just not very good, or are you just overwhelming them with too much? All of those things can factor into it. Especially when you’re early on it can be very easy to just completely ignore churn, because chances are good that you’re growing the community at a rate that it eclipses what your churn is. So it’s sometimes difficult to see what’s happening there, because if your revenue is growing so fast that it basically trivializes or minimizes the churn rates, then you won’t notice that there’s a problem until it’s almost too late. That’s definitely something that you have to be careful of and look back at and figure out whether people are even paying attention to the content that you’re building.
So to just recap a little bit. This was how to build and launch a membership web site, and a lot of it was based on our own experience around building and launching the Micropreneur Academy. And basic steps really, are to validate what you have and what you’re looking at building, go ahead and build it using a variety of different technologies that are out there, and making sure that you’re crafting it in such a way that it’s going to be usable for your community. And then the third step is to launch and make sure that you are setting things up in such a way, in terms of the rate that you’re charging people, and doing ongoing launches to make sure that people are coming in as a cohort so that you can measure things and ensure that what you’re providing to people is valuable. And if you’re interested in the FounderCafe you can go over to foundercafe.com and everything that we have for our online community is laid out there.
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 277 | Five Ways to Structure Your Startup Mastermind
Show Notes
In this episode of Startups For The Rest Of Us, Rob and Mike talk about five ways to structure your mastermind. They list some different formats to try and the pros and cons to each.
Items mentioned in this episode:
- ZenFounder
- Sherry Walling’s Retreat Book
- The Nights & Weekend Podcast
- Mastermind Jam
- The Productivity Project Book
Transcript
Mike [00:00:24]: In this episode of Startups For the Rest of Us, Rob and I are going to be talking about five ways to structure your startup mastermind. This is Startups For the Rest of Us, episode 277. Welcome to Startups For the Rest of Us, the podcast helps developers, designers, and entrepreneurs be awesome at launching software products, whether you’ve built your first product or you’re just thinking about it. I’m Mike.
Rob [00:00:25]: Hi, I’m Rob.
Mike [00:00:29]: And we’re here to share our experiences to help you avoid the same mistakes we’ve made. What are you doing this week, Rob?
Rob [00:02:16]: Well you know how at the end of every year I talk about how email had become such a problem for me. That’s kind of the one thing I’ve haven’t been able to fix. I feel like I’ve outsourced or delegated or figured out systems for so many things, but my inbox was always the one, it’s just hammering me non-stop. I finally might have a solution. Basically I hired a VA about, let’s see, six or seven months ago. And it was more like, I’d say maybe a step up from just a standard VA, and it was someone who called themselves an Executive Assistant so I’ll call her an EA. And Executive Assistants are more used to dealing with executives, in essence, and it’s not like I’m some high-powered executive, but they are used to managing calendars and going through email and evaluating things, and being less about – there is definitely some process there but it’s also a lot of pretty hardcore thought put into it. And so the one that I had before didn’t work out. It became a little too much of a process and she was basically just filtering my stuff into some categories and it wasn’t actually helpful. I let her go a while back, she eventually became not liable. And now I have a new one who’s been with me for about a month and I’m slowly ramping more and more up. I have notices a dramatic difference now. Instead of waking up to 70 or 80 new emails in my inbox every morning, and then I get another 50 during the day or something, it’s just way, way less, stuff that I’m processing. Because not only is she filtering things, but she is responding to podcast invites. I told her my criteria, my loose criteria for evaluating invites for interviews and guest posts, and even some partnership stuff and she’s starting to take some action on those and inquire for more information or to let someone know that not able to do it or to actually book the thing, and then she has access to my calendar and she’s booking that. A long way of saying this week I’m feeling finally good for a brief glimpse about the status of my email inbox.
Mike [00:02:21]: Cool. I just have one question about that. Are my emails getting directly routed past?
Rob [00:02:59]: They definitely are. I said one of my things is if someone seems like they know me and they’re emailing me, just put them into the ‘Today’. ‘Today’ is everything I handled today. I get a lot of cold pitches for different things and I’ve asked her that if they’re cold that either evaluate it yourself or if you don’t know how, let’s talk about how you can evaluate it in the future, and then she puts it into a ‘This Week’ label. And I check the ‘This Week’ label once, maybe twice a week. And that’s where I have some newsletters that I like to read and some other stuff. And it’s people asking for advice as well, if I don’t already know them. Stuff that I just want to do in a big batch. Yes, since you know me, you would go into the ‘Today’ label.
Mike [00:03:01]: Well that’s good to know, I guess.
Rob [00:03:22]: The other thing, too, is I’m not having her reply as me at all. For some reason that feels weird. I know some people have a VA or an EA reply as them and that, I don’t know that I will ever want to do that. I’d prefer for her to basically send it over to me and I reply or she can reply but signed as her just to let someone know.
Mike [00:03:28]: I was going to say you could just have her do that and do the reply but then also sign it as herself instead.
Rob [00:03:28]: Exactly.
Mike [00:03:29]: That would work.
Rob [00:03:31]: How about you? What’s new this week?
Mike [00:04:33]: I was reading a new book over the past day or two. It’s called the “Zen Founder Guide to Founder Retreats.” And that’s by Sherry Walling. We’ll link that up in the show notes. I talked about founder retreats in my book as well, but it was based on an interview that I did with her and also, obviously, she was the source of that idea. So this is probably the definitive guide, I would say. It walks through four steps to making sure that you have a successful retreat and then goes through various strategies and activities that you should use while you’re on that retreat. And then it also includes some worksheets along with it. Like I said, we’ll link that up in the show notes, but I would definitely recommend that anybody who’s out there who’s considering a retreat or even if you’ve already gone on a retreat, there’s a lot of good tips in there. I especially liked the strategy section where she maps out four different strategies specifically for how to answer some of the questions that you have in your head, or how to go about goal setting. Again, definitely worth a read. We’ll link it up in the show notes.
Rob [00:06:27]: I was pretty happy with how this turned out. I did absolutely none of the writing. I didn’t write a single word in this thing. I did read it over for her and give her a little bit of advice, but she really drove it. And this is the first product she’s ever launched so I’m excited about it and she’s certainly stoked about it. If you go to ZenFounder.com there’s a link to it in the right navigation and I think she’s selling it for $24.00 via Gumroad. If you’re interested in it you should check it out. I have another recommendation for a book. It’s something I stumbled upon from listening to the Unmistakable Creative podcast. And the book is called “The Productivity Project.” I’ve listened to a lot of productivity books over the years and I’ve become immune to a lot of them and they have a lot of suggestions and tactics that don’t necessarily work for everyone or they just become advice that you don’t take. But what this guy did is he did, I think, a 100 different productivity experiments over the course of a year or a little more, and he basically looked at all the best advice and some of the worst advice and just implemented it and then he recorded all the results and he published it on a blog. And later, that turned into this book. So the book itself, I think, is 20 or 25 of the ones that worked the best for him. Maybe I’m 20% into the book and I had to stop listening in the car because I wanted to take so many notes and I didn’t want to take notes while I was driving. It has really resonated with me in terms of actually having actionable stuff and things that I have implemented so far this week. I mean I’m only three days into implementing these, but I want to see if I can make them sustainable because I think his suggestions and his insights are worth doing. Again, I’m not a huge fan of these productivity books because once you read one, if you’re not implementing the suggestions, then you should not read another until you do. But if you think you’re at a point where you really need a boost in productivity and you’re ready to start building some new habits, and I think that’s the key, then I would check out “Productivity Project.” It’s obviously on Amazon and Audible. I’m listening to it on Audible myself.
Mike [00:06:40]: I was just going to mention that when you pick up those types of books, basically if you make the decision to go down that road, you’re creating work for yourself because you have to commit to doing those things otherwise reading the books doesn’t actually do anything for you.
Rob [00:07:13]: Exactly. And I think I’ve listened to three or four approaches and I’ve noted down one, one and a half. I made a variation on the second one. And that’s what I’m going to do, is filter each one and say, “Am I going to do that? Do I think it will work, and B, do I have the discipline and the head space right now to start doing that?” And my hope is not to come away with 20 new ideas, it’s to come away with about three or four, and then implement one, make it a habit, wait about a month and then implement the second, make it a habit, wait about a month. So that’s my plan with it. But hopefully it helps folks out if you decide to listen to it. What else is going on?
Mike [00:07:49]: We have a question that came into us from Don Falcor [ph] and he asks us about using Medium. And he said, “Hi Rob and Mike. I’ve recently noticed a slew of folks who are using Medium as their content marketing platform instead of their actual site. I noticed that Drip is also doing this. My thought process is that I’m now losing control of the platform and I’m not able to provide a Drip pop-up or email marketing opt-in form and cross promotion since I don’t own the platform. Medium’s rather limited, and though it’s a fantastic tool for writing and sharing content, I can’t get past the fact that I no longer own the platform and I essentially lose the extra opportunity to cross promote and upsell a reader. The question is why do you use Medium instead of your actual marketing site?”
Rob [00:10:29]: And the answer for us is that we started it purely as an experiment. I’ve got quite a bit of content, let’s say between two and four posts a week and some of those – we put a post out today on blog.getdrip.com. It’s essentially a 3,000 word teardown with a bunch of screenshots of Derek Halpern’s recent email sequence that he used to sell his seven figure course thing. So we’re putting out pretty big pieces of content like that, and what we found is if we didn’t experiment and we ran it on our blog where we send the tweets to send people to the blog, and when we email our list we send people to the blog, and we did all that and we looked at the numbers. Then we tried a separate experiment where we still posted to the blog but then we posted to Medium as well. At the bottom of Medium we have two things. One, we have a link back to our blog that says “This was originally published here,” and we then have a call to action, “You can get this free email marketing email course.” They have to click through and there’s a landing page and they have to enter their email, so it isn’t as nice as being able to embed an opt-in form there. But the whole Medium post is there and so far we’ve seen no Google content penalties or anything like that, having duplicate content. In addition, then when we do the tweets and we do the shares and we send the email we refer people to the Medium post. It still exists on our blog, people can find it. But we’re sending them over there and the idea there is that you’re basically using your network to get noticed within the Medium space. The more hearts and more reads something gets, the more likely it is to get onto Medium’s list of popular posts today. And if you hit one of those then your stuff skyrockets. You get 2X, 3X the traffic and the views and the reads and all that. So that’s the idea, is you’re trying to utilize some else’s network. I totally agree with Don in the sense that you’re losing control if you’re building it solely on Medium. We’ve gone back and forth and we’ve run different experiments and what we found is that we do definitely get more traffic and more reads over on Medium. We also have found that they tend to be, I’ll say less qualified. So we get less interest, less people clicking back to our site because they’re not on our blog anymore, right. So there isn’t a Drip logo on the header, we can’t directly ask for the opt-in. There’s pluses and minuses here. I don’t have a definitive answer. We have not made a decision to go solely with Medium. I wouldn’t make that decision because I still want stuff to live on our blog. We don’t want to be a digital sharecropper where you’re basically building this community and this reputation but you don’t own any of it like Don said. I guess that’s a non-definitive answer to what we’ve done and the experiments we’re still currently running. And we were just evaluating one today. I was evaluating with our growth marketer Zack about which way should we go? Do we need to make a commitment to these because some we’re posting on Medium and then some we’re not. I didn’t realize, that was a long answer. It’s probably the shortest answer I could give.
Mike [00:11:25]: So Don hope that helps. Thanks for the question. In today’s episode what we’re going to do is we’re going to talk about five ways to structure your startup mastermind. And back in episode 167 we talked about how to organize and how to run a startup mastermind. So if you’re not a member of a mastermind group or you’re thinking about starting one but you’re not quite sure, go listen to that episode and you can learn some of the basics of how to get started. But in this episode what we’re going to do is we’re going to talk about the pros and cons of some different formats that you may or may not have tried in your own mastermind groups. This came about because in my own mastermind group, what we’ve started doing is we’ve started experimenting a little bit and talking about what different things we can do and how we can continue to use the people that are in the mastermind group to drive our businesses forward, but also to do some experiments, to not just mix things up so that the format itself isn’t stale but to help identify whether or not there are other formats that would work better for our businesses.
Rob [00:11:31]: So today we’re going to be talking through five different approaches for structuring your startup mastermind.
Mike [00:12:28]: The first approach is to use what’s called the round table. In the round table, pretty much everyone speaks for an equal amount of time for each session. Let’s say that you have a mastermind group with three people and you’re meeting for an hour and a half, then each person gets about half and hour. There’s a couple of different reasons why you might go with this approach. We started using this approach very early on just because it was the one we came across first and it just made sense. But one of the benefits of doing this approach is that pretty much everybody gets to speak every single time so everyone has a reason to go there. Everyone has a reason to show up because they are going to be getting valuable feedback for their particular business. And another reason is that you always get an opportunity every single time you meet to bring up the problems and issues that you’re facing in your business that were a little bit different where, let’s say you were skipped on a particular week or you got less time then you wouldn’t have those opportunities to talk about the problems that you’re facing.
Rob [00:13:46]: And to be honest, this is my preferred approach. I wouldn’t say it’s the best one but it’s the one that I’ve found that resonates the most with me because since we only meet every other week in the two masterminds we do, I’ve always struggled with if we do a hot seat one or a rotating hot seat, that I may not get to talk about my stuff for four, six, eight weeks, and that’s just too long given how much is going on. I think it depends. It’s certainly a personal preference and maybe it depends on what stage your business is at and how fast things are moving and how often you meet. But I’ve always really like the round table approach. I’m trying to think if I’ve even ever tried any of these other ones. I don’t know that I have. I think we might have done a hot seat one at one point and I didn’t like it as much as round table. But I do know that some people swear by the hot seat approach. And one of the cons, or the con, I think, the biggest con of the round table approach is that you may not get enough time, you may not be able to dive in deep enough into specific topics most of the time if you have four or five people in a mastermind and you only have an hour to meet, then you have like 12 minutes. So you really need to focus on what you’re talking about. I think the way I’ve gotten around this if by keeping masterminds really small, like three people, and then meeting for 60 or 90 minutes so that you have apple time each time. There are some trade offs here, but that, compared to the others, that would definitely be the drawback of round table approach.
Mike [00:15:17]: The second approach that I came across doing some research was essentially doing a timed segment. In a timed segment, what you do is you divide the call into very short time segments for somewhere between five and ten minutes. Let’s say that you have five minutes allotted to you, you can talk for those five minutes and then you get one minute to ask and answer questions, and then you get about a minute to transition to the next person. Now, in this, the nice thing is that you get to speak multiple times. So if you’re meeting for an hour and there’s three people, you’re going to get four different opportunities to speak or somewhere along those lines. Obviously those extra one minutes in there, but you get to talk several times in a row throughout the course of the conversation. And one of the other side effects of this is that if you forget to bring something up, you can bring it up later. What I’ve found in doing the round table is that if I go first, for example, then I might speak for my half and hour and then a little ways into somebody else’s turn speaking I might remember something. It does give you the opportunity to come back and bring something up that you might have forgotten about. The other thing that it does is it helps to keep the call on track without meandering a lot. I have had calls where the mastermind group will go long or will meander into discussions which are sort of meaningless, but if you have a strict timetable that you’re trying to stick to, then this can help alleviate those. And it’s not to say that you shouldn’t have fun during your mastermind calls, but there are certainly times where conversation will meander a little bit and an hour and a half call can turn into two and a half hours pretty easily.
Rob [00:16:19]: What I also like about this format is in essence it keeps you from having to listen to the same voice for 20 or 30 minutes. Studies have shown that if someone sits there and talks for no visuals for a solid 20 or 30 minutes that people, you almost naturally tune out. Our attention spans are only so long when it’s just one person talking. And so this breaks it up more and gets multiple voices into the system. I think this is a cool approach. I hadn’t heard of this one before. Obviously there are a couple cons to this one. I think the first one is that you need to be really focused to talk about your topic in only five minutes. Five minutes goes very quickly, and so if that’s all the time you have then you need to present an update and then maybe ask a question, and then you just have time for one or two people to weigh in and you have to move past it. And maybe the other con is that someone needs to be keeping track of time because if someone doesn’t have a timer going that beeps, you’re going to go long every time because five minutes is so short. You would have to be more structured and be willing to cut people off with this approach, but there’s the only two cons I can think of.
Mike [00:16:32]: It seems like you have to be much more, not just structured, but it’s very much more business like. It becomes less of a, I don’t want to say less of a peer scenario or friend scenario, but you’re a lot more businesslike about what you’re doing, what you’re talking about because you have to stick to that timer.
Rob [00:16:34]: Yeah, a lot of discipline to get this one going.
Mike [00:17:29]: The third way to structure your mastermind group is to have a short hot seat. This is similar to the round table in that every person still gets a chance to talk during that session, but one person is going to get extra time on the hot seat that week. And everyone else who is not on the hot seat is going to provide smaller updates. Let’s say that you’ve got three people in a mastermind group that’s a 90 minute call, one person might get an hour and the other two each get 15 minutes, so that would carry you through that 90 minutes. One of the benefits to this approach is that you get to have longer between your sessions in order to focus on your goals, and then during your hot seat you would provide larger updates when you are on the hot seat. If you have three people in your group and you’re meeting every other week, then it’s going to be six weeks to focus on your goals and buckle down, and then come back to the group and be on the hot seat about what you were able to accomplish over those past six weeks.
Rob [00:18:08]: There’s a couple pretty solid pros with this one. First is that you get longer between sessions to focus on your goals, and so you’re able to provide larger updates when you are on the hot seat. Because, as you said, you have a gap of like six weeks or eight weeks between times you talk so you can get a lot done during that time. The other pro is that you get to do one or two deep dives during your turn and get more detailed feedback. Because if you’re really on the hot seat for let’s say, 45 minutes or something, you can cover two topics, even three, pretty in depth. And you can explain a scenario, ask for feedback, get a good discussion, and then move on. There’s just a lot more time here to dive into some things that you might need help with.
Mike [00:19:08]: There’s also a number of downsides to this approach. The first one is that there are obviously higher expectations for you when you’re on your hot seat. For example, if you didn’t perform and it’s been six weeks since your last hot seat session, it’s really hard for the other people in your group to let that slide because you’ve had a number of weeks in order to work on that stuff and to get things done. The second thing is that it takes a lot more preparation for when you are on the hot seat. You really have to spend some time in advance of the call and make sure that you’ve got all your numbers laid out and you come to the group with some very explicit questions along with the data that you can present to them that will, essentially, give them some context about why you’re confused or why you’re not sure what to do at that point. So those two things definitely factor into the cons list. And this is an approach that we’ve tried in our own mastermind group. We’ve tried the round table first and then we went over to a short hot seat. And these are some of the things that I’ve brought out of that as cons for this particular approach.
Rob [00:19:40]: I think another couple cons to this approach are, one, that it can be easier to let things slide a bit during the weeks that you’re not on the hot seat. If you’re really going after strong accountability, then having six or eight weeks between each time you talk might not be optimal for you if that really is what you’re looking for. And the other con I can think of is that you might not get the ongoing attention you need if you run into a serious problem right after you have a hot seat because of the delay between them. Obviously you could always have email exchanges and get around that through other means, but that is definitely one of the cons.
Mike [00:20:42]: The fourth structure that we have here is a dedicated hot seat, and this is different from a short hot seat where a short hot seat, you still get an opportunity to speak every week. With a dedicated hot seat, each session is focused on a single person and that’s the person who’s the focus of the entire session. Obviously the benefit here is that you get an entire session that’s dedicated specifically to focusing on your startup and the problems that you’re having and being able to really dive deep into a lot of the issues that you’re facing. But that also comes with the drawbacks. And the drawbacks are that it could be several weeks before you give any kind of update to the group, and a lot can happen during those six or eight weeks. If you’re going to do an approach like this then it would seem to me like you’d probably want to also have another mastermind group that you’re part of that is not doing a dedicated hot seat approach. That’s where I think this would probably best fit in. I don’t think that it’s something that you can do alone. But if you do this in conjunction with some of the other mastermind formats then it would probably work out quite well.
Rob [00:21:15]: This is taking the rotating or the short hot seat approach to an extreme, I think. Obviously you get a lot of good time dedicated to your own startup and your problem when you’re on the hot seat. I think the cons here are again, there’s going to be several weeks between giving any kind of update. So that could be, I think, a real detriment to you. Also, it’s easier for someone to justify skipping a session because they’re just contributing ideas and really not getting much out of it. I think you’d have to have a certain kind of group and attendees if you’re going to do this, because if people start skipping sessions then it really isn’t going to work. It isn’t going to be an optimal mastermind at that point.
Mike [00:22:57]: And the fifth way to structure your mastermind group is to use a moderator. And if you’re using a moderator then I think what you’re going to want to is you’re going to want to bring somebody in from outside the group in order to moderate the call and drive those discussions forward. There’s a number of different benefits to this approach because that moderator can be used to ask the hard questions and help push for results from people. Sometimes it’s very difficult to put pressure on your peers because you don’t want to come off as being overaggressive or overbearing or even taking hot shots at somebody who came back to you and said, “I think this thing that you’re working on here is a terrible idea.” You can essentially have those things piped through the moderator and the moderator can help do those things. They’re also there to help mediate any personal conflicts between people, which hopefully in a mastermind group you wouldn’t have, but those things do come up on occasion. The moderator can help with that stuff as well. The last thing that a moderator can really do is they will do a better job than you probably would of tracking people and holding them accountable to their goals. And what I found that is in the mastermind groups that I’m part of, I tend to focus on the things that I’m working on and keep track of those things very well, but when it comes to what other people are working on, unless they bring it up, it’s very easy for me to forget something that they commented on or that they said that they were going to do a couple of weeks ago or a month or two ago because I’m so focused on all the different things that I have to do. Unless you’re very regimented and disciplined about keeping track of lists or checklists where people can literally check-mark things off and say I did this and I did this and did this, unless you are doing that kind of thing, it’s very easy for somebody to just let something slip through the cracks and then not notice it for weeks or even months at a time if you notice it at all.
Rob [00:24:34]: I think this is an interesting approach and I think this is the old style of running mastermind. There would be an info-marketing guru in the ’90s or the early 2000’s and they would say we’re going to have a mastermind and they’d get eight or ten people together and then I think they would moderate it or they would get one of their minions to moderate it, and then they would charge for it. And they’d charge a lot for it, to be part be of it. And I think there are arguably some value there to be given advice by someone who’s ahead of you, as well as to be around other folks. I’ve always had an issue with A, the overcharging of this stuff and, B, the fact that there’s eight or ten people in the group really is beyond me. I can’t imagine that actually being that productive. Since I haven’t participated in one, I don’t want to speak too strongly about it. With that said, I think there’s maybe a more modern approach to this in having a moderator in a smaller group of, let’s say, between three and five people. And still compensating that moderator, because I think that if you really are going to moderate, which means you’re not going to be one of the participants, then you need some type of compensation. And that may be monetary and it may be something else. But it has to be worth you spending the time to do all of these things that you said, tracking the meetings and asking the hard questions and mediating personal conflicts and all that. I don’t think it’s a sustainable model. I don’t think someone’s going to do it for a year or two if they’re just doing it as a volunteer thing. But I definitely see the advantages of using this approach, especially if you really do want to be all about business. Like you said earlier, it’s less of a discussion and maybe a hang out time and conversations between friends, and it really is a hardcore moderated business discussion with someone keeping it on track.
Mike [00:25:05]: I think one of the downsides that I can think of for this particular approach is that if the moderator ever is unable to make the call then the call is probably going to get canceled at that point. Because if you’re so used to having that moderator around to drive the conversations, you may very well find yourself a little bit lost if they’re not able to make it for whatever reason. And then there’s the obvious things of being able to compensate that moderator for their time. And then the other problem of some people are just really not qualified to be moderators so you have to have the right type of person who is filling that role for your group.
Rob [00:25:50]: I think another con to it is scheduling becomes slightly more difficult because there is another person involved in the mix. Easy enough to work around, but it is something to think about. I think another con to it is I don’t know anyone who’s doing it today. And so there’s no model for it. It would be experimental and you would have to spend some time to find that moderator and the experiment with it and figure out if it’s going to work and you’re kind of pioneering it. So it’s less about listening to what others have done and more about pushing into some new territory, which is not a bad thing, but it’s going to take time. It’s going to take adjustment and it’s probably not going to be optimal at the start. To recap, we talked about five ways to structure your mastermind group. The first was a round table, second was timed segments, the third was a short hot seat, fourth was a dedicated hot seat, and the fifth was using a moderator.
Mike [00:26:18]: And we mentioned it earlier on that if you’re not a member of a mastermind group, check out episode 167 where we talked about some of the basics of finding a mastermind group and setting it up and finding people. Something else that you can do is you can head over to a Web site called MastermindJam.com. We’ll link that up in the show notes. It’s run by one of the MicroConf attendees named Ken Wallace who also cohosts the Nights and Weekends podcast, which you can find over at nightsandweekendspodcast.com.
Rob [00:26:35]: And we don’t get any type of commission or anything like that from using Ken’s service. We just know that he’s a smart guy, working on this problem and trying to solve it for the community. And if I was looking for a mastermind today I would either go to my network or I would go to MastermindJam. This is a place you’re going to want to do it in the bootstrapping circles.
Mike [00:27:02]: And what he does with that service is he actually puts you together with other people who are in similar situations and who, based on the data that he has available to him, are probably going to fit well because they are in similar market verticals or let’s say, if you were building a SaaS company he would put you with other SaaS founders with similar revenue numbers. And he does that work on the back end to make sure that the group that you end up with is a good fit for what it is that you’re trying to achieve.
Rob [00:27:23]: And with that, we’re wrapped up for the day. 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 276 | Handling Failed Payments, Cold Calling, and Staying Accountable
Show Notes
In this episode of Startups For The Rest Of Us, Rob and Mike talk about handling failed payments, cold calling, and staying accountable. These topics come from more listener questions and Rob and Mike share their expertise and advice on the subjects.
Items mentioned in this episode:
- Drip
- Blue Tick
- Churn Buster
- LeadFuze
- LeadGenius
- HostFamily
- Successful DJ
- Startup Stories Podcast
- FogBugz
- TeamWork.com
- Codetree
Transcript
Rob [00:00]: In this episode of Startups for the Rest of Us, Mike and I talk about handling failed payments, cold calling, and staying accountable. This is Startups for the Rest of Us, Episode 276.
Welcome to Startups for the Rest of Us, the podcast that helps developers, designers and entrepreneurs be awesome at launching software products. Whether you’ve built your first product, or you’re just thinking about it. I’m Rob.
Mike [00:28]: And I’m Mike.
Rob [00:29]: We’re here to share our experiences to help you avoid the same mistakes we’ve made. What do have this week, man?
Mike [00:34]: Well we’ve got an email from Will Samuels, who wrote in to us about our 2015 predictions, and he says he thinks that Rob was right on the storage. He gives us a link to … I think it’s hubic.com, it’s H-U-B-I-C dot com. They are a hosting provider, and they are, I believe the third largest in the world is what he says. According to the “”Way Back Machine, he says that back in March of 2015, they were offering 10 terrabytes of cloud storage for €120 a year, so that’s 5 terrabytes for $65.50. So according to that, Rob you were correct on one of your predictions last year.
Rob [01:13]: Wow, thanks Will, for writing in. Yeah, both you and I tried to look for some confirmation, or otherwise, from our 2015 predictions and it was kind of hard to find them and I think found some shady cloud hosting thing that did this, but I didn’t really want to call it good. So if these guys are the third largest in the world or thereabouts, I think that’s pretty good. Then when I made the prediction again for 2016, I can’t count that as a win, can I?
Mike [01:34]: I don’t think so. In fact, they’ve actually dropped their price, so 10 terrabytes is no longer $130, it’s more like $65 or so at this point. They’ve dropped the price since then, yeah, so 10 terrabytes personal cloud.
Rob [01:47]: Let’s be honest, this is kind of a gimmee. Every time you’re predicting that storage is going to get cheaper in the next year, it’s kind of obvious; like processors are reading it faster, phones are going to get better cameras and high resolution screens. This is not that interesting, but the fact that the price point was actually under that exact point is kind of cool. That’s a lot of storage, man. Five terrabytes, or now I guess, 10 terrabytes for that much?
Mike [02:10]: Yup.
Rob [02:11]: So, I’m running some split test right now on DRIP, on the homepage, and other pages, to try to nail down some messaging. We’ve had the same positioning and messaging for a long time, and I just want to see if something else resonates, because we’ve changed so much over the 18 to 20 months since we really nailed down that headline of “lightweight automation that doesn’t suck”. and I’m wondering if perhaps different ways to phrase that that might resonate with the current traffic to come rather than … the last split test I ran was 18 months ago. S, I always find split testing — I feel like it’s pain to get set up, even with something like Optimize.ly, but man, it’s so much fun. It’s so much fun when you hit Start and you’re just excited. Every morning, I wake up like a kid on Christmas and look at the results to see, is something winning?
Mike [02:52]: I thought you were going to say you’re excited to look at the credit card bill and say, “Oh, I just lost a thousand dollars yesterday.”
Rob [02:57]: Oh nice. Well, that could be the other thing, I guess, right? Like, “Doh! I totallt hosed it.” Yeah, I definitely a keep a close eye – when something like this, when it’s on the homepage, or it’s a high traffic page – I like to keep a pretty close eye, and tabs on it, because you’re right, you can, kind of, screw things up pretty bad pretty quickly, I think.
Mike [03:15]: Yeah, funny you mentioned that, because I’m just kind of in the final stages of finishing marketing plan for my product, Bluetick, and that’s kind of one of those things that I’m looking at pretty heavily right now, is to figure out what should the exact wording of the messaging be. I have my personal favorites picked out, but I’ve also got a list of about 10 different things that I want to go through and start testing to see what resonates with people, and whether or not those things take people through and convince them to actually sign up for, like a mailing list. So I’ve got to look through those, and do some split testing myself, and see what comes out of that, because whatever you think may not necessarily be the winner. It may be, but at that point, you’re just spending $1,000 a day or whatever, but it will be interesting to figure out what happens and what comes out of that.
Rob [03:58]: If I were you, I wouldn’t start with all 10. I would go back to the people who have already bought from you and run those by them and have everybody pick up their top one or two, and then try to aggregate a few from there. Because it seems like you already have a little bit of an audience, and if you have a mailing list as well you could toy around with that. If you felt like sending people an email or ask them to choose how they would describe it, or something like that. It might give you a little leg up so that you don’t have so many things to test, because you need a lot of traffic to test that many options.
Mike [04:30]: Right. I don’t think I was planning on going through and testing all 10 of them, but it also kind of puts in my head the idea that if I go to those list of 12 or 13 people that have place preorders so far, I’ve got their language, so I will essentially be finding more of those people, which is not necessarily a bad thing, but it’s also a very self-selecting group. I wonder if there are other groups out there that it would resonate more with. I don’t know the answer to that, but I’m also not sure whether or not that makes a difference at this point, and I don’t think that it does.
Rob [05:00]: Yeah, yeah. You’re pre-launched now, and so I would focus on super small vertical target market, and if selecting now, then that’s actually good. Because if you go out and try to get multiple groups of people in there, then they’re going to be asking for different features, and it’s going to conflict. I would imagine you have small entrepreneurs and solopreneurs and single founders and probably some bootstrappers in there, that type of thing. If that’s where it’s working right now, I would focus on that for the time being until you feel like you’ve tapped that market out, rather than trying to expand out. Maybe it’s not even premature optimization, but it’s just going to be time consuming to try to do this, when I think there’s other stuff that you could better spend your time doing.
Mike [05:44]: Yeah. Either way, I still have to go out and start doing … I want to start doing some paid acquisition to start acquiring email addresses that I can start building up that mailing list. I think that tying back some of the messaging into that is probably wise at this point. It would at least give me some data points. But you’re right, I don’t think just testing all of them would probably be a good idea at this point. I haven’t really gotten to the point where I’m going to actually pull the trigger on that. I’m just starting that process now.
Rob [06:11]: I think I realized when you said dropping a thousand dollars a day, you meant on ads to split test, right?
Mike [06:16]: Oh yeah.
Rob [06:18]: Okay, because right now you don’t have any organic traffic yet. No, the DRIP that I’m doing, I’m not running any ads to this. This is all the organic traffic that comes through. We get a bazillion visitors a month, so it’s actually going to be pretty easy. I was thinking you meant, when you said losing a thousand dollars a day, I was thinking you meant that if you run a split test and one of them is doing really poorly, that you lose the trials and therefore lose the thousand dollars a day.
Mike [06:39]: Got it. no. I haven’t even thought about that, but I was kind of operating under the assumption that you were going to be doing paid advertising for those split testing, but it makes sense.
Rob [06:47]: Yup, cool. Hey, we have a bunch of new iTunes reviews. Can’t read them all, but I’ll read a couple here. This is from Jerry Weir. He says, “Great show, value in every episode. If you’re at all into starting your own business alone or in a team, you really shouldn’t miss out subscribing for Startups for the Rest of Us. Actionable advice in every episode.”
Then we have one from Prof. Duchamp. Five star review from the US. It says, “Listen or miss out, you choose. If you’re doing anything related to startups, you would be plain silly not to listen to this podcast. Mike and Rob do a really job of exploring the minutiae of building a platform. It’s not about interviewing the biggest names in the industry, or even talking about the trending topics. They get into stuff that really matters. Keep doing what you do.”
Lastly, from Zephron ADR, from the US, he says, “Great content for first time entrepreneurs, great knowledge, thanks for sharing.” We have 462 worldwide reviews in iTunes, and we’re looking to get that number up over 500, so if you haven’t ever given us a five-star review, it would be awesome if you could. Log in to iTunes, hit that five-star. Even if you don’t write a full review like these folks did, you can just click the five-star and it will greatly help us out. If you feel like we’ve given you some value, it would be great to get some back.
Today, we’re answering some more listener questions. We had some really good questions come in, the first one is from Don Felcor, and it’s about handling failed payments and dunning. He says, “Hey Rob and Mike, I’d love to hear how you guys handle subscription problems that relate to failed payments. For example, if you use the default Stripe subscription system, you have three options after the user’s payment method fails three times. Those three options are to “cancel the subscription, to mark it as unpaid, or to leave it as is.”
By default, Stripe selects “cancel the subscription”. I feel this is bad mojo because you then lose the subscription that you worked hard to get. Therefore, I’ve changed it to mark it as unpaid so I can follow up with the customer. Given the other options, what would you recommend SaaS companies do in this case?” Then he has a follow up question. Maybe we’ll answer this one first, and then look at that one later. You have any thoughts about this?
Mike [08:42]: It seems like that’s the way that it should be handled. You don’t necessarily want to just make that subscription go away. You want to go back and talk to those people for a couple of different reasons. One is that it could just be that the credit card failed because it expired or their account was hacked so they got a new credit card. There’s a lot of different reasons for the credit card to fail. So it’s not necessarily uncommon for those things to fail three times, but there’s also a lot of cases where customers have decided, “Hey, I know that my credit card is expiring. I’m going to use that as an opportunity to essentially wipe the slate clean on all of my paid subscriptions, and anything that I really want to renew or that I depend on, then I will renew it.”
Those are the types of people that you probably want to reach out to, that you can at least get some sort of feedback about why it is that they cancelled or why it is that they chose to go in that direction. A couple of other options for getting those customers back…I mean, obviously you can send some sort of dunning email to them if you’re not doing that already, but there are services out there like Churnbuster or Stunning.co that you can use that will go out and try to get those people back for you as customers. It really depends on whether or not you want to be the one reaching out to them or if you’re at a scale where…I don’t want to say that their feedback to you doesn’t necessarily matter, but it is less important to you to hear the specifics of what it is that those people are saying. Those other services might be an option for you if you have other things that are a little bit more important to you than listening to the specifics of what their feedback is.
Rob [10:08]: Yeah, I think the meat of Don’s question is about whether after three email attempts – because that’s what Stripe does, right, it’s built in that they email three times and you can set the intervals. And after they haven’t responded, or updated their card after three attempts, do you cancel the subscription or not? Don says he doesn’t, and that he then wants to touch base with them.
So in my experience of trying to do this manually, and I did this with HitTail for a while in the early days, just because I didn’t know any better and I was experimenting and trying to get the people back. If they didn’t respond to the three credit card expiration emails, I never got a response to a personal email. Either they weren’t getting the emails, they didn’t care about them, they were going to spam, they’ve abandoned the inbox — there was just something, where if they’re not going to open or come back after three emails, I never… and let’s say I emailed by hand maybe 20 or 30 people. It’s not thousands of people, but it was enough that I stopped doing it, because it just was a bad use of my time. So I didn’t get good results from there.
With that said, I think that if you have phone numbers, and you can reach out, I know that that is dramatically more effective. I saw an article by [Allan?] at Less Accounting, where he talked about – this was a couple of years ago – but he talked about, I think it was like his sister doing basically dunning phone calls to people, and that they dramatically changed the number of people who gave them a credit card, and basically an updated card number.
That’s my thought. If someone doesn’t respond to three, and you’re just going to send them another email, I actually don’t think it’s worth it, and I would put their subscription into cancelled mode. Now, with DRIP, we wrote our own engine. We didn’t use the Stripes subscription API, we just used a [bare?] charge API, and as a result, after three emails — I think it’s three, maybe it’s four – your account is pending cancellation, and if you come back and try to log in to that account again, then it says “Hey, your card expired, or your account is cancelled, Just enter a new card here and we’ll get you started again.” It is easy to undo that, and I’m not sure if it is with the Stripe subscription API, because obviously we don’t do that.
Mike [12:06]: I’m not sure if Stripe actually sends those people emails if their payments fail. I think that it initiates a web hook – or you can have it initiate a web hook back to your site – but I don’t know that it actually sends them an email on its own.
Rob [12:17]: Oh got it. Okay. Thank you for that clarification. Absolutely then, I would capture that web hook and send some automated emails – whether you use Stunning or Churnbuster, or whether you just write some code to handle that web hook instead of emails – that has to get done, yes. I don’t think that you – even at a small scale – you don’t want to handle this manually, because it’s going to happen a lot more than you think.
Mike [12:39]: I really like the idea of capturing the phone number and getting in touch with them. It just sounds to me like that’s something you would probably want to do much earlier on in the cycle of them becoming a customer. So maybe a week or two weeks after they’ve become a customer, you pop something up and ask them for their phone number. And you can use that – maybe bribe them in some way, shape, or form. Either you give them an extra amount of service, or discount, or free white paper, or free consultation, like that, in order to gather that information, so if it does happen down the road, then at least you’ve kind of planned for it in advance.
Rob [13:10]: I’m glad you said that. It reminded me of what I did with HitTail. We do something similar with DRIP, although we do it during the guided set-up. We’re asking some other questions, and we do ask phone numbers and say, “We’re going to contact you for billing purposes.” It’s not required, but we get a good response rate to that. With HitTail, I’d coded up this form where it was like every fourth or fifth time you logged in, if you didn’t have a phone number, it would do a little pop-up, and it would say, “Hey, just in case your account gets messed up, can we ask for your phone number? We’ll use it for billing purposes.” We got a nice chunk of phone numbers, and then I went – this is before Stunning and Churnbuster, right – I went and I got an account with, I think it was Coalfire, and they basically do Robo-calling through an API. In essence, I recorded a 45-second call from me, it was just like, “Hey, this is Rob, I’m the owner of HitTail and your credit card is expired, and blah-blah-blah. Go to hittail.com/account to update your credit card.” Something like that. Then that would then fire, after all the emails had gone and people weren’t doing it, then it would put them into a call thing and they would basically get an automated call from me. Most of them hit voice mail – you can see how many hit voice mail and how many didn’t. But the impact of calling versus just emailing was substantial, I will say. I don’t want to give exact numbers, but it was substantially better. Even with Robo-calling, which is not going to be nearly effective as actually having someone do it. So if you’re at any kind of scale, you’re definitely going to want someone to help out and actually make the phone calls.
Then the second part of Don’s question, he says, “On another note, I know from conversations with Derek,” – that’s my co-founder with DRIP – “that he built the billing system for DRIP from the ground up, and it does not use Stripe-built subscription system. If you’ve built it that way,” – which we have – “how do you guys handle this kind of stuff?”
To be honest, we handle it similar to Stripe. We basically just, we retry, and if it fails, then we email. If you notice – I don’t think we’ve ever gotten our dunning emails. I think they might be published on the Stunning.co blog, to be honest, because he did a dunning series. They may have changed since then. But you’ll notice that they’re not shaming, and they don’t sound like they’re coming from a Fortune 500 company. They’re very much personable, and they’re like, “Hey, this happens to everyone sometimes. No problem. All you have to do is…I mean it’s just like talking like a person. I think I sign it as a co-founder of DRIP.
We do that a few times, and like I said, they go into cancellation. They can come back after any length of time, frankly, and reactivate the account. They just have to enter their credit card and make that payment. So thanks for the question, Tom. That was a good one, I’m glad we’re able to discuss it today.
Our next question is from Glenn at archived.io. It’s about cold calling, and he says, “Hey Rob and Mike. I’m in the very early stages of business development. I was wondering if for your B to B businesses, in the early stages, did you do much, or any, cold calling, or possibly cold emailing.” Then he addressed something to you, Mike. He says, “How did you go about finding the prospects to interview while you were doing customer development with Audit Shark.”
Mike [16:00]: So back when I was doing sales level, what I found was as I was trying to do cold calling it generally didn’t work very well for me. What I ended up running into was the fact that, in much larger size accounts, what tends to happen is that those types of accounts have enterprise sales reps who are talking to them from Dell, and HSI, and Tiger Direct, and HP, and places like that, and they’re all basically in the door. So, unless you’re talking to those people, and you’re getting introductions from those people, it can be very difficult to get anyone’s attention.
That tends to be more at the manager, or director of IT, level. I wasn’t trying to get in at the lower level people, like the end engineers or things like that. Although I did try to do that as well. I never had much success with it, but it could be just a matter of either the calling scripts that we were using, or the types of people that we were calling, and the leads that we ended up dredging up. It honestly just didn’t end up working very well for me. I do know that there are people out there who are making it work, and they’re doing extremely well with it, but they’re also in, I would say, different businesses where their products are not necessarily aimed at the IT department. So I can’t really speak outside of the IT department, because I haven’t done anything with larger companies outside of that area.
Rob [17:20]: I have not done cold calling in the early stages of a product – frankly in any stages of a product. I did used to do some cold emailing outreach, but it’s very, very specific, when I was consulting and contracting. I would email designers and other folks, to try to get work, and that actually worked pretty well. I mean, if you really hone it, and I wouldn’t email a hundred or 200 people. I would email like 10 in our local area and I would say, “Hey, here’s what I am. I can be your outsource developer, blah-blah-blah.” I had a pretty well-written email that got me some leads. I think cold email like that can actually work reasonably well. The other option is something that’s pretty popular these days, with the publication of Predictable Revenue – which is a book by one of the guys who helped grow Salesforce – is this cold outbound email to these large lists. So you can use a service like LeadFuze, or LeadGenius, and they will put together a lead list based on your criteria, and they will email them. If you don’t have the budget for it, you can totally Google this and people will show you how to do it. It’s not that hard, it’s just a lot of manual, grinding work, because you can’s mass email this lists. That’s spam, but if you send each email individually using a tool like Tout or Yesware – there are a lot of tools in that space – and you customize the email reasonably well, you can actually get some traction here and get some demos if you have a decent value proposition.
So I wouldn’t say that cold calling is dead, or doesn’t work, or anything like that, but I don’t think it’s a good use of your time, necessarily, early on, unless you really are trying to access a market where a cold email isn’t going to work. Maybe if you’re selling to realtors, or you’re selling to someone who is by the phone all the time and is going to pick up, I think that might have some legs. I think that may be the best way to get a hold of them, because in general, realtors tend not to respond to emails. If you’re marketing to designers or online marketers or software developers, or something, cold calling is probably not going to be a good way to do it, and you either got to do it through cold email, or frankly, just getting some semi-warm introductions. I think before I’d start doing cold stuff, I would think about running ads to a landing page and getting some prospects there. You get 10, 20, 30 emails and you don’t then have to go outreach. You can just basically say, “Hey, you’re interested in this. Let’s talk more about it.” That’s an interesting idea.
Another one is to think about going to your network before you try to do cold outreach that’s so time intensive, and trying to figure out if you know people who can recommend others who might be interested in this. So I think there’s two ways to think about this cold outreach. It’s like in the early stages of your company, when you’re just doing customer development and you’re just trying to figure out what to build, it’s not going to scale. But yeah, I think that maybe you should consider doing it if that’s really what you need to do and you can’t figure out a way using ads or using the network to get around it.
Then in the later stages, once the company’s growing and you’re looking to scale, I think that cold emailing has, kind of, been proven to be an effective medium. For the time being, anyways, everyone’s getting into it, and when everyone gets into these marketing approaches, they tend to stop working. I’m getting so many cold emails now that I’m already seeing the effectiveness of them drop. So I think, like infographics and like – what was it five years before that – certain things come into vogue, and then they go out of vogue. I think that cold emailing will be around, but I think it’s effect in this – especially with the technorati, who are getting all these same emails from everybody – I think the effectiveness of it is going down and will continue to do over time.
Mike [20:50]: One thing that you mentioned in there that I want to expand on was the idea of asking for introductions to people. I found that that works extremely well, especially if you find one person who is interested in what you have to offer and is interested in talking to you. So even if you don’t have a product yet, and you have one person in your network that you can talk to, you can ask them for an introduction and say, “Hey, are there three people that you can think of that you can introduce me to that might have this particular problem?” If they can’t get you one right away, I think that there’s a couple of videos from [?] talking about exactly this thing, where even if they say no right away, just say “Okay, just give me one. I just want one,” because that one person can lead to three others who are not in your personal network. And after a while, when all of those roads start pointing back to the same people, then that method has probably been saturated to some extent, because when I was going through this for Bluetick, I was asking that exact same question of people. What I found was that there’s one person who’s several people in a row would start recommending me back to him, and I’m like, “Okay, well, this network of people is probably, at least, a little bit saturated.” Obviously, I didn’t go through every single list of everyone that I had access to, but I got to a point where it was obvious that a lot of people were pointing back to the same people.
Rob [21:53]: Good question, Glenn. Thanks for sending it in. Our next question is a voice mail from Rudy, and he’s asking about starting two product ideas at once.
Rudy [22:01]: Hey there, guys. This is Rudy. I own [?] I have a quick question. I’ve been [?] for a little bit of a short while now, and I ran into a problem and some people then came up with a product idea for the solution to that problem. As guys that are involved with multiple ventures, and kind of dabble in different projects. What’s your advice on trying to manage maybe starting two product ideas at once, or trying to build something that would both solve your present need with a different existing business, as well as solve other users’ needs in different niches. Thanks.
Mike [22:41]: I think the technical term for this is Objectivius Shinium Syndromus, which is Shiny Object Syndrome.
Rob [22:47]: Yeah, the scientific name.
Mike [22:49]: There’s a scientific name for this.
Rob [22:50]: Episode 170 of this podcast, 12 Strategies for Avoiding Shiny Objects Syndrome. That’s exactly what I was thinking too.
Mike [22:55]: Yeah, it just seems to me like, yes, it’s a problem that you kind of need to be solved, but if you’re looking at it as something else that you can build, it’s very easy to get distracted from what you’re currently working on. It’s also very easy to let your attention, kind of, drift off to those other things.
Now, if your current business is kind of stalling out, and it’s not because you’re getting distracted, then maybe it’s worth looking at that as kind of the next area that you’re going to go at, but it seems to me like trying to build something like that and making it into a full-blown product is probably not a good use of your time.
One of the things that come to mind is Rob with DRIP. Very early on in the stages of building DRIP, what you had wanted to do was you wanted to be able to collect email addresses on the HitTail website. So you built this little widget that you could install onto the site to help collect email addresses and send them into an email campaign. That eventually turned into what is now DRIP, but you didn’t let that distract you too much from building on HitTail. You still buckled down and got everything on HitTail that you needed to do, and you didn’t turn that into a product until you had made the conscious decision that, “Hey, I’ve taken HitTail really as far as I want to go right now, and I want to go do something else, because everything is fine here and I just want to build a different product.”
So it seems to be like this may very well be one of those situations where if you build something, make it something for you, make it something you use internally, and if it gets you to where you need to go with your current products, awesome. But I would not spend any time and effort to build it out into like a full-fledged product for other people, because that involves a whole world of other problems that you’re going to need to dig into.
Rob [24:42]: Yup, that would be my advice as well. I think that it’s easy to see something and think of it as going to be more fun or easier than what you’re working on now. If you are ready to completely abandon what you’re doing now, then I’d say consider this. Because in essence, your summary of the HitTail to DRIP transition is mostly accurate. Basically, Derek was contracting for me at the time and he built that little widget. I was at the point where HitTail was already – we were not starting out. It was already generating somewhere between $20,000 to $30,000 a month, every month, as a SaaS app. Given the return and a bunch of other factors, I saw that it was topping out. I could have pushed it further by really digging in and building a bunch more features and doing a whole revamp, but I started evaluating the landscape, the SEO space, the [not provided]?. “There’s just a bunch of things, factors that are coming into play, and you know what? I think I’m kind of ready to move on. I think I’ve accomplished a lot here, and I’ve learned a lot.” And I was ready to move on to another business. I did keep HitTail running on the side. It declined over time, slowly, but it was able to fund the next project, which is now bigger.
Even that, trying to manage two things at once- trying to grow one and manage another – was a challenge. I would be very, very hesitant – not just hesitant, I would never start two projects at once. Don’t try to grow two things at once. That’s my unequivocal advice, is not do that. Owning two things at once is doable, if you get someone to manage one. As long as you’re not trying to grow both of them at once, because it’s the growth that really takes the founder and the creative thought, and it takes some mental energy. If you split that between two things, neither of them is going to go very far. If you’re thinking about building this other product, I would abandon the first one. That’s a decision that you have to make at this point.
All right, last question for the day is another voice mail. It’s about how to manage a project from conception to completion.
Bran [26:25]: Hey, what’s up guys? Big fan of the show. This is Bran from successfuldj.com. What my question is is about project management. I was listening to a little bit of the startup documentary, Rob. I just want to say that was awesome. Thank you for putting that out. But I’m curious about how you guys do project management. I was hoping you could do an episode where you walk us through how you go from, let’s say, the concept of DRIP to the creation of DRIP. I know you did that in the documentary, but if you could take maybe a smaller project and concept, and just give us some ideas in terms of software you use – [?], Trell, to do it, whatever it is, and some mistakes you made in the past with project management, and how you just keep everything streamlined and efficient in terms of breaking things down into small pieces, and what to put on the “to do” list, et cetera, et cetera. Keep up the good work, guys. I’m loving the show as always. Talk to you later.
Rob [27:20]: To clarify, he mentioned the Startup Documentary. That is the documentary that Derek and I recorded. It’s an audio documentary, as we were building DRIP, over the course of 9 months. That’s at startupstoriespodcast.com if you haven’t heard that before.
Mike, the reason I wanted to talk about this in this episode, instead of doing an entire episode around it, is I actually think it’s a lot simpler than most people think. I think he asked for mistakes that we made, and the mistake that I made in the past is putting too much process, or going too heavyweight. Seeing someone break out Microsoft Project to manage a three- or four-month software project. I have a couple of tools that I use pretty loosely, with some light process around it in order to manage features or even entire DRIP process. But I’m curious to hear, before that, what you use. Because right now, you’re in the middle of building Bluetick. What kind of tools and process you have set up?
Mike [28:13]: Sure. I think there’s two different aspects to this question that, kind of, came to mind when he was talking about it. The first one is what tools do you use, and how do you basically manage the flow of data back and forth between them. Then the second piece of it is, how do you decide what to do, and when? I think that those are related things, but the tools do not necessarily dictate what you’re doing and what order. They can, especially if you were to use Project, or anything like that, where you can put up cascades between one task and the next.
For what I’m doing now, I use probably three different tools pretty extensively. The first one is FogBugz, which is where all of the development tasks go. So anything that is related to code, or back end or front end application changes, all of that stuff goes in FogBugz. Everythig that’s basically product development oriented goes in there. I manage all of that code, and all the various sprints, and what we’re working on, all of that goes in there.
For all of the marketing stuff, I have a teamwork.com account, and I actually have two different projects that have been there. One for the engineering team, which I did not expect them to use, and they have not used at all yet. So it’s there if they need it, if they need to share files or whatever, but we also have kind of a Dropbox on the back end that everybody has access to the same sharer. So if they really needed to share larger files, they could, and it’s all connected to my account, so it counts against my storage space. Then I also have inside of Teamwork, I have a specific project set aside for just all of my marketing tasks.
Now the other thing that I use pretty extensively is a Goggle Doc, where I put together a marketing plan for Bluetick. What I did is – I actually have been working on that for the past couple of weeks. I sat down and I decided what my goals are, how am I going to get there, what the product is, how do I describe it to people, what are some of the descriptions and potential headlines that I used, what are the concerns that people have about the product, why would they use it? I have stuff in there about pricing, and all these other things that go into the marketing document. But most of them are really just notes. They are things for me to look at and review, and think about how I want to address that problem, or some of the different ideas or thoughts that I have about that particular piece of it.
Then what I do is I take those things and then I translate them into my Teamwork account and say, “These are definitive things that need to be checked off as something to do.” For example, in my marketing plan I might have the idea of hiring writers. Then I have like a bunch of different job boards, or places where I might find writers. Then I take that over into my Teamwork account and I write it down and I say, “Okay, if I’m going to through, and I’m going to do a content marketing campaign, these are the places that I can go and evaluate a writer. But, one of my tasks is going to be to go each of these things, do a little bit of research, find a writer, and then hire them.” Then it then leads into the other tasks. The document itself is really just for me to kind of basically spew out all of my different thoughts on a particular topic, because Teamwork is much more for lists of tasks, and being able to iterate through those. There is like a notebook section, but because it’s not really tied over to the tasks section it’s a little bit more difficult for me to use it in that way. So those are the tools that I use in terms of process. I kind of start from that marketing plan document and decide what needs to be done, and then it goes over into Teamwork. Again, all of the software development stuff gets managed directly through that other side of things inside of FogBugz.
Rob [31:44]: For me, when I’m first starting a project out, I don’t use any type of issue tracking. I go into basically a Google spreadsheet, or an Excel — it used to be an Excel spreadsheet — and sit down with a developer, or if I’m building it myself…I forgot what are the top objects. Typically if it’s a web app, I look at web pages. If it’s a mobile app, I would look at screens. If it’s a desktop app, I’d look at screens or forms, I guess you’d call them. Then I’d try to throw some time in there for database development, and some project management, and database design, and that kind of stuff. Then go right to the screens and say, “How long it’s going to take to build each of these?” And throw estimates at everything in a big Excel spreadsheet, or Google spreadsheet these days. Then start working and deduct those as I go so I know where the project is. So it’s basically an entire project tracking mechanism just within the spreadsheet.
There are some more exotic stuff you can do that I’ve talked about in the podcast before, but you basically can say how many hours a day you’re working on it, and then you can set a date, using – there’s a workday function – where it just automatically tells you when you’re going to deliver this, based on how many days a week you work. So If you don’t work a few days, it just continues to push the date out. You can physically see at the bottom of that Excel spreadsheet continually getting pushed out. It’s pretty motivating when you see that.
The reason I do that, instead of stuffing everything into an issue tracker, like a FogBugz or Github Issues, or Codetree, is because early on you might have 50 things that all have to get done, and you’re kind of just hammering through them. I don’t want to have to update 50 issues independently. I’m just trying to aggregate everything, because you really are coding this in a block, right? And this is maybe a three- to six-month project, and if it’s one or two developers just sharing that doc with someone working with them like me basically driving the project, this is I found to be a lot more efficient than having every individual task in a tracker.
Once we start getting towards the end and it becomes more of a punch list thing, we were actually looking at maybe 10 or 12 individual tasks left in order to get to a certain milestone, and then you really do need to start measuring stuff, that’s when I switch over to more an issue tracker and enter them individually. Of course, at Drip we use Codetree, which is built over GitHub issues essentially. It’s like a nice sprinkling layer on top of that that helps your prioritize and do other stuff.
That’s really it. I’ve never been a fan of the heavyweight project management tools. I think, if you are managing 10 developers, or you’re on a big enterprise team where you have a lot of communication, you do need it. You know, you’re a big company. But for small startups, the gift that we have, or the advantage that we have, is that we move quickly. I’ve found that a lot of the PM tools that I’ve seen tend to weigh you down a bit more. Now with that said, I still have not tried Teamwork. I have an account that we got for MicroComf Europe, and I do want to try it, because I’ve heard so many good things about it, and I know that Peter and his team have certainly built something good there. So I’m tempted to do that, perhaps for a future project. So I think that would be the one othercaveat I would lend to it.
Mike [35:05]: Yeah, I think that in terms of the development side of things, I think that it’s more a matter of personal preference than anything else. There’s no right or wrong answer, it’s what works for you. What I was running into was that for the development team that I’ve got working with me on Bluetick, I wanted them to basically handle everything. Because of that, when I took all the different UI mockups that I’ve run through people who have placed preorders, I took a PDF of those mockups, sent them off to the development team and said, “Look, this is what you’re going to be responsible for building, and I want you to give me a time estimate of how long it’s going to take you to build each of these screens.” From those, they were able to break those down into individual tasks inside of FogBugz, and apply an estimate to those and say, “Okay, to put the screen together is going to take me, let’s say, two hours or three hours or whatever. And then to wire it up is going to take another hour. And to do unit testing. or whatever, it’s going to take another hour on top of that, whatever those numbers happen to be.
What that did for me is it allowed me to go from there and then look at the total report and make sure that none of their task estimates were more than four hours. If they were, I could go back to them and say, “Hey, you need to break this down a little bit further, because we need to be sure that this is probably more accurate than not.” Then using that information, I was able to go back in and, kind of, look at a report and say, “Where on the timeline is getting all of this stuff done going to fall? Is it going to be closer to four weeks, is it going to be closer to eight weeks?” Just having all of those hours added up was really helpful. The point is really what those hours add up to; how you do it, whether it’s in FogBugz or in a spreadsheet, it is almost immaterial. It’s more a matter a matter of personal preference than anything else.
Rob [36:17]: I think that’s a good point. It’s like, don’t get hung up on the tools. Seth Godin will often not talk about the tools he uses to write, because he doesn’t want everyone to try to use the tools he uses to write, because that’s not what makes him Seth Godin. I would say the same thing with project management. You can ask for advice, you can get a suggestion, try out a couple of different approaches. Obviously Mike and I have very different approaches. Try out both of them, and just pick one. Don’t go looking for the tool that’s going to make your project succeed, because it’s not the tool that’s going to do it. It’s you and your developers and your team that’s going to do it. You can even use some pretty shoddy tools and get some good work done. It’s happened in my career, where we’ve been forced to use things that don’t work that well, and you can still produce good product. Other times you can use the best tool available and you can turn up crap. It’s really much more you and you’re team in terms of actually getting things done on time.
Mike [37:00]: I think that about wraps us up for today. If you have a question for us, call it into our voice mail number, 1 888 801 9690, or you can email it to us at questions@startupsfortherestofus.com. Our theme music is an excerpt from ‘We’re Out of Control’ by MoOt, used under Creative Commons. Subscribe to us on iTunes by searching for startups in business, and visit startupsfortherestofus.com for a full transcript of each episode. Thanks for listening and we’ll see you next time.
Episode 275 | How to Influence Decision Makers on Your Pricing Page
Show Notes
In this episode of Startups For The Rest Of Us, Rob and Mike talk about how to influence decision makers on your pricing page. Inspired by a listener question they give you some tips on how to optimize for better conversion.
Items mentioned in this episode:
Trancript
Mike [00:00]: In this episode of Startups for the Rest of Us, Rob and I are going to be talking about how to influence decision-makers on your pricing page. This is Startups for the Rest of Us, Episode 275. Welcome to Startups for The Rest of Us, the podcast that helps developers, designers and entrepreneurs be awesome at launching software products. Whether you’ve build your first product or you’re just thinking about it. I’m Mike.
Rob [00:25]: And I’m Rob.
Mike [00:26]: And we’re here to share our experiences to help you avoid the same mistakes we’ve made. How you doing this week, Rob?
Rob [00:30]: I’m doing pretty good. I’m feeling excited and, I guess, relaxed to be on the other side of my launch. Last week’s podcast episode, Derrick and I talked about launching the big feature in Drip called “Workflows”, and I feel so much more relaxed now. Trials are coming in. We’re going to look to have the biggest month of growth we’ve ever had, and it’s like you have two fears. I feel like I have two fears when I launch something like this. One, that the feature itself somehow isn’t going to work, right? You’re going to have bugs, you’re going to give yourself some performance errors, or something like that, none of which happened. Then the other one is that you’re going to do it and no one is going to care. You’re going to spend all this time and just have crickets. So far, neither of those has happened. So it just feels good, and I feel a lot more calm than I was last week.
Mike [01:16]: Yeah. That was a huge change, I’ll say.
Rob [01:18]: Yeah, it really changed the focus of the app, and brings us on or above parity with a lot of really big competitors. So it’s definitely starting to have a ripple. And what we’re seeing is that launch day we got more trials than usual, but then it just kept going, and just every day after that there’s conversations in Facebook groups I’m being pulled into, and forums, and people are now asking questions like, “What really is the difference anymore between DRIP and all these big competitors?” Just that those discussions are being had with a lot of strong opinions has just up’ed the game. I mean we’re just being mentioned in places where there’re previously probably an open and shut case of, “I’m an infusion suffusion user, and that’s’ all I’m going to use.” or Entrepot or ActiveCampaign, or something like that. That just doesn’t seem to be the case anymore. And it’s noticeable as the trial count has – at least for now – and we only launched last week, in essence, but we already have reached a new normal for trial counts. We don’t know how long that will last, but so far it’s looking really good. How about you? What’s going on? You were at the Big Snow Tiny Conf last week.
Mike [02:16]: Yeah, it was a lot of fun. The unfortunate thing is that the New England area is not exactly cold right now, for whatever reason. We’re just having a warm winter. It did rain one of the first nights we were there, so the next day there was a lot of ice on the mountain, as opposed to snow. But it was still a lot of fun, and there were a lot of great conversations that were had, and people were grilling me early on. There was actually a betting campaign going on about what my upcoming product is, because people who were there were listening to the podcast, and they were like, “Oh, I think I know what it is!” So they went around the table. They wanted to start a pool. I don’t think any money ever actually exchanged hands, but some of the things that they came up with were rather interesting.
Rob [02:57]: That’s cool. That’s fun. To dive into that with folks, especially when people are already invested in the thought of it. So you pulled the trigger? You pick a name? You get something up?
Mike [03:07]: Yeah. so I guess I’ll finally pull the rabbit out of the hat, so to speak. I’ve got a minimal website up and running right now. The product is called Bluetick, and you can find it at bluetick.io. It’s animated follow-up software aimed at freelancers and small agencies who have high-touch sales pipelines. So if you think of current tools that you’re probably using – something like Boomerang or FollowUp.cc – it’s similar, but it goes a step further. In those types of tools, those will detect whether or not somebody replied to you, and if not it will throw something in your inbox and say, “Hey, you’ve got to go talk to this person.” Or, “You’ve got to follow up with them.” The Bluetick software that I’m working on will take that a step further, and will actually send the e-mail to them automatically so that you don’t have to.
And if there’s additional e-mails that need to be sent, it will do those as well. If there is a workflow in place that you need to put such that you’re walking them through a sales process, then it will be able to handle that stuff as well. So I’ve gotten a lot of great feedback from it so far, especially over at Big Snow Tiny Conf and then, as I said, I’ve got 12 people who have placed preorders for it. And right now I’ve got a team of developers who are tasked with building it based on the designs and stuff that I’ve put together, and they’ve been working on it. Things are going pretty well so far, and right now I’m focused more on all the marketing stuff, and I’m trying to stay completely out of all the tech stuff. People have been asking me for decisions and stuff on different things. Generally speaking, I’ve stayed out of the code.
Rob [04:32]: Got it. If someone’s a freelancer or an agency and they have a high-touch sales pipeline, they might want to check out bluetick.io, get on your list at least to see what you’re up to and hear the updates on the product. We set a deadline for this, didn’t we?
Mike [04:44]: The target deadline for having it in front of the people who’ve placed preorders from me is April 1. It’s a coincidence. Maybe I should have said May 30th or 31st or whatever it is, March. Whatever those months happen to be. Maybe I failed grade school, I’m not sure.
Rob [05:01]: It’s approximately 60 days from now.
Mike [05:04]: Yep.
Rob [05:05]: And are you on track?
Mike [05:06]: So far, I seem to be.
Rob [05:07]: The only other thing, I was just looking at my e-mail, and Sherry, my wife, is writing an e-book about founder retreats, and it is shaping up pretty cool. I just saw the final, or almost final, PDF version, and it’s going to be e-book PDF Kindle and ePUB. She got the layouts from a designer who cranked it out. It’s looking really nice. It’s looks to be about 28 or 30 pages, and it has a worksheet, and that kind of stuff. We’re going to be launching it more through zenfounder.com, if you’re not on that mailing list. If you’re interested in hearing more about founder retreats; whether you’ve taken one and you feel like you might need more guidance, or if thought about taking one and want, kind of, what at this point I’m thinking it’s the definitive guide to founder retreats. Mike, you wrote about it in your book. Sherry and I have talked about on the podcast. She wrote a little one or two page helper thing a while back, but this is where she just said I’m going to put down everything, all the knowledge that we have on this into a single resource. So if that sounds interesting, head over to zenfounder.com and get on that list, because we’ll be launching that in the next couple of weeks. What are we talking about today?
Mike [06:13]: Well, we got an e-mail from Dave and he asked us, “Hey guys. I’d love to hear an episode in regards to tactics for getting people to sign up for your highest plans. We have four plans but only 4% of people sign up for the highest two. Why is that? I’d love to know what the benchmark should be in terms of the percent of sign-ups and revenue your highest plans, on average, should be and tactics for increasing that percentage.”
Rob [06:33]: Dave is from ninjaoutreach.com. So we’re going to take the rest of the episode to explore Dave’s question. Really quick, I wanted to chime in on – he has a precursor question where he says, “We have four plans, but only 4% of people sign up for the highest two. Why is that?” Frankly, because a lot of your traffic these days is probably bloggers and small agencies. Which is, you have four plans. There’s blogger for $29, small agency for $49, large agency for $129 and enterprise for $249, and either you’re getting more bloggers and small agencies than large and enterprise, or it’s the fact that the price points are so different, right? You have a $49 plan. It’s your first from the bottom. Then your large agency plan is a big jump to 129. If people aren’t getting value out of your software yet, they’re probably not willing to dive in with both feet to pay 129 bucks. Most people want to try a lower priced plan to dip their feet in. As long as it has the same amount of functionality, why not sign up for the one user $29 a month plan, just to give it a shot so that, maybe, if accidentally I forget to cancel, or forget to stop after my trial, then I’ll only get billed 29 bucks – always knowing that if the person does start to get a lot of value out of it, they can quickly upgrade to the $49 or $129 plan. That would be my take on why only a small percentage sign up for the higher ones, because there’s no feature gating here. There’s no features that are not in the lower plans, and so there’s not much reason for them to sign up for the higher plans until they’ve seen value from your software.
Mike [08:02]: What Rob just said takes us into the first point of our outline for this episode. That is to highlight a default plan for the user. This, kind of, ties back into segmentation a little bit. You have to know who your audience is, and the bulk of the users who are coming in. For example, specifically on this page, the small agency plan is highlighted. So if you wanted to try and push people up into those larger tiers, you could highlight the large agency of the enterprise plan. I wouldn’t do the enterprise plan because it’s not typical to highlight your priciest plan, but highlighting the large agency plan would probably be a good bet there. The other thing that you’re doing here is that the names of the plans are essentially a self-categorization of the user. For example, enterprise users or enterprise companies are not going to sign up for a blogger plan or a small agency plan, because they can’t really justify that. Patrick McKenzie has some great stories about how he went in and tried to sign up his company for a personal plan that was only $9 a month, and his boss crossed it out and said, “Yeah, we’re signing up for the $500 a month plan,” and he said, “We only need the $9 a month plan,” he’s like, “Nope, we’re an enterprise. We pay for the top of the line.”
Rob [09:10]: Yeah, I think something else to think about is, where did you get these names from? We have blogger, small agency, large agency and enterprise. They’re great first cuts to allow people to self-select. But have you spoken to folks who’ve signed up for your small agency plan and asked them, “Are you actually a small agency? Do you identify as a small agency?” Try to forget how many of them are just random people. Maybe they run in a SaaS app or sell info products and they’re not an agency at all, but that’s the plan that they needed based on the number of users and contacts that you allow. So I would circle back and go for some qualitative data from your existing customers, because “large agency”, right off the bat, makes me think of a 50% company, and a 50% company probably needs more than four users, which is what this plan has, and she’d probably be paying more than 129.
That’s just my opinion. I’m not a small or large agencies, so I’m not necessarily an authority on this, but that’s what I’m saying is go to the people who are signing up and really figure out if these are the right names or if there’s another angle that you can take here with the naming. I think one other thing that I would throw out is we have four SaaS tiers on this pricing page. and I’m not sure if we really need tiers, or just doing a per user pricing, much like a CRM, would be a better approach. If you did $29 a month per user and each user gets whatever it is, 1500 or 2500 contacts, it would simplify your pricing. It will be an interesting test. I’m not saying it would absolutely be better, but since you’re not feature gating, and if someone is really a large agency and they do need 10 people in there, it would, kind of, be nice for them to come in and be able to pay that 290 bucks and get started with one user as they’re just getting their feet wet with it, and trialling it out, and then ramp up piece at a time instead of feeling like they have these big jumps between tiers. So here’s definitely arguments. It’s probably whole episode to talk about a per user or per subscriber cost, versus actually having tiers, and feature gating, and that kind of stuff. But that’s something that comes to mind here as maybe if these folks are used to paying per seat or per user, which I bet agencies are – because that’s how CRM is done, that’s how project management – then maybe that model could be closer to the other tools they’re using and therefore it might make a little more sense for them.
Mike [11:23]: The next item for how to influence decision-makers on your pricing page is to limit the number of sign up options. By that, what I really mean is if you’re trying to do too much on your page, it’s going to hurt the level of sign-ups that you get. If you start looking at most people’s pricing pages, you’ll see things like, “Oh, we have a monthly pricing, we have annual pricing, and then we also have three plans or four different plans that you’re offering,” and in some cases you’ll see things like a trial button, to sign up for a free trial versus a ‘buy now’ button. Once you start compounding those options, now you’ll say, “Okay, well, I have to decide, first of all, whether I’m going to do an annual or a monthly plan. Then I have to decide which of the plans I’m going to go for.” In addition to that, you also have to decide, “Do I want a free trial, or do I just want to pay for it now?” And tied it with that last piece is, are you going to ask them for a credit card upfront, or are you going to ask from them for a credit card down the road? That may be tied directly to whether or not it’s a free trial versus buy now. But again, you’re putting a lot of options in front of your prospective customer, and that serves almost as a road block to them even signing up, because they have to make all these decisions both before they get the software and start setting things up.
Rob [12:31]: Yeah. I’m not sure that I’ve seen this before, where there’s a 14 day free trial button for each tier, and then a ‘buy now’ button right below it. That feels to me like unnecessary decision-making, because now someone has to think, “Wow, do I want to do a trial or do I just want to buy it?” And I can’t imagine anyone’s going to want to buy it now without a trial, even if they know they want to use it eventually and they’re 100% sure, they still want to take advantage of the free trial. So that would be something I would definitely consider not having that ‘buy now’ button. It will remove another color from the screen, because that’s a green button, and it will simplify your pricing grid, in terms of there’s one call to action there and it will just be sign up for the free trial..
Mike [13:08]: The next item on the list is to deemphasize specific options. These are especially things you don’t necessarily want people to sign up for. For example, let’s say that you had a starter plan, where it was one user and it was very stripped down. You might have just a link there for that particular plan. If it’s a $9 a month plan, you might want to just get somebody started on your application and then up-sell them inside of it to a higher pricing plan. But then there’s also things like the enterprise plan, which if you have something that is going to be much more of a custom plan for that person, depending on the number of plans that you already have, you may not even want to have a column or a tier for that. You may just want to put down in the text some place that says, “Are you thinking that you’re an enterprise customer? You need something more than this? Just call us.” That way it doesn’t take up one of the spots on your page as a full blown pricing tier.
Rob [14:00]: And for that button on the enterprise tier, I’ve seen folks do ‘Call us now’. I think requested demo is an interesting test for that enterprise tier, because if they really are enterprise they probably want a demo before they can even think about anything else. They don’t typically want to start a free trial without seeing a demo of it. So what’s nice about requested demo is then, boom, you instantly ask for their contact information. You’re not making them contact you. You just pop up a form right there and ask for an e-mail, phone, perhaps how big their list its; some metric to where you can figure out how large of a customer they might be. Then the ball is in your court to follow up with them. And you could use fancy software like Bluetick.io or you could just put it in your CRM, or however you’re going to do it. Then, like I said, you are essentially in control at that point. So that’s another angle. Instead of having them taking action in terms of calling you, it’s nice to set it up where you have their contact information and can follow up as needed.
Mike [14:58]: A bit of a follow up to one that you mentioned a few minutes ago, Rob, which was removing either the free trial button or the ‘buy now’ button and just having the one to help limit the number of calls to action, and eliminate an additional color on the screen that’s fighting for attention. You can deemphasize other navigation options. So whether that’s up at the header, or in the footer, or even just removing pop-ups. I’ve seen pricing pages where they will still pop-up something that will try and get you to sign up for their newsletter. The one exception to them might be if you have something there that asks them if they have pricing questions, or have some sort of little widget there that allows you to interact with the person to help them make a decision. But that’s something I would definitely test. I wouldn’t just throw it out there and just hope that it’s going to work, or expect that it is doing its job. That’s something that you definitely want to test to make sure that it is moving people in the right direction.
Rob [15:49]: Yeah. I agree. I tend to strip away all the noise that I possibly can, all the buttons, all the colors and everything that you can, off of your pricing page and make it almost a little bit minimalist, or a little boring. Then the only colors that you need are on those buttons that you want folks to use, like the ‘start a free trial’ button. Those can be a nice, attractive – like an orange or a yellow – and they’ll really stand out. And you don’t have to make them flash, and have a marquee tag or something to stand out against all the other noise on your page.
Mike [16:21]: The next item on the list is using heat mapping software. On your pricing page, especially if you have enough traffic coming to the page where it makes sense to go in that direction, there’s a lot of different options out there. There’s Crazy Egg, ClickTale, Get Clicky. You really want to see where people are looking on your page, and find out if there’re other elements on the page that either people are clicking on because they’re distracting those people, or if there is copy that is drawing their attention and, kind of, influencing them on the page. Those are the types of things you want to know, and find out whether or not they’re additional things that you need to add on the page or remove from the page, because it’s either confusing the user or it is retracting from them moving in the direction that you want them to go.
Rob [17:06]: Yeah. Heat maps are really cool. I’ve learnt a lot from them. The two tools that I would use these days are Crazy Egg and Inspectlet. Those both give you a nice heat maps. You’d be surprised at how much you can learn from one of these. They also have scroll maps that shows you where people are scrolling and where they’re looking around. This is worth running on your homepage and pricing page at a minimum.
Mike [17:30]: The next item on the list is to identify feature differences. General advice and general wisdom basically says that you should be talking about the benefits of your products. But I think on the pricing page it is an exception to the rule, because on the pricing page people are much closer to making a decision. By that time, the expectation from you is that they have most of what they need to make a decision, and what they’re looking for is, what the pricing is, and which of the plans is right for them. They’re not trying to figure out, “Is this going to do something for my business? Is this the right tool for me?” What they’re really looking for is, “Which of these pricing plans do I fit into?” And, “I need help making that decision.” So at that point, comparing and contrasting the feature differences between your plans is much more important than it would be on your homepage, for example, or on a page where you’re talking about the benefits of using the software, or why you would use it. The pricing page, I would tend to err on the side of doing feature comparisons between the pricing tiers.
Rob [18:30]: Yeah. On a pricing page, you still want to be building that social proof with testimonial and these trust markers that we’ll talk about in a minute, but you don’t want to be still talking at a high level in terms of benefits. I think that’s something that people make that mistake of getting overly benefitted, and it feels like it’s vague, if you’re still talking about too many benefits — you can have a nice headline that’s a benefit, or the button can have the benefit on it, but if you have any other text on this page, people are already at decision-making process and they’re trying to figure out– it’s hard enough to make a decision. They’re trying to decide between your tiers. Make it really simple, really clear and very specific as to what they’re signing up for. Because without that, it’s going to sow the seed of doubt in their mind and the odds are they’re going to back out and not click that free trial button.
Mike [19:15]: One of the things that you just mentioned, Rob, was the trust symbols. With trust symbols, sometimes you can be pointing to third party rating systems, or maybe you’ll show like an SSL Certificate. Sometimes they have site seals that you can put on your website just to say, “Hey, this is secure.” I don’t know if I would put that on the pricing page itself. I might put it up on the sign up page, because I think on the pricing page it would probablydetract from the sign-up experience. But you do want to show – once they go through and they click the buy now button or the free trial – that you are securing their information. So that’s probably where I’d put the site seal information. On the pricing page, you might want to put some testimonials to talk about what other people are saying about your products, and what sorts of benefits those people have experienced.
When you’re doing that – I see this when people are using comments from Twitter, for example – and I’ve made this mistake myself. I actually still have a place where I have it on my list to do to change it, but If you have dates on those testimonials because they’re coming directly from Twitter, then somebody might look at that and say, “Oh, well that testimonial is a year old,” or two years old or five years old. You have to be a little bit careful about that, because you don’t want it to look outdated. You want it to look as if somebody just recently said that. I think that If you have those dates on there you do have to be a little careful about making sure that you either updating them with more recent things, or doing a live stream from Twitter is little bit of a risk because then you could have somebody goes on and just complains about it, and that could end up on your website inadvertently, and you don’t want that in your pricing page. You do want to make sure that you pay attention to whether or not those dates are displayed.
Rob [20:45]: I’m a fan of having testimonials, but not a big fan of having the big, bulky tweet boxes that come natively when you do a little plug in, or a Java Script thing that displays it, because there’s then just so many buttons appearing. You have like the person’s headshot, their name, their Twitter username, a follow-up button, a heart button, and a retweet. It just adds to the noise on the page. So when I tend to do testimonials, I like having a headshot if I can. I like having something in quotes, right? That’s the testimonial, and include the quotes around it. Then a name, and perhaps a URL that’s not underlined, that’s not blue, that doesn’t drag away the eye from the rest of the page. So if you are going to have tweets on it, I would opt to not use the big, bulky or fancy tweet boxes with all the options, because you want to remove that noise. It doesn’t necessarily add to the value of it to have all of that on the page. You can certainly use someone’s Twitter handle, and grab their headshot from their Twitter account and use it, but I would think twice before adding a lot of extra noise to the pricing page.
Mike [21:51]: The next thing on our list is to mitigate the risk for the user of signing up. This comes into play when you are looking at using a free trial button versus some sort of a buy now and saying there’s a satisfaction guarantee. If you use a free trial, there’s a limited time window during which they have to get in and they have to start setting things up. There’s this time pressure for them to do it. On the other side of it is if they’re buying it now, then they know that they’ve just paid for it and they have usually like a month or a year before they have to pay for it again. So hopefully, during any point up to that renewal time, they can go in there and start using the software. But you are forcing them to make a choice about whether or not they are going to get started using it right away, or they’re going to, kind of, delay that decision. So it does factor into that, and the trial length also factors into that as well, if you’re going to use free trials. So whether it’s 14 days, 21 days or 30 days, the trial length is something you’ll probably want to play around with a little bit to see whether or not there’s a difference in conversion. You want to be able to provide that value to them as quickly as you possibly can, but you also want to make sure that that’s as short as possible so that you can start getting them as a paying customer. So there’s a balancing act that you need to take into account.
Rob [23:04]: In terms of trial length I always try to go as short as possible so that you can run the most split tests. When I first required HitTail years ago, the trial was 60 days long, and that meant that I could only run six tests a year on the on-boarding e-mails, or on making changes. Then if you’re running marketing experiments, and different quality leads were coming in the phone, you didn’t know for two months. So you can make a lot of mistakes. Pretty quickly I had dropped that down to 30, and I wound up getting it down to 21. The reason I couldn’t go shorter than 21 is it was taking people about 21 days to get a lot of value out of HitTail at the time. Later on we rewrote the code and we were able to give value a lot quicker than that. But if you can do a seven day trial and people can get value out of your software in that timeframe then that’s what I would go with – even going as far as to charge upfront if you can. I feel like when you’re first starting out and you don’t have any type of brand or word of mouth, it’s a little hard to do that, not impossible – especially if you’re still learning about the app, and what people want, and what features you need, and the feedback is rally valuable – I’d probably still do free trials to get people in. But the time urgency of a free trial, there’s a benefit there. In terms of mitigating a risk for the users who are signing up, one of the big ones is to have that 100% money-back guarantee and to display it prominently on the pricing page, and to let people know that you will always refund the most recent monthly payment, you have a money-back guarantee within 30 days, just all that stuff.
There’s no reason not to do that. I know that some apps won’t refund payments, and to me it’s such short-term thinking. Yes, you’ll get some people who’ll screw around with it and they’ll get their $19 or their $39 back from you and it will feel unjust and the principle of it doesn’t feel right. It is absolutely not worth screwing all the other people who genuinely didn’t mean to do whatever. They forgot about something. They weren’t using it. There are lots of legitimate businesses that just have a reason to get the refund, and this world of ours is not that big. I know you think that you can, perhaps, not refund people and it won’t get around, but eventually it will. If you hit any type of size, word just gets around that you are not treating people fairly. So that’s always been my policy. It also helps keep chargebacks from happening, because charge-backs are expensive, and they’re a pain in the butt and you either have to fight them, and you spend the time to do that, or you get this extra charge. So if someone was not happy and you don’t give them a refund, the odds are they’re going to charge you back anyways and you might lose that as well, and it’s definitely going to waste time. So those are some thoughts around free trial, trial length and how to offer that money-back guarantee.
Mike [25:30]: The last item on our list is if you’re displaying answers to FAQ questions, make them relevant to the pricing tiers that you have. So rather than displaying a huge list of FAQs that are relevant to you products, make the FAQ questions that you’re going to display specifically relevant to the plans themselves. For example, maybe you have something in there about your cancellation policy, or whether somebody wants to upgrade or downgrade from a particular plan. Those are the types of things that are relevant. But things like “How to use your product” or “How to use a specific feature.” – those are things that should not appear on your pricing page.
Rob [26:07]: Right. Examples of questions that apply directly – either to the tiers, or just signing up for a trial – are something that I’m pulling here from the HitTail and the DRIP pricing pages. Questions like, “How does the trial work? What if I go over my monthly limit? Do I have to sign a long term contract? What happens when I start a free trial? What’s the set up process like? Can I change my plan?” Right? Those are things that people are thinking about as they’re looking at your pricing grid. So they may not answer specific questions about a specific pricing tier, but it is what’s going through the person’s head as they’re deciding whether or not to sign up, and they’re thinking, “What are the risks? What are the negatives of doing this?”
Mike [26:42]: And if you’re looking for additional resources on conversion rate optimization, we’ll include a link over to quicksprout.com, where they have the definitive guide to conversion optimization. There are a few things from this episode that were taking from that, but there’s a lot of things on there that are generally applicable to your website itself, or to learning pages. So there’s a different instances where some of the things that they have in there would be applicable.
Rob [27:04]: We outlined and recorded this entire episode based on a listener question from Dave at Ninja Outreach. If you have question for us, call our voicemail number at 8-8-8-8-0-1-9-6-9-0, or email us at questions@startupsfortherestofus.com. Our theme music is an excerpt from ‘We’re Out of Control’ by MoOt, used under creative commons. Subscribe to us on iTunes by searching for startups in business, startupsfortherestofus.com for a full transcript of each episode. Thanks for listening and we’ll see you next time.
Episode 274 | How to Mentally & Technically Prepare For Your Launch (With Guest Derrick Reimer)
Show Notes
In this episode of Startups For The Rest Of Us, Rob and guest Derrick Reimer of Drip, talk about how to mentally and technically prepare for your launch. They give you first hand advice from things they learned and experienced when launching a new feature to their product.
Items mentioned in this episode:
Transcript
Rob [00]: In this episode of Startups For The Rest Of Us, Drip takes over the podcast. My co-founder Derrick Reimer and I talk about how to mentally and technically prepare for your launch. This is Startups For The Rest Of Us, Episode 274.
Rob [21]: Welcome to Startups For The Rest Of Us, the podcast that helps developers, designers, and entrepreneurs be awesome at launching software products, whether you’ve built your first product, or you’re just thinking about it. I’m Rob.
Derrick [30]: And I’m Derrick.
Rob [31]: And we’re here to share our experiences to help you avoid the same mistakes we’ve made. What’s the word this week, Derrick?
Derrick [36]: The word is “Workflows.”
Rob [37]: Indeed, it is.
Derrick [40]: We just launched probably our biggest paradigm-shifting feature in Drip since we launched our automation engine about a-year-and-a-half ago.
Rob [48]: It was quite a week, this week.
Derrick [50]: Indeed.
Rob [51]: It always is, and that’s what we want to talk about today. We were in a discussion the other day, and I realized it was probably worthwhile having on the podcast. Mike is out this week at Big Snow Tiny Conf in Vermont, and since we did this launch this week and there was so much that I learn every time we do one of these – both from just a planning perspective, like, the actual tasks we have to get done in terms of getting the feature built, getting the marketing out; but then there’s also that whole mental side of it. And I think I experienced it. I think part of it is being lack of sleep, but part of it is just trying to get stuff out on a deadline, that is pretty interesting to talk about and, I think, it help folks who are interested in preparing better for their next launch, whether it’s a feature launch like we just did, or whether it’s an actual product launch.
Derrick [01:33]: Absolutely. It seems like we go through these constantly, but it somehow never seems to get easier.
Rob [01:38]: I know. I know. I wonder. Part of that might be that you just get more and more ambitious with each one.
I think about the very first launch that I did. I’m trying to think of what it was. It was probably launching a new version of DotNetInvoice, and it was release the code and email my customers, and that was the launch and that was it. So it was pretty easy, because I had to draft one email and check something into source control and put a zip file on a server.
But this launch that we did this week with Workflows – and if folks didn’t hear about it, it’s, in essence, a visual way to build a marketing funnel. So it’s centered around email, but there’s all types of stuff you can do in terms of tracking someone clicking a link, or an action they did outside of just doing stuff in email, so it’s a visual flow. I’ll put a screenshot of it in the show notes for this. Or, frankly, you can go to getdrip.com/workflows and check out the whole deal. But launching something this large is more ambitious than just an update or some bug fixes. And so we didn’t just push a feature out, we did a big marketing push to people both in our list and not. We had some loose partnerships. We had some onboarding we had to redo. A bunch of documentation had to be updated and all that stuff.
Derrick [02:49]: Right. And on the technical side, there were a lot of opportunities to break things when building this as well, and the stakes are higher because with this new feature, we basically had to rewire the app to push everybody to center their whole account around their Workflows. So it’s – yeah, definitely the stakes are higher with this feature.
Rob [03:07]: Let’s start by running through the tasks that need to get done to launch a feature or a product. Maybe you won’t have all of these in your particular case, but this is what we saw, and this is a complete representation of the stuff that we’re working on to get Workflows out this week. I think the first one is just finishing the feature itself, getting the code out there in a way that the feature or the product is done. And, frankly, you were almost done with it a couple weeks prior to the actual launch.
Derrick [03:39]: Right. A couple weeks prior, we started to get some early-access users looking at it, and we didn’t encounter a whole lot of technical problems after they started using it. There are a few things here and there, a few recommendations on things we can improve, but it was pretty technically sound. At that point, we started looking at the other tasks that were needed to actually get this launch started.
Rob [04:01]: Right and the plan for this one was to do a little bit of a buildup. Since it was such a big feature we were getting out, we didn’t just want to launch it and send an email. We actually wanted to give a teaser a couple weeks in advance, but the thing is once you send a teaser email like that, you’ve basically set a ticking clock, right? You’ve started a timer. And assuming you want to hit the deadline that you’ve committed to – which, for us, the teaser said, “It’s coming in two weeks” – we know people will give you a day or two, but if you go a month after that, people are going to notice. So we really wanted to mentally focus on hitting that. If you’re going to do that, then you’d better know everything that needs to get done between that point and the day that you’re going to launch.
And I felt like we did a so-so job of that. I felt like, technically, we were dialed in, but there were so many other things that we discovered after that like, “Oh, all of our knowledge base docs. We need a ton of knowledge base docs for this.” We had a lot more marketing collateral and email copy and blog post copy and filtering of lists than I thought we were going to have. Then there were also a few things on the technical side that we had to expand, and we discovered that, I think, the day we sent that two-week email. You and I went into a conference room, and you said, “We need to rework some stuff.”
Derrick [05:12]: The big thing that jumped out as soon as we started the clock ticking was our entire user onboarding – basically, we call it our “guided setup”, which is a few screens that ask you some questions when you first sign up for a Drip account and basically helps us to auto-generate some things in your account, like a campaign and an automation rule and things like that. We realized that, basically, our whole guided setup was centered around our basic automation rules, and now we’re trying to get people to shift into centering their whole account around Workflows. And when we originally built guided setup, I think it was at least a month long of planning and iteration and building out how exactly should this wizard work. So, yeah, it was a little frightening to realize that late in the game that we had missed something so large.
Rob [05:58]: Right. So, again, the feature itself was pretty much feature-complete, code-complete, and it was even in beta, so it was pretty heavily tested. But the realization of, “Oh, yeah. Our onboarding doesn’t push anyone into Workflows. It’s going to take them through this older style of stuff,” we had to sit there in that conference room and say, “How can we best do this in a way that works for our new trials, but that doesn’t take more than two weeks, in essence, because we literally have a ticking time bomb?” And that’s not something we do. We don’t do deadlines here at Drip. We just haven’t ever set a hard deadline like that. We push, and we try to get stuff out on a time schedule, but we don’t kill ourselves. We have the luxury of doing that, since we don’t have the investor timelines and we don’t have a burn rate. And so that was, I think, kind of a new experience for both of us.
Derrick [06:41]: Totally. And there were some other features that I really wanted to add in if I had time in the two weeks leading up, and when you’re looking at it a month out, you feel like you have a lot more time than you actually do. When that clock is ticking and you start looking at, “Well, this is how many business days we have left until that deadline, and if I do sub out some of this work to someone else on the team, we’ve got to review everything, make sure everything is airtight before deploying it.” So you realize how quickly those deadlines come up. I definitely had to cut out some features that I really wanted to add in the interest of getting our onboarding done.
Rob [07:16]: Right, and so those will go in post-launch, and I think we prioritized those yesterday.
So in terms of actual tasks, we’ve talked about a couple so far. I have a total of eight here listed. The first was basically finishing the feature or the product itself. The second one was – for us, it was realizing that, “Oh, there’s this extraneous thing that’s impacted.” It was our onboarding that was impacted. So I think, as a listener to this, if you’re launching a brand new product, you don’t have to worry about this, but if you’re launching a major, new feature, try to sit down earlier than we did and think about, “How does this feature impact other features in the app,” such as your onboarding, or such as other flows that are already existing. Because I think that while technically everything would’ve worked and nothing would’ve crashed, it would’ve been a poor user experience had we not circled back and done that.
The third thing that I thought was interesting was we had maybe 5 to 10 alpha users, and then we had close to – I think it was between 20 and 22 beta users who were really digging in and building production Workflows. I was working one-on-one with most of them, answering questions via email. If they ran into any issues, we were correcting them or clarifying them. A lot of them were just questions or misunderstandings rather than any type of technical bug or issue, but the amount of feedback that generated and the number of tweaks we made based on that was not inconsequential. We added a couple features based on some really good advice from some – these are very knowledgeable, influencer beta users who use other products that compete with us. We wound up adding a couple new features within the last couple weeks, as well as making some tweaks.
How did you feel about that and how that process went?
Derrick [08:49]: I felt really good about that. I always enjoy getting features in front of customers early on, because it’s like we talk about, with launching brand new products. You never want to go off in your basement and build for months, without getting it in front of potential customers or people who are really knowledgeable about the problem space you’re trying to attack. So I felt really good just showing it to people and hearing this feature that I thought made perfect sense, as soon as someone else looks at it, they’re a little bit confused by it. Then as soon as we iterate on it and work on it, then it becomes clear that, “Oh, yeah, it totally makes sense what they’re saying.” So I like to think of any big feature like this as almost a brand new product that we have to do adequate customer development on and getting it in front of people.
Rob [09:34]:And to be honest, I found that having knowledgeable beta users using it in production flows and giving us feedback made me rest much easier when we did the launch, because I knew that it had already been battle tested pretty well and that a lot of questions had been answered, and those early rough spots in an early product were ironed out by that point, right, because we had folks who were using it and offering suggestions in a controlled environment where we didn’t have 500 people or 1,000 people using it. We just had ten or 20. So if you have any time where you can carve that out and give yourself even a week or two to hone the product based on user feedback, it will make you sleep better the night before launch.
Derrick [10:15]: Absolutely. And just back to the point of part of the process of finishing the feature, I feel like this is included in that, where immediately I felt better once I was able to take this feature that I’d been working on for a few months and actually deploy it into production behind some feature flags. So just knowing that this code is actually running on our live servers, nothing’s falling apart, and now we can tick a box in our admin screen to open it up to people and start getting people using it, that’s just a major load off my mind.
Rob [10:45]: I agree. That’s another good point, and that’s something that we’ve done a lot over the past couple years is we try not to have these big branches, these two-, three-, four-month-long branches/features that are not merged into the core codebase. Because one of the worst things that can happen on launch day is not only are you worrying about all those extraneous tasks and the marketing and the docs and all this stuff, but you’re also trying to merge in code, and you’re breaking other things. So that’s something that you’ve been really good at, is along the way, you were trying to get as much code into production months before we actually launched this thing.
Something else that I was thinking of that we didn’t have to do here, but may happen if you have a really big launch list, or if you think that this new feature is going to be hitting your servers hard is some folks have to increase their capacity. They either have to staff up with support, or they have to increase server capacity, spin up new VMs and stuff like that. We didn’t have to, because we don’t see this as being a big load on our servers.
Derrick [11:43]: Look, fortunately for us, this one’s pretty light on the servers.
Rob [11:48]: The next task that you’ll want to think about – and this is our fifth one we’re talking about – is essentially getting your documentation up to speed. We call them “KB docs.” They’re knowledge base docs. You can check all our stuff out. It’s at kb.getdrip.com, see how we structure it; but for a feature like Workflows, that’s almost an app unto itself, you need docs that show people: a) how to get started; they need a quick start guide; b) they need a more encyclopedic list of what do all the steps do in these categories and what are really the ways to use this. And then they probably need some case studies or use cases. They probably need an FAQ. They might need a migration guide of, “This is the way we used to do it with one-off automation rules, and we’re still going to keep those around for certain purposes, but Workflows are now the main focus. And if you can, and it makes sense, then move yourself into Workflows from rules.”
So all that to say that’s not just one KB doc. That’s not just cranking up WordPress and hammering something out. And this really requires some planning in advance, and luckily we have the help, and we were able to get Anna to write all these KB docs. But I can’t imagine if we were still a two-person team or a three-person team, this would have been an enormous amount of effort for us to do, in addition to the marketing and the technical side.
Derrick [13:01]: Oh, man, yeah. It’s really easy to think that the feature itself is the hardest work and to think, “Oh, yeah, the documentation – that stuff, we’ll maybe work on it the day before.” But watching Anna, our customer success person, flesh out all these docs and start rerecording help videos and rerecording her demo videos that she sends to folks who want to watch a video demo, it’s been a monumental effort, for sure. Just a few days before launch, we were all sitting in the office, and you and Anna were both editing videos, and I watched you guys sit there for hours. I realized that the editing process is really time-consuming. So things like that, it’s important to keep in mind that everything takes longer than expected, just like feature development.
Rob [13:42]: Exactly. Exactly.
Last couple things. One is basically just your marketing plan and your marketing collateral. For us, there was a lot of email copy and thought put into how that was going to be sent because we have a lot of segmentation, right? We don’t just want to send our customers, our marketing lists, all the same stuff. If people are in a trial, they probably want to hear something different about the feature. If they’re a customer, they want to hear something different. They want to see KB docs. If they’re just on a marketing list, then they probably don’t want to see KB docs. They really want to hear, “Why is this important to me? Should I sign up for Drip?” because they’re not even a customer yet. So thought went into how the emails were structured, and then announcement blog posts, and then we had the whole Features page that we added. You brought it up two weeks in advance, and then it never made a list, and so then it was like two days before, and we were also scrambling to get that out.
But there’s a lot to be thought about here. It, again, is not just so feature-centric. Especially if you’re going to do a launch that requires multiple phases of marketing, where you’re not just sending a single email, but you’re doing a two-week-before and then a day-before. Then that day before, realize that if you create any type of stir or conversation, you’re going to be on Twitter a lot of the day. Or you’re going to be answering emails. Or you’re going to be helping answer questions on forums, or in Facebook groups, where people are talking about us. So a lot of time can be pulled into that, so it’s better to be ahead on pretty much everything and not waiting last minute trying to do that, and still finalizing the next day’s copy.
Derrick [15:08]: Absolutely. A lot of this stuff we talk about, like the demo videos, the KB articles, the blog posts and feature pages that explain what this is, all of that, you could probably skip some of that, but what you’re doing is potentially creating a much larger volume of support and questions afterward. So part of this is doing the work up front to mitigate the amount of questions and support emails you’re going to receive, and also just it makes customers happier if they can figure things out on their own and things are intuitive. And when they do have a question, the answers are right there at their fingertips.
Rob [15:40]: Right. Another thing that we did pretty well with is you have to prioritize. For a while, I kept saying, “If we can do a screencast – if we have time, then we will do it,” but that is below the priority of just getting the features page up and just getting the launch copy written. As it turned out, I was able on the last day, to get a screencast recorded and edited, and we got it into production after getting some feedback from you guys. But if we hadn’t had time, if something had gone sideways, we just would’ve launched without it, and that’s okay. You don’t need all of this stuff. This is trying to approach the perfect launch. We really were thinking, “What is the ideal launch that we can do that will give us maximum impact, maximum conversation, maximum number of trials coming in, the least amount of support?” because we answer questions up front. That’s what you’re trying to think through, but you may not be able to do everything that you dream up, and there may be some things that you do have to leave on the table, in essence.
The last task that I want to talk about is interesting. It’s another marketing piece, but I found myself spending a lot of time working with our early users, our early-access folks. Some of them are influencers, and some of them are just people who are power users of Drip, and so we wanted to get them into an alpha just to play around with it. We knew it was still buggy. This is, like, November, December. Then we pushed it into beta in, I think, early January. And that’s when we started doing a lot of production work, production flows for ourselves, and other people started building it. The nice part about that is I was in such steady communication with them that by the time we launched, these people knew how to use it pretty well, and they were able to instantly throw stuff into production if they didn’t have it already. And since they’d been part of the process, they began tweeting about it and talking about, and it definitely drove conversation and it made people feel like, “Wow. These Workflows are everywhere.”
That’s approach you’re trying to go for. So we had [Brenan Dunn?] record a screencast yesterday all about a flow he built and threw into production. We had Dan Norris posting in his – he has a seven-day startup, private Facebook group, and he was posting in there about it. It’s because these guys we’re in early. They’ve been longtime Drip customers and they were using Workflows for a month before everyone else, and so they had the familiarity and the confidence in it, to then on launch day be able to do that kind of stuff for us.
Derrick [17:46]: Absolutely. It didn’t seem like it was a stretch for any of them to honestly say, “This is a super awesome feature. You should go check it out, and here’s what I’ve done with it so far.” It wasn’t forced. It wasn’t like they were pulling a favor for us, necessarily. They were really genuinely excited about it, which is, I feel like, the best way to do it.
Rob [18:05]: So the interesting part with that was it was very time-consuming, period. I did a lot of one-on-one emailing. It was totally worth it in the end, but realize that this is another task that you have to do if you’re going to go down this road. And in early products that I did and launches that I’ve done, I haven’t done this part because I didn’t have the team doing all the other stuff that enabled me to have the time to do this. Because if you are writing the code, and you’re doing the marketing collateral, and you’re doing the docs, and you’re going to handle support this is a nice-to-have, and it can help you, but it’s not in the top of the list – right – in terms of getting features out. But it can be powerful if you have folks who are on your side on launch day.
All right. So let’s dive into the mental side of things, because in addition to just getting the feature out and getting all the marketing and the docs, there’s this levels of stress that hit you at different points. And there’s mental games when you and I are up until midnight, and then we wake up at 5 in the morning to launch the product. There’s a certain amount of struggle that you’re going through to just think clearly and make good decisions and to sleep well when you can and get it done. So I think the way that I was thinking about it is a couple weeks before the feature launched, before we set the initial, “Hey, this feature’s going to be out in two weeks,” we all had a conversation at lunch. My memory of that was that the sentiment was very positive. Do you recall that? I don’t remember feeling any stress during that meeting.
Derrick [19:25]: Yeah. No, I felt like we had given ourselves plenty of time to build the feature, to test it, to get people using it. We already had our beta users banging on it and making sure that there were no bugs, so I felt really calm at that point.
Rob [19:36]: Then we sent the two-week email, that started the clock ticking, and then essentially that day or the next day, we realized, “Oh, we have to rework our whole onboarding.” What did that do to your psyche?
Derrick [19:49]: That definitely added an element of stress. I don’t know why setting a deadline in public like that somehow opens up areas of your brain to think of things like onboarding, but as soon as we did that, I can remember the moment and starting to think of, “All right. What do we really have to do in the next two weeks, because things have gotten real here?” And that’s when all these little things like – or, big things, like onboarding, started coming up. At that point it wasn’t – I don’t feel like it was toxic stress, but it was definitely stress.
Rob [20:18]: That’s a good point you bring up about setting a deadline in public really puts your feet to the fire. And I agree. I also started really gathering the list of deliverables at that point, and we really should do that before we set the deadline, but you just don’t. It’s just the nature of how we’re rolling. If you’re moving fast and doing things, I think you’re just – maybe it’s, like you said, your mindset shifts once you’ve committed to something.
Rob [20:43]: And I think that’s a good thing. I think that’s a lesson for listeners to take away, is if you find that you’re just pushing it off and pushing it off, maybe just set a deadline in public even if it’s just on Twitter, or even if it’s just in a blog post. It may not be to 10,000 people like we did but maybe it can be to 50 or 100. And if you feel that pressure, it can be something that forces you to make some tough calls towards the end. I could totally have seen that if we hadn’t set that two-week deadline, that it may have taken us a month to get it out. We may not be launched, because there were things that were coming up that we were like, “Oh, yeah. There’s this other feature someone just asked for. Should we build it before launch or not?” And if we could’ve pushed off launch, we very well may have decided to.
Okay. So that takes us up almost to the launch. I think the week before, we were doing fine. We were hammering stuff out, and then really the day or two before, we all came into the office. We typically come into the office a couple days a week and we really packed those days before launch with office time. We essentially launched on a Wednesday; and for me, personally, I felt like Monday was intense, but not stressful. We were all very focused. In fact, we normally have a lot of conversation here in the office, but I felt like we all had headphones on with some type of deep-focus playlist. We knew what we had in front of us. Did you feel the same way?
Derrick [22:00]: I did, yeah. At that point, it was all hands on the feature. We all had our own individual tasks we were working on for it. There were a few points where we wanted to be in the same room, because sometimes you just get those spontaneous – someone has a thought, someone brings it up. Another person hears it and contributes, and magic happens. So I think we had a few of those moments, and some really good things came out of it, but for the most part we were pretty heads-down.
Rob [22:24]: And I think that, as a listener to this, the theme for those 48 hours before launch is “focus.” That’s what. You have to focus in. We sat around the whiteboard, and we figured out what were all the – we threw them out. What are all the tasks that need to get done? And then each of us took their tasks. I had my own Trello board, and it basically had the list of tasks, because I was writing the email copy and segmenting the lists and running lists through some processors and trying to get the screencast done and talking with our launch partners. You were finishing up features and onboarding. Anna was doing KB. Ian was doing other stuff. So I think the fact that we did that once, got everything out on the table that we knew about that had to get done, and then all went into our little cocoons of deep-focus sound. I think that’s a way better approach, way less distracting and way more productive than always having something new, then not thinking of everything –
Derrick [23:11]: Right, absolutely.
Rob [23:12]: – and having the interruptions.
Cool. So the night before launch, I was stressed.
Derrick [23:18]: I was pretty stressed as well. We had just wrapped up the onboarding stuff, so of course it took a little longer than usual. We were so heads-down on our tasks that we had – we had tested it. I had tested it locally, and Ian had tested it as well, but we basically started doing our final run-through. We had it deployed in production, so that only we could see it, and we started –
Rob [23:41]: Right. This is just onboarding, not the feature itself.
Derrick [23:44]: Right, just the –
Rob [23:44]: Just the onboarding code, yeah.
Derrick [23:45]: – onboarding. The main feature itself was solid, but the onboarding, we were doing final run-throughs, looking basically from a very high level, end-to-end, what is the user experience of signing up for a trial, going through onboarding, the guided setup and then looking at your first Workflow. There were definitely some things that we all caught that night that were just extra polish things, but that path is so critical. So to be working on those things at the eleventh hour, essentially, was pretty stressful.
Rob [24:17]: It was literally the eleventh hour. It was 11 p.m. and we were on slack. I’m starting to nod off in my chair, because I’m not as young as I used to be, and I’d been getting up early to do stuff. I was like, “Oh, man. I just went through it, and this part – what are we going to do about this?” I know that at 11 p.m., that’s not what you want to be doing the night before launch.
But it was cool. We came up with, I think, some really good tweaks and we added some yellow highlighting to something just to call it out, because I felt like people wouldn’t see it. And we came up with good solutions that you were basically able to implement in under an hour.
Derrick [24:47]: I was pleasantly surprised that the problems that we did discover – or, not necessarily problems, but just things that could’ve used extra polish – that we were able to come up with a quick solution and deploy it in a way that it didn’t feel like making some last-minute change that might break a bunch of stuff. So it worked out pretty well. It could’ve been worse, but it turned out to be pretty smooth.
Rob [25:09]: And I think the lesson here for a listener is we were down to the wire, but it was down to the wire with onboarding. Realize that we could’ve shipped with what we had. We were not tweaking the production feature at this point. That had been feature-complete, code-complete for a long time with beta testers and all that, because that would be really scary. I would’ve pushed the launch off if we were still tweaking code the night before, because there’s no chance that we could launch to that many people with any type of question that we were going to have some buggy interface. This really was small stuff. So there was a certain level of stress, but it was a lot less than if we suddenly discovered some major flaw in the feature itself. In fact, we would’ve just pushed it off at that point for risk’s sake.
So there’s interesting levels of stress that go along with a launch like this. One can be a technical one of, “Oh, man. Is the feature going to work? We haven’t tested it well enough.” Try not to be in that boat. We were not in that boat, I felt like. There’s other stress, though. It’s all this work and all this time. Because it was five, six months of development, and then the last several weeks, it was the whole team, all hands-on, doing all this stuff. “Is this going to be worth it? Or is no one going to care?” It always goes through your mind. Or, “Are people going to be haters?” Are people going to be critical of it? Is something going to happen? Are we missing it here? So were we going to get criticism, or negative feedback, or is no one going to care? That’s another stress, I think, doing this, because you’re really putting yourself out there.
Derrick [26:25]: Totally. Are people going to sign up? We’ve just completely transformed the whole guided setup, the whole onboarding process. Are people going to be completely confused and not know how to use the app anymore in such a large shift like this?
Rob [26:38]: So we woke up on Wednesday morning around 5:00, 5:30, and we deployed everything. I remember you said, “I’m pushing the button,” and I logged in, and there were such minimal changes, because all the code pretty much was already in production. And all you did was add Workflows to the marketing site top nav and changed where the automations button. It was some very minimal stuff. So I remember feeling calm in the sense that the complex code that was in production had been in production and being hammered on for weeks, and the only changes were more aesthetic, I guess.
Derrick [27:11]: Right, just basically opening it up – removing the feature flags and opening it up for everybody.
Rob [27:15]: Yeah, which was nice. I’m always surprised on launch days. I think it’s a good thing, but launch days themselves tend to be anticlimactic. Did you feel that way as well?
Derrick [27:26]: Yeah, I did. You see these startup launches are things that create a big splash and a big viral wave of chatter and people talking about it. And we definitely had a lot of chatter on Twitter and things, but, by and large, it wasn’t like we had a thousand new users sign up, or servers going down, or – basically, it always end up being calmer than I expect.
Rob [27:48]: And I think that’s a good thing, because I think there certainly were conversations going on online, and we were responding to that kind of stuff; people talking about it on Twitter, and that’s a good amount of action going on. What you don’t want is the action of bugs being found, or people running into problems or getting confused. If it’s calm, probably consider yourself lucky as long as people are talking about it and/or signing up for trials.
So the day of, I didn’t feel too stressed about it. You as well?
Derrick [28:15]: Yeah. I felt really calm the day of. I did have trouble – for some reason, I had trouble focusing on the day of, I think because you’re just on edge, waiting for the other shoe to drop – like, “What’s going to go wrong?” I was looking at my list of tasks and things that I wanted to get in before launch, but didn’t quite have time and thinking, “Should I start working on one of these right now, or should I be trying to anticipate what might go wrong and get out ahead of the problem?”
Rob [28:40]: I totally agree.
Derrick [28:41]: I think I had that going on just looping in my head, and I think it affected my ability to focus that day.
Rob [28:47]: I think that’s something good to take away – is consider your launch day a non-working day. You’re going to sit in front of your computer all day, and you should, and you should interact with people, but you will likely get zero work done. Because I was in the same boat as you. I sat there and stared at my email queue. I really didn’t have anything to do after the emails went out aside from handle some email and some important conversations, but that was very minimal. Yet, I feel like I accomplished nothing that day, because I had that same track playing for me of, “What’s going on?” “Where are we?” “What’s going to happen?” It’s kind of like the stress that built up over the previous two weeks – it doesn’t just go away when you launch. It doesn’t dissipate. It hangs around, and I think that launch day is the day where you’re able to blow off that steam and release it. Because for me, the day after launch was actually when I came back and I felt really good. I wasn’t depleted anymore like I was on launch day.
Derrick [29:34]: Right. And we were a little tired, too. I know I took a nap on launch day when I found a lull in the afternoon.
Rob [29:40]: Well, yeah, after five hours of sleep, it’s probably a good idea to get your wits about you.
Hopefully, this gives you some thoughts and ideas and a checklist of how to mentally and technically prepare for your launch, whether that’s a feature or an entire product. Again, you may not run into all of these things, depending on the size and complexity of your launch, but these are definitely things to think about and get out ahead of before you do so.
So thanks for joining me today, Derrick.
Derrick [30:05]: Thanks for having me. It was a blast.
Rob [30:07]: And if folks want to keep up with you online, where would they do that?
Derrick [30:10]: Probably on Twitter @Derrickreimer.
Rob [30:12]: Sounds good.
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 on 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.
