Show Notes
The eight sentiments:
- “This product idea is awesome. Now off to the basement to build it; see you in 6 months!”
- “I haven’t even finished the features I want to build yet and potential customers are already asking me to build X.” Translation: “I’m sticking to my product idea no matter what my potential customers tell me.”
- “I’m halfway done with this idea…but that shiny new one over there seems so much better.”
- “I plan to quite my job 60 days after I launch.”
- “It would take me as much time to explain this task to someone else, so I’ll just do it myself.”
- “I don’t want to bother with all that click through and conversion rate nonsense…I’ll just build a great product.” Translation: “Build a better mousetrap is not a good strategy”
- “My idea is pretty hard to explain, do you have 20 minutes to spare?”
- “I don’t want to talk publicly about my idea because someone might steal it.”
Transcript
[00:00] Mike: This is Startups For The Rest Of Us episode 98.
[00:03] [Music]
[00:12] Mike: Welcome to Startups For The Rest Of Us, the podcast to help 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.
[00:19] Rob: And I’m Rob.
[00:20] Mike: We are here to share our experiences to avoid the same mistakes we’ve made. How are you doing this week Rob?
[00:24] Rob: I’m doing pretty well; I’m back off of 48 hours of being completely off the line. We went to the central coast to California around Big Sur area and went camping car camping with my two kids and then my brother and kids five kids, brother and his wife.
[00:41] Mike: What is car camping?
[00:43] Rob: You go to a camp site you pull your car in and then you park within a walk of that like there is technically a picnic table, fire pit setup and you setup a tent and you just have kind of this little camp spot there and it’s frankly before we had kids we always back packed right, you do a four mile hike up the hills seven mile hike up to some hill to a lake. But when you have a two and a six year old that’s just not as conducive.
[01:05] Mike: I see, yeah I’m outdoorsy in that I like drinking on patios.
[01:10] Rob: Yeah I know totally. It’s good to get out in nature and all that but it’s tough men, it’s tough with kids and trying to get all the, you know , it’s 40 something degrees at night and so I kept worrying that the kids were going to be too cold and had to lug air mattresses. Normally again I would sleep on, you know, a little mat. It was fun made smores, did some hiking and saw some waterfalls. But I was totally gone with no, you know it’s weird, I’ve gone places with just my phone for several days at a time and you can just email and make sure no kind of no emergencies came through but men I was off the grid for a couple of days. From Sunday until Tuesday and frankly it was pretty refreshing.
[01:45] Mike: Really? I find it disconcerting when my cell phone just doesn’t work at all.
[01:49] Rob: Well here is the thing; it was disconcerting for about the first day. Because it’s like wow I need to check where we are where is the map? Oh you can’t map and then maybe someone mentions something oh yeah that movie I want to find out who it is. I go to look it up at Google and it’s like duh you can’t do that. But then I felt like I slowly started to adjust like adjust out of that. Actually the fast pace of life kind of goes away. I started feeling like just more calm. In that sense I would rather be away for a longer period because I think if I’d hang out for maybe a week offline, I would have gotten more used to it but it’s hard for me to get into work when I come back. Essentially I had five days off right? Do you find you have that issue when you come back?
[02:24] Mike: Yeah to some extent. I mean if I’m just completely disconnected for whatever reason it seems like it takes a couple of days to kind of work my way back into, I will say a mental state where I’m going to be actually productive. I think a lot of it has to do with just trying to figure out okay well now I’m back to work what should I do, what should I do first? Because there is a billion things to do and it’s just that because there is so much to do you’re just not really sure where to start sometimes.
[02:47] Rob: Yeah, I must feel like it’s a learned skill. The more I go away on these short trips these one and two day trips in addition to the weekend, I’m starting to do once a month, twice a month just I’ll go to the coast or whatever. I’m becoming better at being productive once I get back. I feel like certain people and I’m one of them has a real hard time getting back and other people come back refreshed right? You take four days off you come back and they are just chomping at the bit and getting all types of stuff done but I’m not there yet.
[03:16] Mike: Got it.
[03:16] Rob: What’s going on?
[03:17] Mike: I’ve just been reworking some of the backend database in AuditShark to support some fun stuff called bidirectional database synchronization.
[03:25] Rob: And what are you doing that for?
[03:26] Mike: The short answer there is a component in AuditShark that people will install locally and it needs to synchronize with the cloud database.
[03:32] Rob: A component that you install locally has a database built into it?
[03:35] Mike: Yes.
[03:36] Rob: Okay.
[03:37] Mike: It’s basically about making database calls back to my database to be able to be able to store that information, that’s really what it is.
[03:42] Rob: And are there any, I mean you’re going to dot net right?
[03:45] Mike: Mmmh.
[03:46] Rob: Are there any libraries that help with that kind of stuff or you have to write from scratch?
[03:50] Mike: There is a synchronization library that Microsoft publishes but you have to have certain database columns in place in your database. What I’ve done is I’ve basically shoe horned these new columns into the database. There is like 11 different database tables that I need them in and essentially what you should do is you have to put four column into each of the tables and then you also have to create like a tombstone table for each of those tables. So I had to add 11 tables and then put two new fields into each of these new tables and then in addition to that change I had to add four more columns to every one of the existing 11 tables.
[04:26] Rob: I love that phrase “tombstone tables”.
[04:27] Mike: Well, its’ because if you delete something and you’re trying to synchronize between two tables how do you know where it was deleted?
[04:34] Rob: Right, right.
[04:35] Mike: Or where was add it because it could be in either one, it could be deleted from one table or added to another and depending on which ways you do the synchronization first you may be adding it or you might be deleting it. It’s just you have to keep track of that stuff which kind of sucks. But it’s getting close to being done so once I get that done then I can move onto other things. I’m working with some people from Microsoft on helping get some of the other stuff in AuditShark set up for automated and testing and deployment. Because right now I’m not doing a heck of a lot of changes that I think need to be tested, but extremely strenuously but I can see it done in the future and I’m trying to get into a position where down the road I’m not going to have to worry about that as much because I’m going to have like a full blown staging environment that’s going to be mostly a copy of production like a true staging environment which Azure doesn’t really offer you that.
[05:20] Rob: You said you’re working with folks from Microsoft, like their support or their technical help?
[05:23] Mike: They are BizSpark developers.
[05:26] Rob: Developer liaisons or something?
[05:27] Mike: Kind of yeah I mean like they reach out to you and say, “Hey do you have any questions or problems or anything we cans help you with?” And then I have this problem, so I have gone back and forth with them a couple of times. Right now at first I was just working with one person he handed it off because he wasn’t technical enough. That’s person basically involved somebody else’s. Now I’m involved with like three different people kind of talking about it because it’s just such a giant issue.
[05:50] Rob: Got it, did you tell them about your tombstone tables?
[05:53] Mike: No I did not.
[05:54] Rob: Okay, I wanted to talk about a new iTunes review and it’s from RC in New York City. He says a great podcast like the title says for the rest of us. I discovered this podcast of Stitcher when I ran out of tech entrepreneurs to listen to and boy was I pleasantly surprised. I was used to the tech — I like this next phrase a very good tonal phrase — I was used to the tech luminary type podcast where people bask in the glory of their own light and speak in obtuse generalities. Sir you have quite a vocabulary. Being a non tech wanna-entrepreneur it was refreshing and informative to hear the tough examples, experiences and tips and tricks of Rob and Mike as they slog week to week to make the projects/businesses a success. So thanks for that review RC in NYC we are up over 200 ratings now, really appreciate a rating and or a review on iTunes if you get the chance.
[06:45] Mike: You know I got an email from listener who had also send me –he’d heard that I was talking about putting together documentation for AuditShark. Although I’ve hired somebody to do it who has a background in writing documentation for compliance and security products, so I don’t really need this. But the products point from me to was something called Screen Steps Live from Blue Mango Learning and it looks like it’s a SAS application where essentially you sign up for a subscription and they will essential host your videos and just kind of streamline the process for building FAQs and tutorials and things like that’s for your product. So if you don’t have access to developers that’s a great tool to leverage that. But they do aim it specifically at non developers and I know that we do have a number of non-developers who listened to the podcast. So I thought I’d share that little tidbit and then send over.
[07:36] Rob: That’s pretty cool. Man they need to get a better domain name. They are at bluemangolearning.com/screenstepslive. Probably not ideal. I searched for their product name expecting it to be dot com or something so product sure looks interesting for that niche. So I am working on a basically a bit of procrastination because I don’t actually want to do real work. Every month about this time, I’m looking at my HitTail dashboard and I’m trying to figure out, where am I going to be at the end of the month? There is revenue sources coming from a few different things I’ve old billing, I have new billing, I have article billing I have just a lot of stuff to add up and prorate for the rest of the month.
[08:15] I found that there is so many ups and downs during the month, there are just certain days where a lot of people signed up one month and so during a simple prorating of, hey we are X days into the month multiply that by out to 30 or 31 days is just not accurate. So I’m working on a more intelligent prediction query for HitTail but it’s surprisingly challenging. I know the conversion rate of how many go from trial to paid during a particular 30 day period, but if I’m half way through that period for them and they are still there, then they have a higher chance of sticking around.
[08:47] So I can’t just use this blanket percentage across everyone, I actually have to prorate the conversion percentage across people who are still there. So I’ve only spend about 15, 20 minutes on it yet but like I said it’s not super productive per se but I do feel like it’s going to give me some better insight, I know where I’m going to stand at the end of each month. I’m still trying to sort out if knowing that information is actually helpful or actually helpful if it’s just mentally helpful for me.
[09:10] Mike: Well I think it might help prevent you from becoming distracted and thinking about it more often because if you have a dashboard that’s accurate and shows you that information and you’ve already done the code behind it to know that it’s pretty close to being accurate then you won’t think about it as much to try and figure out all the different scenarios for, “Oh well, my conversion rate last month was this and the month before that was this” and you’re trying to figure out and do some mental interpolation between those and figure out what your conversion rate is going to end up bringing in for revenue this month. So if you’re not thinking about all those different things kind of frees up your brain to think about other stuff.
[09:45] Rob: Yeah that’s a good point and that’s actually the way I look at it because every time I look at this dashboard I know that 90% of the numbers I’m like yeah those are on, those are on. But this one I’m just like, you know, because I have just a simple flat paraded prediction now and every time I look at it I’m like I know that doesn’t include this, I know it doesn’t include people who are currently in the trial funnel. I mean it’s just, it’s such a weak estimate that I’m not taking it seriously. Every week probably I do want to have an idea of where I stand this month and where I look to be by the end of the month. So I download an Excel file from PayPal and I go through some manual work and add it all up by hand just to see where it is and it would be so much better to have that for real.
[10:22] Mike: I have a question for you; I mean you obviously have all this historical data right?
[10:26] Rob: I do.
[10:27] Mike: Why don’t you go back to the historical data that you have and try and figure out develop an algorithm that will guess what it should be at the end of each month and then take a look at those and see how close it is at being accurate as opposed to trying to kind of guess because that’s basically what you’re doing right now is you’re guessing. Then you’re doing to have to wait a couple of weeks to try to figure out whether that’s accurate or not as opposed to going back and looking at the historical data and you already have that stuff so you can essentially run through the algorithm see if it’s right at different points along the month, see how close it is and just kind of do a percent gap and says oh it’s within 5% or 10% tolerance of this number and that’s good enough as long as it’s that close.
[11:07] Rob: Right no that would be what to do except for the historical data I have, these are live customer records and so the data is actually not in the form it was when I was in say the middle of May. So in the middle of May I had X number of trials, certain number of people had cancelled by that point but over the next 15 days in May as more people cancelled then they get set to inactive. So their records are actually different now. So I don’t actually have a snapshot of the database on that day. Does that make sense? So I can’t go back and rerun the algorithm based on what it looked like at that point.
[11:39] Mike: Oh I see.
[11:40] Rob: You know what I’m saying? And like it’s not like I have some huge data mining thing that I took snapshot of it everyday and I could run it. It’s live data that has changed since then.
[11:50] Mike: I see, you’re not tracking the historical events as much as you’re changing the records of the individuals that are in the system
[11:56] Rob: That’s right and if I were — a couple of things one if I was architecting the system I would of course have a cancellation date instead of inactive bit because then you have the actual information right then I could go back and do exactly what you’re saying. But I didn’t architect the system and it’s not worth me for this thing it’s not worth me going back in you know adding a bunch of code just to get a little better prediction of algorithm. I think even given what I have I could probably spend less than an hour right now and get within 5 to 10% without changing app code.
[12:25] Mike: I see, I see.
[12:26] Rob: But no I like your approach that’s exactly what, that would be the ideal approach to it.
[12:30] Mike: Yeah what I did recently is I hired a developer who built the web hooks for stripe and then whenever stripe does something it basically sends out information back to this web hook that is on my server. It sends just information about hey this is just what happened and it sends and I think it sends JSON over through that request. I hired a developer who built two different things one was to go into stripe and pull in pretty much every single web hook that has been processed over the past 30 days and the second one was to actually implement something so that there is a web hook out there that I can have live so that whenever stripe does something it will kick off, it will send something to that.
[13:12] All I do is I take the entire JSON query and send it directly into my database so that if I ever need to put new post processing on it later, I don’t have to worry about it because stripe only keeps track of the last 30 days of web hooks that they’ve basically send out the last 30 of events. So to get around that I basically just save every single JSON query that they send to my web hook and throw in the database and it’s not like I really care about the storage space or anything like that. Then if I ever need to run through and do any post processing on anything all the way back to the beginning of time I can do that.
[13:42] Rob: Interesting I haven’t done any of the web hooks stuff; I’ve looked at it as kind of…
[13:47] Mike: Neither have I.
[13:48] Rob: Premature optimization thing I didn’t even know they only held it for 30 days. What kind of information do they have that you could need? Because I haven’t had a need and I’ve been running on stripe for about nine months and I haven’t had a need to go look at that stuff. What kind of information that I don’t have right now would you have in your database?
[14:04] Mike: So they have whenever somebody signs up. They have whenever there is a cancellation they have, whenever payment was attempted but fails, whenever payment was succeeded, whenever they send you money. I mean pretty much any given like all that happens and they keep a record of it.
[14:21] Rob: So you’re looking at the logs right, you’re logging events is what you’re doing. Because I can get that data but I only get the data at the customers and look at the payments and look at this and that but I can’t look at the event of when that happened and that’s what you’re getting.
[14:36] Mike:Yes.
[14:36] Rob: Got it.
[14:36] Mike: I mean I don’t have any specific use for it right now but it was a task that I was able to, you know, send out there and I knew that once that that 30 day period time goes by I’m not going to have that data ever gain. So if I ever need it in the future it would be good to have it and if I don’t ever use it that’s fine it’s not like I actually did the work on it anyway I just scoped it and said here is what I need. It took me it was like literary five minutes of my time to say this is what I need.
[15:01] Rob: You realize that the phrase “If I ever need it in the future” is the very definition of premature scaling that we talked about in the last episode?
[15:09] Mike: You know but I think with the premature scaling you’re also talking about something that takes more than five minutes of your time.
[15:13] Rob: You’re right; right you said something to me shortly before we hit record.
[15:17] Mike: I had just said something like, “Oh I hate java” and you asked me if I was working with java and I said no I would shoot myself if I had to code in java.
[15:26] Rob: And why is that? Did you code java back in the day?
[15:27] Mike: I did for a while it just irritated me for some reason I don’t know why. Part of it was the IDEs that you had to work with and don’t get me wrong I haven’t worked with java in probably nine years.
[15:37] Rob: You’re still going to get hate mail.
[15:39] Mike: Yeah.
[15:41] Rob: And you know what people should send you? Java is not bad you work with .net you idiot.
[15:46] Mike: I don’t care, I just it rubbed me the wrong way when I was working with it and it just seemed like they were always making these weird changes that didn’t make a whole heck of a lot of sense. Then they came out with net beans and this and that.
[15:58] Rob: It was pretty gnarly. It was pretty complicated.
[16:00] Mike: What is all of this stuff? It just didn’t make any sense to me and so I just kind of got away from it.
[16:05] Rob: I coded java for about 18 months and it was I found it complex. It’s my memory of it, I remember the ring no-good IDEs for it and I remember it being extremely complicated even and that is coming I’m a dot net developer like dot net is not simple compared to php and ruby and python and you know those types of frameworks. Java really kind of pushed it over the top and maybe it was the documentation wasn’t good so it just seemed complex but it was definitely a struggle to build things that are easier to do in a lot of other languages. It’s also building web apps and I just don’t think it’s the ideal language to build web apps with.
[16:37] Mike: Yeah I don’t either. I would attribute a lot of it to the IDE.
[16:40] Rob: Right.
[16:41] Mike: And I think that the reason I think that is because at least with dot net if you’re typing something you get a little interface that pops up you’re starting to type a function and it just will auto complete it for you and it will show you all the command-line parameters for that. Whereas if you have a bad IDE for java you are not getting any of that but with dot net you’re typically you’re working with visual studio and everything is right there you don’t generally have to worry about it.
[17:06] Rob: Yeah most languages don’t have the intelisense that dot net does and you get so spoiled by that as a developer because it dramatically improves your productivity. But stepping into when I step into php I have I’ll just say it takes me a lot longer because I have to sit there and look everything up, it doesn’t auto populate it like it does with .net.
[17:23] Mike: Yeah the other issue I think I have with java was all the debugging.
[17:27] Rob: I remember spending like six hours just getting a step through debugging working on a JSP server
[17:32] [music]
[17:35] Rob: So Mike and I are going to be talking about eight sentiments that do not bode well for your startup. Realistically these are a bit tongue in cheek. But before the call Mike and I were talking about how each of us including us here on the podcast as well as most people out there and most entrepreneurs that we talk to make at least one of these mistakes and typically several of them during the time of building launching a product. So the first sentiment is, “This product idea is awesome. Now off to the basement to build it I’ll see you in six months”. Mike how many times have we covered that on this podcast?
[18:06] Mike: At least one.
[18:07] Rob: We’ve talked about this certainly with AuditShark you built it for quite a while before showing the actual app to customers, I think we see this everyday. We get questions from podcast listeners who basically say, “Glad I found your podcast, I’ve already build this app and about to launch it but I have no mailing list, I haven’t done any marketing”. But that might be the most common email I get these days actually is ,“ I have this product and either I’m just about to launch or I launched a month ago and no one is buying and I don’t know what to do now”. Typically my first thing is, “Well, does anyone want this? Like have you talked to customers?” If you didn’t do it before you built then you need to do it now so that you can determine if you should, you know, even continue with this product. There is no reason to throw good money after bad.
[18:51] Mike: Or good time after bad.
[18:52] Rob: Indeed. So our second sentiment that does not bode well for your startup is, “I haven’t even finished the features I want to build yet and potential customers are already asking me to build X”.
[19:04] Mike: I love this one because the translation to this is basically, “I’m sticking to my product idea no matter what my potential customers tell me”. I have this vision in my head of stuff that I want to build but people are asking me to do these other stuff and I’m not done yet I’m not done yet I still want to do this other stuff. What they are telling you is what they want and what they are willing to pay for and what you’re telling them is no I’m going to do this because this is my vision. You’re basically saying my vision is more important than what my customers want.
[19:31] Rob: Yeah and this is a really hard balance because as soon as you launch an app and as soon as you have people using it you’re going to get feature request especially if you launch when you’re still a little embarrassed about your product and I think most V I.0 are they should be launched when you’re still a little embarrassed about it. So you’re going to get a slew feature request and it’s up to you to figure out well which one of these should I actually implement, which one of these maybe lined up with my vision, which ones don’t but are still worth implementing and maybe even have a higher priority that the features I have in mind because frankly your product can go down an entirely different road than you imagined and it could be more useful to your potential audience if they are using it in a way that you never thought possible.
[20:11] Mike: Yeah and it’s interesting the dynamic here because I was actually having a conversation last night with prospective partner of AuditShark and he’s asking me he’s like, “ What do you see is the vision for this, you know, what do you envision this turning into down the road?” But I basically put it blunly and I’m like, “The product direction is going to be driven by what the customers want, and at the end of the day if I do what the customers want then I will make a metric ton of money, it’s not going to matter. But it’s really about what they want not necessarily what I want for the product.
[20:44] Rob: Yeah and again that is a really, it’s a hard thing to do to actually implement what you’ve just said. Because it’s hard to know when you get 20, 30, 40 customers all sending you a request you can’t do everything the customers want, you have to parse it out and figure out which on or which set of features is actually the thing that you can implement that is going to help the most customers and attract the most new customers to the product. So the third sentiment that does not bode well for your startup is, “I’m half way done with this idea but that shiny new one over there seems so much better”.
[21:19] Mike: Aren’t we all guilty of this one?
[21:21] Rob: Yeah absolutely. Every month yeah I’m currently evaluating ;let’s just say a couple other potential acquisitions and I’m in due diligence right now I’m signing an NDA on one and right away I told it to one of my mastermind groups and one of the guys was just like what are you doing? Like I feel like you’re taking your eye off the ball. You know he didn’t say it quite like that but in so many words.
[21:41] Mike: I’ll say it, I feel like you’re taking your eye off the ball.
[21:43] Rob: Yeah, no it’s definitely something in the back of my mind I mean if you listen back 10 episodes I’ve been talking about this you know about to shift focus because there is this thing that I’ve said over and over is that I never work on two products. I never try to grow two products at the same time. Anytime I’ve tried to that I’ve failed because there is just too much to do. I have a couple tricks up my sleeve that I’ve never had in the past — but the bottom line is it’s risky game and it’s always a gamble if you’re going to try to either do two idea at once or even worse just leap from one half completed idea to the next because that’s a good way to kill three, four, five years of your entrepreneurial career and never actually launch anything and launching is when you really start learning.
[22:25] Mike: Yeah I mean you can take a look at the hard drive of just about any developer and just count the number of unfinished products and that right there will give you a good idea of, you know, how I guess pervasive this particular problem is. I mean there are people who just leap from product to product or projects to projects because they never actually finish anything and after two, three, five, eight years of working on this stuff they still have nothing to show for it. I think we are all guilty of that at some point I mean there is always these projects that we get involved in that you kind of bogged down, you loses your motivation to work on it and it’s no longer as exciting and sexy to kind of push through to the finish line because you don’t have customers yet, there is nobody really relying on it yet and you’re just like, “Well you know that looks really interesting” it’s very easy to get distracted and go on a different direction.
[23:13] Rob: Yeah and don’t get me wrong here I’m not saying don’t own multiple products because obviously that’s you know really the approach that I’ve taken on, I’ve had success with it it’s not to bounce from idea to idea without completing one and either getting it to a state of automation or of some type of semi autopilot state where you are not just having to really focus on it to make it grow all the time. Our fourth sentiment that does bode well for your startup is, “I plan to quit my job 60 days after I launch”. So why is that a bad sentiment?
[23:45] Mike: I think that is a bad sentiment because it places, I’ll say, unrealistic expectations on your launch and when you don’t meet those expectations it’s not only mentally draining but it’s also going to put you in a position where you’re starting to look for excuses, why didn’t this work? What didn’t go right? And you’re going to basically put blame everywhere except for where your expectation should have been. I just don’t think that it’s good for your mental health; I think that being able to quit your job 60 days after launch is just an unrealistic expectation to have for virtually anything. I mean I can’t think of anything where that sort of thing would happen. They are going to take some time to kind of get to the point where you have the steady stream of visitors and customers who are coming in and saying, “Yes, I’m willing to pay money for this.”
[24:31] Rob: Right the problem is that, if you set your expectations so high and then you fail to hit them and you fail miserably to hit them, which is really likely will if you think you’re going to have may have a fulltime income after 60 days. It’s just very discouraging, you know, there is kind of these three dips that you hit when you’re launching a product. One is about half way through development, one is just after launch and then the other one is like three, four, five months after launch where the buzz has worn off the launch and this will just contribute that all the more and will encourage you to basically bail on the product.
[25:07] Our fifth sentiment that doesn’t bode well for your startup is, “It will take me as much time to explain this task to someone else. So, I’ll just do it myself”. You know Mike I think we should start startups for the rest of us drinking game because we talk so much about VAs and outsourcing and not even outsourcing to developers and designers that everytime we mention it everyone listening should have to do a shot.
[25:30] Mike: You know I think that is a great idea, I think that our listeners should start sending things in. So anyone who is listening please send us some stuff for to questions@startupsfortherestofus.com send us your thoughts about what should go into the podcast drinking game where anything we say or something somebody asks that should go in every time that comes up you take a drink.
[25:51] Rob: Right because we I mean that has been a recurring theme since episode one of not trying to do everything yourself and especially not using the excuse of, it would take me as much time to explain this task to someone else so I will just do it myself. I think the big, I mean there is many, but one of them I think the one that I found to be the most kind of impactful to me is that it always feels this way the first time you have to hire a developer, the first time you have to hire a designer, tier one email support. Any of those things it’s like gosh! Four hours, six hours, eight hours whatever to hire this person and this task is only a one or two hour task.
Well, a couple of things. 1. You’re probably not very good at estimating so you’re probably underestimating the actual amount of time it’s going to take to do it. 2. Once you have that person and you find them and they are good at this, then the next 100 times you have this come up, it’s a five or ten minute email to send them a task. Right? A one hour a 30 minute tasks can be outsourced really easily if you don’t have to go through the hiring process. So there is this almost like these economies of scale, once you get these first several hours of hiring them out of the way then you can build on that. This stuff does not happen overnight but it’s about building a team of people you can rely on, even if you don’t use the all the time but you at least have them as resources and it makes outsourcing very easy and very cost effective and time effective.
[27:10] Mike: Well the other thing that comes up is that and I was talking to somebody last night about this which was the person I was speaking to has to do billing for a bunch of different customers and it has to be done in a very specific way and it’s a lot of it is recurring thing. He’s constantly just looking at this stuff saying I will just do it myself as opposed to sending it to so and so to do. I told him I was like why don’t you just create a video, you know, do a screen cast, walk through it, sign up for screencast.com and buy Camtasia studio and just walk through the process, record it once. Send it over to the person who needs to do it and if you ever need to replace that person or if both of you are busy and you need somebody else on your team to do it, because he’s got a team of like 10 or 15 people, I was like just send it over to him, send him the link to the video and say this is who it needs to be done I need you to do it.
[27:58] There is new customer they need to be added to the CRM package here is all the information that you need to do it and here is the video that explains exactly who to do it, please go do this and take care of this. Because they are employees of yours, they are working for you just go ahead and get it done. As opposed to spending all of your time doing these things when there are repetitive task that somebody else can be doing.
[28:18] Rob: Our sixth sentiment is, “I don’t want to bother with all that click through and conversion rate nonsense I’ll just build a great product”.
[28:25] Mike: I lovethat “ the click through and conversion rate nonsense”. I mean basically what you’re saying is you know build a better mouse trap and they will come and building a better mouse trap is not actually a good strategy. Mouse traps themselves have really not changed over the years. People have tried to build better mouse traps but if you look for building a better mouse trap there is pictures of all these really weird contraptions that just generally don’t work very well. Building a better product does not draw new customers, solving their problems draws customers.
[28:55] Rob: The challenge with this is that building a successful business requires an ongoing stream of people who are interested in your product. It’s over romanticizing building software, building web apps, building startups to say that the product is going to be so good that word of mouth is going to spread or that the virility is going to spread the word or that social media. These are the things that are fun that we do anyway right? People are on Twitter, on Facebook and so thinking that that’s going to be enough just having that good product is going to make people talk about it enough to build a sustainable business is wishful thinking bottom-line.
[29:32] And while you don’t have to be like ultra left brained about it and do hardcore click through, conversion rate analysis and just be all about the numbers you can move a little more towards the center. Every entrepreneur that I know who has been successful in the long term has a really good handle on what their conversion rates, click throughs, at what their numbers are for their business. I don’t know anyone who does it who doesn’t know that. Anytime someone has a business and I ask them where is your marketing and they say, ‘Oh its’ all a word of mouth”, hugely skeptical right away.
[30:03] I’m hugely skeptical that either a) is their business actually successful; and b) is it really word of mouth or is this person just attributing all these other things that are happening to word of mouth because they don’t know any better? This may be the one that I don’t think is talked about very much, I think it’s wishful thinking to believe that the product is enough to make a successful business.
Our seventh sentiment is, “My idea is pretty hard to explain, do you have 20 minutes to spare?”
[30:33] So this probably comes back to that kind of enterprise software, the high tech software versus being able to sell on the web. The problem with having something that is so complicated and you can’t explain it in a couple of sentences, is that it’s very hard to sell. It means that you have to educate your market which is very expensive and time consuming and you have to educate a lot of people and only a few of those people will buy. It also means it’s extremely hard to do with like paid customer acquisition because you have to send them through a long funnel. You can’t just have a headline that explains what your product does, if you can’t explain it in 30 characters which is I think is 32 characters is you know a Facebook headlin or 50 something characters is an Ad Words headline.
[31:12] If you can’t explain your product then you have to go a different route that is almost like a lead gen route and you have you have a headline that kind of addresses part of the problem and then either have them talk to sales people, go through auto responders, download reports all those are good tactics to do long term for any business and they will expand your sales. But if you can’t make sales without them, then you’re basically a medium to high tech sales all the time and that’s just a different business then. You knew I think as a solopreneur or a micropreneur than you want to be in.
[31:42] Mike: I think the other side of it is that, if you can’t explain it succinctly then it’s very difficult to convey that to new customers very quickly and when people hit your website they are just going to leave very quickly. I run into this problem I think a lot earlier on with AuditShark where it was very difficult for me to explain to people what it is that AuditShark does and why you would wants to do it. I still feel like I’m tweaking the response and what I’m telling people, but basically I feel like AuditShark is a product that brings clarity to the security posture of your web servers and that’s really it. It just tells you where your server stands with regards to security, how vulnerable they are etcetera.
[32:22] Rob: Right and I think there are, you know, with this one my idea is pretty hard to explain do you have 20 minutes to spare? I think there are two ways to look at time. One is either that your idea really is that hard and that’s obviously a danger sign or your idea isn’t actually that hard and you just don’t know how to explain it yet. That’s also a danger sign it means and you can correct that one right? You can learn the language of your customers, we talked about that last episode and you can just learn how to more succinctly describe it and that’s absolutely a requirement if you do plan to sell online like you said through sales or marketing website. So rounding out our eight sentiments is, “I don’t want to talk publically about my idea because someone might steal it”.
[33:01] Mike: This has got to be one take a drink.
[33:04] Rob: This is the other drinking game one I know. We’re getting quite a few emails with a question but the person won’t tell us their idea they just say, “Oh it’s in the kind of commerce space” and here is this question but the answer to it depends entirely on having more specifics.
[33:21] Mike: So the issue with this is that’s, if you’re not talking about your idea then it’s very difficult to find people who are going to basically tell you you’re crazy that it’s not a very good idea. If you’re not telling people what the idea is, then who are you talking to about what problems you’re actually solving? If it’s a known problem then people are presumably already talking about it and searching for it so it’s not like it’s this giant secret.
[33:44] The other side of it is that the second you launch it’s out in public I mean everyone knows about your idea at that point because the world is connected to the Internet so everyone can see it it’s not like you’re able to hide anything at that point. So if somebody really has tons of money and wants to come steal your idea they are going to do it. But the problem is that nobody wants to steal bad ideas. What they want to do is they want to steal successful ideas. So, if you have an idea you could tell everybody in the world and nobody is going to care but if it’s a good idea that you follow through with and you’re successful with it that’s when people are going to start copying you, that’s when people are going to start taking your idea and trying to implement it or come after you with more money. But it’s not until you’ve proven that that idea is successful that anybody is going to care.
[34:30] Rob: Right and there is a difference here between going on a podcast with several thousand people listening and saying here is what I’m going to build and here is exactly what I’m going to build and how I’m going to market it and all the steps I’m going to take, I mean that could be stupid, right? You’re basically giving away a plan of something that is actually valuable. But talking to people in person or over the phone mentioning it to some people, asking people and saying hey I would appreciate if we don’t tell everyone about this. But here is the idea what do you think and getting really in-depth about it there, is not much risk in doing that, right?
[34:59] Even going on the podcast Mike if you and I were to sit here and talk about and I always explaining a whole idea, I questions how many people would even move forward with that and how many people would be able to basically the out market you even if you gave them most of the broad tips of how to do it. Because everyone has their own idea and they all want to implement it, right? They don’t want to implement your idea they tend to want to implement their own because they are passionate about it and that’s probably another sentiment that doesn’t bode well for your startup, is being able to adopt other people’s ideas or acquire startups that are failing rather than just the traditional, I’m going to build a novel product and launch it like every other developer does.
[35:37] Mike: Well I think I have a perfect example for this is mean Jason and Justin from the TechZing podcast talked about the idea of AnyFoo. Their product idea was essentially providing a market place where if you need a expert on whatever the topic is sit can be a programming topic, it could be C Sharp, it should be you know Azure, it could be Ruby, I could be Rail whatever, I mean any of those topics there are experts out there. Their idea was to essentially build the website where you provide a market place for going and hiring these people. Now obviously you’re not going to hire them for an extended period of time because they are going to probably charge you a bare minimum of $100 and they talked publicly about this for a long time.
[36:20] They said somebody should build a website where you go there and I can pay $200 to talk to an expert on security for an hour. Just to pick his brain, to get some thoughts and figure out what I should be doing and you know what sort of things that I’m missing in the existing things that I’m doing. They talked about it for a year, they told their entire listener base, “Hey somebody please implement it” and nobody did. So they finally decided to actually follow through and start building it themselves because nobody else had. They are publicly talking about it and they are actually asking people to go do it and not one person steps up and goes to steal that idea.
[36:53] Rob: Yeah there is so much more that goes into building a business than the idea, basically the idea is a small piece of it and having a great idea is great but there is so much execution and work and expertise and development and marketing that goes into it, that just having someone know your idea is not enough for them even if they get there first it’s not enough for them to beat you if you can out market them. Well, that about wraps us up for today, top review our eight sentiments that do not board well for your startup are:
- This product idea is awesome now off to the basement to build it. See you in six months.
- I haven’t even finished the features I want to build yet and potential customers are already asking me to build X.
- I’m half way done with this idea but that shiny new one over there seems so much better.
- I plan to quit my day job 60 days after I launch.
[37:42] Mike:
- It would take me as much time to explain this task to someone else so I’ll just do it myself.
- I don’t want to bother with all that’s click through and conversion rate nonsense. I will just build a great product.
- My idea is pretty hard to explain. Do you have 20 minutes to spare?
- I don’t want to talk publicly about my idea because someone might steal. [Music]
[38:02] Rob: If you have a question or comment you can call it in to our voice mail number at 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. You can subscribe to this podcast on iTunes by searching for startups or via RSS at startupsfortherestofus.com where you will find a full transcript or each episode. Thanks for listening we’ll see you next time.
Episode 97 | Premature Scaling
Show Notes
Transcript
[00:00] Rob: If you stick around to the end of this episode Mike and I are going to be talking about premature scaling. This is startups for the rest of us episode 97.
[00:07] [Music]
[00:15] Rob: 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 just thinking about it. I’m Rob.
[00:24] Mike: And I am Mike.
[00:24] Rob: And we are here to share our experiences to help you avoid the same mistakes we have made. This week the word is Audit Shark, early access.
[00:32] Mike: Yep.
[00:32] Rob: So what’s going on? Did you… Are people using it Mike? What you had talked about on the podcast was that yesterday people had started using it in September 10th.
[00:38] Mike: Yep.
[00:39] Rob: Did that happen?
[00:40] Mike: Well actually I had somebody start using it last week so…
[00:44] Rob: Oh, nice.
[00:44] Mike: I had somebody install AuditShark on a couple of their servers and basically worked through some of the issues that they were having just to basically make sure that everything was usable and functional. And then from there basically to ran some more tests over the weekend and made a huge number of changes of the code over the weekend and then I waited until this morning actually to get my next customer on.
[01:07] So yesterday I touched base with, you know, somebody who was interested in using it as an early access customer and got him installed, he was up and running and you know once we started with the process it was maybe five or ten minutes tops. And most of that was working through some last minute code changes that I had made. So for example I dropped some columns and then forgot to pull out some of the error checking code so they were looking for it, but there was no way for him to enter in that information so I had to make some raw database changes. But other than that I mean things went pretty smooth I think.
[01:38] Rob: Awesome. And so you have two customers or potential customers using it? Well, so that’s an interesting question, are they customers, like are they paying you yet or are they under the understanding that it’s maybe a 30 day trial or how has that worked out?
[01:52] Mike: So one of them is a prospective partner who wants to resell it and the other one is a prospective customer who will be using it for his own servers.
[02:03] Rob: Got it, so he is checking it out, see how it works, see what it does. And is there a trial period you have discussed or you are just kind of going to say how is it working and touch base with them and that kind of stuff?
[02:13] Mike: Yeah that’s probably going to be more it than anything else. Most of—I mean the thing is one of the issues that have right now is because the product is functional but it isn’t necessarily complete. The primary issue is that it works and does what it’s supposed to do but because I don’t have the library populated with a lot of content yet, it’s not as useful as it could be. So essentially what I am doing is I am working with him to essentially do things on, I don’t want to say consulting basis, but in a way I am basically taking a look at his servers, you know, and I am going to be building the policies on his behalf and just I am going to let him know, hey this stuff is ready, you know whenever you what to run it., if you want to double check and watch your servers just to make sure that there is not going to be any major impact or whatever then he can do that and he can run it on his own schedule. It’s very simple to do that for him.
[03:04] And then you know he can take a look at it and maybe later on he just decided, oh well you’ve got some new stuff, I have already seen it in action. It’s not hurting anything; it doesn’t have a very high impact, just go ahead do whatever you want whenever you want.
[03:17] Rob: Right. Sounds a lot like customer development at this point, right? I mean you are actually working with a real customer and basing your features, your new features on his needs.
[03:26] Mike: Yeah, I mean and that’s the nice part about this piece of it, because it’s content driven and I can just develop new content and add it in, it’s not like I am adding new features but I am adding—I guess in a way I kind of am adding new feature because they are new things that the software is going to be looking for but it uses all the same underlying code that I have already written.
[03:45] Rob: Right, you are modifying XML files that the code consumes, is that right?
[03:48] Mike: Yeah basically.
[03:49] Rob: RUL files, yeah, AuditShark audits. Servers and the security audit scan stuff and you are basically adding more rules and more scans, more points of data by not modifying code but modifying some text file, I assume it’s XML or something so–.
[04:04] Mike: Yeah.
[04:05] Rob: Fantastic. So how do you feel? Does it feel good or is it like—are you as excited as you thought you would be you know because you finally, you are on early access, or is it like a letdown?
[04:14] Mike: I don’t think it’s a letdown. I feel good about where things are at, I mean I am a little disappointed that I am not further a long but I think that that’s going to be the case no matter what.
[04:22] Rob: Sure.
[04:22] Mike: You know I ran into some previously undiscovered scalability issues last week that took me quite a while to track down because I had some—some of my logging code wasn’t actually logging anything and I knew that a long time ago but I just said, well you know, it’s logging code, it’s really not that big a deal. Well, then I ran into an issue where connections weren’t being closed to the database and it became an issue because I couldn’t see where those connections were being opened and closed.
[04:50] Rob: Right.
[04:51] Mike: Now I had to fix the logging code and then once that was fixed then I had to go fix the connection issue.
[04:57] Rob: Right. And that’s early product stuff, right? I mean you are always going to see that at this early stage. So what’s your plan now, like today, tomorrow, this week? You are working on AuditShark almost exclusively, are you writing more code right now, are you building more rules for your two kind of customer development folks, are you looking for other people to do early access so you can get more feedback? What’s your game plan?
[05:20] Mike: So right now I am planning on, I am doing a little bit of code, just basically the bare minimum stuff that I need in order to be able to populate the database, beyond that I am not really doing anything that is code development related. There is a few minor features that absolutely need to be there that, you know, for them to be able to use it that I am still kind of working on. But you know those kind of go hand in hand with populating the library. So until the library is populated, those features are kind of completely unimportant and in order to test populating the library I need those features.
[05:51] So I expect those to kind of be hammered out in the next couple of days, probably two days at most. And then from there on it’s just a matter of, you know, running these policies against their machines, taking a look at the output, seeing what things come back as okay, what things come back as not okay, where I can drill in to find out more information and then essentially determining what other recommendations I can make based on what they have installed, because if by looking at their installation, let’s that they don’t have Apache installed, well why would I go out and build, you know, 100 rules that check what Apache is, how Apache is configured and what versions of everything are there and what vulnerabilities are there if they don’t have Apache. I feel like that’s important down the road but because it’s still early customer development stuff and they are not going to be using that, I don’t feel that it’s as important.
[06:40] Right. Do you have plans right now to get another potential customer or two on board, like as of next week do you think you will have more people using the system in order to vary the feedback that you get?
[06:51] Mike: I would expect that by the end of the week I probably will.
[06:54] Rob: Okay.
[06:54] Mike: We’ll start talking to people early in the week and then trying to identify specifically who I am going to add in by the end of the week.
[07:02] Rob: Very good. Well sir, let me join each person listening right and wish you a hardy congratulations on getting it out of the door and getting it on a real server, a few real customer servers.
[07:13] Mike: Thank you.
[07:15] Rob: So this actually ties in with a voice mail we received, J. Speaks called in and he thought I let you off too easy with our discussion about Altiris Training versus AuditShark because AltirisTraining you spent maybe a month, about somewhere between a month and six weeks, you outsourced a lot of it, you recorded the videos and you have had some early success with it. Pretty quickly people signed up and you know you have some demand. And then AuditShark you have been working on it for several years, people can go back and listen to the last 40 episodes to hear all that, but basically it’s just much bigger project, it’s more ambitious and you know you are just now getting into the really—the focusing and doing customer development stuff.
[07:52] J’s concern was that when I asked you, I said hey you know how come you are going after AuditShark instead of just focusing on Altiris Training, just going after it and ten-exing your effort on that and leaving everything else behind. And you said because you are not that interested in AltirisTraining, it’s not that big of a market, you don’t have a passion for it, you know, some other stuff. He just said it seemed to him AltirisTraining is the obvious choice to pursue based on its early access. So I wanted to hear more from you, why aren’t you doubling down on AltirisTraining and why are you continuing to go after AuditShark?
[08:24] Mike: I think the primary reason that I am not really going after the Altiristraining.com website harder is because of the fact that I don’t see where additional traffic would come from. Looking at the searches that are done for it, looking at the current traffic that I am getting for it, I am still only getting, you know, four or 500 websites visits a month and that includes people who have already bought. And since I have launched it, I think in the first week or so I had several sign ups and since then I haven’t had one.
[08:53] So to me it looks like, you know, there is a market for it and it’s probably as small as I kind of thought it would be. I don’t see it as being something that’s going to just grow and grow and you know maybe that’s just going to take a little bit more effort on my part to try and, you know, figure out how to optimize that pipeline a little bit. But you know at this point I just don’t see any sort of substantial growth.
[09:19] Rob: Yeah tell me—so there is a market for this right, some people are interested in it, potential opportunities for expansion, I mean there could be partnerships, could be, not affiliate deals in the traditional sense but affiliate deals that are like high tech sales on your part, right? Of actually talking to consultants and talking to—and I guess you already have one of those in place, but multiplying that. They are all fairly, they are not really automatable and they are not internet marketing based, right? It will be more about building a real business, more about focusing and doing more medium and high tech stuff, whether it’s direct sales or selling to partners who can then resell it.
[09:54] And my take on it is the reason you don’t want to focus on that is because the idea is not that interesting to you and if you are going to spend all that time that you prefer to spend that time working on AuditShark. And it’s an interesting question, right? It’s like what are you optimizing for. And I think every person who is launching apps needs to ask that, what are you optimizing for? Are you optimizing for to make enough money to quit your job, are you optimizing to, you know, enjoy what you are working on, like are you really passionate about it? Is it some mix of the two? And I think that’s the question you are probably dealing with, is even if you could, let’s say you just stopped working on audit shark all together and completely focused in Altiris Training.
[10:33] Number one, it’s going to take you a heck of a long time to grow it, right, because it is medium and high tech stuff. And my guess is that with AuditShark, after you build a product people want, you are going to be able to get some of that automated—it’s more like the fly wheel traffic effect of getting online marketing going. Based on our conversations it seems like your desire is to go more of that route and you are just more interested in Audit Shark? Is that accurate?
[10:58] Mike: Yeah I think so, I mean I looked at it as something where I could probably build something that would have value in the future but not necessarily a substantial value now and that I wouldn’t have to sink a lot of time and effort into it to make a few hundred dollars extra a month. And at this point you know I had somebody who paid for six month subscription upfront, I do have the potential for, you know, an additional anywhere from 250 to $ 1000 a month in sales that, you know, very well could be recurring just through the partnership but at the same time the existing customer base is only paying a couple $ 100 a month for access to the site.
[11:37] So realistically I am looking at, you know, maybe close to $ 1000, maybe a little bit more. I don’t realistically see it going over $ 1500 a month anytime in the near future. The point was really to get it to a point where it was automated enough that I didn’t have to worry about it too much, but at the same time I may be able to just turn around and flip it. I was really looking for in many ways a project to vet a couple of developers that I was trying to identify.
[12:03] There was one developer who I had working on Audit Shark who was not really working out very well and I was very low to find another one and put them also onto AuditShark, at least right away. So in some ways it was a vetting process for finding those developers, you know, finding a developer who I can put on a different project, have him do something that, you know, may very well be meaningful and substantial to me but isn’t going to break the bank, isn’t going to necessarily either positively or negatively impact AuditShark, and that was really what I was more concerned about, was the negative impact to AuditShark.
[12:37] Rob: Yep, and I know where you are coming from because I own a number of websites, they are in the similar vein for me, right? It’s more automated income, automated revenue, and they are not in a niche that I particularly want to go and spend a bunch of time in and they have a traffic source or two that is recurring and that is a fly wheel and that I don’t mess with, but growing it beyond where it’s plateaued would be a lot of effort and I much prefer to spend that effort, you know, on something else.
[13:05] So hey I have two quick updates then we are going to dive into the premature scaling discussion. The first thing is, I don’t know about you but I am looking forward to episode 100. We have a special episode planned, we are stocked about that. Keep your eyes peeled, just three episodes away now. The other thing is I hired a half time contractor to help me with marketing and support and I already have a VA doing Tier one support, but I hired this—he is actually a colleague, a friend of mine who I have known for about a year and he is going to be doing tier two support. So I have been doing tier two for, you know, the last nine months.
[13:42] And so he is going to learn the ins and outs of the app and he is also already creating an email follow up sequence. He is doing a bunch of stuff that’s been on my list since I acquired the app but have not had the time to do. So he is doing a lot of content creation, he has worked on some ideas for info graphics, some viral blog posts, a couple of other things that are just, you know, they are too complicated to kind of outsource easily. And what I like is that I have a lot of task people, I have a lot of task Vas and developers and such where I can give them a task and they can do it. But he is much more of a project person where I can just say here, go do that, research it, proposes titles, and I say alright pick that one, there, now go gather data for an info graphic. Boom! Comes back, you now, it’s like that kind of thing where he is more of a full service person.
[14:21] So basically I had several agencies quote on doing this exact work that I am talking about and they outlines their process of how they would do it. And I am taking that process, and they were definitely going to be contractors, they work for an agency. And I took that exact process and gave it to him and said go do what they sad here. They didn’t give me any ideas, we didn’t steal anything or write anything, but I said here are the steps here are the steps we are going to go through because these are the steps I was going to go through with them. So I am pretty darn sure that going through these steps does not make you an employee.
[14:50] You know and I am excited to have someone on board who can do a higher level of work with, you know, with less supervision who is more like a consultant, you know, it’s more like a consultant than a contractor.
[15:00] Mike: Right, yeah. And that definitely nice to have, my wife and I were having a similar discussion a couple of nights ago that was just about like our previous work histories where, you know, where she used to work at a graphics design company where there would be employees who come in and unless they were explicitly told to do something, they wouldn’t do anything and they would basically sit around waiting for people to assign them work. How does anything get done if you know nobody is there to tell you to do something then what gets done. And the answer of course is nothing, and that’s one of these–, I would call that a hiring problem more than anything else, I mean you really need to identify those people who are going to be employees who can identify what needs to get done and get it done.
[15:38] Rob: And I think that’s the difference, you know when founders say like I want to hire great people, like great people are the ones who improve your business. You hire an employee improve your business even if you step away for two days, you come back the business is better than it used to be, whereas, average people maybe don’t do that. You know Kagan talks about that in his talks and he says there are minus ones, zeros and ones, and the ones are the ones that improve the business. Zeros keep it so, so, and you will need some of them and then the minus ones are kind of more the toxic people, the people who I actually degrade from the business.
[16:06] [Music]
[16:10] Mike: And this episode is based on some thoughts I had regarding a forum thread came up inside the Micropreneur Academy that popped up a few weeks ago. And essentially what had happened was that Facebook decided they were going to eliminate about 80 million fake Facebook accounts. One of the members of the Micropreneur Academy ended up with what was literally exponential growth because all these Facebook accounts got shut down and people were looking for another place to go and his site offered something that very much appealed to this particular audience and it was kind of a social networking site. And you know people just kind of flooded his server to sign up for accounts. And this wasn’t something that he had planned; this wasn’t something that he had actively gone after, it just kind of fell in his lap. You know obviously not everybody is in this kind of a position but it brought about a discussion about, you know, when is it the right time to scale out the systems.
[17:01] And I think that the obvious short term answer for him is, you know, it’s kind of too late to scale your code at this point, you basically just have to buy a better server, buy more hardware, you know, throw hardware at the problem until you figure out how to deal with it. But you know the questions came up, well why didn’t you, you know, build for scale to begin with? I mean what’s preventing the site from being to handle this influx of people. So the basic question is, you know, when is the right time to scale, you know.
[17:27] And there is different aspects to that question, I mean the first is engineering your software to scale. And I think that I was reading Dharmesh’s website on startups.com and he actually a blog post that was specifically about this and the direct quote is, “ don’t fall into the trap of spending limited resources on planning and preparing for success, instead spend them on times that will actually increase your chances of success.”
[17:51] Rob: You know I have seen this over and over especially with businesses that I have acquired where the previous owner has invested literally tens of thousands of dollars into either hardware or into bullet proofing software and making this exotic admin area or just automated incredible amounts of things to where their app could handle 50,000 paid customers, but when I buy the app it has four paid customers. They either didn’t know how to market, they ran out of money before they were able to market or it just wasn’t a good idea for an app at that scale.
[18:26] And then you know I will take it over and downgrade everything and go to a—I mean I went from a $ 500 a month hosting plan with one app and I moved it to a shared hosting account that is eight dollars a month and it has never had a glitch, just incredible stuff, right? So that’s definitely premature scaling and I have seen that a lot when I was—I also saw it a lot when I used to consult especially for the government.
[18:47] Mike: Well the government is totally a different story, but so basically you increase your profit margin by $ 500 a month or $ 492 a month just by moving it to a different server?
[18:57] Rob: Yes. It was crazy I know. That might have been the single most profitable move I did that year. It is very common especially for some reason as developers and I am the same way, I have to fight off this urge but when I—I think coming through the enterprise software ranks you have to think a certain way. And with enterprise software it tends to make sense that you would think that way. You know, you are trying to avoid these massive outages, you are trying to avoid of manual labor, you are trying to avoid one off things, all of those things need to happen because you have hundreds of thousands of users or your system is absolutely mission critical, it cannot fail and so you learn to engineer things a certain way.
[19:36] So it’s really hard to then come away from that and sit down to build invoicing software SAS app or a keyword tool SAS app and to think differently, right? Because you think about every edge case and then you spend months building this software that can handle every edge case. Whereas handling those edge cases manually is going to save you those months of development time.
[19:57] Mike: Yeah and if the application itself changes significantly enough, those edge cases may just completely go away.
[20:04] Rob: I agree. And I mean even this morning I was recording a screen cast for kind of a new edge case we discovered with one of my apps and I sent it to the virtual system and I told them if this happens a lot and you feel like you are doing this too much, let me know and I will write the code to fix this, but it’s about 10 hours of work for me. And I know that doesn’t sound like a lot but that’s a bigger time investment than I want to make when this is literally—it’s about a five to seven minute process for him each time he has to do it. And my guess is this is going to happen once a week and I think that’s what has been happening for a few weeks.
[20:38] And so, hey that’s a nice trade off for now because I am going to take that 10 hours, invest that into actually getting more customers which is basically what Dharmesh said, don’t spend the time actually preparing for success, actually increase your chances of success. And so I am going to invest that 10 hours right now into increasing the success. The other thing that people shouldn’t over look is I am not just saving time, right, I am saying it’s 10 hours and he is going to spend five to seven minutes per, but I am saving my time. So him spending five to seven minutes for several months is still worth me saving a few hours of time so that I can push the business forward.
[21:11] Mike: Yeah and I think that’s, you know, that’s really what a lot of people over look when they are trying to figure out what they should do next and you know people get hang up on these little details where, oh well, this is taking too long to do or oh I can write the code for this. And the answer is not always code, I mean as developers our brains kind of naturally gravitate in that general direction because we like to solve problems and get things done. But sometimes you have to look at the bigger picture and the bigger picture in many cases is Identifying when it is not cost effective to do something, you know, when is it going to save you more time by, you know, skipping over that and just dealing with it when that piece comes up. And there is all these different things that you have to maintain in addition to that once you have written that code. So you write that code and then you own it for the life time.
[21:58] Rob: Yeah I think the big question you should ask yourself anytime you think about sitting down and not building a feature but doing scaling type stuff or handling edge cases with code or admin tasks that could be handled manually is what is the danger of this actually happening and what is the consequence if it happens. And so you can take an example like, you know, some edge case, someone clicks a button in Hit Tail and they are on the old billing instead of the new billing and it can’t do it. And so I can write a bunch of code to go back and you know mess with scripts and mess with data, or I can just pop up a message and say you know what, you are on old billing, click here or you know our Admins already been notified and they will go on and do this manually. And that is like a three minute change, right, to just ping off an email and give a message.
[22:46] Alternatively, I could spend four or five hours and solve this thing for this one person, but the question I have to ask myself is, what is the chance that this will happen again? The consequence is oh, that someone sees a message? That’s a bummer, if 100 people a week saw it then yeah I don’t want my app to function like that, but if it’s once a month then you got to be willing to put up with that in order to save like I said even four or five hours a time because our time as entrepreneurs is so valuable, it’s more valuable than having perfection.
[23:16] Mike: And I used to be extremely guilty of that one, I worked at Pedestil because we would ship the product and we would ship it with this list of known issues and it just buffed at the time, I mean looking back on it I was kind of young and naïve but looking, you know, at the time I am looking at that saying well we know about these issues, why are we not fixing them. And you know of course it’s all about getting the product out there and making sure that people are using it so that you can charge more money for it and so that you can pay the bills and you know pay my own salary which, you know, I should have been able to realize that stuff but I just didn’t and I was too focused on the code itself as opposed to the bigger picture of the business.
[23:55] Rob: As a software craftsman you want the code to be the most important part and you want it to matter, right? You want it to be what matters and what makes the difference and you want your product to be perfect because that’s what you are good at, you want your be proud of what you are building if you are a craftsman. But when you are an entrepreneur, even if you are still that technician, you have to balance these two things out.
[24:16] Mike: So let’s kind of go onto a slightly different topic in terms of scaling. What about scaling marketing and paid advertising and things like that? I mean it seems like especially when it comes to paid advertising, the last thing you want to do is start dumping money into that and scaling it before you even know it works.
[24:34] Rob: There is some pretty obvious steps that you need to follow before you try to scale a marketing spend, and by marketing spend I don’t just mean paid advertising, I mean investing your time or money into having info graphics made, having viral blog posts written or writing them yourself. Any part of partnership where you do an integration, like this all costs either money or time whether you hire or do it yourself. So before you know that you have a product that people want to use and that will actually convert when they hit your marketing website and that they will stick around for a while until you have a reasonable lifetime value, then you should not scale your marketing, period.
[25:14] The first one is do you actually have a product that people are interested in and that you can communicate pretty quickly because that’s the core of going on marketing on the internet, right? If you have a product that’s so complicated, whether it’s an enterprise product or it’s just such a new idea that putting up a Google Ad or a Facebook Ad or building an info graphic isn’t going to really get people to come in and buy, then you know you have more medium and high tech sales stuff.
[25:37] So the first step is getting a product that people want, the second step is having a website that actually sells it well and that gets a decent conversion rate and gets enough people through the funnel that if you do go out and buy, whether you do the info graphic or paid Ads, you know if you send a bunch of traffic to your site are they actually convert. And then the third thing is plugging that funnel, making sure that people who start your trial actually convert to paid and after they convert to paid they don’t just churn out in the first month or two because then all that money you spend early on is just going to go away.
[26:12] So that’s you know one of the–, there was a startup survey and I wish I could remember the name of it, but it basically said that one of the, if not the most common causes of startup failure, was premature scaling. And what they meant was it was trying to go out on just market, market, market, before they had done those three steps.
[26:33] Mike: It’s interesting because, you know, I am kind of in that position right now with Audit Shark where I don’t necessarily specifically know the product market fit is the yet, I mean I am sure that there is, you know, a way to tweak Audit Shark so that it s the right product and you know it just needs to find the right market for it. In some ways I am having a hard time kind of identifying the terminology that people would use to like search for it. How do you translate what people are thinking into words that they would actually use to go search for this type of product and that’s, you know, that’s the stuff that I am struggling with.
[27:05] Rob: Absolutely.
[27:07] Mike: It takes a little bit longer, I mean I feel like I am going about things a little bit slower than I would like in many ways but at the same time I feel like it’s the right path because I don’t necessarily know all of the fine grain details. So you know I would like to make sure that, you know, once I find that, you know, test it out, make sure that it’s right.
[27:25] Rob: Right, I mean I just ran through this over the last nine months, right, because I had HitTail, I know the old marketing wasn’t working very well. And so I had to figure out what do people call this, is it an analytics package, real time analytics, is it a keyword tool, is it a Long Tail keyword tool, is it Nassio keyword tool, what are the ramifications of this thing, you know, and what are people going to search for, what’s going to make sense in their mind. So that was a lot of—there were some research, I did some competitive research, looked at what Analytics—what people think of when they see Analytics versus Keyword Tool. And then also it was honing copy and I wrote the first version of the website and since then I just tweak and tweak as I find that certain Ads convert well and get a lot of clicks. Then when they come to the website I will start borrowing copy from my Ad and putting it in the website because I know its compelling headline and compelling Ad copy.
[28:18] So it is an ongoing process but you certainly optimize, you kind of optimize up as you do it, right? Your first version is your best guess and then the more you talk to customers the more you get people to come visit your site and the more you do, you know, advertising or even info graphics and blogging. You just learn the verbiage that people used to talk about it and it becomes part of your kind of vocabulary as you speak about it. And then it becomes much easier. If you go back and revisit a page you wrote six month ago, whether it’s the home page or any page of your sales site and you haven’t seen it since, you will realize like oh my gosh, I can’t believe I called it that it’s not that at all, you know, no one called it that. And you will revise it, so definitely a process but the key part of that is starting to talk to customers pretty early.
[29:00] Mike: You know I came across this book on Amazon called Nail it then scale it-The entrepreneurs guide to creating and managing breakthrough innovation. Have you come across this book before?
[29:10] Rob: I haven’t.
[29:10] Mike: Okay. It has 31 reviews and the vast majority of them are five stars.
[29:16] Rob: Oh yeah.
[29:16] Mike: It’s like 28 of them are five stars and I think I am actually going to pick it up and take a look at it. I guess the third piece that I wanted to talk a little about was scaling the business itself and you know how do you go about scaling the business. One of the things I read a while back was this thing called the lily Pad Strategy. The basic idea was to treat your market as if it was a pond and you know you are addressing this little tiny piece of the market and that’s represented kind of by a lily pad. And in order to address the entire market space, what you need to do is you need to jump from your lily pad to an adjacent lily pad. And instead of trying to go to a lily pad that’s clear on the other side of the pond, you want to go to an adjacent one because that is much more reflective of what your product currently looks like versus something that’s on the other side of the pond where their expectations are completely different and the product that you currently have is not going to even remotely resemble something they are looking for.
[30:11] Rob: So does the Lilly pad strategy mean that you should just make small tweaks to your product, is that what it’s saying? I guess I am missing out on what the adjacent pad–.
[30:20] Mike: Oh, so let’s say that you have a product that is like a CRM package for a dental practice and you’ve got this CRM package but it’s specifically for dentists. Well an adjacent market might be a CRM package for like a chiropractor practice, you know, some sort of physical therapy because it’s still in the health care but it doesn’t branch out into things like mental health where there might be other, you know, logistical hurdles in terms of regulations that you need to deal with. Maybe there is laws that deal with how that data is going to be stored that are radically different from the mental health perspective versus physical health.
[31:01] Rob: Right, okay. So this is about growing your business, like growing your market and taking over new adjacent niches.
[31:08] Mike: Yeah, so I thought that, you know, the article it was very interesting about discussing it in terms of these Lilly pads which are market verticals which are right next to each other and some market verticals are going to be really close to each other and then there is other market verticals which are much, much further away. And you start branching out and you start addressing all of these different needs which you start ending up doing, is you essentially morph your product into more of a generalized solution that addresses a much, much larger portion of the market as opposed to the niche product that you started out with.
[31:39] Rob: Right and you see that like with Fog Bugs, right? Fog Bugs originally started as a bug tracker and then it moved into like a project management tool, and then it added like estimating and you could do Adgil development with it and it had built in estimating algorithms, and then they added a Wiki so you could so specs and roll that right in. so it kind of expanded into a larger tool, I think that’s pretty natural.
[32:03] My experience to be honest is with smaller shops like you know one to five person software companies, is that most markets they are going to be in are going to be large enough that there is low hanging fruit that people leave behind and they expand too quickly. I guess that’s what we are talking, premature scaling. It’s if let’s say I am a one person software shop and I have a product like Hit Tail, there is still a lot of the market that I could reach that has never heard of my product and so if I were to right now start going after—I have had suggestions like you should get it localized and globalised, do both. And so get it into other languages and handling other currencies and you should just start going after Western European markets and all this stuff. And it’s like, yeah okay that could work, but to me that’s way too premature to branch out into other markets.
[32:56] Well I think people need to use caution and thinking, well since I have tried some marketing and I am pretty much tapped out I am going to branch into this other market, because that’s that—it’s that downward cycle I would say of constantly thinking you need to build new features when you really you don’t know how to market yet. And you don’t know how to market your app yet and you haven’t optimized that part of it and you are expanding too quickly.
[33:18] Mike: Yeah I mean all of those things are great things to think about, but I think that maybe some of the listeners might question, you know, what are the things that you can look at in your business to figure out whether you have reached the market potential for a product versus, okay I have kind of saturated this piece of the market, I really need to start looking at either adjacent markets or complimentary products or just an entirely different product.
[33:39] Rob: Right. Well I think you can look what traffic sources you are currently harnessing, and I don’t just mean online traffic but you know if you take inbound phone calls or whatever other types of stuff you are working on, I think that a product that people are actually interested in using and that totally clicks with them and you have a high retention rate, I think that a product like that has a much larger market and a longer life cycle than most people have attention for.
[34:07] And so I would ere on the side of if you have an app that people are actually paying for and saying wow this is fantastic and offering to give you testimonials, which I have seen happen, then you need to double down and really look at where is all your traffic coming from and what have you not even touched, because I can almost guarantee you that if we sat down I could point out five areas that you haven’t even thought about, five places you haven’t even thought about marketing.
[34:32] So I would almost say, as a rule, don’t expand out until you are way, way down the line. I feel like you are going to have so much experience and so much knowledge as an entrepreneur you are going to know when the time is right that you should scale it out. If you are hesitant or wondering, my app kind of isn’t really taking off, should I just add more features or go onto other verticals? I think that’s the wrong time to do it. But if you do a full pivot, then that’s one thing, right? If you realize wow this other market really needs it more and I am just going ditch and leave the other one behind, but if you are thinking about expanding and just building a bigger and bigger product, trying to capture a few more crumbs from other verticals, I don’t think you built something that people want.
[35:10] How about scaling like internal business stuff, like if you know in terms of building the product and maintaining it and then supporting the product and then marketing, what are your thoughts on scaling those areas in a business?
[35:23] Mike: You have to find either employees or contractors, consultants even that you can essentially hand those tasks off to that have some sort of a measurable goal that they can measure the results against and they have to have a process to do that measurement. And I think that’s probably the most important thing to figure out whether or not they are making progress or not and make sure that the time lines are short enough such that they can measure those results and figure out whether they are making progress. And if they are not, how can they go backwards a little bit, take a couple of steps back and then maybe come at the problem from a slightly different angle in order to actually move things forward again.
[36:00] Things get to a certain point where you just can’t manage everything yourself, at least not all in your head or, you know, there is only so many hours in a day. You are going to have to have other people that you rely on that you hand some of these things off to.
[36:14] Rob: If you want to go to the next phase then you do, otherwise stay where you are if you are happy. You know and that first phase is that solopreneur, it’s the micropreneur we have talked about over and over and doing everything yourself and that can work for a while. Step two which I do actually think or phase two which I do actually think people should move into, that’s where you are outsourcing and you are outsourcing mostly to task based contractors and we talk a lot about that here in the academy, hiring VAs, hiring developers. But you are still the entrepreneur and the manager and you are handing off just some of the technician aspects of it.
[36:46] And then phase three, this is where you know a lot of people don’t want to go and actually historically you and I have not gone here, but I feel like I am slowly being pulled into this as I want to grow larger and larger, that’s where you do hire that consultant level, the project level person. And like you said whether they are an employee or a contractor it’s kind of irrelevant, it’s can you hand off an entire project to them. And they go handle it and they are just at a higher level and they go based on goals rather than here is the process, you know, that you plug this into. And then past that I think is hiring like full time employees, but I think early on you really need exceptional employees to really push the business forward and then I think when you get to five or ten employees then you need to start having a little bit more process in place because you are just not going to find 20 phenomenal employees.
[37:33] You are going to get some people who are just kind of average and you need to have processes that help the whole thing function and you did get more process oriented. And obviously growing up from there requires even more process and that’s typically the time that a lot of founders sell and leave because it’s not necessarily fun anymore if you like early stage startups. To be honest I typically haven’t stuck around with companies as they have grown past teams of about 15 or 20 developers. That’s when I historically I have just found out that it’s like this is way too much headache, you know. But what’s required for that size business is not a bad thing, it’s just it’s not a good fit for everyone.
[38:06] Mike: Right.
[38:07] [Music]
[38:10] Mike: If you have a question or comment you can call it in to our voice mail number at 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. You can subscribe to this podcast on iTunes by searching for startups or via RSS at startupsfortherestofus.com where you will find a full transcript or each episode. Thanks for listening we’ll see you next time.
Episode 96 | Cold Calling with Robert Graham
Show Notes
Transcript
[00:00] Mike: This is Startups for the Rest of Us: Episode 96.
[00:04] [Music]
[00:11] Mike: 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.
[00:20] Rob: And I’m Rob.
[00:21] Mike: And we’re here to share our experiences to help you avoid the same mistakes we’ve made. How are you doing this week, Rob?
[00:25] Rob: I’m good. I just took four days off for Labor Day weekend. So of course instead of actually taking four days off, I got this bug in my ear over the weekend and rewrote my churn, not algorithm but my report. So I have this one page dashboard I use in HitTail, and has all these numbers lifetime value and I’ve talked about it before. But what is bothering me is that when I got a big spike and new customers my churn 30 days later would spike way up. And the reason is with typical SaaS businesses any type of recurring you have the highest churn in your first 30, 60, 90 days and then it settles down after that.
[00:59] And so if you have an imbalance, you know, people who are in their first 30 days and you have a ton and then you’re overall churn is not a good measure because you need to break it down. And so I was like no problem. I’m just going split that out. It’s the weekend. I had a corona with a lime in it. I’m sitting there writing a little bit some SQL queries. And 5 hours later, no joke, I finally, I just it kept not working the way I want it. Now granted my data model is not the most elegant and normalized data model. I inherited it from the previous owner. So there were some challenges as well as some dirty data. I have to kind of code around in the SQL statement. Don’t include it if that string field includes this underscore. I mean this crazy stuff like. But once it all got done now I’m very happy that I spent almost an entire day over Labor Day weekend to split out my churn into 30, 60, 90 days and beyond. All right. So, how about you? What have you been up to?
[01:52] Mike: I spent the last week or so working pretty hard on AuditShark and I’ve churned out more than 5,000 lines of code over the past week and a half or so. A lot of it was of I’ll say copy and reformat type of code. So basically I have a component that I had built and then I needed to build another component but I also needed to reuse or I wanted them to share the same kind of web services on the backend. So essentially what I did was I wrote a generic version of the component code and all the classes that go along with it.
[02:23] So essentially I had to refactor a lot of the code in order to make it generic enough that I could use it again for other components that I have that are coming down the line a little bit later. So most of it as I said was copy paste. But I had to tweak a lot of it and make sure that the logic still work. And that took a long time to get done but I’m really happy with how it all came out. And as of yesterday, I’ve had the new agent installed on a couple of servers. So that’s been running. I haven’t seen any problem so far.
[02:49] Rob: Well good. Is it true that as of today we are 6 days away from the AuditShark early access?
[02:56] Mike: Yes, it is true.
[02:57] Rob: And so when this goes live it would actually be the day after. So yeah, early access is on September 10th. You’re going to hit that?
[03:05] Mike: I think so. I’m looking at my list of things that still needs to be done on my end for the early access and it says that I’ve got 36.5 hours worth of work left. I went through everything that I have in five bucks and assigned a time estimate to it. And I was pretty conservative for most of my time estimates. So I think that it seems reasonable and the 36.5 hours from today would realistically leave me about a day short. But as I said I was conservative with those times and I think some of them will just take a little bit less time that I’ve estimated. I fully plan on spending some additional time probably this weekend to make sure that everything gets done.
[03:42] I won’t call it a concern but the one thing that I’m not terribly happy about is that I know that some of the content is not going to be done. So I’m not going to be able to launch it with the policies the way that I want them to be from the server. So there’s not going to be enough content that people are [auditing] for on day 1 but that’s also something that’s going to take time anyway. I mean it’s not like I can just launch on day 1. Like if I was doing a vulnerability scan I would launch on day 1 and say okay we’ll I’ve got 3 million vulnerabilities that I’m scanning for. It just doesn’t really work that way.
[04:12] Rob: I think that’s why they called it early access.
[04:13] Mike: Yeah. Yeah. [Laughter]
[04:16] Rob: So August was a good month for HitTail. I was actually worried because internally because July was the best month ever. But there was that $1,000 article order, remember. And I was concerned that I was actually going to decrease, you know, have less revenue but I wound up making it passed that and another several hundred bucks. So I made it to another milestone. And some things in terms of marketing are not working at all but the ones that are working are working quite well. And so it’s driving a lot of new trials, you know, it continues to grow. So it’s been good to be hitting on a few cylinders that I’m trying.
[04:51] Mike: That’s really good to hear and that’s part of why I’m working on AuditShark cause it kind of reposition it as more of a SaaS application more anything else and I kind of made that decision a long time ago. But in talking to some of the webhosts this past couple of weeks, I found that they are more than willing to pay for a product like AuditShark on a subscription basis. The price points that I kind of talk to them about they don’t really seem to blink at down there. Just like a couple thousand a month, that’s no big deal, whatever.
[05:20] Rob: Yeah, I would expect that would be a huge sticking point. Speaking of couple thousand dollars a month, do you have a billing mechanism in place if I sign up?
[05:29] Mike: [Laughter] No and actually I have a contractor who’s working on that right now. And that’s one of those things that, wait, why are giving me crap over this. Aren’t you the one who that waited until three days before you have to bill somebody that…
[05:42] Rob: Indeed, I did. But the funny part is he put it on the outline. And I’m like wow he’s working on it already. This is way ahead of schedule in my mind. Early access you’re like at least minimum of 30 days away from billing somebody. Do you have a 30 day trial? Is that what it is?
[05:57] Mike: Yeah. Well the thing is this is just to get the thing started for them to sign up. It isn’t the actual billing code itself. It’s just you know as part of the initial registration for customers, here enter your billing information, in the backend so that I can bill you later. But I’m not actually building the billing code yet.
[06:15] Rob: Right. That made sense. And that code actually it’s not as simple as it sounds because they do the cool java script thing where you don’t need PCI compliance. But as a result it’s a new unique experience that no one else does. So you really do have to dig in and understand what they’re doing in order to implement it.
[06:32] Mike: Yeah. I really don’t because this contractor has already done it and he did it for altiristraining.com which is why he’s doing it for this product as well.
[06:40] Rob: Awesome.
[06:41] Mike: Definitely. Not only code reuse but contractor reuse.
[06:44] Rob: That’s a best way man. I mean that’s something, every time I talk to someone about outsourcing I say if you find a good whatever developer, virtual assistant, designer any of these things, you keep them around. I have people who work for me for five years. They may be part time. They may be hourly. They maybe halfway across the world but it’s like all the knowledge that they have from my various businesses helps me moving forward cause I don’t have to redefine everything. It’s so valuable to train someone like you’re doing on one or even multiple of your apps cause you’re going to tend to use the same billing systems. You’re going to tend to have the same approaches and it’s great if someone is up to speed. It’s similar to having an employee who is just around and kind of understands the legacy of how you do things.
[07:24] Mike: Uh-huh. The one thing I have found that’s a challenge in working with some of these guys though is when I go to reply to some of their question and stuff that the Google, so when reply to somebody, the height of the box that you type in your message into it’s like 240 or 260 pixels tall. So it makes it difficult to see what somebody else has said in line with what you’re typing which is kind of pain in the neck. So I went out to search for some Chrome extensions that would actually allow you to expand the size of that. I tweeted about it and somebody said, well in Firefox you can just drag it and make it whatever size you want. And I’m like yeah stupid Firefox. But I went out and I found these extensions and I went to install them and you can’t install them anymore. You have to go to Google Chrome web store in order to install them.
[08:13] Rob: Google is doing crazy stuff. I mean I don’t know why they’re doing that. Maybe it’s a security thing but it seems like they’re making things hard on a lot of people with a lot of their choices that they’re making with their tools.
[08:24] Mike: Yeah. I read up on it. There is a way to do it. You can basically drag it on to the extension. Like if you have to download the extension on to your hard drive and then you have to drag it from there onto the extensions page in your web browser and then you can install it. But it’s a manual effort and they said that they’ve done that intentionally to help increase the security of the web browser, which is fine but is in no way shape or form obvious that that’s what you have to do in order to get it installed. They just pop up this little thing that says you can’t install this. You have to go download from the web store instead.
[08:54] Rob: And the trippy thing with Chrome is on most of the websites I visit if there’s a text area it has the draggable thing in the bottom right. But it doesn’t have that when I’m looking at Gmail and Chrome. I wonder if it’s in the Google apps. Did you see if there’s just one an enabler? I guess our listener will let us know if that’s the case.
[09:12] Mike: Yeah. I just remember searching for a quick fix to it and the chrome extension was one of the first things that came up and I’m like that’s a very quick fix. It’s simple. And I went to do it and it just didn’t work. So I thought I mentioned they change their security model on Chrome.
[09:25] Rob: Well this is one of; like I said so many things they’re doing lately that I’m just it’s like making it harder on people in general. They did the penguin update which made it harder on SEO whatever. That’s fine. Although, they did kind of hose me with the badges, they went back. Stuff that used to work doesn’t work. They have shut down their API. They had a search API that all the rank trackers used to use. So if you’re trying to track your rank of keywords you can hit the search API, get the result back, and search for URL. My URL rank this high for this keyword. They shut that down. They’re like deprecated it. So now any rank tracker you use is scraping, screen scraping Google. And they have to have this bank of servers with multiple external IP or Google will shut them down. They have to make it look like they’re a bunch of different computers.
[10:12] Mike: Funny that you mention that because my webserver in Rackspace is hosted on a subnet where they’re doing that. And whenever I try to go to Google and search when I’m on that server if I need to get something, Google pop up this saying that says please confirm that you’re a real person cause we received too many searches from this IP subnet.
[10:31] Rob: Bingo. So they’re doing that. You know they have a reason but it stinks. It makes it crappier for end users or people who used to use the Google API. I actually have an app that used it at one point. Luckily it’s not in production anymore. And then they’re taking keywords out of the searches. You know if you’re looking in your Google analytic account. I mean this is about a year old now. But anytime anyone could log into Google and they do a search and they found your website for a particular Google won’t tell you what that term is anymore. It just says not provided which is that stinks. I have a lot of website where that is very important information for me to know and to know how they’re getting there, and what terms of converting and stuff. The trick is if you pay for clicks, if you pay for AdWords clicks they will tell you the keywords even if someone is logged into Google.
[11:14] Mike: Is that what it is?
[11:15] Rob: Yes, isn’t that crazy. So it’s really a trip to watch these companies. You know the reason, [hubbub] with Twitter and what they’ve done with their API and they’re really hurting developers. And then you look at Facebook and they changes, some of the changes there making with privacy and all that stuff. You look at Google. These companies are like clawing. They’ve gone public. Twitter hasn’t yet but you know they’re on the road to it. And they’re like clawing for this revenue. They really start to do stuff that it isn’t, I don’t know if it’s necessarily in line with the don’t be evil thing anymore.
[11:44] Mike: Well they canned that whole statement a while back they rework some of their pages and somebody noticed that the don’t be evil slogan had basically been removed.
[11:54] Rob: Yeah. I mean so I’m not saying certainly not a conspiracy theory. Oh yes, shocker. Companies are going to, you know, if you’re not paying for the service then you are the product right? You’re not paying for it, Facebook. They obviously are marketing you. The same thing with Twitter and Google. None of this is shocking. I’m not saying Google is the worst thing on the planet. We used a lot of their tools. I like it. But it is a boomer when it impacts our usability, our ability to basically support our businesses as we use their tools. I don’t know. How things turn around but I don’t necessarily see that in the future.
[12:25] Mike: Well I think that they’re just going to continue to do whatever, I mean I don’t expect them to work any different than any other company. And they’re going to do whatever is best for them. You know that’s going to fit in line with their don’t be evil. And the face of that is going to well if it’s bad for us, we can’t do it. If it’s evil for us, it must be evil for the world. So if you’re doing something that negatively affects us then we’re going to shut you down because it hurts us which ultimately turns around and hurts everybody else. Which isn’t necessarily true but you know that’s the line of thinking that I feel like they’re following. There are certain things that they’re doing that I just kind of shake my head.
[13:00] Rob: Right. I mean even the not showing the keyword when someone is logged in that is absolutely impacting too. Like I’m able to, my service is able to provide less value to people because I have less information on how people are finding the websites so I can’t offer as many suggestions.
[13:14] Music
[13:17] Mike: So what are we doing today?
[13:19] Rob: We are talking to Robert Graham about cold calling and not cold calling in a tradition sense. He’s done a lot customer development and vetting business ideas using cold calling, and he’s a software developer. I don’t know, not someone who you would think that would really be drawn to this. So today, Mike and I are going to be having a chat with Robert Graham, native of Austin, Texas. How are things today Robert?
[13:41] Robert: Going pretty well. How are you guys doing?
[13:44] Rob: Doing all right. Robert Graham is a software developer. He’s actually a long time member of the Micropreneur Academy. He’s gone to both Microconfs and he’s just a friend of the show. Robert has kind of carved out this niche probably by mistake, I think he told me once. He’s gotten really good at cold calling and he’s a believer in the customer development, a lean startup approach and so he started doing cold calling for some of the ideas he had. And he wound up writing an eBook on it. The eBook’s selling well and you know I’m just fascinated by this concept because it’s never something that I’ve done to great scale. And Robert has done it so many times that he’s become kind of startup expert on it. So welcome to the show Robert and if you could of kind of just give us a little more background about kind of who you are, what you do and how you fell into cold calling.
[14:32] Robert: Okay. Sure. I kind of came to this totally by accident like you said. I’ve been a software developer forever. You know like in 8th grade I was writing basic on my calculator to solve quadratic equation formulas in class. I guess I got into a niche from my background I grew up in southeast Texas, hunting and fishing. My dad and pretty much all the red blooded males that I grew up with all did. I knew a bunch of guys that had land or big hunters so I jumped in at some point whenever I made some of my first product to wildlife management. It turned out that they were not as online as I had hoped.
[15:12] And so it was kind of my one last ditch ways to connect I tired cold calling. And really just kind of stumble into some success after calling a lot of people with phone calls that maybe I get to talk to someone but it wasn’t taking me anywhere. And other one where I know on the first couple of calls if I got a voicemail prompt I was happy like it was a success. So I didn’t start in a place where I was very good in this or even excited to try but eventually after a little bit of success it went to the other direction for me.
[15:46] Rob: Right. And have you used cold calling both to vet ideas like in the customer development sense as well as to make sales or what you used them for in the past?
[15:56] Robert: So this gets a little under the semantics of what you mean by cold calling. I don’t know if I’ve ever sold something directly over the phone where the person I’m calling I’ve never spoken with before, but I’ve definitely used cold calling to starts relationships that ended in sales.
[16:11] Rob: Got it. Okay. As well as to vet product idea, is that right? To figure out if someone would be willing to pay for a product and you try to figure out if you’re going to build it at all?
[16:22] Robert: Yeah. I mean that’s probably the no. 1 thing I’ve done with cold calling. And I think the two things are tied up together if I were kind of starting over today how I would approach it.
[16:32] Rob: Right. Mike you’ve also done cold calling. What capacity did you do it in?
[16:35] Mike: That’s from Moon River Consulting and it was back in probably end of 2007 and early 2008 and when I tried to scale up the company. Essentially, I was trying to generate leads for some of the products that we were selling and doing consulting on. They were primarily Altiris and Symantec products. And essentially what we’re doing is we would get this list, they called them unqualified or semi-qualified leads from Symantec.
[17:02] So whenever an enterprise customer download something from them, you give them their email address and they will add it in to their database and try and match it up with any phone numbers or names that they might have. And then they’ll take those leads that if they don’t think that they are worth their own sales rep’s time to follow up on they’ll basically divvy them up and send them out to their partners. So what I was doing was going through this list of leads and trying to talk to people to figure out what it is that they were looking for and whether or not there is anything that we can help them with.
[17:35] Rob: Got it. So you really were doing then outbound cold calling for sales.
[17:40] Mike: Yeah.
[17:41] Rob: Okay. So that’s cool. That’s good to know. So it sounds like we have a variety of experience here. Robert, you wrote an eBook on this. What’s the URL?
[17:49] Robert: It’s www.coldcallingbook.net.
[17:52] Rob: Okay. So talked to me about how cold calling and cold emailing maybe complement things like contact creation and list building and traffic generation. Like why would someone do cold calling in addition to those other things?
[18:06] Robert: Right. So I think the biggest answer is because they can be extremely complementary. One of the things that you need to do as part of any contact creation strategy is have good sources for that content and good places to continue getting new ideas. And I think whether part of say an interview series with some of your customers or your potential customers where you could highlight themselves, their facilities, how they do business, best practices. You could invent awards that you give out and do all kind of different things where you have readymade content for the web.
[18:40] I know the award I did I kind of stole from Rand Fishkin who talked a lot about it. He said there’s one like Seattle startups or top 100 or something page that, you know, it’s just someone’s complete invention. And it doesn’t even matter how the ranking get generated or why, but everyone that he knows and had seen visit the page cause they want to see the rank. And I think that’s true you know everybody experience with post and ranking across all kinds of different things.
[19:10] So it’s a good way to have content to put out there. It’s a good way to have goodwill with your customers and also start relationships with new people. And that means a lot of different things. But cold calling if you’re mostly online or you’re mostly in magazines or wherever your main channels are, if you’re going to cold call you can really tap into network that you’re not a part of. And even a small foot hold in a new network can have an exponential effect once you make some people there really happy.
[19:42] Rob: I see. So you’re saying you use the cold calling to build a relationship, to get into a network that you otherwise wouldn’t be able to.
[19:48] Robert: Right.
[19:49] Rob: I’m curious Mike. I’m curious to hear yours sense of like back in the day when you were doing cold calling, why were you doing cold calling instead of other types of whether it was like online marketing or other approaches.
[20:02] Mike: I started doing cold calling more in part because it was forced on me. Their previous relationship that had been in place between Altiris and Symantec and their partners was that you would work very hand in hand with the sales reps. And then Symantec started pulling in a lot of leads they were getting and started bringing in partners a lot less. And basically said, well instead of us giving you leads you’re going to have to find your own. And they ended up torpedoing most of their partner network at one point because of that.
[20:33] And in about a year they shifted their strategy and kind of came back around on it, but by then they’d already killed about half of their partners in that particular space. So for me, it was more of I’d say a force direction than something I said like oh this seems like a great idea. And one of the things that I’ve found was that when you actually get in and you start talking to somebody especially when it comes to enterprise sale they expect you to be there.
[20:56 ] And they expect somebody, they expect to be able to put a face of a name is really what it comes down to. And doing any sort of inbound marketing efforts those tend to yield a lot less because at the enterprise scale these customers are used to having sales reps kind of walk in the door and introduce themselves and say here this is what I’ve got for you and this is how it can solve problem X, Y and Z.
[21:19] Rob: Right. Okay. We’re really talking about two different kinds of cold calling here. Mike has done mostly or entirely outbound sales cold calling. What we would traditionally think of as that kind of stuff. And Robert has done mostly costumer development cold calling which is calling people to figure out if they would buy an app before he builds it and then often like he said that does turn into a relationship later on that he can then go make a sale because the person has probably followed his development for several months while he got the product going.
[21:48] So we’re going to keep those two things. So I think my first question is as someone who is obviously much more of an online marketer and I bet there are a lot of folks listening to the podcast who feel the same way. There is this aversion to cold calling. In your book Robert you say how to get over the fear. So you use the word fear or you know a lack of desire to do it. What are some strategies and some thoughts on how you’ve done it, how you recommend people do it and then Mike we’ll toast it over to you when he’s done.
[22:14] Robert: You’re specifically asking about overcoming fear?
[22:17] Rob: Yeah.
[22:18] Robert: Yeah. So overcoming fear is a big thing for a lot of people with cold calling. I mean I kind of look at it a little bit in the rear view mirror which I think is both really good for giving advice and really bad for giving advice. Sometimes hindsight is 20/20 but it’s not quite right. I think the really bad cliché to answer that everyone will give is just do it and it will get better. You know practice makes perfect. The better answer is we need to figure out exactly what it is about cold calling that bothers you.
[22:46] Are you unconvinced that it will help your business? Are you scared of rejection? Are you scared of talking to people you don’t know? Are you scared do humiliation? Are you scared your product isn’t good enough? You need to really think about and isolate those factors and then kind of come up with things that you can do whether it’s role playing friends, calling old friends out of the blue, maybe some of that pickup artist techniques that see where people try to get rejected in the mall by people they don’t know.
[23:17] There are lots of different things that you can try to experiment with to get over some of those fear and then I mean eventually you just have to take the final step and make some calls. And know that the worst case on a bad cold call is that you get rejected, maybe someone yells at you. Honestly in all the cold calls I’ve done, the worst I can say that I’ve had is someone say that they weren’t interested in a less than friendly way.
[23:43] Rob: Right which is not that bad. So when you were vetting say I know you ran kind of a tracking service for a whitetail deer and did you make calls before that to find out if people were interested or you build it first and then call.
[23:59] Robert: That one actually, there were two products in that space and the first one I build before I called anyone and the second one I build after I had done some customer development. And each of them kind of had varied level of success and it’s a long story. But that’s the answer.
[24:15] Rob: Got it. And so if someone listens to this and they’re thinking I don’t have a whitetail deer startup. I have a startup where people are online. It’s an analytic package or something dealing with social media. I know my audience is online and I know that I can do some SEO or Pay Per Click or get on Hacker News or TechCrunch or any of these things, build a landing page, get an email address and then email some people and starts some conversations. In your opinion, do you think they should consider cold calling and what do you think the benefits would be over the approach I’ve just mentioned.
[24:45] Robert: I think it does depend a little bit on your market. I think you need to gauge what people’s expectations would be and if receiving a cold call for that type of business would be an absolute shock then you probably don’t need to engage in cold calling. But there are a lot of businesses that while they have an online component or they can get significant online traffic, it’s also a traditional B2B scenario where it’s definitely in balance to make calls to people and see what they would be interested in doing.
[25:16] I know a lot of different things come to mind. I would say I was in wildlife management. It’s a big agriculture industry. I know a couple other people writing software in that space that are making full time livings and cold calling is kind of a part of it for them. I would say proposals for designers is another place where it seems like a lot of those companies wouldn’t be totally out of balance to give a call. It may not be the fastest way to scale in every context, but I think it’s a great way to jumpstart and it’s a great way to jumpstart sort of new areas that you’re not well established.
[25:49] Rob: Right. So, Mike back to you. I mentioned earlier there is this fear or aversion to cold calling. You obviously did it. How did you get over that?
[25:56] Mike: It took a while to be perfectly honest. And I came to the realization, thankfully it was kind of early on, but it probably took a week or two of calls before I kind of got over it. But it was exactly the fear of calling. And I couldn’t quite figure out why it was that I was afraid to call. I finally ended up narrowing it down to the fact that I didn’t want to make the mistakes in the calls that I was making because I didn’t want to get rejected. And it wasn’t so much getting rejected it was the fear of losing you know whatever sales I was trying to pursue. It’s like if I say the wrong thing, this person will hang up on me and there’s a $30,000 sales that I just lost because I said the wrong thing.
[26:34] And that’s one of those risk that you’re just going to have to take. And you have to learn what works and what doesn’t. So what I ended up doing was I actually invested in a product called [AX]. And what I would do is I would take detailed notes about who I was calling, when I was calling them, and when I got through exactly what I was saying to them. And that I would essentially cross reference what I was talking to each person about with the other person I was talking to about hat particular topic. I also seem to find that there were certain times of the day that made it easier to get through to people.
[27:06] So first thing in the morning, at the very end of the day was usually a good time to call. Sometimes in the middle of the morning you know 10 a.m., 11 a.m. wasn’t so good. You tend to interrupt people and run into a lot of issues there. It really just took a lot of practice. And getting over the fear of I’m going to lose something by calling this person or I’m not ever going to be able to talk to this person again. And usually I can’t think of anybody who I called and they were just rude upfront but it was definitely a learning experience throughout the course of making all those calls.
[27:37] Rob: Yeah. Sure. So what was your worst? Was your worst response also something like I’m not interested in a rude voice?
[27:43] Mike: Yeah. I’d say that was probably. I mean I never got profanity. I mean I’ve gotten profanity from people in person consulting before, never over the phone. Yeah. I never got anybody who just swore at me and just scream don’t ever call me again. It was just look I’m really not interested.
[28:01] Rob: Yeah cause it’s different then the cold calling I think that we as consumers think are the people who are calling at like 6 p.m. right at dinner time and they’re to sell you long distance.
[28:12] Mike: Yeah.
[28:13] Rob: At least targeted. You know both what Robert has done and what you’ve done is at least like I work for this company, we provide this service. That’s a cost of business like that. I mean I’ve been in that position where I get inbound calls or I was managing teams at the development houses and people want to sell you tools or they want to sell you services or whatever. And yeah I was always respectful and I feel like most people are going to be.
[28:34] So it really does. I do hear that from of you that it almost sounds like this fear of doing cold calling is probably overrated. You’re not likely to get people yelling at you. It might also be the time thing. Like Robert said maybe people just don’t think it’s going to work or don’t think it’s going to be time well spent. Now, Mike you did cold calling to make sales, did you find it was a reasonable use of time or I mean did it generate sales or did you eventually abandon it and just kind of say this isn’t working right now in this niche.
[29:05] Mike: No, I did. I actually landed one of my largest sales by calling people. One of them was $169,000 sale. So it was not small by any means. I mean it was definitely worth in that regard but the problem was that and it sort of came back to the fear of calling people. I was afraid to make mistakes and part of it was that was one of the early experiences that I had with cold calling was I made this really really great sale but it just came out of the left field nobody in Symantec or Altiris expected it. It just kind of landed in my lap.
[29:39] So I was constantly afraid of making mistakes going forward. And looking back on it now I realized that most of entrepreneurs who are doing online marketing are doing the exact type of thing that I was doing then it’s just in a different mental category. When you drive people to your website, you only expect to convert like 2 or 3 or 4 out of a 100. And that’s kind of the status quote. That’s no big deal.
[30:07] But the same thing, you know, not those exact same numbers but there’s going to be similar ratios of some kind where there is X number of people that you call out of a hundred that are not going to respond to what you say. And I think the fear is for me it really derived from okay well how many of these calls do I have to make before I get to one that is actually going to yield any sort of actionable thing that I can go after.
[30:28] Rob: Right. And do you have a rule of thumb at all base on your experience?
[30:31] Mike: Specifically for what?
[30:32] Rob: For what you’re doing like outbound. It was a cold list to you. You didn’t have relationship it was at least a targeted list. It wasn’t very targeted? [Laughter]
[30:40] Mike: No. I learned after the fact that it was much less targeted than I would have thought.
[30:46] Rob: So with that in mind, with that description do you remember any idea like how many calls you had to make in order to get to the next step.
[30:53] Mike: It really depended on how targeted the person was that I talked to. I was pitching a specific type of products. If they happened to submit an email for a webcast that they may or may not have actually been interested in, they maybe just saw the headline then it kind of got categorized in a specific way and Symantec just said this person is in this bucket and go ahead and call them and see if they’re interested.
[31:14] And a lot of times it just wasn’t well qualified traffic. I have very much related to the same type thing like get it on the front page on TechCrunch and getting a 100,000 people to your website but how many of those people are targeted and actually interested in what it is you have on your website.
[31:29] Rob: Right. So there’s a lot of people walking up at a conference to your booth and saying I want to enter the iPad competition or the iPad contest to win it. So they scan your badge and it got on the list. But you don’t really want the product. You want the iPad.
[31:40] Mike: Yup.
[31:42] Robert: Yeah. I was going to piggyback what Michael was saying about conversion rate and talking about seeing that in a different way. I think it’s more personal when you’re actually making the calls as to whether or not you feel like you lost the sale in comparison to you get visitors to your website all the time that don’t convert and you don’t give it a second thought. But one big difference between having people hit a landing page and talking to people is something I brought up you can take notes and get feedback instantly on every person you talk to. And so you can A/B test and change what you’re doing with every call.
[32:18] And that doesn’t mean that you’re going to get your conversion rates to skyrocket because you always are still fighting, you’re still calling someone relatively cold and you may not be hitting them at the right time. But you can do a lot of moving toward how the costumers think and what kind of language they use really fast. Where if you even add a survey to a landing page that really hits your conversion rate a little bit because you have another call to action on a page. You have more things going on. It detracts from what you want people to do. So I think cold calling can give you a big leg up there and you can get a lot of feedback really fast.
[32:54] Rob: Right. You get a lot more of the why a lot faster than if you have a thousand people hit your site. You can tell they’re not converting but you don’t know why.
[33:02] Robert: Right.
[33:03] Rob: That make sense. Do you have any comments or thoughts on that? I mean I realize it was kind of a broad question but it was like what are the approximate conversion rates given your experience of calling to doing some kind of customer development calling for an idea. Like is it 1 in 20 calls someone actually talks to you or is more than that?
[33:23] Robert: No. For me, it was a lot higher than that. I usually try to have really targeted list that I’m going after. I do a lot of different things to target the list. You know picking people that are entrepreneurs. Making sure that I’m talking to someone who can make something of a purchasing decision, someone that has a stake in whatever it is that I’m trying to do the problem that I’m trying to solve, businesses that are close enough that I do something face to face if that’s an option.
[33:48] So all those things like just bringing you closer to the target and they realize kind of instantly as you get them talking. My percentage for doing cold calling for customer development are close to like 25% or 50% depending on the market and how good I could come up with the targeted list, how targeted the list was, and exactly how sure I was of what the product was too. That made a difference.
[34:12] Rob: All right. That make sense. I mean Mike was trying to sell something, right. People know that when you call. Whereas you as I recall had a good opener where it was like I’m a local entrepreneur and I’m thinking about building some software. Could you help, I mean it wasn’t like I’m selling you something. It’s totally different opening.
[34:31] Robert: Yeah. Well actually the opening that was most successful I wrote about close to about 100% conversion rate and that was true that happened for several weeks for me where I was calling people and I basically pitching to say hey I’m going to come out to your facility, do a tour, take some pictures, talk to you about how you handle X, Y and Z. It was people that breed whitetail deer like kind of a farm setup. And every one of them was like totally into me coming out and doing that. I mean it was free publicity for them. None of them know a lot about online marketing but they were all excited about having more of it done for them.
[35:03] Rob: Right. Cause you were going to interview them and do a little bit of case study or talk about their thing and publish it on your blog.
[35:08] Robert: I had a blog that was inside of the whitetail management niche. I mean it was really a win for everybody. And that was what got me super high conversion rate. But I’d also done calls where I don’t really have a value pitch. I’m just kind of threading on people’s willingness to help out someone getting things started. Even then the conversion rates are a lot higher.
[35:32] My brother-in-law is in heavy equipment sales and rental and I have a good friend that did door to door an commercial security system sales and they have times where they have to go to the office and make a 100 or 200 calls a day and I know their conversion rates are closer to maybe 5%. And a lot of times especially in the like residential security system space the 5% is he gets to convert 5% to let him show up and do a presentation.
[36:00] Rob: Yup. It’s next steps.
[36:02] Mike: I know some people who work in the high tech sales area for basically doing cold calling for enterprise sales. And they routinely make at least 50 to 60 calls a day and they might get 2 or 3 a week that they are able to basically hand over to sales reps to go after for the next step. I mean it’s not unusual to make that many calls in a day and have to continue making that many calls and not just getting very many that they’re able to turnover. In the past couple of weeks I’ve been doing cold calling or warm calling for AuditShark and as Robert said the conversion rate of that type of question or that type of call is significantly higher. I mean I haven’t had anybody in the past 2 or 3 weeks that I try to talk to say no I don’t have time, I don’t want to talk to you.
[36:52] Rob: Right and I think we should be clear here. The reason we’re talking about cold calling again is it obviously has a place in customer development, a place before you have a product is going to be super helpful for touching base with people who aren’t necessarily online and they’re a huge amount of niches that are not online. And even if they are online, they’re still instant way to get better feedback, to [iterate] quicker. There’s some value there. I don’t think any of us are espousing, you know, leaving online marketing behind and going out and having me stop my SEO and HitTail and just cold calling a 100x a day. That doesn’t make sense.
[37:24] We have these online marketing skills for a reason that we can bring a lot of people to our site and convert them. It’s kind of like one more approach that you can try out and obviously it’s especially good for some very specific instances. And I think I haven’t done out on cold calling, I have done some very specific emails to some companies that I know could really use some of my products. And it’s not like I get this list, a buy a list. It’s nothing like that. It’s I would pick out a single person and hand send them an email and be like hey, it’s almost like you can call cold email. But of course unsolicited cold email and spam in the US. But it’s like a personal note for me and it’s commenting on how I think this product can help them.
[38:06] So I can totally see the value of this outbound approach just what cold calling and cold emailing you know postcards and all that kind of stuff really is more of an outbound approach that we have been talking about. But there’s definitely some value there. It opens up a new market. So Robert earlier you mentioned that your conversion rate often depended on how well you were able to generate a list, like to get the call list. If I were to generate a call list I would go to Google and search for companies. I would have my VA do it then I would just put them in spreadsheet and kind of order it by some criteria. Is that how you get it or you have other recommendations.
[38:43] Robert: Yes. I had a professor in college that used to always say the answer is it depends especially when you ask marketing question the answer is pretty much always it depends. But that it’s usually a good approach to start with. There are some other places to get information about industries. It depends on what kind of industry you’re going after. If you’re going after some of the older more established industries they’re usually associations, state registry, big companies that basically just sell list like Hoovers or there’s half a dozen others that are pretty good sources of information and most of which you can get for free in different ways.
[39:24] And starting with googling is a pretty good way to start. It’s especially effective if you use a VA but you have to be a little bit careful. It depends on the types of calls you want to make and the volume of calls you want to make. I think that’s a great way to get 30 or 40 people to talk to. But if you’re really going to call 200 or sustain calling 20 or 30 a week or something then it’s going to breakdown fairly quickly.
[39:51] Rob: Right. You’re just going to run out of prospects. Let’s say someone is listening to this and they’re thinking about writing software for electrical contractors to help them with some part of their business. And they’re thinking obviously they’re not exactly target online audience that they can really drive them to a landing page and get emails. How many people do you think if they put together a list from Google of 40 or 50 local electrical contractors, do you think that’s enough if they called all of them to vet this idea or not, to kind of have an idea of whether their software idea has legs.
[40:30] Robert: In my experience, that’s enough people to talk to. I think if you can actually talk to 20 or 25 people you get a fairly clear idea. Some people will quote higher number, some people will quote lower numbers, some people will change it up and say you need 5 sales or 10 sales. The best advice I got on that front was Jason Collin picked up a tweet of mine asking a similar question a while back and he said you can stop whenever you don’t learn anything anymore. And so from that perspective you really want just to find the place where I called 20 or I’ve called 30 or 40 and I’m not really getting new things from what these people are saying. Either there’s not something I can solve here. There’s not some inconsistent or a lot of this people would pay for this.
[41:17] Rob: Got it. And here’s the big question and I know the answer is it depends. But I’m wondering do you mention price?
[41:26] Robert: You may or may not mention price in your initial call. Sometimes I used calls especially with local people in the early stages is a way to setup a face to face but you definitely mentioned price at some point in the process. It’s got to be part of you deciding if this is a viable business or not. Cause it doesn’t matter if you have something for electrical contractors that all of them want to buy but all of them want to buy it for $9 a month and you need to be $50 a month then you still have nothing.
[41:56] Rob: Right. All right well, you know, Robert I appreciate you coming on the show. Your eBook which is at coldcallingbook.net is I know it has other stuff. It talks about writing script, the importance of taking note, dealing with gatekeepers and I think you have an appendix for sample notes that you took and sample scripts and all that stuff. If someone was interested in finding out more and going deeper into this topic they can go to coldcallingbook.net. But if they want to catch up with you I know you have a blog or you talk about this kind of stuff as well as process to getting your own startup off the ground. Where would they find you?
[42:28] Robert: The best place is whitetailsoftware.com, that’s the blog.
[42:32] Rob: Very cool. Well thanks again for coming in the show and we’ll see you at Microconf 2013.
[42:37] Robert: Thanks a lot guys.
[42:38] Music
[42:41] Rob: If you have a question or comment, you can call it in to our voicemail number at 888-801-9690 or as Mike would say 9960 cause Mike transposed the numbers last week, or you can e-mail us at questions@startupsfortherestofus.com. Our theme music is an excerpt from “We’re Outta Control” by MoOt, used under Creative Commons. You can subscribe to this podcast in iTunes by searching for Startups or via RSS at StartupsfortheRestofUs.com where you’ll also find a transcript of each episode. Thanks for listening. We’ll see you next time.
[43:10] Mike: You know it’s not funny when you have to explain the joke.
[43:13] [Laughter]
Episode 95 | When Freemium Fails, 36 Rules of Social Media, Negotiating on oDesk and More…
Show Notes
Transcript
[00:00] Rob: This is Startups for the Rest of Us: Episode 95.
[00:04] [Music]
[00:11] Rob: 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.
[00:22] Mike: And I’m Mike
[00:23] Rob: And we’re here to share our experiences to help you avoid the same mistakes we’ve made. What’s going on this week, Mike?
[00:29] Mike: I’ve talked about my Altiris Training site for the last couple of weeks and things are starting to, it looks like some of my trials are actually starting to convert now so I had my second trial convert yesterday.
[00:38] Rob: Awesome.
[00:39] Mike: I’m only up to I think four or five customers but they’re recurring customers. It’s not like it’s a small price point. So I think the minimum price at this point is $100. So the first two people…
[00:51] Rob: A hundred dollars a month?
[00:52] Mike: Yeah, a hundred dollars a month. So I’ve got I think four or five people on there so far. The fifth one actually paid me for six months upfront. Needless to say my first month’s conversion is pretty nice. I mean I haven’t had many people, actually I haven’t had anybody cancel yet so.
[01:09] Rob: So what do you think this says. I brought this up like casually one time and you and I kind of laugh about it. But it was like you’ve been working on AuditShark for a couple of years and your deadline is actually coming up about 12 days out from kind of your beta.
[01:22] Mike: Uh-huh.
[01:22] Rob: But what does it say like Altiris Training you came up with the idea maybe two or three months ago or that’s the first time you mentioned it to me and then you crank it out and you build it fast, outsource and stuff. And you just got it going. What are thoughts kind of the difference between these two and if you were to do AuditShark again could you do it differently or is this just a completely different product?
[01:42] Mike: Yeah. I think it’s a completely different product. I mean don’t get me wrong. The website itself took some time. I handed it off to somebody else and said here implement this. The reality is that it didn’t take a whole heck of a lot to put together. I mean the whole thing was put together in — I’m trying to think how much I actually paid for the website development and was probably 60-70 hours’ worth of work maybe 80 tops. There’s like $10 or $11 an hour or something like that. So it cost me around $800 for that. And then I got a $100 a month Wistia subscription and then everything is going through stripe and then beyond that it’s just a matter of cranking on the videos. So in terms of my time investment, I don’t think it’s very high. But also the fact is that it’s not a high traffic site. I mean it’s very very specialized, very niche and I don’t expect a lot of traffic.
[02:27] Rob: Right. So this is much more along the lines of like the true blue micropreneur approach where it’s a very small niche and it won’t get a ton of traffic but it’s easy to out market the competition. It’s not that you don’t have any but they really don’t know what they’re doing. And if you go to your competitor’s website it’s just all over the place. You go to yours and actually it looks like a reasonable thing that you take a tour or buy. I mean it’s the basic sales funnel. Whereas AuditShark is a bigger, like a bigger idea, a bigger endeavor, all that stuff, bigger market as well, bigger potential.
[02:58] Mike: Right. I mean the other thing that, I mean part of the reason why I even bothered to go down the road and try to launch altiristraining.com was because I was looking for a way to vet a developer and I needed a project to put them on. So I basically went out and looked for somebody, hired them, put them on this project and it worked out really well. So I actually in a way promoted him into doing stuff for AuditShark. So at this point, you know, he’s got a bunch of task. They’re lined up to start working on and stuff for AuditShark. But I actually let go of somebody last week who was working on AuditShark, who I hired directly onto it which in retrospect was probably not the greatest idea in the world. But the same kind of thing happen previously with somebody that I had hired and had them working on some stuff and then essentially promoted him onto AuditShark and that person worked out fine. It’s just the person who was hired directly into it, you know, just didn’t work out very well.
[03:50] Rob: Right. So have you considered focusing on Altiris Training and trying to grow it, grow it big to get to the level you want it to or do you view as a, I won’t say a side project but a project that maybe will take a backseat to AuditShark long term.
[04:03] Mike: No. I think it’s definitely a take a backseat. I don’t have any preconceived notions that it’s going to grow into some giant thing. I mean I’ve talked to a lot of people who are in the Altiris world and things are changing dramatically. Symantec just recently had their CEO leave. So things are kind of up in the air in terms of what Symantec is doing and there’s a lot of question marks over what the future of Altiris actually is.
[04:28] So people are not necessarily jumping ship to other project but they’re certainly giving other products a serious look. And I do know a consultant out there who is based in Australia who he has had problems finding work in finding doing Altiris work because their costumer based is leaving and they are going to other products. So he would like to see Altiris Training succeed because that’s one of the people’s main complaints is that there’s not enough training out there or not enough quality training, but at the same time I don’t know is that my future is there either. It’s not something I really want to upkeep.
[0:05:01] I mean the way I see it is what I’ll probably do is I’ll probably grow it kind of on the side and for the time being just to kind of squeak out whatever revenue I can. And then as I build it up if I get to a point where it becomes any sort of a distraction at all, I’ll look to unload it to one of the existing Altiris partners and just say you can have all this. You can have the customerbase and everything else that goes with it.
[05:21] Rob: You watch it’s going to get huge. It is going to totally outstrip AuditShark it’s going to be like Doh!
[05:27] Mike: Well I mean if that happens then I can hang on to it but I just don’t see that in its future. The interesting thing is that almost with no marketing I ended up landing on the front page of this website called alteregos.com and they are, I’ll call them a third party community site for Altiris and Altiris administrator. I don’t know who did this or why but you go to their website and bam right there on the front is you know a link to my training site.
[06:02] Rob: I see that. That’s crazy.
[06:03] Mike: I don’t know how that happens. I don’t even know who run the site. I mean that right there basically double my traffic.
[06:09] Rob: Geez. Awesome. And this is from June and it continues to send traffic for you. What a fortuitous little event there.
[06:16] Mike: Yeah. So I’ve been getting inquiries here and there from different people and I’ll be reselling some other people’s instructor based training on my website. I actually have that on my development server right now. I haven’t fully tested it yet or check to make sure that I can accept payments for that. But I bundled it with another partner who they’re going to give a three month subscription of my site to everybody who goes through their instructor based classes and for that they’re going to give me $250 for each person.
[06:45] Rob: I’ll tell you what, Mike. There are some potential here. It sounds like people are coming out of the woodwork to promote you and tie in with you. I mean that’s a sign that you really met an unmet need with this thing.
[06:56] Mike: I know I’ve met an unmet need it’s just it’s a matter of my interest level in it.
[07:01] Rob: Yeah.
[07:02] Mike: That’s one of those things where it’s, you know, you have to look at these things and when you’re trying to identify a business opportunity it’s like you hope for something that you know is not only profitable but you’re going to enjoy. And this isn’t something I particularly enjoy but it makes money. So you know who am I to complain about it.
[07:19] Rob: I hope to hear more about it as things kind of unfold with it. It sounds like it’s on an upward trajectory already.
[07:25] Mike: Speaking of fortuitous media what’s with this comment in the Wall Street Journal.
[07:32] Rob: Indeed. So the Wall Street Journal contacted me. A couple of reporters contacted me and ask me about freemium. They wrote up HitTail and it was like a three or four paragraph mention and its inbetween, like Dropbox, Evernote, iPhone Apps company I’ve never heard of and it’s like a games company and then HitTail and I think one other. So I’m among pretty good company. But the funny thing is two things. One, they say my name, Fresno, California all that stuff. But right away they misquote. They say he is struggling to make freemium work for HitTail. And I didn’t say that. I just commented that there was a free plan when I purchased HitTail and then I shut it down. But they kind of inserted the word struggling and I’m like huh? I didn’t. I mean I shut the free plan down within a month or two of buying it. I’m now actually struggling to make it work. I’m not even trying to do freemium.
[08:20] Mike: [Laughter]
[08:21] Rob: And then the other thing is they mentioned all the companies. They don’t hyperlink out at all. I think the only two hyperlinks are two if they mentioned a public company’s name and they link to the Wall Street Journal’s stock page for that company that shows their quote and everything. But all the other people including HitTail zero links which obviously the hyperlinks would be worth a lot of authority from them but second to that I would love to have seen how much traffic this drove. Because I can’t tell because if people came to the site they either typed in the name directly or they did a Google search for the company name.
[08:51] Mike: Uh-huh.
[08:52] Rob: So I really don’t know. I would guess it didn’t drive that much. I can kind of see a spike in trials and it was so-so. But it wasn’t like some amazing boost in trials but I wouldn’t expect that from an article like this. But it was cool. They did get my favorite quote in there. I likened freemium to samurai sword. I said if you’re a master then you can do great things with it. But unless you’re a master you can cut your arm off. And the reporter is like that’s great. I’m going to get that in there.
[09:17] Mike: Yeah. I really like that quote.
[09:20] Rob: So this appeared in the print Wall Street Journal paper print edition which is pretty crazy.
[09:22] Mike: Wow. Did you get a copy of that?
[09:24] Rob: I didn’t.
[09:25] Mike: [Laughter]
[09:28] Rob: I don’t know. What would I do with a copy of the newspaper? I could start a fire with it.
[09:31] Mike: I would probably have taken a picture of it and said yeah I got I got in Wall Street Journal but that’s about it.
[09:35] Rob: Yeah. How about you, what else is going on?
[09:36] Mike: This week and next week I’ll be working on AuditShark almost exclusively. Aside from a couple of videos I have to build cause people have actually started requesting something for the Altiris Training site but, let’s see here. What was it? Last night I had a conference call with a prospective partner and they’re going to start tapping into their existing costumer based and trying to identify at least a couple of people who we can possibly install AuditShark on for the early release.
[10:04] And then in addition to that I had two conference calls earlier today. One was with a hosting company and then the other one was with a managed services provider. And I think both calls went really well. I definitely learned some things but essentially what I did was I called them up and I had a list of question that I wanted to run through and ask them all my questions and most of them I didn’t really learn a lot from them, but there were certain key pieces that I did learn that I found out that some of my assumptions were just wrong or a little bit off in terms of how they run their business and what sort of things they’re looking for and how they do budgeting.
[10:38] And what I found really interesting was that they were more than happy to talk specific products and specific numbers of what they were paying for some of those other products. So that was definitely intriguing from I’ll say a positioning standpoint.
[10:52] Rob: Absolutely. It’s almost like you’re able to research both your customers and your competitors at the same time. That’s really handy.
[10:59] Mike: Uh-huh. I got another scheduled for Thursday and tomorrow I’ll mostly be working on probably code and I got two developers who are working right now on AuditShark. And I’ve got a documentation writer who is going to be starting probably later this week. I promised her I put together a screencast later today but I just haven’t had time to do it yet. Somebody is going to be building some policies for me later this week as well. I have to give them over the desktop client that allows them to actually build policies but he’s going to be working on that. And he’s got a lot of experience with this kind of things so I’m not too concern about him being able to put those thing together.
[11:34] Rob: Very good. Yeah. HitTail is doing well. I’m continuing with the paid acquisition I’d talked about. No real news there except for I hit the point where I have more trials in my cue with 38 trials going on at any time since I’ve owned it. I would guess more paid trials at any time since HitTail was started six years ago. Things are looking up. I’m hoping to be able to continue this growth. It’s a fairly scalable traffic source. I’m excited to see what happens.
[1:59] And this month did in fact it looks like it’s going to be on pace to match last month and last month I had a $1,000 article order that was just a one off thing. So I’m pretty please with, cause I didn’t start the advertising until well after that. And so none of that traffic has converted yet and it’s still going to grow to keep up with that pace, you know, the $1000 in a month so.
[12:23] Mike: Very cool.
[12:24] Rob: Yeah. I’m pretty pleased with it. I’m trying not to, you know, I’m always cautious optimistic with this stuff right. I never want to, there’s so many things can happen. I’ve had a bunch of trials in the cue and my conversion rate just plummets because the trials were basically from traffic sources that weren’t actually interested in buying. And so making projection is so difficult but at the same time it’s nice to have more than I’ve ever had in the cue and with the possibility with being able to continue that moving forward.
[12:50] Mike: Now have you turned off those advertising avenues that were not working out nearly as well. I think you’ve said that there were two or three that were working really well between 7 and 10 that weren’t working out so well. Have you turned off those other ones and kind of focus just on those two or three?
[13:06] Rob: I have. So everything that wasn’t working, you know, there were a few that I had to purchase. You have to purchase three days at a time but it wasn’t ridiculously expensive so I did it. But everything else I was able to turn off between, you know, basically 24 hours of discovering. Hitting the point where I was like wow zero conversion and 500 visitors. This one is not going to make it even if I get a few conversions all of a sudden. It’s still going to be a crap traffic source.
[13:30] So yup everything else at this point is turned off. I am doing some new experimenting now. I’m swinging back to one. Since I’ve learned so much about buying clicks and demographic and stuff that are converting well now, I’m circling back to one other site that I think I could potentially improve upon and just see if that works this second time around. But aside from that I am focusing and I’m not going to be, I don’t plan to revisit any of the other traffic sources that didn’t work out.
[13:58] Mike: Uh-huh. Cool.
[13:58] Rob: So I saw this thread on Quora. I think someone linked out to it. I think maybe Dan Andrews had linked out but the thread is called, is anyone here a member of the Dynamite Circle/Tropical MBA? And Dan Andrews runs a lifestyle business podcast and then he has essentially it’s kind of like a private social net call that the Dynamite Circle or the DC. And it’s a still membership website basically. It looks like its three months for $97 or $388 a year. And asking the question of course is it worth paying, is it worth the price? It seems kind of pricey with a forum with 400 members.
[14:30] And I love, there’s a whole discussion after this but basically it’s like 10 or 15 Dynamite Circle members come out and say it’s ridiculously cheap. This question is hilarious cause it’s so worth the value. But Dan’s, I love just the way he handles this. He says my sense is if you came to Quora to post this question rather than risking the Benjamin, you aren’t the target market for the DC who are mostly highly engaged followers of our work who have established businesses. Our free information is just as good or bad depending on your view. You aren’t going to learn anything there earthshattering. It’s about networking and sharing information with likeminded entrepreneurs.
[15:05] And someone comes back and says well just someone is cautious about their money doesn’t make them unfit to do anything and kind of almost acts offended. But there’s a really intelligent discussion that follows. And frankly I love so many of the DC-ers coming out the members of the Dynamite Circle coming out and being most of them at least being respectful. Saying no if you aren’t willing to risk $97 then you shouldn’t join. It was an interesting discussion for all and I like the way that Dan had handled the question.
[15:32] There’s a lot of ways you can go with it right when someone says it seems kind of pricey but you can like try to defend the value of it and defend all the things that are in it and what you’ve done to put it together. But he basically eh, he makes it more exclusive by his answer and he comes off as classy.
[15:48] Mike: Yeah.
[15:49] Rob: Well it’s the response that I wanted to start giving. You know when we first launch MicroConf like there were people complaining like $499 for a conference is crazy. And I remember thinking like man if you’re not willing to do it you shouldn’t come. But I didn’t say that to people. And now in retrospect I totally wish you had. I think this is going to be my new line when I launch something because I know the value, you know, the stuff that I or we release or work on has. And I really do think that not trying to please everyone is just a better way to go.
[16:16] Mike: Yeah. It’s just the more I look at things with either my training website or with AuditShark I mean there’s, AuditShark can do a lot of different things but I definitely realized that I don’t want to do too much with it. I really need to just focus on one small area and basically master that because trying to branch out basically leads you into these larger solutions that are more geared to the enterprise that do everything and don’t solve anybody’s problems really well.
[16:45] Rob: Yup. Exactly. So it’s about be a niche and if someone says you’re too expensive or you’re too cheap then you just tell them hey maybe this isn’t the solution for you.
[16:53] Mike: Uh-huh. So speaking of cheap, I decided that I was going to upgrade the RAM on my desktop because I installed Backblaze and I was doing everything locally. I have a NAS device that I was backing everything up to. And I said, well, you know, I should really get this stuff offsite because I got enough important things that I would like to have it offsite. So I installed Backblaze and I have some I’ll say memory issues. It seems like when I leave it running for too long the memory usage tends to escalate and it doesn’t free it up so it seems to me that it got memory leaks. I don’t know for sure if does or not but it just seems like that’s what’s going on. I was looking at my machine and I was like well I only got 4G of RAM. This machine is actually pretty old. I went back and looked and found out that I’d actually purchased this machine in 2006.
[17:40] Rob: Wow. Yeah.
[17:43] Mike: So I was like well can it even support more RAM cause I don’t know. I got Window 7 64bit on it and I was like well I’ll take a look and it turns out I can support up to 16G of RAM. I’m like oh great. I’ll just go buy a new RAM. It’s $400 to buy 16G of RAM.
[17:56] Rob: What. That is crazy. That is much more expensive that I would have thought.
[18:01] Mike: The computer itself is not worth $400 that’s the problem.
[18:04] Rob: I was going to say that’s insane. Yeah.
[18:06] Mike: So.
[18:07] Rob: Cause I bought, I mean geez I bought 8G of laptop RAM for I thought it was a $100.
[18:11] Mike: Right. The thing is that’s not for a computer that’s six years old. I mean the problem that I run to is that its DDR2 RAM not DDR3.
[18:20] Rob: I see. It’s old. It’s not made any more or something.
[18:24] Mike: I don’t think so. I don’t know if they’ve stopped making it or whether they’ve just scaled back on it so much that you know it’s just not around. But that’s kind of the highest end of the DDR2 RAM that they kind of offer. So I don’t know what else I can do.
[18:37] Rob: Yeah. I would check out crucial.com. Crucial may have it. That’s probably the only other place. I would check and then I would ponder just buy a new computer for $400.
[18:47] Mike: Yeah. And buying a new computer I’m just looking at and saying well do I really want, you know, to go that route.
[18:52] Rob: Yeah. I know.
[18:53] Mike: Yeah. I mean I would love to have more RAM right now but at the same time I got so many things going on with AuditShark that I don’t want to have to rebuild my machine either.
[19:01] Rob: Right. Well you can also just upgrade to 8G. So for listeners who have never heard of Backblaze it looks like it’s a backup service just like Mozy.
[19:08] Mike: Uh-huh.
[19:09] Rob: Is that right. It’s a just a little less expensive. So, Mozy starting jacking their pricing structure. I’ve been a member of Mozy or customer of Mozy for I don’t know four or five years and they used to be unlimited for $5 a month and then they become not unlimited. And so suddenly my bill jumped. You know I was backing up two computers. It was $5 a month per computer. It was about $120 a year and it doubled to like $220 because of how much space we’re using. And we weren’t even using that much space. So I jumped over to, I was going to do Carbonite. But Carbonite does not backup video or exe files by default and you have to go individual, you can’t do right click and say back up all these. You have to individually click a checkbox next to every one of them. Ain’t that crazy.
[19:48] Mike: Ouch.
[19:50] Rob: Yeah. So people, like there were people giving them bad reviews. They say its unlimited backup but they don’t tell you that and so I used it for about a week and was like no, I’m not going to do that. Now I use CrashPlan and I have never heard of Backblaze but this would be an alternative cause I think the pricing for these two are similar. So if you’re out there and you’re not backing up your machine you really need to look at Backblaze or CrashPlan. All it is you download a little exe to your computer that runs, you set it to run it at 2 a.m. every night and its $4 a month or $5 a month depending on how far out you pay. I think I even paid out three years with CrashPlan.
[20:24] And for me it’s $10 a month over the course of three years for all of the computers in my house and it’s unlimited storage. So assuming they don’t screw with that unlimited, it really is great. And my wife had an issue actually. Her computer failed. We got nice Toshiba Ultrabook and about 60 days in the thing just failed. The screen stop working and we can’t access anything. And so luckily all her stuff is in Dropbox. Some of it is in Dropbox her working stuff and then everything else is in CrashPlan. So even if they have to scrap it we’re going to be able to get her stuff back.
[20:53] Mike: Yeah. I went with Backblaze. I think I’d looked at CrashPlan a little bit and I forget what it was that made me not go that direction. I don’t recall off the top of my head.
[21:03] Rob: So hey we have a new review on iTunes. I want to thank Ken Brodhagen. He just reviewed us a couple of days ago. He says this is a great podcast with a lot of practical tips. Mike and Rob also have a great chemistry that makes the show entertaining as well. I listen to 25 episodes or so and I’ve just downloaded the whole backlog of archive so I can listen to them all. And of course Mike and I recommend that you do the same if you haven’t heard those glorious first 50 episodes.
[21:26] Mike: [Laughter]
[21:27] [Music]
[21:30] Rob: So I came across this cool article. It’s actually just a one page thing from this September issue of Fast Company. But it’s the 36 rules of social media and it’s kind of just they surveyed a bunch of social media people like the guy behind Radian6 and one at Percolate, VPs of marketing of different web company and all that. And they got these 36 rules that they put in this graphical display and a lot of them are boring. We’re not going to go through all of them. But I wanted to mention a few here that I thought were either clever or just ironically true. The first one is if you all do is respond to complaints that’s all people will send you. Another one is everyone says they don’t want to be marketed to; really they just don’t want to talk down to. And then this might be my favorite. Don’t try to be clever, be clever.
[22:16] Mike: I’m not going to respond to that and try to be clever.
[22:19] Rob: I know.
[22:21] Mike: [Laughter]
[22:24] Rob: See just a couple more. One is people would rather talk to Comcast Melissa than to Comcast.
[22:28] Mike: I don’t think anybody wants to talk to anything Comcast.
[22:31] Rob: it’s okay to drive people to your site instead of Facebook. And that’s an interesting one. So several people who I talked to when I was talking about gearing up on paid acquisition and a couple of folks who’d used Facebook said oh yeah don’t send the traffic to your site. You really want to send them to your Facebook page because Facebook jacks up the price of the ad as soon as you send them to an external URL. And I wasn’t super comfortable with that. I mean there is HitTail Facebook page and of course you drive them over there and then you try to get them to like you so that it’s viral.
[23:00] And you try to get them to go from there to then your external website. And then that certainly is a long term thing. I’m going to look into. But I wanted to see if I could get people to convert straight away from the site. You know have a compelling enough value prop for them, a compelling enough ad that they click through and then a compelling enough value prop on the site that they convert. So I like that one because I think kind of the common wisdom of today is send them to Facebook because that’s what Facebook wants you to do. So they make your ad click cheaper and make it easier.
[23:26] Mike: I didn’t realize they made it cheaper to do as well.
[23:30] Rob: I haven’t done it. I think that’s pretty much, several people told me that so I’m assuming that’s the case.
[23:36] Mike: Wow. That’s crap.
[23:38] Rob: That’s Facebook.
[23:39] Mike: As told by their stock price.
[23:41] Rob: Yeah and that’s a whole other discussion probably.
[23:43] [Music]
[23:46] Mike: Why don’t we answer a listener’s question.
[23:49] Rob: All right. This is from Gerald Briones. He’s with Ganda Studios and he says hey I’m a big fan of the show especially like the podcast on Marketing a $1 App. Any tips of negotiating with contractor via oDesk? I’m hoping to develop a project but I’m on a limited budget. The programmer I currently used has declined to do my next project due to low budget. I’m probably going to try contacting other programmers on oDesk. Cheers and happy podcasting.
[24:15] Mike: So I think that when you’re working with contractors via oDesk it’s probably going to be a little bit challenging to negotiate with them on price. And I think the reason for that is because when you’re going through oDesk you’re already asking them to compete against each other. And unless you have set forth a very specific budget for the project and then post it out there as a fixed price project I think that you’ll probably going to run into issues.
[24:44] And you know this question doesn’t necessarily say whether the projects are being done on an hourly basis or on a fixed price basis. So I don’t know. I think it’s a complicated situation. I mean why don’t we just discuss it as opposed to me giving an answer that we can talk around quite a bit and then go from there. Cause there’s a couple of different sides. The first one is whether it’s a fixed price contract or whether you’re doing something on hourly project right.
[25:09] Rob: Yeah. I mean the big difference is if it’s a fixed price and you negotiate them down they’re going to cut corners, right? I mean that’s what they’re going to do. Contractors are not going to sit there and then work the same amount of hours and take less pay. And I think the problem is hourly, yeah, to me it’s a bad idea. I mean I think you can always try to squeeze dollars out of people but I would look more at cutting scope or somehow trying to come up with money through other means basically. You know when you’re boat strapping you can do all types of crazy stuff to come up with a few dollars.
[25:42] But I think try to cut down the fixed price one like I said the person is going to cut corners and then you’re going to get in fight over that if the app doesn’t work or whatever. And if its hourly and you’re negotiating down, I mean as a contractor when I was consulting, I never let people negotiate. If they wanted to ask to pay less I would just say you know what this is my rate period and you can pay it or leave it. And I wasn’t a jerk about it but that was what my time was worth at the time. And I had plenty of people who would pay it.
[26:08] The flip side of that is even if you get them to agree to drop their rate, as soon as they have other work that pays them the better money, they’re going to prioritize that higher than yours. And so you’re always going to be the person they don’t want to be doing your work. They don’t want to do more work for you. They want to do it for other people. I think it’s a short-term mentality to think about negotiating for something like that.
[26:27] In fact, when I hire contractors I’ve done this for a while. If I find someone who is good and who does solid work I actually increase their rate. I’ll negotiate against myself after a while once I know that they come through because I want me to be priority. I want them to think of working for me as the no. 1 highest priority because I’m actually the highest paying guy that they’re using. And I did this even before I had a lot of success cause I knew early on that finding good people was important.
[26:53] Mike: Yeah. I would agree with everything you said. I mean it’s just I don’t know I would have a hard time especially on oDesk trying to convince people to cut their rate. Because when you go onto oDesk if you’re doing like an hourly project I haven’t done a fixed price project there but if you’re doing an hourly project then you’re already providing a rang. And they can come in and they can say, let say you get a range to $8 to $18 an hour for whatever the project is. If you come in and somebody says well I’m going to charge $20 an hour or somebody else comes in and says they’re going to charge $6 an hour there’s I think a certain level of quality difference that you’re going to get between those two people as well.
[27:37] And it may be substantial and it may not be and it’s up to you to try and figure out what those differences are. And when you get into the hourly projects I mean that kind of get rid of any sort of fixed price project. I think when you’re talking about people on oDesk one of the issues is that you just dot want them to start negotiating because as you said I mean if they have to negotiate with you against the rate that they’ve already tried to persuade you to give them, you know they are going to cut those corners.
[28:05] Rob: All right, Gerald. Thanks for the question. I hope that helps.
[28:08] [Music]
[28:12] Mike: If you have a question or comment, you can call it in to our voicemail number at 888-801-9690 or you can e-mail us at questions@startupsfortherestofus.com. Our theme music is an excerpt from “We’re Outta Control” by MoOt, used under Creative Commons. You can subscribe to this podcast in iTunes by searching for Startups or via RSS at StartupsfortheRestofUs.com where you’ll also find a transcript of each episode. Thanks for listening. We’ll see you next time.