Show Notes
In this episode of Startups For The Rest Of Us, Rob and Mike inspired by a listener question, talk about whether or not the Micropreneur dream is still alive. Some of the topics discussed include reasons to start a business, stages of micropreneurship, and legacy.
Items mentioned in this episode:
Transcript
Mike [00:00:00]: In this episode of “Startups for the Rest of Us,” Rob and I are going to answer the question “Is the micropreneur dream still alive?” This is “Startups for the Rest of Us,” episode 307.
[Theme music]
Mike [00:00:16]: Welcome to “Startups for the Rest of Us,” the podcast that helps developers, designers and entrepreneurs be awesome at building, launching and growing software products. Whether you’ve built your first product, or you’re just thinking about it. I’m Mike –
Rob [00:00:25]: And I’m Rob.
Mike [00:00:26]: – and we’re here to share our experiences to help you avoid the same mistakes we’ve made. What’s the word this week, Rob?
Rob [00:00:30]: Doing pretty good. I think we’re getting ready to send some emails to the MicroConf mailing list here in the next few weeks, because we’ve settled on the dates for MicroConf Vegas next April. If you’re interested in joining us and a few hundred of your closest founder friends in Las Vegas for, either MicroConf or MicroConf Starter Edition, head over to microconf.com and add your email address to our list, and we’ll let you know as soon as tickets are available.
Mike [00:00:55]: Are you saying we’ve actually planned something a little bit in advance?
Rob [00:00:57]: [Laughs] Once every two or three years we do this, and I think we might be ahead of the game on this one – although as I’m saying that, I’m realizing there’s still time for us to slack and get behind the eightball like we usually are.
Mike [00:01:08]: Yeah, cool. I talked a little about it a little bit this past week, about some of the changes that I was testing out for Blue Tick, and hit a couple of snags here and there mostly due to various RFC issues where they’re not real clear about stuff, or they imply things that are just absolutely not true. So, I’ve had to work through some of those, but the testing’s gone really, really well so far. I have a internal launch date that I’m shooting for at the moment, but I need to do a little bit more planning on that before I can commit to that actual date. I have a date in mind. I just want to go through all the lists of things that really need to be done before I can publicly call it out and say, “This is going to be the date.”
Rob [00:01:42]: Is this update just an internal rewrite, or does it add new functionality to Blue Tick?
Mike [00:01:46]: It adds new functionality. It allows you to see all the different emails that have been sent and received regardless of whether they were sent through Blue Tick or not, so when you add in a contact you basically just put in the email address of somebody that you want to add to the system. What it does is it matches that email address up to all the emails that you have sent or received from that person historically, even before you signed up for Blue Tick, and then it will be able to show those to you directly inside of the app. It’s a nice way of being able to mind your mailbox and identify people that you’ve started conversations with, and then they didn’t get back to you, and then – for whatever reason – you forgot about them. The app will have the ability to show those things to you.
Rob [00:02:24]: Cool. Given this, do you have a public launch date? At this point, you’re basically in early access right now, right? You’re getting your folks who’ve pre-purchased from you into the app and honing that and everything. Do you feel like your launch date is within reach?
Mike [00:02:37]: That’s what I’m still trying to sort out. I’ve got a list of all the things that need to be done, and I’m trying to figure out a time estimate for each of those. I know in my mind, “This is the date that I want to hit,” and I’ve got the list of things that need to be done, but I don’t have all the time estimates for all those things matched up and added up so that I can say, “Is this actually reasonable to be able to hit that date or not?” That’s what I’m working on right now, and that’s what the next step is.
Rob [00:03:00]: Mike and I really want to congratulate Glenn Germaine of My Practice. Glenn is a several-time MicroConf attendee. He’s come to MicroConf in Vegas with his wife. They fly up from Australia. He’s also written into the podcast several times, and has just been a supporter, and we’ve really appreciated our dealings and interactions with Glenn. His company was acquired by Best Practice Software, and he actually tweeted it out. He said, “Shout out to all our MicroConf buddies, particularly Rob Walling, [Single?] founder, for the years of advice.” He linked over to the press release, and so we have just a big “congratulations.” It’s such a big step to get to that point. He really grew My Practice on his own, boot-strapped it, and grew it to several employees, if I recall. Didn’t he have ten, 15 employees? That’s a big deal, to be able to exit that. We wish you the best, Glenn, moving forward.
Mike [00:03:45]: Yeah, and Glenn’s been coming to MicroConf since 2012, so it’s definitely been a long-time listener.
Rob [00:03:51]: Yeah, very cool.
Mike [00:03:52]: Yeah, congratulations, Glenn.
Rob [00:03:53]: What are we talking about today?
Mike [00:03:54]: Well, today what we’re going to be talking about is, “Is the micropreneur dream still alive?” This is inspired by a listener email from Scott Underwood. I’ll paraphrase some of the things that he said, but some of the different pieces he went into were the fact that, Rob, you just recently announced the sale of Drip a few months ago to Lead Pages, and it ties into Glenn Germaine’s announcement that he’d sold My Practice and is presumably going to be joining them for a while. Another announcement that came out recently was Patrick McKenzie announced that he was selling Appointment Reminder and, in addition to selling Appointment Reminder, should move on to other things. One of the things he’s doing is moving on to join Stripe as a full-time employee.
[00:04:31] Scott wrote to us and said, “I sent Patrick a quick congratulations email just before he broke the news, but it felt like the day the music died. My heroes are giving up on the dream I’m chasing and going back to being employees. Life’s a journey, a transition, growing families, etc., so priorities change. The Startups for the Rest of Us troops might need a little rally that the dream is still alive and attainable for those of chasing it. Thanks again for all the advice and entertainment over the years. Looking forward to more.”
[00:04:50] A couple of things I wanted to call out in this email snippet that I read out was that, I agree, priorities definitely change over time. But I think if you look at the three stories that I mentioned earlier, with Rob and Glenn and Patrick, the fact of the matter is that all three of these stories – if you look at them very objectively – they are success stories. All three of these were built from the ground up. They were built from nothing and were sold to the betterment of the founder. I think that if you look around at the general, broader community of people who are boot-strapping companies and building them, you can trice that back to MicroConf. You can see that MicroConf tends to sell out very quickly, and it’s aimed directly at this particular audience.
[00:05:30] So, you have to ask a couple of questions. The first one is: Are they pursuing something that’s ultimately going to put them back in the same position that they were in, which is working for somebody else? The second one is: Are they all delusional? The answer to that is, probably not, and I’m hoping it’s [laughs] really not. Certainly for some small segment of them, yeah, there’re some delusions of grandeur, but the reality is that people start businesses for a wide variety of reasons.
Rob [00:05:53]: Yeah. First off, thanks to Scott for sending that. I think it’s an interesting sentiment. I certainly thought it before I sold DRIP. It definitely crossed my mind, “What will people think?” That wasn’t a driving factor in the decision either way, but I did wonder how that would feel, and it’s interesting that there has been quite a bit of transition recently, and I bet just beyond Glenn and Patrick and myself, I bet there’re other folks here. I know there’s a lot of folks selling their aps and moving on to other things.
I think the thing to think about is – I don’t want to speak for Patrick or Glenn – but for me specifically, the micropreneur dream was to not work for someone else in a capacity that I didn’t enjoy, and to be stuck with that until I retired. These are the things. I didn’t work till I was 65 for someone, just trying to cram money into a 401(k) and just eke by and do the 9 to 5 and work my way up the corporate ladder. If you get fired or you leave that company, maybe you can do a lateral move. Maybe you won’t have as much trust. It’s kind of the rat race, right? I didn’t want to do that, and I didn’t want to work till I was 65.
[00:06:52]: So, while you can say at this point in time, this snapshot, “Yes, Rob now works for someone else again.” – something I haven’t done for about eight or nine years, I think, since I’ve been an employee at another company. But I ask myself: a, am I forced to do this until I’m 65? The answer is no, and that’s based on the financial means that happen from the exits and other things that I’ve had. The other thing is I’m working very much in a capacity that I really, really enjoy. I’m given this creative freedom. I could go into the specifics of it later, but I’m basically a product person. I’m doing what I was doing on DRIP anyways, but with a lot less headache and little to no – or, a lot less, I’ll say – financial risk. When you’re running your own company, you’re waiting to get just swatted by your competition, or to run out of funding, or to run out of money, or whatever, and that’s gone.
[00:07:38] So, I’ll just preface that by saying the fact that currently at this point in time I work for another company, given how different it is – so ten years ago, the last job I had, compared to now, it’s just night and day. I was basically a programmer just slogging away in a corporate environment. What I’m doing today is night and day, and I owe that to my entrepreneurship, and to the micropreneur journey. So when it’s like; Is the dream still alive? It’s like : Yes, it changed my life completely. Night and day. If I had not done that I would be in a completely different situation, with a completely different outlook and, again, I’d be slogging away, putting a couple hundred bucks a month into a 401(k), counting the days until I could retire and be in control of my own time. So, that’s kind of my initial thoughts, and we’re going to now dig into all matters of thinking through what this looks like.
Mike [00:08:23]: A couple of points that you made there which fed off the initial point, which was people start their business for a wide range of reasons. Some of these reasons are negative, and that’s because they want to move away from something. Then there’s other reasons why someone would start a business which have a more positive slant to them. They want to move toward something. Just to illustrate a couple of those examples, somebody might hate their job, or they hate their boss. There’re definitely reasons to start your own reason that have that negative slant. It’s because you’re trying to move away from a current situation. Rob just talked about the fact that he didn’t like his job. He was sitting there slogging away as a programmer, didn’t enjoy it. Those are the types of things that somebody would say, “I don’t like this. I either want to find a new job.” and that’s what the vast majority of people do. The other option is to start your own business to create a job that gets you away from that.
Then there’s the flip side of that, those things that you’re trying to move towards. It’s not to say that there’s only one reason to start the business. A lot of times these things factor into each other, and there are multiple things at play. You might want more money, or you might want some sort of financial independence. You might want to travel. You might want more time available to work on your hobbies, or spend with your family. Those are the ones that I talked about that have a much more positive slant to them. You’re moving towards something. Those are goals that you’re trying to achieve.
Rob [00:09:37]: Everything you have in this list are things that – these were goals that I wanted to achieve by getting out of just the salary employment of being just a 9 to 5 developer. So, I think this is really poignant, and I bet these things resonate, I would bet, with the majority, if not all, of our audience. The thing is I achieved all of these. Within a few years of even DotNet invoice, and in the early days, pre HitTail – these are all these little $2,000, $3,000, $4,000 apps. I hated my job, so I quit it. I hated my – I didn’t hate my boss – but I didn’t enjoy working for other people, so I left that. I did have a little more money. I definitely had time to travel, and I definitely had more time with my family.
[00:10:14] Then things change, right? Two years later, I personally got a little restless and got a little bored and wanted to have more impact on the world and do more interesting things, and working the four-hour work week wasn’t as interesting after a couple years. But it was amazing for the couple years that I did it. So I think that’s something to keep in mind. I don’t think you’re going to find your end state and be like, “Now I’m here, and I’m a micropreneur, and I’m independent, and I’m done for life.” None of us have done that. You look at Patrick McKenzie’s journey. You look at Jason Cohen’s journey. You look at my journey. Just everybody continues to evolve, because we’re entrepreneurs, and we’re ambitious, and we’re curious, and we need to constantly be learning. That means you have to do new things, and often those new things have to be bigger and scarier challenges, and oftentimes that may not look like you think it’s going to look. It may not look like raising a round and starting a big company. Maybe it means exiting your company and working for someone else to see if you can have an impact.
Mike [00:11:06]: That just kind of illustrates that the reasons that people exit their businesses is just as varied as the reasons that people start them, and some of those reasons overlap. For example, if you want more money and you want more financial independence, one of the ways to get that is to sell your company, to essentially get rid of all the responsibilities and the things that go along with it and essentially give yourself a financial reward for that that allows you to go do other things. The reasons you start the business can overlap very much with the reasons that you exit it.
[00:11:37] Now, I think that the biggest question to ask out of all of this is, “What is the end game for you?” I don’t think that there’s any right or wrong answer here that’s generally applicable to everyone, but it ties back to the classic “Rich versus King” argument. There’s two different variations of this. One of them comes from an article – we’ll link both of these in the show notes – but one of them comes from Noam Wasserman, who is a – I forget whether he’s at Harvard or MIT, but he’s a professor there who teaches about entrepreneurship. He talked about the idea of “Rich versus King” being a founder’s dilemma where you are trying to decide whether or not you’re going to take external funding. Are you going to try and build a business and make it huge and be rich because of it, or do you just want to grow it to the point where you are king of that particular industry, but you don’t necessarily don’t have a ton of money, because you didn’t take all the money, and you didn’t take any of it off the table.
[00:12:29] There’s another one a year after that, in 2009, by Jason Cohen, who talks about this particular dilemma as it relates from the standpoint of selling a company. Do you want to build a company and just run it as a lifestyle business – and “lifestyle” in air quotes, because Oprah’s got a lifestyle business, and she has quite a lot of money [laughs]. There’s different ways to look at that, but the idea is that you want to own that without giving up any ownership. That is your identity. You see it as an extension of yourself. The flipside of that is taking funding, going big – which may or may not work out – but it’s a risk. All these are about tradeoffs, about whether or not you’re going to take that external funding, give up some control. Again, it’s the classic rich versus king argument for that.
Rob [00:13:09]: Yeah, and the thing to keep in mind is as you go through this journey – I mean, I already touched on it for myself – but this journey of entrepreneurship is just that. It’s a journey. It’s a path, and your perspective is going to change. Whether you get married, whether you have kids, whether you start to travel, you’re just going to – that’s all going to shift you. It’s going to shift your priorities and your focus and the thing that you really, really value the most. To be honest, your current situation is going to heavily serve to shape your motivations. So, if you think about how things are going to change over time, let’s throw out some stages of entrepreneurship where step 1 is like, “Well, I hate my job. What can I do?” You go, and you find MicroConf, or you find this podcast, or one that – Justin Jackson, or Patrick McKenzie, or just somebody, and you follow them, and you figure out, “Oh, this is actually possible.” Right? Then maybe you validate an idea, and step two is building an idea, and three is launching, and four might be some growth.
[00:14:03] The, after that – let’s say you’ve quit your job at that point – what is the endgame? What is step five? Is it to just die with the most money? Is it to just sock money away? Is it to have freedom? Put yourself in the shoes of someone who has come from exactly where you are, and you’re working a salary job, and in your mind just getting out of that salary job is it, and you feel like you’d be happy for the rest of your life. That’s not what happens. Over and over, we see that it’s really good to have that motivation – for it to be strong – but once you get out of that salary job, you’re going to be super-happy for, I’ll say, a year or two, maybe three, depending on your disposition. Then you’re going to get restless, and you’re going to start thinking about, “What else could I be doing? This person over here’s doing something interesting. Maybe I should launch another product.”
[00:14:45] Or, you could perhaps even feel instability in your revenue. When I had HitTail at a certain point and Google tried to kill it two or three times accidentally, I suddenly realized, “Boy, I could lose my whole micropreneur dream that I have going right now overnight if Google decided to just nuke all the key words,” or whatever. So, certain things come up that then start making you think about, “What is next?” “What is next?” I think being in a steady state of just making eight grand a month, just enough to live, and trying to do that for 20 or 30 years – I don’t think any of us are going to be happy with that, and I don’t know how particularly stable that is. So, you have to start thinking about that. What is next? Is it to go bigger, or is it to diversify your revenue? Is it just to enjoy a few years of super-relaxed time and then think about what’s next? There’s a lot of thought that goes into this.
[00:15:30]: And you don’t need to think about that until you get there, to be honest. If you still are in a salary job and you don’t like it, your number one goal should be to get out of that. It should be to make enough money to get out of that. Once you get there, enjoy it. Live it up, and then when you do get bored, just think back to this episode and come re-listen to it. It really does come back to the arrival fallacy, right? You’re going to think that you will have arrived once you’re free from the 9 to 5, but it’s a fallacy. That doesn’t mean you shouldn’t do it, because it’s awesome to enjoy it for the time that it’s going to keep you happy – and that will be, like I said, one, two, three years, depending on your personality. Then you’re going to look at the next thing, and that’s how we grow as humans. We evolve over time.
Mike [00:16:06]: Yeah, I think the point of all that is even after you have, quote-unquote “arrived,” your life is still going to continue after that, so you still have to find things that are going to be interesting. Relating back to what you’ve said about the different stages of the micropreneurship, and the fact that your current situation is going to shape what your motivations are, in the early stages your focus is much more on yourself and your own needs : What are the needs of you and your immediate family, so that you can pay the bills and keep a roof over your head? Then it extends past that, and as you grow the business you extend that. It extends out to your family, or friends, or your co-workers, or employees. It extends out to your customers, and eventually to different parts of the region that you live, or the country, or the world that you want to have an impact. Over time, that impact is going to grow. The question becomes: How far is your reach? How much of an impact are you making?
[00:16:59] The goal of entrepreneurship is really to make an impact in whatever way is most appropriate for you. That question you need to answer for yourself is what do you want to have an impact on? I think I saw on Twitter Michael Pryor, who is the CEO of Fog Creek, had tweeted over to Patrick McKenzie – after he announced that he was going to be going to Stripe – and he said, “This is the perfect place for you to maximize your effective output on the world.” I think that’s a very poignant quote because of the fact that Patrick McKenzie is in a position where he probably doesn’t necessarily have to work for anyone else. But what is ultimately going to make him happy? He could go back to consulting. It didn’t seem to me like he particularly cared for that, although he could make a very successful career out of that if he wanted to.
[00:17:42] But the reality is that he comes from the bootstrapping world. He likes dealing with entrepreneurs. Looking at that from an outsider, I look at that and say: I agree with Michael. I think that going to Stripe and working with them to help entrepreneurs around the world, and small businesses, to succeed, that fits Patrick – from what I can tell – to a T. I mean that’s a perfect fit for him. With Stripe’s backing he essentially has resources that he can bring to bear on a problem that he sees as a worldwide problem of helping people to succeed with their businesses. The ability to bring Stripe’s resources to that particular problem – that is a huge impact for him. I think that, looking at that, if that’s his goal is to make an impact, I can’t think of a better way for him to do it. This relates back to the question of: What is it that you want to have an impact on. What are your goals? How do you achieve them? Even once you’ve achieved them, what’s next?
Rob [00:18:34]: Yeah, and there’s actually a pretty interesting chapter in Chris Guillebeau’s book. It was his first one. It was like “World Domination,” I think. He basically talks through entrepreneurship and some other stuff, and then late in the book he talks about legacy. He said at certain point, you got to start thinking, “What’s my legacy?” I remember reading this when it came out, which was probably – I don’t know – maybe 2010. At the time, I wasn’t ready to think about that. I remember dismissing that chapter out of hand, just being like, “I don’t even know what he’s talking about. I’m never going to think about that.”
[00:19:05] Then, lo and behold, a couple of years later I started realizing, “Wait. There’s something more here for me. Running businesses making $2,000 a month for the rest of my life is probably not the best use of my abilities. It’s not going to have the maximum impact. It’s not going to help people. It’s not going to help me and my family in terms of financially and freedom and all this stuff.” There’s so much that goes into this decision, and so I think at a certain point, as I said, you will probably start to shift and to think about your legacy.
[00:19:32] You know, there’s one other thing I wanted to bring up. I was thinking about Joel Spolsky and Jeff Atwood. I remember both of them just blogging in the early days. Joel Spolsky – what – around 2001, I think, started; and Jeff around the time I did, which I think was 2005. I watched Jeff move from a salaried employee to then working with Joel on Stack Overflow to then leaving Stack Overflow. Then they raised funding, and then he left and went to start his own – is it Discuss? Is that what it’s called?
Mike [00:19:56]: I forget what the company is called, but the product is Discourse.
Rob [00:19:58]: Discourse, yeah. Then the same thing with Joel. Joel was all about bootstrapping a real software company, and he built Fog Creek with Michael Pryor, which was awesome. Then when they started Stack Overflow, I was just totally shocked. I just thought he would run Fog Creek forever. Then when they raised funding, I was like, “What? But Joel always said don’t do the funding thing.” But then if you listened to his rational, it really made sense. They just had started a different business. He wanted to do something bigger. There was all this stuff that went into that decision to do it.
[00:20:24] So I think that’s even another story. I remember seeing that and hearing him talk it through, and being like, “That actually makes sense.” “That makes a lot of sense.” It didn’t tell me, “Oh, man, I don’t want to start a Fog Creek now,” which before I had wanted to start, like a software company. It didn’t make me think that I didn’t want to go down that path. It just made me think, “Wow, he’s just entering another chapter of that journey, and maybe I’ll get there someday.”
Mike [00:20:46]: If you look at examples of not just Joel and Jeff, but lots of other people in the bootstrapped world, as people grow their businesses, as they do things like that – they launch companies, and they exit them – it feels to me like they do bigger things over time. Nobody sets out to do something smaller than the last time. They want more challenges. They want to do things that are interesting to them, so the next thing always seems to be bigger than the last. It’s because people want to be challenged. Nobody wants to do the same thing over and over and over again. So, I think that what you’re seeing is as people move through this journey they start doing things that, to you, are unexpected, and it’s because you’re not necessarily in that situation. You don’t see all the things, and you don’t see the challenges that they’re having as boring. You look at them and say, “That’s exciting. I’d love to experience that.” But they’ve been through it probably numerous time, and they say, “I don’t want to do that anymore. Let me do something that’s completely new.” That’s why it makes sense to them, and from an external standpoint it really doesn’t sometimes.
Rob [00:21:41]: So, this is some stuff to think about, and this specifically relates to Patrick and myself and Glenn. The cool part is I think, a) this legitimizes this entire path of starting small. If you want to just stay small forever there are examples of people doing variations of that, where they just stay as the micropreneur, the micro [ISP?], and that’s totally cool. If you get there and you decide you want to do that, fine. But if you get there and you decide you get bored, this is the path. Look at what Patrick’s done. Look at what I’ve done. Look at how other folks have stair-stepped their way up.
[00:22:11] So, I think this: a) legitimizes it, but b) I think it’s cool that we’re still able to comment. We still have so much in common, right? Even when I was growing DRIP and we’ve been acquired now, I can still comment, I feel like, pretty intelligently on the early days, and how to – thinking about ideas and how to validate and how to find a market. I actually feel like I have more knowledge of that now than at any time previous. Just because I’m further away from it doesn’t mean I still don’t have a finger on the pulse of what’s going on there. Maybe over time, maybe in a decade, I won’t anymore. but right now I think the stuff we say on this podcast is still valid for a wide range of people, all the way from just trying to seek their idea, to building into a seven-figure SaaS business. I think there’s no question about it.
[00:22:57] The other good thing is there’re always people that’re kind of coming up behind us. You know, people who are currently earlier in the journey. So, you look at maybe Justin Jackson, [Kai?] Davis, maybe a Jordan [Dahl 00:23:09] from the Bootstrap Web podcast, Ryan Battles – I mean there’re people out there who really are focused on the early-stage stuff, and I think that that’s the cool part. This stuff’s all in flux, and people are at different stages. So there still is a lot of good information being created at all stages of this bootstrap journey.
[00:23:29]: So, the question I think we want to leave you with is: How far is your reach now? How much of an impact do you make, and how much do you want to make? The idea that entrepreneurship is – the goal of it – is to have an impact on yourself, on your family, and then maybe on the world? I don’t want to sound too grandiose, like starting DonNetInvoice had an impact on the world, but it certainly had an impact on my own life which allowed me to then change things, and change our lives. So, the question you want to think about as we leave this episode, I think, is: What do you want to have an impact on long-term? What do you want to start having an impact on? Maybe that starts with yourself. Then maybe the next one is your family – meaning you have more time, or you can travel with them. Then beyond that, that idea of legacy. How do you want to impact those outside of your immediate sphere?
So, thanks again, Scott, for the question.
[00:24:09] If you have a question for us, Mike and I very well may discuss it on the show. You can call our voicemail number at 888.801.9690; or email us at questions@startupsfortherestofus.com. Our theme music is an excerpt from “We’re Outta Control” by MoOt, used under Creative Commons. Subscribe to us on iTunes by searching for “startups” and visit startupsfortherestofus.com for a full transcript of each episode.
Thanks for listening, and we’ll see you next time.
Episode 306 | Mixing Subscription and One-time Pricing, Angel Investing, Options for Recurring Payments, and More Listener Questions
Show Notes
In this episode of Startups For The Rest Of Us, Rob and Mike answer some listener questions including mixing subscription and one time pricing, options for reoccurring payments, affiliate programs and more. Mike also gives some recent updates on his progress with BlueTick.
Items mentioned in this episode:
Transcript
Rob [00:00]: In this episode of Startups For The Rest Of Us, Mike and I discuss mixing subscription and one-time pricing, angel investing options for recurring payments, and more listener questions. This is Startups For the Rest Of Us, episode 306.
Welcome to Startups For The Rest Of Us, the podcast that helps developers, designers, and entrepreneurs be awesome in building, launching, and scaling software products. Whether you’ve built your first product, or you’re just thinking about it. I’m Rob.
Mike [00:33]: And I’m Mike.
Rob [00:34]: And we’re here to share our experiences to help you avoid the same mistakes we’ve made. What’s the word this week, Mike?
Mike [00:38]: Well, I’ve had a couple of pre-order cancellations in the past week, which is a little bit disappointing. But one of them never got to the point of going through the on-boarding process. They never even connected their mailbox to the system – to Bluetick – and their concern was essentially privacy. They were really just trying to limit the number of applications that have access to their mailbox. So there is really no way for the software to work right now without that, and I can think of things down the road that might enable that, but it’s just not going to happen any time soon.
That was one of them. And then the other one, they had some other tools that they were looking to replace and then the vendors came back and implemented some of the things that they were lacking that I was building. So it’s unfortunate on both of those things, but the first one there’s really not much you can do about that, and then the second one, I mean, that kind of thing is just going to happen. Like I said, it’s a little disappointing, but I don’t think that it’s any reason to panic at this point.
Rob [01:29]: I think that other vendor building that extra feature is a bummer, but it’s not the end of the world because you just need to out-feature them, right? You need to stay ahead of them and innovate and stuff. Is that competitor a large competitor that you think could swallow up the market, where everyone’s going to be telling you – kind of like when MailChimp launched automation and everyone was saying, “Oh no, and MailChimp launched automation. Is that better than Drip?” and then we just had to keep addressing it. Is that what it’s going to be? Or is this competitor kind of an also ran or a lesser known player?
Mike [01:56]: No, they’re a big competitor, and they’re funded. And – how do I put it? The things that they implemented still don’t completely overlap with what I’m doing. The reason that the person was switching was they had a short list of things that they had that they needed that the vendor just simply didn’t have. And then when the vendor went in and added them, they’re like, “Oh, I’m sorry. The vendor just added a bunch of these things. And they were the reasons why I was going to switch away, because you had them and they don’t. But I have all my systems set up through them.” So it would have been painful for them to switch, and there’s a lot of other things that they probably use with that vendor that the customer would have had to wait for me to implement. So it would have been kind of painful, and because it was so integrated in those processes, it would have been difficult for them to switch. So it’s probably best that this happens now kind of and left the door open to possibly switch over at some point in the future.
Rob [02:44]: I think you’re going to hear this again. So I think you’ll either need to figure out a way to counter that objection, or build out enough functionality that someone would consider leaving whole-hog from that vendor over to you, or from that competitor over to you. Because otherwise, I have concerns that if they become the de facto for this type of sending, and everybody knows that, it’s really hard for you to get a foot-hold in the space.
Mike [03:07]: The thing is, they don’t even do like the email sending. So that’s the thing, is like it was just this customer wanted certain features that the vendor didn’t have, and the sending of the emails would be really nice and helpful, and that’s not what they have and it’s not what they implemented, but they implemented enough that it’s like, “Okay, well, yeah, I’ll stick around for a while longer.”
Rob [03:26]: Right. But then the other one I’m actually more concerned about the fact that he didn’t want to connect it due to security issues? I think other people are going to balk at that as well. What kind of education could you put in place – I’m brainstorming here. How can you educate people? How can you overcome that objection in the future, because if one out of – what do you have 10 or 15 pre-orders? And if one person out of that many cancelled, I have to imagine that that’s going to come up again.
Mike [03:51]: I had pretty in-depth conversation with them about it, and it feels to me like it’s much more of an edge case than, I’ll say, a mainstream thought about limiting the number of applications that have access. So one of the things right now that I don’t have implemented is any sort of OAuth mechanism to access the mailbox. It’s all directly done through one-time passwords if you’re using Gmail, or just the regular passwords if you’re using other mail servers. So that’s something that I could use to allow me access without having to provide the credentials into my system, and then they can revoke it at any time on the other side. You can do that with one-time passwords as well, but there’s only so much that you can speak to those types of points. I mean, if somebody is just not fundamentally not comfortable with your products interacting with their mail server, there’s really only so much you can do. And I think that there’s enough people that are okay with it that that’s not going to be a big deal.
Rob [04:44]: Yeah. I think you’ll know more as you have tens and/or hundreds of conversations. Then you’ll start to see a pattern. We had concerns in the early days from early customers about deliverability, because they just – it was an unknown. And that was a big thing we had to educate them on, because they kept saying, “I’m on MailChimp. How do I know your deliverability is as good?” And at that time, we were actually sending through, essentially MailChimp servers, right? Because we were using Mandrel, and so we always brought that to the table and basically said, “Look, our deliverability is as good as them. We actually ran parallel tests and we saw the same results. It was within a tenth of a percent deliverability either way.” And so we took the time to really focus on that one, because it was – we don’t get that almost at all anymore, because we’re just now, you’re accepted as a major player, but in the early days, that was for some reason this big concern of everybody’s, and it’s funny because that’s never been a concern of mine. I know you need to worry about it, but I figure if someone’s sent an email, they probably know what they’re doing.
But all that to say, I think that in the early days since you’re not a brand name, and since people don’t know who you are, that you are going to hear these types of things, and the more you can have prepared to really address it directly, and to be like, “You can revoke this at any time. These are the only things we look at…” and blah, blah, blah – whatever you can do to basically minimize it. You’re never going to talk everybody out of that concern, but if ten people raise it over the next six months and you can maybe talk five of them out of it – and it’s really education. It’s not even talking them out of it, it’s just educating them to the point where their fears are allayed, I think you’ll be in good shape.
Mike [06:09]: Yeah. I mean for the, I’d say the first batch or two that I’ve added in, I don’t know if that’s going to be too much of an issue. Most of the people I’m talking to know what my background is, and I can explain to them, “Okay, this is how everything’s encrypted. All your user names and passwords are encrypted. You can’t even get the user names and passwords of mail servers out of the system. There’s not a way to do it. You basically have to crack open the system, hack into the entire server, pull out the database, and then decrypt the information inside of the database for each of the records.” And at that point, there’s much easier ways of getting information.
But I also understand that access to your entire mailbox could be a huge issue for some people. So, as you said, there’s only so far you can take that conversation and try to convince somebody that, “Hey, this is going to safe – or at least reasonably safe – and you’re not going to have to worry about it.” But my bigger concern is down the road, when there’s people who are signing up that I’m not directly talking to, that I’m not having those conversations with. And I can’t answer those questions, because they’re not asking them. They’re on a website.
Rob [07:11]: And that’s where having that as a question right next to the credit card form, or right below it in the FAQ on the pricing page, or just something where it’s pretty prominent, I think is going to be a win. That’s where these early days of hustling and talking to people builds up not just your customer base, but it’s education of what the standard objections are. If you start noting these down somewhere in a Google doc and you’re able to say, “This was the objection, this is the reason why that’s not a big deal,” and I saved reams of those things. I probably had 20 or 30 by the time that we launched Drip. I had objections, I had FAQs, and answers I provided via email. So I just had it all as text, and then we basically pulled from that to build the marketing site, and not only the marketing but the FAQ piece of it. That’s such a big win. That’s something you’re pulling out of right now. The learning right now is worth way more than the revenue.
Mike [08:02]: Oh, definitely. I have probably 50 or 60 pages of notes and in various Google docs with like – every time I have a conversation with somebody I take notes on it. So I keep all those notes in those Google docs, and I date them all so that I can just go back through and eyeball it and see who I talked to, and when I talked to them, and it’s all in one spot. Actually it’s in several different spots, but I think it’s in five different documents based on when I talked to them. So I keep each conversation in a single document that maps to where in the sales funnel they were at the time I had the conversation.
Rob [08:31]: Very cool. From my end, when to log in to my calendar app, it’s on my iPhone, which is called Sunrise. Have you ever used it?
Mike [08:39]: No, but I’ve heard of it. Didn’t Microsoft acquire it?
Rob [08:41]: They did, and in typical funded startup with no business model, Microsoft acquired them and shut the app down. And there’s been a bunch of notifications and so this is not a surprise, but it’s such a bummer because it is by far, in my opinion, the best calendaring app on the iPhone.
Mike [08:57]: Minor correction there, was.
Rob [08:58]: Was the best. Thank you very much. So I’ve switched. I’m using Tiny Calendar right now which is fine. And the Google calendar client for IOS, it’s decent, right? It’s not terrible but – and I’ve also tried to use the Outlook IOS app because they basically bought Sunrise and then tried to integrate some of that into Outlook, but it’s not the same. It’s nowhere near as polished and the UX just isn’t as good. So thanks to Derrick Reimer for initially introducing me to Sunrise, and now I think we’re all looking for a replacement of that.
And that’s a bummer. I don’t like it – it kind of irritates me when a startup starts with no business model and you’re just counting the days until they get acquired. I mean, right? In most cases that’s what’s going to happen. They’re either going to go out of business because they ran out of funding, or they’re going to get bought right before they ran out of funding, and the app’s going to shut down anyways. So it’s a little bit irritating.
Mike [09:45]: Definitely disappointing. So other Bluetick news here is we’re testing a pretty massive update to a lot of the backend infrastructure where we’re introducing an event messaging system, so that as different things happen in different parts of the application, that it will be able to send messages back and forth. And it allows us to react to different things that happen. So if somebody opens an email you can trigger a message that will perform a bunch of different actions. You can chain those things together. And there’s a huge amount of work that’s gone into this, but it’s kind of nearing the completion phase, but it allows the entire system to be a lot more scalable. And because those messages can be just pulled off a queue and processed, and if anything fails along the way then it’ll reprocess it. Obviously, there’s a lot of care that you have to have in certain cases where, if you don’t want obviously an email that could be sent more than one time, then you have to be very careful about concurrency aspects of that stuff, or whenever certain things are being shut down or started up. But like I said, it’s a huge update that we’ve been testing for probably close to two months now.
Rob [10:46]: Oh, man. Wow, that’s a long time, man.
Mike [10:50]: Yeah. Some of the stuff is just things that we’ve never worked on before, and then there’s error messages that we have to try and figure out exactly what they mean. I read one to you earlier. For the listeners, the error message I’m getting is, “The condition specified using HTTP conditional headers is not met.” which doesn’t mean a whole heck of a lot. So there’s a little bit of research involvement in some of this stuff.
Rob [11:09]: “Stack overflow. Help me!”
Mike [11:13]: Yeah, no kidding. No kidding.
Rob [11:14]: Cool. So well let’s dive into questions. I think we were talking about doing a more in-depth updates episode in the next few weeks, so we can dive further into this kind of stuff. But we have a bunch of questions today. I don’t think we’ll get through all of them. And actually, if you listen to this and you have either a topic suggestion for Mike and I to discuss, or a question that you have about anything startups, SaaS related, even tech related, tabletop gaming related – no I’m just kidding about the last one – but send it in to questions@startupsfortherestofus.com, because we are at this point running a little bit low on questions, so I bet we’ll be able to answer your questions sooner rather than later. And at this point we do have some guests lined up over the next few months. We don’t need topic suggestions with a guest included, because we don’t like to do a ton of interview stuff, because we’re not really an interview show, but definitely questions or topics are welcome.
So our first question is from Brian Matheson and he says, “Hey guys, many thanks for all your work on the podcast. I’m a big fan and I’ve learned a lot over the years. I’m a freelance videographer and I’m working on launching a new project that doesn’t require me to do stuff on a project by project basis. I want to collect recurring payments and communicate with businesses in this new project. At the moment, my plan is to use Stripe and link that up to my CRM. I’ve been researching payment systems, but Stripe looks like it offers the best long-term rates and compatibility with payment methods as well as CRM and other software. I’ve never dealt with recurring payments before and my question is, should I go with Stripe or are there alternatives you’d recommend? Also, are there any pitfalls I should be aware of, or advise you could give regarding setting up and managing recurring payments? Thanks for your help. Brian.”
Mike [12:53]: So one piece that you actually left out in that was he had said, “My intention is to begin with annual licenses, though I may offer monthly plans in the future, and potentially even three or five year deals for some material.” I think that based on that piece of information, I don’t know as I’d worry too much about the recurring payment side of things, because if you’re charging people on an annual basis my guess is that the price points for those are likely going to be high enough that you’re going to have to have conversations with people just to get them sold on it. And then you’re going to have to invoice them. So I would look for something that allows you to send invoices and then make sure that they get paid. There’s a lot of different pieces of software out there that do that kind of thing. FreshBooks is one, for example. There’s probably a bunch of others. I’m probably most familiar with FreshBooks. But there’s a variety of different ways to do that.
The other thing that you could do is you could wire up your website to take the payments through Stripe and then have just like a special page – or a set of pages – to one side that are private or hidden from the public world, and you just send links to those pages to get people to pay you online. I don’t know if I’d worry about the recurring aspects of it, just because I think that people are probably going to be a little bit leery of giving you a credit card for that they know is going to get paid on an annual basis. Now, that’s not to say that you can’t do that in the future, but I think that getting started when you’re spending all this time trying to focus on that piece is probably the wrong place to be focusing your time.
Rob [14:12]: I would agree. If you’re going to have a high price point, you’re either going to invoice. If they are willing to prepay with their credit card, that’s great, so you don’t have to do Net30 or whatever. In that case, I would really consider just setting up a WordPress install on WP Engine and then buying Phil Derksen’s plug-in called WP Simple Pay. In fact, I think they just rolled out subscription support, so it’s pretty simple to get that kind of thing set up and not have to worry about another layer. There are services like Recurly and Chargify that are SaaS apps, and they provide you with subscription billing infrastructure. But for what you’re doing, it just doesn’t sound like you need to scale that much. And they charge an extra chunk on top of your Stripe fee, whereas something like WP Simple Pay – and I’d imagine there may be a non-WordPress approach that’s similar to that that you could buy that would make it simple for you to just get that up and running if you do think people are actually going to want to sign up on your website. But as Mike said, if you’re going to be having conversations with them anyways, and it’s going to be either in person to start with or phone, then as far as I know, you don’t even need the website piece of it. I think you could set up a subscription right through just the Stripe web admin area. As long as you get their information from them, you can just start billing them right there, and things should work. That’s probably the simplest way. And I agree, Stripe compared to a traditional merchant account, or PayPal web Payments Pro, hands-down, I would go with Stripe, as long as it’s available in your country, and it sounds like it is.
Mike [15:36]: The other thing to keep in mind is that because you’re doing an annual payment for this stuff, you’re essentially just kicking that problem down the road by 12 months. You don’t have to fix that problem now which is, it sounds like you’re trying to fix the problem of scaling those payment systems, and you’re just not going to have the volume right now to have to really worry too much about it.
Rob [15:55]: So thanks for your question, Brian. Our next question is about pricing. It’s about mixing SaaS – or subscription – and one-time pricing. This is from Basel at Techsol Software and he says, “Hey, we just launched our product Clock. It’s a cloud time and attendance-based solution. So it’s at clockit.io. As part of generating some immediate cash flow we’ve been speaking with companies who are willing to buy for a one-time cost. Usually, it’s our expected lifetime value, plus an annual maintenance contract of 20%. Is it common for SaaS apps to do this? What, in your experience, are the pros and cons?”
So one piece about this I’m a little confused about is, he says, “Usually we’re trying to charge the lifetime value up front, and then have an add-in annual maintenance contract,” Typically, you figure out what the monthly subscription fee would be, you multiply that by 12, and you either charge that, or maybe charge 15% discount on that amount or something. But I’m not sure how he’s calculating “lifetime value”. Because let’s say your lifetime value for a time-based solution, it might be – for a time clock solution – it might be three years or four years of a lifetime. So if you charge ten bucks, is he then multiplying that by 48 and charging all of that up front with annual maintenance at 20%? I’m a little confused by that specific piece. I think exact numbers would be helpful here, but maybe we can answer it even with that kind of confusion in mind.
Mike [17:18]: Yeah. I think the issue here is that there’s a little bit of confusion, or crosstalk, between the idea of the delivery of the product versus how something is being built. And I understand how this is very confusing, because people tend to talk about them as being the same thing for a SaaS product, where you are delivering it over the web and you are billing for it on a recurring basis – whether it’s monthly or annually, it doesn’t really make a difference. But I think in this case what you’re really talking about is that SaaS is the delivery model, where you’re delivering it over the web, and it has whatever those ongoing costs are, but then your pricing model is actually much more geared towards a one-time fee. So it feels odd to me that somebody would do this, because there’s going to be those inherent costs moving forward for being able to deliver the service. And if you’re just charging them that one-time fee, as if it was a one-time downloadable piece of software, then it seems to me like you’re probably going to run into problems down the road at some point, in terms of the profitability of each of those customers. Now if they stop using it after 12 months or 15 months and you’ve charged them for what would have effectively been 24 months, then you come out ahead. But there’s going to be those customers that sign up and you expect them to stick around for 12 months, and then they end up sticking around for 5 years. I know somebody who runs a SaaS app that does time tracking, and a lot of their customers have been customers for five, six, seven, eight years, and they don’t leave because it’s just a pain in the neck to change. They’ve already got it integrated in all their systems.
Rob [18:46]: I’m not sure I have much to add to this. I think that trying to charge a lifetime value up front sounds a little weird to me. It’s more of an enterprise approach to things, and I think that one of the benefits of SaaS is that your revenue is fairly even. Even if you have some annual and some monthly plans, it is just a more stable revenue stream. So it’s easier. It’s more predictable, it’s easier to build a business on that. If you do this, it’s nice to get all the cash up front, but then realize you’re going to have to be perpetually selling and getting only that 20% renewal is going to be kind of painful. Imagine if you sold pretty hard for a year and you got revenue up to – whatever – half a million, or a million that year. The next year you only have 20% of that that’s recurring. And so that is an unusual approach. You’re not going to get SaaS multiples doing that, because you’re essentially taking so much cash up front that you don’t have a ton of long-term value. And so it all depends on your goals and all that, but I would personally consider having a more even keeled thing and just charging the same amount every year. That’s the model that I’m typically seeing working.
Mike [19:51]: Especially on a SaaS model where you’re continuing to deliver it. And I think that that’s the piece that is the difficult part here is because essentially you’re telling them, “Hey, you’re going to have to pay full price for this first year, but then every year after that, you get an 80% discount.” That’s difficult for you as a vendor to make work.
Rob [20:07]: So thanks for the question. Hope that helps.
Next question is from Bob and he says, “Should I seek investment advisors or both?” He says, “I have a product where the lifetime value is between $500 and $1000. I currently spend nothing on anything but my own expenses, minimal hosting costs, and as a result the product has been ramen profitable for years. Due to various reasons, this has now become my primary source of income. The product market fit is nearly perfect. In recent months, surveys have said they would not change a single thing about the app and more than 80% of users would be somewhat, or extremely disappointed, if they could no longer use the product. I have to do so much work to move it beyond ramen profitability, but I don’t really know what to do. I’ve read and read and read, but I’m paralyzed with the potential monetary black holes that I cannot afford because of the aforementioned ramen profitability. So my options as I see them are: number one, try and get another source of income going. Option two, take on an investor. Option three; take on an advisor who could guide me on next steps. Option number four, take on an advisor who is also an investor, and option five is find some low-hanging fruit.” What do you think?
Mike [21:08]: I think what I’m not clear about is what things have been tried at this point? So it sounds to me like the product is stable and it’s making enough money to support you, but probably not much more than that. And I think that that puts you in that difficult position, where your app is not growing enough – the app has stable income – but the growth curve is simply not there. And in order to push on that and make that growth curve higher, then you need to spend money in order to do it. And running all those different experiments to do different things to try and push the app forward, it’s resource intensive, in terms of cash and time and everything else, and that’s just a difficult position to be in. And I think it would depend a little bit on how many of these different things you’ve tried, and how many that you’re looking at that you think would be likely to succeed. And you have to do a risk analysis to figure out whether those are things that you want o try or if you’re just going to go in another direction and potentially offer a completely different product, or find an overlapping market where you can sell a product that solves a different problem to the same audience, which is probably the better direction to go. But I don’t know specifically what the product does, so it’s hard to judge whether or not that makes a lot of sense.
In terms of taking on investors, or advisors who are also investors, that seems to me to be pretty risky. It’s hard enough to get something to a profitable point where you’re making enough money that it supports you, and basically putting yourself in a position where you owe somebody else something seems like it’s probably the wrong approach. I might look around to see if there are mastermind groups that you can get in. Talk to other business owners. I would go that route first. Unless you stumble across something where you really are almost sure that by getting an investor you know what channels need to be pushed, and what gas pedals need to be pushed, in order to make the products much more profitable than it is, but you need the money in order to do that. I don’t think it’s a wise idea to get the money in order to run those experiments. You need to know what’s going to work first, and then spend the money on it, versus trying to use that money to basically guess at it and run the experiments. That’s the classic problem that most people who start out and they’re looking for funding are running into, is that they try to get funding to fund their business so that they can run experiments. And investors don’t want that. They want a business where they know that they can put money into it and they’re going to get more money out of it. They want all that experimentation done and out of the way up front, so that they can just push on the gas pedal.
Rob [23:38]: Yeah. I feel like we’re lacking some information to properly advice on this. Like, I’m wondering, you have product market fit, but do you have 10 customers? Do you have 100? Do you have 500? What’s the pricing model like? There’s things that I would need to think through before I could even consider giving advice, but to me it’s like finding the next lever, right? And I think the reading and reading and reading isn’t super helpful at this point. Obviously, it’s paralyzing. But it’s like, what is the problem that is keeping you from making more money? Is it a pricing issue? What do your competitors charge? Do you think you could increase pricing 50% tomorrow, and – not on existing people but on new people? And do you think that that would have an impact on your bottom line and not hurt sign ups? Or just run the test and just do it. Just increase it 50% and see what happens. That’s one test you can run.
Another one is, it’s a question to ask, is how many uniques do you get per month, because if you get 1,000, then you have a traffic problem then, right? But if you are only converting a tiny percent of people to a trial that hit your website, then you have a conversion problem. And if only few people are getting on-boarded and you’re bleeding them out after the trial, then you know you have essentially an on-boarding problem. And so that’s what it is. Identify the next thing that just looks all – that looks messy. And you know in that episode with Ruben Gomez, it’s what, 50 episodes ago, we laid out specific numbers and percentages that I like to see, and I know that if we don’t hit those that we have a problem in that area. I also outline these in at least one Microconf talk – and unfortunately, I forget which – but that’s where I would look if I was trying to improve this. The question of whether to take an investor or do it yourself is: Do you have the energy to attack it? The paralysis, you’re going to have to get over that, and you’re going to need to either talk to somebody, you’re going to need to get into a mastermind, like Mike said. Some exterior voice is going to help you push past that.
Mike [25:19]: I think the paralysis much more – other than the fact that certain experiments just take a lot more money – or he’s perceiving it to take a lot more money than he has available.
Rob [25:27]: But all this stuff you can do without money. I mean, with almost no money.
Mike [25:30]: I agree.
Rob [25:31]: That’s the issue. It’s like when I was bootstrapping back in the day, I had almost no money to spend on this. These days I do things differently and I can move faster. And if you raise funding you can certainly move faster. But if you want to do it yourself, you can do this yourself. And you can do it with not a ton of money. It’s just going to take longer. That’s my take on it. And so I think trying to find an advisor, if you have zero network and you’re trying to find an advisor, it’s like, “Good luck.” I think that’s going to be very, very hard. Just because everybody is busy. In fact, the people who know how to do this stuff are busy with their own projects. Finding an investor with zero network, it’s certainly possible, but there’s a lot more that has to be done. It’s not just something that – those are the harder roads to go unless you already have ins, you already know somebody who can vouch for you, you already have some type of online reputation, you have something to show for it. If you don’t, then I would personally turn your head towards your app, think about what are the quickest wins and what are the ways to do that without spending barely any money, because there are those wins out there. Right? There’s the SEO and there’s the content marketing which means you create it – whether that’s a video or text or audio. There’s social media stuff, there are a really cheap clicks. So it will take a little bit of money, but there are really cheap clicks on some sites these days. There are a lot of cheap/free – except for your time – marketing approaches, and those are the ones that, if you have a traffic problem – again it’s identifying if it’s a traffic problem then do one of those things. The conversion stuff. If you already have enough traffic and you’re just not converting, then it’s looking at what other people have done, like how does DRIP do their on-boarding and why do they convert so many people into their trials? It’s thinking through how to optimize this stuff. So I think with more specific information, we could probably make a better recommendation, but that is the thought process I would use to go through this.
So our next question is actually two questions, both about affiliate programs. So the first one is from Eton, and he says, “Hey guys, big fan of the show. I would love to hear about affiliate programs. In particular, how that plays into DRIP’s growth as a marketing channel, experience working with Ambassador, et cetera.” And then there’s another question from Robert Brandl from chattooltester.com and he says, “How do you set a program up? How do you find good affiliates? How much do you pay them? Your own experience, et cetera.”So it’s just kind of a little quick mini-episode maybe here on affiliate stuff.
Mike [27:38]: I have very little to offer on this, because I’ve just never really gotten into like the whole affiliate marketing thing. So why don’t you go forward?
Rob [27:45]: Yeah, cool. I have some thoughts on this. So in terms of affiliate marketing as a marketing channel, I think that I have used it on a couple of products, and certainly have had affiliate programs for most of them. I’ve seen really mediocre results in most cases. You have to be extremely deliberate about it, and I think if you have a really strong network, and you have a network of people who have audiences, or you’re willing to build that network, I think affiliate marketing can be exceptional. If you look at Leadpages, all their growth in their early days was from affiliates that Clay Collins knew, because he was an information marketer and everybody respected him, and he knew all these people from speaking at conferences and they had already done JVs for info. So then when he launched this software, there was a bunch of people lined up that he knew that had these massive audiences – 10,000, 100,000-person email lists. If you have that – very, very few people do – but if you have that, affiliate marketing is going to be awesome for you.
If you are literally going to sign up for Ambassador or sign up for referralsaasquatch.com or whatever else affiliate programs you have – and if you’re going to do it, I would definitely recommend finding a SaaS app to do it – that’s the best way to set it up. Just setting it up and then pinging your customers periodically, kind of promoting it, sending them emails, it’ll work. You can build a decent channel there, but it’s not the number one thing I’d be doing. If you really are time-constrained, and you’re bootstrapped, and you’re focused on getting new customers, without the network, you do have an uphill battle.
Now how to find good affiliates? I think that’s all about the network. I think cold approaching people can work, but you have to have something to bring to the table. And you have to have a better product and you have to have a really nice affiliate commission. So think about it. If you’re a SaaS app, the range I’ve seen is recurring subscription affiliate commissions, and I’ve seen it range between about 15 and about 30%. I think these days like an email marketing as an example, AWeber pays 30%, and I think MailChimp might pay 25%, and Drip pays 30% as well. And I think Leadpages pays 30%. So that kind of gives you an idea of where marketing SaaS apps fit, but other industries and such may have different norms, so you really just want to take a peek at some affiliate programs and see where you wind up.
Those are really my general thoughts on it. I think that affiliate marketing can, and has been, a really good channel for some SaaS apps; some people launching software. But it really does mean I think you need to have your own audience, and then have good network and a solid network of other people who are willing to promote it up front. Otherwise, I would prioritize affiliate marketing and blow a lot of the other marketing approaches that we talk about here on the show. So thanks for your questions guys. Hope that’s helpful.
Mike [30:10]: So as Rob said at the beginning of this show, we are looking for questions, so if you have a question for us you can call it into our voicemail number at 1-888-801-9690, or you can email it to us at questions@startupsfortherestofus.com. Our theme music is an excerpt from We’re Outta Control by MoOt used under Creative Commons. Subscribe to us on iTunes by searching for Startups and visit startupsfortherestofus.com for full transcript of each episode. Thanks for listening and we’ll see you next time.
Episode 305 | Strategies for Taking Pre-orders for a New Product
Show Notes
In this episode of Startups For The Rest Of Us, Rob and Mike talk about how to take pre-orders for a new product. These are strategies that can be used to help gain interest and validate a product. They also discuss some motivations and benefits to taking pre-orders.
Items mentioned in this episode:
Transcripts
Transcripts
Mike [00:00:00]: In this episode of “Startups for the Rest of Us,” Rob and I are going to be talking about strategies for taking pre-orders for new product. This is “Startups for the Rest of Us,” episode 305.
Mike [00:00:16]: Welcome to “Startups for the Rest of Us,” the podcast that helps developers, designers and entrepreneurs be awesome at building, launching and growing software products whether you’ve built your first product, or you’re just thinking about it. I’m Mike –
Rob [00:00:25]: And I’m Rob.
Mike [00:00:26]: – And we’re here to share our experiences to help you avoid the same mistakes we’ve made. What’s the word this week, Rob?
Rob [00:00:30]: Well, it’s nice to be in a big city where a lot of musical acts are coming through, and this week we are seeing not one, but two, bands, or acts, at this club called First Avenue, which is this icon of Minneapolis. It was featured prominently in that movie “Purple Rain,” and I think Prince owned it at one point, so it’s this club that’s been a club since the ‘70’s, and it’s just a very popular club. Anyway, we saw Lauren Hill, former lead singer of the Fugees, a couple nights ago. Then we’re seeing Explosions in the Sky tomorrow, so aside from the same stuff that I’ve been saying for the past four or five episodes, of we’re almost done unpacking, it feels like transition is coming to an end, we’re hiring several people at Drip, and things are moving forward and going pretty well in general, that’s the other thing that’s new.
Mike [00:01:13]: You know, when you first mentioned you were going out and seeing a couple of musical acts, my first thought was you’re going to get to hear the entire soundtrack for “Frozen,” or something like that.
Rob [00:01:21]: Yeah, right.
Mike [00:01:22]: Laughs.
Rob [00:01:22]: I mean that’s a lot of what we did – well, not a lot of what we did, but I think that tends to be the default. You get the musical stuff coming through that is kid-appropriate. It’s easy to bring them, and it’s been fun to do some grownup things, too, which the big city really allows that pretty easily.
Mike [00:01:37]: Cool.
Rob [00:01:38]: How about you? What’s going on?
Mike [00:01:38]: Well, I’m finally back to normal in terms of my back issues. I don’t think I really talked about it on the podcast, but I was kind of out of commission for about a week, week and a half with a pretty severe spinal problem. So, back on my feet now. I can actually stand and walk around without too much trouble, and kind of getting back to things and plowing through the work that has been stacking up a little bit. The other thing I do have is a listener sent us an email about an episode we did back in 303, which was our favorite tabletop games, and he runs a company called Playtable.xyz. So, if you go over to that website, they have – essentially, it’s a tabletop game device that you can put down, and you can play tabletop games on it. The focus is on being able to minimize the setup and tear-down time for some of the more complicated games and to be able to streamline the rules so that you don’t have to go look things up, and it gives a little bit of visual flair to the tabletop games. I checked it out. They’ve got a video up and got a mailing list that you can sign up for. It looks pretty cool.
Rob [00:02:33]: Yeah, I checked it out as well. I’m intrigued by it. I’d like to see how many games they get on it and how expensive they are and that kind of stuff, but certainly it’s an interesting work-around instead of having to read all the paper rules all the time. That’s something I like. You know, we talked about Pandemic a couple episodes ago, and there is a Pandemic for the iPad, and it’s really cool –
Mike [00:02:51]: There is.
Rob [00:02:51]: – Because you don’t have to remember all the stuff. You just move around, and it really helps guide you. I think it’s – once you know the rules of Pandemic, it’s easy enough to play, but those first couple of games are pretty painful just trying to remember everything –
Mike [00:03:01]: Yeah.
Rob [00:03:02]: – And that’s what the iPad kind of – it’s scaffolding that helps you get their faster, basically.
Mike [00:03:07]: Yeah. Some of those games, it’s not even just all the rules. It’s all the little markers and stuff that you have to put on the board for all these different things. Then there’re special-case situations that an app will just take care of that stuff for you. I think there’s a bunch of apps for some of the games that we had talked about. I’m pretty sure there’s one for Catan. There is one for Pandemic. There’s also one for Small World, which I think was only $6 or $7, but if you buy the board game itself, it’s 40 or 50 or something like that.
Rob [00:03:32]: Oh, jeez. Okay.
Mike [00:03:33]: Yeah, so there’s a huge price difference between them, but it’s on an iPad so it’s not nearly as expansive; but you do get the abilities to play against computer opponents. So, if you like to game, you can do that.
Rob [00:03:44]: Yeah, that’s nice. Cool. So, what are we talking about today?
Mike [00:03:47]: Today, what we’re going to be talking about is how to take pre-orders for a new product. These are essentially strategies that you can use to go out and, if you have an idea that you’re trying to validate, or you’re trying to get people interested in it and trying to figure out what it is that you actually need to build, then you probably want to get to a point where you’re going to be taking pre-orders for that product. That product can be a piece of software, it can be a book, it can be a service, it can be a course. Depending on how long it takes and what your time investment is going to be, you want to be reasonably sure that people are going to pay for it afterwards. You don’t want to spend six months or 12 months building something and then try to find people to buy it. I think we talked about it before. James Kennedy at MicroConf Europe had said that sales is really about finding out what people want, going out and getting it, and then delivering it to them; and you have to do it in that order. And if you try to build something and then go find someone to sell it to, you’re in a much more difficult situation, because now you’ve already put that time investment in, and it may not have been the right time investment. So, taking pre-orders is a step along that process to identify whether or not you’re on the right track. So, let’s talk about some of the motivations for taking pre-orders. I think the first motivation is risk mitigation. Are you going to be able to find people who are willing to pay for this? Can you convince those people that it’s going to solve their problem? There are a few caveats here, because if you’re talking to people individually and one-on-one, it’s much easier to sell somebody on the idea than it is if they were to come to your website; but that’s also the intent behind this. You want to have those conversations so you’re talking to them directly and you get the feedback about what sorts of hurdles you’re going to run into, or what questions they have, so that you can use those questions to put on the website that talks about those objection points that they might have.
Rob [00:05:36]: Yeah, and I think risk mitigation is a really nice benefit of asking for pre-orders. I think there’re obviously a lot of different ways to mitigate risk in terms of having a product idea that you don’t know if anyone is going to buy, but this is perhaps one of the best. Building an email list is another one. Talking to people and getting a verbal commitment is another one, but until someone actually makes purchase you don’t know for sure if they, in fact, will do it, right? We’ve heard people different doing it different ways, where you get a check that you’re not going to cash, or where you get the credit card and actually charge it and tell them you’ll refund it if stuff doesn’t work out. But I think this is an intriguing way to do this, and I think that it requires probably a lot of chutzpah to ask for money up front, especially if it’s someone you don’t know. I think if you tend to know people and they trust you’re going to deliver, makes it a little easier; but I do think that doing this is an interesting idea. We’ve talked about this in the past. I have always tended to build the email list rather than actually as for pre-orders up front – than actually take money. There’s a bunch of logic to that, that maybe we can cover in this episode, of why I’ve done that; but at the same time, I do think that, single-handedly, risk mitigation may be the single biggest reason that you may want to lean towards actually taking pre-orders.
Mike [00:06:48]: Let’s expand on that a little bit right now instead of trying to talk about it or come back to it later –
Rob [00:06:52]: Sure.
Mike [00:06:52]: – Because building the email list, I think in many ways, serves as a proxy for asking for money –
Rob [00:06:58]: Exactly.
Mike [00:06:58]: – And that you can use that as – there’s people that have signed up for my mailing list; and, sure, I’ve got 1,000 people there, but not all of them are going to buy, but some percentage is going to buy.
Rob [00:07:07]: There you go.
Mike [00:07:07]: The question is what percentage is that? You don’t really know, and taking the pre-orders and actually taking somebody’s money for it is not even just a proxy for that email list. It is actual money that you’ve got in your hands that all you have to do is you have to deliver what it is that they wanted.
Rob [00:07:22]: Right. And, yeah, all those points are valid. The reason I like building an email list is because I can get – let’s take Drip, for example. I built the list up to about 3400 people, and then I was able to nurture them along the process: give them screenshots; give them screen casts; ask for feedback via a survey; eventually do a slow launch, a email three to five hundred people at a time. It was a very well-orchestrated and well-crafted thing, and we had a really good conversion rate on that. If instead of building the list I just had a form that was like, “Here’s this amazing thing, and at the bottom of this page pre-order Drip for” – whatever – “three months for 99 bucks,” or whatever price it would’ve been, I would have gotten – I don’t know – a hundredth. Maybe I would’ve gotten 50 people or 100 people to pay me. Now, I would’ve had that money up front and would’ve had it for sure, but I wouldn’t have had the access to all 3,400 people, right? I actually think in the long run I converted a lot more people to paying, but I had to accept a little more risk up front by not taking the money up front. That make sense?
Mike [00:08:20]: Right. It does, but I don’t think that you would use that exact, same process for taking pre-orders. Taking a pre-order is not something where you just put up a website and just hope that people buy it sight unseen without any real walk through of it. I think that with a pre-order, your strategy is really finding people who really desperately have that problem and then crafting a solution that specifically solves that and, at the same time, having those individual conversations with other people who hopefully overlap, to help give you a better sense of what you should actually be building rather than building stuff, sending it out, doing surveys and not having as much of a hands-on approach with the people that you’re talking to. I think the strategy that I’ve seen work and I’ve used so far, with BlueTick, for example, is that if those initial people that you’re taking pre-orders from – if you know them or they know you, you can have those one-on-one conversations and establish that rapport with them such that you’re able to get the answers to the questions that you really need answered.
Rob [00:09:19]: Got it. Yeah, so you’re talking about doing medium-, high-touch sales to get a handful of pre-orders, in essence, to validate a product. I think there’s a difference – I think we’re talking about two, different things and I think those two different things are you’re talking, by hand, going through 10 or 15 people and getting those pre-orders to say, “All right, it’s valid. Let’s start building it.” I’m talking more about later on down the line, having that big list where you actually want to launch and you want to launch to thousands of MRR right off the bat. But I think our two approaches that we’re talking about are actually most powerful when they’re combined, and let me –
Mike [00:09:48]: Yeah.
Rob [00:09:49]: – Talk through that real quick. I do think that validating – the way I validated Drip was I emailed a bunch of people – by “a bunch,” it was 17 – and I got verbal commitments via email, “Yes, if you deliver that, I would try it out for three months.” That’s all it was. I didn’t actually take pre-orders. Now, why didn’t I take pre-orders? Well, two things. One, I knew that it could easily be six months from that time until we finished the product, because Derek was part-time on it. There was just a bunch of stuff, and I didn’t know how long it would take. It didn’t feel cool to me to take people’s money and to just sit on it for that long. Number two, all the people I was emailing with had some relationship with me, and so I trusted that if they actually said that they would try it out, that they would try it out. In the end, almost all – there were 11 people that said yes, and almost all of them – I think nine or ten – took me up on it and did deliver. Now, your mileage may vary there. If you’re at a conference and you’re meeting brand new people and you don’t know them, it’s like how much is their verbal commitment worth? You don’t know. I do think there’re some things to think about there. I don’t think there’s a right or wrong answer here. I really do think that you have to ask yourself what situation you’re in. Now, I have seen people multiple times when they go to take pre-orders, they do it on a landing page, where they send you to a site that looks like a landing page or a SaaS marketing site type thing, and they say, “The products aren’t ready. Enter your credit card here. We’ll charge you 49 bucks, and you’ll get the first X months free.” That’s the approach I mentioned, and that’s, I think, what we’re both saying is: “You probably don’t want to do that.” I actually think that’s a really bad approach, and the reason is because of what I said earlier. If you can build a list of a couple thousand people and then get pre-orders from there, you’re going to be way better off, right? It’s to combine the two approaches and nurture that list until you’re getting close to when the products will be ready. Then you’ve shown the screenshots. You’ve shown them screen casts. You’ve got them interested in the product. Then before the product is ready, but you’re like, “I think it’ll be done in the next month,” or the next few weeks, then you come in and say, “I’m going to give you this awesome deal. Buy your first year or your first six months for X, Y, Z.” They’ve already seen the screenshots. They know it’s pretty close anyways. Then that’s when you’re going to make that big, initial push, and I think you can get quite a bit of revenue. You’re no longer validating the idea. I guess you’re validating all the way to product-market fit, if we were to just take it literally; but you do at least know that there’s some desire for it. At this point, you really are trying to maximize some early revenue and get momentum going.
Mike [00:12:01]: Yeah, and I think the two approaches, as you said, are very complementary, and they overlap quite a bit. I don’t think that you either do one or the other, but you are probably not going to be in a position where you can gather 1,000 or 2,000 emails without having a pretty solid idea of what it is that you’re offering and what problem that you’re solving. That’s really where some of these strategies for taking the pre-orders really helps, because you can have those individual conversations. You can use that to craft what it is that you’re going to building, the marketing messages around it, the specific pain points that you’re trying to solve, and then use that information to go out and help build your mailing list at the same time. Then you’re building, and you’ve validated, “Hey, I’ve got enough people here that have placed a pre-order for it.” In parallel, you’re also trying to build that mailing list, using that information. I think you can build a mailing list without it. You can kind of – I don’t want to say “guess,” but it is, I’ll say taking educated guesses about what it is that people really want or need and having a few conversations here and there to help make sure that you’re on the right track.
Rob [00:13:00]: Yeah. I think another benefit to doing this kind of hybrid approach you’re talking about, where you do get validation up front from a small number of people and maybe take pre-orders, maybe you don’t based on what you want to do, and then building that mailing list, launching to it and potentially also taking a second round, essentially, of pre-orders right before you’re ready to launch. There’s another benefit to that in that you can then start trying out paid media when you’re building that list, right? You can try Facebook ads and AdWords and whatever else. You can also try content marketing. You try SEO. You can do a bunch of stuff that is that more broad, wider funnel marketing rather than just all the one-on-one stuff that would be required if you really have to talk to everyone who’s going to buy from you.
Mike [00:13:39]: I think one of the other motivations for accepting the pre-orders is that it allows you to fill in some of the knowledge gaps in terms of who exactly is your target customer, what do they do, what’s their role. This comes back to having those individual conversations with people, and it allows those one-on-one conversations, let you find out what you think is important that the customer actually doesn’t care about. It’s very easy to think that something needs to be done when the customers actually don’t care about it. It might be cool. It might be interesting to see, but it’s not something that is really a big deal. Then the reverse of that can also be true. You might think that, “This small feature over here is a nice-to-have,” and then customers see it, and they realize how powerful it is, and suddenly that’s the thing that they really are looking for; and you didn’t necessarily realize right away that that was so important to them. They may not have either, but in seeing it, it can change their mind, and it can make them see things in a different light.
Rob [00:14:34]: Other knowledge gaps it can fill in are what is important to buyers that you don’t know about, how much are people willing to pay versus what you think they’re willing to pay or what you think your app is worth. There are a lot of questions early on when you’re building an app, and I think that getting someone to put money down – this is essentially another form of risk mitigation, and it’s a form of learning early on, even before you have a product.
Mike [00:14:55]: Yeah, and we’ll talk specifically about what people are willing to pay versus what you think it is a little bit further in this episode. Yeah, those are all very important parts. Again, those two motivations for taking the pre-orders are just the risk mitigation and then helping to fill in the knowledge gaps. Let’s talk very, very briefly about how to actually take somebody’s money when you’re doing pre-orders. There’s three different ways that I know of. The first one, that I’ve done, is using WordPress and WP Simple Pay Pro and Stripe. It’s very easy, obviously, to set up a WordPress site. There’s a plugin made by Phil Dirkson. It’s called WP Simple Pay Pro, that you can buy. I think it’s $40 or $50, or something like that. It’s not very expensive. Then you wire it up to a Stripe account, and you can take pre-orders. You can even refund people’s money through Stripe months later, whether it’s six months, or seven months later. It appears to not be a big deal through Stripe. Now, of course, their credit card still has to be active; but you can do that and because Stripe hooks into your bank account when depositing the money, they’re able to turn around and take that money back out of your account, assuming that no more money is coming into the Stripe account. The other two mechanisms that I’ve seen are Gumroad and SendOwl. Both of these are mechanisms for typically delivering digital assets over the Internet. Both GumRoad and SendOwl allow you to set up a pre-order mechanism that allows you to distribute things once you’ve taken a pre-order. One thing I don’t know about either of these is whether or not you can go back and charge them in the future, like on a subscription basis, so it may not be the best option if you’re selling a SaaS application. But if you’re selling an info product, or a training product, or a book of any kind, those are pretty reasonable options, because then once you’ve finished it, you can upload it and then get it distributed to people very, very quickly.
Rob [00:16:36]: The other option here is there’s an iOS app – I’m assuming there’re android apps as well, but I’m just looking in iTunes right now. There’s an iOS app called Payment for Stripe, and you can hook this into your Stripe account. You could potentially, if you’re at a conference or anywhere, you could be talking to folks in person and pretty easily take pre-orders. I think that’s a nice way to do this if you don’t want to do it over the web and you want to do something more in-person.
Mike [00:16:57]: When you’re doing one-on-one demos with people, what is it that you really need to show them? For something like a course or a training product, you probably want to give them a course outline. If it’s a book, you probably want to give them a table of contents and outline all the different topics that you’re going to cover. If it’s software, you mostly want to have screen mock-ups of some kind. What I would do is I would walk through all the important parts of the application that are going to solve their problem. You don’t need to put in every screen, show things like profile screens and administration screens. You most likely don’t need those. You really want to focus on the screens that are going to solve their problem. I would wire up as much as you possibly can in a way that makes it obvious where they’re supposed to go and what they’re going to do and how they’re going to solve the problem that that software is designed to solve. There’s a lot of different tools and wire framing products out there that you can use. Balsamic is one that I’ve used pretty extensively. I’ve also seen people using Vision App, and there’s probably half a dozen others as well. You can put these together, and you can spend as much or as little time on these things as you want. It’s like any software product. You’re going to get out of it what you put into it, but at some point you have to draw the line and say, “Yes, this is good enough.” I think that’s a very important piece to remember – is that you don’t have to make everything look pretty. The final design does not have to be there. You’re really trying to focus on the problem that you’re solving and showing to the person that you’re going to give that demo to that this product is going to solve that problem.
Rob [00:18:23]: Yeah, that’s a key thing to remember. When I did pre-orders for Drip, I actually didn’t show any screenshots. I do think it’s helpful – if you are a designer, you can do decent mock-ups – to show some, but I think that if you get too far into the weeds, people frankly don’t necessarily have the time to dig into it. I think building a landing page and a marketing page for it with just a bunch of copy and maybe a fake screenshot – not even as something you’re going to distribute, but just as something that you can email to folks as you’re emailing or as you’re talking through – or, even just a short slide deck, like five slides of what you think things might look like. But I think you should focus, as you said, more on – you’ve got to figure out that value proposition, and that value proposition could almost be communicated in one sentence or a sentence plus a few bullets. If that’s what resonates, then what you’re actually going to build can come later. You’re just trying to figure out – is there a problem here that needs to be solved? and what is the general way that I’m going to solve that? I think the earlier in the process that you can figure out and that you can get confirmation that it really resonates with people, where they’re not puzzled, like, “Yeah, I guess that’s it,” but where they’re like, “Oh, my gosh, yes. This is such a big pain point,” that’s really what you’re trying to get to.
Mike [00:19:26]: The other thing to keep in mind when you’re going through that is that your value proposition that you communicate people is likely going to change probably dramatically between the first two or three or even five people. You’re going to iterate on that value proposition and your sales pitch after each person that you talk to, because you’re going to get feedback. There’re going to be certain things that resonate with them, and the future conversations that you have, you’re going to want to take those and extract things that you’ve learned from earlier conversations and present it to them and see if that works with them. You’re sort of split-testing the information that you’re learning with the other people that you’re giving the demo to. I don’t know as I would just say, “Give a demo to five or ten people.” You want to give it too as many as you can. I would probably shoot for at least 15 or 20, if you can do that; but realistically, you also want to run your idea past probably more than that. Probably, 30 or 40 people is probably a good, ballpark number of people to run the idea past. Then in terms of the demos, you probably want to give at least a dozen of them so that you can start honing in on the specific pieces that the majority of the people feel are important to them. Then you can concentrate on understanding what features need to be built first and what is the most important to people, and categorizing them according to what things need to be built first, and what things can be pushed, what things are not important and just can go into a future version.
Rob [00:20:45]: Is this similar to the process that you’ve been following for BlueTick?
Mike [00:20:48]: It is, actually. Most of it is. For example, I didn’t take orders through GumRoad or SendOwl. I took them using WordPress and the WP Simple Pay Pro. One thing that we haven’t talked about yet – I did say that we’d come back to it – was talking to people about actually taking the sale and taking their money for it. What I did for this piece was – what I wasn’t sure of was how much people were willing to pay for it. I had in my mind that I wanted to charge people $50 per mailbox for it, but I wasn’t sure whether or not that would be appropriate. What would people feel like the product was going to be worth to their business based on the problems that it solved? So, when I explained to them – I said, “Hey, here’s what my process is. I may or may not actually go through with this, but if I take your money and I decide not to go through with it, then I’ll refund it.” I laid out my refund policy. I laid out exactly what my timetable was, and I told them, “I’ll take your money now. I’m probably not going to be able to deliver for at least four to six months, and even after that point, it may still not work for you for another three or four months after that. So, it could be upwards of eight or nine months before I have something that I’m able to deliver to you. With that said, if eight months down the road you say, ‘This isn’t working for me,’ or, ‘I’ve gone on a different direction,’ I’m more than happy to give you a refund, and I’ll eat whatever transaction costs. If I have to send it to you through PayPal, I’m more than happy to do that. What I’m really interested in now is does this actually solve a problem for you that you’re willing to pay for.” Going back to the naming a price, this is a piece that I wasn’t real sure about, so I was very careful and cautious about presenting it to people in such a way that I wanted them to name what they felt it was going to be worth to their business. So, when I did that, I said, “You’re going to put your credit card number in,” and the website that I connected it to, I literally had a text box there, and they had to type in the amount. So, I would send them a URL through Skype, and they could plug in that number, and I would ask them to prepay for a certain number of months. It defaulted to 3, but they could select anywhere between 1 and 6. I’ve had a recent conversation with somebody, and they thought that, by and large, everyone would just choose one month. But the reality is what I found was out of the dozen people that I took pre-orders from initially, there was one person who prepaid for one month, there were two people who prepaid for two months, and then nine people who prepaid for three months. So, it was very interesting to see that most of them prepared for either the default, or at least a little bit. I think that that was because they had this understanding that, “I’m not going to get a ton of value out of this up front. It’s more of a longer-term investment,” which is really what I was looking for, because that validates and qualifies the people who are signing up for pre-orders, they’re looking at it as a longer-term investment. They’re looking at it as something that they’re going to be using for a while as opposed to somebody who’s a tire kicker who’s on your mailing list and does not have the level of investment or intended investment that you desire as the person who’s creating the product. I will say for sure that the first couple of conversations that you have with people – and this is especially true on the first conversation where you’re asking for that pre-sale – is when you ask them and say, “This is what it looks like. Would it solve your problem?” If they say yes, say, “Great. Well, here’s a webpage I’m going to give you. Here’s what the refund policy is, timeline, et cetera, when you will be charged for it the next time.” What I did for people was I took the payment that they had, and I said, “I will apply that as a credit to your account, but only after you have told me that it’s going to provide value to you.” I think that there’s a few different ways you can structure when they’re going to start paying for the application that you’re delivering, or the product that you’re delivering. But if it’s a SaaS application, you have three options. You can either have them start being charged when they’re first onboarded, a specified time after onboarding. Let’s say you onboard them on the first of January. You can say, “You get it for X number of months,” whatever you’ve prepaid for, “and then I will start charging you immediately,” or maybe you give them a 90-day grace period because you know that when you first get them onboarded there’s probably going to be issues. So, maybe you give them a little bit of an extended runway there. What I did, which I think may have been a mistake, was to say, “I’m not going to charge you until it provides value.” In retrospect, I think that that was a mistake because it gives people an unlimited time window which they can push it lower on their priority list. So, one of the challenges I’ve run into is people just aren’t really making time for using the app, and I think that if you were to say, “After I’ve onboarded you, I won’t charge you for 60 days, but once that point hits then the clock will start.” If you set that expectation up front, then you can always extend it. You can always say, “Look, we delivered this. We’re not quite ready yet. We know that there are some issues or things that we need to implement for it to really provide value, so we’re going to push this timetable out.” If you’re trying to dial things back in, if you’re trying to reel them in, you’re almost taking things away from it, and it’s not really fair to do that.
Rob [00:25:34]: Yeah, that makes sense. That’s a good way to think about it. I’ve talked about this, but with Drip I basically let people have unlimited trial because I was working so closely with them. This was for the first, let’s say, maybe 20 customers, when I was essentially doing early access, and we were just onboarding and trying to get features done. The hard part that I had is certain people would say, “Once I have X and Y, then I’m willing to pay,” and sometimes X and Y took us a month to build. I didn’t want anyone’s trial to be expiring during that time, so that’s why I was telling people, “Once it provides value, then let’s call it and start charging.” But I think you make a good point. There’s always not a real impetus for them to dig in and do a time investment there, so I think this is another place where kind of have to use your judgment.
Mike [00:26:17]: The other piece that factors into that is – let’s say that you signed up – call it ten people for easy math there, and three of them come back to you with stuff that’s going to take a month to build. Well, in order to deliver all three of those things, it’s going to take three months to probably deliver it, so it kind of pushes your entire timetable back for all kinds of things, and some of them you may not have realized up front that those things really needed to be built in order to provide value to everybody. So, if you dial back those expectations a little bit and say, “Look, you’ve prepaid for three months. I’m going to give you a month and a half, or two months up front just to get comfortable with it. Then I will start applying the credit.” Again, it just goes back to being able to extend things out if you need to, or if problems come up and you need to push things out and say, “Look, I know we were going to charge you now, but we’re not going to. We’re going to push this out because we’re not ready yet. We can’t deliver on this yet, and it’s not fair to you.”
Rob [00:27:10]: Yeah, I think that’s a good way to handle it.
Mike [00:27:12]: The other thing that I did, as I mentioned before, about naming the price and letting the customer pick their price is that it gives you a solid sense of what people are actually willing to pay versus what you think that they’re willing to pay. I think that this is super-important, because if you are too far off in what you think that the product is worth – let’s say that you think that people are going to pay $100 a month for it, and they come back to you and they say, “Yeah, I might pay 35 or 40 for it, but 100 is just way too much,” you might step back and say, “Do I really want to go forward and build this product when my lifetime value is going to be less than half of what I thought it was going to be?” And assuming that somebody paying $50 a month would stick around the same amount of time as somebody paying $100 a month, your lifetime value is going to be half for those people, so the issue is can you justify building the product at that price point and selling it at that price point. Are you going to be able to acquire customers at that price point? If you are talking to somebody and you name a price, their mind is instantly anchored to that price as opposed to what they think it’s going to provide to them in value, so there may be a disconnect between people who don’t know who you are or what the story is behind it and just hit your website versus those people that you’re talking to individually, and you can kind of convince them that, “Hey, this is a justifiable price for reasons X, Y and Z.” You can’t have that conversation with somebody who just hits your website.
Rob [00:28:30]: Yeah. Since pricing is such a hard thing to nail down, and there is so much guesswork and risk in it, I really liked the conversations that I had early on validating Drip. I think it is really important, and I also think something you need to think about is, if you’re just getting started, it can be okay to have a lower-priced product that you’re going to learn on. I think of how I stair-stepped up, and I went from one-time sales and then to subscriptions with HitTail, and it was – what – nine dollar starting point. It was like $9.95 and 20 bucks and 40 bucks and 80 bucks. Then at a certain point, I saw how bad the churn was, and there were limitations of how much I could grow it. Then beyond that, it was like, “Let’s get aspirational,” right? The original pricing of Drip was 99 bucks a month. That was going to be the minimum, and I kept saying, “What do we have to build to make this product worth 99 bucks a month?” That can be an interesting question if you’re far enough along that it makes sense to do, but I also don’t – I think you can toy with lowering price points. Just know you’re going to have more churn and stuff like that.
Mike [00:29:25]: I think the last step in this process is once you have decided whether or not you’re going to move forward or abandon the product that you’re looking at launching, I think you need to let everybody know. You need to let them know whether it’s a mass email or individual emails. If you’ve decided to move on and go do something else because it doesn’t look like you’re either going to be able to deliver, or that the product is going to be radically different than what you had envisioned and it’s not something that you want to pursue, then you’re going to want to go back and refund everybody’s money and maybe look at either a related product, or try something completely different. But regardless of what that is, you need to let people know early enough in the pre-order process, especially when you have them on the phone or you’re talking to them and you’re giving them that demo. Set their expectations, and you can tell them, “I’m doing this with X number of people,” or you can just ballpark it. Let them know, “I expect to know within 30 days,” for example, “whether or not I’m going to move forward with this. At that point, if I don’t have enough people, or haven’t gotten enough momentum with this, I’ll refund your money.” So, just make sure that you let them know what you’re going to be doing at that point. If you’ve made a commitment to them that you’re going to let them know by a certain date, follow through with that. Once you’ve done that, make sure to keep in touch every four to six weeks to let them know how things are going, what new developments are going on. If you can, include screenshots and keep them posted on how different pieces of the application are going, if you’re ahead or behind in any areas. The more information that you can tell them about how close you are to the original timeline that you expected, the better off you’re going to be and the more invested that they’re going to be in the application when they finally get onboarded. You’re going to help generate that excitement with them.
Rob [00:31:00]: I think this part can’t be underscored enough. When you have someone’s money, they tend to want to see some results from it. You can either make it kind of a crappy experience for them where you’re not communicating with them very well, and that would tend to be a lot of our defaults. As a developer, your head’s down, and you want to build stuff. Or an entrepreneur, if you have other developers, you’re going to tend to not communicate enough. But I think there’s a really nice approach here to be able to get people excited about this, and then they get thinking, and then they get talking about it. Then they tell other people. What we saw with Drip was there were people in early access who started talking in their Mastermind groups and in their little, private slack channels and their private forums, and I started getting direct emails from people saying, “Hey, So-and-so’s talking about this,” you know. We had early-access folks like Brennan Dunn and Jeff [?] and Ruben from BidSketch, and they’d say, “Ruben mentioned this. This sounds like something I need. Can I get in on it?” So, I then had people asking to get in early access before we launched. It was crazy – right? That’s a type of thing that you want to be able to build. It’s not as hard as it sounds. I don’t think this is lightning-in-a-bottle, Cinderella story stuff. This is just following this playbook and building something that people really are interested and need, and that it really does solve a pain point for them.
Mike [00:32:08]: Yeah, that’s actually a really good point, because if somebody comes to you and specifically asks to be on that early access program, there’s nothing saying that you can’t put them into it. Let’s say you’ve got the initial 12 people signed up, and you’re working through the pre-order process with them. Maybe you’ve delivered an alpha version to them. There’s nothing saying that you can’t take more pre-orders and put them through that process and start onboarding those people. I’ve actually done that to some extent, but it’s also got to be somebody who I feel is going to be a good fit for it and is going to start using it right away as opposed to somebody who is more of a tire kicker, I’ll say.
Rob [00:32:40]: Totally. I feel the same way. I also added people late. I did confirm with them. I was like, “If you’re really ready to dive in, let’s do this. There’s not a lot of time.” So, I added a little bit of time pressure, and I also started implying by that point – since I’d had enough experience with folks getting started up on Drip, I did tell them, “Hey, I’m going to give you as much time as you need for trial, but it’s going to tend to be between 20 and 30 days when you’re really going to hit the ground running.” So, I kind of set an expectation of, “You can’t just surf on this thing for 90 days and expect to see results.”
Mike [00:33:06]: Yeah, and as they’re going through that onboarding process, it helps you pave over some of the rough points of the app, whether there’s documentation issues, or pieces that are not entirely clear because the [UY?] or the [UX?] is not well designed. Or, you just haven’t quite figured out how to present information in a way that makes it easy for the user to understand. There’s lots of those types of issues that, as you’re going through the early-access pieces of it, you’re going to be aware of those. You can point people specifically to different things, or you can create videos that you send somebody so that you maybe don’t – get to a point where you don’t have to onboard each person individually. That’s really the position you want to be leading up to the point where you leverage your mailing list and start doing a much more public launch.
Rob [00:33:49]: That wraps us up for the day. If you have a question for us, can call our voicemail number at (888) 801-9690; or, email us at questions@startupsfortherestofus.com. Our theme music is an excerpt from “We’re Outta Control” by MoOt, used under Creative Commons. Subscribe to us in iTunes by searching for “startups” and visit startupsfortherestofus.com for a full transcript of each episode. Thanks for listening, and we’ll see you next time.
Episode 304 | From Bootstrapped to Funded and Back to Bootstrapped with Simon Payne
Show Notes
In this episode of Startups For The Rest Of Us, Rob talks to Simon Payne, a co-founder of Leadpages, about his journey from being a bootstrapped developer, to raising funding, and eventually moving on from Leadpages and developing his own product.
Items mentioned in this episode:
Transcript
Rob [00:00]: In this episode of ‘Startups for the Rest of Us’ I talk about moving from bootstrapped to funded and back to bootstrapped with special guest Simon Payne. This is ‘Startups for the Rest of Us’ episode 304.
[music]
Welcome to ‘Startups for the Rest of Us,’ the podcast that helps developers, designers and entrepreneurs be awesome at building, launching and growing software products. Whether you’ve built your first product or you’re just thinking about it. I’m Rob, and today with Simon Payne we’re going to share our experiences to help you avoid the same mistakes we’ve made. Every once and awhile, Mike and I like to mix things up and have a guest on the show. And today I welcome Simon Payne, who many of you will know as one of the co-founders of Leadpages. He was, in essence, the developer who helped to Clay and Tracy build Leadpages from day one. And Simon lives in Prague. I’ve met him in person and we’ve hung out several times over a few years. And so there was a good conversation that we had about basically starting off as a developer and transitioning from this bootstrapped company to Leadpages raising their $37 million in funding. And then just recently in the past few months, Simon has moved on and has decided to launch his own product called Convert Player. You’ll hear us talk about that in the interview. Hope you enjoy it. And we’ll be back next week with more of our normally scheduled programming. Thanks so much for joining me on the podcast today, Simon.
Simon [01:25]: I’m happy to be here.
Rob [01:26]: You and I first met in person – was it in Prague when we did MicroConf there the first year? I think you came to MicroConf in Europe it was like four years ago, is that right?
Simon [01:35]: Yes, I went to both of them in Prague.
Rob [01:38]: It was cool. And then we connected again, I think in DCBKK.
Simon [01:41]: Yes, it was in Bangkok.
Rob [01:42]: Cool. So you and I have known each other for several years, and you’ve been a big part of the dynamite circle, which I’ve had some affiliation with. But the reason that I wanted to have you on the show today is to talk about your experience basically working with Clay Collins and Tracy to get Leadpages off the ground in the early days, and finding out what it felt like to go through that journey as the first developer. And then to see the company raise funding and, obviously, get very large – there are 160, 170 people today. And you did that all while you were working remotely from Prague. And then recently, you have decided to move on, from what I understand – we’ll dig into it – it was a mutual decision and very amicable. And I know you’re still in touch with Clay. And then you’re working on your own new software product called Convert Player. And if folks want to check that out, go to convertplayer.com and you’ll find out more about what Simon is working on.
So, let’s start by talking about – this has been covered elsewhere, kind of the advent of Leadpages and how you and Clay met, so I don’t think we’re going to spend a ton of time on it. What year was it when you and Clay connected and started working on it? It wasn’t even Leadpages at that point, right? I think Clay was selling info products, and you were kind of like the web guy?
Simon [02:47]: Yes, I was helping him transition from information products into software. So we did the first few software projects together. First ones were just [Wordpress?] plugin.
Rob [02:56]: What were those?
Simon [02:58]: The first one we did was Welcome Gate. It was a simple WordPress plugin. It was for free. It helped you to make welcoming gate when you arrived on some website that will cover the whole page and give you an offer the first time you visit the site.
Rob [03:12]: Right. And this was like – no one was doing it at that time. You had to hand code it, and people didn’t really use that tactic, is that right?
Simon [03:19]: Yes, it was a completely new tactic. People liked it, but they didn’t know how to do it, so we made it easy for everybody to do it.
Rob [03:24]: And what year was that?
Simon [03:25]: It was 2012.
Rob [03:26]: And then after that you did – was it LeadPlayer was the next one?
Simon [03:29]: Yes, it was LeadPlayer. It was like a month later.
Rob [03:32]: Got it. Wow, a month later. You cranked it out fast. So it was like a WordPress plugin for video? Could you embed videos and then you could ask for emails during the video playing?
Simon [03:42]: Yes. Exactly.
Rob [03:43]: Got it. And then was Leadpages on the horizon shortly after that?
Simon [03:47]: It was very shortly after that. Yes.
Rob [03:48]: Leadpages launched was it January of 2013?
Simon [03:52]: Yes.
Rob [03:53]: And from what I recall, it got big really fast. Right? Revenue spiked way up. Was that mostly based on Clay’s audience and just his marketing chops?
Simon [04:01]: I was watching it from the [?] perspective and I was just completely stunned by the growth, because I just had to keep up with everything. So yes, it was all stuff that was Clay bringing through his content marketing, his audience, and his great marketing skills.
Rob [04:15]: How did you scale that so quickly? What were you hosted on?
Simon [04:18]: I already had good experience with Google App Engine so I was pretty confident with using that. Without App Engine, you would never be able to scale so fast. So it was super easy.
Rob [04:30]: Yeah, for sure. You’re a contractor, you’re living in Prague, you’re working with Clay and Tracy, you’re writing all the code. And things start going hockey stick. You guys were – I don’t remember what the numbers were, but I remember you guys hitting a 100,000 MRR in like no time. It was crazy. Did you hire more engineers right away, or were you solo working on the product for a while?
Simon [04:53]: It was growing so fast we couldn’t properly hire fast enough. So, I think the first year and a half it was just two, three, four, five developers coming pretty slow. But those first hires, they’re developers that are still in the company today. We were very careful about hiring somebody who’d be like a technical leader later, and could manage other people. [?] with Tracy about hiring somebody really smart and I think that was one of the secrets that helped us along.
Rob [05:22]: Right. Was Tracy a big part of the – because it sounds like you had some really good early hires – do you think she was a big part of that?
Simon [05:28]: Yes. Tracy was awesome. She had like 25 years or more experience in HR and hiring all the right people. She hired me. And it was really interesting how we head-hunted some of the developers. We kind of like stole them from other agencies and ODesk.
Rob [05:45]: An interesting part of the story, very similar to how Derek was a contractor for me, and then he became W-2, and then he eventually – kind of retroactively – became a co-founder of Drip. A similar thing happened with you and Clay and Tracy. You want to talk a little bit about that?
Simon [06:00]: Yeah. I originally joined Tracy and Clay to learn more about marketing. But then I realized I can just refocus on myself and my software skills. And I didn’t even think that I would be a co-founder. I just worked so hard and passionately on the business that they invited me to kind of join the center circle of the three of us.
Rob [06:20]: When did that happen?
Simon [06:23]: I think it was like one or two months at the beginning. They told me, “Simon, you are telling us every day what should we be doing. You’re already a co-founder because you behave like one, so we don’t even need to make more changes.” I was so excited about somebody being able to sell my software because, as a developer, I wasn’t very good at that propagation and promoting my stuff. So, for me it was a very interesting experience.
Rob [06:46]: Well, yeah. You know, I was in a conversation with someone the other day – it was actually another podcast, Bootstrapped Web – and we were talking about co-founders. And as we talked I realized there’s kind of this framework that just came out of it which was: if you’re going to have a co-founder you’re going to worry about kind of the interpersonal relationship. Like can you work together well? Are your working styles similar? And that was the first part. The second part was goals. Are the goals similar? Do you both want an IPO, or do you both want to build a nice profitable lifestyle business. And the third was are your skill sets complimentary? Because what we find is if two developers get together and they both know how to write code really well, they’re going to stomp all over each other, and then they don’t have anybody to market the stuff. So, it sounds like you guys had a really unique situation where you were basically the technical co-founder, Clay, obviously, ran marketing, and then Tracy, it sounds like she did most of the business and the hiring. And that sounds like a pretty potent combination.
Simon [07:34]: Yeah. And I think most people just saw me and Clay, but they overlooked Tracy, and that was the key thing because she gave us the undisturbed focus on each of our doings. It was very important for us.
Rob [07:47]: It’s really interesting because I knew of you and Clay, and I had no idea you had a third co-founder until, I think, you and I sat down to lunch a couple of years ago and you said that. And I was like, “Well what does she do?” Because you have marketing and engineering down, but now I understand it. And having met Tracy now – for those who don’t know I work at Leadpages now. Drip was acquired by Leadpages about two months ago. And so, I’ve obviously been working closely with Clay and then Tracy came into town – because she works remotely – and I was able to meet her. And I started seeing that’s her super-power. It’s like working with people, reading people, talking to people. And so I can see how that was really an advantage for you guys as you grew. So, Clay was marketing info products for a while before – I think since 2009, right? Then he was getting into software in 2012, and I’d imagine that was a bit of a transition, right? In terms of moving from marketing info products to software. Could you talk a bit about that?
Simon [08:38]: Yeah, definitely. I was kind of guiding his hand through software, but the learning curve was pretty fast for him. We did quickly make the duration to learn fast. So first we did WordPress plugin. I think it coded over a weekend. And over next week he just started marketing it. The next project was a little bit more. It was a bait plugin. We did that in a month. And then Leadpages was, I think five, six months later. So, we started from small, free stuff, we moved to bait plugins, and then we moved to selling SaaS and subscriptions. We just went through all these phases so that we learn how to do each stage and that will help us to see how people react to software. How to sell them to get them to communicate about it because it was all new for Clay. But it was interesting how quickly he picked up everything.
Rob [09:27]: Sure, it sounds like you guys – you’ve heard of my stair-step approach of basically going from WordPress plugins or one-time sales up to SaaS – it sounds like you guys did that really fast.
Simon [09:35]: Yes.
Rob [09:35]: Normally it takes years. And that’s cool. And you said Clay picked it up really quick, which that seems like that is his super power, right, is marketing? So that makes sense. And so, you said even over the first year or 18 months, you hired as fast as you could but since you were picky and wanting to hire the best, the team wasn’t huge. You recently left Leadpages, maybe a month or two ago. How big was the team by that time, the engineering team?
Simon [10:01]: Engineering, I don’t know. I think it was like 60 or 50 people, including QA and other technical people.
Rob [10:07]: Was there a difference from when you guys were self-funded to when you raised funding? Did that change anything for you and the engineering team? Or was it kind of the same path the whole time?
Simon [10:18]: It felt literally – and I talked about it with Tracy – that I was working for maybe four or five different companies. There were different stages of the company’s life when everything changed, like from one day to the next everything was different. And we didn’t see that coming. So, I remember some people were saying, “We are the early people.” They were like remembering when the company was like under 50. And I was laughing because I was there when it was like just three. So it changed dramatically every few months. The first period was the longest. I think like a year and a half, we were like three developers maybe. And I think it’s kind of interesting because people think that many of this fast growth you need a lot of people. But if you do it kind of smart, and we used App Engine and we trie to do it kind of like a lean way, we realized we don’t need to implement everything and have all this staff. And it actually was enough in the beginning.
Rob [11:15]: And what was the next phase?
Simon [11:16]: The next phase was kind of growing the US team, because in the beginning we were completely all remote. And basically, even when we were five or six people, we each took one big chunk of projects on their own. One guy just went and made analytics, one guy made split testing, a new [builder?]. And we each worked individually. The biggest challenge was to build a team that can work together in US and be integrated with some management. And that started completely, from scratch and it was really painful and slow.
Rob [11:47]: Yes. That transition can be. Did you have funding by that time?
Simon [11:50]: I think so, yes. I think it was about the time when we needed funding. So it was even more motivation for us to get more structured. I call the early days like a [“Hero”?] development, when you just have one guy and you basically have one phone call, tell him what to do, and he goes and figures out everything. But the next stage shifts to stuff like QA and processes and you have to write requirements, and starting documentation and tests. And that’s – if you haven’t done it for a year and a half – then it’s hard to start with all of that. So we have to bring new talent and people that can do all of that. And it took us some time to do that.
Rob [12:22]: That’s always tough. It’s a tough transition. It also slows you down because it adds more process.
Simon [12:27]: Yes, definitely.
Rob [12:28]: And so, you and I talked before the interview about there was kind of a transition point for you. You were a co-founder and working for Leadpages, and there was a point where you were going to move to Minneapolis, because I’m assuming that it just made a lot of sense given that most of the team was here that you would come here and be involved. But tell us the story of that and how that turned into, in essence, kind of a transitional point for you mentally.
Simon [12:51]: I wasn’t sure. I was kind of trying to test it so I was coming just for a few months. I was highly considering actually moving there. But then I had some problems with the visa because we were growing so fast we didn’t have time to properly prepare for all the legal situations. And I was kind of delayed more in Prague. And eventually realized I kind of value my life in Prague and my environment more. And I felt more stable and more productive here then I would be maybe there. So eventually I kind of transitioned into staying permanently remote in Prague.
Rob [13:25]: So that was maybe two, two and a half years ago and you kept working for Leadpages. And why was that? What was the driving force that kept you at Leadpages working away as the team got bigger? I know things change. Sometimes that can be tough on an early engineer. But there had to be something that kept you there toiling away on the product.
Simon [13:44]: I still very much enjoyed working with Tracy and Clay and I still like the company. I wanted it to succeed. And I felt like I can help the company a lot doing it from inside. So, that’s why I stayed so long during these four years.
Rob [13:59]: Yeah, four years you were there. Cool. And then, recently like I said, a couple of months ago you decided to transition out and you’ve built a new product called Convert Player. It’s at convertplayer.com. And your headline there is ‘Turn your video viewers into email subscribers.’ I have an inkling that you are building this one on your own, and probably want to bootstrap it and make it into a lifestyle business. Is that right?
Simon [14:20]: I don’t like this term ‘lifestyle business.’ I just like building business. But yes, I’m going to bootstrap it on my own and I’m going to be doing everything. I’m already coding it myself, writing all the copy. I’m going to be doing some video marketing and email marketing all by myself. I think it actually might work.
Rob [14:39]: I think so. And you’re in kind of an early access right now? You have some folks using it already? Things are going alright?
Simon [14:45]: Yes. Things are going pretty well. I’m actually excited about how well it’s going. I like that.
Rob [14:51]: Good. Where do you want to take it from here? What does the next maybe six months look like for you with Convert Player?
Simon [14:58]: I have an idea that I want to implement and share and communicate and give away to people, because I feel like this is a piece of marketing tool that is kind of missing on the market. And I basically will be developing a new feature every week and then documenting it on video and showing it to other people to tell them how to do it because I’ve got some experience in that. So I think I’m going to be just doing this simple process like weekly videos and new features for the next half year.
Rob [15:28]: So content marketing basically demonstrating all the new stuff you’re doing and educating folks on how to use it.
Simon [15:33]: Yes.
Rob [15:33]: Yes. Do you want to tell folks – I gave the headline of what Convert Player does – but do you want to tell folks what it actually does?
Simon [15:39]: It helps you to get more email subscribers from the videos, which you can do on YouTube, but if you embed the videos on your site like WordPress or other site, you can actually achieve that by placing a special opt-in box anytime during the video.
Rob [15:55]: Got it. And is this WordPress plugin? Or is it SaaS?
Simon [15:58]: It’s actually SaaS. I was considering WordPress plugin and actually Clay gave me the idea that I should turn it into a SaaS. And I eventually did that.
Rob [16:08]: Yes, that’s cool. It looks like you support YouTube and Vimeo videos and, rumor has it that you’re integrated with Drip. Is that right?
Simon [16:13]: Yes. It is going to be one of my first integrations.
Rob [16:15]: Yes, that was cool. You emailed me and it was kind of fun to hear. Well, to hear A) you were working on a new project. Just because I’ve been watching what you’re up to with Leadpages for so long. Then it was nice that Drip was one of your first integrations.
Simon [16:27]: I’m actually using Drip for my own marketing and I’m using it, I have to tell you, I fell in love with that product. It’s really cool.
Rob [16:35]: Awesome. Yes, that’s good. Glad we could help. A few months ago, when you finally made the decision to leave Leadpages and go on your own and do Convert Player, that had to have been a pretty long thought process. And I’m wondering kind of what was the impetus for that? What eventually made you decide that it was time for something new?
Simon [16:54]: I was thinking a lot about how I could contribute to the company, and how can I help and contribute to the growth. And especially in the beginning, in the first years, I felt like really helpful and really valuable. And then the more the company grew it changed the different sizes and the environments, I slowly got the feeling like the skills I used to grow it from the ground are not as useful. But they are still useful for other things. So eventually I realized I’m going to use them to build a new product from scratch. Because I feel there are some people that generally good at taking a company that’s already launched and taking it to a higher level. And there are some people who are generally good at taking stuff from the ground, which I feel like that’s kind of like my domain. So, in that sense, I might have stayed even a little longer than necessary. But I felt I was still very productive.
Rob [17:44]: Yes. I totally get it. I feel the same way. I am a starter. I mean, obviously, right. I’ve started 20 things. But it just comes to a certain point where – and I don’t know if it’s – I guess it’s level of complexity, or it’s number of employees, or just at a certain point where your contributions aren’t as valuable as they were when they were only two or three people. So, that makes a lot of sense.
Simon [18:06]: Yes. And that start can be long. It could be a few years.
Rob [18:10]: Oh, yes. For sure. Well, and you know what I liked about it is I was basically coming into work for Leadpages as you were moving on, but the relationships are intact. It was a very amiable parting of ways and Clay still speaks very highly of you. And you talk about how Clay gave you the suggestion to go to SaaS. So, it’s obvious you guys are still talking and I know you’re still in touch with Tracy. That’s cool that it’s not some type of burning of bridges or bad blood or anything.
Simon [18:35]: Yes, that’s really important for me. And I want Leadpages to succeed, and I want to be really close to it as a partner business ideally. So, Leadpages incentive would be one of the integrations for Convert Player itself. And I just want to be around Clay and Tracy because they gave me so much and it was a very interesting and awesome ride.
Rob [18:58]: Yes, very cool. Alright, sir, thanks again for coming on the show today and talking about your journey over the past few years. I’ve already mentioned convertplayer.com if folks want to check that out. How else could someone get in touch with you if they wanted to follow what you’re up to?
Simon [19:12]: Well, I guess they can easily just follow me on Twitter and send me a message as well.
Rob [19:16]: Sounds good. What’s your Twitter handle?
Simon [19:19]: Mine is @SimonPrague.
Rob [19:20]: @SimonPrague. Sounds good. Thanks again for coming on the show, Simon.
Simon [19:25]: Cool. Thanks for having me.
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