Show Notes
In this episode of Startups For The Rest Of Us, Rob and Mike talk about overcoming challenges with subscription pricing models. They dive into how to test selling subscription based products, deciding between one-time, monthly, or annually, how to raise prices, how to lower prices, and how to avoid overpaying for support.
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Transcript
Mike [00:00]: In this episode of Startups for the Rest of Us, Rob and I are going to be talking about overcoming challenges with subscription pricing models. This is Startups for the Rest of Us, episode 316. Welcome to Startups for the Rest of Us, the podcast that helps developers, designers, and entrepreneurs be awesome at building, growing, and launching software products whether you’ve built your first product or you’re just thinking about it. I’m Mike.
Rob [00:26]: And I’m Rob.
Mike [00:27]: We’re here to share our experiences to help you avoid the same mistakes we’ve made. What’s going on this week, Rob?
Rob [00:32]: Well, as I mentioned in last week’s show, I went up to Lake Superior to have my retreat, to do a bunch of thinking, and kind of relax. The day I went to leave Minneapolis to drive up there, I was feeling terrible. Like sore throat and all sorts of stuff, tired. So I drive up there kind of fever-dream-ish. I was in and out of conscious, but it was in a state where you don’t remember how you got there type of thing. So I got there, slept 13 hours that night. I get up in the morning and look at my throat with the mirror on my camera phone and it’s just brutal. White spots all over the place. Turns out I contracted strep throat right before my retreat.
Mike [01:12]: Well, on the bright side you probably didn’t have to talk to anybody.
Rob [01:14]: But this thing is – it was exactly that. I was like, “this is a real bummer that I’m not -” I couldn’t think well enough to actually do retreat work. I pretty much watched TV, slept, and listened to podcasts. But on the bright side, I didn’t have to be at home around everybody. Because you know, when you’re sick and you have two kids that are waking up early. You’re trying to sleep and you want to be helpful with them, but you’re kind of incapacitated. I didn’t have that guilt because I was just in this cabin overlooking Lake Superior. Kind of couldn’t think of a better place to be when you’re that sick. I was up there for three days. I was able to get some medication up there. Hour-round trip to the nearest clinic and I started feeling better by the last day. It was an eventful or uneventful retreat, depending on how you look at it.
Mike [01:55]: Kids running around when you’re sick? I know not what you’re talking about.
Rob [01:58]: Oh, man. It’s the worst. How about you? What’s been going on?
Mike [02:01]: Well, I got an email the other day from John [Salmans?], who is a attendee of MicroConf and he runs MarketTender.com. He published a list of podcasts called “The Ultimate List of Developer Podcasts.” We’ll link that up in the show notes, but there are dozens and dozens of podcasts on here that are aimed at the developer crowd. It breaks them down into different programing languages, and marketing, and front-end, back-end, all sorts of different areas. If you’re interested, definitely check that out. The other thing is that my youngest son has decided that he is going to become a professional YouTuber. So that’s a college savings win, I believe.
Rob [02:38]: Boom. That’s awesome. My son, my ten-year-old, has been talking about that for a long time. I’m like, I don’t know. I don’t want to get everything set up to do that. But I think it’s a good idea for kids to start thinking about that. That’s the future, right? I mean, I know it’s the present for a lot of adults these days, but for a kid to start tackling social media at this age, as long as you can keep them protected from stuff, is a good thing.
Mike [02:59]: As long as they’re 13 years old and can click that button without violating the law.
Rob [03:04]: Yeah. Exactly. So, hey. Circling back to that podcast list from John [Salmans?], there’s an entrepreneurial section, a category, and I just want to read a couple of the podcasts. You’ll probably recognize most of them. One is EntreProgramers, then there’s BoomStrap from Ian and Andre. Although I’m not sure if that’s still going. BootStrap with kids, with Brett and Scott. Although that’s not going anymore. And then we have TechZine, BootStrapWeb, and of course StartUpsForTheRestOfUs, and a couple others. RocketShip and a few others. So you definitely want to check that list out if you have a chance. How about today? What’s our topic for this week?
Mike [03:36]: What we’re going to be doing today is discussing subscription pricing models and some of the challenges associated with coming up with a subscription model. And how do you logistically go about testing a subscription based products? I say “subscription based products” as opposed to a SASS application because a lot of these things are applicable to any sort of subscription pricing model. So whether it’s a membership site, or a coarse that you’re running, or obviously a SASS application falls under that umbrella as well. But there’s a lot of different types of products out there that essentially fall under this umbrella. Productized service, for example, might come under this if you’re doing a recurring service for people over time, on a monthly or weekly basis. All those things kind of fall under this umbrella. So we’re going to kind of talk through some of the different challenges associated with one, just deciding what type of pricing model is appropriate, but then moving on to how do you raise and lower prices, how do you start building up the service while you have all these incoming costs and you’re not making as much money as you’re putting into it, et cetera.
Rob [04:39]: Cool. Let’s dive in.
Mike [04:40]: So the first one is how to go about testing whether you should be charging on a one-time basis or monthly or annual subscriptions. I heard the CEO of [Atlasian?] named Scott – I can’t pronounce his last name. It’s [Farakuar?] or something like that. He talked to businesses about software and he was asked this exact question. He said that if the value of a product goes up over time, then you should charge a subscription. But if it maintains the same level or the value of the products to the customer goes down over time, then charge a one-time fee. That’s actually a very interesting way of looking at it because if something is going up in value for the customer, then it’s something that they’re going to want to keep around for an extended period of time. Whereas like a training course, you buy it once. Or a book, for example. Once you’ve read it, you’ve kind of consumed that information and you’re going to move on. The impetus for you paying on a subscription basis on that is no longer there. So I think using that delineation of whether the value is going up over time or not as a determining factor in whether you charge monthly or on that subscription based one-time fee is a very interesting way to look at it.
Rob [05:43]: Yeah. Obviously there’s a lot of pluses and minuses to this. I mean, I think if you run a software company where you are actually hosting and having a different value over time, then a one-time fee is a terrible idea because you always need new customers to keep the servers on. But if it’s downloadable software, then a one-time fee most likely makes sense because people don’t want to download and host it on their own server and then pay you a recurring fee. I know there are some apps that do this, and frankly, they’re bucking the trend a little bit. Now, if you have a SASS app, then I thinking offering monthly and annual is the way to go. The test that I’ve seen people do is basically run it, test on the pricing page. See default to annual, see how many people go through and default to monthly, see how many people go through. Obviously you’re giving a slight discount. Maybe one or two months free, or 15-20%, whatever you want to give for annual, and then you do the math. Not only are you making more money, but are you getting more cash up-front or not. That’s a big deal if you’re bootstrapped.
[06:40] Now, if you’re running a membership site, it is a little bit different. Unless there’s a lot of ongoing expense, then I have seen some membership sites basically do a one-time fee that’s kind of a lifetime buy-in. Typically you want to have an asterisks there that says it’s the lifetime of the membership site, not the lifetime of the user. Right? Because the membership site may not be around for 40 more years, but the user may. So you have to walk a line there. As long as people get a bunch of value from the membership site, typically membership site lifetimes are between four and six months. These are average numbers I’ve heard based on these large swath of folks I’ve talked to in our own experience running a membership site. And so, if you give them a ton of value in that amount of time and they get their money’s worth, it doesn’t matter. The ongoing access is cool for them to have access to forms and such, but if three years down the road you do decide that they bought a lifetime access and I’m deciding to shut this down, you’re going to have very little push-back. People understand that this stuff has to change. I think that you have a question that is how do you really, logistically test this? And again, with SASS you just change it on the pricing page. With subscription sites or a membership site, I would just look at are you going to tend to want to do launches for membership sites rather than just have an open sign-up process? And you’re going to know your numbers. You’ll do one or two launches, you’ll see the numbers of one and do one or two launches the other way and see the numbers.
[07:56] I would compare and see what cash you’re getting from which one and it’ll be obvious. You will have, in this respect, if you change, you will have different cohorts on different pricing models. That’s okay. It’s a small technical challenge, but it’s not as much of a headache. Everything doesn’t have to be cut and dry with this stuff. It’s not as much of a headache as that probably sounds.
Mike [08:17]: Yeah. And I think that the interesting thing to keep in mind about what he just said there is that when you do a cohort launch like that, most of the stuff that is based around the pricing can be completely hidden. You don’t even need to have that one the website. So, as you said, you can have some people on one pricing plan and some people on another. And really, that’s kind of how you test it. A lot of the pricing information that you’re sending to people or that they’re getting is through their mailbox. It’s not going to be publicly available. It’s not going to be out there until the end of time. Now, something else to kind of keep in mind here is that when you are determining whether or not you’re going to do monthly, quarterly, or annual subscriptions, or just that one-time fee, there’s a difference between charging somebody a subscription and then allowing them to essentially finance the payments over time. So, I’ve seem emails from, for example, Rumi [Sedi?], who runs I Will Teach You To Be Rich. They have several different programs or training courses that they have offered where they will offer quarterly or monthly payments for six months.
[09:18] You’re essentially still paying the full amount for the whole course, it’s just spread out over time. It helps the person who is on the receiving end of it see it in a different light. They will look at that and say, “Well, I’m not willing to pay $1,500 for a training course,” but if they look at it and see that it’s five payments of $300 each, it’s the same amount but they look at that and say, “It’s only $300.” And they kind of mentally put a different spin on it than if it was a $1,500 up-front cost.
Rob [09:46]: Something else to think about here is can customers change pricing models after they purchase? They come on monthly so you can lower their risk and obviously have a 30-day-money-back guarantee or whatever and they’re paying you $30 or $50 a month – getting people in and having them get value and see that your site is legit. Then after one or two months, pitching them on annual is also not a bad way to go just to see how receptive people are to it. This is an approach that I’ve taken with several different apps. The thought of whether someone can change pricing models after they’ve purchased has to kind of play into the picture. I know that you don’t need to do all the selling upfront. You can wait until someone has got a lot of value. It’s kind of an up-sell, if you think about it. Someone is paying you $50 a month and you come in and say, “alright, here’s $500 for a whole year.” If you do that $500 upfront you’re going to get less conversion, right? If you do it after one or two months when you have a lot higher value, you can get a lot higher conversion rate on that.
Mike [10:40]: One of the next challenges with subscription pricing models is how do you go about raising prices? And this is a challenge I think for most subscription based services or products because you don’t really want to put the people who have gotten you to where you are in a position where they have to look at your product and say “I’m really not happy with this particular move or decision that you guys have made to raise your prices and I’m not happy about how you’re treating me. I signed on with the assumption that I was going to get this price for an extended period of time” – or potentially forever in their minds – and some of them may be extremely upset over the fact that you are now raising prices. One of the ways that you can combat this is to communicate in advance to everyone who you are raising prices for. Now, the other thing you can do is you can also grandfather those existing customers in.
[11:34] You can either do in perpetuity or you can do it in a specified time period. I’ve seen some companies where they’ll say, “We’re going to raise prices, but we’re not going to do it on you for the next two years.” So you’re going to maintain your price for the next two years, or maybe it’s six months, or twelve months, whatever you decide. Whatever makes sense for your business based on the lifetime of your customers. You can go about increasing prices for everyone else or everyone new who signs on, as long as you make sure you communicate that to the people who are currently customers. Tell them, “Look, there’s a price increase coming. It does not affect you.” I think that’s the big piece of that. You want to make sure they know that that is not going to affect them.
Rob [12:13]: Yeah, I think that’s a big deal. I’m a big fan of grandfathering. Perpetually, if you can. But obviously, if you look at the way Netflix did it, I think they grandfathered for a year or two and then it went up a dollar or two. I don’t know, it was inconsequential. At the time there was little bit of hubbub upfront, but when it actually happens there are a few people who feel threatened to cancel. You’re always going to get somebody who cancels, so don’t let one out of a thousand people scare you into not changing it. It really is an interesting idea. I’m a big fan of grandfathering. You’re not trying to piss off your existing customer base. We’ve seen this happen. Remember when Intercom was going to raise prices? They were going to double or quadruple their prices. It was a substantial change and they weren’t going to grandfather for like a year. There was a huge uproar and people were coming to Drip and saying, “if you can build this one feature, I’ll move over here.” Because they were so upset about it Intercom actually backed off on that price increase. There was such a backlash. It wasn’t one in a thousand, it was like 20%-30% of their customers that were on Twitter and railing on it. So you do want to be careful and thoughtful on it.
[13:14] Big price increases, I think are really tough even if you grandfather for a year or two if you’re going to do a substantial price increase. It’s going to have some backlash. The other thing to think about that I’ve used pretty successfully a couple of times – actually, several times – is to announce the price increase upfront, let all of your customers know, “you’re grandfathered, thanks for your support, the product keeps getting better, you’re going to keep getting it for the price you have. And if you know anyone who you think could use it, now is the time to get them in. If they start their trial before X date, which will probably be sometime in the next two weeks, as long as they start their trial before X date, then they’ll get the old pricing.” And then you tweet that, you blog post that, and you promote the heck out of that. You’ll get a big spike in trials there. You will kind of suck the air out of the month or the following month because you pull anyone who is even thinking about trying you rushing in. So you’ll have a really good month followed by a mediocre month because you’ve just front-loaded it. But it really is a nice way to get a nice bump of customers. I’ve seen it work both with Drip and with [Hittail?].
Mike [14:13] : And off this particular topic is how do you go about raising prices when your business model for the product or service is going to fundamentally change? If it was, for example, a SASS product before and you’ve come to the conclusion that you really just can’t support people either at that price point or they’re just not being successful with the product and they need a lot more hand-holding, you may need to 5X or 10X the price to make things work and make the product successful for the vast majority of your users. Sometimes this comes into effect because you went down the route of having a free version of the product and your servers just got way too overloaded and there’s so much stuff going through there it’s difficult for your back end systems to keep up. You’re not getting the conversion rate from the free users into paid users to be able to support the infrastructure for the product. In cases like that, you have a fundamental shift in what your business is even offering.
[15:12] I think those are extremely difficult situations. I’ve seen it done in a couple of different ways and I can’t think of one where they did it really well. I think part of that is just the fact that people have signed on with this expectation that you are offering X and that’s what they are there for and you say, “We can’t offer X anymore, we’re going to offer Y instead.” Quite frankly, you’re just going to piss a lot of people off at that point. I mean, you can only do so much in terms of grandfathering or pushing them off on to a different product or service. You can find other substitutes for them or help migrate data to other services that are going to be a better fit. I think the one exception to that where I have seen people do it well recently is with Basecamp where they have come out with additional versions of Basecamp. Basically what they’ve done is they’ve left everyone sitting there with that version of the product and they rewrote it from the ground up. Then they said, “If you want to move to Basecamp 3,” for example, “you can go from two to three, but you can’t go back. So once you’ve gone to version three, you can’t go back to version two. But anyone new is going to get version three. Anyone on the old version can stay there as long as they want.” They’ll continue to support it, but they won’t develop anything new. As a customer you kind of have a choice to migrate everything to the latest version. Maybe that comes with a price increase, but that’s probably one of the best ways I’ve seen it handled. Rob, what have you seen from this?
Rob [16:30]: Yeah, one example that comes to mind that you raised offline is [Indinero?] and what they had launched. It was like a $30 product and they got up to 30K MRR or something and they just couldn’t grow because it was too low of a price. They 10Xed their price and they went with a productized service which, to be honest, would be a fine move. It’s fine to get into a market and then adjust it. The mistake they made is they just stopped supporting their product and it was so buggy and they kind of left their customers out to dry. You and I both used it and we used to recommend it to people. The product just went sideways really bad. They tried to rewrite it but they just didn’t support it well. They were non-communicative. You’d get an email and support would respond two weeks later or something. They didn’t handle the actual logistics of it very well. But the idea of going up market is, I think, a good one. I think doing everything you can to help those existing $30 customers would be what you can do. You don’t want to basically tarnish the reputation of the founders of the product itself.
[17:29] If there’s a way that you can straddle both worlds and grandfather existing, that’s cool. If there’s not a way you can do that, you just have to give people enough time. Because it’s an accounting system. You have to give them six months or a year. If I recall, they gave us 60 days to move off. Which is like, no! I have stuff to move off of here and I have taxes in six months. You kind of want to think this through from a customer’s perspective. Think about how much pain you want to cause everyone and how much do you want to piss people off? Because are they going to give you a chance the next time? This world of startups is not huge and you have a reputation that you’re going to want to kind up uphold.
Mike [18:01]: With [Indinero?] I think the big problem was that they had so many free users that they just couldn’t support them. And I don’t know what the stats they actually had were, but I’m assuming it was one out of ten people were paying customers. Their systems were buggy, as you said, and slow, and there were lots of things going on. They couldn’t keep up with it. In retrospect when you look back at it, what they should have done was say, “Look, if you’re a free user you’ve got 60 days or three months or something like that to get off the system and then we’re going to shut down your account and we’re going to only focus on the people that are actually paying for it.” They did have that free version of it and we were above that. So we were a paying customer, but as you said, they didn’t give us very much time to switch. I think that’s the real issue. When you don’t give your customers enough time to react, depending on how integral the product is to the business of your customers, that’s where things can become the biggest problem.
[18:54] So let’s talk about the opposite of this. How do you go about lowering prices for a subscription model? I think that if you have a subscription based product, if at all possible, this is something you want to avoid, I think instead – Rob, I think you took this approach with Drip at one point. You were looking at the products and looking at Drip and people were saying, “I like it, but it’s not worth it to me at this price point. It’s overpriced for what I feel like I’m getting compared to some of the other things out there.” And instead of lowering the price, you actually looked at it and said, “How can I offer more value for the product instead of lowering the price?” I think that’s a perfectly legitimate and probably the best way to go in this particular situation.
Rob [19:34]: Yeah. The idea of aspirational pricing is what I call it. To realize that if you’re charging $10, $20, $30 a month for a SASS app, it is really hard to get past the 10-20K mark. You just need a lot of customers to do that. You need a really big funnel. So if you are already priced up market and you go $50, $70, $100 a month it just makes it easier to cross that threshold and to start growing at that 5-10K a month mark. Which is when it becomes interesting, in my opinion. So the thought here is lowering pricing – the problem with it is – I can’t imagine lowering pricing and not doing it for all of your existing customers because otherwise you’re screwing all of your customers. Right? If they’re paying $50 a month and new customers can get in for $30 a month, I don’t see a way that you can justify not lowering across the board everyone’s prices. The challenge with that is then you’re decimating some MRR that you spent time building up. That’s actually a move that LeadPages decided to do after they acquired us.
[20:29] Our lowest tier was $49 and Clay wanted to move towards a free plan. Our first kind of toe dip into that water was to do a $1 plan with up to 100 contacts. When we did that we looked at everyone who was under 100 contacts and they were going to be downgraded. It was like $22,000 in MRR that just disappeared overnight. That was a big choice and it was one that Clay had to make because it impacted the bottom line. Later we moved to the free plan, but it was much less of a hit because we had a bunch of people on the $1 plan. But I couldn’t imagine starting a $1 plan and not downgrading everybody. There’s really little justification for doing that. The reason LeadPages could do that is because they’re ‘a big company and they can wait out the massive support burden and all the stuff that comes with $1 or the free plan. But as a bootstrapper, I’m with you, Mike. At any cost try to avoid lowering your prices and instead think about how can I offer more value? Ask you customers. Figure out what you can do to justify the current prices that you’re charging.
Mike [21:28]: I’ve had services where I’ve been a paying customer for them and had an account and I got their website and for whatever reason I’m logged out. I take a look at the pricing page and their current pricing is lower than what I’m paying. And I contacted support at that point and said, “Hey, what’s going on over here?” And they were like, “Oh, we’re testing prices.” I’m like, “Well, that’s great and all, but I’m a paying customer here. You’re charging me three times as much as what you’re advertising here.” What I’m always told is, “If we roll this out to everybody then you can get that pricing.” I’m like, “Can I get it now? Because that’s what you’re advertising.” They said, “No.” So you kind of have to be careful about how you choose to deal with your existing customers because I think you can make them angry if they see that there is that lower price available to anyone new and you’ve been supporting them as a customer for a long time.
[22:18] I think that’s definitely something to keep in mind. The other thing that you can do is offer a credit of some kind to your existing customers. So, if somebody is paying $100 or $200 a month or something like that and you dropped the prices by $50 or $100 a month or something along those lines on the plan that they’re on, you can give them a credit and either drop it by a percentage for the next three to six months or you could just say, “We’ll give you a credit for the next two months,” until you’re back to the point where they’re paying the same amount as the new customers. I think those are two different ways of dealing with it. If you’re offering a percent off as a discount over six months, it’s less of a hit to revenue than if you were to offer them just X number of free months over a time period.
Rob [23:02]: Yeah, I like that. That’s a pretty good way to think about it and I think most customers would likely be okay with that, especially if they’re using the service already and you let them know, “I have to lower prices, this is what’s going on. We’re bootstrapped and we don’t have the cash to just decimate this. Can I give you a credit?” I think that’s a nice kind of in between. And if there is a real pushback you can decide if you want to let some folks truly downgrade versus giving them a refunds or whatever is required. I think that’s a creative way to think about doing this if you do find your back against the wall.
Mike [23:34]: The next challenge is more of a logistical one when you’re building up the product. How do you go about avoiding overpaying for supporting and building your subscription product? This goes along the lines of user subscriptions that you have to purchase in order to just host or build your product or offer it as a service to people. And the money that you’re making doesn’t match or even meet what you’re paying for those other services. Let’s say that you have a product that’s costing you $1,000 a month for hosting costs and you’re only making $500 a month for it. You’re essentially financing your service for the customers. How do you go about dealing with that aspect of building up your service?
Rob [24:15]: I think there’s a couple ways. One, there’s ways to kind of do it on the cheap. I know we talked about [Wistia?] and it’s $100 a month, but there is a service called SproutVideo which, admittedly, does not have all the features of [Wistia?] but it’s like $15 or $20 a month. So you start there. And yes, you’re going to have to migrate later. Yes, that’s going to be a pain. But if that $80 difference is something to you, then you’re just going to have to put in the time to migrate it at a later date if you later want the features. So that’s one way to kind of do it on the cheap.
Mike [24:43]: [Wistia?] changed their pricing, so it’s only like – they actually have a free plan and then they used to have a $25 plan.
Rob [24:50]: That’s interesting. Okay, so maybe [Wistia?] is not a good example, but if you’re spending $1,000 a month on hosting on a membership site, then you’re doing something crazy. My guess is you could do it cheaper. Maybe a less reliable way, but you can find a cheaper alternative. An example is when I launched the Academy. I launched it on WordPress with a WordPress plugin forum on [Dreamo?]. So literally the costs were $10 a month and I think I was embedding the videos there. I don’t know if [Wistia?] was around in 2009 when I was working on this, but I did it really on the cheap. That created some issues later on, three or four years later. Forum stuff was out of date, WordPress was in shambles. WordPress wasn’t in shambles, but the plugins and the stuff that we used was kind of a nightmare. But it did allow me to get out of the gate really inexpensively. Another way is to basically presell it. You’re not putting in all this money in upfront and with a membership site especially, you’re going to be selling based a little bit on your personal brand, a little bit on the promise of the content you have. So go create some content.
[25:50] You can host that for free on YouTube or super cheap on Vimeo. Then you can put it on your blog or put it out as emails or as pdfs. Any way it can be free. Build the list, show what you’re going to do, and then say, “I’m launching a membership site where I’m going to put out awesome stuff like this, but it’s going to be even better.” Paint a picture for them of what it’s going to be and then presell the thing. You know, essentially coming back to the Academy when I launched it, I had two weeks of the content done. I was only two weeks ahead of the people who were at the forefront. When I initially sent those emails I sold I think 100 subscriptions at $50 a month, if I recall. It was a long time ago, so don’t quote me on that. But I’m pretty sure that that was what I presold. It was $5,000 a month. So right then I knew this is what I can put into it. It obviously grew from there, but that was the basis to say, “Okay, I can pay a few hundred dollars a month for hosting or I can afford to hire a designer to do this a little better.” I think that’s another way to think about de-risking this for you. Membership websites are a little easier to do that with. Info products are a little easier than with software.
Mike [26:54]: Yeah, preselling is obviously one of the ways to go with this, but another thing to keep in mind is for the different services that you’re paying for, hosting costs and all that stuff that goes with it. Do you really need them? Or can you go with a lesser version of them? Yes, it can be a painful experience to transform them or change them over to a different system later on, but at the same time you want to [?] your bets a little bit. If you don’t have enough information to really decide how much money you should be putting into it or how many customers you’re likely to get in a certain time frame, you kind of have to [?] your bets a little bit and figure out where you’re going to put your money and how you’re going to invest in the product moving forward. Because you don’t want to be spending a ton of money upfront for three, six, nine months before you get to the point where you are past the break-even-point. That’s something else to keep in mind is that break-even is different than revenue. There’s typically a minimum number of customers that you need to make any product profitable. You need to know roughly what that is. And along with knowing what that is, you need to understand what the time frame and growth trajectory of the product is.
[27:59] If you’re only adding five customers a month at $50 a month, then you’re growing at $250 a month of MRR. But if you’re running at a $3,000 loss every month, it’s going to be a long time before you get to the point where that product is paying for itself. And you’re probably not going to be able to support that. Those are the things that you really need to keep those numbers in mind when you’re building this out and determining what services to pay for. The last thing, I think, here is that when you are trying to figure out what those services are and on what you can spend a little bit less money, you can run it by some of your early alpha customers or people that you’ve talked to or prospects about what is important to them. Use that as a basis to figure out where you should be spending the money. Because a lot of times, you’ll look at something and say, “I really want this,” but at the end of the day it might not actually matter all that much to your customers.
[28:51] As Rob said earlier, when we built the Academy, we built it on WordPress. That’s technically free and there’s obviously a lot of work that goes into building all the different modules and stuff that went into the Academy, but that’s not something that you should probably be paying a heck of a lot of money for right out of the gate. I think we made this mistake ourselves when we switched over to a different platform and we were paying $1,000 a month for it at one point. Quite frankly, it didn’t work out. We thought that it would and fortunately this was much further down the road when the revenue was there. Had we made that mistake early on from day one, I don’t know if the Academy would have ever succeeded.
Rob [29:29]: Free like a puppy, Mike. It was free like a puppy.
Mike [29:33]: Yes.
Rob [29:36]: It took some work to get us out of there.
Mike [29:38]: So the last challenge to tackle is what is the product itself doesn’t work out? What do you do with your existing customers? Do you guarantee that they’ll get this at the same price and the same service level forever? We talked a little bit already about being able to modify the price, but what we didn’t really talk about is what happens if you go out of business or you just can’t support the product anymore because it’s losing too much money. And businesses stop operations all the time. This sucks, but small business owners understand when other small business owners are having a hard time. If the finances behind a product are not working out, there’s lots of companies and apps out there that have simply shut down and ceased to operate. Now, when you’re forced in that situation you do want to go essentially the same route that we talked about earlier.
[30:26] If you’re going to raise prices or shift your business all dramatically, you have to let people know and give them ways to get their data out. You have to give them other options that they can use. If you just flip the lights off one day, people are going to be pissed and they’re going to remember that later on. Those are things that you absolutely want to avoid. But communicating with people as frequently as possible and helping them either transition to another product or service or getting them the data they need. Whether it’s raw database exports into Excel files or something along those lines, you have to make sure they have what they need in order to be able to take their business elsewhere and take their data with them.
Rob [31:04]: Yeah. Shutting a service down is tough. I think it depends on, again, whether it’s membership site versus software. This does happen and it’s something that we all deal with and it’s disappointing. But I think you’re right. The more notice you can give people and the more reason, if you can really explain to people what happened here – that you’re running out of cash or that it was never a viable business. The more time you can give them and allow them to export their data and giving them instructions on how to import it onto another comparable service. Even talking to that comparable service and letting them know, “Hey, I’m shutting down and I have 70 customers. Is there any way you can help these folks with a transition?” I think you kind of owe it to your reputation, I think you owe it to the customers who believed in you to do everything you can to help them do that. If it’s more information, I feel like allowing folks to basically download everything so they can take it with them. It is something they purchased and they can use it moving forward, but if you need to shut down a service, again, just talking to folks as a person and letting them know what’s going on with you. Is it a health issue that you’ve gone through? Is there a life change? A divorce or a death or something that is just catastrophically wrecking your ability to run a business? Or was it just not a viable and you couldn’t do it?
[32:16] That’s kind of how I would approach it. That wraps us up for the day. Again, this episode was based on a question asked by Marcus [Beale?] in FounderCafe. If you’re interested in joining close to 1,000 bootstrap startup founders around the world, go to FounderCafe.com and apply to join. If you have a question for us, call our voicemail number at 888-801-9690 or email us at questions@startupsfortherestofus.com. Our theme music is an exerpt from Out of Control by Moot. It’s 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. We’ll see you next time.
Episode 315 | On Attending Conferences, Opening a Bank Account, and Project Management Tools
Show Notes
In this episode of Startups For The Rest Of Us, Rob and Mike talk about attending conferences, opening business bank accounts, project management tools, and more listener questions.
Items mentioned in this episode:
- MicroConf
- Gelform
- Codetree
- Teamwork
- Startups For The Rest Of Us Episode.167
- Startups For The Rest Of Us Episode.277
Transcripts
Rob [00:00:00]: In this episode of “Startups for the Rest of Us,” Mike and I talk about attending conferences, opening business bank accounts, project management tools, and we answer more listener questions. This is “Startups for the Rest of Us,” episode 315.
[Theme Music]
Rob [00:00:21]: Welcome to “Startups for the Rest of Us,” the podcast that helps developers, designers and entrepreneurs be awesome at building, launching and growing software products. Whether you’ve built your first product, or you’re just thinking about it. I’m Rob –
Mike [00:00:31]: And I’m Mike.
Rob [00:00:32]: – and we’re here to share our experiences to help you avoid the same mistakes we’ve made. What’s the word this week, sir?
Mike [00:00:36]: Well, I recently added another MicroConf sponsor, and I don’t think we’ve talked too much about some of the previous sponsors that we’ve added. One I want to talk about this week is stagingpilot.com, and this one – the sponsor for it was from Hire Auto last year, and he sponsored – he didn’t really have a product at the time – his name’s Nathan Tyler. This year after coming to MicroConf, he validated his idea, went out there and got a bunch of paying customers. Now he’s got what seems to be a pretty viable product going with stagingpilot.com. Essentially, it’s all built around the idea of being able to automate the testing environment for a WordPress install. So, if you’ve got a series of plugins – maybe you may be running Agency or something like that – and you’re trying to build plugins and manage the WordPress infrastructure for some of your customers, it allows you to automate all of the different tests behind that, similar to like you might do unit testing, for example, to make sure that your deployments go well. This allows you to do it at scale for Word Press deployments. It’s a little different than what you would get from WP Engine, where WP Engine makes sure that the site itself works. This makes sure that the site isn’t all jacked up with all the different things, because obviously that can happen when you’re doing WordPress plugin development. I had a pretty extensive conversation with him about it, and how it fits into the audience, and I think it’s a really good fit.
Rob [00:01:52]: Awesome. And if you’re interested in becoming a MicroConf sponsor yourself as you’re listening to this, email us at sponsors@microconf.com.
Mike [00:01:59]: So, what about you? What’s going on this week?
Rob [00:02:01]: Well, last Friday – I guess I should set the stage first here. As you scale an app up, you’re going to run into certain performance issues, you’re going to have certain bottlenecks, certain pages, certain cues, certain things that just slowly grow, and they get slower and slower over time. At a certain point, you just can’t wring any more optimization out of the code and out of the hardware. So there’s a couple things that we’re looking out and we’re seeing, like, “We’re going to hit that here soon.” DRIP’s obviously still doing well, and we’re ahead of stuff in terms of performance and in terms of spam complaints and such, but there’s been this one issue that we’ve been trying to solve, and it’s always been, “Well re-write this piece. Add another index. Add more RAM to the database.” By the time you get a quarter of a terabyte of RAM in your database and it’s still not performing the way you want it to, you’ve got to take a different approach. This thing, on and off, has been plaguing for us for, like, two years, but every three to six months we’ll see a decline, and then we have to come back and revise it. So, Friday afternoon, we were getting ready to take a really big plunge and do a major lind of overhaul, something that would’ve taken a lot of developer time and would’ve probably fixed this for good, but it would’ve added a ton of complexity to the database. We’re basically like, “If we don’t think of something better by Monday, this is what we’re doing.” It was, like, Friday at three, and Derek and I were just sitting there looking through the app. I was like, “What really are the pages that don’t work?” I kept saying, “What if we just load this asynchronously?” “What if we store this in a completely different database?” “What if” – I just kept throwing what-ifs out, and we were just bouncing back and forth. Then we eventually – it was almost like magic, but we stumbled upon this approach that was a massive breakthrough. As soon as Derek’s eyes recognized it, he looked at me, and he said, “That’s how we’re going to approach it!” It was a totally different approach. What was interesting is like the hair stood up on the back of my neck, and I could feel this electricity, like “We just stumbled on something that is an absolute game changer.” It seems like we have maybe one or two of these a year, is kind of what I’ve been saying. I think of when we realized automation rules had to go in the app, or workflows, or these other things. This isn’t necessarily a new feature, although it does allow us to build some other features, but it is just a complete game changer for us. It was stoked. Then four or five hours on Saturday we just could not stop talking about it. Then we were texting about it. Yesterday, it was like, “Oh, and this could also do this.” and, “This is how it’s going to change this.” I mean those moments – those are the moments I realize this is why I do products. I love those huge breakthroughs where you launch something epic, or you figure out how to solve a really hard problem, and you just figure out a completely new way to do it. It’ll take like one to two weeks. It’s actually not that much work. We think it’ll go pretty quick, but it was quite an eventful weekend, at least in our heads.
Mike [00:04:44]: And the interesting thing about that is that your customers will probably not notice it or see it [laughs].
Rob [00:04:50]: Yeah. Well, there’re some customers who are at the edge – in terms of list size and history – with us, who are just starting to see the cusp of this, and that’s where we knew, “We need to address this now before it gets bad.” But you’re right. The vast majority of our customers will never know. They just will know that it’s lightning-fast and, I guess, that’s thanks enough.
Mike [00:05:12]: Yeah. That’s one of those things like the typical story with an IT department. Whenever things are going well, they’re like, “Why do we pay you?” When things go wrong, they say, “Why do we pay you?” [Laughs].
Rob [00:05:22]: Yeah, [laughs] totally. Exactly. Obviously, it’s been a good few days because of that, but other than that I am actually leaving to go on my annual, semiannual – I’m not even sure – retreat. Since we moved to Minneapolis I haven’t been outside of the city, really. So I’m driving four hours north. I’ve heard that Lake Superior’s really pretty sweet. A lot of people have recommended it to me, and I’m looking forward to taking a couple days away from the family and just really relaxing. I haven’t slowed down since the acquisition started, really, so it’s been since January. I haven’t even thought about what’s next, in terms of for DRIP, or me personally, or all this stuff. So, I just feel like I’m backed up on the vision process for the next several months.
Mike [00:06:05]: Very cool. So, are we talking about this week?
Rob [00:06:07]: This week we’re actually resuming the questions that Corey Moss had sent us. He’s from gelform.com, and he sent us an email with a big chunk of pretty interesting questions. In fact, when we did a call for questions 10 or 15 episodes ago, we were down to basically zero questions in our queue, and now we have a nice chunk that’ll last us a little while. So, thanks to everyone who has sent us questions. Let’s dive into this first one. Corey asks, “Do you guys still go to conferences anymore aside from MicroConf? Do you still go to Business and Software? What do you hope to get out of them? Do the two of you really need more networking?” Then he has a smiley face there. How about you? Do you go to other conferences?
Mike [00:06:43]: Not as much as I used to. I think that probably four or five years ago I probably went to more conferences than I do now. I think at this point I tend towards the smaller ones, so obviously I go to MicroConf. I haven’t been to Business and Software, I think, in two years or so even though it’s kind of right in my backyard, but the audience is, I would say, not quite the best fit for me, just because I remember one of the last times I went there I sat down and somebody next to me introduced themselves and said, “Hey, I’m so-and-so, and they talked for a minute or two. So, what do you do?”
I said, “I write software, and I bootstrap a company,” and this and that.
He was like, “I’m a venture capitalist.”
I’m just like, “Okay. We don’t have much to talk to you about,” [laughs] and that was literally the end of the conversation. We really just did not have anything in common. I’ve started to find that that’s more common in the upper-end conferences that I go to.
I also go to the Big Stone TinyConf conference, which is coming up in, I think, January or February.
Rob [00:07:37]: Which is more like a ski retreat, right, with a dozen people. Yeah.
Mike [00:07:40]: Yeah.
Rob [00:07:40]: I almost wouldn’t call that a conference, because you don’t sit down in a chair and listen to talks and such.
Mike [00:07:45]: No, no. It’s a little different. I tend more towards the smaller gatherings of people, I think, these days.
Rob [00:07:52]: Why do you think that is?
Mike [00:07:53]: Lack of time, to be honest, and part of it’s just I like the aspect of being able to get to know people as opposed to going and sitting there as an attendee in an audience where the talks may not necessarily be relevant to me. I think that’s the general feeling I have for a lot of the other conferences that are out there. Obviously, MicroConf is kind of an exception to that just because it’s aimed at people like me, but there’s not a lot of other ones out there in that particular space, so that’s probably it for me. I do enjoy the networking opportunities, and so when I do go to larger conferences that’s probably what I spend the bulk of my time on; talking to other people, learning what they’re doing, listening to what other techniques that they’re finding are working or not working, and just generally getting to know more people. I think that those relationships provide you value beyond the conference and for years to come, whereas, like a conference you go sit down – and that’s kind, I guess, a weird take on it from somebody who helps organize a conference [laughs]. But that’s a lot of where the value comes from for people who’re attending MicroConf. It’s not out of line with that. I think that it’s just a recognition of the place I’m at now is a little different. Obviously, it’s a very different story when you’re paying for a conference out of your own pocket, versus you’re being paid by your employer to go to a conference and learn stuff and bring it back to the company.
Rob [00:09:12]: Yeah, I think it’s hard when – we’ve essentially designed MicroConf to be the conference that we want to attend, right? That was the original goal in 2011, and each year that’s the question I ask myself. So, we invite the speakers that we want to hear. We make sure the right people show up, and we build the schedule around what we want to do. It’s hard – considering it is my idea conference to go to – I have found it harder and harder to go to conferences that are not exactly that. Like you said, if you go to a conference in San Francisco – I went to Jason Calacanis’ launch conference. I like Jason Calacanis and what he’s up to and what he’s doing for the community, but the conference itself just wasn’t applicable to me. I was hoping to connect and network and stuff. I knew I wouldn’t get much out of the talks from the VCs that would necessarily apply to what I was doing. It was cool, but I probably wouldn’t go back – not because it wasn’t good, but because it really wasn’t for me. It wasn’t for me, where I’m at and where I want to go. I guess all this to say I do still go to conferences, but it’s only when I speak. That pretty much tends to be my rule now, and the reason is it allows me to network with the other speakers, and that tends to be what I’m there for now. I think that’s where I get the most value personally, based on where I’m at.
[00:10:25] With that said, I, like you, went to a ton of conferences. When it was basically earlier in my career when I was trying to learn all this stuff and I needed to meet more people. What are conferences good for? They’re good for meeting a lot of people, building your network, learning from the talks. I think those are the main things and main reasons you’re going to want to go. If you find that either the talks aren’t geared towards you, or the talks aren’t at the level of advancement, or sophistication, or whatever that you’re at, you tend to have less and value over time. I still think there certainly are good conferences to be had out there; and, again, if I was earlier in my career, I would probably be going to more, because you kind of have to say yes to everything at that point until you get your feet under you.
[00:11:02] All right. Next question from Corey is, “How do you organize your bank accounts for side or lifestyle business projects? And have you tried opening an online business account recently? It’s a fiasco?” I have tried opening an online business account recently, and it is a fiasco. I’ll agree with that. But, Mike, it’s been a while since you’ve, I guess, had side projects. You have a corporation, right? That’s no longer a side project, because that has to have its own bank accounts and everything. But did you ever intermingle stuff, like do sole proprietorship and have it in the same bank account? How did you do that?
Mike [00:11:35]: No. I’m trying to think. I think when I first started out I probably had things mingled together, but that was more than 15 years ago. I kept track of what was going where, and I didn’t do that for very long, to be honest. I really moved over towards having a dedicated bank account and dedicated credit card for the business itself back in ’99 or so. It’s been a long time since I’ve done that. I do things in my books to keep things separate. So if I have expenses for a particular project, or for a particular product that I’m working on, I do try to keep some of the expenses separate so that I know what I’ve spent on it and what the return on it is. So inside my books I’ll give my bookkeeper explicit instructions about, “This particular expense,” or “this type of expense goes for this product. This one goes over here,” and try and keep the different revenue streams separate so that I can at least see what I’m getting in terms of revenue from a particular product and what I’m paying out for that product. It makes it easier to figure out, “Is this making money, or is it losing money?” If you have everything mingled together then it becomes very difficult. sS I try to keep those separate, but there are times when things are not so clear-cut. For example, I have a couple of different webservers, and they’re not dedicated. I have five, or six, or eight different sites running on one of them for example; and they run behind several of different products. What do you count that against? I don’t really count it against anything. I just kind of say, “This is kind of a blanket infrastructure cost for the business, and I’m going to pay for it regardless of whether I’m running this product over here or not.” I try to do that just so that I get a sense of where I should be spending my time, or what the profit margins are on different things. I think that that’s a generally good way to go. I’m sure that there’s better ways to handle it, but at the same time is it worth me spending the time to figure out the optimal way to do that? Chances are probably not. It’s just not a good use of my time, and at the end of the day it doesn’t matter. I’m really just looking for some guidelines, or data points, that I can look at, and that’s it. I don’t need down-to-the-dollar things, because I’m not buying and selling a lot of different apps. If I were to try and sell one of them, I’d have to go back in there, and I’d try to figure out exactly how much – what percentage of my hosting costs were attributed to this or that, and that would be a lot more difficult; but you kind of have to do that. The other question he has is, “What sort of a fiasco is it to open up an online business account?” That’s a total mess. I mean it –
Rob [00:14:03]: I think that was just a declarative statement rather than a question, yeah.
Mike [00:14:07]: Yeah.
Rob [00:14:07]: Yeah, it used to be easier. I think the Patriot Act really jacked it up here in the States. I don’t know if the rest of the world sees that as well. I have to admit I started the [Numa?] Group, which was just consulting – it was freelance projects – in 2002, and I made it an LLC I think it was 2009. I had seven years when it was just a sole proprietorship, and it was because I didn’t have a ton of liability, based on my judgment. I wasn’t doing things that I thought could get me sued. During that time, I started off, like you, using my personal bank account – like the main checking account – and realized within a few months that that was a [glooch?]. Even if it was only 1,000 or 2,000 bucks a month in side income I just wanted to have in a different place. I just then spun up another checking account under MySocial, basically, and that is pretty easy to do, actually. To open one from scratch with a new EIN, like for a new corp, is a pain in the butt. But, honestly, with Bank of America, or Chase, or one of these banks, it can be just a couple clicks. You submit the thing, and then they’ll just have it open within a day or two. To be honest, if you’re just doing small side projects and, by your judgment, you don’t think you have a lot of liability, and you’re not going to do an LLC or a corp and you’re going to do just a sole proprietorship, that’s not a bad way to go. It all depends on – say it with me, Mike – “risk tolerance”. [Laughs].
Mike [00:15:19]: [Laughs].
Rob [00:15:19]: Remember when that seemed to be every episode for a while. Haven’t had to say that in a while.
Mike [00:15:23]: Yeah.
Rob [00:15:24]: Cool. Next question is, “Do you think swag makes a difference in marketing side/lifestyle business projects?” With “swag,” I’m assuming he’s meaning, like, t-shirts and hats and – I don’t know – USB sticks with your logo on it. What do you think, Mike?
Mike [00:15:38]: I would seem to think that it depends on the type of business. I almost feel like if it’s stuff that exemplifies the things that you are doing for your customers, then it can make a difference. For example, the business credit cards from moo.com, for example? I think that those are an interesting thing that you can give away, and it does exemplify what your work is, allowing people to either order a single, custom business card, for example. Or, maybe you send it to them as an example of what it is that you can do for them and say, “If you want more of these, we can print more, and here’s what the price is for them.” or, “Here’s a link to the other stuff that we do. In terms of giving away things like t-shirts, I don’t know. It depends on what the context is. I think if you have a targeted list of people, or group of people that you’re going after that are all going to be congregating in one place, then that’s good from the marketing side of things. If you’re looking to build rapport with your customers, or just to give them a little bit more than what your competition is giving them. Let’s say that you have some accounting software, for example, and for every person who signs up and they’ve stuck around with you for three months, you send them a free t-shirt. There’s a few things that factor into that. First one is the t-shirt – you don’t want it to be something that’s extremely cheesy. It can’t be something that’s low-quality that’s just going to end up in the trash bin because, ultimately, that’s actually going to reflect worse on you than if you sent them nothing at all. But if you send them a really nice one, they’re going to remember that, and they’re probably going to mention it to their friends.
[00:17:04] I also think that you have to be careful when you do that to not plaster your logo over the top of it such that it’s so inherently obvious that it’s an advertisement for you and for your product. You have to position them such that it’s something cool for them that they’re not going to be embarrassed by. I have no shortage of t-shirts that I’ve gotten at baseball games that I’ve gone to for the kids where some local health insurance company is handing out their t-shirts, and they’re like, “Hey, here’s a free shirt,” and I’m like, “Okay, great. Now I have a new dish rag.” [Laughs]. You have to be conscious of those types of things. I think that it can work. It just depends really on what your goal is. Trying to establish that rapport with customers – especially ones who maybe talkative online – if you have a business that lends itself to being talked about online, that could be useful for the advertising. At the same time, I would probably lean much more towards giving those types of things that are inherently useful to your customers that you want them to remember you by – not because you want to give them free stuff or want free advertising out of it, but because you want to be genuinely thankful like, “Hey, I just want to say I appreciate you as a customer, and here’s something for you.”
Rob [00:18:14]: Yeah, I agree. I think it’s not super important. I think if this doesn’t excite you to print t-shirts or to get swag made, you absolutely don’t need to do it for a lifestyle business project. It depends on what we’re talking about here. When HitTail got to the point where it was doing 20 or 25 grand a month, yes, I spent, I think $700; and I got 100 t-shirts made. They said “I survived Panda and Penguin” on the front. They had the HitTail logo on the back, and Derek designed them, actually, when he was still a contractor on HitTail. I did that because it was fun, and because I wanted to have t-shirts, and I was kind of proud that for the first ever I had budget to print t-shirts, and I was going to MicroConf, so I wanted to give them away to people. It was just something I was talking about. But do I think that those ever moved the needle for me by spending that $700? Probably not. It isn’t something that I would because you think it’s going to grow the business, per se. But I think, like you said, if there’s a lot of word of mouth and you do send it to the first – someone gets their first keyword suggestion, or their first conversion, or their first whatever, I think it’s kind of a fun thing to do. Maybe that’ll get you a tweet here or there. But overall, I don’t think this is a needle mover, and so if it’s something that’s going to be a distraction and is not fun for you, I would say don’t even bother with these with smaller projects.
[00:19:22] This next question is, “Are you guys still in mastermind groups? Anything changed in the way you run them or how you participate?”
Mike [00:19:29]: I am still in a mastermind group. I’ve experimented with having more than one mastermind group, and it didn’t really work out well for my schedule. In our mastermind group, we’ve tried changing the format a couple of times a little bit. It used to be the three of us would just go for about half an hour each, and then the call would end. We’ve recently transitioned a little bit to doing more of a hot seat approach where one person gets about an hour, and each of other two people get about 15 minutes apiece, and that’s worked reasonably well. Not everybody always needs to be on the hot seat, but we do alternate it, so if one person thinks that they need it then we’ll just say, “Okay, yeah, it’s your turn. You can have that slot,” so to speak. It’s a little bit of experimentation, I guess. I don’t think that enough has significantly changed that I would say, “Yeah, this is something that really moved the needle for us, and you have to try it out.” Things are just going as-is, and I think that that’s probably pretty common for most businesses, or most mastermind groups. It’s either working out or it’s not, and there’s not going to be some major changes that you introduce that are so earth-shattering on a fairly regular basis. There will occasionally be some things you try and they work out, and then there’s just things that you try out and they don’t.
Rob [00:20:37]: If you’re interested in our take on how to structure a startup mastermind, go to episode 167, which is “How to Organize and Run a Startup Mastermind,” and then episode 277, “Five Ways to Structure Your Startup Mastermind.” We’ll link those up in the show notes as well.
[00:20:51] My answer is, yes, I am still in the remote mastermind, right? I moved from Fresno to Minneapolis four months ago, so the one with Derek and I and Phil Dirksen in Fresno, since it was in person, we just decided to put it on hiatus for now. We do still video chat with Phil. It’s probably every month or two, and so we kind of do a mastermind. It’s just a lot less frequent. Then my other one has had some type of membership and stuff in terms of people coming in and out, but it is definitely still on. I really haven’t changed anything in our approach, because what we’re doing is working. Corey’s next question is, “Both of you seem to be doubling down on products.” That’s kind of funny. That’s the whole podcast, right? Since episode 1, [it’s?] doubling down on products. We have 315 episodes of doubling down on products. “What did you think of Justin Jackson’s experiment of 100 products?” Are you familiar with that at all, Mike?
Mike [00:21:44]: Yeah, I am.
Rob [00:21:44]: Yeah. What do you think?
Mike [00:21:46]: I think Justin’s experiment with 100 products – it’s a really cool idea. I think that it’s something that, if you’re not sure what you should be doing, I would definitely advocate that you try doing something along those lines. There’s a few different, major benefits of building that many products. The first one is that you learn quickly how to get a product out the door and how to launch it and move on to the next product. It’s not to say that you should always move on from one product to the next, but you get that feeling of being able to launch, you get the process down, and you become more comfortable with it, because I think when you first launch your very first product it’s difficult. You’re very hesitant, but if you have a schedule that you have to get 100 products out there as quickly as possible, you’re going to get over those fears because you absolutely have to. You have no other choice. In doing so, you start to develop an affection for certain types of products that you develop. Over time, you’re going to be able to see that – after pushing out 25, 35, 50 different products, you’re going to start seeing which ones resonate with people and which ones don’t just based on the sales and revenue streams and things like that, and you’re going to figure out, “Where are my talents best put, and where are there places where I just don’t do as well?” I think that those things will help lead you back to what should you ultimately end up working on. I think that there’s definitely cases where there’re some people who are probably better at just launching a bunch of small products, and that’s – I don’t want to say that’s all they do, because that’s obviously a lot of work – but there’s a certain type of person who is attracted to that because it’s always something new. I think you’ve mentioned in past episodes that you get bored by the same thing after two or three years. I’m kind of the same way, because you always want something new. You’re always looking for either the next big thing or, the new, shiny object, so to speak. If you have that to such an extreme extent that launching a new product every three or four days works out well for you, then great. There’s absolutely nothing wrong with that. But that said, maybe you’re the type of person who only wants to work on a couple things, or you want to work on the same thing for several years and build it up and then maybe sell it off. Building that many products gives you a much broader view than if you only worked on one thing and that was it. It’s almost similar to somebody who’s worked as a consultant for 50 different companies. You’ve gotten to see 50 different companies; whereas if you’re building those products, you get to see 50 different products getting launched, and you get all the inside view on it.
Rob [00:24:10]: Yeah, I think if I was early in my career, I would consider something like this. I feel like 100 products is overkill, and a little bit of a – I don’t know – like a circus or something. A “sideshow” is probably a better way to say it, right? It’s like picking 100 is just this huge, almost ridiculous number. It’s going to get you a promotion, and so in that sense I think Justin did a good job, because I’m sure this raised his personal brand and such when people heard about it. But earlier in my career I would have totally thought it might be interesting to launch a product a month for 12 months, or something. I actually really dig in. I think as I’ve gone on in my career I’ve learned you have to focus on something for long enough for it to have legs. You really can’t bounce from one thing to the next, or else nothing takes hold. That’s just been my experience, and I prefer to focus on things really intently for, like you said, one, two, or three years, and figure out if they’re going to work and push them into that place. Imagine if we had launched Drip and then given it a month or two and then said, “Nope. Not growing. We’re going to bail on it.” Could’ve happened, because it wasn’t growing for the first several months, because we didn’t have product-market fit. It took six months or whatever after a grueling five-month launch. Then it took another six months to get to where we had product-market fit. Sometimes you’re pushing a boulder uphill, and I think if you’re going to do something big and impactful – and I don’t even mean “impactful” like a $100 million company. I just mean a mid-six-figure or seven-figure company. I think bouncing from one thing to the next is probably not the ideal thing, but then again, if you’re trying to learn quickly, I think that – and if you are not shipping, like you said, and you’re kind of scared of shipping, or you just haven’t gotten there – shipping a bunch of stuff will just get you over that fear. Our next question is for Mike. Corey says, “Mike, does your wife understand what you do? How about your kids?”
Mike [00:25:47]: I really don’t know [laughs]. I think, to some extent, yes – much more so than I would say that my parents understand what I do, because my parents, if you were to ask them what I do, they’d say, “Oh, he builds computers” –
Rob [00:26:00]: Right.
Mike [00:26:00]: – which –
Rob [00:26:01]: Isn’t really it [laughs]. You did that 20 years ago, right?
Mike [00:26:05]: Yeah, exactly. It’s just not quite the same thing. I think my wife probably has a much better understanding now than she probably did when we first got married, because when we first married I was still dabbling in a lot of different things and trying to figure stuff out. At this point, I’m full-time on the stuff, so I talk to her on occasion about what’s going on, or how different things are going, or what some of the different challenges are, so she gets it I would probably say much more so than our circles of friends, so to speak. Most of them, they’re probably going to say – if you asked them what I did, they’re like, “Oh, he works with computers,” but they wouldn’t necessarily really understand what it is that I do.
Rob [00:26:39]: Yeah. I think back when I was doing all the micropreneur staff and I had a whole portfolio of products, and I had all these websites – I had eight or nine things going on, and I was buying and selling, and I was upgrading and rehabbing and all this stuff – it was complicated, and most people didn’t get it. But once I had HitTail and once I had Drip I could just say, “Look, I have two sides of what I do, the personal brand side and the actual software side,” and then just to say, “I run an email marketing app” – most people get that. Actually, my ten-year-old gets it pretty well. I don’t know that he understands what I do day to day, but he has a pretty solid grasp of it, and I bet he could explain it. If someone asked my six-year-old, yeah, he knows I work on computers and I check email, which is kind of cool. Next question is, “Do you work from home or from coffee shops? Any experience with co-working spaces?”
Mike [00:27:22]: I work from home. I’ve tried working at a co-working space, but it didn’t work out for me mainly because I had to work from my laptop. I can work from my laptop, but I’m not nearly as productive as I am at home, because I’ve got a two-monitor setup. I’ve got a 30-inch monitor next to a 20-inch monitor, and although most of my environment is duplicated on the laptop, it feels too constrained and limiting for me – just because I don’t have the visibility, all the different windows and the giant monitors. It just feels different for me. If I’m sitting there writing an article or something like that, I can kind of get that type of work done, but for most other stuff where I’m alternating between different browser tabs, or working with marketing software, it just doesn’t really work for me. I’ve never really found the co-working space to be particularly helpful in that regard.
Rob [00:28:08]: Yeah, I worked from home pretty consistently for about ten years, and towards the end I was definitely feeling it. I just felt isolated and wanted to get out more, and so as Derek came onboard with HitTail and Drip and we started having co-workers locally, so to speak, even before we had an office, we used to meet at coffee shops and work. I always felt a little less productive, because I didn’t have the extra monitor, although I did use to bring an iPad. I forget what that app is called, but you can actually use it as an external monitor, which is kind of cool. Aside from that, we did do a co-working space. When it first opened, it was called “The Hashtag” in Fresno, and it was the only one for tech folks like us, and I signed up as a charter member. I didn’t work from there very much, but then that turned into the [Bitwise] office building that all of us were in in Fresno when we moved away. That was actually really cool to get a little office. It wasn’t very expensive. I could leave monitors there, so we bought extra monitors. We had desks. We had a door that locked. That was the way to go. If you can find something inexpensive enough, and close enough – it was less than 15 minutes from my house – and then that allowed us to have a dedicated space to really hammer on things, and to be able to collaborate. It was two of us in this 10 x 12 office. We eventually, I think, had four people in that office, although we had to alternate days because we couldn’t all fit in there at once. It was kind of funny, but I think co-working spaces are cool as long as – I’d really like one with an external monitor, unlike you, where I take that for granted these days.
Mike [00:29:32]: Yeah, there’s a co-working facility near me where you can essentially get a dedicated office. I think it’s around $400 a month for your own private office. I’m looking at their website now. One of them is – it’s $225 a month to get a dedicated desk, so then you could put additional monitors and stuff there, and it’s $500 a month for a private office. Either one of those options would probably work well for me, but there’s waiting lists for them. I’m just like, “Eh, well, whatever.”
Rob [00:29:59]: Yeah. We had that 10 x 12 office with the door that locked. We basically put two, and eventually three, desks in there. That was only like 250 bucks, and that’s the beauty of bootstrapping in a place that’s not expensive. Fresno is one of the cheaper areas of California, and that was a benefit, I guess. His next question is about project management. He says, “What project management style and tools do you use?”
Mike [00:30:24]: I’m not even really sure what this question means [laughs].
Rob [00:30:27]: What the style is? Yeah. Well, I’ll go first on this one. My project management style is to figure out what we’re building next. It’s very agile – with a lower-case “A” – meaning we move quickly. We don’t define – I don’t even know what we’re doing in three months, right? It’s basically a 90-day – give or take – idea of what we have, and the roadmap just exists with Code Tree, right? We’re in Code Tree. It’s just a – imagine it’s like GitHub Issues, but with a nice UI sprinkled on top. We enter things in there. We spec them out per issue, and then we basically have them in the order the developers should be working on, and they’re just working through their stuff. We don’t do sprints, where we gather them all up. When a developer gets done we all test it, and then we throw it into production. I don’t know precisely what that style might be called, but it’s definitely just a fast way to do things, because there’s not a lot of overhead. We’ll frequently go in and – if we have an idea, or if we know we need to do something – we will go in, write it on a whiteboard, everybody gets a round – “everybody” being two or three people- and then we take a photo of it and throw that in the issue. Everybody who is there knows what the sketches mean, and that’s our spec. We don’t write up – I remember writing up waterfall specs 10, 15 years ago that were these 40-, 50-page Word docs. Just insane to think about doing that these days, how long that took. Then in terms of tools, like I said, we use Code Tree, which is actually the app that Derek built on the side, and then he sold it. I interviewed him about it a few episodes ago. We used that to manage issues, and that has both a [Camp?] and Trello view, and it has a list view. The developers like the Trello view, and I, as someone who needs an overview, I like the list view of it. Then personally, for my own to-dos and stuff, I use Trello for that and then my Google calendar all the time. Good grief! I’ve so many events in there that, like, ping me at two o’clock on this day to think about this, or to go through this label in my Gmail, or to make sure to do whatever. I mean, half the things on my Google calendar are not meetings. They’re almost like reminders to me or things to be done.
Mike [00:32:23]: Yeah. Most of the development stuff that we do is all based out of FogBugz, so we keep everything in there. Then if anything needs to get done we just assign it somebody, and then we have a couple of what are called “virtual users,” where we’ll assign something to a virtual user because we don’t necessarily have somebody to work on it, or it’s just not something that is terribly important for us to work on right now. For example, inside the Blue Tick project, there’s this Blue Tick unassigned user. It’s a virtual user. If anything needs to go in the backlog, or we’re not sure what to do with it, it just gets assigned to there. Then we have a couple of other virtual users we use for certain things, but generally speaking, if it’s on our to-do list – things that are assigned to you tend to be no more than about ten or 15 items long. Then beyond that there shouldn’t be anything on your open, assigned list that isn’t something you’re actively working in the very short term. It should all be stuff like, “This has got to be done, and it’s got to be done soon,” and by “soon,” within the next two to three weeks or something like that. It’s kind of like you said. You don’t really look too much further beyond that, because the things that are there need to get done. I think if you get too many things on your task list, then things will start to get lost. They start to get pushed, and if they get pushed, there’s always going to be other stuff that surfaces up as more of a priority. Once that to-do list gets too long, you start to pay attention to it less. I think that the whole project management system is – and I don’t mean just FogBugz. I mean anything that you can possibly think of, once you get too many things on it, you start to not pay attention to them, because they’re so far down on the priority list, or there’s other stuff that always comes up. Some things will always fall through the cracks, and they’ll always end up at the bottom, and it’s almost worthless to have them there. That’s why we use our virtual users to just kind of shuffle those things off to the side so that we don’t have to worry about it.
Rob [00:34:08]: Yeah, I think you make a good point there, and that’s, I think, being disciplined about what you let in your issue tracker is a big deal. I think just, in quotes, “throwing” everything in there that any customer requests is a really bad idea. I think for customer requests you maybe can have a label in your support software. Like in Help Scout we have that. It’s says, “Feature Requests.” That’s okay. I think there’s hundreds and hundreds of them in there. But if something catches our eye as it comes in, and we think we really want to build it, we’ll throw it in unassigned. If it’s obviously a critical issue or a bug, we’re going to get to it right away, but not just polluting and overwhelming your list, and getting hundreds of things in your issue tracker. It just becomes unmanageable. I think that’s a good point you’ve raised.
Mike [00:34:44]: Yeah. The other thing that I use is I have a Teamwork account, and I use Teamwork quite a bit for any of my recurring tasks. I have a set of Marketing Monday tasks that are in there that are recurring tasks every week, and I know that those things need to get done, and as I finish them off I just go in and check them off. I also have a special project off to the side that I use for household chores, to be perfectly honest. As things need to get done, whether it’s vacuuming, or mowing the lawn – things like that – I have all of our vehicle maintenance and stuff in there, so every three to four months I have oil changes and stuff like that in there. It’s mostly for those things that you don’t think about it until it’s way past the time that you probably should’ve done it, so having those things surface to me at that time allows me to say, “Okay. Now I need to pay attention to this. This is something that I need to do,” as opposed to getting four, five, six months down the road and you’re like, “Oh, wait. Did I get the oil changed?” “Did I have the tires rotated,” stuff like that. I have a lot of regularly recurring maintenance tasks that’re in there, whether they’re business-related or non-business-related. Then I have different projects in there for some of the different things that I have going on. I also have a separate project in there specifically for my bookkeeper so that anything that I have that comes up as a – like if I have a receipt, I have a special forwarding address that I just forward it over there. Then I can just add a quick, little note that says, “This is for that.” It just cuts off additional overhead or communication emails back and forth between my bookkeeper, because I’ve already said, “This is what this is for,” and I don’t have to answer it down the road, or wait until she goes in, looks at the books and says, “Hey, what’s this WP engine thing?” or, “What’s this thing from Digital Ocean?” I don’t have to worry about it, because I’ve already given her a heads-up, “Hey this is what this is for.”
[00:36:22] I think that about wraps us up for the day. If you have a question for us, you can call it in to our voicemail number at 1.888.801.9690; or, you can email us at questions@startupsfortherestofus.com. Our theme music is an excerpt from “We’re Outta Control” by MoOt, used under Creative Commons. Subscribe to us 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 314 | Management Lessons for Founders
Show Notes
In this episode of Startups For The Rest Of Us, Rob and Mike talk about management lessons for founders. This episode is geared towards how to manage a team of people and discusses the two extremes of a highly involved micro-manager versus allowing people to work independently.
Items mentioned in this episode:
Transcript
Mike [00:00]: In this episode of ‘Startups for the Rest of Us,’ Rob and I are going to be talking about management lessons for founders. This is ‘Startups for the Rest of Us,’ episode 314.
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 [00:26]: And I’m Rob.
Mike [00:26]: We’re here to share experiences to help you avoid the same mistakes we’ve made. What’s going on this week Rob?
Rob [00:30]: Things are pretty good. Getting some positive feedback about episode 311 where I interviewed Derek about what it’s like selling a $128,000 side project. Did you hear that episode yet?
Mike [00:40]: I actually have not. It’s on my list. I haven’t gone to the gym in a couple of weeks, so.
Rob [00:45]: Totally. Now everyone knows that we don’t preplan these intros. That was a genuine so, you know, you have to circle back and let me know if you liked it. But I’ve gotten several emails and I think there’s a comment on the post itself of people who just really liked the inside look of what that was like.
Mike [00:58]: I’ll read the transcript. How’s that?
Rob [01:01]: Yeah, do that. That’s how you always approach it. Cool. And the other thing is MicroConf tickets are on sale which has been kind of fun. And this year – you know, for folks who follow the podcasts – we have two MicroConfs now in Vegas. And they’re back to back in early April. And we went with a starter addition and a growth addition because what we found is that it was hard to build a conference that catered to both ends of these spectrums, right. Of someone looking for an idea, vetting an idea; trying to get to launch; trying to get to fulltime revenue. For everyone to be able to live off it.
And that’s where starter addition basically ends. It’s all the stuff that you do in the early stage. And then growth addition is for folks who are already living off of it and are looking to grow it. And it’s been pretty cool to see kind of the distribution of folks who’ve gone to growth versus starter. And to see a lot of people are going to both of them.
But there are still tickets available which was kind of the goal of doing this, right. We’ve typically sold out. By the time we launch to the public, we sell out in what, five minutes, three minutes. I mean it’s been kind of ridiculous the past few years and this gives a lot more folks the opportunity to come and learn from the speakers and, of course, the other attendees in the hallway tracks.
So, if you’re interested go to MicroConf.com and by the time this airs you’ll either be able to still signup for the list or, perhaps, even just click right through and buy a ticket.
How about you? What’s going on?
Mike [02:11]: Well, I’m planning on casting an early vote for the election tomorrow. But I hate myself already, so, I don’t know. It’s kind of a mixed bag I guess.
Rob [02:20]: You know like; can you take a shower?
Mike [02:21]: Yeah, I don’t know. I almost wish that I could vote for nobody for the next four years and just be done with it. But whatever.
Rob [02:27]: Yeah. So I actually purchased a shirt and it’s got Cthulhu on it. And it’s says ‘Cthulhu 2016, why vote for a lesser evil.’ And so I think that should be our write in.
Mike [02:37]: I think that there’s other ones that have been out there like ‘Pedro for President.’ So –
Rob [02:40]: Right. I also have another one that’s ‘Underwood Underwood 2016.’
Mike [02:43]: Yes. I like that one too.
Rob [02:46]: Cool. What else? What’s going on with BlueTick?
Mike [02:48]: Well, I’m currently mired in support tickets and bug fixes. But I also added two paying subscribers this past week. So, things are going well. It’s just a matter of kind of going through those and – the unfortunate thing is that when there are certain things that go wrong, they create more support tickets than the actual problems that are causing those things. So, sometimes there’s this cascade effect where one thing that goes wrong or needs to be fixed will create like four or five support tickets and they’re all related to the same thing. Which kind of sucks to have to go through each of those and try and figure out are they related or are they not.
But the issue we ran into was there was data that was being displayed incorrectly and come to find out we had to go back through and regenerate some of the data because it just didn’t exist at one point. So we were tracking some information and we didn’t start tracking that information until several months in. And we got to a certain point where we’re showing all these statistics and things like that. And there’s some things that are included and then there’s historical data which doesn’t exist because it wasn’t included until then. So all the numbers looked off. We had to go back through and figure out, “Okay, well, is our logic wrong? Yes, actually logic is fine but this data is actually missing.” So we had to go through and regenerate all that data.
And then when doing that, it caused some other things because we’d fixed the data and then we had to modify how it was displayed but they were out of sync. It was just kind of a nightmare. But we’re at the tail end of that at the moment. I’m onboarding somebody else new tomorrow. I don’t know.
Things are looking up. Things are going in the right direction. It’s just still a lot of work to be done.
Rob [04:12]: Yeah, there always is, isn’t there? But you made it through and you’ve added a couple of new customers, which I think is probably the important takeaway from all of that.
Mike [04:19]: Yeah. So that’s a good feeling to see that I can talk to somebody about the product and walk them through it. And, actually, one of them was sight unseen. They just said, “Yeah, this sounds like it solves my problem. I’m in.”
So, yeah, it’s going well so far, I think.
Rob [04:31]: Cool. One other thing I wanted to mention is I was interviewed on Mixergy again. I was trying to think, this might be my – I think including the time I was on – you know, he did like his 1,000th episode and there was like Seth Godin and Tim Ferriss and a handful of people. And he invited me on for that. I think including that this is my sixth time of going on Mixergy.
So it was fun to talk to Andrew. I had just seen him a week or two ago. I’d converted to then see him again and be able to do it. So, it’s about the Drip acquisition, in essence. About growing and selling Drip. So, if you want to check it out, it’s on the front page of Mixergy as of now. So it’s still freely available.
And, if you do head there, I’d appreciate – there’s like a ‘Like’ button in the upper left. I’d appreciate if you’d click that because it kind of increases my cred in the whole Mixergy ecosystem.
So what are we talking about today?
Mike [05:13]: Well, today we’re going to be talking a little bit about some management lessons for founders. And we’ve had some previous discussions about this dating back all the way to episode 68 where we talked about how to hire and manage virtual assistants. But then we’ve also talked in episode 116 about how to move a team from good to great. And then seven tips for being a better manager in episode 129. And then in episode 193, we talked about distributed team collaboration for startups.
But one thing we’ve never really discussed directly was how to generally manage teams of people. And I think there are two different extremes that you could end up falling between when you’re managing people. One of them is the highly involved micromanager who wants to be involved in all the intimate details of everything. And then there’s the other extreme where the manager doesn’t want to do any sort of management tasks, or the founder doesn’t want to do any of those management tasks and they expect everyone to work completely independently of one another. And, obviously, when you trend towards either of those two extremes, you start running into friction where either people are not doing the right things or their work is overlapping so you end up with all those inefficiencies that kind of come out among those conflicts.
And I think that one of the goals of management is really to move the business in the right direction. And, per Joel Spolsky’s advice a long time ago, he said that the job of management is to essentially get the furniture out of the way so that people can do their jobs. And I think that that’s great in theory if all you do is manage people. But I really think that that starts to fall apart when you need to switch between a work mode and manager mode because, in the early days of your business, you’re still working on a lot of things. And then there are times when you need to manage people and you need to manage either the project or the future road map or working with customers or the support team. So you need to kind of alternate between these different management tasks.
And then at the end of all that, you still need to go back and be productive on the things that you’re doing. Whether that’s coding or marketing or what-have-you. What are the other things that you are regularly working on?
So, when you get into that situation where you have to alternate, I think that it becomes very difficult to follow that mantra of just moving the furniture out of the way for people. And I think that there’s some guidance that we can kind of shed some light on for people to help make them better managers.
Rob [07:15]: Switching between maker-mode and manager-mode, which is what you were just talking about there – very, very difficult. And it’s actually not something I recommend. I’ve found that trying to be productive as a maker, as a creator, whether that’s writing code or putting out blog content, writing, talks, that kind of stuff that really takes the deep glucose – first is interacting with people, being willing and able to be interrupted so that you can keep other people going. Trying to merge those two is extremely difficult. And I’ve found that times in my life when I’ve done it – and I did it the City of Pasadena; I did it as a tech lead for a credit card company in LA; and then I did it kind of coming up into Drip. In fact, a big decision I made moving into Drip as we started and that I’ve never regretted was moving out of the maker-mode and out of the maker role, I should say. Because I didn’t write any code on Drip.
It was a tough decision for me because my identity for a long time has been caught up as a software developer, you know. That’s how I introduce myself to people. And to not write code for the past few years was an identity issue. As well as you kind of lose your technical chops. But with that said, it has been a lot easier for me just to feel calm on a day to day basis because I don’t feel like I need to produce as well as managed people.
Now something interesting is that I should probably reference back – because if you’re listening to this, you might be thinking, “Well, I never want to manage people,” right. “So this episode isn’t applicable to me.” But there was a blog post I wrote in September of 2010 and the title was ’10 things I will never have to do again.’ And I’m talking about being a Micropreneur and how I just didn’t like politics of big companies. And so now that I’m on my own and I’m never going to hire employees, I have 10 things and I said I will never again number one, read a book about leadership. Number two, worry about building a company culture. Number three, get someone’s buy in. Number four, participate in a performance review on either side of the table. And I go one to talk about other things. But it’s all implying that the beauty of being out on your own and doing stuff.
And at the time I thought that’s what I was going to do forever. And, as it turns out, that’s actually A: kind of lonely. B: kind of boring and C – you can do some big interesting things but you couldn’t do the big interesting things that I wanted to do without having people onboard.
So, that’s where I would say like at one point I thought I would never ever higher, manage, and build culture and do all that stuff. I think there’s value there. And even if you’re not going to hire employees, if you’re running a team of contractors – which, in essence, I wound up doing just a couple years after that. I think I had eight contractors working for me. All remote so I didn’t have to go into an office. And they were all hourly so I didn’t have the payroll and the W-2. But still there was – I did have to be a decent manager. And I had to learn how to do that. So that’s where this isn’t just for someone working at a big company going to manage this team of 10 fulltime employees. I think there’s a lot of lessons we can take away from this episode that apply to anyone who start a business even if you don’t plan to hire employees.
Mike [09:57]: So, I think before we even dive into the different lessons, I think the first thing to point out here is that, as you had mentioned, not everyone really wants to be a manager but people aren’t necessarily always good at it either. It’s very rare to find somebody who is just a good manager from day one. It’s essentially a learned skill. And I think that that is very important to keep in mind as you’re listening to this episode or you get into managing different people. So, you will get better at it over time but it does take practice and it can be uncomfortable when you’re first getting started.
So, let’s dive into the lessons. And the first lesson is that information is power, but having too much information can kill productivity. Really what I’m talking about here is over-communication. And I’ll be perfectly honest about this, I am brutally awful when it comes to this. My emails tend to be longwinded and I tend to try and consider or talk about different edge cases that I’ve kind of considered when I’m replying to emails. I’ve actually made this point to the people that I’ve talked to. Like, “Hey, look, if my emails are too long, just feel free to let me know that they’re getting too long and you don’t need as much information.”
And it’s important to know what your limitations are, what your shortcomings are when you’re dealing with people. You have to let them know how they can interact with you and how they can provide feedback to you; and what is okay; and what isn’t. And one of those things that I let people know is, “Hey, if my emails start to get too long or it’s inappropriate to continue that conversation in email because of that, just let me know and we’ll take it in some other mode of communication.”
But the real point of this is that you need to provide enough context about the tasks or the jobs that need to be done. But not so much detail that you’re getting in the way and your communication is getting in the way of what people are trying to accomplish.
Rob [11:35]: Yeah. I think as I’ve gotten better at this skill of managing, I’ve learned to be a lot more succinct and to try to filter in only give people the amount of information that they need because anything else is just noise. And they don’t need the whole back story of how we got here. They often don’t need nearly as much detail as you have in your head. And so I’ve found that this works both ways. In retrospect, when I was a developer reporting to managers, I remember telling them all the technical details of a decision and they really didn’t need to know that. A lot of times I should have just boiled it down to something that was just simpler to understand.
So, yeah, I think this is a really good learned skill in all walks of your life, like all aspects. Whether you’re talking to your kids, talking to your spouse, talking to a manager, talking to someone whom you’re managing. Just being able to sit and filter and to put something in terms that others understand and think about it from their perspective I think is something that all of us should focus on. I think, to be honest, the world would probably be a better place if we could all do this a little better.
Mike [12:31]: I think like that point about it does work both ways. So, when you’re talking to somebody who is higher up than you or you’re being managed by them, that filter should also be in place. That you’re distilling it down to just the important things that they need to know. And you’re right, I think that it comes down to making sure that you’re contextually aware of what sorts of things they are interested in or are important to them.
The second lesson here is when you’re managing a team, at least provide people with a high level idea of what the business objectives are, what plans you’re trying to execute. And that can really just be a simple one-page document that’s updated on a semi-regular basis that just indicates kind of what your key priorities for the business are. You need to let them know what’s important to you today and why it’s important and what the different objectives that you’re trying to reach are and kind of leave it at that. Let them interpret that information and apply it at the micro level to what it is that they’re doing. You don’t really want to be in that position of the micromanager where you are getting into their workday and saying, “Okay, when you do this task make sure you remember this. Remember that over there.”
If there are certain things that you’ve run into in the past that you know that they’re probably going to run into, then it’s appropriate to bring those things up. But you also don’t want to be overbearing or over-communicated all of the different pieces that will go into it because one: they’re going to figure it out and two: that’s what you’re paying them for.
So, you want to make sure that you are spending your time wisely and you’re not deluging them with all this irrelevant stuff that, quite frankly, may not even be relevant to the problem.
Rob [13:57]: What’s nice about giving folks a high level overview is that then if there are small decisions day-to-day, you don’t have to be the single point of contact. You don’t have to be the single bottleneck to make every little decision. The more context people have around it and the more context you build over time in their heads folks working for you can just make better decisions. You don’t want to dump it all once like we said in the first part. But over time giving folks a broader business objective rather than having people just be focused on exactly what they do day-to-day so that they understand what role it plays in the business is a good thing to do. And in the past, if you’re in person – we used to do it with a weekly lunch at the Drip office where we’d all get together and just sit around the table and share what we were up to and where we were headed. And people would share what they were working on and then I would talk about kind of where I thought we were going next. I would often lay out, “Here’s what I think the next 30 days are. Here’s what I think the next 90 days are.” And that’s about as far out as we would go.
But I think if you’re remote, this could probably be accomplished – I don’t know if it could be accomplished with IDoneThis.com, which is kind of an email thing that lets everybody know what everybody’s working on. Or if you might need a 30-minute weekly video all hands where everybody’s on there and you just chat through some stuff. You don’t want to do an hour video all hands. Like it’s just too painful and people are going to think it’s a waste of time. But being in person I think is ideal to do this. But I also think that it’s possible to still keep people apprised of what’s going on.
And you have to think, high level plans and business objectives they change frequently, especially in the early days of a startup. I mean they might change every week or two until things start to iron themselves out and you start to get a more repeatable development and marketing approach.
Mike [15:29]: One of the things that you just pointed out was kind of a key difference between an in-person team where everybody is in the same office versus a distributed team where people may very well be in different time zones when they’re trying to communicate. So typically in those two situations, you have the synchronous communication for the in-office people. And then you have asynchronous for people that are around the world. And that’s generally how the business itself operates. I would think that a video call or something that is probably going to be very constraining for those distributed or remote teams. And what you’ll probably want to tend towards is like a summary email or just a document that you can keep updated.
I think the document tends to fall apart just because it’s not in front of people. If it’s sitting in somebody’s email box they’re probably going to read it. But if it’s like Google Doc that gets updated on occasion, even if you send them a link to it, they may not necessarily read it. You really kind of need to imbed that text in someplace where it’s going to be right in front of them so they are, I’ll say, encouraged to read it as opposed to, “Oh, I got this link. I could go click on that but I’ve got all these 30 other emails in here that I’m going to go deal with at this point.”
So I think that you do have to keep in mind whether or not your team is in person or not when you’re deciding how to communicate effectively across the entire team.
The next lesson has to do more with how do you communicate with individuals on the team. And I think when you’re working with individuals you have to set those short term goals and objectives for them. Obviously, you let everybody know what the long term objectives for the business and for the company are but, with individuals, each person tends to be working on different things. And maybe you group a couple of people together when you’re putting together these short term goals. But you need to know what it is that they’re supposed to be doing and they need to know what it is that you expect them to be doing during a short term timeframe. And that could be a week, it could be two weeks, it could be four weeks. But you don’t want to go for extended periods of time without some sort of communication feedback.
So, really the matter at hand here is how you communicate with them to get information to them that they need and you know that they’re working on these certain priorities and how they return information to you to give you status updates to let them know what’s going on. I’ve had managers in the past who’ve had me send out weekly emails to them with three different sets of information. The first one is what did you accomplish this week. What is on deck for next week? And then the third set was what are any outstanding issues or upcoming issues that you can foresee happening that you may need help with or that I may need to be aware of.
And I think that that works generally pretty well. Other systems – I think you’d mentioned IDoneThis. I’ve also used Status Hero in the past for individual updates which you can use either for daily or weekly updates. It depends on how many people you have on your team and the frequency of communication that you need. If you have a lot of people who are working for you, you’d mentioned that you had eight contractors working for you. I would imagine that eight daily updates emails telling me what people are working on would just be too much. It’s just too much communication overhead so, I’d probably lean towards weekly at that point.
But you really have to dial it up or tone it down depending on what your team looks like; how many there are; people fulltime versus only working once or twice a week. All those things factor into it but really it’s a matter of establishing the communication back and forth between you and the individuals.
Rob [18:39]: Yeah and this is where I’m going to go off on my rant about remote teams versus all being at the same location. I believe that a hybrid approach is the best, to be honest. I’ve tried working with completely remote teams; I’ve tried working five days in an office. And neither one is ideal if you’re working especially with developers. I think if you’re doing marketing and sales and you need a lot of communication, customer success, that kind of stuff. I do think being in the office three, four, five days a week is perhaps kind of more conducive to moving forward. But I think as developers, designers and more of the makers who need their quiet time and the maker time, I think that a half and half approach is the best that I’ve ever experienced. And, again, I’ve done the entire gamut of completely remote, completely in the office and then these mixes. And what we’ve found with Drip when I was left to my own devices to figure out what to make work, we essentially arrived at I was in the office about two and a half days a week. The developers were in two days a week. And some the other folks with customer success were doing calls, some of them were in five days a week, four days a week. It was up to them. Really nice to all be in the office Tuesday and Thursday and we would do a lunch on one day and that was the perfect time to get this kind of stuff done to talk about short term goals and objectives and to get everybody else on the same page.
And then if we needed to talk day-to-day, there were often these little short hallway conversations that could even be five minutes of, “What are you up to today? Do you need any guidance? Do you need any help?” Boom, it’s done. So, again, this can all be accomplished with IDoneThis or with daily stand-ups via phone. I know people do all that stuff but to me it all plays second fiddle to sitting and being in a room with a person.
With that said, in terms of providing people with short term goals and objectives, I think it depends on who you’re managing here. If you’re managing developers, then it’s typically going to be features or bug fixes or here’s the next thing we’re doing. If you’re working with sales, customer success marketing, then it’s like here’s kind of a growth sprint or the next growth thing we want to talk about doing. And they’ll go off and do it. And if it’s customer success, it’s probably like we’re finding processes, how to touch base with people more often or do a better job of that.
There’s just things that you need to be thinking about as a high level. And this is where being a manager, if you are really managing all these facets of it, it can make your brain spin. It’s sitting there every day and not being able to focus on anything works for some people and it doesn’t for others.
Mike [20:46]: The third lesson is to set expectations for how people should work with you and what their expectations of you as a manager are. And you want to do this as early as you possibly can and the reason for doing it early is so that you can identify what the deficiencies in that method of working for you is so that you can get those things corrected. If you don’t correct those things early, what can happen is that you end up in a situation where you have these expectations of somebody but you haven’t really communicated them very effectively. So then you start to get resentful or angry that they’re not doing what you expect of them but you haven’t really told them what it is that you expect. So you have to establish those lines of communication very early and what those expectations are. Whether it is, “Hey, I expect that if you’re working on a daily basis you have to” – this is for developers – “you have to have at least one commit at the end of every single day.”
And if you start letting those things go, then that will not only eat away at the relationship that you have with that developer, but it will also start to undercut the credibility and the overall relationship because you can’ read their mind and they can’t read yours. So if you don’t tell them, how are they possibly going to know?
And if you don’t correct those early it will tend to create a cycle that is very detrimental later on. You can get around these things by having some weekly updates where you start discussing those things. Maybe set aside some specific time when you meet up with people during one-on-ones whether that’s a weekly basis or monthly basis or even a quarterly basis. But if issues start to arise you need to address them early.
Rob [22:19]: This is where hiring people who you think you can work with and who you think can work with you is a big deal. You can’t just hire anyone and expect their work style to match yours or their work style to match your management style or your interaction style. We were extremely slow at hiring at Drip because we were just waiting for the right people. We didn’t want to get people on who would disturb the culture even though we were small. We were two people and then we were four and then we were six and eight. But we really hired people we felt could get along. And part of that was me thinking, “Do I want to interact with this person? When they’re frustrated, how are they going to be? When I’m frustrated, how are they going to react?” And kind of weighing that in your mind.
Something that I talk with folks during the interview process is, “Look, we’re a small team and as such, we’re pretty hands off. We try to hire really smart people and we try to give them really challenging tasks because that’s what we like to do and what keeps us interested. And then we’ll kind of touch base with you now and again, but if you think that you need daily check-ins or weekly check-ins in order to keep things going and you want monthly feedback and you want this kind of stuff, that’s not really how we work. That’s just not how we set up the culture. And I’m not saying that any of those are bad things, but it’s a different culture than what we built.” And I think there’s logic to that, right. There’s a reason that we did that. It’s because Derek and I are both software developers and we know that as a maker you want to get in, you want to do your stuff, you don’t want to be reporting to someone every day about everything you’re doing. You don’t necessarily want to break your maker time and have to have conversations and meetings are often the death of your maker time. And that is what we setup.
So as a result, we set expectations, not even after someone started with us, but we set it during the interview process. And tried to suss out do we think this person can work given our working style and our management style and basically the company culture that we wanted to build. And so, you have to think about that yourself as well. Like how is it that you want to work? And this isn’t an excuse to basically delegate stuff to people and then just walk away and expect it to get done right every time because that’s not how we work either. For the first few weeks, give advice to people and help them work through it and then offer feedback. And then they’d show it to us and we didn’t expect it to be right the first time so we’d iterate on it. But then over time, people just become more and more autonomous. Good people. They learn and they become more and more autonomous in their role. And so you just don’t have to touch base with them nearly as often. I think it’s figuring out what your style is and learning over time how to find other people who can work with that style.
Mike [24:38]: One of the things that I’ve found helpful, which is kind of the next lesson, is to establish the terminology around the feedback loops that you use with people. One thing that I recently did with the developer that’s working with me is that we kind of established some key words or phrases that are helpful for me to determine whether or not the updates that I’m getting from him are things that he needs me to pay attention to or if it’s just something like, “Hey, I just wanted to let you know.” Because there, in the past, had been some tendency for an update to come through and he’s like, “Oh, you know, this is a problem and here are all the different issues with it.” And I’d look at that and, without any real context because it’s just coming through slack, is that I look at that and say, “Oh, well, he’s got a problem and I know generally how to solve that or I know what some of the work arounds are given my history with the code base.” And I can go find some of the information for him.
But there was a lot of miscommunication there just because I didn’t realize the context of that because there wasn’t really anything there. It didn’t say, “I just wanted to let you know.” It was just, “Hey, there’s a problem with this and I think that this is probably how we need to do.” So what we did was to setup a couple of different key phrases where one of them is just more of, “This is an FYI.” So, obviously, you can just put little snippets of text in there. One of them is an FYI. Another one is, “When you get a chance” which means, “Hey, take a look at this, but I don’t need you to look at it right away.” And then there’s other ones that you can use like, “Hey, I need help with this,” which is kind of a, “I need help right now and it’s blocking my progress from me doing anything else.”
And I think that just little key phrases like that can really help, especially when you have a distributed team or when you’re not in an office. If things are coming through email or chat or text, any of those situations where you don’t get that voice intonation that goes along with it, those types of things can be helpful.
In addition, you can communicate time estimates with people very, very easily but you really just need to set up what those expectations are. And, honestly, all it takes is like a five-minute conversation. “Hey, if you tell me this, include this little information so that I know how important it is or if it can wait or if I need to drop everything that I’m doing and respond to it immediately.” Those things will help you and it will help them so that that way you’re both on the same page in terms of the communication.
Rob [26:40]: Yeah, and what I’ve found over the years is certain people prefer certain communication channels. And for a lot of more introverted folks, we’ve had support people who really prefer email and even with big announcements. We’ve had Andy who’s done support for us for – I’ve working with him five or six years now. When I told him about Drip being acquired by Leadpages, I emailed him which is crazy because that’s a big deal. And I wrote him a really long email but it’s because in the past we have done a couple of video calls over the years and he just said, “Yeah, this just isn’t my thing. I’d prefer just to do text.” And he’s really good over email. He had done all the email support for Drip since day one, he’d done all the email support for HitTail, he does it for the academy. He really works well and I know his style and when he said that he’d prefer to do email even with kind of big tricky things I will put them in email. Whereas other folks really prefer to see your face, they’d prefer to hear your voice, they’d prefer to be in person. You just kind of need to learn over time what they’re going to prefer.
When I was developing and when I was consulting, I always prefer text meaning email at the time when there wasn’t much else.
Mike [27:41]: You’re dating yourself here, man.
Rob [27:42]: I am. I am. But, yeah, I didn’t mean sending me an SMS. I meant sending me an email because it wouldn’t interrupt my flow, it was a synchronous and it was something that I could sit there and think about and mull over and then respond to. Rather than you’re put on the spot with this phone call and somebody springs something on you and you don’t know how to react and then it feels awkward and stuff. I have less of that these days now that I, I don’t know, I have more experience with it. But think about each individual on your team likes to be communicated with.
Mike [28:09]: And the last lesson on our list of ‘Management Lessons for Founders’ is to dedicate time to management. As you said early on in this episode, alternating back and forth between that maker-mode and management-mode is extremely difficult. It’s hard to do just outright but in addition it kills your productivity for anything that you’re trying to build or make. And all those interruptions, even if they’re just little things, even if it’s just a question of, “Hey, how do you think I should approach this?” If those things can be pushed to certain days of the week or certain blocks of time, then it will help you out tremendously in terms of your productivity. And the time that you dedicate to managing people does not need to be every day. You can intentionally revisit those management tasks maybe once every couple days or once a week depending on how big your team is and how much communication needs to be had between you and individuals. You can schedule that. And as long as people know that there is that dedicated time for you to communicate with them, they will put those things aside or they at least have the capability to. And you can redirect them if those communications start to come up in the middle of the day. And you have those scheduled calls or communications where you can level set those expectations. You can tell them, “Hey, this could have waited until such-and-such time. Or if this comes up in the future just do this instead.” What that does is it puts you in a position of being able to perform those management tasks without interfering with what they’re doing.
Rob [29:30]: Well, I think once a week is a good rhythm to at least be thinking about it and then you’re going to have to do stuff every day is the bottom line. It depends on your situation. If you’re doing this on the side and everybody’s remote, then maybe it doesn’t need to be once a day. But if you do have folks in an office you can be actively thinking on your drive in, “Who’s doing what? Does anybody need any help? Do I need to check in with people?” That was always kind of a mental thing for me on the drive in and then on the drive home to make a note, “All right, I’ve got to check with so-and-so tomorrow.” But then really, like I said, get maybe that weekly lunch in or the weekly – even if it’s a three-minute, five-minute check-in with people saying, “How are things going? Do you need anything? Everything going well?”
I, again, don’t like the 30-minute formalized or the one hour formalized conversations where you’re trying to figure out what’s going on them and feel like you just have to sit in a meeting. But to take a few minutes and even just ask a question, “How are things going?”, and it might take two or three minutes and you’ll hear some short things and you don’t feel like you have to sit in a conference room together. I always liked that approach.
And, again, I don’t know if that would scale to a huge team. You know, if you had 100 people at a company does that approach work? I don’t know. But I never really had the goal of doing that. And I think folks listening to this podcast, you’re probably thinking more about having a small, remote team perhaps one in an office. And I do think that this is a really good way to go about it.
And that brings up the point of like we often have only seen teams managed at large scale because a lot of us have worked for larger companies. Don’t think you have to do it that way when you only have four people because you don’t. You can have a different approach that’s perhaps more authentic to yourself and more authentic to the people around you because you can do things that don’t scale at this small stage. And you can just handle things as they come up rather than having a lot of formal processes. Then once you get bigger, you probably do need to switch that up and perhaps follow some of the more standard marketing wisdom that you might read in the books or read in the MBA programs because those are often talking about much larger organizations.
That’s our episode for today. If you have a question for us, call our voicemail 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 comments. Subscribe to us in iTunes by searching for ‘startups’ and visit startupsfortherestofus.com for a full transcript of each episode.
Thanks for listening. We’ll see you next time.
Episode 313 | The Viability of SaaS, Cutting-edge Technologies, and More Listener Questions
Show Notes
In this episode of Startups For The Rest Of Us, Rob and Mike answer a number of listener questions including if SaaS is still viable for microprenuers, latest technology they are excited about, and some book recommendations.
Items mentioned in this episode:
Transcript
Rob [00:00:00]: In this episode of “Startups for the Rest of Us,” Mike and I discuss whether SaaS is still viable for micropreneurs, what books we’re reading now, and what solopreneurship looks like in 2016. Plus, we answer more listener questions. This is “Startups for the Rest of Us,” episode 313.
[Theme music]
Rob [00:00:17]: Welcome to “Startups for the Rest of Us,” the podcast that helps developers, designers and entrepreneurs be awesome at building, launching and growing software products, whether you’ve built your first product or you’re just thinking about it. I’m Rob –
Mike [00:00:33]: And I’m Mike.
Rob [00:00:34]: – and we’re here to share our experiences to help you avoid the same mistakes we’ve made. What’s the word this week, sir?
Mike [00:00:38]: Well, this past week I spent quite a bit of time probably alternating between two, different things. First one was having a lot of MicroConf sponsorship-related calls with people, because people have been reaching out and asking how to get in touch, and how to go about sponsoring MicroConf. I’ve been having a bunch of those calls. I won’t say it chews up a ton of time, but because they tend to be sporadically scheduled I have to be careful about how I allocate the rest of my time. The other thing I’ve done is scheduled a few, different calls with some of the people I’ve been working with on Blue Tick to hammer out how to integrate it into their sales funnels for Asana and Streak and a couple of other apps that they’re using. It’s been some interesting calls there. I’ve got some overlapping feature requests that we’ve got to go through and implement. They were on the roadmap anyway. All I’ve basically done is move them up a little bit, but so far things seem to be going pretty well. How ‘bout you?
Rob [00:01:25]: Yeah, speaking of MicroConf, if you’re out there and you feel like getting your company, or product, or whatever, in front of several hundred bootstrapped startups founders would be interesting, drop Mike a line. You can email him at questions@startupsfortherestofus.com, and we’ll get to you, or Mike@micropreneur.com. In terms of MicroConf, yeah, tickets are now on sale for Founder Café members – which is our online membership community – as to previous attendees. I think by the time this episode goes live, we will be emailing the early bird list either that day or the next day. So, if you are interested in heading to Vegas in early April, we’re having, as we said, the growth edition, the starter edition, depending on your stage. Head over there. It looks like we’re going to sell out pretty quick again this year. Is that your take on it as well?
Mike [00:02:10]: Yeah. It’s interesting the number of tickets that we’ve sold just so far. It exceeds what we’ve done in the past, which is to be expected just since we have more tickets available. It’s nice to see that things haven’t really been impacted by splitting things out into two, different conferences. Things still seem to be moving along at a pretty good clip, and it’s a matter, I think, for most people of determining where they should attend – just because there is the starter edition and growth edition. I’ve heard some people have not really concerns, but they say it’s a little bit of disappointment. They’re like, “Oh! I’m not going to see everybody that I saw last year.” because some of them are going to one edition or the other, and they’re going to be at the opposite one.
Rob [00:02:44]: Sure, but this allows us to have – what – probably around 400 people across the two conferences without having any conference be more than about 200, 220 people. I think it’s a good compromise.
Mike [00:02:56]: Yeah, definitely.
Rob [00:02:57]: And if you miss out on tickets this year, and you’re interested in getting an early jump on tickets when it’s much calmer, foundercafe.com, as I mentioned earlier, is Mike and my online community for bootstrapped startup founders. It is a paid community, and folks who are members of Founder Café get basically first crack at MicroConf tickets, both in Europe and in Las Vegas. So, if you’re interested, we do screen and approve incoming requests for new members. We don’t just let anyone in. You have to have some type of business launch, and have some type of traction in order to get in, but we’d love to see you inside Founder Café, if that’s of interest. Last thing for me, I’m preparing for my retreat, and my goal is to take two retreats a year – do one in January, one right around June or July – but with the chaos of the Leadpages acquisition, and the move, I never did my midyear one. So I’ve been encouraged by everyone around me. You know how someone hands you deodorant and toothpaste you take that as a hint, like, “Yeah, you smell?” Well, three different people in different walks of my life basically told me, “You really need to go on a retreat!” [Laughs] So, that was the indicator of like, “Oh. Am I being that much of a jerk?” “Do I look that stressed out?” So, I took that as an omen and booked something. I’m going up to the waters of Lake Superior for the first time ever.
Mike [00:04:12]: Very cool. I used to live right next to Lake Ontario, and very close to Lake Erie. I’ve never been that far up into the Great Lakes region, though. I have been to Minneapolis and seen the Great Lakes from there, but it’s a little different than actually going out there.
Rob [00:04:24]: For sure, yeah. I have not been north of Minneapolis at all, so it’ll be a fun, little drive for me. This week we have a bunch of questions. I really liked these questions. We have one from John Ndege, and then we had an email filled with questions from Corey Moss at gelform.com, and both are long-time listeners of the show. We’ve met both of them in person at different MicroConfs, and so we just wanted to take 20, 30 minutes to run through these. Some of these range from things about us and what we’ve been up to. Other things are more of our take on what solopreneurship looks like in 2016, 2017, that kind of stuff. The first question is from John Ndege, and his question is, “Is SaaS still viable for micropreneurs?” – meaning folks who want a lifestyle business, who want to probably stay solo, and keep a small business that can fund their life. You have thoughts on that?
Mike [00:05:13]: I think the interesting thing about this question is that people are starting to look around and see that the landscape of SaaS businesses is starting to become more crowded. If you look at the landscape today compared to five years ago – or even, honestly, two years ago – things are a lot more crowded now, and the low-hanging fruit is more or less gone. There’re certainly opportunities out there for people to come in with a new SaaS product and aim it at a particular niche and be able to be successful with it, but I think that the problem people are probably starting to run into now is that they look around and most of the ideas that have for a new SaaS product have already been done. There’s a little bit of angst, or concern, about coming out with a new product that does something that another product does, and I think that this is a very common hang-up among developers, where they basically want to invent something new. They don’t want to reinvent the wheel. They don’t want to do something that’s already been done, and that to them is a hurdle that they need to address in some way, shape, or form, either with themselves or with their customers. Because one, you don’t want to build something that there’s already a lot of very competitive products out there that already do that exact, same thing. For example, it’d be very difficult to come out with a new Basecamp, for example, or a new version of Teamwork, or a new project management application. It’s because those markets are very crowded. The analogy there that most people, I think, would take is they transfer that onto all other SaaS products and say, “Oh, there’s already something that does this.”, when the reality is the question you should be asking is, “Can I get in front of those people, and can I deliver something?” I think the other side of this is also that people’s expectations of what a successful SaaS product needs to achieve on day one are substantially higher than they were five or ten years ago. If you look at the new apps that’re coming out, they look very, very polished when they hit the market, and when you first discover them. It’s not often that you get to see the makings of a new SaaS as it’s being built, or as it’s in the very, very early stages, because you just are not in that target market most of the time. I think that those are the two things that factor into this. I do think that there’s still a lot of opportunities here, and I still think that people can come out with a new SaaS and make it work – especially in the micropreneur space – but I also think that you have to be very calculated about the things that you do and the choices that you make in terms of the competition and the market that you’re going after, and the marketing channels that you use. There’re still a lot of marketing channels out there that developers tend to shy away from, that they don’t necessarily need to shy away from, because there’s a lot of opportunities there. Some of those opportunities are a direct result of the fact that other developers and entrepreneurs are not in those because they’re uncomfortable with it.
Rob [00:07:51]: I think that’s a really good take on it. I agree with you, it’s more competitive than it was five years ago. The best time to get started was ten years ago, the second-best time was nine years ago, and the third-best time is today. I’ve been saying this for years about SaaS and micropreneurship and software and all this stuff. Info products have done the same thing. There is so much money to be made, and as audiences have grown bigger and bigger, everyone wants to do it – thinks they can – so there’s a big rush of competition. I absolutely think SaaS is still viable for micropreneurs, and I’m seeing people still execute on it, and launching three months ago and getting decent traction; launching six months ago, getting decent traction. I see the landscape shifting, but I don’t see that ending anytime soon. Even looking several years out, it’s still, in my opinion, going to be a viable business. You may have to niche down more. You may have more competition. There’s a bunch of stuff – it’s different, but I still see people executing and just making it happen. So I have no qualms about saying that it’s still legit. Our next question comes from Corey Moss at gelform.com, and he says, “What specifically have you guys gotten out of the podcast? What are some stories of connections made? And would you recommend it as a marketing channel?”
Mike [00:09:01]: Three different questions buried in there. I’ll try and answer them individually. What have I specifically gotten out of the podcast? I would say that it gives me something to talk about when I meet entrepreneurs. Sometimes they’ve heard of the podcast. Sometimes they’re listeners. It makes getting a conversation started with people a lot easier, especially when they’ve heard of the podcast, or if they’re a regular listener. You can jumpstart into various aspects of things, because there’s already that relationship there, even though that relationship, I think, is mostly one-way when it comes to podcasting, because you’re talking, but you’re not necessarily getting that interactivity with the people on the other side. There is that feeling of familiarity with them to you to be able to talk about different things and discuss things about their business. I really like that aspect of it. It’s really nice to just go someplace and say, “I have a podcast.” or find out that somebody else has a podcast, and you just start talking about podcasting, and about what your format is, and how you do things, and how you prepare, and those kinds of things. I think that those are the basics of what I’ve gotten out of it. Stories of connections? There’s any number of things that have come out of this podcast, MicroConf being one of them, the Micropreneur Academy being another one – although I guess the Micropreneur Academy came a little bit first. Still, there’s all those connections that you can make. I’ve talked to hundreds and hundreds of people that I probably would never have met otherwise, because they just don’t live near me. You don’t get the sense of familiarity, or the ease of being able to just walk up to somebody and talk to them without having that connection of some kind. I think a podcast does help to establish that. Both of the guys in my Mastermind group have come to MicroConf. They both listened to Startups for the Rest of Us in the past. So those are the types of things I’ve gotten out of it; Mastermind group members, MicroConf, relationships. Then, I think the last question here was, “Would you recommend it is a marketing channel?” I think this is very subtly nuanced, because I think it’s very easy to say, “Yes, it’s a good marketing channel.” but I also think that there is a lot of nuance there as to the type of person who can make it work, and whether or not you have a format that is appealing to people, whether you have topics available, and quite frankly, whether the podcast is just interesting to people or not. There’s a lot of things that factor into it. You might just not enjoy talking into a microphone every week. You might not enjoy it very much. You can do what we did. I forget how many episodes we recorded. It was eight or ten before we even released one of them, but that’s one way to test it. Do you even enjoy it? Now, in terms of whether it works as a marketing channel, I can’t answer that for every business. For us, with the Micropreneur Academy, it has worked really well; and, obviously, that translated into MicroConf, which is doing extremely well. I don’t know how well it would work for other types of businesses. I think that it does give you the social awareness, in your circles, for the people who are listening to it, but whether it is an effective marketing channel for everything? My suspicion would be, “No, it’s not for everyone, or for all types of businesses.”, but I think that there’re certain ones where it can work, and it can work really well.
Rob [00:11:54]: Yeah, and from my perspective, what I’ve gotten out of the podcast – it’s similar to you. Before the podcast, I had the blog, I had written my book, and I definitely had a small personal brand in the bootstrapped software space. The thing was there was a realization at one point where I surveyed my email list, and I sent them – I don’t even remember what the questions were, but it was kind of trying to find out what they wanted me to write about, and it was how much did they enjoy the blog and this kind of stuff – and a bunch of them said – and I put this both through the RSS feed on the blog – the email – and a bunch of folks replied with comments like, “Yeah, I think I like your blog, but it’s hard to remember what you write and what everyone else writes, because I just see it all” – “I click through to 20 articles from Hacker News, or I see it all in my RSS reader, and I forget who wrote and who said what.” It occurred to me that as much content as we’re all producing and writing, trying to make these impacts on people, that it really was getting lost in the noise.” Even though you want to have a unique voice – or even if you do have a unique voice – your stuff just gets blended in with all the other information that someone consumes in a day. So the realization hit me that two ways to stand out were, number one, to be audio, right? To have a podcast where someone listens to you. It’s a serial. It’s a show that comes out every week, people follow the trials and the tribulations, and if you go all the way back to the first episodes you’ll hear you and I talking about random stuff. Then you’ll hear us talking about selling apps, and buying apps, and launching Drip, and you just follow this story. It can happen with a blog, it’s just a lot more rare, I think. The other thing I realized is that – in terms of content and people engaging – writing a book is the other thing. That’s the other thing where someone will sit there, they’ll read that book, and they’ll spend several hours digging into it, and then they’ll be impacted, and they’ll remember that you wrote it. That was kind of a big wakeup for me. So, I think specifically, what I’ve gotten out of the podcast is it has made my thoughts and my voice, and the stuff that I want to get out there into the bootstrap community – I think it’s given me a mechanism to do that in a way that people remember, “Oh, Rob.” or, “Rob and Mike said this.”, right? As opposed to us saying stuff, but then it just gets lost because nobody remembers you said it, in essence. Beyond that, Micropreneur Academy – which, as you said, I think, was before the podcast – but MicroConf I don’t think would have – it may have happened, but it wouldn’t’ve been nearly as successful as quickly as it was without the podcast. And it’s a fun thing to do. The reason I like it is we show up here for 45 minutes, and then we walk away, and the show shows up every week. I used to spend six to eight hours per post on the really good blogposts. Sometimes I’d crank one out – including all the edits and everything before I hit “publish” – might be four hours. That’s a tremendous leveraging of my time. That’s why I like podcasting. In terms of stories of connections we’ve made, I could go on and on. So much of growing MicroConf, growing Drip, finding speakers for MicroConf, buying apps, selling apps – almost anything I’ve done – has been easier because of the podcast, and because of the connections that we make. Even if they’re one-sided connections, right? You get 10,000, 15,000 people listening to a podcast. I may not know them, but if I reach out to invite them to speak at MicroConf, I don’t have to explain what MicroConf is. They often will say, “Oh, yeah. I’ve heard your show,” or, “I listen to your show.” It makes it so much easier that they know that you’re legitimate, so, in essence, it’s not a cold outreach.
[00:15:21] “Would you recommend it as a marketing channel?” Similar to you, it really depends on what you’re marketing. As a SaaS marketing channel, probably not. I know it can work; we had talked about doing a Drip podcast at one point – but it’s just such a slow burn, and the time it takes to build an audience is really, really long. I think if you’re trying to market software that doesn’t surround a personal brand, I would say this is like high-hanging fruit. There’re tons of things that are more low-hanging than starting a podcast, with all the overhead of doing it. There’s a lot of things to think about. I’ve started two podcasts now, and Sheri has done a separate one as well on parenting. So there’s three podcasts that I’ve been heavily involved with getting set up technically, and every time it just takes a bunch of time.I think that if you’re going for a personal brand, selling information products, if your unique voice needs to be there in order for something to be sold, then yes, I think over the course of years it’s worth doing a podcast. But be in it for the long haul. You’re not going to release ten episodes and have any type of audience. We were around for a year before we had – I don’t know, I don’t remember the exact numbers – but it just wasn’t that many people. It’s really this long snowball that you’re basically pushing up a hill. Our next question is for you, Mike. It says, “How did Mike’s book do in the end? What did you get out of the process, and would you write another?”
Mike [00:16:30]: I’ll be honest. I have not paid very much attention to it since probably a couple of months after the launch. So during the initial launch – I think if you’re on my email sequence there are emails that go out that actually tell you all the different stats, and show you all the numbers and everything – but that’s all from the launch. I think with the launch itself I did probably around 250 to 300 sales, or something like that, and it was around probably $20,000 or so. The odd thing about that is because the book itself – there was a physical book that went with it – that $20,000 was profit. It was not total income for it. The book itself cost me around $5 for each one just to print it, and then anywhere from about $4 to $18 to ship it. I factored those into the profit margin as well. That’s how it did out of the gate, and then it still sells copies every month. I just haven’t really kept track and gone back to look to see what it does. In terms of what I got out of the process, I understand, I think, a lot more about what would go into writing book. That probably doesn’t necessarily directly help me, in terms of most of the things that I’ve worked on. I have thought about writing a book that would go along with Blue Tick, for example, and it’s given me ideas on how to structure that, and what needs to go into it. I’ve looked at amazon.com, for example, as a marketing channel for that book. Those are the types of things where I would say it’s helped me. Would I write another? The answer to that is “Maybe, but I’m not absolutely sure on that.” As I said, I’ve had the idea to write one for Blue Tick just about sending out emails and being consistent about the outreach, and what sorts of things you should look for, what you shouldn’t, what you should say, and what you should avoid saying. Those are the types of things, I think, that would go into that, but I’ve also been reading a lot of science fiction and fantasy books lately, and I remember as a kid one of the things I wanted to do was be a writer. It’s kind of made me think about the possibility of branching off at some point in the future and doing that as a side project, or a side hobby, or something like that – just writing either science fiction or fantasy books, or something along those lines. It’s been burning in the back of my mind, but I haven’t moved on it yet, just because I’ve got so many other things going on, and it’s just not that important to me right now.
Rob [00:18:35]: Very cool. The next question is for me. It says, “Rob, would you, could you write another book?” Then [chuckles] he put in parenthesis, “That may sound more cynical, but I mean it, too.” It’s kind of funny: “Could I write another book?” Yeah, the answer is, “Absolutely.” I kind of talk about this every year, don’t I? I like to say, “Oh, I’m” –
Mike [00:18:49]: You do. I think that’s a yearly, annual goal for you. Or, at least, you revisit it every year, and you make a conscious decision to not go back and write –
Rob [00:18:58]: Exactly. Yeah, so the answer is, yes, I have hopes to one day do this again. I don’t particularly enjoy the process of writing. It’s pretty painful. I think for most people it is. It’s hard to do, but I think that I absolutely could write another book. I think that I definitely plan to write another book. I would love to go back – I don’t know if I’m going to go back and revise “Start Small, Stay Small.” That’s been the big decision process: “Do I revise this?” “Do I have more to say on that topic?” “Do I want to write another one with a different focus?” I think the bottom line is, yeah. As soon as I have time -things are in place where I can do that – I would guess that that’ll be something that I will add to one of my annual goals. Next question is, “What solopreneur bootstrapper books are worth reading now?” This is, actually, a tough one for me. I know of a few books, but I’m not in the –- in the early days when you’re really thirsty and you’re just trying to drink all the information you can on this topic, you read all the books, and you have a pretty good survey of what’s out there. I actually don’t these days, because I’m not actively seeking them, because I don’t necessarily need to learn these aspects of it. I continuously find myself recommending Ryan Battles’ “SaaS Marketing Essentials.” When I started reading through that book it was similar to an outline of a book that I was hoping to write someday. It’s just kind of step-by-step, “Here’s how to think about SaaS.” “Here’s how to get it launched.” I really like that book. Solid. I recommend it pretty frequently. I also like Justin Jackson’s “Marketing for Developers.” I think it’s just a solid way – especially, I think, even if you’re not a developer, this still applies. It’s really teaching you how to get software out there and into people’s hands. It reminds me a lot of stuff that, if you look back at my writings between maybe 2006-2007 and 2010 or ’11, a lot of it was – it’s similar type of stuff. It’s like trying to break – it’s saying the same thing over and over – trying to break developers out of the thing: “Don’t go in the basement and build it first. Start marketing. Talk to customers first…” It’s the same stuff, but it needs to just be constantly said, to be honest, because new crops of developers come up, and nothing lasts forever. So those are the two books that most come to mind.
Mike [00:21:02]: Yeah. I think when you start to – depending on how you phrase this particular question – the answers could be different, because both of the books that you just mentioned, they are from solopreneurs, or bootstrappers, but I wouldn’t necessarily consider them to be about being a solopreneur or bootstrapper. If I were to look at the landscape out there, there’s not very many that fit in that mold. Your book “Start Small, Stay Small” is one of them. My book, “The Single Founder Handbook,” is another. But when you start looking around beyond that – that specifically talks about solopreneurship or bootstrapping a company -there’s really – I don’t see a whole lot out there. Now, the two books that you mentioned, when I look at those I look at them specifically as a form of “How do I do X?” or “How do I solve a particular problem?” which would be – if you’re looking at Justin Jackson’s book – if you’re a developer, how do you go about marketing; or, if you have a SaaS application, how do you go about building that. I don’t put them in the same vein as the way this question is phrased. I think that there’s a difference between those two things. Is it by a solopreneur or a bootstrapper, about that particular topic, or is it by them about a very particular nice thing? Another one that comes to mind that also fits in that is “Email Marketing Demystified” from Matthew Paulson, who has come to MicroConf for several years, knows quite a bit about email marketing. He’s been on this podcast before talking about how they send, some crazy number – like 10 million emails a month or something like that – which is probably higher than that at this point. Those are the types of topics that I think that are probably relevant, and I think once you get past the basics you’re probably looking for very point solution-specific books that solve a particular problem for you.
Rob [00:22:36]: Yeah, I think that’s a good point. I think implicit in my answer is that, if you’re going to be a solopreneur bootstrapper, I think you should learn how to market, which is why I recommend Justin’s book. I think you’re probably eventually get to SaaS. Maybe that’s not your first thing, but I think you’re going to want to take some stuff away from that – you know, Ryan Battle’s book to do it. But you’re right. They’re not specifically about solopreneurship and bootstrapping. Corey’s next question is, “What new tech has you excited, both personally and as an entrepreneur?” For me, I think these are very different questions – which is kind of cool, there’s the personal side and the entrepreneurship side. As a founder and especially as a solo bootstrapper, I don’t think you want to be excited about new tech. That’s the danger. That’s the Silicon Valley thing. If you want to go build software for drones, or you want to build wearables, you should go raise funding, because if you don’t, you’re very likely going to get creamed. If you’re bootstrapping from your garage you want to look at things that’re a lot more boring. Those are the ways to cut your teeth. It’s not to jump in the middle of the pile where everybody has $10 million, $100 million valuations, when it’s two people in a garage and it’s just going to be red water, and 100 companies are going to launch, and two are going to succeed. If you want something that has a decent chance of success the tech that would excite me is things like: building a web app in Ruby on Rails – a SaaS app that helps B-to-B folks, that’s priced at $20, $30, $40 a month and up – or building something in Python over Djenga. These are boring, old things, but that’s how you do it. It’s going simple. Once you get to the point where you have experience, and maybe you have the income coming in – 20 grand a month from your SaaS app. Then you can go do what you want, right? Because you’re basically going to be able to fund your R amp;D. You have some credibility, and you have chops, and maybe you do want to go raise money at that point. But I feel like taking care of that first is something that I’d recommend. So, entrepreneur side for me? That’s the tech that I think people listening to this should be focused on. Now, with that said, for me, personally, I’m really into crypto currency. I like Bitcoin. I like the promise of it. I think there’s a lot of potential in that. I think it’s way overhyped for a number of dumb reasons. That would probably be a whole episode we could talk about, but I am teaching myself about Bitcoin. It’s something that’s new, and it’s changed something. It reminds me – when I was eight years old, I got an Apple 2E sitting on my desk, and I thought to myself, “I’ve never seen anything like this. I wonder how long these things ‘ll be around.” Then the Internet came up. I got into college in ’93, and I get this email address they handed me, and I’m like, “What is this thing? It’s my initials ‘@ucdavis.’ “What in the world is this? I wonder how long this thing ‘ll be around.” And here we are. The Internet and everything keeps piling up on itself, and it’s like these things that we have all been alive as they launched – few of us saw the potential in them. When I look at Bitcoin I think that it’s going to be around for a really long time, and I think we’re at the advent of something that is going to – I don’t want to say, “It’s going to be big!”, but it really does feel like we’re in the early days of things like that. I also think wearables are interesting. I don’t own any of them myself, but I’m excited, long term, about the potential of those. I like [quad?]-copters and drones. I have a little plastic one we play around with the kids, but I’m not excited about those like I am in terms of learning about them and getting in and doing all the stuff like I am with Bitcoin. I guess the other thing I’ll throw out is 3D printing. I have a little consumer-grade 3D printer that I got on Kickstarter. I’m pretty stoked about that, but I’m more stoked about it for my kids. We do it together, and I want them to understand how to design, and how to print the things out, and how to build them. I think for them, long-term, that could be their programming. When I was eight I learned how to code, and it has changed my life. I think for them, one of these things that we do is going to latch onto one of them, and one of them is going to say, “I love 3D printing. This is the thing I’m going to do.” I think your long-term career prospects, if you do that now and get into it, are really big. Anyways, I just threw out a bunch of stuff. You have opinions as well, Mike?
Mike [00:26:21]: I don’t think my opinions are too far off from yours. I think that there’s definitely a difference between being excited about a piece of technology for personal reasons versus entrepreneurship. There’s nothing really out there that I can see that I would want to latch onto as an entrepreneur. The one – I don’t even really want to call this an exception, because I still think that it would be very difficult – but building small devices, or products, out of microcontrollers and things like that. You could use Raspberry Pie, for example, as a prototype tool, and then go out and build other small devices, or have them shrunk down, or get the manufacturing process so that you can get them cheaper than having to buy an off-the-shelf Raspberry Pie to run whatever it is that you’re building. That said, on a personal front, I’d say that a lot of the things that go around home automation, I think, are interesting. I don’t know how really excited I am about them, so I guess things like being able to measure or monitor all the different things that are going on in your house, whether it’s temperatures, or air currents, or, “Are the lights on? Are you using a lot of power when it seems like there’s nobody in the room?” Those types of things they’re not really terribly interesting, though, I don’t think – at least not from a personal standpoint. It’d be nice to have that information, but it doesn’t really help you. It doesn’t significantly change your life. I think it’s interesting, and I like the idea of working with those little pieces of electronics. I would find a hard time, I think, building a business around it. You could certainly do Kickstarter campaigns and things like that, but I think it’d be tough just because of the cost of manufacturing, which was why I went into software rather than hardware. Beyond that, I have a drone as well. I think that those are pretty interesting, but that’s more because I like playing with them with the kids than anything else, except when I run it into the TV [chuckles]. There’s not a lot out there that, I think, interests me, or really excites me. There’s certainly a lot of possibilities around VR, but VR has been talked about for the past 20 years. I went to college with somebody who made a VR headset for the original Mechwarrior game, and that was back in the mid-‘90s, and VR still really hasn’t taken off. It’s not to say that it won’t, but I don’t see TRON-like features two years in our future. I think there’s obviously potential for those things, but it’s not stuff that I’m looking around saying, “I really want to get into that,” or, “I’m really excited to see that.” because, as you said, it’s so hard to see what the future looks like for some of those things.
Rob [00:28:38]: Corey sent us some additional questions that are really good, and we’re going to cover them in a future episode. But for today I think we’re wrapped up.
Mike [00:28:45]: If you have a question for us you can call it into our voicemail number at 1-888.801.9690, or, you can email us at questions@startupsfortherestofus.com. Our theme music is an excerpt from “We’re Outta Control” by MoOt, used under Creative Commons. Subscribe to us on iTunes by searching for “startups”, and visit startupsfortherestofus.com for a full transcript of each episode.
Thanks for listening, and we’ll see you next time.
Episode 312 | 9 Ways to Introduce New Ideas into Your Business
Show Notes
In this episode of Startups For The Rest Of Us, Rob and Mike talk about different ways to introduce new ideas into your business. These are ways to broaden your horizons as a business owner and learn how other people may be solving the same problem you are but doing so in different ways.
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 be talking about nine ways to introduce new ideas into your business. This is “Startups for the Rest of Us,” episode 312.
[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 have a mouthful of food.
Mike [00:00:27]: – (laughs) And we’re here to share our experiences to help you avoid the same mistakes we’ve made. How are you doing this week, Rob?
Rob [00:00:32]: Well, I’m a little behind on launch, so I’m eating in here while I’m muted. Sorry about the ole mouthful-of-food thing. Things are going well. Went to Coverted yesterday, which is Leadpages’ conference, for the last two days, and so kind of getting over the extrovert hangover. I love going to conferences. I love meeting people, and I did a short talk about Drip and stuff along with Clay. It was good fun to meet folks, but then the next day just got to settle down into work-from-home day, which was really nice, so I can just be in my little cave listening to music and crank through some emails.
Mike [00:01:04]: Very cool. Yeah, I was wondering how Converted went. I saw a bunch of comments on Twitter, and there were some discussions in some forums that I’m part. People were talking about it a little bit. It was interesting. It seemed like it was a good conference to go to.
Rob [00:01:15]: What I enjoy these days is meeting new people. I was able to connect with Andrew Warner, who I already knew, because he spoke at MicroConf a few years back, and we’ve talked when I go on [?] and stuff; but I haven’t seen him in person in five years, maybe, so it was really cool. He threw a little – it was a whiskey tasting, in essence, but it was just a little party at his place. I was able to go up there. Derek and Anna were with me and Sheri, of course. It was good to connect with him. I’d never met Derek Halperin in person. I met Pat Flynn in person. These are all people that I’ve corresponded with in one way or another over the years, and it’s just kind of cool to meet them face to face. I also got to meet – I’d never met Ezra Firestone, who’s really big in the e-commerce space, but super cool guy, really interesting, and we had some good conversations. That’s what I really enjoy, is hearing the inside of people’s businesses, hearing what they’re up to and just connecting with them. It was fun. It was a good conference.
Mike [00:02:00]: Awesome. I’m just getting over being sick. I’ve been sick for a couple of weeks now. My wife got sick earlier this year, and she ended up with some – I don’t know if it was a bacterial infection, or virus, or whatever. Anyway, the doctors said that it was resistant to pretty much everything. It will go away on its own in eight to ten weeks, so I was deathly afraid that I was going to end up with the same thing. Fortunately, it seems to have mostly gone away at this point, so I’m very happy and thankful that that’s not going to be an ongoing issue for the next couple of months.
Rob [00:02:28]: Yeah, but even being sick for two weeks is a big bummer. Did it negatively impact your productivity?
Mike [00:02:33]: Oh, yeah. I couldn’t sleep at night. My sinuses were all congested, and it was just terrible. I was tossing and turning all night, not getting very much sleep, so my productivity nose-dived to pretty close to zero, but there’s not much you can really do about it either.
Rob [00:02:47]: You know, it seems like you get sick quite a bit. Do you feel like you get sick more than most people?
Mike [00:02:52]: I don’t think so. At least I hadn’t really thought about it. I didn’t feel like I got sick very often. It seems like when the kids go back to school, or if they have a break and then they go to school – I was talking about this with my Mastermind group earlier this week – it almost feels like the kids go to school, and they have all these viruses that they’re carrying with them, and they trade them around like Pokémon cards that nobody wants. Then they take them home and give them to their parents (laughs).
Rob [00:03:16]: Yeah, we had a pediatrician who used to tell us that the big spike in sickness is the week or two after school starts, and that’s exactly the reason. All the germs you’ve been carrying with you that your family’s gotten used to gets put back together, and then it just spreads like wildfire until everybody gets immune to it again.
Mike [00:03:30]: Yep. Other than that – on Blue Tick, I actually did make some progress on it. I onboarded a new customer into Blue Tick and restarted some discussions with some people that I’ve onboarded that had dropped off the radar a little bit to help understand why they’d stopped using it. Interestingly enough, there were a couple of cases where they said, “It’d be really nice if you could do this.” I was like, “Coincidentally, we can do that.” They’re like, “Oh, really? Let’s talk. Let’s schedule a meeting, and let’s set that up.” It was just interesting that there was a little bit of disconnect in some cases where the app can already do certain things, and they didn’t realize it, so just jumpstarting those conversations again and then working with them directly to help them set up that automation so that it’s integrated more into their systems. I added another paying customer this morning, actually, so –
Rob [00:04:16]: Wahoo!
Mike [00:04:17]: Yeah, things are, I think, moving in the right direction; but it’s still too early to tell for sure, I guess.
Rob [00:04:21]: But it’s forward progress, and this is like we talked about on our update episode a couple episodes ago. It’s really focusing hard on how do I get that next person to use it. If you are talking to five people and three of them have reasons they don’t want to use it, or objections, it’s figuring out, “Did I just talk to the wrong people, or do they need something that I need to build in order to get them to use it?” So, I think that’s good news. Onboarding a new customer and then adding another paying customer, I think, is pretty good progress for the week.
Mike [00:04:48]: Yeah.
Rob [00:04:49]: Yeah, on the Drip side, we actually launched a free plan last week. We had our $1 plan that had been running since Leadpages acquired us. We made the decision in tandem with Clay and those guys to just make it free at this point, so it’s free up to 100 subscribers. The hard part about free with email, and the reason that Mail Chimp has been one of the only providers able to make it work, is that you can really run into a spam issue, because people can send a lot of spam through you, and you don’t want that to happen because you have these sending IPs that need to stay solvent, so to speak. With the $1 plan, we definitely saw a lot of new spammers coming in. We were writing code constantly to get out ahead of it. Not to overemphasize it, but it’s kind of a machine learning algorithm, a little bit of AI, really focused, just looking at patterns. We can get out ahead of people sending now. We don’t have to wait for them to send to figure out, or to have some signals, that this person is likely going to send poor-quality email. It’s pretty fascinating looking at the data, and we’re digging more into that, but it allows us to launch that free plan. Of course, it takes resources, right? It takes that financial backing, and that’s what Leadpages has. They $37 million in venture capital they raised allows us to – we have six, full-time support people now. Can you imagine? We had one the entire time that we were bootstrapped. Then in the past 90 days, added, trained, onboarded; and we’re now fully staffed with five additional support people. It’s crazy. I couldn’t imagine having the bandwidth or the money to do that, so that’s the luxury of that side of the coin.
Mike [00:06:18]: Yeah, I can imagine the issues with the spammers. It becomes an arms race at some point. You have to deal with it and have to be out in front of it, but at the same time – it’s partially protecting yourself, but in essence you’re also protecting all of the other customers that you have. So, you can’t just let it go for a little while.
Rob [00:06:35]: That’s right. The good news is once we got big enough where we were sending tens of millions of emails, it matters a lot less. If someone gets in and sends 5,000 emails and 1,000 of them bounce, that’s a 20 percent bounce rate. It’s crazy. That is not good at all if you’re sending on your own IP. But when you’re sending 40, 50, 60 million emails, 1,000 bounces actually isn’t that big a deal. Since we’re able to catch people really quickly and stay out ahead of it – it felt good to figure out the signals, because before you experience it, it’s like, “How are we going to figure this out, and how are we going to find this?” But it became, like you said, a little bit of a game of cat-and-mouse, and it was a fun whiteboarding session with Derek and I to plot out all the things and then say, “How can we look at these quickly in real time without completely hammering the database?” You have to have all that in mind. You can’t just run queries every five minutes across everybody’s accounts. You have to figure out a way to do it pretty intelligently. So, that’s where we are. We’re definitely out ahead of it right now, but we notice that about every six months we have to upgrade our database. About every six months, we have a bunch of performance and scaling stuff to do, and about every six months we have to get out ahead of people trying to send spam, whether intentionally or unintentionally. Those six-month things are staggered, luckily. It doesn’t all happen at once, but it definitely is – we essentially have full-time people now working in all of those areas. Where before it was like all developers are building features to push the product forward, now we actually have one developer who all he’s doing is performance and scaling, and one guy who’s purely focused on just anti-spam stuff. These are the good problems to have. It’s the part of success that shows that you’re growing. You become a target as you get more prominent.
Mike [00:08:09]: Yeah, I had to add another server to my infrastructure a couple of weeks ago, so I know. Those issues are just a pain in the neck.
Rob [00:08:17]: Totally.
Mike [00:08:17]: Why don’t we dive into today’s episode? We’re going to be talking about different ways to introduce new ideas into your business. This applies to two different situations. The first one is if you are a full-time entrepreneur. You’ve been working on your own things. You’re self-employed. You’ve been doing that for a while. One of the challenges that you’ll run into is that you have a certain way of doing things, and it’s probably not obvious to you that there are other companies out there that are solving the same problems you are, and they’re going about them in different ways. So, the question is: Which of those ways should you be doing it? Are there other ways that you can bring in new processes, or new efficiencies, into the business, and do things better than you were before? And without having visibility into those companies, it’s really difficult to do that. The other side is if you are an employee of a company and you want to learn about how other people are doing things, you want to improve stuff in the current business that you’re working in, how do you go about doing that? How do you learn what other people are doing? Unless you change jobs, the answer is that it’s probably pretty difficult to do that. We’re going to talk about how to address that problem from both angles, whether you’re the business owner trying to bring in new ideas, or you are an existing employee in a company and you’re just simply trying to bring in new ideas, new ways of doing things either to solve existing problems that are just [cloogey?] and people have just dealt with it for a long time, or there’re things that are just completely blatantly done incorrectly because nobody’s really had the ability to stand up and say, “Hey, they’re doing this over here, and that’s a better way to do it.”
Rob [00:09:45]: Cool. So, let’s dive in.
Mike [00:09:46]: The first one is, I would say, probably the old standby that everyone goes to. The first one is books. I remember Lars Lofgren at MicroConf last year saying that he goes out, and he just – he’s a voracious reader, and he will download essentially a new business book every single week from Amazon and just tear through it. I think that that’s a fascinating way to go about learning and aggregating as much information as you can about how other businesses operate and how they’re doing things. I think it tends much more towards the business side of books, so it’s not really about the technical mechanics of how to do something. It’s how different companies are structured, what sorts of marketing efforts they do. The basic idea there is that you can pull a lot of good information from books, and you don’t necessarily have to read the entire thing. That’s one of the key pieces, I think, that factors into being able to get through 50 books in a year. It’s hard to sit down and read for a couple of hours every day. You can do it. It’s certainly possible, but I don’t think that most people have the time for that. If you can go through those books, read through the table of contents, start skimming specific chapters that are about things that you’ve never learned before, or that you’re aware of but not necessarily have a good knowledge of. That will broaden your base of understanding of a particular topic. From there, then you can go out and seek other information that’ll help you drill into specific areas that you find either helpful, or insightful, or just things that you want to learn more about.
Rob [00:11:09]: Yeah. What I find is when I’m stuck – and it may be stuck on a particular problem, or it may be just stuck wondering, “What’s next here? What’s next for the business? What’s next for me?” – I find that I go through these periods of just massive consumption of blogs, podcasts, books, other things we’ll talk about today. Then other times I’m listening to a lot fewer of them, but at different turning points I will listen to, through Audible, two books a week, like full-on business books. Like you said, I skip around a bit, because certain chapters are about things that either I know I don’t need, or are not going to be helpful. But I love the way that it gets me thinking along certain lines, and it kind of breaks me out of my typical patterns. I also take a lot of – I won’t say a lot of notes – but I take action notes like I’ve always talked about, where I think, “What action could this cause me to have in the future?” I don’t like taking just general summary notes of books, because I find that even if I refer back to them it doesn’t get me back in the headspace of what the book was saying. So, I try at the time to really take either direct quotes that I can use in my writing, or podcasting, or conferencesm or, I take direct actions like, “We need to think about doing this for Drip,” or, “Think about doing this for MicroConf.” or something like that. Gosh, I will read a lot, a lot of books. I actually think in the past – I talked about I’m getting more back into investing a little more lately. I think I’ve read maybe ten investing books in the past six weeks, and again, “read” meaning through Audible. It’s that kind of voracious consumption that I like.
The thing that I don’t like about books, as much as I do like listening to them, is a lot of stuff – especially if you’re looking at marketing approaches – if it’s kind of a tip/trick/tactic thing, once it’s in a book it tends to be pretty old. Even if it’s six to 12 months old, these things start to age, and they don’t necessarily work as well. If it’s in a book that gets popular, like the book about – you remember the one from I think it was the guy who ran sales for Sales Force. It was “Predictable Revenue”. He had this whole tactic of how to do the cold emails and all that stuff, and that just blew up. Everybody’s doing it now. It’s becoming less and less effective. There are still ways to make it effective, but it really has – it’s not as effective as when you first read it. Whereas if that had been a blogpost or a podcast, so many fewer people consume those. It actually makes it a better thing in the long term, if that makes sense. I take books for high-level stuff, but super-tactical stuff I tend, perhaps, to look more to podcasts.
Mike [00:13:18]: Yeah. Kind of a little side note that I wanted to just briefly mention here was that this is more about broadening your horizons and making sure that you’re, at the very least, peripherally aware of a lot of other things that are going on, or at least some of the things that are going on in other companies and, as you said, getting you out of those patterns that you’re probably used to operating in. This is very different than the just-in-time learning that you’ve talked about previously, where you have a particular problem and you consume as much information as you feel like you need to to get to the point where you’re about 60 to 80 percent of the way educated about it. Then you go start implementing things to learn that last pieces that really need to be taught on the job, so to speak. There’s a difference between broadening your horizons and that just-in-time learning.
[00:14:04] The second way to introduce new ideas into your business is to take a training course. There’s lots of training courses out there. There’s various sites, like udemy.com and coursera.org, udacity.com, skillshare.com. All these places are good resources to go out and learn about different topics that you’re interested. Sometimes it could just be you want to learn a new programming language because you’ve heard about it, and you’re interested in seeing what that has to offer, versus what you’re currently doing. It doesn’t mean you have to use it, but it is nice to be at least peripherally aware of what those things have to offer, and whether or not people with that type of background might be hirable in your environment. Is it going to be an easy transition for them? You can talk to different people about whether or not that would be an easy transition for somebody to make, from let’s say PHP to Ruby, for example. But going through it yourself also gives you a broader context, based on your own experience, how difficult should that be. Getting advice from somebody: “Oh, yeah, it shouldn’t be that difficult to make the switch.” that’s true for them, but it’s not necessarily true for everyone, and it doesn’t give you a complete picture of what it actually takes.
Rob [00:15:11]: Our third way to introduce new ideas into your business is, of course, through blogs and podcasts. I think this depends on the way you like to consume things. Some people prefer to read and skim, in which case blogs are for you. If you’re like me, you’re an audio generator and an audio consumer, so podcasts are going to be the way to go. What I like about podcasts is you can really niche down, and that’s hard to do with things like books and magazines because they need these bigger audiences. When I read business books, when I read – the last time I read “Inc.” magazine and whatever, the other entrepreneur magazine and stuff, the advice is just too general, because they’re looking at the entrepreneurs who’re trying to get started with stuff. That’s just not that interesting to me anymore. It isn’t helpful because the stuff is too general, it’s too beginner. With blogs and podcasts you can look around and you see the community of people that we’re hanging out with day to day. We go to MicroConf. We hang in on the same forums and that kind of stuff, and you can listen to their podcasts. Even folks who are not as far along as you are can often have really good ideas, and you can hear it just by them talking about their business. If you’re doing 50k MRR and there’s someone who’s at 5k or 10k, oftentimes they will have insights that can help you as well. I’m a big fan. We’ve had several episodes where we’ve gone through our top 20 or 30 podcasts, so if you’re interested in that you can look back through our archives to find out who we listen to on an ongoing basis.
Mike [00:16:32]: The fourth way to find new ideas or processes is to hire a contractor or a consultant. I feel like there’s a mild differentiation between these two that I can’t quite put into words. I feel like with contractors you’re generally hiring them for a particular skill set to achieve a specific job, but it almost feels like with consultants you’re asking them to solve a problem, and you don’t give them as many constraints. You don’t say, “It’s got to be done in this particular programming language,” for example, or, “It’s got to be done using these tools.” You essentially say, “Here’s the problem. Please help me find a solution to it.” Regardless of the differentiation between them, I think that there is a lot of value to be had by bringing somebody who works in various businesses into yours to help you achieve certain objectives. Part of the reason for that is that if they’re a contractor or a consultant, they have generally worked for a lot of different companies. It’s interesting. When you look across the spectrum at different consultants who have worked at a lot of different companies, they’ve seen a lot of things that you just simply wouldn’t have before, and it’s because they’ve been in so many different environments, they’ve solved so many different problems, and they’ve seen the same types of things over and over. Whether those are mistakes or how things are done well, they’re able to provide that information to you and give you some context about where you stand in relation to other businesses, and how they’re solving their problems versus how you’re solving them.
Rob [00:17:53]: Our fifth way to introduce new ideas into your business is to mentor someone, or be an adviser. I know that even way back in the day – let’s think 2008, 2009 – my blog was already up for three or four years, and people would write in for advice. That would, even not doing ongoing mentoring, would help me think through problems in a way that maybe I wouldn’t have thought through before. That was helpful. Then as things progressed and we had the podcast and MicroConf, all of that has helped me look at new ideas. People will bring stuff like, “Hey, I’m trying this new ad channel.” It’s like, “What? I didn’t even know that existed.” This was someone who supposedly I’m mentoring, where actually they’re giving me ideas. Then even more recently, I would say, as an advisor and beginning angel investor, I have really enjoyed the ability to look deep into these SaaS businesses that are coming up. These are essentially bootstrapped, that raised just a tiny bit of funding to help them get to the next level. I’m able to see all the numbers and what they’re doing and how they’re operating and how they’re executing and how the growth is. I can really get a lot of value out of that. Anyway, all that to say I think that this idea of mentoring someone in order to introduce yourself to new ideas is really one that I’m seeing take hold in my own experience.
Mike [00:18:58]: The sixth way is to do some consulting work on the side on your own. I think that you can do this regardless of whether you own your own business or not, because there’s always people out there who will place some value on the things that you know, and the background and experience that you have. Obviously, it’s going to be difficult to go out and do consulting in an area where you have no experience. That’s probably just not going to happen. But, at the same time, you can take the skills and experience that you have and try to take those into different environments, and try to solve similar challenges that other people are facing using their tools and their environment and the skills that you know and morph their environment. I think that as you start doing that type of thing more and more, you see different environments. You start seeing the different ways that people are doing things, and you get more of a sense of why they’re doing it that way. I think that that’s also very important. That sort of thing can also help you identify different business opportunities as well. When you’re doing consulting, because you see so many different things, you know that the same types of problems tend to come up over and over. If you’re working in one particular company, you don’t see them. You see your own problems, but you don’t necessarily see that there’s 30 other companies that are also having those same challenges. So, it can help you identify different business opportunities, but it can also open your eyes as to different ways of doing things as well.
Rob [00:20:015]: Our seventy way to introduce new ideas is to attend a conference with your peers. This would be something like I just talked about, like going to Converted, going to MicroConf, going to Business Of Software; figuring out where folks who are maybe a little bit behind you, a little bit ahead of you, are going. Go to the conference and meet people. What I’ve found is, even as my business has progressed, I’m still able to find people at different conferences. Even though there may be a lot of beginners at a certain conference, you can still find that if you can mingle with the speakers, or you can mingle with the folks who have businesses that are further along, you can get exposed to a lot of new ideas, new tactics, and jostle you out of your own thought process. An example – even at MicroConf Barcelona, I was talking to some folks, and they brought up the topic of investing, which is something that … It was right after the Drip acquisition, so I started noodling on this, like what to do with some new-found cash on hand. They brought it up, and I was like, “Whoa! I didn’t even know you guys cared about that, or thought about that at all.” Suddenly, they were throwing out ideas that they had, and ways that they were investing and ways of hedging things. It was just a cool experience to hear from these guys. In addition, they also talked about some marketing tactics, and some different competitors that were coming up in different spaces that were all relevant for stuff we were doing with Drip. It was something that would never happen in an online context. It wouldn’t happen on a forum. We probably wouldn’t’ve covered it via email, but sitting there having drinks for a couple of hours, just hanging around with interesting people doing interesting things and new ideas on a number of fronts, they’re just going to come out of that.
Mike [00:21:41]: The next way to introduce new ideas is to undergo a joint venture, or partnership, on a very specific project. I think that there’s a lot of different opportunities for this that people aren’t necessarily taking advantage of, because when people think “joint venture” or “partnership,” they tend to be thinking- – I guess with joint ventures, it’s probably not an extended thing. With partnerships, the mental image that comes to mind for people is, “This is going to be a very long-term thing that we’re going to be doing potentially for several years, so I want to be very careful about getting in and working on this with somebody else.” But there’s much shorter things that you can do that fall into that vein, such as writing an e-book, for example, or developing a training course, that do not necessarily require a lot of ongoing effort to maintain that particular product, but you can put those together and work with somebody else – whether it’s something that they came up with the idea, or you came up with the idea – or you find somebody that you just want to work with, and identify one, small thing that you want to do with them, and go through that. You can launch it, get it out there, and then you can move on and go back to your own business, or back to your full-time job, whichever you prefer. You will get the experience that goes along with that. One example that comes to mind that I’ve seen lately is the Big Snow Tiny Conf that I’ve gone to for the past couple of years up in Vermont has started expanding. Now it’s called Big Snow Tiny Conf East. Then they have one that’s in the west that’s run by Dave Rodenbaugh. Putting together a mini conference or mini meet-up for people is something that’s probably pretty new to Dave. I also know that Craig Hewitt is doing one over in Switzerland, or France, or something like that.
Rob [00:23:18]: France.
Mike [00:23:19]: Yeah, it’s in the Alps. Regardless, that’s kind of a new thing. You get to learn not just about working with these other people, but you also get to learn a new set of business skills that you otherwise wouldn’t be exposed to. I think that those are very neat ways to learn about new stuff that you could potentially bring into your business. Obviously, running a in-person group can be applicable to most businesses. Obviously, not all of them, but there are ways to leverage that in a lot of different businesses.
Rob [00:23:48]: Yeah. I think in terms of joint venturing, early on with Drip we did some joint venture webinars with different marketing teams, and we were blown away by the way some of them operated, just in how much of a machine they were in terms of processes and how well-executed. We just saw professionals doing it, basically. That experience alone showed us, “We need to up our game. We need to get better at just having refined processes and really going after what’s working and doubling down on that.” I think any type of JV, if you’re working with someone who’s sharp, you’re going to pick things up from them.
Mike [00:24:18]: The last one is to do some self-study and then blog about the experience. Obviously, self-study can take on a variety of different forms, but typically you want to have some sort of an endpoint or a goal in mind. Whether that’s to actually launch a product, or to build a training course, or even just to put together a case study – writing a book, for example, is something I talked to somebody about recently, and they just grilled me about all the different things to go into it, what comes with physical books versus digital books, how do you get the ISBN numbers, what goes into the layout and design for the book cover, and how the spine factors into it based on the number of pages, and all these little things that you wouldn’t necessarily think of, but they all go into that process. If you have to put that together and then present it to other people – whether it’s a blog, or a case study, or something along those lines – then you’re essentially teaching them. You have to understand the topic well enough in order to be able to teach it. If you can’t do that, then obviously there’s gaps in your knowledge, and those are going to show through. When you’re going through that process of putting together the teaching or training materials that go along with it after the fact, you’re going to be able to fill in those gaps, because if you look at that as a standalone work, the training side of it, you’re going to see that those gaps exist. You’re going to have to go back, and you’re going to have to learn those pieces so that you can educate other people. This really applies to anything. Teaching is one of those things that you have to understand a process or a product in order to be able to teach it to somebody else. One, it’s clear that you don’t understand it if you’re trying to teach it and you don’t. The second thing is that, by default, when you try to teach somebody something you understand it a little bit better because you have to present it in such a way that it’s easy for somebody else to pick up. So, teaching does help your own understanding of it as well.
Rob [00:26:04]: To recap, our nine ways to introduce new ideas into your business are through: books, training courses, blogs and podcasts, hiring a contractor or consultant, mentoring someone else, doing consulting work on the side, attending a conference with your peers, joint ventures and partnerships and self-study.
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