Show Notes
Transcript
[00:00] Rob: In this episode of Startups for the Rest of Us, Mike and I are going to be discussing the Product Test: 9 Attributes That Will Determine the Success of Your Product. This is Startups for the Rest of Us: Episode 134.
[00:11] Music
[00:17] 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.
[00:27] Mike: And I’m Mike.
[00:28] Rob: And we’re here to share our experiences to help you avoid the same mistakeswe’ve made. What’s the word this week, Mike?
[00:32] Mike: Well, we’ve got an e-mail from Jay Adams who says, “Dear Mike and Rob, first off, you guys rock. I’ve been listening to the podcast for a couple of years. And I really appreciate how you share real world facts and advice about your startup experiences. I finally started my own company focused on enterprise server management and security software called SystemFrontier.com. I’ve formed an LLC in January of 2012, released an MBP in October and got my first paying customer in December. I left a very good IT career on March of this year to go fulltime. I’ve been consulting through my business to help gets the lights on until sales pick up. I’ve got a long way to go but I’m all in. My family has been very supportive and hearing about other single founder experiences just to help me know there’s light at the end of the tunnel. I’d just wanted to say thanks.”
[01:09] Rob: Awesome. So, where’s our page? We need [Laughter] we need to get a page up of people who’ve quit their job. So, this is the first e-mail we’ve received after our call for people who were able to gain freedom from the 9 to 5. So, very cool. Thanks for writing in.
[01:23] I was interviewed last week on I guess I called it a podcast but it’s more of a video blog thing. It’s called the GrowthHacker.tv and I like their tagline. It’s “Growth Hackers don’t watch cable.” So, there’s a bunch of pretty cool video interviews up there. You do need to enter your e-mail address to watch the videos. And I think you can watch some previous three. So, it’s kind of a freemium model. You can the watch the freemium three by giving your e-mail and then youhave to pay a month of subscription to watch the entire archive and future ones. But the interview went well. The guy asked some really good questions and the other folks they’ve interviewed on there were interesting as well. So, I figured it resonates with our audience and some folks might want to get in early while it’s because it’s just launched in the past few weeks.
[02:04] Mike: Pretty cool. Is now – is there a limit of the number of people who can get in or is it like they’re time limited or no?
[02:09] Rob: Neither of those, yeah. It’s just kind of a freemium model where they charge a monthly fee to access the videos.
[02:15] Mike: Very cool. So, I hired a new developer yesterday whose sole focus is going to be on building policy files for AuditShark. And I ran in to a bunch of issues getting him just initially set up but I was able to explain how things get built to him pretty easily. It seemed like he followed it along. Some of these issues, they were like code bugs that were due emerges but I was able to fixed those in less than 24 hours. So, at this point, he should be good to go and I would expect to see some of that stuff coming from him by the end of the week.
[02:42] Rob: Nice. Is this the last thing that you need done for your launch?
[02:46] Mike: It’s the last major thing, yeah.
[02:48] Rob: So, you’re —
[02:48] Mike: I mean there’s always going to be like little things here and there, you know, like the billing code is still kind of in progress but I don’t really need that to launch, you know. So —
[02:55] Rob: Right.
[02:56] Mike: But that should be done later this week, anyway. So, I’m not real concern about that. And then there’s a bunch of user experience stuff that I’m working on this week and touching base with some prospects and saying, “Hey, you know – you know, when would be a good time for you to start signing in and taking a look and see what’s there?” But I also have to kind of push off on that just a little bit until there’s more policies and stuff there because I’ve got to vent this guy’s work.
[03:18] Rob: Right. Yeah, that always takes quite a bit of time upfront to get a new developer up to speed both to find them and then to get them set up and then to start reviewing their work. I mean I guess there are some ways to shortcut that. I’ve done in the past where I haven’t – I’ve given folk kind of one off really localized task where they don’t need to access the source control. They don’t need to get the entire environment set up. They really — or I’ll send them like a console app and I’ll say like, “Here’s three table create scripts. Create them and then write this console app against those three tables.”
[03:50] It’s just in visual studio bare and get it running. Then I’ll take a look at their codes because if they don’t pass that, right, it’s a real…it’s a real thing that I need for the app but if they don’t do that well, if their communication isn’t good, if the code doesn’t work out, if there’s bugs, then I can cut them lose without investing all that time of getting an entire environment set up for them and all that other stuff. But unless you have something like that for them to do, then you kind of have to eat that upfront time of really getting them on boarded in to your team. And it’s definitely no small expense of your time and theirs.
[04:21] Mike: Yeah, I mean this is a little different because I’m just handling him the policy builder. He doesn’t have to have anything else. There’s no visual studio. There’s literally nothing else. I just said, “You know, bring your laptop over with, you know sequel server express installed and I’ll install everything.” And literally, we were done installing stuff in like 3 or 4 minutes and that’s what it.
[04:38] Rob: Okay.
[04:38] Mike: And then I started to sit with him the rest of the time going over, you know, how to build policies with – you know, showed him what I was looking for, showed him how it worked. And he was kind of off and running already. It didn’t take him more than one hour.
[04:47] Rob: Yeah, that’s nice. He came over, a local developer, huh?
[04:50] Mike: Yup, yup.
[04:51] Rob: Nice. I received an e-mail from – his name is Emil and he has an app called Helpjuice which is like a help desk app. And he says, “Man, I effing love your podcast. A couple of months ago, I couldn’t pay for a plane ticket to America and this is our current bank balance.” And he sent me a screenshot of Helpjuice’s bank balance which I thought that was cool. And he says, “…all because of listening to you. I wish I could connect more with you but I know you’re super busy.” A testimonial via e-mail that I wanted to share, I just thought it was pretty funny to see that, that screenshot of his bank balance.
[05:21] Mike: That’s awesome.
[05:22] Rob: Yeah, it’s cool. So, on another note, almost the opposite sentiment, we’ve got an e-mail this week from Rudy at HigherFlow and he is a long-time listener and he’s attended the last two MicroConfs. I‘m going to paraphrase his e-mail basically said, “I came away from MicroConf with renewed energy and a lot of ideas for moving HigherFlow forward. Unfortunately, before I could do any of it, my Rackspace cloud server had a complete unrecoverable failure. I had everything on one virtual server and the reason the cloud server is redundant and it would just fell over it to a new box if anything bad happened. To make things worse, the only backups that I have the snapshots of the virtual machine made daily by Rackspace. And their automated backups actually destroyed the backups that had already been made. So, the end result was a complete data loss.”
[06:06] He basically restarted with nothing. He reinstalled everything from scratch and then he had a database that dev build the database that was 10 months old. He basically lost 10 months of data and in fact, he says, “I don’t even know who my customers are or how to reach them because their contact information was in the database. Looking back, I can’t believe how stupid I was. Lots of lessons to be learned here and hopefully, this story can prevent some other founder for making the same mistakes. HigherFlow is up again and I’m moving over to either OrcsWebor Azure but whatever I do, you can bet I’ll have rock solid offsite backups.”
[06:39] So, certainly my condolences, both of our condolences go out to you, Rudy. That’s like it’s devastating to hear this. Fortunately, it is – it’s uncommon that this happens but it absolutely can happen and even when you do have backups this kind of stuff happen. So, folks that I know are zipping up entire directories or entire database backups and shipping them off to S3 on a nightly or a weekly basis, so that at worse, you lose, you know, handful of days of data.
[07:04] So, thanks for writing in, Rudy. Obviously, it’s really hard to hear that and to know that happened. But I do hope it serves as a reminder for all of us to get our backups in place and you know, so that this type of thing doesn’t happen to us.
[07:17] Mike: Yeah, I think the worst part of this whole story is just losing 10 full months of customer data because like he said he has no idea who his customers are at this point and if you don’t know who your customers are, it’s not like you can contact them to try and fix things either. And a lot of them are probably just going to drop off but I mean those backups are the critical part and it’s just – what do you do at that point? I mean he and I actually e-mail back and forth a little bit and he was tracking them for a while and everything was fine and then he just stopped tracking them because they were always fine and it just went wrong.
[07:45] Music
[07:49] Rob: Okay. So, today we are following up from what we talked about last episode. We talked last episode about the Founder Test which were 11 Founder Attributes That WillDetermine the Success of Your Product. And we looked at attributes that a founder can have that can, you know, either make you successful or not. This episode we’re going to talk about the Product Test: 9 Attributes That Will Determine the Success of Your Product.
[08:11] These are borrowed heavily from The Personal MBA written by Josh Kaufman. He was a MicroConf speaker this year. I listened to that book and really enjoyed it. And what I’ve done is I took his 10 factors and there were three of them that didn’t really apply to software and so, I removed those and then I replaced two of them with, you know, some stuff that does actuallyapply to software. So, what we have is 9 factors that apply more closely to our audience of bootstrap software entrepreneurs.
[08:40] So, attribute number one is urgency. And we’ve talked about this in the past where there are vitamin apps and there are aspirin apps. Vitamin apps are apps that, you know, someone may or may not want but there’s not a lot of urgency when they go to look for it whereas aspirin is something they have a dire or need for. They’re trying to cure their headache. They’re trying to convert something and they have a last minute deadline and it’s just a real urgent need and they need to fix now. That’s what we’re talking about here.
[09:06] Urgency does two things. One, it impacts the length of the sale cycle quite a bit, right? So, if someone has a more urgent need, then you can have a very fast sale cycle of someone typing a keyword in to your Google or search engine finding you and buying you…buying your product within 10 or 15 minutes. So, your sale cycle can be very short versus something that’s, you know, like let’s talk about automating our office or something. That’s going to have a long sale cycle because someone doesn’t need to do that right now. They’re getting by just fine with the substitute. As a result, you’re going to have to wait longer to make sales. You’re probably going to, you know, have to charge more money because you’re going to have to do more high-touch, that kind of stuff.
[09:45] Mike: I think one of the difficult things of this particular one is that when you’re trying to evaluate whether something is a vitamin or an aspirin, a lot of times it boils down to the situation that the person who is purchasing it is in. So, let’s take for example, a software] that converts a Word document in to, you know, ePub format. What you end up with is there will be people who have plenty of time to do that and then there’s going to be people who have very, very little time in order to get it done until you’re trying to sell to them. I mean you obviously have no idea what their situation is.
[10:16] So, there’s going to be some people who buy immediately. There’s other people who are going to look around a lot because they’re just kind of researching, you know, a process for something that they’re doing educational research at the time. So, for those people, the sale cycles can be a lot longer and it’s hard to determine how long the sale cycle is going to be until you know what the situation is for them.
[10:33] In terms of aspirin versus vitamin, you know, that’s a definite need. They need that particular job done and they can either do it manually or they can use software and the softwareis all — so it can save them a lot of time. So, in that case, I would say that that’s probably more of an aspirin than a vitamin. A vitamin is going to help you but not necessarily necessary at the moment. They probably have something else in place that they’re using.
[10:54] Rob: Right. So, you’re saying it’s situational that all of your sale cycle is may not be short but there will be some people who wait until the last minute and do have an urgent need for your product. And then some of them, they may take more time and be planning out and maybe will have a one-month sale cycle on those so that it’s not necessarily going to be uniform. The urgency may not be an absolute. It’s like and maybe a percentage of your sales are more urgent than others.
[11:18] Even if you think about it that way like if you have a game that is not a name brand game, your urgency is pretty low in general, right, because people mostly are just kind of cruising through. Let’s say I’m cruising through the iOS app store looking at featured games and I don’t have the urgency to buy any of them. I maybe wanting to fill some time or something, but in general that whole marketer, that whole niche is not going to be really urgent. Whereas something like a business app that solves a very specific and acute problem, my overall this has a lot more urgency. It’s just be higher on that 1 to 10 scale.
[11:49] Attribute number two is market size. And to be honest, I think for our purposes, you know, unless you’re a huge company finding an existing marketing channel meaning an actual way to get customers, I’ll say get traffic that people interested in your idea, figuring out how large that is, it’s actually a lot more important than figuring out overall market size because if I build a SaaS app for hair salons as an example, you can look, you know, at some demographic information to figure out, okay, there are 50,000 or a hundred thousand hair salons in the United States.
[12:22] So, that’s your whole market but that’s – it’s completely not relevant to you as a solo bootstrap founder. What’s actually relevant is what marketing channel, how am I going to contact those hair salons and how many of them can I contact and close each month. And that’s a much more relevant piece to this attribute number two I think than the overall look at it.
[12:44] Mike: I think that this is something that not a lot of people give enough thought to when they’re trying to build their product because you really need to be able to know exactly how it is that you’re going to reach these people or at least have a very good idea of what is going to work because if you can’t figure out how to reach these people, it doesn’t matter how good your product is or how well it solves their problem or how cost effective it is for them because if they don’t know about it, they’ll never buy it.
[13:08] Rob: Attribute number three is pricing potential. And the translation of this is basically how much can you charge for your product? So, if you can only charge a $9 dollar one-time fee, you’re probably pretty low on the pricing potential. You’re going to have a tough time growing the product unless you have a really large channel of customers who’s coming almost free. Whereas if you can charge, you know, a hundred bucks, 500 bucks a month, it’s just so much better opportunity, you might have a higher chance of success and then increasing revenue quickly.
[13:36] I think a lot of this comes down to two factors. One is, are you selling B2B or are you going B2C? These days I pretty much wouldn’t do a B2C idea. The B2B market, you can sell on value. Basically you save someone time, save them money or make them money. And there is…there is so much higher pricing potential in those areas and you know, often a lot less support. There’s just a lot of benefits to going with that.
[14:02] Mike: Yeah, I think at MicroConf Jason Cohen had pointed out that pretty much every speaker there were selling B2B in some way, shape or form. And Patrick McKenzie was kind of the sole stand out where he has the Bingo Card Creator where he’s selling it to individuals but at the same time he’s also a heavy proponent of selling B2Bs and he’s also got Appointment Reminder which is a formerly a B2B app.
[14:27] And I would definitely agree. It’s just going to B2C route is – I’m not saying as a recipe for disaster but at the same time, it’s very difficult to go down that road because there are so many different businesses out there that have established needs and when you’re selling based on need, it’s easier than selling based on what somebody wants.
[14:43] Rob: Yeah, I was the other one that has B2C because I have WeddingToolbox andapprentice lineman jobs. And he listed that up there along with Bingo Card Creator and said, “But both of these guys have since moved to B2B,” and everything we’ve launched since then has been B2B. So, it’s definitely the direction that the people moved. I think the exceptions, notable exceptions are if you’re dealing in mobile apps that it’s feasibly since the cost to acquire customer is so low there because so many people are in that ecosystem. It’s a little more reasonable to think about doing it there.
[15:14] You can always point out exceptions. There is – you know, there’s WinZip and FTP programs and that kind of stuff that just have these massive search channels. They’re typically have a lot of organic traffic. And it’s definitely possible. I mean there was a guy on MicroConf who had I’m trying to think it was like tens of thousands of downloads of his free like FTP client every month. And huge chunk of it just came from Legacy Search and he’s just been around for a long time and had a lot of long-tail stuff. That – and that’s great for him but if I were to pick amore ideal business model from the start and I was looking at this factor that we’re talking about here, price-potential, I would definitely be and then firmly in the B2B camp.
[15:54] Attribute four is cost of customer acquisition. So, this is how much does it cost you to find a new customer and to get them to use your app? It’s a pretty long path from the first time some hears about you until they get all the way through to a download or a trial and they’re actually paying you for your application. So, I mean there are several rules of thumb here. One is that online customers are always cheaper to reach than offline customers. There’s just so many more mechanisms. I mean this is basically the stuff we’ve talked about for the past hundred and thirty episodes.
[16:23] You know, another factor to keep in mind to kind of decrease customer acquisition cost is to try to pick something that has urgency so that you don’t have a long sale cycle and don’t need to spend a lot of labor on it because even if it’s your time, it’s still costing you money. In addition, finding businesses where there’s a single decision-maker can help make like a medium or a low-touch sale rather than having to hold someone’s hand.
[16:47] Now, it’s not the end of the world to have to do high-touch sales, right? But it’s just, you know, you got to know what you’re getting in to and you need some type of gifting or some type of desire to do that in terms of lowering your cost of acquisition or at least knowing where it is because if you’re charging 500 a month, it’s okay to have a high cost of customer acquisition, it’s okay to do high-touch sales but you have to know that going in at these two things are going to matched up so that you don’t have a low pricing potential and a high cost of customer acquisition which is unfortunately what, you know, some apps that I’m approached with have.
[17:20] Mike: One of the points that you’ve made in there was having a single decision-maker involved in the process and when you get in to more of the larger business or enterprisey sales, that’s when you start to have like committees and multiple people who are looking at a product and you know, the different decision-makers who are taking a look at it. And what’s really sucks about dealing with that type of sales situation is that you almost have to talk differently to the different people involved. So, if you’ve got a team of technical people, they’re going to want to know all the technical stuff and their manager is going to want to know all of the business stuff. So, you almost have to talk to both of them at the same time on your website and but in different ways. You have to say the same types of things but you approach it differently.
[18:02] So, for example, with the technical guys, you’re going to approach it very technically and say, “This is the time I can save you. This is how I can allow you to do your job easier and help make you look better to your boss,” versus, you know, on another page you might have it more for the benefits of using that products and you’re talking more about the business objectives and meeting those goals and helping provide services for them that are going to save the company money.
[18:26] Rob: Attribute five is the cost of value delivery. Not just a fancy way of saying how much does it cost you to service a customer? So, with a typical brick and mortar, if you had a restaurant, you know, you might look at how much the food cost and the weight stuff and that kind of stuff, electricity, all that. If you’re a software company, it’s a little different because your overhead is going to be a lot lower. Hopefully, you don’t have, you know, many employees. There’s just a lower per customer cost because things are so much more scalable.
[18:54] But I think where those some of those larger costs creep in that you don’t typically think about are a couple of things. One is the cost or the effort to get someone on boarded and using your app in getting value out of your app. Sometimes that can be a semi-manual process if you have like a tag, you know, some JavaScript tracking code that they need to install on their site in order to use your app. You’re likely going to have some type of manual intervention at some point and that’s obviously not a free thing. So, you need to make enough money from your customers to be able to support that.
[19:25] And the other thing is in general just support whether you do e-mail or phone, chat, what-have-you, those are, you know, tend to be a decent chunk of your cost as you deliver value through your app. Then the other one that depending on whether you need to hire a DBA, that’s the one I have, you know, a DBA with HitTail and it wasn’t a cost that I really thought of in advance but since we have a large database and I want multiple backups and be able to restore a point in time and he works every month. It’s a recurring cost for the business.
[19:56] And so, that’s kind of another one is, you know, your IT infrastructure because I think I always think about, yes, I normally need to pay designers, programmers, probably some copywriters, you know. There’s kinds of miscellaneous things of building and marketing the business but these are the ones that maybe have…have snuck in the backdoor as I have…as I’ve grown businesses.
[20:12] Mike: I think one of the cost of value delivery that is frequently overlooked is the support and on boarding. So, like for example, when a customer first signs on, getting them up to speed with what your product does, how it works and how it can quickly benefit them is something that you need to spend a lot of time and effort on. And if you do it right, you can bake that stuff in to the app so that it essentially walks them through the process of on boarding themselves and you can essentially automate that within the application.
[20:40] There are some applications that are going to be a lot more complicated that you’re not going to be able to do that. One thing I saw which was very interesting today was a sign up process for a product that a product itself is very complicated or could be and they actually had two different sign up forms. They had – it was on the same page and on the left-hand side, you could just say, “Please sign me up right away. This is what I want and you know, just dump mein to the application.” And on the right-hand side of the page it was something along the lines of, you know, get the enterprise treatment and you basically provided some a little bit different information, your name, phone number, et cetera. And they would contact you to help get you on board. And I thought that was a very interesting way to handle the on boarding process based on what the end user thought their needs were going to be.
[21:23] Rob: Yeah, that’s really – I haven’t heard of that. That’s a very interesting approach.
[21:26] Mike: Yeah, I’m totally staying with it for AuditShark. [Laughter]
[21:29] Rob: Yeah, I agree. I think that’d be well worth your time. Attribute number six is the uniqueness of your offer. And this just means how unique is the value that you’re offering in the market, how much can you differentiate yourself from your competitors. And I’ve actually translated it in to something else, how simple is your value proposition? Can you communicate it in three words or five words or the length of a Facebook ad headline or the length of a headline on an HTML page?
[21:58] So, I think there’s two sides of this, right? It’s the uniqueness and the simplicity. And what I’ve discovered is especially as a single founder bootstrapper, having a simple value proposition is really helpful because it instantly removes prospects who shouldn’t be using your app or shouldn’t be interested in it. And so, you can find people who really need that problem solved so that you can kind of tap in to the urgency factor which can help shorten your sale cycle which can help you determine how best to reach them and can help you, you know, lower your cost of acquisition to be honest.
[22:35] So, it’s like – it’s not just about being differentiated from your competitors but it’s actually how well can you communicate the single value proposition. So, I’ll give you an example, when I was split testing the Drip landing page, GetDrip.com, I had number of different headlines. And they revolved around several different value propositions. One of them said, “Reconnect with drive by visitors via e-mail.” Another one said, “Increase conversion rates by reconnecting with visitors.” Another one said, “Let’s use e-mail to create a double digit jumping your conversion rate.”
[23:08] And so, it was different ways of saying what sounds like the same thing but if you really look at it, it’s actually kind of a different value prop. And one of them performed way, way better. It was the double digit jump headline. I had a couple others as well but it’s, you know, being able to split test or to interview and actually talk to people and find out which of the – truly the values that they need out of your app can be very helpful for figuring out when you’re starting out, you need to be laser focused so that you can figure out who really needs your app and what problem you’re solving and that’s where this, you know, uniqueness and simplicity of your offer comes in.
[23:43] Mike: And as you said I mean that helps when you’re trying to optimize your overall conversion funnel because if people come to your website and they don’t think that that whatever it is that you have applies to them, they’re going to leave. So, you really want to be able to increase the conversion rates on whatever the landing pages are that you have. And if you’re able to clearly and effectively communicate whatever your value proposition is there, it’s going to increase the number of people who go through that funnel.
[24:09] In addition to that, it allows you to go in to AdWords and AdRoll and all these other places to leverage those types of paid traffic with some targeted keywords that you know already worked. Those targeted phrases that you’ve already tested, you’ve found what works and what doesn’t and you can put those out there and hopefully, scale up that side of your acquisition funnel.
[24:32] Rob: Attribute number seven is time to get to market. And in this, I’m actually adding money to get to market. So, you may not need a lot of money as a bootstrapper but as we talked about last episode, it can definitely help. So, you know, looking at this on a 1 to 10 scale, if you, you know, can get an app out in a weekend for $0, then that’s probably a 10. And if an app is going to take you a couple of years to develop and cost you 40 or $50,000 in terms of a bootstrapper’s budget, then that would be definitely on a lower end of the scale.
[25:06] Attribute number eight is evergreen potential. Basically, how long is your app going to be able to provide value? Does it rely on an API that’s going to change overnight? Does it rely on a social network like Friendster or Myspace that, you know, slowly loses interest overtime and that doesn’t have the customer base that it once did. Or is it something that that sticks around and has, you know, a 10, 20, 30-year lifespan where it can basically stick around forever providing its value?
[25:35] Mike: I think one of the key issues here is, you know, are you building on somebody else’s platform? And if you are, how long does that platform going to be around? Because if it’s not going to be around for a long time and granted a lot of time you look at any given platform, it’s very difficult to judge what the future that platform is going to be. But at this point, I think it’s pretty clear that, you know, Windows, Linux, and OS X are not going anywhere. You could probably reliably build on any of those three platforms and you’ll be fine.
[25:59] 15 years ago, you probably would have – you know, people would have given you funny looks for building on Apple’s platform because they’re like, well, you know, this has got a really, really low market share. It’s not doing well and I don’t see it turn around. But obviously, over the past 15 years that has changed dramatically. But then you look at other things like Twitter or Facebook or Myspace, those are kind of iffy, you know, who knows what the future of some of those is going to be. And if you were to look at those five years ago, it was completely not clear.
[26:25] At this point, Facebook is kind of a clear winner in terms of Facebook versus Myspace. Twitter doesn’t seem to be going anywhere. It seems like it would be a reasonably safe path but at the same time, you’re building on their API. They can change the rules underneath you no matter what and Facebook could do the same thing. So, those are the types of things that you have to be at least a little bit concern about when you’re evaluating different niches.
[26:47] Rob: Right and it’s not a “never do this” or “always do this” but it’s building on Twitter’s API has more danger than if you’re just building more of a self-contained app that can run by itself, right, building like an e-mail marketing software. Let’s say you build MailChimp versus you build a Twitter client three years ago like which one has more early win potential? It’s much more likely that e-mail is going to stick around and as it happens, there are Twitter clients that are basically going under or dramatically having to raise their prices or losing customers because of the Twitter API changes.
[27:16] And if you think about Zynga which is, you know, a game developer that developed most of its games on Facebook, well, at certain point, it had to diversified. It went public and the investors were just too concerned that the Zynga was too reliant on Facebook, on the platform knowing that Facebook had more control than Zynga should allow them to. So, it’s definitely something to keep in mind is its evergreen potential.
[27:40] And our ninth and final attribute is recurring revenue potential. Let it be said here for the tenth time on this podcast, everyone take a drink, any app I build from now on will always have recurring revenue. I’ve done the one-time software downloads and I am done with them because every month on the first day of the month, you have zero dollars in sales for that months and you’re scrambling to make it work.
[28:03] So, I’m not saying you should never do, you know, non-recurring revenue but personally, I will never do it. And so, I think this is something to keep in mind as you’re talking about building your app, if you want to grow revenue over time having recurring revenue and subscription is by far the best way to do that because you are then building on something every month.
[28:24] Mike: I couldn’t agree more. I mean the recurring revenue, if you’re not at least looking at ways to establish recurring revenue or to upsell your existing client base in to additional add on I mean you’re really spending a lot of time and effort redoing those sales every single month and what you really want to do is you want to be able to do something once and then resell it forever. And if you’ve got a downloadable products, you have to continue repeating that particular process as opposed to ripping the words of, you know, the software that you’ve already built in month after month.
[28:54] Rob: Yeah, and this is another where especially your first app, the first app you launched, I don’t think it needs to be recurring because I think you need some small wins early on and if you’ve never launched a software product, I do think it’s okay to launch a – like a one-time fee download something like a WordPress plugin or, you know, maybe a mobile app if you have that skill or something downloadable like, you know, Richard Chen has PHP Grid and I think that’s a really cool idea and he built it up and was able to quit his job.
[29:21] But now, now that you have that, the next step then is to think about how do I get to subscription revenue whether it’s with the existing product, finding a continuity program, some additional value you can offer, extra support, something like that. Or if it’s, you know, starting on an entirely new app and then you have the leeway, you have – you bought out so much of your time. You have that flexibility to then go after that long build.
[29:44] I remember the CEO of Constant Contact spoke at Business of Software last year and she said that it’s the long slow SaaS ramp of death [Phonetic] that SaaS app takes so long to build a revenue because just one at a time you’re finding customers for 20 bucks a month, 40 bucks a month and to try to build, you know, a really large revenue stream is a lot harder that way. But that revenue stream is such a flywheel and it lasts a long time.
[30:09] If you can buy yourself some time upfront by doing, you know, like I said some early wins, you’ll have more patience if you already able to quit your job and you’re already enjoying what you’re doing then if building that SaaS app, launching it and getting the revenue high, you know, it takes a year or two or three, that’s okay because you’re already in a position, you know, where you’re not just hitting your job the whole time.
[30:28] To recap the 9 Attributes That Will Determine the Success of Your Product are urgency. Number two, market size. Number three, pricing potential. Number four, cost of customer acquisition. Number five, cost of value delivery. Number six, uniqueness of your offer. Number seven, time and money to get to market. Number eight, evergreen potential and number nine, recurring revenue potential.
[30:53] Music
[30:56] Mike: If you have a question for us, you can call it in to our voicemail number at 1-888-801-9690. Or you can 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 us on 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 133 | The Founder Test: 11 Founder Attributes that Will Determine the Success of Your Product
Show Notes
- For an excellent write-up of this episode, see this post by Toby Osbourn.
Transcript
[00:00] Mike: This is Startups for the Rest of Us: Episode 133.
[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.
[00:19] Rob: And I’m Rob.
[00:20] Mike: And we’re here to share our experiences to help you avoid the same mistake we’ve made. What’s going on this week, Rob?
[00:24] Rob: Well, remember last podcast how I said we were within one day of getting Drip installed on the first paying customer’s app?
[00:32] Mike: Yes.
[00:32] Rob: We are still within one day. I mean [Laughter] —
[00:34] Mike: [Laughter]
[00:35] Rob: …install paying customer — so, here’s what we did. It was actually really helpful. We got on Google Hangout with Derek, myself and customer number one and he installed it in the morning and gave us some feedback on the early kind of on-boarding. And it was – there were no surprises. I mean he had little feedback tidbits here and there but it was nothing that we didn’t know we aren’t going to work on or wouldn’t just implement right away.
[00:57] But then he hit a roadblock. A couple of things he wanted like he wanted a sync between Drip and MailChimp because he wants to use MailChimp as his core repository because he just has so much invested there and then something else dealing with actually creating e-mails. He wanted more control of images and such. And so, these were basically like show stoppers for him, you know. He was like, “With these things, I really can’t use Drip.”
[01:20] Ands so, back to coding and we are wrapping up both of those features and should hopefully, have them installed, you know, within the next 24 to 48 hours. But it was basically a 3-hour Google Hangout and it was amazingly helpful. It was amazingly helpful to hear his perspective on things like how naming was confusing, how precisely, even though I’ve had conversations with him, I’ve e-mailed with him dozen times at least about how he was going to use it. There were still, once he got in and started using it, these little nuances that you don’t pickup on and a little – the two small features I just named, they never came up before now.
[01:55] It’s a good feeling. I feel much less discourage. That day I was kind of like, “Oh, man. We’re still not on customer one.” But now that we’re getting back to installing them again tomorrow or the next day, it feels good. It’s like we’ve moved forward. We’ve made progress since last week.
[02:10] Mike: That’s really cool. I mean I noticed the same thing when I started walking some people through some of the early versions of AuditShark where there’s certain things that are named in a specific way and it just doesn’t make sense to people. And there are some of those things are still like that but they’re obviously areas that I’ve looked at and said, okay, I got to go through and make some adjustments here. But yeah, just even just naming something as trivial as that sounds, you know,it can make a big difference when the customers get in, they start looking at it because if they don’t understand what they’re looking at, then you have to either educate them or they’ll – you just kind of abandon that because they don’t understand it. They don’t get it.
[02:42] Rob: Right and I had intentionally let Derek moved forward with development and really was not in the app very much. And I did that on purpose so that there would be a fresh set of eyes once we install it on HitTail and sure enough, as soon as we got it working, I logged in and I said, “Oh, you know, we had to move this around. Change the naming, this is confusing blah, blah, blah.” And I was that first run through of just making a little more useable but now, you know, we’re what? Maybe three weeks in I would guess, three and a half weeks and it’s starting to become where I’m comfort able with the app and I don’t see those things anymore. And so, to have another set of eyes, just it gives you perspective, you know. It’s that fresh set of opinions. How about you? What’s new this week?
[03:22] Mike: Well, I’m still wrapping up a couple of things from MicroConf. I still got to get the survey out, you know, just some paperwork issues other than that and like hotel just got back to us today and said that we, “You know, you owe us another $1800,” or whatever.
[03:34] Rob: Yeah and if you’re interested in seeing some photos from MicroConf, go to MicroConfPics.com. That’s MicroConf P-I-C-S.com and that leads to a Google Plus album. We have about 50 pictures of speakers, people hanging out, Mike and I up on stage and all that kind of stuff. So, check it out if you’re interested.
[03:54] Mike: Aside from that, I’ve been doing some more customer development this week for the AuditShark, you know, just reaching out to some more people who are in the security space who already had — that I knew of, the repservers that need to be protected. And just trying to work with them to talk to them about AuditShark and get it installed with them. You know, I’ve already had some preliminary discussions with them and talk to them about pricing and everything else and that all seemed fine to them.
[04:15] So, hopefully — I got word a few minutes ago just before this podcast that the billing code was, you know, ready to go out. So, just needs to be tested a little bit and once that’s in place then I’ll start putting these people on and hopefully, it actually start charging people within the next week or two.
[04:30] Rob: And I say testing some thing [Phonetic] to your billing code —
[04:33] Mike: Yes, yes.
[04:34] Rob: Roll that…roll that baby. I’ll look at possiblyalong [Phonetic].
[04:36] Mike: Well, the thing is I’m not actually billing – like all I’m doing is I think for the first one I’ll just bill them automatically and then after that, there’s all this other stuff in place that says, “Oh, well, if your next billing date is this…” and the first charge just kind of go through and then after that, it’s a matter of targeting people for their follow up recurring billing.
[04:55] Rob: Right, right. Hey, in line with what you said on the last episode about hiring a bookkeeper, I am in the midst of that and I interviewed a bookkeeper today as well as last Friday and found some pretty good candidates. And it was funny one guy I talked to, he asked me about MicroConf. As we were talking, he said, “How’s MicroConf go?” And I was like, “Oh, you must have researched me based on my name.” I was just kind of puzzled and then he told me that he was on the waiting list for MicroConf. It was —
[05:19] Mike: Oh, oh.
[05:20] Rob: It was really funny, yeah. I was like wow. We – I guess we got around. I just wouldn’t expect, I mean, you know, he’s a remote bookkeeper but he’s just in the technology and startups and stuff. And so, he had tried to get in and haven’t got a ticket. So, that was kind of a fun conversation. It actually made me be like, “Huh, I like this bookkeeper.” It’s like if we have asimilar interest, he’s probably going to have a better understanding of my business and he works a lot of other smaller software companies and SaaS companies. So, I mean he’s on his own like he works alone. He has a home office. I’m pretty stoked about him. Hoping we can work something out but I also have a few other folks I’m looking at through oDesk.
[05:54] Mike: Very cool. I signed up for a Square account a while back and I actually gave them enough information for them to send me a Square Reader. So, I’m going to be using this hopefully when talking to people. You know, still I’m early on with AuditShark and say, “Hey, you know, is this something you’re interested in?” And you know, inevitably get the, “Yeah. That sounds great.” And of course, then there’s the question of, “Can I get your e-mail address,” or “Would you pay for it,” or “Will you pay for it?”
[06:18] And of course, the next step is actually getting their credit card information and I’ve got a Square Reader here that they mailed me over the weekend that will allow me to take payment on the spot and it was — I just thought of that as a great way to start validating ideas. So, if anyone has an idea that they’re trying to validate, you’re asking people if they will pay for it if they’re going to prepay for it, you know, using something like a Square Reader seems like a no-brainer because you’ve got it right there or you can actually ask them for money and take a credit card payment on the spot.
[06:46] Rob: Very nice. So, that would have been cool to have at MicroConf.
[06:48] Mike: I know —
[06:48] Rob: You know —
[06:49] Mike: …I thought of it after the fact.
[06:50] Rob: Yeah, you know, there’s another recommendation I can make if you don’t have a Square account is if you have a Stripe account or even you can open a Stripe account like two minutes and then there’s an iOS app called Paid and if you search for like Paid Stripe in the App Store, it’ll come up. It’s 5 bucks I think. It’s a really nice app. It looks gorgeous and it helps you monitor your Stripe account. There’s a lot of reports but then there’s also one page where you can just enter a credit card number and charge it an arbitrary amounts. So, it doesn’t have the cool swipey thing, you know, that Square gives you but it is another way just right on the spot on your mobile app to, you know, to be able to do that. You don’t have to carry around the extra hardware.
[07:29] So, John from BlueBridgeDev.com commented on episode 130 which was the episode where we talked about Unfair Advantages. And he mentioned three additional unfair advantages. The first one he said was assets like a massive savings account, website with good SEO, et cetera. And I like that. I like, you know, once you’ve built up some assets of your own, it’s definitely can be an unfair advantage to someone who doesn’t have those.
[07:54] Second one he mentioned is personal qualities. And I think I preferred to be more specific here but the examples[0:08:00] he gave were like public speaking, strong writer, ability to sell. The third he said is a business model. So, like recurring or exclusive rights or low overhead. And I would argue that. I don’t think that’s an unfair advantage because other people can take advantage, you know, unless you’re Netflix going against Blockbuster where like Netflix weren’t recurring and Blockbuster didn’t or couldn’t because they’re in trench competitor, then maybe that’s an unfair advantage because they can’t pivot quickly enough. But if it’s just two or three startups going against each other, then you’re going with recurring, your competitors can easily switch to it or you going with having low overhead, the odds are your competitors can do that to you.
[08:38] Now, something like exclusive rights to something that would be, you know, an unfair advantage that other people can’t easily duplicate, those were the comments from John and we appreciate the feedback as always.
[08:48] Music
[08:51] Mike: So, when we’re looking at for iTunes reviews, I saw a bunch of new ones out there.
[08:55] Rob: Yeah, we haven’t talked about it on a — ton of new reviews, lot of 5-star reviews. We really appreciate them. Jocelyn Krauss [Phonetic] says, “5 stars, most useful of all startup-themed podcast.” She says, “I’ve been on a startup-themed podcast listening binge and can confidently say this is the best out of two dozen or so shows I’ve sampled. If you’re looking for advice to actually build an online software product, this is the show for you. Keep it up, Mike and Rob and thank you.”
[09:22] Another is from a username that I can’t possibly pronounce because there’s a bunch of numbers and consonantsbut it says, “Actionable, practical and accessible like most other reviews here say, Rob and Mike do a fantastic job of providing not only tactical advice but also strategic advice for people who want to start their own business on the side. The icing on the cake is that they released new episodes like clockwork every week.”
[09:45] We’re looking like comments about that but you know, we have been consistently — I think we’ve released an episode every Tuesday morning for the past year even the weeks like theMicroConf week, we recorded like an extra episode and during Christmas week and New Year’s week we recorded an extra episode. And I think that’s something that we both take pretty seriously and I think it – I’m glad that it, you know, that people noticed and that we have — there’s always something to listen to on Tuesday morning.
[10:08] Mike: Yeah, it’s funny because at MicroConf we were there. I think I was talking to somebody on Monday and they’re like, “Oh, you’re going to be recording a podcast episode tomorrow?” And I’m like, “No, we’ll probably do that like Thursday or Friday.” And they seemed really disappointed and they’re like, “Oh, I’m not going to get a new episode tomorrow.” I’m like, “Oh no, you’ll get it. We recorded tomorrow’s episode last week. We do them about a week in advance.” So, yeah, there were people who were at MicroConfwho were listening to that podcast.
[10:30] Rob: Yeah and that was – on my plane flight home I listened to our Tuesday episode as well.
[10:33] Music
[10:37] Rob: Today’s episode is based on question fromStephen Rhyne. He’s from ThrowingBoulders.com. He’s a long-time Academy member and a MicroConf attendee. He e-mailed me afterwards and he had a question. He said, “Should you enter a niche based solely on opportunity? Or do you need to have passion and or industry experience with the subject matter? I’m trying to understand were keyword counts, customer development results, et cetera stop mattering as much as your passion to execute.”
[11:05] And he actually sent several questions to me via e-mail and instead of writing back with paragraphs of pros, I recorded him a screencast and kind of just talk through some stuff. And before I knew it, I had like 16 minutes of audio and at the end I said, “You know, this – there’s enough meat here that I know we need to talk about this on the podcast and share it with, you know, with the whole community because it’s just – there’s a lot of depth to that question.”
[11:28] The thing Stephen asked is, “Should you enter a niche based on opportunity or do you need to have passion?” The first thing I said is it’s not an either or question. I hate it when people say, “Oh, you should always do this,” “You should never do this,” “This never works,” “This always works.” It just doesn’t work that way, right? There was absolutes either an easy way to think, you want to think black and white but they’re not reality.
[11:49] And so, today’s episode, we’re titling “The Founder Test” and it’s – the subtitle is “11 Founder Attributes that Will Determine the Success of Your Product”. And then later on, perhaps next episode or in a couple of weeks, we’re going to do an idea test and it’s going to be a number of attributes that determine the success of your idea. And the point of this is to say it’s not should you enter a market based on this or that, it’s to say, it’s a gradient.
[12:13] There are 10 or in this case I guess 11 attributes of you as a founder that all factor in to this decision. And the way I like to think about it, it’ll be ideal if this is a list of 10 because then you can rank each one on a scale of 1 to 10 and then add them up and based on if you add 0 or a hundred, you can say, “Well, I think I haven’t found it but you know, eventually going to succeed or not.” And you can do the same thing with an idea.
[12:37] So, we’re going to be talking again about 11 founder attributes and the first one is your knowledge of the niche or the problem to be solved. So, this is much more in line with what Stephen originally asked was, you know, should you have knowledge? Should you have passion? Should you go in solely based on opportunity? And bottom line is if you have — on a 1 to 10 scale, if you have a knowledge of your niche or the problem to be solved of a 1, then you need to educate yourself and you stand less of a chance if someone has equal founder attributes as you but they have a 10 here, right, that they are in it. They know what they’re going to build, their own customer zero, all of those things play in to how much success you’re going to have.
[13:20] So, again, it’s not – you should never enter a niche that you don’t have knowledge of but it’s definitely helpful to, you know, the more knowledge you have of that niche or the problem to be solved.
[13:30] Mike: I think this is one of those things of where you have to take this in to account. You have to when you’re looking at the competition and you’re evaluating them as to whether or not you should go in and whether you stand a chance against them head to head. This is something you definitely need to take in to consideration because if they know the niche and you don’t, you’re going to be the serious disadvantage regardless of the other resources that you may be able to bring to bear. It’s very difficult to overestimate the level of helpfulness that having that knowledge is going to give you.
[13:59] Rob: Attribute number two is your technical/programming knowledge. And so, we’re assuming here you’re building a software product and we’re not saying that if you don’t know how to code that you can’t successful launch a software product. What we’re saying is that the more technical knowledge, the more programming skills you yourself have, the higher the chance that you’re going to be able to deliver a finished software product. This is irrespective of whether you write the code yourself or whether you hire it out. In either case, the more skill experience and knowledge you have of programming, the easier it would be for you to actually deliver a finished software product in the end.
[14:35] Mike: I think this matters a lot more if you’re the person doing the code than if you’re the one who’s got knowledge of the problem to be solved. If you have the knowledge of that problem but you don’t necessarily know how to accomplish it, I think that that’s a much easier situation than the reverse.
[14:50] Rob: I would agree because you’re right. I know a number of non-technical founders who have intimate domain knowledge and they know how to solve that problem. And hiring out code, well, it’s not trivial to do that. It’s easier to do that often than it is to learn, you know, a new domain from scratch.
[15:10] So, founder attribute number three is your skill as a project manager. And this assumes that you are going to be doing some type of outsourcing or delegation which is something we recommend and I think your ability or willingness to outsource and delegate is actually the point after that because the more you’re willing to hand off to other folks, the more likely you are to complete a finished product. But you have to be able to manage them effectively and have some type of experience or skill with that or else, you know, projects go off the rails fairly easily as we’ve discussed in, you know, the last couple episodes.
[15:45] Mike: I think that your skills as a project manager are crucial to being able to scale up a business especially when you’re trying to scale it up just past yourself or just trying to take certain pieces of it and say, “Well, you know, this is too much for me,” or “I don’t want to have to deal with this,” or “I can’t deal with this right now because I don’t have the time.” Those are the things you have to be able to manage and if you cant, it’s going to put you to a disadvantage to anybody else but it’s critical to be able to develop those skills.
[16:09] And the key point I want to make here is that a skill, that’s a learned skill. Just because you sucked at it now, doesn’t mean that you won’t suck at it after trying it a couple of times. And you do get better at it over time. You do learn from your mistakes but the first couple of times, you try and manage a project where you don’t have somebody over the top of you who is trying to push things down to you and say, “Well, these are the things that need to get done. You know, this is the order they need to get done.” When you’re the one calling the shots and you’re the one making those decisions, it’s very difficult the first time but it does get easier over time.
[16:40] Rob: Founder attribute number four as I just mentioned is your skill with outsourcing and delegating. And I think this comes down to two points. Number one is do you have experience outsourcing and delegating? And do you have a confident person or people to outsource to that you’ve already found? Because maybe if you — let’s say it’s a 1 to 10 scale, a 1 might be you’ve never outsource, you don’t have any experience delegating and you have no one to outsource to and you’re going to start by looking on oDesk.
[17:07] And then a 9 or a 10 is someone who has several years of outsourcing experience and already has a virtual assistant or a programmer or a developer or a designer who has extra bandwidth and they are known quantity and you have a known relationship and your communication is already…already set. You know, you’ve already used them and they’re reliable and they not only do – that you understand them but they understand you like they understand your – the way you work and what your expectations are. And so that would be the, you know, the 1 to 10 that I would look at in terms of outsourcing and delegating.
[17:39] Mike: I talked to a ton of people at MicroConf who had I’ll say significant issues with – just mentally trying to do outsourcing because they’re, you know, they always have the mentality, “Well, you know, it’s hard to find somebody,” or “It takes a long time to find somebody. It would be so much easier or so much quicker if I just did it myself.” But you know, when you start compounding those things, you know, on any given project, sure, it’s going to take you a lot longer to find somebody and then implement it. But once you get to 2, 3, 4 or 5 different things that you have them do, that’s when you start seeing there is cost savings.
[18:08] It’s more like when you’re launching a new product where you look at your revenue for example and you have this deep because you’ve got this initial investment but then as that starts to rise, as you start to get more comfortable with the person that you’ve sent stuff off to or you’re gathering money from your product, that starts to rise and you go in to the block. And it’s definitely a worthwhile investment but you obviously have to do it right, you have to be using confident people who aren’t going to flake out. And it takes a lot of practice in order to get good at it. And I see it just the same as being a project manager. It takes time. It takes effort. You do make mistakes but you do learn from those mistakes over time and you get better at it.
[18:46] Rob: Founder attribute number five is your passion for the problem to be solved. And I’ve heard a lot of different arguments about this. Some people say passion is a competitive advantage. Other say passion doesn’t have much to do with it. I,like other things on this list, believe that the more passion you have to solve the problem you’re trying to solve that all of the things being equal that you will come out ahead of someone who really doesn’t care that much about it or just going in to it because the opportunity that, you know, the keyword results and the expected market size and other things looks promising.
[19:20] Mike: I think in some ways this boils down to the amount of success that somebody might foresee coming out of whatever you’re undertaking because if – as you said, I mean if the opportunity causes low and it doesn’t take a lot of effort to get in to it, then people who have kind of a cursory interests are going in to it. If they start running in to hurdles or roadblocks or anything like that, they may very well just give up because, “Oh, it didn’t take much effort to try and get in to it and I don’t really feel like dealing with this,” whereas if you have the passion to solve those problems and really address the market, then you’re going to be able to push through those because you don’t care about those. You want to get through those. You want to be able to solve people’s problems.
[19:58] If you don’t care about it as much and you don’t[0:20:00] have the passion, then you’re not going to bother pushing through them. And I could definitely see how that factors in to it but I also think that it has something to do with, you know, what the potential outcome is, you know, what’s the upside to this. You might, you know, have a lot of passion for solving the problem but you might see that there is this massive upside to it where you could reach a lot of your other goals in life by solving that problem because you can reap a lot of rewards. So, I wonder how much that kind of plays in to it. You know, it’s definitely the difference between doing something because you love doing it versus doing something because you, you know, want the money from it I’ll say.
[20:33] Rob: Right and I think that’s where some people kind of go off the rails on this because just having a bunch of passion for an idea and if you ignore all those other ones, those success factors, then – and you just go, “Oh, I’m just so passionate about this idea but there is no market and it has a very long sale cycle,” and you can’t find a single a decision-maker and nobody really wanted it. It doesn’t solve the pain but like if you ignore all those other things, that’s where you run in to the overvaluing passion and thinking the passion can conquer all. And what we’re saying here is no, it can’t. It’s helpful to be passionate about it but it’s just one of what we’re saying are 11 different factors that kind of compiled to figure out whether or not you’re going to be successful with this.
[21:15] Mike: Yeah, I totally agree with all that.
[21:17] Rob: Founder attribute number six is your ability to build something people want. And to translate this, it’s kind of like are you a product person? Are you an exceptional product person? Do you build awesome UIs? Do you have lot of experience building apps? Do you have flexibility and the openness to change your idea based on someone’s feedback during customer development? If you can really focus and build something people want and you have that experience, then I put you at a 10 on this one. And if you are not a software person and you’ve never designed a software app and I don’t mean graphically designed but done user experience stuff, thought through screens and flow and naming and all of the things that make an app easy to use, then you’re closer to a 1 on this scale.
[22:04] And so, again, this doesn’t make or break you. You’re going to have to educate yourself and or get a little lucky to build a good app if you don’t have much experience with it or you can obviously outsource that if you can find someone who’s a really good at it. They’re not going to tend to be cheap but this is a place where, you know, you can hire expertise that’s outside of your own in order to boost your number of rating on this one.
[22:27] Mike: I think that the ability to learn from your mistakes probably factors in to it a little bit more than your experience but the flexibility side of this is probably a lot more important than that as well. I mean you need to be able to change your idea based on the feedback that you’re getting from the customers. You need to be able to adapt and understand that just because you think that you have the right solution, doesn’t mean that it is the right solution that people are going to pull out their credit cards and buy.
[22:50] It’s interesting to look and hear people talk about, “Oh, well, Steve Jobs didn’t talk to customers and this and that,” but Steve Jobs is an extreme outlier. I mean he had this vision of what was going to be and what should be and what people wanted and he have, you know, the capital from Apple in order to be able to drive that marketing engine to craft a story to make it happen. Not everybody has access to that and anybody who’s listening to podcast probably doesn’t have access to that kind of resource.
[23:17] So, you really have to think about what is it that people are going to pull out their credit cards and pay for versus what it is that that you want to build for people and is that something that people will pay for?
[23:27] Rob: Yeah, that’s the thing. We’re, you know, we’re going to cover the other factors here in a second. One of them is money. And you could say, well, you know, money is on a 1 to 10 scale in terms of how much money you have to fund this startup idea but as you said, you know, Steve Jobs was worth $1 million when he was 21. $10 million when he was 22 and a hundred million dollars when he was 23.
[23:46] By that time, he’s – if you look at these founder attributes, certainly he had some of this, right? He had skill and experience and such but he had so much money that maybe he would get a hundred points like you and I would get 10 points for, you know, having a decent amount of budget. But he had so much money he could fail over and over and over and actually, he proved that with Pixar like he dumped most of his fortune in to keeping Pixar alive. And when you have such an outlier case like that, it doesn’t necessarily fit in to our model that we’re doing here. I think like you said for most of the listeners, you would fit in to that.
[24:19] So, founder attribute number seven is your skill as a marketer. And I will actually say that this is another one that we should – the weighting should be doubled because marketing is – maybe even tripled, right? Marketing is such a large part of whether your product is going to succeed and I think this falls in to a number of camps but one of them is whether you’re a creative marketing mind, someone like Seth Godin or Matthew Inman. These are people that I bet they aren’t looking at their Analytics tracking and measuring every little number and nuance and split testing and all that stuff but they’re just genius marketers.
[24:48] The other side of it is if you have high skills with Analytics, tracking, measuring, split testing, that’s more of the kinds of things that, you know, we’ve talked about of analytical marketer what myself, Patrick McKenzie, Sean Ellis, Hiten Shah, if you can really nail this part, it can absolutely – it can really tip your scales, you know. It can make it so even a mediocre idea can – it can do well.
[25:09] Now, there’s this old saying that great marketing will just make a crappy product fail faster and I wholeheartedly believe that. So, you can’t do a crappy product but if you have a decent product that you have exceptional marketing, it can make a software product at least a moderate success just by having that over weighting of the marketing jobs.
[25:28] Mike: I think that there’s two different pieces of this that you have to keep in mind. I mean because there’s the people like as you mentioned Seth Godin where he’s got a really great marketing mind and can come up with this I’ll call the most outlandish but typically brilliant ideas of how to go about crafting a story and talking to people. And then there’s the other type of marketer who is very much about the Analytics and tracking and measuring and incremental tweaking to make that story better. And they leverage what they’re learning from that to make their story better versus somebody like Seth Godin. And I would classify [0:26:00] Steve Jobs in this as well but, you know, they have this vision that they can push out there and kind of make people believe.
[26:08] So, I think that those are two different, you know, ways of approaching the marketing side and they don’t necessarily overlap a lot. There’s a spectrum there and you fall somewhere in that spectrum and it’s just how far towards one of the other do you fall and at what intensity.
[26:24] Rob: Attribute number eight is who you know and well, this may not sound like a personal attribute, it really comes down to do you naturally build a lot of relationships and do you have that rolodex where you can call on folks to help you in either give you feedback or to leverage your network to help you promote the product or help make it a better product or to integrate with. I mean there’s just so many valuable things you can do.
[26:47] This actually goes back to our unfair advantage episode where we talked about how just having that unfair advantage of a large rolodex can in fact tip the scales in your way of success. Now, you need to have reasonable ratings for the rest of this but having a really big network and knowing a lot of people, you know, can definitely be a big benefit.
[27:06] Mike: I think the area where this really comes in to as a benefit is the types of people you can go to and just ask questions. And if you’re the type of outgoing person where you can go out and meet new people, you’re in a decent situation but at the same time if you just have a large network of people who know you or you know them, you can approach them and say, “Hey, I’ve got this problem. Can you help me out,” or “You know, can you offer me some advice?” You’ve already got that built-in relationship, you know, it basically greases the wheels. It makes it easier. It makes is quicker for you to iterate through that process as opposed to having to introduce yourself to people in order to get their feedback and opinions on stuff.
[27:41] Rob: Attribute number seven is time. If you have 5 hours a week to work on your idea, give yourself a 1. If you have 80 hours a week, give yourself a 10. Time doesn’t always make people be more productive or more effective but it absolutely can make a difference all other things being [0:28:00]equal. And of course, you can tip it too far, right? And if you work 80 hours a week every week, your productivity or the long hold goes down but having the flexibility to put in longer weeks when needed versus the person who could only work 5 hours, it will tip the scales all other things being equal.
[28:15] Attribute number ten is money and I mean this comes back to the Steve Jobs thing we said a little earlier but even on a smaller scale, you know, if you have basically no money saved up to fund this app or you only have $20 a month that you can spend on it, you’re going to have to move slow and this is a disadvantage and that would be give yourself a 1 whereas if you have someone who saved up even $10,000 or 20 grand, they are definitely at an advantage. And you don’t need a ton of money to do it and we’re not talking about raising money here, we’re talking about having either a few thousand bucks saved up to help you with outsourcing, gaining of knowledge, marketing and not having to worry about little expenses like hosting and credit card fees and all that kind of stuff.
[28:57] And it also allows you just to move a lot faster. You can get an app coded and done twice as fast or more if you’re able to outsource pieces of it or if you’re able to hire a developer 20 hours a week instead of 10 hours a week or you’re able to buy out some of your time. You know, if you’re consulting and you can consult less because you have extra income coming in every month or you have a block of money that you put away, then you can just move faster and that always winds up being a success factor because not only are you able to get to market faster but the quicker you can get to real people using your app, the quicker it benefits you mentally.
[29:32] I mean we know, we talked a lot about how the psychology is a big part of launching an app and not getting discourage is a big piece of that. I don’t know if I’ve said this on the podcast before but I have this thing that said, “Funded companies go out of business because they ran out of money. Bootstrapped companies go out of business because they ran out of motivation.” The only time you’re going to close up shop is when you lose motivation because you don’t have any money coming in the first place, right? So, it’s not a matter of missing payroll. There is no payroll. So, that’s where having some money to speed along the process and get to market quicker can help keep you focused and on the rails and so you don’t just eventually kind of lose motivation and shut the thing down out of disappointment.
[30:11] Mike: You know, I think they look at the money side of this a little bit differently, I mean one of the things that I look at is how are you able to mentally justify spending the money that you do have. I think that having the money is only one piece of it but having a mentality of saying, “Okay, I’m going to pay $20 a month for this because it’s going to get me where I need to go faster,” versus the people who sit there and think, “Well, why should I pay $20 for that when I know that I could do that myself or I can hack together a solution that would do that and it wouldn’t take too much longer than I’m already spending to do that.”
[30:44] Part of it is about time management but it’s about managing your resources to be able to get things done faster and move yourself towards your goals quicker. If you’re not willing to part with some of that money and use it as an investment in your future, then chances are really good that you’re going to have trouble with that down the road and there’s going to be a huge number of roadblocks in your way that you’re putting there because you’re not willing to make that investment yourself.
[31:09] Rob: Founder attribute number eleven is focus. Do you have the ability to not chase after shiny objects and to focus on one thing long enough to bring it to market? Hopefully, that’s four to six months, then to go to the learning phase. Hopefully, that’s three to six months and then to grow that thing. And that may take another six to twelve months. So, mentally when I starta project, I always say, “The next 18 to 24 months, I have to focus on this.” And I may do other things, right? We put on MicroConf and yes, that does take a little bit of time, a lot of time over the course of a couple of months but then it’s done and now, I refocus and put all my energy in to that single project.
[31:47] You’ll notice that right now I’m not looking at releasing a second edition of my book or writing another book. I’m not looking at starting another podcast. I’m not looking at launching a different app. I really am talking most about keeping HitTail going and getting Drip launch because those are the things I’m focusing on. All the other things I just mentioned are things on my long-term to-do list. But I’m not bouncing around and trying to do all of them at once. I know that they are on my long-term road map and that I will get to them eventually. And so, like I said founder attribute number eleven, how well do you focus?
[32:21] Mike: Yeah, I mean this is one of the reasons that I cut back on some of my yearly goals. I mean I think at the very beginning of the year I said, “Oh, I want to write a book by the end of the year and I have it out late summer.” And I actually decided to completely kill that a little while ago. So, that’s one of those things that I just said, “Look, you know, I can’t concentrate on that now.” And even though it’s a long-term goal, I’ve got to push that off. I can’t even think about that right now just because it’s taking up space to my brain.
[32:44] And then I’ve got a couple of signs around my office that just say one word, it’s just FOCUS in giant letters so that when I look up from my monitor, I look around and I see that. It’s just a reminder to me that if I look around and I start to get distracted I see that and I say, “Oh, you know what? You’ve really got to focus on the things that you’re working on right now.” And whatever those happen to be, you need to be able to leverage your time effectively. And I think one of the things that people run in to when they’re trying to shift from a consulting business in to a product business is they’re thinking in the back of their minds, “Oh, well, I could spend two hours doing client and consulting work and I’ll make X dollars,” or “I could spend some time over here, you know, the same amount of time and I may or may not get a return on it.”
[33:23] And that’s not really the right way to look at it. I mean you really have to be focused on those long-term goals and understand that everything you do is an incremental improvement on the previous things that you’ve done. And if you’re not working towards that goal I mean if you’re not making those incremental improvements, it’s never going to improve. You’re never going to find this thing that where you change some text on your website, magically converts 300%. By the way, it just doesn’t happen.
[33:46] You’re going to have to continue doing these incremental improvements and tweaks in your business to try and figure out what works, what doesn’t and focusing on your products, focusing on the goals that you have and just going through the daily processes and weekly processes that you put forward to move you towards your goals is what you need to focus on.
[34:04] Rob: When I was putting this list together, there are a couple of other factors that I had in there but I – there are almost so fundamental and so general that I didn’t want them in the list but they are honorable mentions and I’ll list two of them here.
[34:16] One is do you get things done? Like are you actually effective when you’re sitting there working? Because I know people that maybe good project manager and decent developer and they have a passion for a project or product but when they sit down to do things, they aren’t that effective. They actually don’t move the project forward and so, if you don’t do that, then that’s almost like a non-starter. That’s actually you have to figure that out or you’re never going to get this project done.
[34:41] The other one is persistence. And again, it’s like such a generality but I’ve seen people start building an idea and then at the first roadblock or the first sign of a speed bump of any kind, they just say, “Well, this isn’t going to work. Maybe this whole entrepreneur thing, you know, is just more than I want to get in to.” Yeah, you’re not persistent enough. You probably shouldn’t even get in to this game because you’re going to have a lot of failures. You’re going to have to deal with that and you’re going to have to — you kind of get over them, learn from them and get better the next time.
[35:10] So, I guess these are less honorable mentions as I’m talking about them and they’re more like fundamental attributes that you need to have sorted out before you even get to, you know, the eleven we just talked about because if you don’t haveeither one of those to get things done in the persistence, the odds of you even getting to launch are very, very low.
[35:29] Mike: So, as a follow up question and some people might be thinking to themselves, “Am I unprofessional if I draw inspiration from scratch my own itch?” What are your thoughts on that?
[35:37] Rob: Yeah, so that’s what Stephen had said. It was another question he had asked. I think the question of unprofessional is not the right one to be asking but it’s more like, “Am I making a good decision if I scratch my own itch or not?” There’s a lot to talk about this, right, about people who want to solve their own problems because 37signals did that, right? And they did it back in 2005, 2006 and then they talked about it. And they kept saying, “You should scratch your own itch and if you’re not doing that, you’re going to fail.”
[36:02] And that’s the attitude that I don’t agree with, right? Because they’re saying it’s an all or nothing thing, you will always fail if you don’t scratch your own itch. And scratching your own itch dramatically increases the chance of success. I think it does increase it, I just don’t think it’s an either or proposition. I guess it comes down to you don’t have to scratch your own itch. I do think you have a higher chance of success, however, there’s a trick here. They started doing that in 2006 and they built Basecamp and Highrise and all these other things. Well, it’s 2013 now and hundreds, if not, thousands of developers have been scratching their own itch. So, all the low-hanging itches have been scratched.
[36:36] So, you have to think at a higher level now. You can’t just go out and build a basic SaaS project management app. You have to have some unique piece to it. So, I would say, yes,scratch your own itch. Go do that. But figure out a way to scratch that itch in a way that no one else has before you. You have to have a noble approach to it. You have to have a noble way to market it. You have to have some type of value prop that will get you heard above the den rather than just saying, “Well, I have a problem. Look, I solved it,” and then trying to figure out how to market it because that’s something we see a lot, right, with entrepreneurs who come either ask for advice. They come in to the Academy, just meeting day to day.
[37:11] I know that people build the product to solve a single problem that onto itself is a problem because then it’s – you find yourself, you know, six months in and you haven’t really validated that there is a need. So, I guess it’s like scratch your own itch but validate that hundreds, if not, thousands of others also have that same itch before you write a line of code.
[37:32] Mike: I agree with you. I don’t think that it’s unprofessional in any way but, you know, as you said there is since 2006, a lot of those personal itches that people that had been scratched. And I think that if you were to look around and start asking the people who went down that road, I think you’d also find a lot of people who failed miserably because they didn’t validate that there was a market. I don’t think that scratching your own itch is in any way, shape or form going to be an indicator of success. It’s the market. Is there a market? Are there people willing to pay for it? And if you don’t take that in to account before you try scratching your own itch, before you even write that first line of code, then it doesn’t really make a difference because you’re not going to be able to turn it in to a fulltime income.
[38:11] With that said, you know, it’s fine if you take some sort of side project that, you know, was reasonably well done and you didn’t necessarily want to productize it or weren’t trying to productize it when you first built it and you know, then you look around and you say, “Huh, is this a product? Is this something people are willing to pay for?”
[38:29] And in fact, I think that that’s how Fog Creek ended up with FogBugz, I mean Joel had this piece of code laying around that he built to do bug tracking and they decided that they would ship it and they cleaned up and shipped it out and people loved it. And that turned in to their flagship product and that’s what they’re known for today. And so, it’s not to say that you can’t do something like that, it’s just that, you know, if that’s something that you did awhile back, make sure that you validate that there is a market for it.
[38:54] Music
[38:57] Rob: So, that’s what we called the Founder Test. It’s eleven founder attributes that will determine the success of your product.
[39:03] Mike: So, first founder attribute is knowledge of the niche or the problem to be solved. Number two is technical andprogramming knowledge. Number three is your skill as a project manager. Number four is your skill with outsourcing ordelegating. Number five is your passion for the problem to be solved. Number six is your ability to build something thatpeople want. Number seven is your skills as a marketer. Eight is who you know. Number nine is available time. Number ten is money and number eleven is focus.
[39:32] Rob: Oh and by the way, before we head out, we are putting on MicroConf in Europe. It’s going to be in Prague in October, October 5th and 6th. If you’re interested in hearing more as details pan out and we find more speakers, go toMicroConfEurope.com. Add your e-mail to that list and we’ll definitely be in touch. Right now Mike and I are the only confirmed speakers but we have a short list that is looking quite attractive. So, if you have any inkling about going, head toMicroConfEurope.com and give us your e-mail.
[39:59] If you have a question for us, call 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 us on 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 132 | 7 Steps to Rescuing a Failing Software Project
Show Notes
Transcript
[00:00] Rob: In this episode of Startups for the Rest of Us, Mike and I discuss Seven Steps to Rescuing a Failing Software Project. This is Startups for the Rest of Us: Episode 132.
[00:10] Music
[00:19] 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.
[00:28] Mike: And I’m Mike.
[00:29] Rob: And we’re here to share our experiences to help you avoid the same mistake we’ve made. What’s the word this week, Mike?
[00:33] Mike: Well, last week I interviewed a bookkeeper and the hope is that I can basically hand off all of my bills and credit cards and you know, my books and everything and just not have to worry about any of it and free up some of my time every month.
[00:46] Rob: That is a very good idea. Are you doing it for your personal accounts or for your business accounts?
[00:50] Mike: Technically for my business but if it works out, then I may very well say, “Hey, can you also do this process as well?” [Laughter]
[00:56] Rob: Yup. So, I’m looking in to this exact thing actually since inDinero hasn’t worked out and I have a pretty complex system and lot of rules need to be put in place and I haven’t been able to find an online source to handle it. I think I’m also going to be hiring someone to handle it. It’s too much work and it’s work that doesn’t move your business forward at all.
[01:12] Mike: Yeah, I just feel like it’s a waste of time.
[01:14] Rob: Yeah, I agree. Is the person you hired or you’re talking to, are they local?
[01:18] Mike: Yeah, she is actually. You know, part of it was a comfortability with that and if I ever move and that’s fine but you know, I explained to her as like, “Look, I really want to get to a position where I can hand things to you and I don’t ever actually have to see you,” because she was concerned, well not concerned but she’s like, “Oh, do you need me to come in to your office? Do you need me to – you know, how many times a week do we need to meet?” I’m like, “No, no, no. I don’t ever actually want to see you.” [Laughter]
[01:40] Rob: Yeah, let’s get this straight, I don’t even have an office, you know. It’s my basement of my house.
[01:44] Mike: Right.
[01:45] Rob: Yeah. No, I feel the same way. I actually have it on my post MicroConf to-do list. I have three things and one of them is hire a bookkeeper. And now, since going to MicroConf, I’ve added a couple of comments to that Trello – that Trello item of hire a bookkeeper. I’ve heard that Xero , X-E-R-O, could potentially work for me and then someone mentioned that I should try LessAccounting as well. I had tried both of them about two and a half, three years ago and they didn’t work given my complexity of all the PayPal and bank accounts and merchant accounts, all that stuff that run through my company, the Numa Group but now that I’m out looking again, I’ll probably sign up for both of those guys and then also look in to getting a bookkeeper and figure out which of the three approaches is going to work best for me.
[02:26] Mike: I talked to several people at MicroConf who were using Outright as well which we use —
[02:30] Rob: Yup.
[02:30] Mike: …internally.
[02:31] Rob: Absolutely, yeah. I use Outright – we have two Outright accounts. One is for Micropreneur stuff and then DotNetInvoice has its own Outright account but the rest of my stuff is more complicated than Outright can easily handle it. It’s a pretty simple system which is great but it just can only support so much. And please, please don’t post a comment and tell me to do QuickBooks Online or QuickBooks of any kind. If I need to use QuickBooks if that really is the solution, then I’m definitely hiring a bookkeeper because I don’t want to touch it, you know. I want them to handle all of the – any interactions with QuickBooks is going to be handled by someone else.
[03:02] Mike: Yeah, this bookkeeper that I’m working with she primarily uses QuickBooks which I’m not terribly pleased about it but at the same time if I’m not dealing with it, then I don’t necessarily care a whole lot. So —
[03:11] Rob: That’s right.
[03:12] Mike: …you know, we’ll see how it works out and she actually has a relationship with QuickBooks consultant. So, anytime she has a question, she just goes talk to them and it’s a friend of hers and just gets it all straightened out. So, there, you know, she might even be doing my payroll. I may be switching over from Paychecks to have her do that as well.
[03:27] Rob: Yeah, that’d be nice for sure. So, hey, last month I had a projection of what HitTail was going to do. I actually mentioned it in my MicroConf talk. And it actually grew by more than expected like quite a bit more and I realized that at the end of every month like as the end of the month approaches, you know, you have projections in your dashboard that you’re looking out. I’ve just found it so difficult to be accurate with those projections even with four days left in a month. I mean I can be off by 20%, 30% of growth, not the 20% of revenue in the total month because I know where my base is but just the percentage of the growth or loss that month, I just have not found a good way that I feel confident that I can say yes within, you know, hundred dollars. That’s going to be the number.
[04:09] And the funny thing is I thought it was just me and that the data the way it sorted in HitTail but I’ve talked to several other people who own SaaS apps and software companies and it feels like this is a recurring problem. Everyone I know has it. I have an analysis apps and I have DigMyData and I have a bunch of apps that I can run reports on the stuff but there really isn’t a great solution for it. I just — I thought it was funny to – I ran the numbers in. I’m always a little bit surprise and you just think at this point I would have just dialed in.
[04:35] Mike: is that because of the way that the months fall? So like, you know, some have 30 days —
[04:40] Rob: Yup.
[04:40] Mike: …some have 31. Is that —
[04:41] Rob: Sometimes it is, you know, other times you’ll just get a chunk of cancelations for some reason just a little blip and it’s just enough that it kind of sense you – the growth is just a little smaller than you think. The reason I got the bigger bump, I don’t know. I had some boost – I don’t know if it’s going to improve conversion rates or if I just had a lot of trials in the funnel that I – just for the last couple of days of the month that I really hadn’t encountered on and suddenly convert it. It was something at that effect. And so, there’s always these small anomalies and again, it’s not like, “Oh, I can’t run my business because of this,” but I guess if you’re out there and you’re running a SaaS app and you’re on the same boat, don’t feel bad because everybody I talked to always has that thing of like how – where really am I going to be at the end of this month?
[05:16] Mike: I had a discussion this past week with my AuditShark developer to finalize the list of things that needs to get done before we can really start pushing on it. It’s really small at this point. I mean the only two things that are left I would say are e-mail reports and billing. And billing obviously doesn’t necessarily need to be completely in place but beyond that those things are both things that he’s taking care of and then just expanding the Policy File library. But other than that, I mean everything looks like it’s good to go. So, next week I’m going to be sitting down. I have the week off or I took the week off and I’m going to be sitting down and figuring out exactly who else I’m going to be putting in to my beta program and try to figure out exactly why I want to go live for the full public launch.
[05:54] Rob: Very good but at this point, do you think you’re within weeks?
[05:57] Mike: Yeah, it is definitely weeks [Laughter] and definitely not months unless something —
[06:00] Rob: Right.
[06:00] Mike: …major comes up that I didn’t see or wasn’t able to test, I don’t see an issue with getting out there, you know, within next several weeks.
[06:07] Rob: Right, very cool. Yeah, I would encourage you to launch without billing in place. And obviously as you’re collecting a credit card or maybe even you don’t need to collect a credit card if you’re not going to collect it upfront but —
[06:17] Mike: No, I’m going to. I want to because it’s until now I haven’t billed anybody for it yet so next week I want to get to the point where things are in place enough so that I could start billing people and I intend to. There’s a few minor pieces I need in place just to be able to put the credit card numbers in but the final billing code is probably not going to be ready when I, you know, go through that process. I’ll have my developer work on that while I’m going through with them.
[06:40] Rob: Right, definitely. Yeah, that’s a nice part about having a developer that – you know, there’s a couple of ways to do it right. If you’re writing all the code, then nothing gets done unless you’re doing it. But there’s also the hybrid where you’re writing some of it and they’re writing some of it and it’s nice because you can keep your hands in it and writing code is so much fun, right? But I find that that still weighs on me that I would still assign a lot of it, task that have to get done to me and if I wanted to get them done quick and then I just work until 1 or 2 in the morning just try to get a bunch done.
[07:09] Being able to outsource everything essentially to have someone else doing it, I find there’s like a certain level of – it’s actually it relieves – I don’t have the stress that I should be doing something right now because there are critical path is held up by how fast the code can get written but I’m not writing any code on this project. I’m talking about Drip now. And you know, I know you’ve written code on AuditShark. Are you – are there tasks here that you could feasibly get done faster if you pulled some of them back to you or is that it? Are you kind of done right now with writing a code and it’s all outsourced to your dev?
[07:40] Mike: They’re definitely things that I could pull back and work on myself that would get done quicker because he’s only working on it two days a week at this point. There’s things that could definitely get done quicker if I’m working on them because I could obviously work on them seven days a week but at the same time there are so many different things that need my attention. It’s just not worth the time and effort. If I start focusing on the code [0:08:00] at this point, I’m going to start dropping some of the other things and all the other things are sales, marketing or customer development related. So, those are the things that really need to get done.
[08:09] And then the policy library is kind of a big chunk that I have not sunk my teeth in to yet. I’ve really got to figure out how to get that built out as quickly as possible and put a process in place for somebody to kind of walk through and start implementing those things. And that’s a key component right now that I just don’t have a good handle on. So, I’ll be putting some time and effort in to that next week just because it needs to get done and it needs to be something that expands overtime. I can’t just do a bunch of work there and then just walk away. There’s other things that need to be built on an ongoing basis.
[08:38] Rob: Yeah and that makes sense, that’s actually what I’m saying is like not getting dragged back in to the code right now when all the marketing and sales and this other stuff needs to get done. There’s a certain amount of serenity to it. That’s what I was saying is that having someone that I can hand off the code do and say, get it done as fast as possible but not feeling the compulsion to go on and do it myself is better for the product in the long term. I mean that actually leads it right in to what’s going on with Drip.
[09:02] As we record this podcast, we’re in an hour or two of having all the features complete to install it on customer number one. And I expected this to come late last week but MicroConf just kind of trashed everything. And then when Derek and I met, he’s the Product Manager for, well, for HitTail and the developer on Drip, we went through some more features that we wanted to get in before we got customer one on. So, my hope is that by the next time we record, it’s realistically should be by tomorrow, our customer one, who I have already talked to should be installing it. I’m sure we’ll run in to a whole slew of other things small features here and there that we need to add and tweak to get it ready for customer number two.
[09:42] What’s cool is in FogBugz, I have milestones for each of the customers that I’m going to get on. There’s this milestone of – it’s called customer number one and it has all the issues that I need to fix and that I think that he needs. I’ve already e-mailed him and asked him exactly what he’s going to do with it and so, we had to add some things last minute to get it in. But it makes it really easy. It feels like it’s slow going but it makes it easy to know that when he gets in there, it should have everything he needs to basically do what he’s doing today with his software.
[10:11] Mike: That’s really interesting idea. I hadn’t thought about creating milestones for each individual customer where they look at that and they say, “Oh, well, this isn’t working for me,” or “I need something over here instead.” That’s a really good idea. I think I’ll steal that. [Laughter]
[10:23] Rob: And we are – I mean it’s not that we’re giving them access to it, it’s not that we’re letting them know, “Oh, here’s all the issues we’re fixing,” or “Here’s all the things we’re adding.” It makes it easy to not be like, “I’m launching to 500 people.” We’re really launching this week to one person. It’s one guy who owns a SaaS app. I was able to interview him and say exactly how you’re going to use this and he kind of said – gave me some ideas. I asked more questions and then I realized and you know, talked to Derek and said, “All right, our app doesn’t do these four things right now. We need to build this in order for us to support him.”
[10:52] And knowing that his needs are common is helpful, right? It’s not that he sends us off on a rabbit trail to do some random feature. The features that he needs, everyone is going to need. It’s just about prioritizing them. We have a list of say 50 features right now and I just picked the next four that we need to get him on the system because once we have him on the system, we’ll just start learning so much faster.
[11:12] Mike: Cool. Yeah, I had a similar discussion with Jason Roberts from the TechZing podcast at MicroConf last week and I was talking to him about his secret project. And told him I was like, “You know, these are the things that I would need and these are the thing that I would use in that. And these are the pieces that are important to me.” He’s like, “Oh, well, I haven’t really thought about that, you know, and that wouldn’t be too hard to add in.” But it just kind of highlighted some of the things that are fairly common used scenarios that, you know, just hadn’t really occurred to him.
[11:39] Rob: Yeah and that’s always the way it is. We never quite realize how people are going to use our apps. So, until someone is actually using it and I would – I dare I say paying for it although if they’re very serious about it even if they haven’t paid you a dime, if it’s the right people who really know, you know, who built apps themselves, they can often get you feedback even without giving you money. But I think the ideal case is that until you have someone using it and paying you for it, you just don’t know how folks are going to be utilizing it.
[12:08] Mike: So, one of our listeners his name is Masaj from Fired Up Digital. He started listening around episode 22 and he’s since left his job. He dropped us a few more productivity tips related to episode 125. The two tips that he sent in to us was the first one was to split the day. Do e-mail and stuff like that in the morning and then work in the afternoon in a coffee shop so that you’re not doing the same thing all day long in one location. And then second thing he said was that, you know, he exercises regularly to get some of the endorphins going and just recently had done a marathon. But both of those I think are really good tips to fit in with episode 125.
[12:44] Music
[12:47] Mike: So today, we’re talking about Seven Steps to Rescuing a Failing Software Project. And this idea is really about if you have a project that you’re working on whether it’s in-house development or you’re working on a product itself that you’re going to be launching out to the world and things are starting to go wrong, you know, whether the code isn’t getting done fast enough, there’s people who aren’t responding when you ask them for things. And you know, you’re trying to manage the project but at the same time there’s just lots of stuff going on that, you know, you’re not quite sure how to handle or those things are going off the rails a little bit. You need to be able to get things back on track. So, this episode is really about stepping in kind of assessing the situation and then rescuing that project put it back on track.
[13:32] Rob: And this applies both to being a – for being a pre-launched product as well as maybe you’re going from version 2.0 to version to 2.4 and you have a bunch of tasks that you’re trying to do. Maybe you’re working with developers and like you said, things aren’t working out.
[13:48] Mike: So, step one is to don’t assign blame. If you start assigning blame to people, they’re going to, you know, at least be a little bit resentful. Some things are beyond their control. Maybe they’re – you haven’t given them enough direction. Maybe they’re waiting for other people. The point here is that by assigning blame, you’re essentially pointing fingers and they’re going to resent that. What you really need to do is you need to step back. You need to figure out what’s going on and address the underlying reasons why things are starting to go wrong.
[14:14] Now, that doesn’t mean that, you know, if somebody is willfully ignoring you or they’re just not doing what you’re telling them to do, you know, obviously, you need to address that. But in a general sense, you don’t want to kind of bring everybody together as a group and say, “Hey, look. Joe over there, you’re not doing your stuff. This stuff is got to get done, you know, all these other people are counting on you but you’re just, you know, you’re not coming through a force. We need you to, you know, get on things.”
[14:37] The other thing that goes along with this is not doing it publicly either. I mean if you do need to provide some critical feedback to people because they are in that type of situation, definitely do it privately. You don’t want to make a big deal out of it in front of everybody because that will push them away instead of bring them in to the fold.
[14:53] Rob: The best example I’ve seen of this of a manager who handled this kind of stuff really well where mistakes were made and he wanted the entire team to learn about something. So, if you think about it like mistakes are opportunities for learning, right? A mistake would be made, he would correct that person privately just like you said and then he bring the team together and he would try to anonymize it, right and say like, “Hey, guys. This just happened…” And in any way he could – if he couldn’t anonymize it, he would just say, “This just happened. Here’s what we’re going to do to correct it. Here’s why we don’t do that, you know. Here’s the remedy for it so that we all don’t make it in the future.”
[15:27] And if he couldn’t anonymize it, he would say exactly what you just said. He’ll say, “Look, John here did this. He and I just talked about this. It was a mistake but the reason I’m bringing this up is not to shame him, it’s that all of us need to learn from this like this is a learning experience.” He would actually use it as kind of a teaching moment so everybody was feeling okay about it. And then, you know, as the project went on like it wasn’t a guilty thing where you felt like a mistake was this bad thing, right? It wasn’t – rather than assigning blame, it was used as kind of a learning thing to help improve everyone helped improve the team dynamics and just help move the project forward.
[16:02] Mike: Step number two is to look at the numbers. Is it time to pull the plug and you need to be able to make an honest assessment as to whether or not the project can be salvaged. If there are definite milestones that you need to reach, if it’s an outsource project to you or your customers are coming in saying, “Hey, we need this by this particular date,” look at those numbers, any timelines that you have or try and figure out honestly where exactly things stand. I mean you have to be realistic about everything because if you can’t, then it makes it very difficult to plan for the future. You need to be able to be honest with yourself, be honest with your team and ask people, “You know, do you think this project can be saved?”
[16:39] And by asking everybody, you get different people’s feedback on that and it’s really important to not just depend on your own optimism or pessimism is the case maybe. Ask everybody on your team and let them know, “This is where things stand. Do you think this project can be saved under these parameters?”
[16:56] Rob: This is such a hard question to answer because it is such a case by case basis thing. A lot of it depends on trusting your own gut and looking at a project and really asking some tough questions. Shutting a project down is – it always feels so painful right because you’ve invested time, money, resources, everything in to a project whether it’s month’s old or even if it’s just a few weeks old but at the same time, there’s that that expression sending good money after bad.
[17:23] I’ve actually a little bit dealing with this right now on a project dealing with HitTail. It’s not a development project but I hired a contractor to help out with something. We’re about three months in to it and it’s not moving as fast as I would want it but the contractors had been really good about communicating with me and really good about pointing out, you know, road blocks and bumps along the way. So, there’s that thing of like if they just don’t communicate, then yes, it’s obvious it’s not going to work out. But he’s always one step away from delivering something.
[17:50] So, I’m in a place of like I’d ask myself this morning I was in a call with him and I said, “You know, is it time to pull the plug on this? Can it be salvaged?” And so, I brought that up to him and I said, “Hey, here’s how I’m feeling. I’m feeling right now like we’re three months in to this and I’m not sure that you’re going to be able to deliver on this and here’s what I need. I need to feel confident that the next thing you do, you’ll hit the deadline and you’re going to deliver it at the level that I need.”
[18:15] And that actually turned out to be a really good conversation and I appreciated he – he was very professional about it and now we have a hard deadline with like an exact milestone that happens in a couple of weeks. And we both agreed, you know, if it doesn’t work out at that point, we are just going to walk away and he’s actually going to refund all the money that I paid him. I don’t know. It’s just a worth while thing.
[18:34] So, that’s I found especially lately it’s like if a contractor is either unprofessional or unreliable or an employee for that matter, then that tends to be, you know a better reason to pull that plug. But if they’re willing to work with you and like commit to things and get them done and actually do start delivering, then a lot of things can be salvaged even when maybe you think they can’t.
[18:56] Mike: The third step is to stop looking at the software you’re building. A lot of times if a software development project starts to go off the rails a little bit, people will look at the software and say, “Well, why are these things not getting done? You know, what is it in a software that’s so complicated?” And they start digging in and they tend to go down the rabbit hole. The problem is the software is probably not to blame. It’s the management over the project. It is the deadlines that you’re putting in place and the time estimates that you’re putting in to those.
[19:23] I mean if those things are being created in such a way that is unrealistic to even be able to come up with those time estimates, then that’s the issue that needs to be addressed. It’s not building the software that’s the problem, it’s the time estimates that you’re associating with it. You really need to assess where things are going wrong and deal with those issues rather than just assuming that the problem is in writing of the code.
[19:45] Rob: Moving from developer to project manager is hard. You know, a lot of developers don’t estimate how long it’s going to take them to do something and they want to move ahead with the fun stuff which is coding, the building and the creating. And I totally get that. That’s how I am built by nature. And so, if a project is going off the rails, the first place I look at obviously is the project manager because here she’s the one responsible but more importantly I start looking at like well, where are your estimates and how close or how far off have you been from those? And figuring out either that you are a bad estimator or that, you know, that you missed pieces of the estimate.
[20:25] Somehow taking away like realize this is probably a mistake on your part and learning from that so that you don’t do it next time is extremely valuable as opposed to just ignoring it or like you said, you know, blaming it on the software, blaming – it was too technically hard or I didn’t do estimates because I’d just wanted to have fun building it. It’s like none of that is helpful. If you actually do want to get better and improve at this whole project management thing or just even at building software products, you have to sit there and examine the process and figure out where you went wrong and improve yourself.
[20:57] Mike: Yeah, that’s something that I have to personally take a little bit stronger look at just because we haven’t really put a lot of time estimates in to AuditShark. I mean there are certain places where there are but there’s a lot of places, a lot of things in FogBugz where there are not time estimates which makes it hard to do scheduling and trying to figure out where different dates are going to fall. So, that’s definitely something I need to get better at on my end. But I think that that’s a common problem too.
[21:20] Rob: I sometimes feel like a broken record because everytime I talk to one of my developers and we talk about doing in a feature, the first thing I say is, “All right, I need an estimate on that. And you have to give it to me right now. You have to think about it for five minutes and send me an e-mail. Put it directly in FogBugz or the Google doc we have set up but I need before you write a line of code, I need an estimate so that we have some idea of how long this is going to take.”
[21:43] And the thing is if you get 20 or 30 small little features, you know, all in your issue tracking system, it’s impossible to know. It’s impossible to estimate how long that’s going to take especially when someone is not working fulltime. That’s where it gets weird, right, if they’re working 16 or 20 hours in a week, then things get kind of hairy. I think all of us learned if you’ve been developing, you know, writing code for 20 years, you think in terms of a person weeks.
[22:09] And so if they’re only working 15, 20 hours a week, I find it really hard to just look at a swath of and things oh, this is going to take them X amount of weeks because you’re – you don’t have in mind that they’re only working, you know, part-time. And so, having those actual hour estimates even they’re off by a 10 or 20%, it really makes it a lot clearer as to when potentially you could deliver the thing.
[22:30] Mike: So, step four is to cut twice and then cut again. And this is really in reference to feature creep because feature creep is real. It bugs on a project. There’s always new things to be implemented. There’s always new features that are coming in whether they’re from customers or from project management which is tends to be you but you have to be able to make the project manageable and make the milestones manageable by cutting things out that are just unnecessary.
[22:54] Rob: This is where I’d become a pretty big believer in this whole early access model when we’re – as we’ve been building Drip, I have been looking at just the minimum feature set we needed to get it installed on HitTail. And whenever we had a question or decision to make about should we implement that, I asked Derek and I said, “Do we need that to install on HitTail?” And then we’d say yes or no and that will go in to the HitTail milestone, the customer zero milestone we had. And as soon as we got it on HitTail, yay, big celebration and even that took way longer than we wanted to rather than we thought which it always does.
[23:27] Then we said, “Okay. What are we going to do next?” And that’s when I interviewed customer one, looked at exactly what he needed that we didn’t have and everything since then that we’ve discovered, you know, the other five to ten things we found on our own, we’ve asked the question, does he need this to launch because if he doesn’t, then don’t put it in this milestone yet. Put it in customer two or even way down the line we have a public launch milestone in FogBugz. And so, that’s the one that we need before everybody gets in.
[23:54] So, that’s things like setting a settings page and updating your password and all the billing stuff and I mean there’s a lot of stuff that’s not in place at this point. It is absolutely, you know, about as much of an MVP as we could do and feel reasonable about. No matter how much you do that, it’s still going to take longer than you think. You can only cut so far and being able to focus on a handful of customers upfront and just building for them makes it much easier to prioritize than if you’re just picking things out of the air and trying to decide yes or no or should be build this because the answer is always yes, we should build this but the question is when should we build it? How soon should we build it? Can we push this off one more milestone down the line? Can we push it off the public launch? Or maybe to one point one which is after public launch when you have that revenue coming in and you have the motivation and the excitement of having customers paying you that the pay off of all that because that will be the time where you can really hunker down and potentially hire more developers if you have more revenue, pushing things off pass that is really a benefit to a bootstrapped product.
[24:59] Mike: Step five is to be honest about your project risks. Anytime there’s a dependency on something when things go wrong, it’s going to push everything back. And this is one of the fundamental problems with the waterfall method that Agile and Scrum tried to solve. But if you’re not honest about the project risks and the project risk can be any sort of dependencies that you have whether they’re on software or people or availability of resources, new hardware coming out, new software releases.
[25:25] So, if you’re – I mean you’re waiting for the next version of Windows or the next kernel Linux to become available. Those things are probably beyond your control. You don’t have any say in when those things actually occur and although you may get commitments from people, they’re not necessarily setting stone and they can decide, “Oh, well, we’re going to push this back because of XY and Z,” and they may very well be legitimate reasons. But because they’re outside of your control, you have to take that as a risk and taking in to account what you’re going to do if those things don’t come through.
[25:53] Rob: Yeah, an element of a project having risk or not really it isn’t a binary thing, right? It’s not a yes or no. It’s more of a gradient but in my project plans, I always just have a yes or no because most things you’re doing as you’re writing code have very little risk because if you’re inserting data in to a database, validating it, pulling it out and displaying it like these are virtually zero risk. But the – anytime you’re integrating with an external API or you’re doing any type of algorithm that needs to do kind of some magic that you’re going to have to play around with or any type of external dealing with, you know, third-parties that you have to rely on in some form of fashion. Those things are all in my opinion the risk is just through the roof.
[26:37] There’s a big risk of running over your estimate more than anything. There’s always a risk that you’re never going to get it done, you know, it’s just not going to work or not going to do the thing but that’s lower risk within. You’re just going to be 50 or a hundred percent over your estimate. So, when I have project plans, I – if it’s in a Google doc, I’ll put a big like risk column and then say, “Yes. This part right here, I’m really sketchy about. I just don’t know if we’re going to be able to deliver this. I want to build that first,” like I want to eliminate the risk as soon as possible in a project and that tends to be the opposite of the natural inclination which is to push all the risky stuff off to the end and do the easy stuff first.
[27:12] So, you’re attacking a project and you don’t want it to get to the point where it’s becoming a failing project, try to stack up the hard things first, the tricky things first and build them before everything else because we know that you can write billing code and we know that you build the settings pages where people can reset their password, that’s the trivial part. It’s doing a hard stuff first that’s, you know, going to hopefully ensure the success of your project.
[27:34] Mike: I think the biggest thing I ran in to in those types of things is kind of what you alluded to. It’s like third-party libraries and third-party integrations, any external APIs because you can always run in to a bug in those or you know, if it’s an open source project you may have to resort to reading the source code to figure out exactly how it works and be able to do what it is that you need to do.
[27:54] Step six is to intervene when necessary. There are times when you’re going to have to make hard decisions or accept some technical debt now to get a project out the door. You may also need to overrule the opinions of some of your developers, some of the – more extreme cases, you may need to cut people out of the project or bring in news ones but the fact of the matter is that this is your business and you’re the one who asked to make those hard decisions nobody else can make them for you. And you do have to take in to account all the previous things that, you know, we’ve talked about so far in this podcast episode. You have to be willing to intervene when it’s absolutely necessary and make those decisions.
[28:29] Rob: And this counts both for when you’ve hired a developer or when you’re writing the code yourself and that’s the hard part that I think most people don’t think about is that just because you’re the project manager and the developer doesn’t mean you shouldn’t have some type of mental separation between those hats because making the call to not implement something that the developers had really wants to implement because it’s either going to be fun or you know it’s easier, you know you can do it and “just a few hours” if it’s not going to get you closer to launch and closer to having people getting value out of your app and paying you money, then that’s the time to step in and say, “We need to push this off.”
[29:04] Mike: And the seventh and final step is to fix your processes and procedures. You need to document things, figure out how things went wrong and figure out how to do them better in the future. You want to be able to avoid repeated problems from one project to the next and use each project as a learning experience to be able to take those experiences and those good lessons that you’ve learned and apply them to the next project so that things will run smoother the next time around. This applies whether or not you’ve got a single product and you’re just trying to get multiple releases out the door or you’re trying to build multiple products and sell each of them independently and build a small company that, you know, manages multiple products.
[29:41] Rob: You know, I hate processes and I despise procedures but sometimes they’re required so that you don’t make the same mistakes over and over. When I really like processes and procedures is when they make my life easier in the future when they allow me to essentially hand something off to someone else so that it can be done right over and over and over and thereby leveraging someone else’s time instead of mine and when it saves me from losing time or money or just making a big mistake in the future.
[30:10] You know, it’s kind of the entrepreneurial goal with your gut as to how much you need but for sure if you’re a one-person shop, you don’t need very many. But as you grow, even if you only grow with part-time contractors or you know, getting in to some fulltime contractors, you need to start ramping it up just a little bit, just enough so that you can hands stuff off with confidence and not be bogged down by handling all of the processes and then so you can learn from your mistakes and be, you know, more successful in the future and more efficient moving forward.
[30:39] Mike: And don’t forget that that includes documenting things as well because just because you wrote the code for something doesn’t mean that somebody else’s is going to be able to understand it or it’s going to know intuitively exactly how to use it. So, make sure that you put together documentation and not just about your code but around, you know, for example your build process if you have a complicated build setup, make sure you document that so that even if you’re rebuilding your machine and going from one machine to the next, you know how that is supposed to work and you can hand that off to a developer.
[31:08] The same thing that goes with some of your marketing collateral or anything else but I mean we’ve kind of talked about a lot of these things in the past in terms of documenting all the different procedures that you use in your business that you can outsource them and that’s part of what this entails as well.
[31:21] Rob: So, to recap our seven steps Seven Steps to Rescuing a Failing Software Project are don’t assign blame. Number two, look at the numbers. Number three, stop looking at the software you’re building. Number four, cut twice and then cut again. Number five, be honest about your project risks. Number six, intervene when necessary and number seven, fix your processes and procedures.
[31:42] Music
[31:45] Mike: If you have a question for us, you can call it to our voicemail number at 1-888-801-9690. 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. You can subscribe to us on 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 131 | MicroConf 2013
Show Notes
- MicroConf 2013 Recap on the Bootstrapped with Kids podcast
- MicroConfRecap.com – the best online recap of MicroConf 2013, created by @itengelhardt
- Search for “microconf” in Twitter
- Special thanks to @patio11 for his MicroConf tweet stream
Transcript
[00:00] Mike: This is Startups for the Rest of Us: Episode 131.
[00:02] Music
[00:10] 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 mistake we’ve made. What’s the word this week, Rob?
[00:23] Rob: MicroConf 2013 is done. I still feel like I’m about at 70% after sleeping hours and hours on end. How are you feeling?
[00:32] Mike: You actually got sleep?
[00:33] Rob: I did. Well, after I got home, yeah.
[00:36] Mike: Oh, okay because, you know, you were still there like 4 o’clock in the morning when I left. [Laughter]
[00:40] Rob: I know. Well, that was the thing. So, Tuesday night conference ends and it felt to me the whole time like every conversation you have is just too short. You want to hear more about people’s thoughts and ideas. You want to get their feedback. You want to give your feedback. And so we – yeah, we were hanging out after, you know, the evening event and pretty soon it was 1 o’clock and then last time I looked at my watch is 1 in the morning and then pretty soon we saw people coming out of the elevator, attendees of MicroConf with their bags heading to the airport and they were catching morning flights. Totally worth it but, you know, I’ve been paying the price for that and as well as just stay in the plate and doing so much talking for the past couple of days.
[01:15] Mike: Yeah, there were definitely a number of conversations that just didn’t get finished that I was involved in just because there were other things going on. I got pulled in one direction or another. And it would be great to been able to finish some of those conversation because they were definitely worth while. I mean it was just like everytime you turn around, there’s someone else to talk, someone else with, you know, some unique insight or you know, unique problem that needs your perspective and or needs a different perspective and it’s just nice to be able to talk to those people and help them out or get help on the things that you’re working on.
[01:43] Rob: Yeah, absolutely. So, today I mean we’re going to basically dedicate the whole episode but we’re going to be talking about our takeaways from MicroConf 2013 both from what we got from talks from other attendees and then maybe give a little background on how you and I felt about our talks and you know, kind of get that the personal side as well.
[01:59] Music
[02:02] Rob: I just listened to a pretty cool podcast recap of MicroConf 2013 from an attendee. His name is Brecht Palombo and he actually did one of the attendee talks and actually one of the attendee talks that was – it was one of my favorites to be honest and he has a podcast called Bootstrapped with Kids. So, you can obviously search for it in iTunes or whatever but we’ll also link that up in the show notes because it was nice to hear – it’s kind of like you get back from MicroConf and your head is spinning and it was just nice to hear someone else talking about it because I could nod and say, “Yes, I felt that way too,” like it wasn’t just this reality distortion field. There’s just kind of an incredible feeling when you go to a conference like that and you’re around, you know, 150, 160 people who were just like you because you spend the rest of your year really not being people like, you know.
[02:44] I mean, obviously, we have friends and such but they’re not in the startup mentality, in the building of business mentality, the way that these people, you know, at a conference like MicroConf are. Anyways, I recommend that episode and then hopefully, you and I can also do MicroConf justice over, you know, the next 30, 40 minutes.
[03:01] Mike: Cool. The other thing that I’ve got is one of the things that you and I had discussed just like very shortly after the conference is over is the fact that there’s all these people out there who have quit their jobs based on either listening to podcast or joining the Academy or coming to MicroConf. And if there’s anyone out there listening to this who has quit their job because of the fact that they were inspired by the podcast or the conference or Micropreneur Academy, definitely drop us a line and let us know. We’d love to, you know, highlight you guys and let other people know about you and kind of share some of the success stories that we’ve kind of come across.
[03:33] Rob: I agree. I have been completely shocked by the number of people who contacted us even within the last six months and are saying, “Oh, yeah, I started this business but, you know, I’m a lifetime Academy member and I started this business and I quit my job like eight months ago.” And it’s like why didn’t you tell me? This – because this is why I do it like this is why you and I sit here every week and record the podcast. I mean that is the biggest pay off.
[03:55] And someone came up at MicroConf. It was Richard Chen [Phonetic]. He has PHP Grid and he said, “Yeah, I quit my job six months ago.” And I was like, “Man, that is fantastic news.” So, I don’t want it to be, you know, six or eight months from now. We really want to hear about it now and I think we’re thinking about putting together a list of some kind just to kind of – I don’t know, they inspired others and just to kind of keep track of each other. So and like Mike said, you know, send us your info, your URL, your name and all that if you have quit your job.
[04:23] Mike: So, what are your thoughts about the Twitter stream for MicroConf?
[04:26] Rob: Wow, I made the mistake of barely getting on Twitter while I was at the conference and I tried – I figured after the conference, I’d go back through it but it’s thousands and thousands of tweets. And if you go search for the – it’s just #MicroConf, there were patio11 Patrick McKenzie as a lot of you know him. He was just spitting out all types of awesome quotes from the conference. It looked to me like every 5 or 10 minutes, he was just picking up the best thing that was going on, you know, from the speakers and putting it on the Twitter stream.
[04:54] And then I want to give – I think both of us want to give a big shoutout to Christoph Engelhardt. He totally came through. He was doing awesome blog write ups almost in real time. He was basically taking notes from every speaker, putting it in bullet format on to his blog and he’s just hitting publish as the talk ended it seemed and then tweeting those out. And so, he is really has really well documented this MicroConf and he, you know, we’ll link up to him. His Twitter handle is @itengelhardt.
[05:21] But I also – I’m going to register — after we record this, I want to register MicroConfRecap.com and I want to point it, redirect it to his recap of it because he has a link to all the – all his notes as many speakers has put their slides on SlideShare. We don’t have videos at this point but pretty much everything that could be recapped has been recapped by him. So, there’s no reason for you and I to do that as well. So, if you are interested in digging in to it a little more and seeing detailed release at the talks because one I got – obviously, we just don’t have time to talk through all the points, MicroConfRecap.com.
[05:52] Mike: You know, I really like the fact that it was at the Tropicana this year instead of the Hard Rock. I mean I really like the Hard Rock but looking back at the comparison between the two, I really felt like the Tropicana suited the types of people there. I think that was partially because the conference area was far away from all of the action and life, you know, all of the things that the Hard Rock is trying to put on, you know, all the casinos, all the, you know, the gambling areas. And because the different evening events that we had were away from that stuff, it just seemed like it created a much better atmosphere than we got over at Hard Rock.
[06:24] Rob: Yeah, I would agree and I heard that from some attendees as well. It just seemed to be more our age. And I think the Tropicana is great because it’s – you know, obviously, you can go to the Bellagio and we could have it there but you have to add 3 or 400 bucks to every ticket and it’s like for our audience, I think at the price point we want to be, the Trop is perhaps the best conference hotel in, you know, in Vegas for us. Maybe the MGM Grand would be another one but everything else is either too expensive or too cheap and everything is out perfect, right? And the food choices there are not outstanding. Certainly of the three years we’ve had it, by far, this – I think this was the best venue for us.
[06:57] Mike: I think that in my mind that was probably the biggest detriment was the fact that there were only a couple of places to eat. It did result in a 2 a.m. Del Taco run. [Laughter]
[07:06] Rob: I saw that. Did you go on that?
[07:07] Mike: Oh, yeah. So, Hiten and a couple of – I don’t know, it’s probably seven or eight people went over and then I followed over with Jas. You know, we sat down a little while after they – they were just kind of leaving when we got there but you know, it was still, you know, 1:30, 2 o’clock in the morning.
[07:22] Rob: Only in Vegas, right? It’s like a Tuesday night and it’s 2 in the morning and you’re just walking – I mean on the street. But second, that’s the part – that’s what’s so cool about a conference like this is and maybe it’s specific to MicroConf. I don’t go to a lot of other conferences anymore but it’s like you hang out with – you go to on a Del Taco run with Hiten Shah who runs KISSmetrics, amazing content marketer, venture funded, venture back entrepreneur and you just talked to him. You can ask him questions about your business. You can just ask, you know, about anything and same thing, it’s like Jason Cohen, Patrick McKenzie, Josh Kaufman author of The Personal MBA, just everybody is there and just mingling.
[07:58] And so, whether you’re a speaker or an attendee, it’s just conversations and we’re all just people and just people at different levels of the game. And that’s what I like most about it. I like that our speakers stick around and they don’t come in for just for their talk and then fly out. It’s just not the vibe that we want to set.
[08:14] Mike: Right. Yeah, I really like that as well and I had saw a number of people who had commented on that. They’re like, “Wow, it’s really awesome to be able to come to an evening event and then just walk up to any of the speakers and just be able to start up a conversation and talk to them because they’re here.”
[08:26] Rob: When we recruit speakers, we specifically ask them to do that. We say, “If you’re going to speak here, we want you to stay all, you know, basically all three nights, Sunday, Monday, Tuesday and we want you to come to the evening events and we want you to be approachable because that’s the vibe of the conference.” And so, we’re pretty specific about, you know, by having them do that.
[08:42] Mike: Uh huh.
[08:42] Rob: Did you get the feeling that a lot of the attendees listen to podcast?
[08:46] Mike: You know, there were a ton of people who would mention it to me but it’s hard for me to kind of give a percentage of the people that I talked to who also listen to the podcast because there were a lot of Academy members there as well. So, I didn’t talk a lot about the podcast to people. I definitely recall people saying, “Oh, I listen to you a lot on the podcast,” and you know, “Oh, I feel like I know you already.”
[09:05] Rob: I tend to think that since our audience, you know, on the global scale, our audience is not huge, right? I mean it’s like we don’t really know how big of it is. We need to get better metrics but let’s say it’s 5,000 people or 8,000 people just, you know, in that ballpark but it’s such a self-selecting group that’s going to come to MicroConf that I think a lot more than listen than I think. And so, as we would be in conversation that say, “Oh, yeah, I remember that from the podcast.” And I heard that over and over and over. And so, it was cool that we were able to meet a lot of listeners in one place like that.
[09:31] You know, Justin and Jason just recorded a TechZing episode where they talked about MicroConf and one of the things Jason said was it’s cool to remember that we’re actually having some type of impact. It’s not just you and I here talking every week, you know, with – and we get four or five comments on a podcast episode but when you meet the real people and they’re really building businesses like you are, it brings it home, you know. It makes such a deeper reality. So, how did you feel about your talk?
[09:56] Mike: You know, I spent a lot of time [Laughter] it’s funny because I always spent a lot of time, you know [0:10:00], working on my talk but this year in addition to the time I spent on my talk, I did some research on how to give an effective presentation and what sort of things you should think about when putting it together and I think that really helped with the quality level. I talked to a bunch of people who said that they thought that it was by far one of the better talks that I’ve given at MicroConf and it felt really good afterwards. I mean it was the second day so I was absolutely exhausted. I mean the first day I got there it was Saturday night and I got around 6 or 7 hours of sleep but I was up at 5 o’clock in the morning and then what was it? Sunday night, I only got about 5 hours of sleep and then Monday night I had like 4 hours of sleep. So —
[10:37] Rob: You were really tired.
[10:39] Mike: I was —
[10:39] Rob: Yeah.
[10:40] Mike: …exhausted. So, I was up there on stage. There were certain things that I was forgetting and you know, examples that I intended to use that I just ended up not using. I thought of other things at the time. So, there were certainly some flaws that I recognized but there were a lot of people that said, “Oh, I really like your talk and it was really good. It resonated. You know, I had — got a lot of good information, a lot of good insights.” So, you know, I think it came off really well. I think, you know, obviously, there’s always room for improvement and I think if I hadn’t been as tired as I was, it probably would have been better but I still think it was a pretty good talk.
[11:10] Rob: You and I had talked about this but I don’t think we’re ever going to give our best talks at MicroConf because we’re too busy with other things. You can’t focus on it. I think speaking at another conference that you’re not running, you’re just going to give – even that exact same talk, it’s going to be a better version of it because your mind is so much more present. I also heard from a few people who came up and said, “That was the best talk I’ve seen Mike give.” And I thought I was going to miss the middle 20 minutes I got pulled out to do some stuff.
[11:33] So, your title was How to Sell Anything to Anyone and you did research in to the psychological triggers. You also went in to enterprise sales. That’s the part that I caught up at the end which I thought was cool. So, it was nice that you could speak both from your experience on being, you know, on both sides of the enterprise sale part and then also do some research, you know, and offer some kind of not just storytelling stuff but stuff that was answering a lot of the questions of why do we believe these things. So —
[11:59] Mike: Yeah. I definitely did research on what sort of emotional triggers people will have and then I got in to what people are actually buying. So, like for example, one of things – the examples that I went in to is the people that aren’t buying software, they’re buying a solution to a problem. You know, they’re buying some sort of end result. They’re not buying KISSmetrics or WooThemes or whatever, they’re actually buying the outcome from that product. So, when you’re talking to people, you have to kind of position it in that way that you’re selling them a solution. You’re not selling them a product. What about you? How was your talk? Did you feel good about it or —
[12:33] Rob: I did. I mean I basically filled in every gap that I could about my HitTail experience. So, you know, we talked about on the podcast and I’ll give some vague notions of where it’s going, if it’s going up or down. I basically laid out every month of revenue from the month that I acquired it including how much I paid for it, how much revenue it had been and I gave an idea of how much money every month through last month and even gave a projection for what I was going to do in April. And then I talked about all the tactics that I used that were both successful and unsuccessful during that time.
[13:05] And so, I went back and forth on whether to be that revealing, you know, because it really – it was pretty much everything I could give about HitTail but I also said, you know, I asked people not to tweet out exact numbers. I don’t really want it to be widely public, you know, make it out at some point but it feels good. It felt like the story doesn’t have as much impact without those exact numbers like you can put up a hockey stick growth curve with no scale. It just doesn’t matter. It’s like, well, did you grow it to $7,000 a month or is that $70,000 a month? You know, it makes a difference and so, that’s when I keep during afterwards was they were really glad that I included numbers because it gave them an idea of what it takes to get to that point, how long it takes to get to that point because I talked a lot about, you know, they’re being the five months of building and the six months of learning where it wasn’t growing.
[13:50] And people keep – were talking about, “Yeah, I remember on the podcast how frustrated you were with it,” and now you can see it on the graph why I was frustrated because the revenue wasn’t growing. And then there’s just this month where I pretty much started figuring things out and from there, it just – it spikes way up. So, in the end, I felt good for sure. I’d hope it would have value for people and based on the feedback that I got they, you know, people told me that it was going to help them in their journey. So, I was happy with it.
[14:13] Mike: Yeah, I talked to people afterwards and they were a little bit surprised that you were as revealing as you were and I understand that and I’ve done this in the past as well. You start throwing out numbers and you’re always concern about how that’s going to come across and you have to be very careful how you put it out there because you don’t want to come off as braggy but at the same time it’s like these things put those numbers in perspective, you know. Those numbers mean something in a certain context and it’s very revealing to be able to see those things especially if you’re not quite at that point yet.
[14:41] And so, I know that were a lot of people who really look at those and said, “Wow, that’s not just impressive that you did but it’s very helpful for me as an entrepreneur to see that, you know, it takes this long to get to that point or it took somebody else that long. So, I don’t feel nearly as bad about the time that I’ve spent on the stuff that I’ve been doing.”
[14:59] Rob: Yeah, that was a comment I heard was it brought it down to earth because especially in the early days, it was making so little that even, you know, just boosting a few thousand visitors in a month made a difference and someone said, “Well, I can boost my traffic a few thousand visitors in a month.” You know, it totally made it realistic for him.
[15:17] So, let’s talk a little bit about the attendee talk. This year we tried something a little different. I think it was pretty successful because frankly the attendee talks were one of the highlights of the conference for me. What we did is after folks – we sold the conference out and then we e-mailed attendees and we said, “Send us your topics and you can do a 12-minute talk on any topic you want,” and we get 21 or 22 of those submissions and then we put them in a private website and we allowed all the attendees to vote them up. And so the ones that were at the top eight, we did four per day.
[15:48] And we had – we had people like Nathan Barry and Brennan Dunn doing talks which were very cool. We had some kind of I’ll say some sleeper hits of some people that I don’t know that other folks have heard of before [0:16:00]. One, we had my wife, Sherry Walling, did a talk. She’s a psychologist and she did a talk called Don’t Burn up in the Launch: Staying Emotionally and Relationally Healthy While Launching Your Startup. And I figured that it was either going to be really popular because it’s so different or it was going to get kind of a big nothing. You know, like people were just going to I wouldn’t say they would groan but they’ll be like, “Oh, well, this is just basic advice.” From what I gathered, it was – people were saying like, “She needs to do a full talk next year.” I had at least five or ten people come up and tell me that. It seemed to really resonate with a lot of people about how you can’t sacrifice your family on the way to building a business.
[16:37] Mike: Yeah, I had asked one of the guys during one of the evening events, you know, what three things he was going to take away from MicroConf and implement when he got home and one of the things that he said was basically set up a weekly meetings with his wife to discuss not only the business but, you know, how things were with the family to make sure that, you know, just to keep the lines of communication open. And I thought that was really nice and obviously, it came directly from her talk. I mean there’s no other – nobody else who talked about that kind of stuff.
[17:02] Rob: Right. That was the nice thing is she never really showed me her slides but I did tell her have some actions. You know, have something that people can take away and do because that’s a big part of the conference is that we want people to actually act on what they’re hearing and not just kind of sit there for two days. I was glad it resonated and she was certainly excited. There was a long Twitter stream of people, you know, kind of talking about it and I was glad it was – it worked out really well. And I do think that there’s room – I mean we just don’t hear about that, you know, at any of our conferences about like kind of work life balance and how to realistically have a family and launch a startup at the same time.
[17:34] Mike: Yeah, that’s something that’s almost never talk about at conferences. I mean and even in social situations, you don’t generally tend to discuss those types of things and I’m not sure whether it’s because it’s socially taboo or whether it’s just they don’t come up because you’re so focused on other things. But you know, she definitely made a point that you have to concentrate on those things. You have to look at those things and be conscious of what they affecting your business because anything in your home life is going to affect the work that you’re doing at your business.
[18:02] Rob: Another one of the attendee talks, well, there were couple others. You know, Brennan Dunn has been on the show before. He’s a lifetime Academy member and he and Nathan Barry are kind of big up and comers over the past maybe 12 to 18 months and they both talked about teaching and how, you know, not just trying to say sell software but to actually teach your audience and offer them something of value. And Brennan looked a lot at writing e-books and having an e-mail mini course. And then Nathan talked a lot about teaching. I think those were some noticeable talks. And you know, luckily we videoed everything. It’s going to take a long time for that stuff to get released. I think that those will also be helpful to folks who are interested.
[18:41] Mike: You know, I really like Patrick Thompson’s talk about building when you – essentially bootstrapping I’ll call it a mobile empire but [Laughter] I don’t know if he would —
[18:48] Rob: Yeah.
[18:48] Mike: …describe it that way but, you know, putting together I think from a single codebase building out a series of apps and being able to expand the reach that he’s got. I mean the reach that he has through push notifications and the app sources are absolutely amazing.
[19:02] Rob: I know and you know, Patrick Thompson is basically the resident mobile expert of the Micropreneur Academy. He’s been in the Academy for really since early on and he’s had awesome success with QuickReader was kind of his flagship product which I recommended to teach you how to speed read but then he has a whole slew of other apps that are somehow one way or another related to that. And I agree, his talk was – he has a full version of his talk that he did at Oregon Mobile Users Group. It’s about an hour and he shrunk it down to about 15 or so minutes for this attendee talk but that was the other one actually that people said they wanted to hear a full version of it like they were – when I mentioned there was a video of it, people were like get up their phones and like started writing the URL. So, I think that was also a big success story and could easily be turned in to a full talk in a future MicroConf.
[19:53] The last attendee talk I want to mention is Brecht Palombo and he basically came out of nowhere. He’s – he’s also a lifetime Academy member who I had no idea, I don’t think either you or I did know that he had left his job but he e-mailed a month or two ago and said, “Hey, I’m a non-technical founder and I built a 6-figure SaaS business using only free public data sources.” And I’m like what a story, you know. And he and I e-mailed back and forth and so, when I saw that he was coming at MicroConf we’re doing attendee talks, I e-mailed him and said, “You should talk about this.” And so, he applied and I’m glad he got voted up because he’s a good speaker like he was a salesperson in a previous job and it shows.
[20:29] His talk was very funny and also, he put things in perspective because he wouldn’t just say, “I got distracted by shiny objects,” but he actually had revenue graphs. And he would show the – how was revenue had grown over a couple of years, he would say, “And here’s where I saw the shiny object and I went off and tried to build like a Twilio app.” And his revenue just flat lines and then he says, “Here’s when I start refocusing and it just shoots up.” It was this visual representation of all the mistakes you can make as an entrepreneur at least the mistakes that he made that he basically set his business back 18 to 24 months. And so, that was also one of the standouts for me. And again, Brecht is the one – he has that podcast called Bootstrapped with Kids that just did a recap of MicroConf as well.
[21:10] Mike: You know, I think one of the single quotes that kind of stock with me was from Jason Cohen. He said, “The predictable acquisition of recurring revenue with annual pre-pay and a good market creates a cash machine.” His talk had a lot of elements in about talking towards creating a business that was a cash machine where you could predictably put money in to one end of it to do marketing or customer development or customer acquisition and then at the other end, you knew exactly how much you were going to get out of it. And I thought that that was really interesting quote and definitely a great way to put things in such a way that, you know, it makes you really think about the types of things that you’re doing, how you can measure them and why you’re measuring them.
[21:46] Rob: Yeah, I agree. For those who don’t know Jason Cohen, he blogs at SmartBear. He started multiple bootstrapped companies. He sold them for cash and then he recently raised funding and is running WP Engine. What I like about that quote and again, I’m going to say it again because it’s so dense, “The predictable acquisition of recurring revenue with annual pre-pay and a good market creates a cash machine.” And each of those points he would talk about. He didn’t start with that sentence. He started and said, “Look, if you’re going to bootstrap a business on the side and you’re a single or maybe two founders and you don’t have employees, you have limitations. And so, let me show you what you can’t do.”
[22:20] And so, he started going through it and he’s basically like, “You can’t do one-time revenue. I’ve done it. It’s too hard with one person. So, we’re going to talk about recurring revenue and then let me show you how annual pre-pay totally gets your cash flow up. And then let’s talk about good markets and bad markets,” and he defined those. And so, by the end he has this epic sentence that describes the ideal bootstrap business. It’s like how to back in to your business model if you have these limitations. And then he was quoted I mean not only all over on Twitter but he was mentioned in other presentations, you know, later that day and the next day. And I think this is going to outlive. I hope he writes a blog post about this because I think this statement here will outlive this talk. It really is it defines what I consider the ideal bootstrap business if you have, you know, limitations on your life and you’re working on the side trying to launch something.
[23:05] So, here’s the thing [Laughter] we got up in front of the crowd on the first day and we say, “You know, we want you to take away three actions from MicroConf that you’re going to implement in the next month and three relationships, three people that you’ve met that you will stay in touch with over the next year and that will – you can either get feedback from, give feedback to, build a relationship, have some kind of mastermind like something to keep you going because just having actions isn’t enough.” And you know, within 3 or 4 hours, you already see tweets of like, “I have 13 action items,” or you know, I have by the second day, it was like someone tweeting and said, “I have 26 action items.”
[23:40] And that’s kind of how MicroConf tends to go. We recruit the speakers that are going to talk about action stuff and then we encourage them to really go over board. I only took notes on a couple of the talks because I was running around and I had about 6 or 7 action items but let’s maybe just talk about 3 or 4 takeaways maybe the biggest ones, the ones we think are going to make the biggest difference to our businesses. What do you have?
[23:59] Mike: So, the first one that I got was from Jason Cohen’s talk which was basically with the annual pre-pay is amazing and there’s a lot of ways to kind of convince people to go for an annual plan and one of which is if you offer a couple of months free if they signed up for a year. If you e-mail existing customers and offer them a month or two months free in order to get on to those plans, something that Patrick McKenzie kind of came up with near the end was that if you have a set of customers who were kind of budding up against the limits — you have the SaaS application and they’re budding up against the limits of whatever their plan offers, you e-mail them like a special offer and say, “Hey, if you upgrade now, I’ll give you 20% off and you’ll get some head room.”
[24:37] And that’s interesting because what he said was that there are people who they don’t look at that as an upsell. They look at it as, “Oh, my god. What do I do? I’m close to the limits of this plan and I don’t want to have to, you know, worry about what’s going to happen if I go over. You know, is it going to cut off? Is it like the phone company where I’m going to get these massive charges?” And they want to be sold to. So, contacting those people who are within 20% of that limit, it can work really well.
[25:03] Rob: So, I took that one away and that’s absolutely something I’m going to implement both I would guess on HitTail and definitely on Drip. The other thing I took away which was kind of brought a big smile to my face because I was already going to do it and already have done it a number of times is to build an e-mail mini course. Basically, some content that educates as highly educational and doesn’t sell to people but that you provide to them via e-mail and this is the entire idea behind Drip which is why it brought a smile to my face because it’s like I’m such a proponent of this approach that the fact that it was mentioned over and over and over was more encouragement to really get Drip out the door and to get it working, get it so people can use it because I believe that it’s actually the best way to deliver an e-mail mini course but since it’s not out today, it’s not actually the best way because it doesn’t exists yet.
[25:48] That’s the one I took away and actually I started making notes already on the components because I have not written – obviously, I’m going to have a little e-mail of mini course for Drip itself when you come to the Drip website and I haven’t written that but I already had some ideas right away just watching both Patrick and Jason and Hiten all talked about things that they’ve done to e-mail as well as actually Brennan Dunn touched on it as well. And so, I have a bunch of notes for that that I don’t need to go and to hear it, they’re just super detailed based on, you know, what am I going to do with Drip. That is such low hanging fruit. Do it once and you build that course and it impacts your conversion rate forever like it never goes away. That is just – it’s one of those flywheels that you can’t ignore.
[26:27] Mike: Another tactic that I got out of it was switching from using a trial to a 60-day money back guarantee because the rationale behind that makes a lot of sense because if you offer a free trial to somebody, then you also have to answer the questions of oh, well, I’m going to charge them after 14 days or 21 days. You know, how much value are they going to get out of it? And I think that you can, you know, just from the talks, Jason Cohen had said, you know, switching to a 60-day money back guarantee, it gives people a little bit more incentive to give you money earlier, you know. It just kind of moves your cash flow forward. Getting that money now is worth a heck of a lot more than getting it later and if your conversion rate, the people who try out your trial and actually stick around is relatively high, then you don’t necessarily have to do a whole heck of a lot of refunds. So, that really helps in terms of cash flow to be able to get that money now as suppose to later.
[27:17] Rob: Yeah, I’ve struggled with this one because this, you know, Justin Vincent does this with Pluggio and he’s had a lot of success with it. He said it really helped this conversion rates and actually just had more, you know, happy customers. It didn’t impact that at all. The thing I’ve struggled with it specifically with HitTail is that, you know, people don’t get value out of that for a week or two or sometimes three and I feel almost like it’s hard to charge someone on day zero because they’ve used the tool that they don’t get value right after they log in. Whereas with WP Engine, it’s WordPress hosting, you get – as soon as you sign up, you get value because you can move your site over and bam, the hosting works. And so, getting 30 days free in that instance doesn’t actually make that much sense, right? Because why are you getting a free trial of hosting like in either works where it doesn’t, right [0:28:00]?
[28:00] So, I think that there might be instances where this is more applicable. I could see with something like AuditShark that you could potentially get value on day one and I could see you’re charging upfront, you know, and then having the guarantee. But I don’t know. So, Drip is another one of those, right? If someone signs up for Drip and they get the form and they put on their site, you’re not getting value on day zero. You really need a couple of days to get some e-mails on it and to see how the conversion rate impacts you. And so, I certainly think it’s something to test but I’m not sure that I believe that it works in all situations.
[28:31] Mike: I think it depends a lot on how long that cycle is. If it’s a couple of days, I don’t think it’s a big deal but if it’s, you know, if they’re not going to see value for 20 to 30 days, it’s totally a different story.
[28:40] Rob: Well, last takeaway that we’ll talk about again, they were dozens, the next meme that kept coming up was to raise your prices. Developers tend to undercharge. We tend to undercharge for our products think they’re worth less than they are and I guess we think we’re going to get more sales if you’re charging a lower price. And so, the single fastest thing that I’ve seen people do to basically start making more money in their businesses and a lot of them this is the kicker that gets them to the place where they can actually quit their jobs and split their businesses fulltime which is obviously very helpful. That tactic has been to raise prices.
[29:14] Mike: You know, it’s interesting that in talking to a lot of the people there, they felt uncomfortable raising their prices because they’re constantly looking at it through their own eyes, you know, “I wouldn’t pay for that. Why would somebody else?” And they aren’t looking at the value that they’re providing, how much pain they’re saving somebody else with their product because raising your prices and being able to do that and measuring how well it works and whether people respond to it, whether they – are actually found to paying more, that is validation that you have a good idea that you are actually providing something of value to people.
[29:43] Rob: Yeah and I did talked to one person who said that he had basically raised his prices every month and eventually, you obviously do hit a ceiling and he raised it to the point where sales dropped off pretty dramatically. This is certainly another one to be – you can’t just take it to its unnatural extreme. I think as a generality, most people undercharged. I have also increased prices on a number of different products and seen the overall revenue dropped significantly. So, I do feel like, you know, there’s pricing elasticity and then you hit a point where it just – it doesn’t work anymore. So, if you’ve never raised your prices, then this is definitely something to consider doing.
[30:18] Music
[30:21] Mike: So, what about next year, what are we thinking we’re going to do for next year? What are we going to do different? What works great? What are we going to keep around? What are we, you know, that we – because we tried a bunch of things this year but what about the things that we tried. Do they work? Do they not work? What are we going to do different?
[30:34] Rob: I think first thing is unless there’s a reason not to, I think we should do it at the Tropicana again. I thought it was good and I think, you know, working with the same staff would be helpful two years in a row because we bounced around so far. Second thing is I absolutely am going to convince you that we need to hire a coordinator next year. We are not doing this again on our own. There’s just every year we’d say we’re going to and then we don’t find one and I think we need to find a Vegas-based coordinator. We already starting on MicroConf Europe and we have a person on the ground who lives in Prague where the conference is going to be and already, it’s been so much less work that this is the way to go.
[31:10] So, I think that’s a big thing we need to do next year. I think that will also allow us like – let’s take example the attendee talks were one of the highlights for me but they were a lot of work. They were way more work than I thought they’d be and if we can get a coordinator to handle at least some of that work, then I’d be willing to do them again next year. If not, it’s actually not worth doing. It would be, you know, something that I would consider dropping.
[31:34] Mike: Yeah, I definitely agree with you on the coordinator. I don’t think you need to really convince me with that one. [Laughter]
[31:38] Rob: Yeah.
[31:39] Mike: The other thing that I think we definitely keep around is the teardowns. I mean there’s a lot of people who really like the teardowns and kind of what value they bring because even if it’s not your website or your product that’s being torn down, you look at it and you say, “Hah, yeah, I get it. I understand why making some of these changes is going to make sense and I can translate them back to my own websites and to my own businesses that I’m running.”
[32:00] Rob: Yeah and to give folks an idea, if you’ve never heard the term teardown, basically what it is, is you call out a URL and one of the speakers is doing them and they pull it up on their computer and then they give you a feedback like, “Here’s what I would test,” maybe in terms of your headline or in terms of structure, UX stuff to try to convert higher. And so, you know, almost anyone in the room could do that could give feedback on it but what’s nice is that we’ve had Hiten Shah do it, Patrick McKenzie. This year we had a copywriting expert named Joanna Wiebe who is one of our speakers do it and really a lot of unique insights come out of those sessions. And those — I think those maybe the most popular parts with our attendees. A lot of them say it’s the most participatory part even if you’re not participating and you’re thinking to yourself, “What would I do to improve this website?” And so, it’s a lot more thinking it in application than just being told information like when you’re, you know, sitting, listening to speaker. So, I agree.
[32:52] We also did something different this year. We had idea teardowns where Josh Kaufman who wrote The Personal MBA talked about a framework for evaluating and validating ideas like business ideas and he basically called people up and have them do a short pitch of their idea and then would ask them probing questions, you know, like, “Who’s the market,” “What’s the value?” And then they’d answer and he’d say, “Nope, try again,” like, “Get more focus.” But really for who is the value and by the end of it, you had a better – even though it was only, you know, 4 or 5-minute conversation, everyone had a better idea of what that person’s marketing message, what their positioning, perhaps what their headlines should read. They haven’t even built a product, right? It’s just a nascent idea in their mind right now but they had a better idea of how to position it and how to think about the value that it brings to the market.
[33:38] Mike: Yeah and what that does is it allows you to kind of focus on the things that matter and not build things that people just they’re not going to want or not going to actually use.
[33:46] Rob: So, yeah, I agree with you, teardowns have been a staple of the conference now for three years and I think we may want to – we only did two 25-minute sessions. I think we may want to think about doing four over the course of the conference. I think four 30 minutes sessions because it always seems like there’s not enough time to do as many teardowns as we like.
[34:03] Mike: Right, cool.
[34:04] Rob: If you have a question for us, call 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 us on 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.