Show Notes
In this episode of Startups For The Rest Of Us, Rob and Mike answer a number of listener questions including if SaaS is still viable for microprenuers, latest technology they are excited about, and some book recommendations.
Items mentioned in this episode:
Transcript
Rob [00:00:00]: In this episode of “Startups for the Rest of Us,” Mike and I discuss whether SaaS is still viable for micropreneurs, what books we’re reading now, and what solopreneurship looks like in 2016. Plus, we answer more listener questions. This is “Startups for the Rest of Us,” episode 313.
[Theme music]
Rob [00:00:17]: Welcome to “Startups for the Rest of Us,” the podcast that helps developers, designers and entrepreneurs be awesome at building, launching and growing software products, whether you’ve built your first product or you’re just thinking about it. I’m Rob –
Mike [00:00:33]: And I’m Mike.
Rob [00:00:34]: – and we’re here to share our experiences to help you avoid the same mistakes we’ve made. What’s the word this week, sir?
Mike [00:00:38]: Well, this past week I spent quite a bit of time probably alternating between two, different things. First one was having a lot of MicroConf sponsorship-related calls with people, because people have been reaching out and asking how to get in touch, and how to go about sponsoring MicroConf. I’ve been having a bunch of those calls. I won’t say it chews up a ton of time, but because they tend to be sporadically scheduled I have to be careful about how I allocate the rest of my time. The other thing I’ve done is scheduled a few, different calls with some of the people I’ve been working with on Blue Tick to hammer out how to integrate it into their sales funnels for Asana and Streak and a couple of other apps that they’re using. It’s been some interesting calls there. I’ve got some overlapping feature requests that we’ve got to go through and implement. They were on the roadmap anyway. All I’ve basically done is move them up a little bit, but so far things seem to be going pretty well. How ‘bout you?
Rob [00:01:25]: Yeah, speaking of MicroConf, if you’re out there and you feel like getting your company, or product, or whatever, in front of several hundred bootstrapped startups founders would be interesting, drop Mike a line. You can email him at questions@startupsfortherestofus.com, and we’ll get to you, or Mike@micropreneur.com. In terms of MicroConf, yeah, tickets are now on sale for Founder Café members – which is our online membership community – as to previous attendees. I think by the time this episode goes live, we will be emailing the early bird list either that day or the next day. So, if you are interested in heading to Vegas in early April, we’re having, as we said, the growth edition, the starter edition, depending on your stage. Head over there. It looks like we’re going to sell out pretty quick again this year. Is that your take on it as well?
Mike [00:02:10]: Yeah. It’s interesting the number of tickets that we’ve sold just so far. It exceeds what we’ve done in the past, which is to be expected just since we have more tickets available. It’s nice to see that things haven’t really been impacted by splitting things out into two, different conferences. Things still seem to be moving along at a pretty good clip, and it’s a matter, I think, for most people of determining where they should attend – just because there is the starter edition and growth edition. I’ve heard some people have not really concerns, but they say it’s a little bit of disappointment. They’re like, “Oh! I’m not going to see everybody that I saw last year.” because some of them are going to one edition or the other, and they’re going to be at the opposite one.
Rob [00:02:44]: Sure, but this allows us to have – what – probably around 400 people across the two conferences without having any conference be more than about 200, 220 people. I think it’s a good compromise.
Mike [00:02:56]: Yeah, definitely.
Rob [00:02:57]: And if you miss out on tickets this year, and you’re interested in getting an early jump on tickets when it’s much calmer, foundercafe.com, as I mentioned earlier, is Mike and my online community for bootstrapped startup founders. It is a paid community, and folks who are members of Founder Café get basically first crack at MicroConf tickets, both in Europe and in Las Vegas. So, if you’re interested, we do screen and approve incoming requests for new members. We don’t just let anyone in. You have to have some type of business launch, and have some type of traction in order to get in, but we’d love to see you inside Founder Café, if that’s of interest. Last thing for me, I’m preparing for my retreat, and my goal is to take two retreats a year – do one in January, one right around June or July – but with the chaos of the Leadpages acquisition, and the move, I never did my midyear one. So I’ve been encouraged by everyone around me. You know how someone hands you deodorant and toothpaste you take that as a hint, like, “Yeah, you smell?” Well, three different people in different walks of my life basically told me, “You really need to go on a retreat!” [Laughs] So, that was the indicator of like, “Oh. Am I being that much of a jerk?” “Do I look that stressed out?” So, I took that as an omen and booked something. I’m going up to the waters of Lake Superior for the first time ever.
Mike [00:04:12]: Very cool. I used to live right next to Lake Ontario, and very close to Lake Erie. I’ve never been that far up into the Great Lakes region, though. I have been to Minneapolis and seen the Great Lakes from there, but it’s a little different than actually going out there.
Rob [00:04:24]: For sure, yeah. I have not been north of Minneapolis at all, so it’ll be a fun, little drive for me. This week we have a bunch of questions. I really liked these questions. We have one from John Ndege, and then we had an email filled with questions from Corey Moss at gelform.com, and both are long-time listeners of the show. We’ve met both of them in person at different MicroConfs, and so we just wanted to take 20, 30 minutes to run through these. Some of these range from things about us and what we’ve been up to. Other things are more of our take on what solopreneurship looks like in 2016, 2017, that kind of stuff. The first question is from John Ndege, and his question is, “Is SaaS still viable for micropreneurs?” – meaning folks who want a lifestyle business, who want to probably stay solo, and keep a small business that can fund their life. You have thoughts on that?
Mike [00:05:13]: I think the interesting thing about this question is that people are starting to look around and see that the landscape of SaaS businesses is starting to become more crowded. If you look at the landscape today compared to five years ago – or even, honestly, two years ago – things are a lot more crowded now, and the low-hanging fruit is more or less gone. There’re certainly opportunities out there for people to come in with a new SaaS product and aim it at a particular niche and be able to be successful with it, but I think that the problem people are probably starting to run into now is that they look around and most of the ideas that have for a new SaaS product have already been done. There’s a little bit of angst, or concern, about coming out with a new product that does something that another product does, and I think that this is a very common hang-up among developers, where they basically want to invent something new. They don’t want to reinvent the wheel. They don’t want to do something that’s already been done, and that to them is a hurdle that they need to address in some way, shape, or form, either with themselves or with their customers. Because one, you don’t want to build something that there’s already a lot of very competitive products out there that already do that exact, same thing. For example, it’d be very difficult to come out with a new Basecamp, for example, or a new version of Teamwork, or a new project management application. It’s because those markets are very crowded. The analogy there that most people, I think, would take is they transfer that onto all other SaaS products and say, “Oh, there’s already something that does this.”, when the reality is the question you should be asking is, “Can I get in front of those people, and can I deliver something?” I think the other side of this is also that people’s expectations of what a successful SaaS product needs to achieve on day one are substantially higher than they were five or ten years ago. If you look at the new apps that’re coming out, they look very, very polished when they hit the market, and when you first discover them. It’s not often that you get to see the makings of a new SaaS as it’s being built, or as it’s in the very, very early stages, because you just are not in that target market most of the time. I think that those are the two things that factor into this. I do think that there’s still a lot of opportunities here, and I still think that people can come out with a new SaaS and make it work – especially in the micropreneur space – but I also think that you have to be very calculated about the things that you do and the choices that you make in terms of the competition and the market that you’re going after, and the marketing channels that you use. There’re still a lot of marketing channels out there that developers tend to shy away from, that they don’t necessarily need to shy away from, because there’s a lot of opportunities there. Some of those opportunities are a direct result of the fact that other developers and entrepreneurs are not in those because they’re uncomfortable with it.
Rob [00:07:51]: I think that’s a really good take on it. I agree with you, it’s more competitive than it was five years ago. The best time to get started was ten years ago, the second-best time was nine years ago, and the third-best time is today. I’ve been saying this for years about SaaS and micropreneurship and software and all this stuff. Info products have done the same thing. There is so much money to be made, and as audiences have grown bigger and bigger, everyone wants to do it – thinks they can – so there’s a big rush of competition. I absolutely think SaaS is still viable for micropreneurs, and I’m seeing people still execute on it, and launching three months ago and getting decent traction; launching six months ago, getting decent traction. I see the landscape shifting, but I don’t see that ending anytime soon. Even looking several years out, it’s still, in my opinion, going to be a viable business. You may have to niche down more. You may have more competition. There’s a bunch of stuff – it’s different, but I still see people executing and just making it happen. So I have no qualms about saying that it’s still legit. Our next question comes from Corey Moss at gelform.com, and he says, “What specifically have you guys gotten out of the podcast? What are some stories of connections made? And would you recommend it as a marketing channel?”
Mike [00:09:01]: Three different questions buried in there. I’ll try and answer them individually. What have I specifically gotten out of the podcast? I would say that it gives me something to talk about when I meet entrepreneurs. Sometimes they’ve heard of the podcast. Sometimes they’re listeners. It makes getting a conversation started with people a lot easier, especially when they’ve heard of the podcast, or if they’re a regular listener. You can jumpstart into various aspects of things, because there’s already that relationship there, even though that relationship, I think, is mostly one-way when it comes to podcasting, because you’re talking, but you’re not necessarily getting that interactivity with the people on the other side. There is that feeling of familiarity with them to you to be able to talk about different things and discuss things about their business. I really like that aspect of it. It’s really nice to just go someplace and say, “I have a podcast.” or find out that somebody else has a podcast, and you just start talking about podcasting, and about what your format is, and how you do things, and how you prepare, and those kinds of things. I think that those are the basics of what I’ve gotten out of it. Stories of connections? There’s any number of things that have come out of this podcast, MicroConf being one of them, the Micropreneur Academy being another one – although I guess the Micropreneur Academy came a little bit first. Still, there’s all those connections that you can make. I’ve talked to hundreds and hundreds of people that I probably would never have met otherwise, because they just don’t live near me. You don’t get the sense of familiarity, or the ease of being able to just walk up to somebody and talk to them without having that connection of some kind. I think a podcast does help to establish that. Both of the guys in my Mastermind group have come to MicroConf. They both listened to Startups for the Rest of Us in the past. So those are the types of things I’ve gotten out of it; Mastermind group members, MicroConf, relationships. Then, I think the last question here was, “Would you recommend it is a marketing channel?” I think this is very subtly nuanced, because I think it’s very easy to say, “Yes, it’s a good marketing channel.” but I also think that there is a lot of nuance there as to the type of person who can make it work, and whether or not you have a format that is appealing to people, whether you have topics available, and quite frankly, whether the podcast is just interesting to people or not. There’s a lot of things that factor into it. You might just not enjoy talking into a microphone every week. You might not enjoy it very much. You can do what we did. I forget how many episodes we recorded. It was eight or ten before we even released one of them, but that’s one way to test it. Do you even enjoy it? Now, in terms of whether it works as a marketing channel, I can’t answer that for every business. For us, with the Micropreneur Academy, it has worked really well; and, obviously, that translated into MicroConf, which is doing extremely well. I don’t know how well it would work for other types of businesses. I think that it does give you the social awareness, in your circles, for the people who are listening to it, but whether it is an effective marketing channel for everything? My suspicion would be, “No, it’s not for everyone, or for all types of businesses.”, but I think that there’re certain ones where it can work, and it can work really well.
Rob [00:11:54]: Yeah, and from my perspective, what I’ve gotten out of the podcast – it’s similar to you. Before the podcast, I had the blog, I had written my book, and I definitely had a small personal brand in the bootstrapped software space. The thing was there was a realization at one point where I surveyed my email list, and I sent them – I don’t even remember what the questions were, but it was kind of trying to find out what they wanted me to write about, and it was how much did they enjoy the blog and this kind of stuff – and a bunch of them said – and I put this both through the RSS feed on the blog – the email – and a bunch of folks replied with comments like, “Yeah, I think I like your blog, but it’s hard to remember what you write and what everyone else writes, because I just see it all” – “I click through to 20 articles from Hacker News, or I see it all in my RSS reader, and I forget who wrote and who said what.” It occurred to me that as much content as we’re all producing and writing, trying to make these impacts on people, that it really was getting lost in the noise.” Even though you want to have a unique voice – or even if you do have a unique voice – your stuff just gets blended in with all the other information that someone consumes in a day. So the realization hit me that two ways to stand out were, number one, to be audio, right? To have a podcast where someone listens to you. It’s a serial. It’s a show that comes out every week, people follow the trials and the tribulations, and if you go all the way back to the first episodes you’ll hear you and I talking about random stuff. Then you’ll hear us talking about selling apps, and buying apps, and launching Drip, and you just follow this story. It can happen with a blog, it’s just a lot more rare, I think. The other thing I realized is that – in terms of content and people engaging – writing a book is the other thing. That’s the other thing where someone will sit there, they’ll read that book, and they’ll spend several hours digging into it, and then they’ll be impacted, and they’ll remember that you wrote it. That was kind of a big wakeup for me. So, I think specifically, what I’ve gotten out of the podcast is it has made my thoughts and my voice, and the stuff that I want to get out there into the bootstrap community – I think it’s given me a mechanism to do that in a way that people remember, “Oh, Rob.” or, “Rob and Mike said this.”, right? As opposed to us saying stuff, but then it just gets lost because nobody remembers you said it, in essence. Beyond that, Micropreneur Academy – which, as you said, I think, was before the podcast – but MicroConf I don’t think would have – it may have happened, but it wouldn’t’ve been nearly as successful as quickly as it was without the podcast. And it’s a fun thing to do. The reason I like it is we show up here for 45 minutes, and then we walk away, and the show shows up every week. I used to spend six to eight hours per post on the really good blogposts. Sometimes I’d crank one out – including all the edits and everything before I hit “publish” – might be four hours. That’s a tremendous leveraging of my time. That’s why I like podcasting. In terms of stories of connections we’ve made, I could go on and on. So much of growing MicroConf, growing Drip, finding speakers for MicroConf, buying apps, selling apps – almost anything I’ve done – has been easier because of the podcast, and because of the connections that we make. Even if they’re one-sided connections, right? You get 10,000, 15,000 people listening to a podcast. I may not know them, but if I reach out to invite them to speak at MicroConf, I don’t have to explain what MicroConf is. They often will say, “Oh, yeah. I’ve heard your show,” or, “I listen to your show.” It makes it so much easier that they know that you’re legitimate, so, in essence, it’s not a cold outreach.
[00:15:21] “Would you recommend it as a marketing channel?” Similar to you, it really depends on what you’re marketing. As a SaaS marketing channel, probably not. I know it can work; we had talked about doing a Drip podcast at one point – but it’s just such a slow burn, and the time it takes to build an audience is really, really long. I think if you’re trying to market software that doesn’t surround a personal brand, I would say this is like high-hanging fruit. There’re tons of things that are more low-hanging than starting a podcast, with all the overhead of doing it. There’s a lot of things to think about. I’ve started two podcasts now, and Sheri has done a separate one as well on parenting. So there’s three podcasts that I’ve been heavily involved with getting set up technically, and every time it just takes a bunch of time.I think that if you’re going for a personal brand, selling information products, if your unique voice needs to be there in order for something to be sold, then yes, I think over the course of years it’s worth doing a podcast. But be in it for the long haul. You’re not going to release ten episodes and have any type of audience. We were around for a year before we had – I don’t know, I don’t remember the exact numbers – but it just wasn’t that many people. It’s really this long snowball that you’re basically pushing up a hill. Our next question is for you, Mike. It says, “How did Mike’s book do in the end? What did you get out of the process, and would you write another?”
Mike [00:16:30]: I’ll be honest. I have not paid very much attention to it since probably a couple of months after the launch. So during the initial launch – I think if you’re on my email sequence there are emails that go out that actually tell you all the different stats, and show you all the numbers and everything – but that’s all from the launch. I think with the launch itself I did probably around 250 to 300 sales, or something like that, and it was around probably $20,000 or so. The odd thing about that is because the book itself – there was a physical book that went with it – that $20,000 was profit. It was not total income for it. The book itself cost me around $5 for each one just to print it, and then anywhere from about $4 to $18 to ship it. I factored those into the profit margin as well. That’s how it did out of the gate, and then it still sells copies every month. I just haven’t really kept track and gone back to look to see what it does. In terms of what I got out of the process, I understand, I think, a lot more about what would go into writing book. That probably doesn’t necessarily directly help me, in terms of most of the things that I’ve worked on. I have thought about writing a book that would go along with Blue Tick, for example, and it’s given me ideas on how to structure that, and what needs to go into it. I’ve looked at amazon.com, for example, as a marketing channel for that book. Those are the types of things where I would say it’s helped me. Would I write another? The answer to that is “Maybe, but I’m not absolutely sure on that.” As I said, I’ve had the idea to write one for Blue Tick just about sending out emails and being consistent about the outreach, and what sorts of things you should look for, what you shouldn’t, what you should say, and what you should avoid saying. Those are the types of things, I think, that would go into that, but I’ve also been reading a lot of science fiction and fantasy books lately, and I remember as a kid one of the things I wanted to do was be a writer. It’s kind of made me think about the possibility of branching off at some point in the future and doing that as a side project, or a side hobby, or something like that – just writing either science fiction or fantasy books, or something along those lines. It’s been burning in the back of my mind, but I haven’t moved on it yet, just because I’ve got so many other things going on, and it’s just not that important to me right now.
Rob [00:18:35]: Very cool. The next question is for me. It says, “Rob, would you, could you write another book?” Then [chuckles] he put in parenthesis, “That may sound more cynical, but I mean it, too.” It’s kind of funny: “Could I write another book?” Yeah, the answer is, “Absolutely.” I kind of talk about this every year, don’t I? I like to say, “Oh, I’m” –
Mike [00:18:49]: You do. I think that’s a yearly, annual goal for you. Or, at least, you revisit it every year, and you make a conscious decision to not go back and write –
Rob [00:18:58]: Exactly. Yeah, so the answer is, yes, I have hopes to one day do this again. I don’t particularly enjoy the process of writing. It’s pretty painful. I think for most people it is. It’s hard to do, but I think that I absolutely could write another book. I think that I definitely plan to write another book. I would love to go back – I don’t know if I’m going to go back and revise “Start Small, Stay Small.” That’s been the big decision process: “Do I revise this?” “Do I have more to say on that topic?” “Do I want to write another one with a different focus?” I think the bottom line is, yeah. As soon as I have time -things are in place where I can do that – I would guess that that’ll be something that I will add to one of my annual goals. Next question is, “What solopreneur bootstrapper books are worth reading now?” This is, actually, a tough one for me. I know of a few books, but I’m not in the –- in the early days when you’re really thirsty and you’re just trying to drink all the information you can on this topic, you read all the books, and you have a pretty good survey of what’s out there. I actually don’t these days, because I’m not actively seeking them, because I don’t necessarily need to learn these aspects of it. I continuously find myself recommending Ryan Battles’ “SaaS Marketing Essentials.” When I started reading through that book it was similar to an outline of a book that I was hoping to write someday. It’s just kind of step-by-step, “Here’s how to think about SaaS.” “Here’s how to get it launched.” I really like that book. Solid. I recommend it pretty frequently. I also like Justin Jackson’s “Marketing for Developers.” I think it’s just a solid way – especially, I think, even if you’re not a developer, this still applies. It’s really teaching you how to get software out there and into people’s hands. It reminds me a lot of stuff that, if you look back at my writings between maybe 2006-2007 and 2010 or ’11, a lot of it was – it’s similar type of stuff. It’s like trying to break – it’s saying the same thing over and over – trying to break developers out of the thing: “Don’t go in the basement and build it first. Start marketing. Talk to customers first…” It’s the same stuff, but it needs to just be constantly said, to be honest, because new crops of developers come up, and nothing lasts forever. So those are the two books that most come to mind.
Mike [00:21:02]: Yeah. I think when you start to – depending on how you phrase this particular question – the answers could be different, because both of the books that you just mentioned, they are from solopreneurs, or bootstrappers, but I wouldn’t necessarily consider them to be about being a solopreneur or bootstrapper. If I were to look at the landscape out there, there’s not very many that fit in that mold. Your book “Start Small, Stay Small” is one of them. My book, “The Single Founder Handbook,” is another. But when you start looking around beyond that – that specifically talks about solopreneurship or bootstrapping a company -there’s really – I don’t see a whole lot out there. Now, the two books that you mentioned, when I look at those I look at them specifically as a form of “How do I do X?” or “How do I solve a particular problem?” which would be – if you’re looking at Justin Jackson’s book – if you’re a developer, how do you go about marketing; or, if you have a SaaS application, how do you go about building that. I don’t put them in the same vein as the way this question is phrased. I think that there’s a difference between those two things. Is it by a solopreneur or a bootstrapper, about that particular topic, or is it by them about a very particular nice thing? Another one that comes to mind that also fits in that is “Email Marketing Demystified” from Matthew Paulson, who has come to MicroConf for several years, knows quite a bit about email marketing. He’s been on this podcast before talking about how they send, some crazy number – like 10 million emails a month or something like that – which is probably higher than that at this point. Those are the types of topics that I think that are probably relevant, and I think once you get past the basics you’re probably looking for very point solution-specific books that solve a particular problem for you.
Rob [00:22:36]: Yeah, I think that’s a good point. I think implicit in my answer is that, if you’re going to be a solopreneur bootstrapper, I think you should learn how to market, which is why I recommend Justin’s book. I think you’re probably eventually get to SaaS. Maybe that’s not your first thing, but I think you’re going to want to take some stuff away from that – you know, Ryan Battle’s book to do it. But you’re right. They’re not specifically about solopreneurship and bootstrapping. Corey’s next question is, “What new tech has you excited, both personally and as an entrepreneur?” For me, I think these are very different questions – which is kind of cool, there’s the personal side and the entrepreneurship side. As a founder and especially as a solo bootstrapper, I don’t think you want to be excited about new tech. That’s the danger. That’s the Silicon Valley thing. If you want to go build software for drones, or you want to build wearables, you should go raise funding, because if you don’t, you’re very likely going to get creamed. If you’re bootstrapping from your garage you want to look at things that’re a lot more boring. Those are the ways to cut your teeth. It’s not to jump in the middle of the pile where everybody has $10 million, $100 million valuations, when it’s two people in a garage and it’s just going to be red water, and 100 companies are going to launch, and two are going to succeed. If you want something that has a decent chance of success the tech that would excite me is things like: building a web app in Ruby on Rails – a SaaS app that helps B-to-B folks, that’s priced at $20, $30, $40 a month and up – or building something in Python over Djenga. These are boring, old things, but that’s how you do it. It’s going simple. Once you get to the point where you have experience, and maybe you have the income coming in – 20 grand a month from your SaaS app. Then you can go do what you want, right? Because you’re basically going to be able to fund your R amp;D. You have some credibility, and you have chops, and maybe you do want to go raise money at that point. But I feel like taking care of that first is something that I’d recommend. So, entrepreneur side for me? That’s the tech that I think people listening to this should be focused on. Now, with that said, for me, personally, I’m really into crypto currency. I like Bitcoin. I like the promise of it. I think there’s a lot of potential in that. I think it’s way overhyped for a number of dumb reasons. That would probably be a whole episode we could talk about, but I am teaching myself about Bitcoin. It’s something that’s new, and it’s changed something. It reminds me – when I was eight years old, I got an Apple 2E sitting on my desk, and I thought to myself, “I’ve never seen anything like this. I wonder how long these things ‘ll be around.” Then the Internet came up. I got into college in ’93, and I get this email address they handed me, and I’m like, “What is this thing? It’s my initials ‘@ucdavis.’ “What in the world is this? I wonder how long this thing ‘ll be around.” And here we are. The Internet and everything keeps piling up on itself, and it’s like these things that we have all been alive as they launched – few of us saw the potential in them. When I look at Bitcoin I think that it’s going to be around for a really long time, and I think we’re at the advent of something that is going to – I don’t want to say, “It’s going to be big!”, but it really does feel like we’re in the early days of things like that. I also think wearables are interesting. I don’t own any of them myself, but I’m excited, long term, about the potential of those. I like [quad?]-copters and drones. I have a little plastic one we play around with the kids, but I’m not excited about those like I am in terms of learning about them and getting in and doing all the stuff like I am with Bitcoin. I guess the other thing I’ll throw out is 3D printing. I have a little consumer-grade 3D printer that I got on Kickstarter. I’m pretty stoked about that, but I’m more stoked about it for my kids. We do it together, and I want them to understand how to design, and how to print the things out, and how to build them. I think for them, long-term, that could be their programming. When I was eight I learned how to code, and it has changed my life. I think for them, one of these things that we do is going to latch onto one of them, and one of them is going to say, “I love 3D printing. This is the thing I’m going to do.” I think your long-term career prospects, if you do that now and get into it, are really big. Anyways, I just threw out a bunch of stuff. You have opinions as well, Mike?
Mike [00:26:21]: I don’t think my opinions are too far off from yours. I think that there’s definitely a difference between being excited about a piece of technology for personal reasons versus entrepreneurship. There’s nothing really out there that I can see that I would want to latch onto as an entrepreneur. The one – I don’t even really want to call this an exception, because I still think that it would be very difficult – but building small devices, or products, out of microcontrollers and things like that. You could use Raspberry Pie, for example, as a prototype tool, and then go out and build other small devices, or have them shrunk down, or get the manufacturing process so that you can get them cheaper than having to buy an off-the-shelf Raspberry Pie to run whatever it is that you’re building. That said, on a personal front, I’d say that a lot of the things that go around home automation, I think, are interesting. I don’t know how really excited I am about them, so I guess things like being able to measure or monitor all the different things that are going on in your house, whether it’s temperatures, or air currents, or, “Are the lights on? Are you using a lot of power when it seems like there’s nobody in the room?” Those types of things they’re not really terribly interesting, though, I don’t think – at least not from a personal standpoint. It’d be nice to have that information, but it doesn’t really help you. It doesn’t significantly change your life. I think it’s interesting, and I like the idea of working with those little pieces of electronics. I would find a hard time, I think, building a business around it. You could certainly do Kickstarter campaigns and things like that, but I think it’d be tough just because of the cost of manufacturing, which was why I went into software rather than hardware. Beyond that, I have a drone as well. I think that those are pretty interesting, but that’s more because I like playing with them with the kids than anything else, except when I run it into the TV [chuckles]. There’s not a lot out there that, I think, interests me, or really excites me. There’s certainly a lot of possibilities around VR, but VR has been talked about for the past 20 years. I went to college with somebody who made a VR headset for the original Mechwarrior game, and that was back in the mid-‘90s, and VR still really hasn’t taken off. It’s not to say that it won’t, but I don’t see TRON-like features two years in our future. I think there’s obviously potential for those things, but it’s not stuff that I’m looking around saying, “I really want to get into that,” or, “I’m really excited to see that.” because, as you said, it’s so hard to see what the future looks like for some of those things.
Rob [00:28:38]: Corey sent us some additional questions that are really good, and we’re going to cover them in a future episode. But for today I think we’re wrapped up.
Mike [00:28:45]: If you have a question for us you can call it into our voicemail number at 1-888.801.9690, or, you can 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.
Episode 270 | Our Predictions for 2016
Show Notes
In this episode of Startups For The Rest Of Us, Rob and Mike make their predictions for 2016, forecasting bootstrapping related topics as well as the greater technology space.
Items mentioned in this episode:
Transcript
Mike [00:00]: In this episode of Startups For the Rest of Us, Rob and I talk about our predictions for 2016. This is Startups For the Rest of Us, Episode 270. 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 Mike.
Rob [00:23]: And I’m Rob.
Mike [00:24]: And we’re here to share our experiences to help you avoid the same mistakes we have made. What you doing this week, Rob?
Rob [00:28]: Things are pretty good. It’s the last week of the year and we have a new Drip HQ. We moved offices just a few blocks to a nicer building. We’re up on the second floor now, with a nice view of a busy street, and it feels cool to be downtown and just have a lot of people around. It’s like a 50,000-square foot building here in downtown Fresno, and it’s good to be around even more tech companies. We were around maybe 27-ish small software companies over at the other building, but it was only about 10,000 square feet, and this one just has a larger feel. And it’s new construction retrofitting a 100-year-old building. It’s got a unique vibe to it.
Mike [01:03]: Cool. Did everybody move from the other building over to this one? Or how does that work?
Rob [01:07]: A lot of us did, yeah. It was up to you if you wanted to move. The rent’s a little higher here. And it’s in a different location, so some folks opted to stay at the other one and then were backfilling with other companies. There’s been a nice tech scene that’s formed here over the past few years. And so what’s nice is there’s a waiting list at both buildings, from what I understand, and so we’re able to keep them occupied and keep the energy level. It’s something that I think’s going to be taken up. We’re one of the first companies, but I think there’s maybe a half dozen, that are moved in here, and there’s going to be 40 eventually. So it’s still pretty sparse, but just seeing people on the hallway and being able to look out over a cool downtown street is fun. It’s a different vibe than I’m used to, but it’s neat.
Mike [01:44]: That’s cool.
Rob [01:44]: How about you? What’s going on?
Mike [01:45]: Well, I’ve realized that one of the things that I talked about last week on our yearly goals episode was I was going to try and be writing more. And I realized that I should probably have classified that as more of a success than I think I initially did because I realized that one of the things that I’ve been doing is keeping a journal and writing in it three times a day. And I don’t know why I completely spaced out on that, but I did. So I would probably say that that was much more of a success than I initially had indicated on the podcast even though I write it for myself. But I write in it, like I said, three times a day: once first thing in the morning, and then once in the late afternoon, and then once just before I go to bed.
Rob [02:21]: Yeah, it’s interesting because your goal was actually “Keep up my writing habit.” And that doesn’t necessarily mean publishing, although that’s what I had read it as. I’d assumed that you meant to actually blog and push stuff live. Was that your intent when you said, “Keep up the writing habit,” was just to write and not necessarily to publish?
Mike [02:38]: It was a little of both. I think I had initially intended to publish more, but at the same time, there’s a certain amount of content that you create that you don’t ever necessarily publish either. And what I wanted to do was to make it more of a habit than anything else, so just getting into the habit of writing on a very regular basis as opposed to writing a couple of blog posts or writing a couple of articles or something like that and then not coming back to it for two of three months and just doing zero work on it in any way, shape, or form of writing.
Rob [03:06]: I see some value in writing and not publishing, but I think there’s so much more value in getting it live. And so I would give you a half pass on this.
Mike [03:14]: Sure.
Rob [03:14]: Just on my personal, metric system, my arbitrary, personal metrics.
Mike [03:18]: Yeah, but I think that when I’d looked at that on last week’s episode, I’d looked at it from the perspective of, “Oh, I haven’t really written anything at all.” And that wasn’t necessarily true. I agree with you I’d probably get half credit on that, definitely not full credit of course because I don’t think it got published. There’s a huge amount of work in there that just never got published. But the idea I had in mind was like, “Oh, I was actually writing quite a bit here.” I do think I need to do a better job of publishing more, so that will make its way to the forefront, I think, this year.
Rob [03:45]: Indeed. Other news, wrapping up the year, was able to finally make a solid hire to help with growth. He started last week. So pretty excited about that, able to pull some stuff away from myself and Anna, marketing tasks that we’ve been handling. And he is going to be able to focus on this stuff. And so one example is I was messing around with retargeting and trying to optimize it and get it to the place where it needed to be. And then eventually we stopped it at a certain point, and he is able to spend 30 hours a week basically focusing on this kind of stuff. And so already he came in with a much more advanced- and it’s a time-consuming approach but it’s definitely one that I think has legs. So I’m really looking forward to getting going in January with our ramping back up marketing. Because as of essentially next week, when this episode comes out, that’s when things start to come back alive and all the dips and trials and the dips and growth and all that stuff I think starts to turn around for all of us. And so yeah, I’m always excited to hit the ground running as we enter early in mid-January.
Mike [04:39]: It seems odd to be hiring right at the very end of December.
Rob [04:43]: Yeah, it was a little bit of a coincidence. I think I posted it in November and then really wanted to find the right candidate. Because what’s interesting is there are a lot of developers, as an example, and designers. And they’re not necessarily easy to find really good ones, but they’re out there, and you know how to test for that. But finding someone who has the right mentality, or the right experience, and the right hunger to actually do pretty intense marketing and really go after the growth opportunities, it’s still such a nascent, unique skill set, right? It’s not something I think that’s easy to test for. And so that’s what I did, was went around and around with a bunch of people. And when he finally came on, I realized that it’s actually a pretty good time for him to come on because it’s so quiet.
And so we haven’t launched anything yet, but it’s been all prep work. I got him onboarded, got him in the system in terms of payroll and all that HR stuff, and then got him into our processes. He’s now the blog editor in essence. And he really hasn’t started doing any outreach or doing any of the stuff yet, but he’s all set up to hit it hard next week when everything actually ramps up. So it turned out to be decent timing even though it didn’t first appear it would be.
Mike [05:49]: Very cool. To circle back on one of the things that we talked about last week, was some of the different monthly experiments and things that I wanted to do this year, and you had ask me to come back with a list of these 12 different things. And so what I did was I sat down and I started looking at those, and what I realized was it wasn’t necessarily a series of month-long experiments so much as it was an extension of what I read in a book called Habit Stacking. You can find it on Amazon. We’ll link it up in the show notes. It’s called Habit Stacking: 97 Small Life Changes That Take Five Minutes or Less. And what I want to do is essentially stack a bunch of these things together. And a lot of them are just little things. They’re not necessarily major life alterations or anything like that.
So one of them, for example, is drinking at least eight glasses of water a day, which I did it for a little while, but I didn’t keep up with that habit. So what I want to do is I want to go back to some of these and revisit them and start working on those and try and stack them up over time. And I’ve stumbled across a website called healthmonth.com, which allows you to put forth goals that are essentially measurable, and you can put things like that in there. So whether it’s getting up early, or exercising, or setting aside time to do X, Y or Z, you can track those things in there. And it will go on a month-by-month basis, and you get to essentially measure your progress against that of other people who have set a similar number of goals for the month.
Rob [07:06]: So are you going to report on that weekly, bi-weekly here on the podcast?
Mike [07:10]: Probably not. Because, like I said, there’s a bunch of them in there. But you had asked me to put together what that list was, so I’ll quickly run through them. We’re not going to spend very much on it, I don’t think. But they included things like exercising at least 30 minutes a day for 6 times a week, drinking 8 glasses of water a day, going to bed and waking up early at certain times, no junk foods or snacks after 7.00 PM, setting aside an hour to write for my blog, working at a co-working facility 3 times a week, which is something I’ve tried in the past but it’s never really stuck or worked out for me. So I think I’m ready to go back and try and revisit that and try it for a month or two.
Another one was to track all my food intake every day, meeting 10 new people in a given month. I’m going to specifically target a non-MicroConf month for that. I’m not going to cheat on that one. And then spending 15 minutes a day doing, I think I’d talked about this before, it’s a mental game called SuperNBack which allows you to train your brain to remember things a little bit better. So I’ve got a game called Reactor on the iPad that is really good for that, and then scheduling my work day in advance, and checking e-mail only twice a day, which I do that on occasion, but I’m not real good at limiting myself and checking e-mail twice a day so –
Rob [08:19]: Is each of those a one-month thing then?
Mike [08:21]: Yes, they are. My goal is to say, “Okay, let me take one or two of these and just do that for at least a month and see if I can maintain that habit over the course of the month.” And the goal, of course, is to, by the end of the month, turn it into a habit as opposed to something that I’ve just tried out. And if I need to extend it as something that I’m going to track, I will. But the idea is to be able to take those things and engrain them into my daily routine so that I don’t necessarily have to think about it or track it anymore, I will just do it. And that way, I can drop off my list of things that I want to stick with. And if it turns out that there’s something that I really just don’t enjoy or don’t want to continue with, then I’ll just drop it off. And then the next month I won’t continue tracking that or doing it.
Rob [09:07]: I think if there’s one adjustment I would make, as you said, you want to look at one or two of these things in a given month, and I would definitely not start with that. If you’re going to go January 1, pick one and focus on it. If you try to do too many things, it overwhelms you and it’s hard to change behavior. So at least for the first five or six months, until you get the hang of this, I would probably try to attack one thing at a time, unless you really feel like you can do multiple things.
Mike [09:31]: Yeah, some of them are easy enough. For example, drinking more water per day, that’s not terribly difficult. Really what it boils down to is just remembering to do it. So you can do that with timers. I found that there is a prescription reminder application from I think it’s Walgreens or something along those lines that you can throw something in there and it just reminds you every couple of hours to do something, and I’ve used that in the past.
Rob [09:54]: So you mentioned drinking eight glasses of water per day, but you missed the one of drinking eight glasses of beer a day.
Mike [10:00]: Well, that is in the water. You can call it beer if you want to, but –
Rob [10:04]: Right. Beer, water with hops.
Mike [10:06]: Yes.
Rob [10:06]: All right. Well, let’s dig in today. We’re doing our predictions episode, which is an episode that we like to have fun with, right? We made some predictions about a year ago, and some of them have nothing to do with entrepreneurship. We had predicts about Google Glass, net neutrality. And so we revisit those and we figure out if we had success or totally whiffed on those. And then we look at some predictions moving forward and what we think is going to happen in 2016. I think we each have one or two that might relate to bootstrapping, and then others that we just see in the greater tech space. So why don’t you kick us off with maybe looking back at some of your predictions from 2015?
Mike [10:37]: So the first one I had was that net neutrality is going to take a bigger stage. And the thinking I had behind that was that Netflix had started paying service providers for higher bandwidth to serve up a lot of their content. And internet speeds, in general, have increased by 50% since the beginning of last year. So what I was thinking was that this was going to be essentially a problem for many businesses where they were going to feel that they needed to pay for their content to be served up. And I don’t think that this has really come true. I haven’t seen a lot of battles or a lot of public discussion about people having to pay extra for their content to be served up. And it could just be that Netflix is so large and serves up so much bandwidth worth of content every single night that they’re more of an outlier than anything else.
What I have seen though is an interesting shift in how a lot of the content providers have started to go direct to people. So I think it’s interesting that companies like HBO and Starz and Showtime have started coming out with their own subscription services that essentially bypass the cable networks. So I don’t think that those directly affects net neutrality. I would probably call this one a miss more than anything else, but it’s interesting to see the shift for the content providers to go direct to the consumers rather than directly through cable providers.
Rob [11:55]: Yeah, I’d agree with you on this one. I don’t think you hit the nail on the head, but there’s definitely something cooking there where we’re going to continue to see shifts and conflicts in this space. My first prediction for 2015 was that Twitter would become profitable and it would piss off its users in the process, but it would be a solid opportunity for paid placement or promotion for bootstrappers and startups. And I think that I was wrong on the first two aspects because as far as I know, Twitter was not profitable during any quarter in the previous year. They obviously haven’t recorded Q4 earnings, but in Q3, they were still losing money. I don’t feel like they pissed off their users in the process of not becoming profitable. What I was trying to imply there was that they would become profitable but they would have to just stuff so many ads down our throats that there’d be a backlash. That didn’t happen. Solid opportunity for paid placement and promotion, I do think that one is correct and that Twitter cards and other Twitter paid placement is still a viable alternative, even heading into 2016, to get some cheap clicks.
Mike [12:53]: My second prediction was that the number of startups in the wearables category is going to skyrocket, both in terms of the hardware and software. And I hesitate to say that this was a complete failure or a complete success in either way. It just doesn’t seem to me like there’s been a huge number of startups in this area. Obviously Apple came into this space with the Apple Watch, and Fitbit and a couple of other companies have started pushing their wearables, but it doesn’t seem like the number has skyrocketed. I was thinking it would have much more of an impact than it probably has.
Rob [13:26]: Yeah. I think there hasn’t been enough of a ecosystem around it since the Apple Watch. It didn’t “take off.” I know a lot of people bought it, but it really has not become a day-to-day use thing. I don’t think I’ve seen anybody in a while wearing an Apple Watch, maybe one or two people at a tech conference or something. But it hasn’t become a day-to-day thing like an iPod or an iPhone did that I think the wearables category is either still getting going or it’s dying at this point, and I’m not sure which. I think eventually wearables will find out which form factors work for us, but 2015 was not the year of that, for sure.
Mike [13:59]: Yeah, I have seen a couple of people use them, but I think it’s going to be probably several years before companies really figure out what people even really want from a wearable device.
Rob [14:08]: Yeah, and that’s what we were saying back in 2013. So my second prediction was that video ads, namely YouTube ads, would be a big opportunity for cheap clicks in 2015. And I think this one was a success. I don’t know how bold of a prediction it actually was. I guess the way they could have not been an opportunity for cheap clicks is if a lot of advertisers had jumped in on it and, to be honest, that’s what’s happened with Facebook ads now, right? Facebook is a lot more competitive. They’ve nailed mobile and they’re making buckets of money off of their ad platform. And typically when the provider’s making buckets of money, like a Facebook or a Google, that means it’s not a good opportunity for cheap clicks anymore.
And so that could have feasibly happened with YouTube in 2015. It did not. It is still a big opportunity for both retargeting and just cheap ad clicks in general, if you can figure it out how to make it work and reach your audience. If you haven’t looked into it and you are looking for another paid marketing avenue, YouTube ads continue to be there.
Mike [15:02]: My third prediction was that Google is going to screw all the bootstrap startups and there’s very little we can do about it. And I don’t think that there was any large event that comes to mind in terms of Google making our lives difficult. Obviously they make changes to the UI in some of their different applications and stuff like that, and the cost of doing paid advertising through Google AdWords is really high. But it doesn’t seem to me like there was any one major event that you could point to and say, “Hey, these guys have really screwed over a bunch of people.” I would chalk this up to an inaccurate prediction.
Rob [15:33]: My third prediction was that VR, Virtual Reality, would actually be a hit with the early adopters set in 2015, and that did not come true. I know that a couple of headsets came out. It does not seem, even with the early adopters, to have taken off in any way, shape, or form.
Mike [15:49]: My next prediction was that Google Glass isn’t going to go anywhere fast. And I would say that this one, it’s hard for me to judge on whether or not this prediction is successful because I have not seen very much uptake and people using Google Glass. But just a couple of days ago, Google came out and said, “Hey, we’ve got another version of Google Glass coming out.” I really thought that they were probably going to be shutting it down. But I just don’t see any demand for it. I don’t think that people are going to use it in a widespread fashion. I can definitely see places where people would use it in very specific scenarios, but I just don’t see it becoming widely adopted.
Rob [16:23]: Yeah, it was an experimental form factor and they were pushing the envelope. It didn’t take off. They obviously sold their early $1500 versions. They’ve redoubled, and they’re iterating on a hardware schedule, right? You can’t iterate as fast with hardware as you can with software. I think it will find some niches and it will be really worthwhile for whatever, airplane mechanics or surgeons or something. But I don’t see that this will have mass market adoption. I would agree that if you look back a year ago, we didn’t know if Google Glass was going to take off or if they were going to do an actual consumer version. So I think your prediction came true. The fact that nothing really happened with it is what happened in 2015.
My next prediction is that we would see our first sub-$100-a-year, consumer-level, five-terabyte cloud storage service. And I think the week after I said this, someone said that Microsoft was already offering unlimited cloud storage. And then within the past month, they actually revoked that. I don’t know if you heard about that, but they basically said, “We’re not going to do unlimited anymore.” And they backed it way off to a couple of terabytes, I guess. So I’m not sure if this has happened. I was trying to Google around a little bit before this episode and I didn’t particularly come across a mass-market, five-terabyte, sub-$100-a-year service. Certainly, if it didn’t happen this year, I think it’s going to happen in 2016. But maybe if someone out there knows of a reputable service that’s not some fly-by-night thing in someone’s garage that is actually offering this level of storage for that price, you could hit us up in the comments or via e-mail at questions@startupsfortherestofus.com.
Mike [17:49]: Yeah, it’s interesting because I’ve looked around at that a little bit as well, and you see places where they’re doing unlimited backups for $5 a month for Backblaze and a couple of other service, but that is more of an archiving service. It’s not necessarily real-time like Dropbox, where even Dropbox is what, $15 a month or something like that. You can get a terabyte, but you can’t get five yet. But I think you’re right though. I think that it’s coming.
My last prediction was that cloud platforms and services are going to be viewed as a commodity by the end of the year, with not much differentiation between them other than their brand identity. And I have gone through and poked around the differences between Amazon, like the AWS services, Azure, and Rackspace. And quite frankly, there is very little to differentiate them from one another. They’re all trying to point to Gartner or third-party companies that are doing experiments and research on the platforms to try and find out which one is the fastest and which one is the best. And of course they’re paying these companies to do that research. So it does make it a little bit suspect when they come back and say, “Oh, sure. Microsoft paid us, but we did find that they were faster.” But I don’t see very much difference between any of these different platforms. I just don’t see it. So I would say that this one’s a win.
Rob [18:59]: My last prediction for last year was that we would start seeing 3-D printers in the houses of our early adopter friends and I would call this a miss. I know very few people who have 3-D printers in their homes. I’ve seen them start to get into schools. Several of the schools in our area have them, seeing them more and more in local labs and makerspaces, also saw them for sale at Barnes and Noble the other day. There was a 3-D printer there, which was surprising. But being in the home thing, it just doesn’t seem to be there, and I’m wondering if it’s ever going to have that moment that computers had where suddenly we all owned one, or if 3-D printers are going to continue to be this external service that we see at schools and maybe in offices and facilities that need to print and we’re all just going to do it on-demand instead of owning and maintaining our own 3-D printers.
Are you ready to dive into our predictions for 2016?
Mike [19:46]: Yeah, absolutely. Let’s go.
Rob [19:47]: Why don’t you kick us off?
Mike [19:48]: Well, the first one is an add-on to last year and it’s about the wearables category. And I don’t see this going too far. I think that there’s still going to be a lot of churning in the wearables category and it’s going to be several years before any of these devices become really big. I think that the Apple Watch is not going to be nearly as big as the iPhone or the iPod ever turned out to be. So I think that Apple is, in the coming years, going to be looking to see what other products they can develop. And maybe they’ll launch a new product by the end of the year. I don’t necessarily think that’s the case, but at the same time, the general prediction here is that over the course of the coming year, we’re probably not going to see a lot out of this category. There’s going to be some new announcements here and there, but there’s not going to be anything major that comes out of it.
Rob [20:30]: Ooh, I like this prediction because it feels pretty bold. Because I think we’re ripe for someone to come in and really nail this. And it is most likely going to be Apple with like a V2 of the watch, because that’s when they start getting traction with stuff, but I think somebody’s out there really doing some good work, and there’s a decent chance that we could see someone disrupt this category this year.
Mike [20:48]: Got you. Well, I’ll take the opposed view on that and say, “Not this year.”
Rob [20:51]: Yeah, totally. Well, that’s why I like the prediction, right? That it’s actually bold, and maybe a little bit counter to what I think some other folks might think. My first prediction is that single-round bootstrapping, also known as fundstrapping, will become a common, viable option, both in our circles and elsewhere. I’m just hearing more and more about bootstrappers who are getting to a little bit of traction, let’s say between 5 and 20K MRR, and then raising around to just up the game to grow pretty quick, and then to get to profitability and essentially issue dividends to the investors and then spit off cash, instead of doing these multiple rounds of financing where you’re just trying to get bigger and bigger and bigger, and eventually most of them implode.
And so whether you call it fundstrapping or single-round bootstrapping, this is a term I’m tossing around right now, I am seeing more of it, and my hope is that it does continue to become a pretty viable option in 2016. The reason I like this model is because it counteracts all of the negatives of raising traditional VC funding, right? The thing of someone taking over your board and taking control is gone because there’s no board seats. The idea that you’re pushed to get just get bigger and bigger and bigger and basically destroy a company that could be viable as a million-dollar or five-million-dollar company is gone because that’s not what you’re doing. It also gets around the idea of “I’m going to build slide decks instead of build businesses, and I’m going to spend six months pitching and trying to raise this $2 million thing. And that’s the big victory lap is when I raise the funding.” That goes away because let’s say you’ve already built the business up to a 5 to 20K MRR business, which means you’ve actually done something interesting and you’ve had the rubber meet the road, and then you’re purely raising the fundraising as a growth mechanism, which is always the point where I have thought that funding is a good idea. It’s when you have some traction and you just need to add $1 in order to pull $5 out the other side.
So all that to say I still think bootstrapping is very, very much alive and it’s going to be far more common. But this idea of a [?] raising a single round, single-round bootstrapping as I’m looking at it now I think is something that I’d like to see more of in 2016.
Mike [22:51]: Are there any other specific metrics you’re pointing at for here or you’re looking at for specific websites where there are terms sheets for this type of thing commonly available?
Rob [23:00]: Yeah, I see your point. It’s like, “How do you measure this?” right? Because I basically said it will be a common/viable option. What we’ve already seen in 2015 is Indie.vc has basically an outstanding offer on their website to do this. I have heard David Hauser was on Rocketrip podcast a few weeks ago talking about this kind of stuff, although he’s investing at a higher MRR. I’m doing it. I’ve talked to a couple of other successful folks, who, if I’d mention their name, you would know who they are, and they’re looking to invest in startups like this. Because the interesting thing is these kinds of startups have a huge chance of success, but it’s more of a modest chance of success. So it’s a lower risk than investing in the next Twitter or Facebook, and there’s a lower rate of return as well, right? You’re not going to 10X your money with this. You’re not going to 100X your investment. But you stand a much, much better chance of hey, maybe you earn 10%, 20%, 30% on your money every year as this thing spits off dividends. And so I do see people moving into it. I don’t know that I have an absolute metric of what I think we could measure this by, but it’s just something that I think’s going to become more prominent in 2016.
Mike [24:04]: Yeah, that leads into my next prediction, which is I think that we’re going to see a lot more bootstrappers in our circles concentrating less on making money for the sake of making money and focusing more on doing what they enjoy doing and living their lives on their own terms. And essentially what that amounts to is a less of an emphasis on consumerism and accumulating stuff. Because I think you get to a certain point in your life or your career, and you look at it and you say, “Having the big house or the big mansion on the hill doesn’t really matter so much as the things that you’re doing and the things that you find enjoyable on a regular basis.” And this is another one of those things where I think it’s difficult to measure, but I feel like we’re going to hear a lot more stories about this kind of thing.
Rob [24:43]: My second prediction is that Twitter will become less relevant than it is today. It will return more back to its roots where a lot of journalists are using it, news continues to spread on Twitter and the technorati will use it. But the adoption curve for Twitter I actually think is going to be on the decline. I think it’s going to be ripe for an acquisition. It’s still has been unable to turn a profit. It’s been unable to monetize it’s user base, and it just can’t do that forever. And I think 2016 will spell some changes for it. I still think Twitter is a reasonable communication tool, but it’s definitely a lot different than it was a year or two ago. And unless Jack is able to get in and really turn things around, I think they’re looking to be on the decline in 2016.
Mike [25:25]: My next prediction is that we’re going to see fewer IPOs and more acquisitions in the tech space, especially at the higher end. And the reason I think that is because from the so-called unicorn companies, there’s a lot more of them now than there used to be, the ones that that are valued at a billion dollars or more. And I don’t see a lot of these companies doing anything dramatic or really innovating in their spaces. I think that they’re going to hunker down. And they may run some experiments here and there, but it also feels to me like their main growth strategy is going to be through acquisitions and acqui-hires rather than building their own stuff and extending their reach. And as a result, I think that we’re going to see fewer of these companies actually go through an IPO, and we’re going to see more of them eating each other alive.
Rob [26:09]: That’s interesting. That ties into my third prediction, which is that the public markets will continue to value companies lower than the private markets. This has already started in 2015 where companies being privately held as they raise rounds of funding, they’ll be valued at a certain level, and then they go public and their stock actually drops when they go public. And this was the exact opposite 15 years ago, right? That was the liquidity event and the big payday when everyone doubled their money from the most recent private round. And it’s been the opposite a number of times in 2015. And this ties in with what you’re saying, that unicorns are starting to stagnate.
A lot of them don’t have unit economics that actually make sense. They have literally been paying a dollar to make 50 cents. And they keep saying, “We’re going to make it up in volume.” And certain business models, like in Amazon, you can do that with, but several of these unicorns have forsaken any type of not even just profit, but any type of unit economics that make sense. And so I think we’re going to see some fallout from that, as you predicted, and I think that’s going to continue to result in these public market valuations being lower than private markets, which is going to keep a lot of people private longer, resulting in fewer IPOs.
Mike [27:13]: Yeah, it almost seems to me like the fact that they’re paying more to acquire a customer than they’re making from the customer, it’s not even just that they’re doing that. It’s just that they’re also not maintaining those people as customers moving forward. So you had said that oh well, companies like Amazon can do that and make it up on volume. And I think what you really mean is that because somebody uses Amazon, they’re so happy with it, they will continue to be a long-term customer for it. So depending on how you’re going to measure the cost of acquisition for that customer, maybe it is a dollar and you only make 50 cents from the customer, but over the course of the long term, you’re going to be a Amazon customer for a long time. I looked on my account, and I think I have been an Amazon customer for almost 15 years now. I’ve spent easily tens of thousands of dollars with them. And they’re able to do that. But I think a lot of these companies are just not getting people to come back because it’s interesting for people to check them out. But after that, they have no real reason to come back and buy a lot of other stuff from them.
My last prediction is that drone technology’s going to take some serious step forward. And I base this on the idea that new FAA Regulations that have come out that essentially force people to register any drones that are over eight ounces, and I think it’s about 250 grams or so. And there are a lot of drones that fall into that particular category, but because of that lower weight limit that says, “Hey, anything underneath this limit, you don’t need to register,” I think that there’s going to be a lot of technology advances in the space that make it feasible to have drones that are very small, or I’ll say featherweight or ultra-light or whatever the term is, that they’re going to be using for that these days. But I think that you’re going to see a lot of advancements in the size of the components and the weight reduction and things like that to essentially circumvent the FAA Regulations for registration.
Rob [28:58]: And my fourth and final prediction for 2016 is that virtual reality will actually be a hit this year with the early adopter sets. So this is just carrying last year’s forward. I think this thing’s going to catch. I think VR and AR really have a future. And I hope it doesn’t turn into an AI thing where 10 years down the line, I’m still making the same prediction. But I feel like with the release of the Oculus, which is supposed to happen, what, here in Q1 of 2016, that we’re going to start seeing something catch on because [?], the Internet of Things, wearables, and VR, right? These are the next big things. One of these has to catch.
Mike [29:30]: I think I heard a podcast episode from, was it the Daily Tech News Show, where they talk a little bit about some of these different things. And especially with the VR headsets and things like that, there are certain things that almost need to be in place in order for it to catch on. Like the early days of the internet, you need to be able to buy stuff and you need to be able to not take the headset off in order to interact with the world around you. And if there’s any sort of pay walls inside of a virtual reality system that you have to leave that frame of reference, it’s going to make it difficult for it to catch on.
Rob [030:02]: So those are our predictions for 2016. It’s our last episode of the year, and we will see you in early January. If you have a question for us, call our voicemail at 888-801-9690, or e-mail us at questions@startupsfortherestofus.com. Our theme music is an excerpt from We’re Outta Control by MoOt. It’s 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.
