Show Notes
Transcript
[00:00] Rob: In today’s episode of Startups for the Rest of Us, Mike and I are going to be discussing co-founders and equity, personal branding, advice for a recent graduate and answering more listener questions. This is Startups for the Rest of Us: Episode 111.
[00:14] Music
[00:23] 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.
[00:32] Mike: And I’m Mike.
[00:33] Rob: And we’re here to share our experiences to help you avoid the same mistakes we’ve made. Well, I recorded my first video training course last week. I had a videographer come to the house and I had someone interview me and we spent about…well it was about two hours behind the camera. I think he’ll edit it down to maybe 45 minutes to an hour of content. It’s about why startup should hire VAs and how to do it and the whole process and stuff. And it was absolutely terrifying but it was absolutely exhilarating at the same time to have all the cameras up there and just…I’m very comfortable now on podcasts and with screencast and that kind of stuff but it’s so different to be standing in front or sitting in front of an actual camera and knowing the people are going to watch later.
[01:15] Mike: Yeah, interesting. I hadn’t thought about like the lighting aspect of it. That would be I suppose a little bit intimidating if you haven’t really done it before or you’re not used to it. It’ll be almost be like being on TV all the time.
[01:25] Rob: Yeah, that was it and he…you know, he had a full lighting set up with all of those big white umbrella things that reflected inward and then he had a three-camera set up. So, you’re being watched from all angles and a microphone fix…I mean it’s just…it’s a different scene and he actually made it really professional. He made it feel a professional and so as a result, it was like, “Oh, man. I feel like I’m under the gun here with a producer or something.” But it was a lot of fun. Obviously, folks are…if you’re interested in hiring a VA and you want to know more about it. I probably will market it through…announce it through my e-mail newsletter at softwarebyrob.com. You could sign up for that in the upper right and that would be the main avenue that people can hear about that.
[02:02] Mike: Pretty cool. So, when do you think that would be out?
[02:04] Rob: I’m supposed to have the videos in the next week. I’m actually very excited. This is, you know, it’s different than any other video course I’ve ever seen because it is like two people in the same room. It’s not like a Mixergy interview where you’re over Skype. So, it’s two people in the same room discussing this topic and then it comes with the actual assets that I use, the job posting and some questions and a sample screencast. I mean it kind of all of that and I’m going to package it up and sell it as a video course. With these many things that are going on in January, this is lower priority. I mean you and I need to get MicroConf tickets sold. I have three marketing things that are completed for HitTail that we decided not to launch in December because things are slowing down. So, that will be in January. So, as a result, I think I’ll probably spend the time to write the e-mails and launch this course. It…either be late January or early February and then I have two more plans for the remainder of the year as time permits.
[02:56] Mike: Cool. Do you have a website and everything for that or no?
[02:58] Rob: I don’t and I don’t think I’ll launch a separate a website. I will probably host it through someone like Udemy and they have pretty cool deal for if you want to host courses like this. There’s no reason to go through or finding another domain and trying to market it separately and all that stuff. Maybe at some point but I think for now, I’m just going to do more of a low-profile launch and then I have some ideas on how I’ll market it past there and none of them require with setting up all the stuff that it takes to get a…being in process in place and the check out functionality and all that stuff.
[03:27] Mike: Cool.
[03:27] Rob: What else is going on?
[03:29] Mike: Well, I got a slightly depressing e-mail today from Verelo. If you remember Verelo was one of the sponsors at MicroConf. I had showed a screen shot of the server statistics of like ping times and things like that and how fast my server was responding and then I showed it after I had switched my website from where it was over to WP Engine. Do you remember that?
[03:50] Rob: Yeah.
[03:51] Mike: Unfortunately, they’re shutting down.
[03:52] Rob: What’s going on?
[03:53] Mike: It just sounded from the e-mail that I got those are funded company and things just were not progressing well enough. It seemed like they were behind some of their competitors and they just didn’t have kind of enough lead time in order to be able to do the things that they wanted to. So, there might have been some marketing challenges. There might had just been being late to the market and just not able to get enough traction because, you know, the people who would do that kind of stuff, they probably sign up for it and then afterwards, it’s like why are you going to switch from one provider to another because you’ve already went through all the leg work, chances are their pricing is not going to be exponentially better if you go some place else. Unless there’s this giant value proposition to switch what is it by you.
[04:31] Rob: Right. Yeah, that’s a bummer. They…because they were also in the Academy, right?
[04:34] Mike: I think they were, yeah.
[04:35] Rob: Do you know if they’re pivoting or if they’re absolutely like shutting everything down?
[04:39] Mike: I got the impression it’s completely shutting everything down. I think the —
[04:42] Rob: Okay.
[04:42] Mike: …founders are kind of moving on to another project to this point.
[04:45] Rob: Right. You know, if it’s slow growth, it’s always hard to justify that and if you have investors who want their money back, it’s maybe even harder.
[04:52] Mike: Right. Yeah, I mean maybe if they were…if they were self-funded, it might have turned out a little differently because they probably would have been able to kind of keep going. But, you know, it really depends on what their income stream was and I…I have no idea what that looked like. So…
[05:05] Rob: Right and that’s where to trip, right, if you have two people and you grow this business to 10 grand a month. It’s like, oh, that’s a nice…nice little chunk of change but if you have investors and then two founders and you’ve grown it to 10 grand a month, that’s…that’s nothing.
[05:16] Mike: Right.
[05:17] Rob: Like that a complete waste of everyone’s time, you know, because the returns are just so small.
[05:20] Mike: Uh huh.
[05:22] Rob: Well, I’m winding down. It’s…we’ve got about 12 days left in the year and every year, my wife and I each try to do a solo retreat. Stay in a hotel for one or two nights, no kids, no family and in fact, I don’t bring my laptop when I go. I might bring the iPad because that’s where my books are but I try not to do…trying to be online answering e-mails, any of that stuff, mostly pen and paper, mine’s planned for the first week of January. And that’s that time that I spend either planning my goals for the next year or I spend it really figuring out if I already know my goals like this year I do, right, because we actually did that in our goal’s episode. I really want to mark out like month by month, how am I going to do them, whether or not I really want to do all these things, maybe even look out past a year but it’s just a day or two to really focus and think about, you know, clear my head and kind of have more than clarity to really gain energy and momentum as the year starts.
[06:16] Mike: Cool. So, I was up till 3 a.m. last night hacking away a code. And remember how I said I want to stop doing code?
[06:22] Rob: I do.
[06:22] Mike: Yes, Don’t get me wrong. It was…it was fun to sit there and do this but I was hacking away this code to do some integrations for the some e-mail marketing that I’m doing. And it’s going pretty well but I ran in to some problems with KISSmetrics and literally just before this podcast started, I finally realized what the problems were because I was doing stuff. I started on it probably last night at around 10 o’clock at night and then I was working on it until about 3 a.m. And some of the data was there and some of it wasn’t and I realized just before we started the podcast that the problem I ran in to which was I had thought was caused by the fact that they say, “Oh, well, we don’t process a lot of these things or a lot of the data for two to six hours. So, maybe a little while.” I realized that it’s because the date range was set to the last seven days versus this month. So, what happened is like all the data that was going in before midnight was getting there by virtue or the fact that it was last seven days versus this month with…which sort of also included everything after midnight.
[07:18] Rob: Right because last seven days means the last seven complete days. So, if you’re in the middle of a day, it won’t show any from that…from that current day.
[07:26] Mike: Yup.
[07:26] Rob: Is that right?
[07:27] Mike: Yup.
[07:27] Rob: Okay. That’s always a bummer. Yeah, I’ve done made this exact same mistake in advertising dashboards. It seems to last seven days or last 30 days should be from now but they…they do this completed day thing and that always screws me up.
[07:40] Mike: I understand why it’s like that but I just wish there had been something in the UI where you’re choosing the date range where it says, “Such and such a date, to such and such date or to midnight —
[07:49] Rob: Right.
[07:49] Mike: …or something like that.
[07:50] Rob: Right and once you’re using this for a while and you have data, that’s…it’s not going to make a difference, right? Because it’ll be a few hours a day that it doesn’t show up but when you’re doing this integration and you’ve written all this custom code and you’re trying to test it, it’s…it’s kind of a pain.
[08:02] Mike: Uh huh but other than that I’ve also been outsourcing a bunch of new articles for the AuditShark website and that’s going pretty well. I’ve got I think 10 or 12 that are on my lists to I have written and I’ve gotten probably half a dozen of them back. So, far I’m very pleased with what the quality is of these different articles because a lot of them are definitions for things around security or compliance and the things that I could write but it’s just not really worth my time to go ahead and sit down and write them.
[08:29] Rob: Oh, absolutely. Writing is not only time consuming but it’s that good glucose, you know, that you really needed to save for high…kind of high productivity and high value actions and writing articles to go and kind of an FAQ or an article section of your site is not one of those things. So, that’s good to hear it’s been working out well. Are…did you hire a single writer or using one of the…the writer marketplaces?
[08:51] Mike: So, I’m using one of the marketplaces. I’m using the content authority right now but there’s others that I kind of poked around a little bit at and I was…I just kind of evaluated this with two initial articles thinking to myself, well, if this works out, I’ll continue using them and if it doesn’t, then maybe I’ll try some place else. Because at the end of the day, there’s kind of a certain quality bar that you want to hit and as long as it’s above that bar, you don’t necessarily care whether you’re paying 4 cents a word or 4 and half cents a word. It’s just…it’s immaterial at that point. The first couple of articles worked out, ordered a bunch more of those seemed to be working out. There’s one article that came back out of like six or seven that we’ve done so far that it’s a little iffy. It refers to a lot of legal jargon that would be referenceable elsewhere but I just don’t have those references and you know, it kind of sucks that it has that but we did put a limit on how many words the article was supposed to be. So —
[09:41] Rob: Yeah.
[09:41] Mike: …I was a little leery of it just like on their main page, everything looks fine but then when you start digging in, you’re going to like the FAQ, all the formatting there is all so screwed up. And I don’t know why but the content I was getting back was recently decent.
[09:54] Rob: So, I have a little bit of a rant here. I don’t know…have you been following the news with Instagram and how they updated their terms of service?
[10:00] Mike: Yeah, I haven’t followed it but I know that there was some little [Indiscernible] or something like that about it.
[10:06] Rob: It just continues to amaze me. These companies with no revenue model that just want to build mass audiences and then they’ve kind of figure out how to start making money and always has to do with advertising or with selling user created content or selling advertising around user created content. I don’t understand why they don’t have it in their terms of service from the beginning because that’s what Instagram did. They…they changed it and put language in that said they could like sell the photos that they have like an unlimited license to them or they have ownership even though you’re posting your photos. Facebook has done this, right? They do the privacy stuff. Twitter has screwed their API developers. I mean it’s just on and on and on these big companies with no revenue model just suddenly turn and do this.
[10:46] Now, the funny thing though is the reaction, it’s people who just become shocked by the fact that suddenly these companies do to make money that they…they think Instagram could just be free forever and that there was never going to be this. So, it’s kind of both sides of the coin are…are humorous to watch like really this is happening again, really there’s going to be another uproar. This is…it’s…it’s quite predictable and…
[11:07] Mike: Yeah, that’s just pretty sad.
[11:09] Music
[11:12] Rob: Actually, we have two voicemail questions for the day and then a number of text questions that came in via e-mail. So, let’s dive right in. The first one is from Justin Jackson and he says, “Hey, Rob and Mike. I love your podcast and I love the Micropreneur message. It seems like you have your hands in a lot of different baskets like you’re a jack of many trades and you don’t seem to be as stress out as some of these other entrepreneurs. I did some reading today by Adii who is the founder of WooThemes and he had an article that says ‘Passion will make you work more’ and then he has one that says ‘Jack of all trades, master of none’ basically saying that it decreases the quality of your work, your product or your services. I’m wondering if your experience as a micropreneur with no employees and multiple projects has been different or am I reading your life wrong? Have you found a secret to a balance life? Cheers. Justin Jackson.”
[11:59] So, there’s… there’s two main points here Justin is asking about. The first is about “Passion will make you work more” and the quote that he pulled out of there is “When you start a business, it’s fun at first but then it feels like you’re feeding the beast, daily you’re making a deal with the devil. You need to work more and more to maintain the business.” In my experience as a bootstrap entrepreneur, now, Adii is as well, right? He didn’t accept funding. But in my experience I’ve always felt like I’m able to work more when I want to and I think a lot of that comes back to really structuring my businesses around my life and around the kind of life that I want to live. And so outsourcing has been a huge part of that. Outsourcing, tier one, e-mail support and you know, hiring now most recently a product manager but having a number of folks hovers around between 7 and 9 contractors who work for me in any given month. I had been very deliberate about that and I know Adii has employees and so, you don’t know if he’s able to outsource essentially off load work from him to the employees he’s hired or if the employees are more of a burden, right, because that can also be the case.
[13:07] If you have 10 employees reporting to you, it’s different situation than if you have 10 contractors, independent contractors working on different things and they’re kind of set up to be more autonomous. That could be the difference here, right, is that Adii really is growing a startup that’s more like a traditional company and I’m not and I’ve never had that goal to do it. I want to grow my businesses as large as they can within these confines that I’ve set up and confines often have to do with as long as they don’t have major impingement on my life and they don’t require me to…to work ridiculous hours because I just…I don’t have it…I don’t know if my life structured to be able to handle that.
[13:44] Mike: I think my take on this is really it depends on what you’re trying to do and how you have decided to tackle the problem and part of it is…I see a lot of people who will try to build businesses and they’re trying to do everything either all at once or in very quick succession and they’re not taking the time to automate certain aspects of it so that they don’t have to do those things especially the things that they either are not good at or don’t want to be good at especially with developers. Developers have a hard time doing a lot of the marketing stuff and that’s really kind of the hardest part of them and part of it is because they procrastinate because they don’t want to do it because they don’t like it. And it just gets to a point where they’re not doing those things that they really need to be doing to make the business successful.
[14:26] So, they feel like they’re working a lot but they’re not actually doing the things that need to be done. I think that that’s probably part of it and you know, maybe that’s what their reference to feeding the beast and making a daily deal with the devil in order to get things done. The other part of it is being able to finish the things that you started because there’s a lot of people who are more than happy to start a brand new project but there’s that last mile that you really have to undergo in order to take a product to market and if you’re not able to kind of push through those challenges and get the product out the door, then you’re going to get to a point where things stop being as fun as they were in the beginning and you’re kind of give up before it’s time. So, I think that those are the sorts of things that play in to it. I think that it really has a lot to do with what your personality is and what your purpose behind making those decisions is.
[15:16] Rob: Yeah, I agree it has a lot to do with what you’re trying to build and bottom line, I mean Adii is a friend of mine. He spoke at MicroConf last year and you know, you can think of this, his single blog post here could have been just a snippet in time, right? He could have just been feeling this way on that particular day and wrote the blog post. It may not be the case for his entire startup. The other part of the question was about being a jack of all trades. So, the quote is “If you’re a jack of all trades, master of none, it decreases the quality of your work, your products and your services.” We do know a little lot of people hold this view point. And so, I think the implication here is saying should you not work on a number of different products at once, does that make you a jack of all trades?
[15:56] I would argue that I am not actually a jack of all trades because I don’t do design work. I don’t do…I do some copywriting but I also outsource a good chunk of that. I don’t do a ton of development. I do some of it. But for the most part, I focus heavily, heavily on being kind of the visionary for the entrepreneur role of my…my apps and my products. I focus on marketing. And that is really my core thing. I would say that I’m not a jack of all, I’m more of a master of, you know, the marketing and the vision stuff at least within…within my realm. I would agree that it’s a challenge to be a good designer, HTML, CSS guy, jQuery, developer, copywriter and founder, that does water you down because you only have so much good glucose in a day. You can’t spread it around all these activities.
[16:44] And so, as your business grows especially, you need to get people who are special, who specialized in something and who are masters of that area and I think you need to choose the one or two areas that you’re going to become a master of and not spread yourself all over the place. And so, well I may have ten products, I do kind of the same activity for all of them and if you put it under umbrella, it would be marketing like that’s where unachieved marketing guy at all of those area, you know, and all of those products and for the most part like the development, the support, these other areas are outsourced.
[17:19] Mike: Yeah, I was going to say something along those lines as well. I mean you’ve got, you know, all these different things that are kind of under your umbrella but when you start expanding things out, I would say that the two aspects you need to really kind of focus on and be a master of are one is marketing and two is project management. And if you can get those two things down, then the rest of it can be outsource because as a good project manager, you can make sure that the code gets done. You can make sure that the design work gets done and by people who are fully qualified to be doing it and because those things tend to be time intensive, you can outsource them and as a good project manager, you’ll make sure that they get it done in time and that all these different things are going in parallel and they get done in about the same time or in the time and frame that they need to get done and you can basically get all the work splice together.
[18:05] The other side of it is the marketing side which you basically need to be able to do that well in order to have a product that’s going to sell well and if you can combine those two aspects and become really good at both of them, then essentially it doesn’t matter how good a designer or how good a developer you are. I mean as long as you have the money to at least get started and the time to be able to invest in it, if you’ve got those two skills, the rest of it is largely immaterial.
[18:32] Rob: Next up, we have a voicemail call in question.
[18:35] Voicemail 1: I’m contacting you for some advice as somebody who’s recently graduated from a CMIS degree, the difference being between this and the Computer Science degree would be calculus. The whole reason I got the degree was to feel more confident both on the process of creating stuff online and hopefully, being able to do a majority of it myself. That said, I feel still stuck in the burning process. I live in an area where they don’t really have so many jobs to offer recent graduate. I support my wife’s military career and so, I’m kind of stuck. I can’t really move away.
[19:13] Am I deluded to think that I can learn to make online path while still supporting her career and being home for the kids. Would it better to gain experience working for somebody else regarding languages has giving inundated on which one to really focus on, maybe focusing on PHP since the servers that supported seems to be a lot cheaper than a .NET and I guess what can I be doing better? I’m on tutorial site Lynda.com net apps just…I guess practicing and honing and making up situations first. I…I just don’t seem to be getting past a hobby or skill level. Thank you so much for your time.
[19:53] Mike: So, thanks for the question. I think that the first thing you need to do is really decide what your end goal is because it sounded to me like you were unsure [0:20:00] whether or not you should go out and find a job doing fulltime development or whether you should be looking to build a business and you know, sell your own products online. And it sounds to me like there’s a lot of hesitation to do either one almost as if you make that decision and it’s going to be final and I don’t think that that decision whichever one you ultimately decide to do is going to be final. You can certainly choose one and then if things don’t work out or if you decided that you don’t like it, you can pivot later on and do something else. So, I would keep that in mind first and foremost because it’s not like you can’t change you mind later.
[20:34] The second thing is that you needed to decide what, as I said what your ultimate goal is, what you want to try and do. Start down that path. If you want to build products, then start building products. If you want to go out and get a job, go out and do that. Now, there are certain ways to find contract work online and some of them will pay well, some of them won’t but you definitely need to get started and get some sort of a portfolio if you want to go that route. So, if the local job market can’t support you, the internet is available to you. You can certainly go out and start looking there. In terms of finding a product to develop, that’s about talking to people who have problems and just trying to solve those problems for them. Develop a marketing strategy to reach out to those types of people who are having that problem and make sure that you have a solution for them. The one thing I would caution you about is don’t go building a product that you think people want and then try and sell it to them. Find what people actually are having problems with and then build the products to solve that problem.
[21:29] Rob: In addition, the caller mentioned that he went to college. He got a CMIS degree and that he didn’t feel like he was prepared to…to now build apps and I would second that. If you actually want to build web apps, don’t go to college to learn that because that’s not the best place. People I know who have…have really know how to build web apps, build web apps, right? They had to buy a book and then build the sample project or build the project of their own. Some of them do like tech…technical schools that are training schools for to actually get a job. College tends to be much more academic. I mean I got a Computer Engineering Degree from UC Davis and I came out knowing languages that were 10 and 15 years old that hadn’t been used in industry in a long time. He also mentioned that tutorials aren’t enough that he still feels like he doesn’t know how to build web apps and I would say, yeah, you’re right. They aren’t enough. You have to go and start building something, building a project because you’re going to learn more doing that than anything else.
[22:26] The question of PHP versus .NET versus Ruby, you know, what language you should use, if I were you and I was learning from scratch right now, I would go with either PHP or with Ruby on Rails. They’re just…they’re open source. They’re inexpensive to get in to. You can build, you know, really great web apps with them. So, pick one whichever suits your fantasy and do a little bit of research and figure out which one is going to work for you. The last part that I’ll address is he mentioned whether you should try to teach yourself or you should start trying to make some online apps like get…get a job from someone else, right, to actually have someone paying you to build their app to get the experience. I would say it depends on how much time you have in a given week. If you literally are working fulltime and have a wife and kids and you have five hours a week, then I would say now is probably not the time to take on contract work because that’s just enough time to learn anything valuable.
[23:19] If you can figure out a way to get between 10 and 20 hours a week of time, I think that’s reasonable to go on a site like eLance or oDesk or Rent a Coder. Like Mike said, the rates are going to be abysmally low especially on your first few projects until you gain some reputation and then you can raise your rates. You’re not doing it for the money though. You’re doing it to hash things out and…and to learn and it’s going to take you a lot longer to build something than it should because you’re still learning about experience of actually building production things and getting them live on the internet is going to be more valuable than six months of going through tutorials, bottom line. So, whether you have the confidence to do that now or whether you want to just come up with a small project that you think might take 20 or 40 hours to build that you give away for free online that you post to Hacker News to get some traffic and feedback just to see how your stuff holds up, then…then maybe that’s your first step to build the confidence that then you can now have at least a little bit of a resume and a portfolio to go on like I said eLance, oDesk, Rent a Coder, any site like that. And then actually start making a little bit of money to justify the time you’re spending and that’s how I would do it. I would reiterate on that until you have the chance to potentially go out and work for someone else.
[24:28] And I do think that working 40 hours for someone else and taking a salary and hopefully being, you know, trained on the job is the best way and the fastest way to learn to code. That’s how I learn to code. Be careful that you don’t get in to a job or it’s like you’re a software developer but half of your time is in meetings and half of your time is spent doing maintenance coding because you’re not actually going to learn much from that. So, you will have to be picky about jobs that you accept but that’s kind of the path that I would throw out.
[24:57] Our next question comes from Scott and it’s about consulting a new contract position and a SaaS app. And he says, “I’ve been consulting fulltime since spring doing web development. I’ve been developing my skills and learning consulting as a side business over the past six years. So, I’ve been growing my consulting business and working on a SaaS product that will launch by the end of the year. I recently got the opportunity to take a fulltime hourly contract web development position. Contract position could last a month, six months or be open ended. So, I don’t have a good idea of how long it will last. I’m looking for advice on how to handle this so that when a contract position ends suddenly, I don’t have a gap between a contract position ending and obtaining new consulting projects. This month, I’m going to be putting in crazy hours as I already have my usual consulting work lined up and the fulltime contract position starting. But I’m wondering what your thoughts are in handling these next few months. One thought is to choose better consulting projects/clients during this time and try to increase my hour and rate for project. Thanks again. Scott.”
[25:52] Mike: So, this is really a good question and I’ve been in this situation before where I was doing some consulting and doing part-time projects here and there and then a project landed in my lap that was going to be a fairly long-term project or at least I felt like it could be. But the question was if I undertake this project and it is let’s say 30 to 40-hour a week project and then how long is that going to last and how do you go about maintaining other clients that you’re working with and working for while you’re doing that one such that if it ends or when it ends, you don’t have nothing to go back to. There’s two different ways that I would approach this.
[26:29] The first one is to essentially solidify how long it is that they’re going to actually have you on retainer for. So, ask them upfront to find out. Get it in writing so that you know when it’s going to start, when it’s going to end. The second thing I would do is ask them for a renewal clause of some kind that says that, okay, if it’s going to be a 4-month project, they let you know 4 weeks in advance whether they’re going to extend it and you have to put that in front of them. You have to ask the questions because you are in that position. You can’t wait until the day before the contract ends and find out, “Oh, we’re not going to renew this. So, we’re done.” Because that put you in an extremely bad position and you know, it’s not going to be your fault but you’re the one who’s going to end up suffering for it. So, those are the two things that I would keep in mind.
[27:13] Another option would be to instead of working for them fulltime, work for them part-time and offer instead of 40 hours a week, do 30 hours a week or 25 or something like that. If that’s a possibility, then great. If it’s not, then if you’re looking to expand your consulting business, this might be an opportunity to do it. But again, if you start getting in to a consulting business, then you’re getting away from products and it’s very difficult to expand a consulting business and at the same time transition in to products.
[27:41] Rob: When I was consulting, I was offered fulltime contract positions and I never took them. I always negotiated them down which sounds crazy, right? It’s like you’re turning down work but I never wanted to be in this position where someone basically held my livelihood in their hands because now you have a single point of failure and you kind of have to do whatever they want or you have to walk and you have to find other work before you walk. It’s a tough situation to be in. Not something I would necessarily recommend doing as a contractor. I mean I think that’s one of the beauties of being a contractor is, is that you can put together multiple clients and have a client base so that you’re not be holding to a single point of failure or a single client who can demand things of you that are unreasonable but you have to put up with because they are…are paying your mortgage. So, I guess I’ll start with that.
[28:27] Fulltime contracts in general are somewhat dangerous. The only time I would ever consider one is if they were paying a very high rate and I knew that I could bank money quickly so then in the first couple of months, I have enough money to have a cushion of a couple of months in case the contract broke down. I definitely think during this time, you should make hay while the sun shines and you should continue pursuing other contracts and you should…this is not something I say often but I would consider putting the SaaS product on hold for now and building up a stash of cash from this fulltime contract and then from any other contract work you can put together and just talk to your…you know, if you’re married, talk to your wife and say, “Look I’m going to work hard for the next several months but it’s going to put me in a position to then shoo out of this once…once all this stops.”
[29:12] In addition, I would only look for those new contracts under a higher rate because there’s no reason that you should be accepting cheap contract work now. You’re in demand and you have…this is when you raise your rates. The third thing I would consider if it all possible is to hire some help. If you could hire a part time developer to assist you even if you have to review all their code and check all their coding yourself, it still could very well be worth, you know, helping during this time and if you take new projects on with the understanding that you are a lead developer and that you will…you have some help with it that you would be the point of contact but that you may hire and don’t say, “I’m going to outsource part of this,” say, “Yeah, I have someone who…who helps me with some things.”
[29:50] I definitely think that could be a good way. It’s like Mike said your tether [Phonetic] on the edge though of becoming a consulting firm, I don’t foresee this as going down the path. I really do see it as making some hay while the sun shines and trying to get money in to your account so that you have a cushion so that if this thing does suddenly end, that you…you don’t have to scramble for that next position. So, thanks for the question, Scott. Our next question is another voicemail.
[30:15] Voicemail 2: Hi, Rob and Mike. It’s Dave. Just want to call and make a quick comment. Just listened to episode 100. Congratulations on that. The…the sound bites from the founders were really great. I just really felt like you guys could have added a little bit after each one would have been really great to get your perspective on what they had to say. Second comment, Rob, I was wondering when I see you around on different kind of podcasts you seem to come across mainly as the startups guy. And I’m wondering if you prefer to be sort of the startups guy or if you’d rather be like the HitTail guy or what your thoughts are in terms of the two brands slash, you know, businesses that you try to run. So, I look forward to the next couple episodes. Congratulations again on 100. Take care. Bye-bye.
[30:57] Rob: So, I’m going to answer that part right now. Mike and I actually discussed this specifically and I remember Mike was like, you know, it’s a 100th episode, everyone’s heard enough from us for 99 episodes. Let’s let some other founders talk. We did about back and forth but I think we just wanted to give…give it room to breathe, you know, allow these truly gifted founders who’ve done great things to kind of speak…speak on their own. So, do appreciate the feedback though. So, the…the question for me was whether I want to be the HitTail guy or whether I want to be startups guy. I don’t just have two products that I’m running. I have ten products that I’m running and some of them are online courses, a book. Mike and I run the Micropreneur Academy. We have MicroConf. I have DotNetInvoice, a number of other software products. And so, it wouldn’t make sense for me to be essentially any one of those things. It just…it doesn’t work. I know that some people, you know, when you look at Joel Spolsky and he was the FogBugz guy for long time and then eventually, he moved on but he was what FogBugz guy for 12 years or something. He was the CEO. But that makes sense for him and 37signals guys, they have multiple products. They aren’t the Basecamp guys. They are 37signals guys, right? They have the umbrella over all their products.
[32:04] That’s what I have as well. I have my company that no one care…you don’t care about the name. It’s called the Numa Group and it owns both startup-related stuff and it’s all of the courses and the writings that I’ve done and then I have these software products that are actually doing…they are actually where I do my laboratory learning. And it just wouldn’t make sense to tie myself to any of those because not only do I have multiple but I may have exits from some of them. I make acquire new ones at any given time. I may shut them down or sell them or, you know, just different things go with that. So, I do have two sides to my businesses. I have the actual software products and then I have the teaching. And mostly when you hear me on the podcast, I’m in the teaching mode and so, that’s where I, you know, that’s why I am the startups guy.
[32:48] And I feel like being a teacher is something that I really enjoy and in orders to do that, you do have to have like a personal brand around that, right. You do have to be the startups guy in order for people to care about what you do and they’ll listen to you and to care about your teaching. Whereas HitTail, it can sell without someone being behind it, right? It doesn’t need a personality or a face to get people using it because it’s a tool and it has utility and you use it for that purpose, whereas if you are selling knowledge and information and doing courses, you do really need I believe a face behind it to be the most effective.
[33:23] Mike: I think one of the dangers with kind of branding yourself as a specific person is that if that business ever goes away for whatever reason, then you’re still kind of tie to that. So, for example, a lot of people think that Joel Spolsky still runs Fog Creek and that you know, my…my understanding is that he doesn’t. He works in an office that’s right next to them but he stepped down as the CEO several years ago but people…and I’ve talked to some people. They still think he’s the CEO and I don’t believe he is. I think Michael Pryor is these days. So, the danger of course is that if you are associated with the specific brand for so long then it becomes difficult to step away from that and speaking from a different brand.
[34:04] So, now people may look at him and say, “Oh, well, he’s the CEO of Stack Exchange and the Fog Creek Software,” and that’s not necessarily true. Let’s say he decided to go off and do something completely different. Let’s say instead of working with developers, he works with accountants. Well, that persona is going to kind of follow him around. So, it’s really about what you want to be known as not necessarily just promoting your business but part of it is promoting your kind of personal brand. You don’t want to tie yourself to things that are going to weigh on you later on but you definitely want to be known for the things that you want to be known for versus things that, you know, people are going to associate with you that are going to have certain connotations associated with it. You don’t necessarily want to carry it around to every single audience that you speak with.
[34:47] Rob: So, thanks for that question. Our next one is about co-founders and equity. It’s from Tim O and he says, “Hi, Mike and Rob. I love the podcast. Thanks for sharing your knowledge with the world. I have a question that might be interesting to answer in the show. I’ve started a marketplace for recruitments agencies and freelancers in Germany. Since I don’t know how to code, I outsource the coding to multiple freelancers and I’ve been particularly happy with the work of one developer considering offering him equity to get him even more engaged and to get more of his time without paying more cash. I was thinking of offering 1% of the company each month over the course of two years. After 24 months, he would own 24%, in addition, I would still pay him a small amount every month but I would expect him not to count the hours. Of course, I do not expect him to be only working for me. What are your thoughts on this? What are the things to consider?”
[35:38] Mike: I think that the question here is really whether or not giving him equity would be something that motivates him. And it almost seems to me like there might be some sort of underlying question about whether or not he wants equity or whether he’s not involved as much as you would like, whether or not you can simply afford to continue paying him or pay him as much as you want. There’s a few different factors that are in play here and I think that if it’s because you want to reduce your upfront burden of paying him, I’m not entirely convinced that that’s going to work unless his goal is to have some sort of equity in the work because some people just don’t. Some people are just not cut out to be business owners or they don’t want to and that’s perfectly okay. There’s nothing wrong with that but there is a certain mentality that you kind of have to have in order to be the owner of a product and owner of a business and not everyone has that and that’s something you really absolutely have to understand because equity may not be something he wants.
[36:34] And on the other hand, if it is something that he wants, then you can certainly offer that but you need to talk to him and find out, you know, what his goals are, whether or not he’s working for other people and if so, what sort of other commitments he has. If right now you’re just having problems of getting hours out of the person and you know, you raise the rate and you’re still not getting the hours out of it, then to me, it seems like there is some other sort of commitment and it’s not necessarily financially-driven. Maybe this person is just doing it because they enjoy it or they’re just learning new things and they just want to learn those things. But you really need to find out what his motivations are versus what yours are and that really takes an honest discussion with him to figure that out. I mean you can’t just guess at them and throw something against the wall and hope that it sticks. You need to ask him or talk to him to find out what his motivations are and find out whether they match up with yours are and then work to find some sort of a middle ground. I think that the idea of offering equity overtime is a wise decision, whatever those percentages work out to be if as long as they fit with what you want, that’s fine.
[37:39] Rob: Yeah, the vesting is key. I think you need to do that. I also agreed with Mike about talking to this guy and figuring out if it’s one of his goals to own part of a company. I think 24% is way, way too much to give. Typically like a founding engineer might get 5% and sometimes it’s even less. Sometimes it’s…with a large company that’s already raised funding, it might be like 1 or 2% and then, you know, CEOs might get 5 to 7%. You’re in a little bit of a different situation because you’re much smaller but I think 24 is too much and maybe a third of a percent or half of a percent a month is probably as high as I would even think about going. The real issue here is what is that equity actually mean because are you planning on selling? Because that’s what, you know, equity in a venture-funded company, they either going to have an IPO or you can get your money out or they’re going to sell it to someone so you can get your money out. But unless you plan to sell the company and have a reasonable chance of doing so, equity isn’t actually that helpful.
[38:38] If you plan to give dividends meaning that everytime you take some money out of the company that’s not your salary, you plan to give him his appropriate percentage, then maybe you can do that. But this…it’s weird. Equity is weird with small businesses. It just doesn’t work out the same way that it does with large venture funding companies. So, I don’t really have a good answer to this other than to…to really think this through and to document everything in a contract whatever you decide. Probably give him less than…than you think you need to upfront. If he wants a huge amount of equity, then he may need to go start his own thing like it’s just…it’s not going to work to give hired or hand a developer a quarter of your company over the course of two years.
[39:22] Mike: Equity in a small business is a completely different animal than it is in like, you know, a large business or public company where, you know, the expectation is that there’s going to be some sort of exit for it.
[39:32] Music
[39:36] Rob: Our next question comes from Tenveer [Phonetic] and he says, “Do you recommend that a non-developer with no real understanding of this field get involved in owning software. My day job is an SEO and marketing so I had focused on that while outsourcing development and support. I’d love to hear your thoughts about this and if you’ve ever met any people who are trying to do this.”
[39:36] Mike: Honestly, I think that it’s a great idea. I don’t think that you need to know a lot about software to hire people to build software for you. Now, it obviously needs to work and you want to make sure that you have some sort of mechanism to make sure that you’re not getting code that is unmaintainable in the future but if you can vet the developers that are coming in to do the work for you, I don’t see anything wrong with this. And if your background is in SEO and marketing and that’s the primary focus of what you’re going to be doing in the business, then I feel like that would be a great opportunity. It would certainly be helpful for most people to know a lot more about SEO and marketing before they’ve start in to a business where you’re selling things online as oppose to beating your head against the wall a lot trying to figure out what works, what doesn’t and not having the experience or background doing that because you’re going to end up making all these mistakes versus someone like you in your position where you’ve already got that background and experience and what you need is you need a product.
[40:51] The other thing that you might consider is buying something. So, if you go out to either a marketplace or you find a product online where they’re not doing very good with the SEO and marketing, then you buy the product outright and then resell it and you know, find some engineers who can kind of tweak the product to make it fit your own brand and then you do your SEO and marketing magic to get it out in to the marketplace and sell it better than they were.
[41:16] Rob: I think if you’re going to get in to software that you should make your first app small so that you can have an early win and learn how it’s really going to be because if you try to tackle a big app like let’s say a SaaS app, there’s so many things to think about in building and maintaining and deploying and keeping the hosting up, the 24/7 aspect. There are so much to know that it’s hard to learn all of that in one swing and you’re going to be much more likely to fail. But if you pick a small problem, then you work with the software developer for the first time and you build, say a WordPress plug-in or you don’t need to handle all of the aspects, all the technical aspects but you really need to spec it out. You’re going to learn how to do that and then you’re going to, you know, learn how to work with the developer. Then learn the elements of the marketing. You can then take that with you and ramp up in the more complex products as you go and I think that early win will help built some confidence in your, you know, in your ability to manage these projects because Mike is right, you don’t need to know how to code to do it but t does help.
[42:13] And I would encourage you to whatever language you’re going to have something built in to buy a book or go through some kind of online course on this just so you know enough to know how hard things are, what it takes to build them. You don’t have to write all the code. You don’t have to write any of the code of your product but to understand what it takes to connect to a database and display something dynamic, you know, in a web page is really important when it comes to managing developers. Well, thanks for all the questions. As always you can e-mail them to us at startupsfortherestofus.com or call in to our voicemail at 888-801-9690 and we really hope that our answers were helpful.
[42:51] Music
[42:54] Mike: Our theme music is an excerpt from “We’re Outta Control” by MoOt, used under Creative Commons. You can subscribe to us in iTunes by searching for startups or via RSS at startupsfortherestofus.com where you’ll also find a full transcript of each episode. Thanks for listening. We’ll see you next time.
Episode 110 | Predictions for 2013
Show Notes
Transcript
[00:00] Mike: This is Startups for the Rest of Us: Episode 110.
[00:03] 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.
[00:19] Rob: And I’m Rob.
[00:20] 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?
[00:24] Rob: I am doing good. I’m winding down for the end of the year. I’ve already noticed a lot of my ads are not being clicked any longer [Laughter] the ones that that worked for the last several months, just noticed lower traffic, lower engagement, lower trial sign ups even on the traffic. I mean it really is a noticeable down turn.
[00:40] Mike: Uh huh. That’s interesting because I’ve…I’ve seen sort of the same thing with some of my sites but interestingly enough, I’ve had a couple of different customers contact me about the Altiris Training site that I have. And one of them told me flat out, “Hey, I’d like to look at your enterprise plan and if it looks good, then I’ll sign up and I’d like to issue purchase order for the full…for a full 12 months.” And I was thinking about it. I’m like, huh, I bet he’s got money to burn in his budget and he’s got to get rid of it before the end of the year and he’s looking for a way to dump it.
[01:12] Rob: That’s exactly what it is and that was the other thing. It’s both for budget and for tax purposes and I’ve already seen a couple e-mails of people saying, “Hey, can I pre-pay for a year in advance of this or that?” People asking about just some of the specials. I mean I did run some…we’ve…you and I ran some specials and then I ran some on my own and I got a better response that I thought I would. I like to think of December as kind of B2B stuff dying down. But there is definitely an angle here in terms of like you said budget and tax reasons. So, I’ve actually made a note to think harder about this next November.
[01:45] Mike: Well, I wonder if part of it is because the whole Fiscal Cliff here in the U.S. were tax rates are set to go up next year and nobody really knows what’s going to happen. So, because of all that uncertainty, they know how much they have to pay on their taxes this year. At least they know what the rate is but almost across the board, it’s going to go up in many cases by at least 5%, if not more.
[02:06] Rob: Right.
[02:06] Mike: So, I wonder if that has something to do with it. I wonder if you would see the same thing next year and I suspect you wouldn’t.
[02:11] Rob: Yeah, that makes sense because I’ve run a special…pretty much every December, I run specials almost across the board with all my businesses and I do like a prepaid special or you know, something where you can buy out ahead specifically for the tax reason and it hasn’t been as…I wouldn’t say it hasn’t been as successful as this year but it certainly hasn’t…there haven’t been as many people asking for it outside of that. So, I think you could be right because they all have been U.S., you know, U.S.-based companies or people who’ve been contacting me.
[02:38] Mike: Uh huh.
[02:38] Rob: How about with you? What’s going on?
[02:39] Mike: So, lately, I’ve been looking at Basecamp and FogBugz and trying to not necessarily integrate them but make sure that I’m using both of them effectively, to coordinate people who are doing on…doing different things for me and it still really early on it. I’ve been living…brought Basecamp in to the fold probably about a week ago. So, it’s still kind of a learning experience. Things are coming along. I bought its specs. I mean it’s a little bit slow. I wish things were going a little bit better. But I have seven different projects in there that I’m trying to manage and different people are involved and different projects on various levels. Right now, I’ve got five different people who are involved in the AuditShark launch projects. So, they’re still kind of counting down for that. But things are looking good for it so far. I mean I’m really happy about how things are progressing to kind of get it out the door and get it in people’s hands to really see what people are thinking of it.
[03:27] Rob: Right and that you’re still looking at mid January for that?
[03:30] Mike: Yeah.
[03:30] Rob: All right, cool. Now, we look at using…I already use FogBugz to navigate and coordinate and track features and tasks and such, someone suggested…someone on my team suggested we should look at Basecamp which I’ve used in the past and it’s okay. I mean FogBugz is not outstanding but it’s just…it’s what we use, right? So, it’s like the…the shifting cost is high so really has to add a lot to it in order to move to Basecamp or to use two tools. And we looked at it and decided that we could get done what we need to in FogBugz or with…with the new project with Drip, we have the…it’s the old Joel Spolsky project tracking spreadsheet. Remember? It’s genius. And I’ve…that’s what I used as a consultant when I was coding for years. I mean even with multiple teams we would share an Excel spreadsheet which is kind of kludgy but now, it’s a lot easier with Google doc. We decided not to use Basecamp. We’re using these other…these other avenues and so far, they’re working really well. So, I want to find out what you’re doing in Basecamp that you can’t do with FogBugz?
[04:26] Mike: Part of it is about just the cost of giving everybody access to FogBugz because, you know, I have people who are using Basecamp who are not developers and it seems a little excessive to be having them…to give them access to FogBugz when I have to pay for both Kiln and for FogBugz. So, it’s…you know, it’s $30 license per month and not everybody is working all the time.
[04:47] Rob: Right.
[04:47] Mike: And that’s the other issue is like, you know, sometimes I’ll have one developer, sometimes I’ll have five and it’s like the fluctuations are kind of pain in the neck. With Basecamp, I don’t have to worry about it. It’s just like, oh, you get 10 projects for 20 bucks a month. All the people who are doing stuff that is non-developer related, they basically use everything that’s in Basecamp and the people who are doing all the developer stuff are using FogBugz. So, there is kind of that…the lineation between them and it might be nice at times to be able to kind of tie them together but the thing that I like about using Basecamp is that I can upload files and have them they’re available. I can have discussions. I can put text documents that everybody is going to be able to see and it’s…I’ll say it’s a little bit more visible there than it is on the Wiki and the other thing is that you can put things in there that are highly visible to multiple view. I said, “Look guys, these are our top five priorities for example and these are the things that we’re going to work on and you’re going to work on this, you’re going to wok on that.”
[05:41] And I don’t know, I feel like in certain ways, it’s easier to see the to-do list and you just check them off instead having a process in place where you’ve got, oh, you got to open this up and you’re going to review it. You’re going to mark this result, you’re going to close it and I know that there’s work flows in the background with the FogBugz that you can use to kind of address some of those issues. But it just seems like there are certain cases where just using Basecamp for some things work better because it’s just like a to-do list. “Hey, I need an article for this. I need an article for that.” And you’re just got like ten different articles and it’s like, okay, well how do you track in FogBugz? Typically, you’d have ten different cases for that or you could have one case where they just have to edit it up with time and it’s like, okay, well, is it done? Is it not done? Then you’ll have to drill in and figure it out, oh, he’s got 4 of it, 19 done. You know, it‘s just not as easy to see some of those things.
[06:23] Rob: Right, it sounds like you’re saying Basecamp is less cumbersome for the task you’re doing and it’s less expensive. So, it’s kind of a no-brainer and it’s sounds like if…if you are just a team of three or four developers and you are all coders that you are just bite the bullet potentially and just do all FogBugz because you guys will all get the work flow. But —
[06:43] Mike: Right.
[06:43] Rob: …since you have some non-devs, it kind of makes sense. There is some complexity involved in FogBugz that’s where you’re introducing Basecamp.
[06:49] Mike: Right, right.
[06:50] Rob: Yeah, that makes sense.
[06:51] Mike: So, like I said so far it’s been going reasonably well but, you know, we’ll see how it goes. I mean who knows, maybe I’ll decide to ditch in a month and it just doesn’t work out.
[06:59] Rob: Very good. Any other updates?
[07:01] Mike: The e-mail marketing campaign that I’ve…I’ve mentioned a week or two ago is starting to get interesting. I’ve got the KISSmetrics account set up. I’ve got a MailChimp account set up. I’ve got the template for the e-mail all straightened out and hopefully, e-mails will start flying in the next 48 hours.
[07:16] Rob: Very nice, that’s for a client, right?
[07:18] Mike: Yup.
[07:18] Rob: Okay, cool. So, you’re…you’re kind of rehabbing his old list that that really hasn’t been utilized very well. So, you’ll get to see if anyone has actually have receiving them pretty soon and what their responses and all that.
[07:23] Mike: Yeah, apparently, they have been sending them but they’ve been sending them through their Outlook online account. So —
[07:34] Rob: Yeah.
[07:34] Mike: …it’s not through their local ISP but they’ve been limited to, I think 500 e-mails a day.
[07:39] Rob: Right.
[07:39] Mike: So, they’ll send a few hundred one day and then a few hundred the next day and it’s just they’re not able to get them to the users on a specific time of a day unless they do it themselves and they can’t really schedule that stuff in advance. They have no metrics about who’s opening it and receive rates. You know, they know when it gets bounced and they know when somebody replies and says unsubscribe but beyond that, they really just have no idea what’s going on. So, hopefully, this will turn out well for them but I’m hoping to just having the statistic there and being able to measure that stuff will give them a better idea of what sort of things they should do. And I’m also doing some split testing based on the original e-mail that they gave me versus an e-mail that I’m tweaking to kind of show them and highlight some of the results and some of the differences between us through e-mails.
[08:21] Rob: Nice, well, I look forward to an update from that.
[08:21] Music
[08:26] Mike: So, today we’re going to talk about our goals and predictions for 2013.
[08:30] Rob: So, let’s dive in. What’s your first one?
[08:32] Mike: So my first goal for next year is to stop writing code.
[08:35] Rob: Gasp. Stop writing code, Mike. [Laughter] So, what’s the impetus behind this one?
[08:41] Mike: Well, I mean the fact is that I’m trying to engineer a business and building a business is not a lot different than building a product. I mean it kind of is but like when you’re building code, you’re building it to provide some sort of functionality and I’m trying to step back from the code because although it is important, as a developer, I realized how important it is to certain things work correctly. As a business owner, I also realized that the business is more important and I can replace myself in writing the code. So, if I can find somebody I trust to handle the code and handle those responsibilities, then I can step back from that. And things are getting to the point where I feel like I’ve got the development team in place that I need who can actually handle it and I trust them to be able to make the right decisions and be able to come back to me with stuff to say, “Hey, this isn’t working. That’s not working. We should do this or that.”
[09:27] And you know, I can just trust their judgment and that they’re going to make those right decisions and come to me with ideas and thoughts about how to do that stuff and I can turn them lose on it and they’ll go implement it in a way that makes sense that it’s going to be good for the business. And at that point, it gives me the opportunity to step back and concentrate on all the other parts of the business that need additional help.
[09:49] Rob: I would like to get to learn Ruby on Rails because that’s what Drip is going to be built in.
[09:54] Mike: Ah.
[09:54] Rob: So, I have a big ramp up [Laughter] period going on there because I just haven’t done much with it. But no, I totally hear what you’re saying and it sounds like you’ve been over the past three to six months, you’ve been hiring and vetting several different developers. So —
[10:08] Mike: Uh huh.
[10:08] Rob: …it feels to me like based on what you said that you’re kind of on way to doing this if you’re able to keep these guys around and that they do in fact perform for you. Do you think your current stock of developers will be the ones that’ll stick around or do you think you might need to change up probably through the year if you achieve success kind of…kind of scale it up and get some…I’ll say some better developers.
[10:29] Mike: I think the guys who are doing work for me right now can definitely handle it. I don’t feel like there’s any weaklings I’ll say, you know, availability and scheduling and things like that are always kind of, you know, an issue that it has to be dealt with but if things start to go well then it’s not like they don’t have the talent. The talent is not my concern. It’s, you know, can I afford to continue to make sure that they’re busy at a rate which they will not have to go look for other work.
[10:55] Rob: So, I have four goals that I have written down for 2013 and my first one is to grow HitTail by 2.5 X. So, 250% and I’m actually basing that on the October revenue. So, it’s about, you know, month and a half ago and that’s just because of that times two and a half makes a nice round number and I figure if I get there around next October potentially at the end of next year that I will be please with it.
[11:19] Mike: Very cool.
[11:19] Rob: Yeah, I’m excited. We have a plan in place and so —
[11:23] Mike: Yeah.
[11:23] Rob: …I’m assuming it’s going to change dramatically as the year goes on but things weren’t executing on right now or have us on pace to do that. So…
[11:29] Mike: I will say you’re cheating though. You’re giving yourself like a 6-week head start.
[11:34] Rob: At least, yeah, about two months it looks like. So hopefully, I mean in the ideal world, I’ll hit before the end of the year in which case it really will be a year over a year thing.
[11:42] Mike: That’s cool. So, my second goal is to launch AuditShark publicly. The January 14th date is really kind of my…my soft launch to get it in people’s hands and work with them a lot more to make sure that they’re using it, gets to incorporate some of that feedback and then I’ll have another launch date in mind where I’m actually going to go public with it and say, “Look, you know, here it is,” kind of open up the floodgates and see what happens.
[12:04] Rob: That’s exciting. The day is finally coming.
[12:06] Mike: [Laughter]
[12:08] Rob: My…my second goal is to launch Drip which I mentioned on our last episode and that’s a new…it’s an e-mail marketing SaaS app that I’ll be launching, hopefully, in the spring, that’s the goal and I also have a 6-month revenue mark that I planned to hit based on the marketing plan and stuff I’ve seen working with…with my other apps. I’m excited about that. If folks are interested to hear about that, it’s at getdrip.com. And it’s one of those things where you just have no idea, right? If…let’s say the launch list is thousands of e-mails, I could hit that revenue mark very quickly or if the launch list is thousand of e-mails that don’t convert very well, [Laughter] then that later it’ll take me, you know, the full six months to get there.
[12:47] So, there are somewhere in between but I just…and like to have…I found it when I have some specific goals to shoot for as long as I don’t let them overwhelm me like I did early on with HitTail where I…where it actually started…it started impacting my performance in a negative way because I was so burden with…with the goal, the revenue goal I had. As long as I don’t do that, I find it that it drives me and you know, it makes me focus on that single metric that I’m…that I’m trying to hit in a certain period of time.
[13:12] Mike: Cool. So, my third goal is to grow to a fulltime team of at least three people. And by a fulltime team, I mean myself and at least two others who are essentially underneath the umbrella of Moon River Software.
[13:24] Rob: Got it and is that working on AuditShark or is that include Altiris Training and others?
[13:28] Mike: It include…it includes the other things as well but I think enough to keep at least three people, if not more busy on AuditShark. As I’ve said before I’m trying to back off from writing the code so I don’t have as much to do there which means I can start pointing at things and say this needs to get that and that needs to get that and I’ve started really doing that over the past month or two. And being able to outsource those tasks so that I don’t have to spend 20 or 30 hours coding three or four different features, I can just say, “Hey, I need you to do this, I need you to do that. And these are the things that need to get done.”
[13:58] And being able to hand those off and have them spend the 20, 30, 40 hours doing those, has really been helpful in terms of overall productivity. And I think that there’s definitely enough work there to keep people busy. I mean I still have 500 open cases in FogBugz right now that need to be fixed in some way, shape of form on various projects. So, it’s not like there’s not work there. It’s a matter of getting the work done in the right order such that it brings in the revenue as quickly as possible in order to be able to scale up the business a little bit.
[14:27] Rob: Where did you come up with the number of three? I guess three includes you.
[14:31] Mike: Uh huh.
[14:32] Rob: Okay, so it’s two other devs. So, why two devs instead of 3, 4 or 5 or just 1?
[14:37] Mike: Part of it is financial reasons because I don’t know and it kind of relates to one of my other goals which is to cut 75% of my travel consulting which essentially means getting rid of all consulting revenue.
[14:48] Rob: Yup.
[14:49] Mike: So, part of that ties in to the fact that I have to essentially replace that revenue with other revenue and in addition to that, I need to be able to fund other people to work on the products. So there’s kind of a huge growth margin there just in terms of shifting from consulting to product revenue but I think that the way things are aligned and the way things are starting to turn out that that’s entirely possible, I just don’t have a good feel for what the timeline of that looks like because there’s a few different things that are in the pipeline that haven’t launch, haven’t gotten out the door yet and until they do, it’s hard to measure what the impact to those are going to be because as you said with the Get Drip, I mean it could be widely successful on day one, it could take a while to get there, really kind of depends on how those things turn out.
[15:34] Rob: Do you also have a revenue goal for AuditShark in mind?
[15:37] Mike: Not specifically, I mean I haven’t sat down to kind of go over all the numbers because the people who are doing work for me right now are doing it more on a part time basis so because of that I just haven’t sat down and do it.
[15:48] Rob: Well my third goal is to have another MicroConf that changes the way that people launch their companies. I felt like the last two years of MicroConf have just been an amazing success and it’s because in the interim year between the conferences, I’m seeing tweets. People hash tagging with MicroConf that say, “Hey, I just launched,” “Hey, I just got this partnership,” “Hey, we started a mastermind group based on MicroConf,” like it impacts people’s business, lives, their professional lives and it’s making a difference in how they do things and it absolutely makes a difference in how I run things based on the people that I meet.
[16:26] There are relationships that…that I’ve been able to build and just the inspiration that I take away from my MicroConf. So, my goal is obviously always to improve the event and to make the, you know, next MicroConf better than the last one but beyond that, I really just want to continue impacting this world of bootstrappers. And I don’t mean this to sound like High and Mighty like oh, we’re changing the world or anything but I really do feel like we’re changing the lives of, you know, the hundred and fifty people that attend. And so that is absolutely a goal high in my list for 2013.
[16:58] Mike: Yeah, I totally agree. I didn’t specifically write that down but that’s definitely entered my mind as well as something, you know, with my MicroConf is just being able to provide an environment for everybody to kind of come together who has similar problems, is in a similar situation and just, you know, providing that environment for them benefits us. I mean it’s…but it’s just really nice to be able to talk to other people who are in the same situation as, you know, myself and yourself and be able to get feedback from people and say, “Hey, I know you had a problem with this. How did you guys deal with it?” Because it seems to me like you can run your business and live just about anywhere you want but when you do so, it tends to be difficult to run in to other people who live in the same area who also have those same types of problems. You just don’t get together with them very often.
[17:41] Rob: Yeah, the…the conversations that I’ve had at the last couple MicroConfs have stuck with me the entire year in terms of both motivation and just changing the way that I…that I operate the new things I try with businesses, new directions that I take and they really are like, you know, I’ve said on air before like that recording this podcast is actually one of the highlights of my week, like it’s one of the best hours of my week to do this. And MicroConf is one of the hardest three days, five days [Laughter] whatever it winds up being but it is definitely one of the highlights of my year and part of that is because of the way it impacts my businesses but the other part is the way that everyone gets together and then I feel there’s like this brief glimpse of time where everyone is on the same page and people go away from it and do awesome things that they wouldn’t have done if they hadn’t shown up.
[18:29] Mike: And one of the next things on my list is to help my wife’s fitness business becomes stable and profitable. I think I’ve mentioned before, she’s a certified Zumba instructor.
[18:38] Rob: Right. Does she work at a gym like she rents a room or she’s an employee of the gym or a contractor?
[18:38] Mike: She’s an independent contractor right now.
[18:46] Rob: Okay.
[18:46] Mike: But she doesn’t have a formal business or anything like and she’s done a lot of certifications around various things so there…she’s done Group Fitness Certification, Zumba Certifications. I think one of them is called like a Gold Certification where it’s designed for people who are older and then she’s also done like high intensity training which is for people who really want to stress themselves and push themselves to the limit. So, she’s kind of all over the map in terms of what she has the capability to do but she’s always going in to these places as an independent contractor. And what she’s trying to do is she’s trying to develop in to more of a business so that she does it fulltime as oppose to somebody who just does it on the side.
[19:25] Rob: And how are you going to be able to help with that?
[19:27] Mike: Right now, I actually…one of the projects that I have that I’m running on the side is to build a website for her and get all that stuff up and running. And then once the first of the year comes around, she’s going to essentially take over that website. She’s going to file for a business. I’m going to be doing some of the e-mail marketing and website marketing for her.
[19:45] Rob: Very nice, well, good luck with that. My fourth and final goal for 2013 is to release three knowledge products also known as information products.
[19:53] Mike: It’s just funny hearing that from somebody who has their background in developer…is a developer and it’s like you look at that and you’re like, “Oh, no. Not another info products.”
[20:02] Rob: Yeah, Well, I mean my goal is for it not to be another info product, you know. The stuff that I’ve done in the past has been different from the standards and that’s certainly the goal. I’m not going to release something that’s not going to help people. I put it that way.
[20:15] Mike: I’ve seen the stuff that you work on. It’s topnotch. It’s…it’s great quality. It’s just that when…when people think info product or when you say info product, the very first thing that you think is like sleazeball marketer who’s selling stuff that’s just…just not work.
[20:27] Rob: Right. So, I’ll call it a knowledge product and is that as…is that clearer or does that just make it…make you not know what heck I’m talking about?
[20:33] Mike: I’m not sure. I think it just needs a different name as —
[20:36] Rob: Yeah.
[20:36] Mike: …oppose like an info products.
[20:38] Rob: So, I want to release three-short training courses.
[20:41] Mike: There you go.
[20:41] Rob: Yeah.
[20:42] Mike: That’s it —
[20:42] Rob: So, that are delivered via…[Laughter] like the first one is going to be a video training course and it’s going to be all the resources and all the info I have on hiring managing virtual assistants. So, it’s going to include sample training screencast, the job posting that I use on oDesk. It’s going to include e-mails and questions and dadadadada so, which is all the info. I actually have a professional videographer showing up here tomorrow and doing a video interview of someone who’s going to interview me about it and I’m excited. For me, it’s a…it is much of a learning process to produce it because it’s such a new thing. I’ve never, you know, done a knowledge part or training course like this in this format. It’s always typically been screencast and or written, an audio.
[21:23] So, I’m excited to tackle this one. The second…third, I don’t…they almost don’t fit this format, the interview format, so I’ll probably do them a little differently but I always like keeping my toe dipped in multiple baskets. The software is fun and that there’s a lot of learning that takes place there but I also really love helping people right in the training is something that I’ve done since, gosh, since I started my blog in 2005. I mean that’s why I started it. It was to pass on knowledge and so…sort of I hope to do with these courses.
[21:50] Mike: Seems like you kind of thrive on publishing or producing different products that are different enough that the marketing challenges are a completely different from one another.
[22:02] Rob: Yes, that’s probably…that’s actually a good summary of it, right, is it that I won’t market this in the same way that I market HitTail or that I market Drip and that’s exciting to me and interesting and it’s interesting for me to enter…I’ll probably sell some of these training courses to different people who wouldn’t buy Drip or by HitTail and that’s interesting to me as well. It’s like helping a new audiences dealing with a new group of people being able to contribute there. But I do like your suggestion. I don’t know if you…I just updated the outline because info products has a certain ramification and training course is…I think I’m going to start calling them that from here on.
[22:37] Mike: Yeah, I think it’s just the connotation associated with the word info product and that’s what…that’s what got me. It was…it was not that, you know, you’re building a training courses that you called it in an info product and it’s like, ugh, I feel like this should be on TV or something, you know.
[22:50] Rob: How about you? Do you have one more goal?
[22:51] Mike: Yeah. So, the last one I have is to write a security book. I talked previously about possibly writing a book and kind of solidify my ideas around it and really think that writing a security book to assist with the marketing behind AuditShark is a good way to go. It’s, again, it’s one of those long term goals. I don’t expect to sit down and just hash it out and bang it out over the course of like a month or six weeks or something like that. I really think that it’s going to take a fairly significant chunk of time to do it but it’s going to be a little bit here, a little bit there. It’s…I view it as more of a long term project. I think it’s going to take a while to get done.
[22:51] Music
[23:27] Rob: Should be diving to some of our predictions?
[23:29] Mike: Oh, yes. This should be fun.
[23:29] Rob: Okay, I’ll jump in with my first one. Last year around this time, we made a couple of predictions. I think threw out that I thought 2012 would be the year of Pinterest and when I name…when I said that you said, “I’ve never heard of it.” Ain’t that funny? Do you…have you heard of Pinterest now?
[23:45] Mike: I have heard of it. I don’t remember when I last heard it though.
[23:49] Rob: So, it seems to have really resonant popularity with the mass audience and then it seems like with my wife’s circle of friends who kind of first introduced it, all of them have stopped using it a lot. They still use it as kind of as a tool or as a resource but it’s not the social network they were once using it as. They’re…they’re now back to using Facebook for most things and for certain specific niche uses, they use Pinterest. I see there’s a lot of value for designers, for photographers, for things where…where…and travel websites where pictures are really important. I know it drives a ton of traffic for certain large niches, I don’t know.
[24:26] I think 2013, I’m kind of revising my Pinterest or updating the Pinterest prediction. Pinterest just going to continue to grow and I think it’s kind of widely popular and it offers opportunities for tying in to it, you know, with in terms of developers. I think they’re probably going to have an API that comes out that kind of stuff. So, there’s definitely going to be opportunity there but I don’t think Pinterest has the potential to be as big as say…a super large network like Facebook. I do think that it’s going to grow a little slower than that. But as I said I do think there are going to be opportunities in 2013 if…if you’re a developer and you want to start building add ons to something that is growing quickly, Pinterest is going to continue to do that this year. All right. How about…how about another one?
[25:05] Mike: I feel like Google is going to continue to host people for using marketing techniques that they have advocated that people use for years and they’ll do that basically by introducing various Algorithm updates which tweak things that they told people that they should be doing these things and now, they’re going to turn around kind of stab them in the back.
[25:23] Rob: Yeah, probably. I think we’re in general because I have a prediction as well that basically says more Google changes are going to come that are going to hammer SEOs and I don’t just mean Algorithm updates, I actually mean they have tool updates they’re doing to keyword tools. They shut down part of their API that SEOs were using. There’s all manner of things that even with Google, the suggest when you type in it, auto completes your queries, that’s taking stuff away from long tail SEO which scoops it in to, you know, paid acquisition. I mean it really is just an…they have a big anti-SEO stunts these days. So, I would agree with that, nothing shocking there. I imagine they’ll be naming them after some other animals. So, we’re going to have to go for update, the Zebra update.
[26:05] Mike: The Honey Badger update?
[26:06] Rob: Honey Badger update. Okay, so let’s see, another prediction I have is that WordPress is going to continue to become more and more prominent. And this is a no-brainer, right? I think it’s like 17% of all websites were on WordPress right now. It is just 300-pound gorilla and so, there are definitely opportunities there in terms of plug-ins and tie ins, the themes and add ons. I don’t think that market is over. People thought a couple of years ago that starting the podcast was too late. They thought three years ago starting the blog was too late. It’s never too late to get in on these large fast growing markets. And so, I definitely think 2013 will continue to be the year of WordPress.
[26:44] Mike: Well, I have a couple of anti-predictions.
[26:46] Rob: Okay.
[26:46] Mike: So, the first one is I don’t foresee Apple releasing any completely brand new products this coming year. So, what I’m thinking of more along the lines of is this year they released the…the iPad mini…I see them making a lot of tweaks to existing products but I don’t see them coming out with something that is I’ll say revolutionary in the way that they would look at it as revolutionary. I see this incremental updates to existing products but nothing that’s going to make a giant splash the way the original iPhone did or the iPod or the iPad or anything like that. I just don’t see that happening.
[27:20] Rob: Yeah, people are talking that the future is with wearable devices. So, it’s like wristwatches, glasses, other kind of wearable tech that integrates with your mobile devices and such. And I don’t know…I think Google is going to release their Google glasses or Google glass or whatever it is. This year it’s slated. And so, I could see Apple coming out of the woodwork with something like that. Otherwise, they are going to be a little…little behind the curve in that stuff. Now, I don’t know if that’s just going to take off. That all sounds kind of goofy to me. I don’t really want to wear a wristwatch or glasses for that purpose. But you know, I didn’t think I’d want to use a tablet either. I pooh-pooh the iPad before they release it and I didn’t think it was going to fly. So, but I do think there’s possibility that Apple will release an Apple TV this year beyond just a little pock that they’ve released.
[28:07] Mike: I don’t think so. I really don’t and the reason…and here’s the reason I don’t think that they will, I think that…and it’s not to say they won’t take the Apple TV and make it in to more of a media center but when you say an Apple TV or you’re thinking of like an actual television that has like Apple software and hardware built in to it.
[28:24] Rob: Yeah, here’s what I think they’ll do, I think they’ll take like a Mac mini and they’ll use the 35 inch cinema display or 40 inch cinema display or something and that…it’ll be a media center that won’t just be the little pock. It won’t be some TV manufacture by Toshiba either which there are rumors of that and the rumor is actually came up today that Apple is talking with Foxconn in getting quotes on a…an actual television…television like you and I think of, like a 60 inch display, you know, just a TV. All right? If that happens, I don’t think it’s going to happen in 2013 but I do imagine the Apple is going to…going to cut some…some content deals this year and that the…the pocks is going to get revamp. They’re going to have apps to go on that the pock and potentially that software within run on like a Mac mini that drives your large cinema display for…probably for, you know, bedroom use or office use to start with and then they’ll slowly move in to like the living room market where you need the larger displays.
[29:19] Mike: Yeah, I just don’t see them moving in to that living room market because if they can build a device that cause exponentially less that plugs in to the hardware and an infrastructure that you already have as oppose to forcing you to shell out 2 or $3,000 for a TV which unless beyond some I mean Apple that that’s the kind of price range that Apple likes to look at. And I think if the margins that Apple likes to get, I don’t think that they’re going to do anything like that in this coming year. I —
[29:47] Rob: I —
[29:47] Mike: …I can see them doing something with the retina display. I can see them doing something significant there and put it in to like a 27 or 30 inch monitor or something like that and saying, “Okay, well, here’s our giant monitor that has the retina display built in to it.” But beyond that, I just don’t see any new products coming down the line that, you know, because it’s almost like the kind of the end of Steve Jobs’s visions for the company, you know, the pipeline of products that he had in place. I would imagine that it’s probably that that well is almost dry at this point.
[30:17] Rob: Yeah, I agree with you that building large cinema display is kind of a shaky production because the…what is it? The replacement time on there is typically 10…5 or 10 years where we buy a new…whereas Apple likes to have a…something new every couple of years. The replacement cycle is a little shorter. So, anything that has a longer place in cycle, I don’t see Apple getting in to. My next prediction is that this will be the year that some subscription WordPress plug-ins start making the splash. Up until now, it’s been tough for WordPress developers to get recurring revenue and I know a lot of them that are…that are doing well because the market is growing, a lot of people installing new WordPress sites all the time but really getting that…that sustained revenue where you can build a large business is tough. And so I think someone is going to crack that nut in 2013 and hopefully, others will follow because I do think like with my previous prediction that there’s just a lot of potential in this market.
[31:10] Mike: Yeah, I can definitely see that as well. I mean there’s companies out there that are making money hand over fist and at some point, they essentially saturate the market that they’re in and they have two options at that one point either see as growing or move in to other markets and that recurring revenue stream for them just hasn’t really been there and I can definitely see people starting to charge either on a recurring model for updates to the products or maybe taking a step further and start supplying content updates not necessarily just the plug-in itself but content behind the plug-in which I think would be an interesting model because let’s say that you could buy an SEO marketing plug-in for your website where you pay them not just for the plug-in but for a subscription service that will do X on your website.
[31:57] Rob: And some people are doing this now. It’s just no one has achieve massive success that I know about. It’s funny you mentioned SEO services because with HitTail, we have a free HitTail plug-in and if you pay for the HitTail service it, you know, allows you to do some…actually all it does is help with the install right now but we have plans in 2013 to have it provide suggestions right there in your WordPress dashboards so that you can describe blog post base on it. So, that’s the kind of thing that I, you know, I could see…see people doing even potentially without the SaaS web interface at all. Just having it everything be interface through the plug in. Maybe that’s a hope more than a prediction but I certainly hope someone cracks that nut.
[32:36] Mike: My other anti-prediction is I don’t think that Windows 8 is going to completely take the world by storm.
[32:41] Rob: Yeah, this is a tough one because I think it’ll be fine. I mean Windows 8 on a desktop, Windows 8 on the tablet, you know, like on the Surface and others Windows 8 on the phone and it’s Windows Phone 8 but it’s very similar interface. So, which of those are…are you saying it’s not going to take the world by storm, all of them?
[32:58] Mike: I think that they’re all do reasonably well but I don’t think that it’s going to be this giant splash that turns Microsoft around. I mean Microsoft to me feels like it a ship that is kind of drifting. It’s got a good general direction but they’re not making any real head way in the search market or not really making any head way in the mobile market. They’re doing reasonably well. I mean they’re holding their ground but it doesn’t to me like they’re getting the growth, let’s say, they’re looking for. And I don’t think the Windows 8 is really going to change that. Now, that may change down the road but I just don’t think that it’s going to be this year.
[33:34] Rob: So, I think Windows 8 on the desktop is going to do just fine. Windows sells a bazillion copies and then what does it sell…it averages million copies a month right now approximately and I think that’s the pace that…that 8 is on. So, I don’t think it’s going to revolutionize their business but I do think it’s going to keep doing just fine on the desktop although the desktop is becoming a less and less relevant, right? Desktop sale have declined and they’re going to continue to decline because mobile is…mobile and tablets are where people are really spending the money and where the units are being moved. In terms of the tablet, I don’t know, that’s a tough one. I don’t think the Surface is going to take the world by storm because the iPad has such a lock on it but I do think they’ll gain some ground this year on Apple and Android.
[34:14] The Windows phone I think has a chance, a real chance to do some damage this year because the UI is awesome. It works really well on the phone. The Windows phone that I’ve seen and held, they work really well and I’ve had some non-developer just straight up consumer friends who have been…who have love their Windows phone and love the Live Tiles and all that stuff. They…they really have innovated in a unique way, in a way that Microsoft is not known for in that…that phone interface and if they can get enough people liking that, they could feasibly ride the back of that and improve on their…their tablet sales and actually, you know, make a dent as well.
[34:50] So, my fifth and final prediction is that this year in 2013, the startup bubble is going to become more evident and what I mean by that is inflated valuations of startups and I am hearing from angel investors, venture capitalist, this is both people I know as well as just podcast that I listen to that valuations have risen so much that it’s becoming more and more difficult to invest at all that people are holding their money because you’re getting these companies that have just launched and they’re asking for 5, $7 million evaluations when they don’t really have any revenue and you don’t even know if they’ve…if they’ve found a market yet. But they’re so much money that they’re getting funded anyways. And so the…the knowledgeable VCs who’ve been through this a few times, knowledgeable angel investors as well are starting to pull back.
[35:37] And so, I think 2013 is either going to have a burst where, you know, that the non-eligible angel investors and VCs start realizing that their investments aren’t panning out. These companies start crashing and then they have kind of a little panic which is a little bit of a burst. I think that could feasibly happen as soon as 2013. Now, it may think till 2014. The good news is that that doesn’t matter for us. And if you’re building a business where you don’t need a bunch of funding where you don’t need someone to acquire you, then all of this is just a side show. You know, we can…we can listen to podcast and redo the magazines and watch panic ensue. I just don’t think it’s going to have that much of an impact on people like us who are building profitable bootstrap businesses.
[36:18] Mike: Yeah and that’s honestly quite nice. They not have to worry about that thing. I do question though if there is a…if there is a bubble and ends up crashing, what the fallout is going to be for the rest of the market though.
[36:29] Rob: Yeah, well, I mean I think the stock market could take a tumble because it’s so emotional. So, it could feasibly I mean given the tenuous financial situation in around the world right now, you’re right it could impact the markets and people could have a bunch, you know, a whole reaction, a chain reaction of people pulling their money back, stopping their spending so then your and my small bootstrap business can get more contracts. That could feasibly happen. I don’t know that it will. I wouldn’t predict something that dire. I would more predict that it just becomes a heck of a lot harder to get funding over the next 6 to 18 months and that we see a lot of those businesses who’ve been funded during this last 12 months where evaluations have been high that they…they can’t get off the ground, they can’t get the revenue quick enough to meet those evaluations so they wind up having to either do massive pivots, not return the money to the investors or…or just shut down out right. My hope is that it won’t cascade any larger beyond that outside of the tech sector.
[37:27] Mike: So, one other prediction that I want to threw it out there is I think that one of the major PC vendors is either going to go under or have to declare bankruptcy or merge with another vendor.
[37:39] Rob: I could see that. Yeah, because that market is absolutely becoming less relevant and it is in decline. And whether your prediction comes true this year, if it doesn’t, I bet it’ll be in 2014.
[37:50] Mike: The thing is about that prediction. I’m hesitant to actually put a bet on which vendor it would be. I don’t think it would be Apple, I’ll tell you that but —
[37:59] Rob: They’re not a vendor anymore, man. They’re…I mean they’re a consumer electronics company now.
[38:02] Mike: Right —
[38:02] Rob: I would think HP, Dell so…I mean there’s maybe a top five and I…I could easily see one of them merging or shutting down like you’ve said.
[38:11] Mike: Uh huh. So, the one question we have left unanswered though is that will Twinkies make a reappearance?
[38:19] Rob: Very good. So, my prediction is that they will and they’ll obviously be owned by someone else and just be a brand name on a new recipe that’s as close to the old one as they legally can get.
[38:29] Mike: I think that somebody will…as part of liquidation of the company, I think somebody is going to buy that asset. I don’t know who but somebody is going to. I mean and Twinkies are one of those things where it’s kind of an iconic thing more than anything else and I could see a company stepping up to the plate to buy them just to own that icon.
[38:46] Rob: Absolutely. I have no doubts about that. The brand value they say is…is it hundreds of millions? It’s not just Twinkies, it was all the hostess line was in the hundreds of millions and someone compared it. I think it was MPR compared it to the brand value of Circuits City when it went out of business sold for, I think $6 million, somewhere on that realm. So, it’s just that…such a timeless brand that really, you know, has a positive place in people’s mind as oppose to something like Circuit City.
[39:12] Music
[39:15] Rob: If you have a question or comment, please call it in to our voicemail number at 888-801-9690 or e-mail us at questions@startupsfortherestofus.com. Our theme music is an excerpt from “We’re Outta Control” by MoOt, used under Creative Commons. Subscribe to this podcast in iTunes by searching for startups or via RSS at startupsfortherestofus.com where you’ll also find a full transcript of each episode. Thanks for listening. See you next time.
Episode 109.5 | MicroConf 2013 Announcement
Show Notes
- MicroConf will be April 28-30, 2013 at the Tropicana in Las Vegas
- Get on the MicroConf Early-Bird List
- MicroConf Promo Video
Episode 109 | 6 Facts About Your Brain Chemistry That Can Help You Achieve Peak Productivity
Show Notes
- (Book) Your Brain at Work
Transcript
[00:00] Rob: In this episode of Startups for the Rest of Us, Mike and I are going to be running through six facts about your brain chemistry that can help you achieve peak productivity. This is Startups for the Rest of Us: Episode 109.
[00:12] Music
[00:21] 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.
[00:30] Mike: And I’m Mike.
[00:31] Rob: We’re here to share our experiences to help you avoid the same mistakes we’ve made. What is the word this week, sir?
[00:36] Mike: The word of this week is Brooklyn because I’m back there again.
[00:39] Rob: Is that where you are?
[00:39] Mike: Yup.
[00:40] Rob: And you’re meeting with a few entrepreneurs while you’re out there?
[00:42] Mike: Yeah. So, I’m meeting James from The Whicher and Corey from the Birdy for dinner on Thursday night. I don’t know if anyone else is going to show up but, you know, we’ll see how that goes. I think we put out some fillers to some people who might be interested and you know, hopefully, we’ll get a small gathering for Thursday night. We’re still kind of deciding on where to meet up. But it should be fun.
[00:59] Rob: So, did James and Corey live there in Brooklyn or in the area?
[01:02] Mike: They live in the general vicinity.
[01:05] Rob: Well, good. So, I have an announcement to make this week. My new product that I’m starting to work on right now is called Drip and you can check out the landing page at getdrip.com. The goal of Drip is to make your website visitors sign up for a trial or to buy, if you don’t have a trial, using e-mail follow up. And it lives in it…the first segment of e-mail follow up, you know, there’s like e-mail follow up during trial, e-mail follow up post purchase but then there’s that pre-trial thing. It’s getting people who just come to visit to get a little more engaged with your product and it’s something…it’s been highly effective for all of my products. And so we built the little engine to…nice little engine to do it on HitTail and we’ve realized there’s a lot of limitations to it. We built and it’s already taking a lot of time.
[01:44] And so, we’re going to start with that and expand it out in to a full-blown SaaS product and the test I’ve done with all my different products I get anywhere between a 5 and a 20% increase in conversion rate. So, that’s from visitors to trial and increases it by that that much. So, it’s something that if you’re only making… I mean for apps making a thousand bucks a month, it’s probably not worth doing because a 5, 10% conversion rate, just it doesn’t move the needle enough. There’s more important things to worry about. But as soon as you get up to, you know, you’re making 5 grand or more per month, this is one of those things where the ROI becomes very, very attractive quickly.
[02:18] Mike: Very cool. So, we have a lot of podcast love this week and I wanted to share a couple of…first one is from Matt. And he says, “Hi, Mike and Rob. I’d just wanted to give you a big thanks for all the podcasts. I’ve just launched my own SaaS app called Icon Practice which I doubt I could have done without your help. I’ve listened to all your episodes and got something from each one. Thanks again, Matt.” We’ll link to that in the show notes. And the second one is from Ryan who says, “Mike, Rob, you guys are awesome. Your show is compelling listening. It’s a gold mine for us all around the world striving to make it online,” and I did not in any way, shape or form modify…modify this. This is word for word from what he says. He says, “Every show delivers. Startups for the Rest of Us is perfectly balanced with delicious tips, wicked insight and practical actionable advice and inspiration for every aspiring digital entrepreneur and I had to write a personal thank you for helping me and thousands like me on the journey. It is truly appreciated. Best. Ryan.”
[03:07] Rob: We should change our podcast synopsis to be that very phrase. That is so well-crafted.
[03:12] Mike: You think so?
[03:13] Rob: Ryan, you are a wordsmith, sir. I tip my hat to you.
[03:16] Mike: And our third one is from Chris who says, “I’ve been podcasting since 2005 and I subscribed to about 70 podcasts. But you had a number in your list that I think I’ll enjoy. Thanks for the list. I’ve now written down my list in a couple of years before I discovered your show which is definitely become one of my favorites.” So, we’ll link to his list in the show notes. But just wanted to say thanks to Matt, Ryan and Chris who sending all that podcast love and want to say we really appreciate it.
[03:38] Rob: Very nice. Now, we also have a listener question we’re going to get in to before we get in to the facts about brain chemistry. Do you want to read that?
[03:44] Mike: Yeah. So, this one is from JT and he says, “Hi, Mike and Rob. I’ve been listening to your podcast for about a year now and I love it. It’s been very helpful. Keep up the good work. I recently developed via oDesk a personal finance iPhone app called MoneyWYN which is Money Within Your Needs. I’ve had a couple of people tell me that I should create an Android version or they don’t have smart phones at all. So, I began looking at turning it in to a SaaS app so that more users can access it. That actually was part of my end goal anyway. I put up an MVP site at withinyourneeds.com to gauge interest. I have a couple of issues going about this. First, I know what I want the app to do but I’m not very creative so I don’t think I can design the app myself and make it look good. I have the same issue with the iPhone version. The app does its basic level what I want it to do but I think it can look a lot better. So, do I hire a web designer and then pass the design to a developer to code everything or do I create my own mockups so probably I want everything to look and pass that to a developer? Second, what is an appropriate level of interest for my MVP site? I’ve started to get ad clicks in the day since I put the site up and not sure what point I can gain there’s an appropriate level of interest. Any thoughts would be appreciated. Thanks.”
[04:43] Rob: Wow, this is a tough one. This kind of app is personal finance app is…it’s a super competitive market. There are so many of these apps out there and typically to take any kind of control of the market, you’re going to need to go free and because you’re aimed the consumers and then try to have some kind of paid upgrade or make money like Mint does where you get to scale and you have…you obviously have to raise funding to get there and then they make like recommendations of credit cards and they basically make affiliate money. So, I guess that’d be my first inclination. Now, I understand MoneyWYN, the iPhone app could feasibly make it work because the iPhone app still provides ongoing sources of traffic that are really inexpensive and so even at 99 or 4.99 price point, you can do it. But I don’t know. My initial inclination just with the idea is like wow, why would I use this over the literally 20, 30 others of this that I’ve seen launched within the last two years that are SaaS apps.
[05:39] Mike: Interestingly enough, one of the guys I’m meeting with on Thursday his name is Corey and he runs the Birdy and the Birdy is also a personal finance application which is a SaaS app. It’s on the web and what he did for his differentiating factor was that he makes it accessible vi e-mail and the application e-mails you during the week and I’m not familiar with all the details of exactly how the app works but it…it is heavily, heavily reliant upon e-mail communication with the user because that interaction with people who use e-mail is so high that if it’s a SaaS application that’s just sitting out there, you might not necessarily think about it and his application I believe it e-mails you and ask you what you spent money on that day. So, people use it as kind of a to-do list and then he parts it with the e-mails and does a lot of things with them. And he, you know, is doing recently well with it. I think its pricing is around 495 a month for but with an iPhone version, obviously, you’re only going to get the people who have iPhones, first of all. Second of all, the recurring revenue is just not there and as you pointed it out having lots and lots of competition is this…in the space is one of those overwhelming things that you have to come out with some sort of marketing strategy that is going to overcome all of that.
[06:48] One of the questions I would have is just how do you overcome that marketing challenge and I don’t think that it’s about getting people to use your app and say, “Yes, this is a good app that I would use.” It’s more or less how do you identify the people who you want to come use your app and then get them to your website such that they will actually use it. I see that as more of a marketing challenge versus what I think that you’re concentrating on in your first question is “How do I make the application look better?” And I don’t think that’s your problem at all. I think that you’re focusing in the wrong place. I think you need to focus on how do I get traffic to my site such that people would use it and I think that’s a much bigger problem than making it look good.
[07:25] Rob: Yeah, I would agree. Let’s just say that you are able to answer that. You want to move on to the, you know, the question of “How do you build it?” Your question was, “Do I hire a web designer and then pass the design to a developer to code or do I create my own mockups and let it pass to a developer?” Well, if you’re not a designer, you’re going to need someone to design the app to create the look and feel because otherwise you’re going to wind up with a very poor UI because developers has a rule do not have design skills. Some of them obviously do but most do not and I’m one included [Laughter] that I have no design skill. So, when I used to code things even when I was building my own apps, I would have a designer create mockups, create HTML, send it to me and then I would code it up. So, that’d be my answer to your question of being creative and making things look attractive is that you would find the designer who’s reasonable and depending on your budget and then you would describe either the pages that you want or even the high-level functions and then pay that designer to create basically an individual mockups of each of those pages, make sure that that everything is in there and then have them create photoshopped files and either have him then create the HTML or have that go to a service and you know, find someone on oDesk basically to create the HTML then hand that to a developer and have them build it out.
[08:37] You could also, you know, the developer may be able to do HTML. I mean it all depends on overlapping skill sets but in general, that’s the process that I follow is I try to find people who are experts at design, experts at cutting to HTML and experts at development and then going through those three steps. In terms of your second question, it says, “What is an appropriate level of interest for my MVP site.” And what…what he has is a landing page and it just has a couple of bullet points and then kind of the thing to sign up for mailing list. I mean I think at this point, I think the page needs some work because it does look…it looks rudimentary. I don’t think you’re going to get much interest here. I think you want to design or to mock something up but it’s a tough question to answer because it depends on your revenue model.
[09:17] If you have a SaaS application that’s going to charge $50 month, then you need a heck of a lot fewer e-mails, then you do if you’re going to have something that’s a freemium model and I know we can have 1% of people convert to a very low paying, you know, or low revenue plan. It’s huge. I mean it literally can be a hundred X difference between those two. If you’re sending using ads and sending people to the site and you’re not getting at least 15 to 20% of people to opt in, then I think you’re going to have a problem long term because I think you’re just going to have to pay way too much for people to sign up for your up unless you have a really good revenue model. You’re not going to make enough money to pay back the acquisition cost.
[09:54] Mike: So, JT, hopefully, that helps answer your questions and give you some idea which direction to go.
[09:59] Music
[10:02] Rob: This week, we’re diving in to six facts about your brain chemistry that can help you achieve peak productivity. And I created this outline based on a book I recently read. It’s called Your Brain at Work and it’s written by a psychologist named David Rock and he studied brain chemistry, brain functioning. And he’s just gathered a community of psychologists and neuroscientists and all types of people who study the brain and he’s had a few conferences and then he’s kind of put all his knowledge in to day to day application. And so the book Your Brain at Work is really interesting because it’s not written…he has a lot of really deep research content in it but it’s written using day to day scenarios. It’s written about this husband and wife who are both professionals and the husband is like a software consultant and then the wife I think organizes conferences. And so it’ll give us scenario where like the wife is in a meeting and this happens and everything goes bad because of it, you know. And then it’ll go in to what the brain chemistry and how that works and why things went bad and then here are the things you can do to help your brain chemistry adjust and how you can perform better in that meeting and then it will redo the same story with her making different decisions.
[11:11] So, when I first heard the premise of it, I thought it was pretty cheesy and I figured I’d be skipping around a lot. But the author actually does a good job of mixing what…what otherwise be very dry material, very academic material and enters this person with interesting stories. And then you start liking the characters in the story. You know, it just takes you away. So, there is a ton of information in this book and I just picked out six tidbits that I thought were most applicable to our audience. So, the first fact about your brain that can help you achieve peak productivity is that everytime your brain works on an idea consciously, it uses a measurable and limited resource. So, in other words, doing really hard thinking, doing really hard tasks like writing or outlining a podcast, something that’s intense thinking, it actually depletes your mental energy for that day and you’re going very fine at that amount. And it actually burns more sugar from your blood stream when you do that.
[12:05] So, long haul truckers, they can drive 16, 20 hours a day. I mean they eventually get tired but it doesn’t actually attacks them mentally because it’s a row…like muscle memory task. You don’t have to think actively to do it but no professional writer…if you ever hear Stephen King, Steven Pressfield, someone who does professional writing for a living, they typically write 3 to 4 hours tops at a stretch and outside of that and basically waste that resource on things that aren’t important.
[12:31] Mike: I’ve seen a couple of studies on this as well that indicate the same types of thing and it’s funny because I’ve noticed the same thing myself when I’m working if I…if I have an extended amount of time off, the pressure is kind of there for me to sit down and work for 8 or 10 or 12 hours straight because I have that time available to me but if I’m sitting there working on stuff that tends to be very difficult to do like certain programming task, then I can’t just sit there and do it because what ends up happening is I’ll get 3 or 4 hours of solid work time in and it will be really good and then after that my brain just sort of shuts down and I just don’t seem to get nearly as much done.
[13:07] Rob: Yeah and that’s why thinking about your conscious thinking as like a precious resource to conserve can be helpful for trying to identify that time of day when you have that optimum functioning because if you pair your optimum functioning time of day with short burst. So, say you just block out your calendar for 2 hours and you say, “Turn the phone off. Turn the e-mail off and I’m going to write copy or I’m going to write this intense piece of code just for these 2 hours, you can get enormous amounts done, literally 2 to 3 times what you would get done if you had an interruptions and you are working, you know, at a non-peak time like if the afternoon time is not your peak time.
[13:43] So, I think there’s a lot to be said here. What’s interesting about each of these points as we go through is some of them I think you’ll probably already know intuitively but you may not have actually said this out loud before and not realized it. I’ve already started doing this one here without knowing it and in the mornings, I drink some coffee. I work very intently and then the early afternoons, I just find they’re not peak times for me and then late…like in the evening after the kids go to bed, another peak time. And I find that I get a lot work…of work done then and I focus really intently on those times and I think you can actually…that’s why you can work, you know, a 20 or 30-hour a week and actually get more done than if you were sitting in an office somewhere in a cubicle getting interrupted all the time just with the…noise around the office and it’s just a lot different working arrangement allows your brain to function as its optimum level.
[14:31] Mike: Part of those 40-hour work weeks that a lot of people end up working is more because, you know, the companies kind of force you to put the time in versus put the work again because they’re paying you for your time and it’s really when it comes down to but at the same time they’re not necessarily paying you for productivity.
[14:45] Rob: Our second fact about your brain chemistry is the less you hold in your mind at once, the better. So, this comes back to the brain being a measurable and a limited resource but in this sense, it’s decluttering your mind. And so this is actually, you know, if you read Getting Things Done, the GTD method, he talks a lot about removing that…that mental stress of holding a lot of things in your mind at once. And I think that the answer to this or if you’re not already writing things down and having to-do list and anytime you think of something you need to do, e-mailing it to yourself or somehow capturing that in a way that is not sitting in your mind basically, you know, slowly stressing your mind out and making your mind tired, then you need to start doing that because this absolutely is one that will impact your peak productivity overtime and people who try to remember things and carry more in their mind, you just…you never give your mind a rest even when you’re not thinking about those hard things. And so when you need to think about hard things, your mind is tired from carrying this weight around.
[15:50] Mike: Yeah, I do this a lot myself. I mean just writing things down all the time and what…regardless of whether it’s stuff that I’m writing down to create a list of things to do, just the very act of writing those things down so that I don’t have to try and remember them, I found that that’s to be very helpful. And it’s funny because this reminds me of Joel Spolsky’s comments on his Painless Bug Tracking post from years and years ago where he basically said that he was…”At any given time I can only remember two bugs. If you ask me to remember three, one of them will fall in the floor and get swept under the bed with the dust bunnies, who will eat it.”
[16:23] Rob: Yeah, I remember that post as well. You know, I’ve taken a lot of away from both his writings and just other writings on getting organized and what you’ll realize is it starts…they all kind of start to say the same thing under the covers and that’s because there is some science to it and we do all kind of, you know, as humans work in similar fashions the deeper you dig. So, the third one is performing multiple conscious tasks at once results in a big drop off in accuracy or performance. So, this is the multitasking myth. Now, the interesting thing is that they’ve done research and they’ve actually found that 5% of people can actually multitask and they actually do get more than faster but that 95% of people do not. And so the odds are that you are not one of those people that can multitask and I know for a fact that I am not and most programmers who I know who are very good at programming are not good multi-taskers because if they tend to be really focused and that is a gift onto itself, right, to be able to focus and to be able to hold large numbers of things in your mind having that in multitasking does not…they don’t tend to go together.
[17:28] Mike: Now, is there anything in there that kind of indicated how to identify yourself as somebody who could multitask effectively or no?
[17:36] Rob: No, it didn’t and in fact that 5% number came, it didn’t come from this book, it came from a book I’ve read last month that talked about this topic as well and either of them said how you would identify by yourself. I do know a couple of people. Actually, women are more likely to be in that, in that 5%. I do know a few people who are actually just from experience from working with them.
[17:56] Mike: Cool.
[17:57] Rob: Number four is that switching between tasks uses energy and if you do it a lot, you will make more mistakes and you won’t get things done as quickly. There’d been studies done in offices where they say if you’re working in a cubicle or office that you on average you work on a single task for eleven minutes before an interruption and that is catastrophic especially if you’re trying to do long…you know, creative tasks like programming or copywriting or designing or anything. The interruptions like I said before if you can block out two hours of time and what I was…I came up with this thought today. I call it striping and I’ve started doing this to my calendar where I’m doing thought intensive work, I’m going to put a one or two-hour block in my calendar and color it with a certain way and then the next one or two-hour block is going to be, you know, the opposite kind of the low mental energy mode of thinking. And so I can let my mind rest for that and so it will kind of look like a stripe pattern because it’ll be every other.
[18:54] But I think that’s not only something I’m going to start doing but something that that I think we need to be more more deliberate about doing and about during those schedule of blocks of the intense time, that’s when you shut everything down. You shut your e-mail down. You shut your phone down the whole deal and I think we’re learning to be aware of your levels of alertness and your…kind of your interest throughout the day really leads you to find the time of the day where you’re going to get your best work done. And if your mind begins to wonder, then you need to ask yourself, “Well, am I just too tired, mentally tired to do this right now or do I need to, you know, to kind of refocus?”
[19:26] Mike: So, are you saying that in a run about way Microsoft has killed millions and millions of hours of productivity because of that little ding that Outlook plays —
[19:33] Rob: Oh.
[19:34] Mike: …[Laughter] when an e-mail comes in?
[19:36] Rob: Yeah. I mean I don’t know. I do not get a ding or notification when e-mail show up on any device of mine.
[19:42] Mike: Yeah —
[19:42] Rob: And —
[19:42] Mike: And I don’t either with one exception and I don’t know how to turn it off but I just…I have an exchange account whenever I have the web interface open and I get an e-mail, it dings. So, typically I have the sound turned off on my computer when I’m working. So…
[19:57] Rob: Indeed. You know, I have the G-mail tab open quite bit in Chrome and I turned that off several times a day now for stretches of, you know, between 30 minutes and an hour just because I find myself naturally wanting to go back to it because when I get in to kind of a hard thinking time and let’s say, I am writing some copy or writing some really intense code, your mind wants to shy away from that because it is so exhausting. And so that’s what procrastination is, is it your mind trying to sneakily give itself a rest. I’m not making this up. It was like —
[20:27] Mike: You’re making it sound like, you know, our brains are slackers or they want to be slackers.
[20:30] Rob: No, it says like your brain tends towards the lowest risk and the highest rewards and the least output of energy like it just naturally goes to those areas and so what that means is that it really does when you’re taxing it and you’re thinking intently, any chance you give it, it will wander away and it will say, “Oh, Hacker News, oh, this is so much…so much more appealing and so much fun.” It’s like a brain’s trip to Disneyland instead of, you know, sitting there trying to write two pages of intense copy or deal with some…some complex coding. So, fact five that can help you achieve peak productivity is that peak mental performance requires just the right level of stress, not minimal stress. And this comes back to there’s something called the Yerkes–Dodson law and those were two psychologists that studied peak performance, the ability to focus and think. They uncover that when you have minimal, minimal stress that you actually don’t perform as well because there are certain things in your blood that are required in order for your mind to really hyper focus and you actually need to have a little bit of stress about it.
[21:33] And that’s why a lot of people work better with some deadlines and a lot of people work better if they are concerned about something like if you’re going to do a talk tomorrow, then that can intend to motivate you to do really good work and to be pretty focus, right, and to actually crank out some pretty good stuff. I have to be honest with my experience, caffeine helps this and this was not in the book. Now, the flip side to this is if you get too stressed, you hit a level where your performance starts degrading because you get too much stress and your brain starts to shut down. So, there is a careful balance there.
[22:02] Mike: I think the caffeine and alcohol kind of go hand in hand as well. I mean both of them acts to help you kind of cut down on outside stimuli and focus on whatever it is that you’re actually looking at. So, I can definitely see how caffeine would do that. I don’t know the scientific explanations behind it but you know, in the morning when I have coffee and I’m sitting there working, it definitely helps me focus on whatever it is that I’m doing. If I’m sitting there doing a programming task, you know, late in the afternoon or whatever because I would not admit to drinking before noon but if for any reason sitting there working on stuff, it seems like my focus tends to be much higher. I don’t know if that relates back to the…to the productivity but it definitely seems that way.
[22:41] Rob: And our six and final fact about your brain chemistry that can help you achieve peak productivity is that focused attention changes the brain. This is something that the author harped on a lot in the book and I really took it home. He basically said that the brain, the internal structure is constantly changing and adapting. That’s why habits are relatively easy to form. They may not be as easy to break but you can get in to patterns and thinking patterns relatively easy because if you focus a lot of attention on something, your brain changes fairly quickly. It’s surprising how quickly it can adapt. So, what that means is that if you spend a lot of time being distracted, checking e-mail and moving to Hacker News and always listening kind of to your brain and letting it be lazy and pull you away from your important task, your brain will actually not totally lose the ability but it will severe away. It will slowly…it will make it easier for you to continue in that pattern.
[23:35] Whereas if you make very deliberate choices and you start whether it’s doing the striping technique I mentioned or just forcing yourself to be really focus, turning off distractions, your brain changes. It will actually change the chemistry of it so that you will be more likely to get in to focus, to get in to flow quicker just to perform at a higher level. So, this is actually both good news and bad news, right? It’s easier to fall in to that patterns but it’s easy to get out of them if you’ve very deliberate, if you know yourself, you learn to monitor your levels of alertness and interest throughout the day. If you’re just deliberate about performing and keeping the six things we mentioned to you in mind.
[24:09] Mike: In a way that seems kind of bizarre to be able to do that because you’re trying to trick your brain in to doing certain things in a specific pattern but it’s your brain that’s tricking your brain that just seems very inception-ish.
[24:21] Rob: It’s a dream within a dream for sure. So to recap, our six facts about your brain chemistry that can help you achieve peak productivity are number one, everytime the brain works on an idea consciously it uses a measurable and limited resource. Number two is the less you’re holding your mind at once, the better. Number three, performing multiple conscious tasks at once results in a big drop off in accuracy or performance. Number four is switching between tasks uses energy. If you do it a lot, you make more mistakes. Number five is the peak mental performance requires just the right level of stress, not minimal stress and number six is that focused attention changes your brain.
[24:58] Music
[25:01] Rob: We have some extra time here, Mike. Do you want to answer a couple listener questions?
[25:04] Mike: Sure. So, the first one we have is from Søren Jacobsen and he says, “Hi, guys, loving your podcast. I have a question for you. In an episode recently, you talked about level one apps and that was a good way to start. Can you give us some real examples of what level one apps can be? I don’t want to go in to iPhone apps. I was thinking more like web apps with recurring revenue that would not cost a fortune to outsource. I cannot code it but I’m a good marketer. I have some level zero websites with AdSense and affiliates that bring in around $2,000 a month but I want to step away from that “sleazy market” overtime and focus more on my own applications. Thanks. Søren.
.
[25:37] Rob: So, to start with I…I don’t actually think that all level zero apps are sleazy but you can certainly be in level zero which is kind of like AdSense and affiliate stuff without…without catering to just the…the dating and weight loss niches. But your question was about level one and that this one reference us back to episode 102 which was four levels of income generating web apps. And level one web app is a low competition niche app. So, typically this is something that has autopilot marketing. So, you either have a nice stream of traffic, very low cost. Typically from either Google, can be from YouTube, it can be from Amazon, WordPress, iPhone apps store. You have to find a source of traffic that’s fairly consistent and that it’s not paid acquisition strategy. So, you just get in the path of that traffic and as long as it converts, it can generate some income.
[26:28] And the examples that I…I threw out a few in that episode but a good example is like a WordPress plugin, iPhone apps. which you said I guess you don’t want to get in to anything that ranks four in niche term, something like apprentice lineman jobs which is one of my apps is like that already, has good SEO rankings and so. It has good rankings in Google and so that’s…that’s where it gets a good chunk of its traffic. Even like a wedding website builder like WeddingToolbox that could also be in these low competition level one niche areas. So, I hope that helps.
[26:59] Mike: The next question we have is from Tom and he says, “Hi, Rob and Mike. I got a question for both of you. I’ve been doing development for 10 years and I’m ready to go out of my own. I want to create software products and going to consulting preferably PHP custom business application to help bootstrap my business. Shall I create two separate business entities for both businesses? I know Mike has two different companies for both but I know companies like 37signals do both consulting and create products or does not really even matter. Again, thanks for your time. Tom.”
[27:24] Rob: So to start, 37signals doesn’t do consulting. They used to and they turned it to a product business. So, as far as I know they haven’t done consulting for five or seven years. It’s been quite a while. There are some companies that still do both but most that I know as soon as they’re able, they…they leave consulting behind. I think there’s really two questions there, Mike. There’s a question that he asked which is whether he should have two different companies for this but the bigger question I have is are you leaving salaried employment to start a consulting firm and to try to lunch products? Because that…that’s a lot to take on all at once. And if you have a decent salary job or you’re not working a bazillion hours a week and you’re reasonably happy, I would say stay at your salary job for now. Don’t take on all the headaches of getting in to consulting and trying to build that business because that’s going to take all your time and you’re not going to have time to build products. So, if ultimately where you want to go with these products and you do have that job thing kind of dialed in, I would stick there and launch the product. Now, if you don’t have a salary job, you already…you know, delved in to consulting full time and then that’s the way it is and then, you know, I think we can answer the business entities question from there.
[28:28] Mike: Yeah, I totally agree with Rob. If you have that salaried employment and things are going reasonably well, definitely, stick around until you can get your own products launch and launch them on a side and I think that you’ll find that you’re probably a lot happier and will probably work a lot better for you in the long run just because you’ll have that stability behind you versus when you dive in to consulting, you generally have to pick up all the pieces, all the paperwork of, you know, things like payroll and insurance and all the other things that go with it and it can be a real nightmare to deal with. So, if you don’t have to deal with all that stuff, I wouldn’t do it. That said, if you’re in that other situation, then you have to deal with the question of, “You know, do I open up a second entity for a business or not?” And I think for that, the primary reason that I had two companies was because the businesses were radically different enough that I didn’t want them inter tangled. I didn’t want people to come in to the website and try to figure out, well, are they a product business? Are they a consulting business? And part of it was also just the fact that —
[29:32] Rob: You had a high liability, right?
[29:33] Mike: Yeah.
[29:33] Rob: High exposure?
[29:34] Mike: And part of it had to with insurance. So, I had a lot of legal liabilities associated with the consulting. I mean if you’re doing custom programming and development, chances are pretty good that you are not going to incur a lot of liability and there’s just not a lot of risks for things going wrong. What I was doing was I rejected going on site with clients and I was working on their production system, so, like production databases, production servers. Typically, I was directly on their network and was touching, you know, thousands and thousands of computers and environments. I mean there were…there were some companies I went in to where I would literally install software in some way, shape or form on more than 50,000 computers and when you get in to a situation like that, you really want to be able to limit the liability and part of having that second company was so that I could put a dividing line between the two companies and I can work on my products, have them under the software business. I could do the consulting under the consulting business and if the consulting business ever got sued in to oblivion, then I didn’t necessarily have to worry about it taking down my software business as well and I could, you know, have that very clear dividing line between them. For me it was more peace of mind than anything else.
[30:43] Rob: Whereas I did consulting under a single company. First, I was a sole proprietor. So, it wasn’t even really a much of a formal company and then I’ve eventually moved it to an LLC. And when I launched products, I didn’t really want to go to the headache of managing two entities. There is both cost with it as well as in the paperwork. There was more paperwork because I had despised all the tax filings and all that stuff. And so, I just kept it under the umbrella of that LLC and then I stopped doing consulting and all of my products are, you know, are essentially under that now. So, there was never…there’s never been a reason for me to change that. I mean I guess I did that several years where they overlapped, you know, the consulting and the products but it does depend on risk tolerance. If you really want to be all buttoned up and yeah, you have a different…realistically, you have a different company for every one of your products that earns more than thousand or 2,000 a month or something but that would…there should be a lot of paperwork and headache in that. So, I think you just have to way that out. A lot of people I know do the…the single company and put everything underneath it and you know, that can work for as well as long as you don’t have…a lot of liability involved.
[31:46] Mike: So Tom, hopefully, that answers your question and thanks for writing in. If you have a question or comment, you can call it in to our voicemail number at 1-888-801-9690 or e-mail 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 in iTunes by searching for startups or via RSS at startupsfortherestofus.com where you’ll also find a full transcript of each episode. Thanks for listening. We’ll see you next time.
Episode 108 | 11 Software Startup Myths Debunked
Show Notes
Transcript
[00:00] Mike: This is Startups for the Rest of Us: Episode 108.
[00:02] 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.
[00:18] Rob: And I’m Rob.
[00:19] Mike: And we’re here to share our experiences to help you avoid the same mistakes we’ve made. How you doing this week, Rob?
[00:23] Rob: I’m doing good. I’m coming back for a week off for Thanksgiving feeling rested. I went to a cabin near Mt. Shasta in Northern California and I did a lot of thinking, a lot of thinking about what 2013 is going to look like, dove deeper in to those topics I mentioned in the last episode about growing HitTail by a certain amount, looking building some – a couple of info products and launching a new app. So, I kind of sort of diving in to those in creating some specific like outlines, plans, dates, that kind of stuff. There’s a lot of fun. I actually – it was so super relaxing to me because I feel like it lays out what, you know, now I know what to expect over the next 12 or 13 months.
[01:00] Mike: Very cool.
[01:01] Rob: How about you? What did you do for Thanksgiving?
[01:02] Mike: I stayed home. My parents came over to visit and had turkey and mashed potatoes and you know, the whole nine yards and I’ve got some more worked done on AuditShark and got all the tasks together to send off to my new contractor for AuditShark so —
[01:15] Rob: He’s a developer and he’s here in the state, is that right?
[01:18] Mike: Yup, so he’s working on the cloud side of Audit Shark which I haven’t put anybody else on that piece yet and I spent probably two or three hours working with him to not only get us some development environment setup but to make basically walk him through everything and I probably would have done that. It’s like a screencast that you just send it over to him because honestly I would want to reuse that in the future but I needed to help him get his environment set up because I hadn’t documented exactly what needed to be done to do that. So, now, I’ve actually got some of that information because I’ve go everything set up on my laptop and my desktop but I haven’t done it for anybody else. It’s been a long time so I’ve had to do it so I couldn’t quite remember exactly what needed to go in to it.
[01:55] Rob: So, he’s working on the cloud side which is like you said it’s more green field development that just kind of plugs in to AuditShark. What does that mean in terms of are you still looking to launch the second week of January to —
[02:04] Mike: Uh huh.
[02:05] Rob: And any updates since last week early access customers using it, have you made any progress on that?
[02:10] Mike: I talked to one early access customer and I had him go through and run a policy. I basically gave him a set of instructions and said, “Hey, why don’t you go through in to this and let me know what your thoughts are?” I made sure to phrase the e-mail on a specific way and not lead him and his response back to me he said, “Wow that was really easy.” “What exactly do you mean by that?” And he explained it a little bit and he’s a like, “You know, usually the stuff is a lot harder.” He’s like, “I expected it to be a lot harder.” So, it was really nice to see that because that’s exactly what I was going for because I worked with a lot of this type of software before in the past and I know how complicated it can be and it was just extremely easy for him to just go in and run an audit and literally, he clicked the button and within two minutes he had his results. It was – it was awesome.
[02:53] Rob: Well, cool.
[02:54] Mike: The real big thing is that now that I have – I’ve had a developer who’s been working on the client side policy builder and now I’ve got a developer who I’m putting on to the cloud side of things. I’m hoping that this works out. We’re going to do a 3-week trial to see how things go and then from there, we’ll make some decisions and talk a little bit more to see where each of us wants to go with it. And what I’m hoping is that I can basically hand off all of the technical stuff to these two guys and you know, I’ve already got all the client side stuff handed off technically and now, I’m looking to get all the cloud side stuff handed off, all that technical stuff handed off so that I can focus, you know, solely on the marketing and customer development and everything else.
[03:29] Rob: All right, well, good luck. So, are you still looking at getting the AuditShark out the door launched in public on January 14th?
[03:35] Mike: Right around that time, yes, so I know that there are certain things that are just not going to be working and you know, in terms of the policy, I know that I’m going to have to go back and forth with my developers over the next six weeks to make sure that everything kind of works from my end and I expected that there’s going to be things that fall a little bit short from where I would like them to be but that’s the goal right now is to have the product out there and launch publicly by the 14th of January.
[04:00] Rob: Oh, let’s move on to some iTunes reviews then, shall we?
[04:03] Mike: Sure.
[04:03] Rob: So, we got several new iTunes reviews, one is from Gerald Dees [Phonetic]. He says, “Excellent advice for any entrepreneur. I’m not a programmer and I don’t have a software or service business but as an author and entrepreneur, I get an incredible value out of the podcast. I love learning from the trials and successes that Rob and Mike share about their business.” Also, we have one from T Nguyen 444 [Phonetic]. He says, “Very informative this podcast and This Week in Startups are my two favorite. This Week in Startups is a high level and Startups for the Rest of Us helps with lower level attention to detail type information.” We got a few more I won’t read but the other one I like is from Eric Foster and he says, “Awesome, awesome, worth listening to every single minute.” Really appreciate your reviews and even if you don’t write a full review, would love a – just a 5-star rating in iTunes. What else is going on with you?
[04:51] Mike: Couple other things. So, next Thursday, I’ll be meeting up with Corey from the Birdy because I’ll be back in Brooklyn and I’m trying to get together a couple of people to meet up for dinner somewhere in Brooklyn. So, that would be fun. Hopefully, we can get some other people. I’ve had a couple of meetings around the country with other people just through the various travels that I’ve done. I had a meeting last night, actually. Some of my consultant work is going to be changed a little bit. And typically, I’m going on site and doing customer work for people but one of the customers that I work with wants me to start doing some of their e-mail marketing campaigns. So, that would be an interesting change of phase I’ll say because I can do it on my own time. I don’t necessarily have to be at a customer site and we’ll see where that lead. I think that there’s a lot of potential there. They definitely have a severely mismanaged e-mail campaign I’ll say. They’re not measuring anything. They have no idea, you know, who’s clicking on what. They’re not even using an e-mail service provider. Everything is going out through their ISP.
[05:42] Rob: Right.
[05:42] Mike: So, I’d suspect that not a lot of it is getting through it —
[05:45] Rob: Getting there, yeah. Well, it’s unfortunately a common mistake.
[05:48] Mike: What I’m concerned about is taking all those e-mails and putting them in to like MailChimp or ConstantContact and then sending out an e-mail and then having most of them actually get through and then flag to spam because previously they – have just never gotten there because a lot of the e-mail vendors, they will just automatically send it to spam if it comes from certain IP addresses and their IP address may have gotten flagged as a spammer so then they’re just going straight to the trash whereas if I move it over to like MailChimp and then send them out, suddenly, they’ll get through because it’s coming from a different IP address and then what’s going to happen. Am I going to get ban from MailChimp?
[06:23] Rob: So, I’ve done this before with a list I inherited and the first in a big paragraph at the top or a big first sentence that just say, “Hey, you’re receiving this because you signed up to receive them or you either a paying customer of X, you signed up on this URL to receive it. If you prefer not to receive any more of this, simply click this link right here to unsubscribe,” and give them the unsubscribe link right at the top because if they are going to click it, then let them do that rather than mark you as spam. I’d also set up a separate account. I wouldn’t use your MailChimp account. I set one up for this – this guy’s business. So, if it does get banned, that you don’t – you don’t also get banned.
[06:58] Mike: Right, I was definitely going to do that. The thing that I remember reading though was that I think that MailChimp also measures the number of unsubscribed and if it’s really high for a list, then they – I forget how they flag it but basically they take note of it.
[07:13] Rob: You’ll get an e-mail. They do but it’s not nearly as bad as spam marks. You definitely want people to unsubscribe rather than spam – rather than mark it as spam. We had a list that did get more unsubscribed than they liked and it was like – it was like if it goes over 1% unsubscribed, then it get upset and that’s fine but they basically e-mail. And I reply back and I said, “Look, here’s what we’re doing. We’re reviving an old list, blah blah blah.” And they were just like, “That’s fine, you know, just don’t – kind of don’t want to happen again. That was just a warning type thing.” So, that’s all they did because people unsubscribing, I mean that really doesn’t hurt anyone, right? It doesn’t knock their IP, you know, whereas when they mark it as spam, it actually like is a ding against their IP address and that’s why they don’t – I can — and that’s why they’ll ban you.
[07:53] So, the only reason they’re looking at people unsubscribing it’s a danger sign that people may start marking it as spam in the future is the thing. So, I wouldn’t worry too much about that. The other thing you could do depending on how big their list is, is you could break it up in to chunks. If it’s 5000 people, you could send like the first 500, the most recent 500 as one list and send it and see what happens and then work your way backwards because by the time you get back five years or [Laughter] you know, however long it’s been, the really early guys probably are going to – there’s going to be a bunch of bounces. They’re probably are going to be a bunch of mark as spam no matter what you do. So but if you kind of work your way that gradually, then you don’t really, you know, pollute the list right from the start.
[08:32] Mike: Got it. They have two different lists. One of them is about a thousand e-mails which is I’ll say much cleaner and they’ve been e-mailing that or at least they’ve e-mailed it at least once that I know of and the other one is around 5000 and I don’t know where it came from and they can’t really tell me. So, I’m really – I don’t know if I’ll even use it to be perfectly honest. I just don’t think it’s worth then.
[08:51] Rob: Well, the good thing is if you set up the MailChimp account, you put the 1000 safe — “safe” e-mails in there and send them a few e-mails over the course of several weeks or a month or whatever, then you can at least get that MailChimp account, get it some credibility, you know, so it doesn’t look like this is your first mailing out of that account. You at least had some successful non-spammy sense. Then if you go to the other list and just do the recent most 500 and see what happens, you at least have some – some credit in their bank of credibility so to speak. So, hey, I received probably the most sophisticated phishing attack via e-mail that I had ever seen. It was an e-mail comes and I’m checking on my iPhone. So, it’s mostly text. It has the exact subject line and all the text from an e-mail that I get from WordPress when I get a comment on my blog at softwarebyrob.com.
[09:42] And so, I’m seeing this comment and I’m seeing the post name and all the URLs and it says to mark it as spam, click this link. To mark it as, you know, approve it, click this link and the comment was junk, right? So, I click on mark it as spam and it opens up Safari on my phone and you know, you know, I just glanced through and haven’t really look at URLs but it sent me to a fake URL and it was all customized for my blog like someone made a specific, very specific attempt. This was not a mass attempt and the only reason I noticed it because they had an image wrong on the thing it was a broken image and I started thinking, “What is going on here?” But I almost like entered my credentials when I —
[10:19] Mike: Wow.
[10:19] Rob: It’s crazy and I went back to the e-mail, it was like list-9.com/rob/ and that’s what all the e-mails where. So, I think it was list-9 or something like that. So, it’s some funky URL and someone really went to – I’m assuming they scraped blogs from some list and then customized it but there was – I was shocked at how close it was to the e-mails that I get. You know, you get every – kind of everyday as you get comments, you need to mark. I mean it was identical because no way I wouldn’t – wouldn’t be fooled like some – by someone like that.
[10:50] Mike: How close for you to actually click in and putting in your credentials?
[10:53] Rob: Well, there were two reasons I didn’t. One was that broken image just made me a little suspicious and that made me look up at the URL because normally if I’m on my computer, my laptop, I’m going to see the URL. That’s like the first thing I look at but on my iPhone I don’t because they hide the address bar pretty quick.
[11:06] Mike: Right.
[11:07] Rob: I didn’t glance up. The other reason is that I don’t really know my credentials by heart and so, it wasn’t in Safari so I was going to have go in and get it out and I was trying to think do I really want to do this right now. So, that gave me pause and enough pause to sit there and work at it. So —
[11:22] Mike: Wow, that’s an – that’s impressive. I think that’s the way that a lot of these types of security attacks are going to go. I mean the password hacks and stuff have kind of fallen by the wayside just because it’s so much easier to get somebody’s credentials through a phishing attempt.
[11:35] Rob: Yeah, it’s that social engineering, right —
[11:38] Mike: Uh huh.
[11:38] Rob: … rather — run a correct password they get you to do that. It’s pretty crazy. So, any listeners, I would just keep your eyes out for stuff like that. I imagine that that has worked with people. It’s a different URL and that should actually raise a flag, right? If typically you’re able to just click and log in, that’s another thing to think about. So —
[11:54] Mike: I don’t know as a lot of people would catch that though because sometimes your browser cashes it and then sometimes it expires so you have to put them in again but if you’re using something like, you know, a password manager then typically you would not have to type it in. It would just cash it there and would allow you just to go right in and then when it didn’t work or didn’t do that, then you’d have to go look up your password and that probably will put you in the same position where that you were in where you said, “Oh, well, why is this not working,” or – then you start to look at it a little bit.
[12:25] Rob: Yup.
[12:25] Music
[12:29] Mike: Today, we’re going to be talking about eleven software startup myths debunked. So, I thought that we’d take some time and talk about it to people and kind of share what our thoughts were.
[12:37] Rob: Let’s dive in.
[12:38] Mike: So, the first one is if you own a business it mean you can never go on vacation and I think that part of this thought comes from a couple of different areas. One is looking at people who own companies like restaurants or brick and mortar businesses where there’s always customers who were coming in and out and you almost have to be there if you don’t have a manager and this is especially true for any sort of restaurant. You know, restaurants are notorious for like having these mom and pop shops where people don’t go on vacation for years and years at a time because if they do, the entire thing shuts down. And because software businesses are completely different because you can sell software from your website while you’re not actually there, it’s a completely different model. And this whole idea just does not apply.
[13:17] Rob: Yeah, I think with software, it’s so much easier to implement some process to systematize things obviously something we talked a lot of about on the podcast but if you – if you’re able to work on your business instead of in the business and you’re constantly thinking week to week what do I not want to be doing, what’s the most repetitive task here, you know, revisiting that and handing them off to either virtual assistant and just doing all the process stuff that we talked about. It is – I mean I got to be honest, I’ve taken more vacation than [Laughter] ever since owning a business than I did before. It’s a dramatic difference to not have the dollars for hour’s thing. Once you decouple – it actually takes a mindset shift once you decouple the hours you work from the money you make because I still have the mindset of like, “No, no, I need to work 40 hours this week,” but you really don’t and you can start cutting that back either on a week to week basis or you can take a lot of vacation. This is a good myth to bring up.
[14:10] Mike: Well, one of the things that I find is that even when I take a week off or two weeks off to work on my own products while I’m not doing consulting, what I find is that I’m not productive for eight hours even if I’ve got eight or twelve hours on a day to work, I’m not productive for eight or twelve hours. I’m really productive for like four or five but beyond that, I’m not necessarily as productive and it feels like I end up wasting quite a bit of time. So, unless I really buckle down and make a consorted effort to be super productive then I’m not going to be as productive and what that tends to do is it tends to essentially kill my productivity somewhere in the future.
[14:45] Rob: Yeah and the cool part about owning your own business is that you are then able to basically hyper focus on those times when you are productive. So, if you are a morning person, you can make that your work day, you know, you can work three hours a day, five days a week and that can be your whole thing. I mean if you literally get twice as much done in that time, then it’s like working 30 hours a week but you do it in – in half the time. Or if you’re more of a night person, you can do that, you can really structure a time and again, the entrepreneurs I know who – who do this well and who run businesses and are really have a good like work life balance, they understand when they’re – when they’re optimum working hours are, what causes them to be in that optimum working zone and when they find themselves and this something I do, when I find myself on HackerNews or Facebook, I just say, “I’m done,” and I’m going to walk away from my computer because there’s no reason for me to sit here acting and thinking like I’m working when I’m not actually getting anything done, you know, I want to actually rest and rejuvenate during that time.
[15:38] Mike: Cool. So, number two is that mailing list don’t work and are nothing more than spam and this is so false that I just don’t even know where to begin.
[15:46] Rob: Yeah, this is the classic developer mentality, right? It’s like, we, as a developer, we don’t like getting a lot of e-mail or we have this stigma against it but a lot of the biggest online businesses in the world are built purely because e-mail exists and they have massive, massive e-mail list. And so if you look at Groupon or you look at Facebook, even Twitter, the startup Foursquare, on Quora and any of these things, I mean they are constantly when you sign up for them, they are sending you updates via e-mail. It’s what engages people. This is the reason that my conversion rate on many of my apps has gone up substantially like by double digits both during trials as well as retaining customers, even taking visitors and getting them in to trials, all of those things are dramatically increased by getting an e-mail address and engaging customers in a nice way. It’s not about hard selling. It’s not about market, market, market. It’s about educating, providing value and engaging them and setting themselves that they actually want to see and want to open, you know, and even this is one of the reasons I spend more time now creating content for my mailing list, my Software By Rob mailing list than I do for the blog. I actually put more articles out on that in the last six months than I have – I have on the blog because there’s something just more personal and more engaging about e-mail.
[17:00] Mike: This kind of comes back to the conversation I had with the business owner a couple of nights ago where we were talking about this mailing list and I was like your entire marketing strategy behind this is completely mismanaged because people actually do want to get these e-mails and what you’re doing right now is you’re just not measuring anything and that’s got to be turned around in some way, shape or form and I’m like and I can help you do that if it’s something you want help with and he’s like, “Yeah, you know, I’d like you to take a look at it.” So, you know, we’ll see how that goes but that’s definitely I think something that people look at and they say, “Oh, I don’t want to send people e-mails because I don’t want to bother them and you have to bother them because you have to get in front of them but if you are providing them with something that they want, you’re not actually bothering them. They want to see those e-mails and it’s just a mental hurdle that I think a lot of people have to get over.
[17:43] So, moving on the third one is that I’m going to make either billions or nothing and a lot of people think that when they start a business and I think there is a realm of difference between these two and I think you have either one or the other you don’t necessarily have both. You either think you’re going to make absolutely nothing and it’s not worth your time and effort or you think that you’re going to make billions and it’s going to be an over night success and when it’s not, you kind of flip flop over to the other one where you’re like, “Oh, this is just totally not worth it.”
[18:09] Rob: The first time I realized it there was an in between where starting a software company didn’t mean I had to have a hundred million users was just completely shocking to me where I realize, oh, you mean, I can build a business that generates $10,000 a month that’s just software company that I can just be a, you know, solopreneur and kind of do what I want to do and as long as I keep these things in check and build an app that people want, that I can just build a business that – but basically is more of like a small business but as software as the core value of it. My mind was completely blown. This is not the impression that’s in the press, right, of any Fast Company, Inc. Magazine, Entrepreneur Magazine, all these things, they’re not talking about these businesses. These are the small niche B2B stuff that we talk about. I mean there’s a whole movement behind it and actually what’s cool is that there’s so much more to talk about these today, these in between businesses, these niche businesses, niche software businesses than there was even five years ago and there’s just so many more people exploring that and that’s exciting to me and a lot more developers are getting, you know, financial freedom and being able to quit their jobs and because of it, because there’s just so much more education and information available about this.
[19:19] Mike: Yeah, that’s absolutely right and it’s interesting to see those dollars just show up in your account when you’ve got something that you’re selling online because it’s not like you actually put in the time and effort, you know, that leading up to that check being deposited in to your bank. It’s no to say you didn’t put the time in to build the products and put it out there and do everything but it’s not as if there was a direct correlation between the time that you spent doing it and the time that those dollars showed up in your account.
[19:44] Rob: Yeah, it’s that decoupling of hours worked for dollars entering your bank account and it really does blow your mind the first several months of it.
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[19:54] Mike: Number four is that “I have to do everything because I’m the one who understands how everything is supposed to work.” And I think this issue can be addressed by setting up various processes and procedures for others to follow. And I think part of this mentality comes from thinking that something that’s either too complicated of it’s going to take too long to explain to somebody else how to do it or you just don’t want to give up the control of it and definitely mental hurdles here to getting over this but I think the key is to find the right people for doing this type of work for you and if they’re not working out, then you need to find somebody else. You can’t afford to act like a full-pledged business that has lots of money to burn. If you’re trying something out and you hand some piece of work off to somebody and it doesn’t work out, cut your losses and move on. But that’s not to say that you should never try that again because it may just be that it didn’t work out with that person. You really have to test the waters a lot in order to figure out what is working and what’s not and if somebody else is making it work, then chances are really good that you can too.
[20:55] Rob: I really enjoy the story that Glen Germaine told us last year when he came to MicroConf. If you recall he had e-mailed in about having really struggling with the idea of hiring a developer. He said he didn’t have the money to hire a fulltime developer and he has a system that I recall it’s like medical – sort of medical billing or medical admin office automation type of stuff. And so it’s a pretty complicated software and he was concern that he would spend more time telling a developer had to do something than – than, you know, actually the time it would take and sure enough, he wrote in and we gave – we designed the whole podcast around it which I think was about – it was about hiring and managing remote developers and then he went and he hired one and it turned out really well. He was very detailed and did an excellent job evaluating but he hired someone through oDesk and since then, he’s just raved about it and he gave us the full story at MicroConf and then we – we talked about it later. But that’s the kind of thing. He did it right. He spent the time and found a right person from the start. The thing to remember is if you do pick the wrong person, it’s a learning process.
[21:54] And so, like you said Mike, if it doesn’t ring up the first time, it doesn’t mean it doesn’t work. It doesn’t mean that it won’t work, it just means that you have to give it another shot and you have to learn from your mistakes and get better the next time because this is the only way that you will actually be able to take that vacation we talked about earlier and that you will be able to grow your business is if you let go of these simpler tasks or the lower end tasks I guess I’ll say and I don’t – I’m not to say that development is a lower end task but it is something that’s easier to outsource than the visioning and you know, kind of the entrepreneur mentality of really directing the business. That’s the thing you can’t outsource. For everything else, I think slowly overtime, if you own a business 3, 5, 10 years you are going to want to slowly outsource more and more pieces of it. It’s a learning process like anything else learning how to do that effectively.
[22:43] Mike: And the one piece that you touched on there that I think is really important is that you can’t outsource the vision of what the product is suppose to become. You can outsource all the things leading up to it but you can’t outsource the vision itself because nobody else is going to have that insight and that’s why it’s so difficult to copy somebody’s idea because if there are actually visionary about it and they have in their head exactly what needs to be done, you can’t just look at somebody else’s business and copy it and expect to get the same results because there’s little subtle nuances that you’re going to miss.
[23:13] Rob: I think the one other thing I’ll add is early on in your business, at least this is the way I did it, I didn’t have a lot of money to pay great people. And so, I started off with cheap virtual assistants, cheap developers. They were inexpensive but that’s what it took to get the business off the ground. They were okay. I dealt with some headaches. I dealt people who were, you know, not ideal but it’s what it took to give me — I bought myself enough time that I was able to leverage these businesses and grow them up but what you can do is overtime you then – you can trade up so to speak. So, I had a VA who is – I always knew she was average but she was good enough and then I found someone who’s almost three times the cost that she is but this person is almost three times better. So, now, I have everything going to him and I’m just funneling all types of stuff. Now, it’s more expensive but I have the leeway to be able to do that and I’ve done the same thing with developers and designers and everything. It’s like you trade up overtime as you have the luxury of being able to do that and it then buys you even more time because you get better people who not only provide better results but they are just more reliable, they’re more consistent that answers many questions and that kind of stuff.
[24:21] Mike: So number five is saying, “I don’t know where to start,” or “I don’t have any good ideas about anything that’s never been done before.” And part of that is finding something that’s never been done before. If you’re looking for something that’s never been done before that is just an outright mistake because if something has never been done before, then how do you know that anybody is willing to actually pay for it and that’s one of those things that you really need to find out early on when you first start building something is to make sure that there is going to be people who are willing to pay for it. In addition to not having the ideas, it’s a matter of just asking people and you don’t want to ask them in a way that says, “Well, do you have this problem,” or “If I gave you X, would you be willing to pay for it?” What you really need to do is start focusing on what people feel are their own problems because when you talk to somebody and you say, “Would you be interested in a product that does X, you know, and solve such and such problem for you?” Well, of course, they’re going to be because you have phrase the question in such a way that is very leading.
[25:15] If instead you ask them, “You know, what sorts of problems are you having with your business or with your environment or with this or that just to describe some pinpoints. You start looking at the individual things that they’re saying and the subtle nuances of things that they might talk about. So, they may say, “Oh, well, I’m having a problem with my billing. I’m doing everything and sell and it’s kind of a pain.” And you may think oh well, this person needs a, you know, some sort of software that will do their billing for them but that may not actually be the pain. You have to drill in a little bit deeper and you may very well find out that it’s not that their billing system is a pain. It’s just that the person doing it is difficult to work with. So, unless you’re asking those in depth questions, you might start making assumptions about what the problem is and going down the wrong path.
[26:01] Rob: Yeah, I think there’s a progression of questions you have to ask because early on, you’re right. You want to ask – you want to find a customer group. You want to find out a common problem they all have, right? So if there’s 20 of them that you talk to, 10 of them or whatever, then you try to group that together and say what’s this common pain they have, then though I think you get in to the customer development side where you start saying, “All right, my hypothesis is they need an app that does this and in order for this to work, I need to charge 50 bucks a month for it.” So then you come back to that group and then you find others and you say, “Would you pay 50 bucks a month for an app that does this,” and if they say, yes or no then you say why. You know, you try to figure out what the salient points are, the feature it needs, you know, maybe something it’s lacking with the prices and all that kind of stuff. We definitely agree with you there’s that early space where you really need to just throw it out, throw up in here and say, and don’t lead them yet because you’re just trying to – you’re almost trying to do a brainstorming session where you don’t want to – you don’t want to introduce, you know, impurities in to the conversation.
[26:35] Mike: And that kind of leads us in to number six which is to build something that people want. Why don’t you talk a little bit about that?
[27:01] Rob: Yeah, so you know, I won’t say this is as much of a myth as it is only half of the equation. It’s a myth that this is all you need to do. This is to build a better mouse trap theory and we know that just building a product that’s better, it isn’t enough. You also have to be able to acquire customers for less money than they give you over their lifetime and I think that’s a key part that’s really missed in the discussion of building something people want. I love the quote because Paul Graham wrote an essay and it may – it was out there titled Build Something People Want and that was the salient point from it and now that’s thrown around all the time on Hacker News and in other startup circles. And I think it’s important but it’s half of the equation. There’s the entire marketing side that people ignore when they say this phrase.
[27:42] Mike: Number seven on our list is that passion is a competitive advantage and this is just not true at all either and the reason is because everyone has passion for the products that they’re working on especially when it comes to their first product but the fact is that passion for your product is just not enough. You have to be able to get over your fears. Be able and willing to go talk to people that you’re not necessarily comfortable talking to and that’s something I think a lot of people miss.
[28:06] Rob: Yeah, I mean there are a lot of ways to have a competitive advantage. I like to think that each person has a competitive advantage that – that really is something that they should leverage, just kind of their number one skill and so some people are awesome networkers. And if you have just a fantastic network and that’s what you’re really good at, then that’s your competitive advantage and that’s what you should totally leverage to build your app. If you have a real like an engineering mind and you enjoy marketing, you should combine those two and become, you know, an engineer-driven marketer and that’s more of like Patrick McKenzie is, that’s kind of stuff that I do, a lot of testing, conversion, improvements and I think you died head first in to that. And the other – other people just have a gift for product, right, design UX, that kind of stuff and that’s kind of their whole thing. They don’t really know a lot about the metrics and the analytics and they don’t care because they can build such a gorgeous product and they have at least some way to market it. And so, I think you really need to think about more practical things like that in terms of competitive advantages rather than something that is as ephemeral at passion because like you said everyone who’s building an app is passionate about it. So, it’s just not enough to propel your app in the success.
[29:15] Mike: Number eight is that you have to raise funding to launch a startup. And I think that the word startup has been seriously abused over the years. I read something recent from Paul Graham where basically he said, “The definition of a startup is this…” So, I think that there’s a lot of fighting about exactly what it means to launch a startup but at the same time, I mean the stuff that we’re doing on and working on I mean we consider them to be startups whether you want to agree with the definition or not. I mean you’re working on a software startup because it’s a — it’s an – basically a new software company. So, but raising funding is not necessary to launch a startup. You don’t need any money or whatsoever. Didn’t Patrick McKenzie say that he launched the Bingo Card Creator with $60?
[29:56] Rob: I think it was, yeah.
[29:57] Mike: There are definitely ways to launch a product and a company with very, very little money. You definitely don’t need to go raised funding and the fact is that raising funding is not necessarily going to be answer to all your problems anyway. In fact, it may very well create more problems.
[30:13] Rob: Right and I mean I want to be clear, we are no anti-funding, right. We’re not anti-venture capital. I’m anti everyone thinking that you need to raise angel fund and venture capital in order to do a startup, in order to start a software company, in order to launch B2B website. Now, I do know that there are cases where the only way you’re going to grow that and the only way you’re going to be scale it quick enough is with funding. What I’ve seen is that the more money you have at your disposal, the faster you can grow, period because you’re not waiting for your revenue to come in to then reinvest in a business. Once you have a flywheel in place, a marketing flywheel and you know that you’d just need to dump a bunch of money in to it and more will come out at the other end, then you really do want as much money as possible. And so if you’re waiting for one in $2,000 a month to come in to stuff it in to there, you would grow a lot faster if you had 10 or $20,000 a month to put in to that engine. So, once you are ready to scale, I absolutely think funding is an option for people but it’s not necessarily and if you don’t want to go that route and you want to maintain control, this is such, you know, something we espoused so much on this podcast is you don’t need it to get off the ground and certainly not to build a business that will support you and your family and your lifestyle in the way that you want.
[31:23] Mike: Yeah, and I totally agree with everything you said. I mean the one thing that you brought up was that we’re not anti-funding, it’s just that you don’t necessarily need funding and that leads in to number nine which is you need a co-founder. And I have the Single Founder blog but at the same time, I’m not anti-cofounder. I’m just anti the idea that you need a co-founder in order to succeed. So, I know a lot of people out there who are building these one-person companies that they’re the single founder of that company and they’re doing quite well and some of them will bring employee, some of them don’t. It really depends on what their goals are but you don’t need a co-founder to succeed. And in fact a co-funder, I mean I think that Paul Graham wrote an essay where he basically said that that’s actually one of the risks in having a co-founder that somebody you can fight with. He’s like one of the number causes of a startup failing is fighting between the co-founders. I just think that it’s very important to differentiate between having a co-founder is in some way is nice and some way it is not versus that you absolutely need one in order to succeed.
[32:25] Rob: There are obvious benefits to having co-founder, right? It gives you that ongoing mastermind group, it’s the ongoing support from someone you keep each other’s morale of and as long as you’re on the same page and you share the vision of the startup, then it tends to be a good thing. Now, it does mean you have to grow that thing twice as large to get the same type of pay out. So, if you’re going after a hundred million dollar evaluation raising funding, it’s kind of here nor there, right, because it doesn’t actually matter if you take home 50 million at the end of the day or a hundred million because you’re not going to be able to spend that in your life but if you are building smaller niche apps and you’re bootstrapping, it becomes a lot harder to be because you have to then pick a market that’s twice as big. You have to build your app to twice as much before you’re going to be able to quit your job. Well, it add some complications at the lower end, frankly of in common app size, you know, startup size. So, there are definitely positives and I can understand why people want to take on co-founders but in general when people ask “Should I,” I tend to say, “You know, if you’re asking that question and you don’t have someone already in mind, then I would basically stop this through this point if you can get it done on your own, then do that.”
[33:32] Mike: Number ten is that you just need one big break and your business will be huge. And this is another one of those fallacies that people think, “Oh, just if I get listed in TechCrunch or if I do this or if I do that, if I get on that podcast, then I’m going to get a lot of press and that would be the end of it and that will kind of push me over the edge.” And it’s really not about that. I mean what you’re really looking for is this incremental wins that build upon each other. I mean there’s a reason there’s a hockey stick growth curve and it’s there because there’s all these other previous wins that have to happen in order for you to start making up that growth and as you make those incremental wins, they build upon each other. There’s no one single thing that you can do that is going to just make your business huge.
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[34:17] Mike: And number eleven is to scratch your own itch. And this really means building an app that you need and by definition, other people are also going to need that. And again, this is another one of those things that is not necessarily true and there’s a lot of people who’ll say, “Well, don’t sell to developers because they don’t pay for stuff,” “Don’t sell to designers because they don’t pay for stuff.” And that’s – those things aren’t true either. I mean if you’re selling something that solves a problem, people are going to buy it. That said, just because you have a problem does not necessarily mean that every one else has that problem as well. And it may be true but it’s not necessarily true. So, you really have to start looking at those types of problems that you’re having and ask other people if they have those problems as well. And if they do, then you may very well have viable products but and this also works in the reverse as well. Just because you don’t have a problem, it doesn’t mean that other people don’t see it as a problem.
[35:06] Rob: Yeah, this one the “scratching your own itch” I’m pretty sure it’s popularized by 37signals because they just built software internally and then started releasing it and other people needed it as well. That worked great for them. Obviously, they have a great niche business, people estimate brings in 20, 30 million a year, that’s awesome. The thing is though as overtime, you know, over the past 7 years since they launched Basecamp, everyone has taken that mentality. And so, you know, every business process that I can imagine for designers and freelancers and developers and small software shops and small, you know, small design shops, whatever has been built internally and released it with Fog Creek, right with FogBugz, with was the SourceGear did with their plug in to Visual SourceSafe back in the day. So again, you’re right. It’s not to say this does or does not work, it’s just it has been espoused as something that that’s what you need to do and that’s the only way you should build software.
[36:00] And if you’re not scratching your own itch and you’re not customer number one, then you’re doing the wrong thing. It’s just – it’s incorrect. I do believe that if you are customer number one, you do have an advantage because you do know your customers and you do know what the product should do. It gives you some insight but it’s absolutely possible and I’ve seen many people do it successfully to build an app that doesn’t serve you, yourself, you know, as you stand today. So, it’s like you said, you need to take this with a grain of salt and look in to it more. Then if you do have a need, that’s great but you need to then do more research to figure out who else has that need, how expensive are they to market to, what can you charge for this, is this then a viable product option just because you have a need in solving your pain, doesn’t mean it’s actually a viable product.
[36:44] Mike: And I think what you said there is – also important because if you are customer number one and you have already validated that other people need this product as well, being customer number one definitely helps you. I mean that’s – that’s a definitive advantage over a product where you’re not necessarily going to use it. That doesn’t necessarily mean it’s not a viable product. I mean you can certainly market and sell a product that you don’t use internally. It’s just that it’s probably not going to be as good as if it was designed by somebody who does use it internally in our regular basis. So to recap to eleven software startup myths, number one is owning a business means you can never go on vacation. Number two is that mailing list don’t work and are nothing more than spam. Number three is “I’m going to make billions or I’m going to make nothing”. Number four is “I have to do everything because I’m the one who understands how everything is supposed to work”. Number five is “I don’t know where to start or I don’t any good ideas about anything that’s never been done before”. Number six is to build something that people want. Number seven is that passion is a competitive advantage. Number eight is you have to raise funding to launch a startup. Number nine is you need a co-founder. Number ten, you need just one big break and your business will explode and number eleven, you should scratch your own itch.
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[37:54] Rob: If you have a question or comment, please call it in to our voicemail number at 888-801-9690 or e-mail us at questions@startupsfortherestofus.com. Our theme music is an excerpt from ‘“We’re Outta Control” by MoOt, used under Creative Commons. Subscribe to this podcast in iTunes by searching for startups or via RSS at startupsfortherestofus.com where you’ll find a full transcript of each episode. Thanks for listening. See you next time.