Show Notes
In this episode of Startups For The Rest Of Us, Rob and Mike answer a number of listener questions including launching books, compensation for a side project, and starting a product with a lot of runway.
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Transcript
Rob: In this episode of Startups For The Rest Of Us, Mike and I talk about launching books, compensation for a side project, starting a SaaS app with a lot of runway and more listener questions. This is Startups For The Rest Of Us episode 350. 350 episodes, Mike.
Mike: Wow. It didn’t even occur to me that this was 350.
Rob: It’s crazy. That’s almost seven years because we tend to release one a week.
Mike: I think it’s more than seven years. Because we started in 2010, didn’t we?
Rob: Yes, you’re right. It was late March of 2010.
Mike: So this is eight years?
Rob: No, because it’s 2017. It’s July 2017.
Mike: Oh yeah, you’re right.
Rob: I was trying to divide 350 by 52 and it’s only like 6.7, but you’re right. I don’t know how the numbering worked out. It’s weird.
Mike: I think it’s because there was a time for six months or so where we were going every other week for a while. That’s why it doesn’t quite work out.
Rob: Really? That wasn’t at the start, was it in the middle?
Mike: Yeah. It was probably a year into it or six months into it, something like that.
Rob: Okay, we dropped down because we had hundreds of listeners and it was like why are we doing this every week? Was that why we did it?
Mike: No. I think it was because we were trying to figure out whether or not it would impact growth and we had other things going on. We were just trying to figure out, “Okay, does it really matter?” And then, we went back and looked at the stats and said, “Hey, publishing once a week actually makes a huge difference.”
Rob: That’s right and we also, I remember early on, we had a tough time coming up with content every week. Remember we got like 20 something episodes in and we’re like, “Alright, that’s all we have to say. We’re done.”
Mike: We had no idea what we were going to talk about next. Of course, we were also a lot more careful about what we were doing, now we just shoot from the hips. It’s like yeah, whatever.
Rob: 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: And I’m Mike.
Rob: 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: I’m hoping that I can get through this entire podcast episode without touching the mute button and then touching my face or mouth in any way, shape, or form because our cat started chewing on stuff including cables and chewed through a couple of cables so I’m like, “I don’t want it chewing through my headphones.” So I sprayed them and you run into at least three situations over the past few weeks, used my headphones, where I touched it and then I wipe my mouth or something like that. And let me tell you that anti-cat chewing on stuff tastes god awful. It’s the worst thing in the world and it doesn’t come off your hands.
Rob: Oh, I bet. There was something called Bitter Orange or Bitter Apple that my mom used to use because we had several dogs for that kind of stuff and I got it on my mouth once, it was horrendous. And yeah, your soap doesn’t take it off. That’s the point. It’s really, really hard to get off. You’ve been working on a video series here. What are you? Seven or eight days into this?
Mike: The ninth one got published this morning so the 10th will go out tomorrow. I’m doing an ask me anything for that one. By the time this airs, that’ll be over.
Rob: Cool. It’s the 21 days before your SaaS launch. If people head to singlefounder.com, they can sign up to hear more about it. I’ve watched every one of the videos although many of them at 1.7 or 1.8 speed, I’ll admit, but it’s been cool to follow along. I’m glad you’re doing this.
Mike: Cool. I’m publishing a new blogpost today probably that’s basically just going to open it up. Previously, I just had it available for the people on my mailing list but I’ve got enough comments and feedback and stuff that I think it might be beneficial to put it out there so that even if you’re not on the mailing list, if you just want to head over to the site and click on the videos and stuff, you can watch or barrel through them if you want to catch up. Yeah, I’ll be doing that today.
Rob: One thing you do that I had a question about is in every episode, you hold a bottle of whiskey and you talk a little bit about it for 30 seconds then you take a sip of it and then you go into what you did that day but I was trying to do loose math. I’m not that great at math, Mike, but if you’re doing 21 days and you hold up a different whiskey bottle, do you actually have 21 bottles of whiskey?
Mike: Do you want the honest answer to that question?
Rob: The honest answer, Mike.
Mike: There’s technicalities here. I probably have closer to 30 or 35, but in all fairness, somebody came over and dropped off a 12 pack of nips of Fireball at one point. If you include that, it’s a little higher than it should be.
Rob: I don’t count Fireball as whiskey, I’m sorry.
Mike: I don’t either. I was really torn about whether I’m even going to show Fireball. I think I might put several whiskeys together and be like this one’s terrible, and then drink it.
Rob: I thought it was funny. One of the best parts is you did Crown one day and then the next day you did the maple flavored or something and then you were like, “Ugh! This is god awful.” Like the look on your face was hilarious. I think you offended some people with that comment.
Mike: I don’t care. I’m sorry but it is a very fake maple taste. There are Maple whiskeys out there that you can get that actually have maple syrup in them but they tend to be classified more as a liquor than as whiskey just because of the content which there is technicalities there, I get it, but there’s another one called Sortilege, I’m not sure exactly how to pronounce it but that’s a liquor and it’s got whiskey and real maple syrup in it. It’s actually quite good. But the Maple Crown Royal is just awful.
I actually had somebody’s comment to me like thanks for turning me away from that because they were going to try it. In terms of full bottles of whiskey, I have 18 or 19 full sized bottles.
Rob: You’re going to have to run out last couple of days?
Mike: Yeah. Sometime between now and next week, I’ll probably go out and pick up a couple of extra bottles just so I’m not repeating some things.
Rob: That’s interesting because I drink a lot of whiskey but at any given time, I have maybe two or three bottle in the house and then as I finish, I’ll buy something else but I don’t have a big place where I could store that much, I don’t think.
Mike: Got it. I was born in Japan and my mother brought over all these Japanese hand carved furniture from Japan and she gave me the bar that they had so I have that fully stocked with all these different whiskeys. I used to just collect them but I got to the point, probably six months ago, I’m like, why am I collecting these? Why am I not just drinking these? I’ve been digging into them a little bit.
Rob: Now that we’ve lost all of our listeners, I think there’s three people left listening, they’re like, “When are these guys going to start talking about startups for the love of God.” For the last week on my end, I’ve been doing some hiring, more interviewing. We’ve been interviewing constantly pretty much since the acquisition but we hire slowly. We’re extremely picky about skill set and about personality and culture fit and a lot of elements so we hire a lot slower than most SaaS teams or most startup teams do.
We have just stumbled on two or three really good candidates in the past few weeks. It’s nice to grow the team slowly and a lot of people get on board and productive. I don’t know if I said it on the podcast but we’ve had several weeks of the highest feature velocity in terms of shipping new features. The last month or two is probably the highest in Drip’s history.
That’s just gut feel, I don’t have absolutely numbers on it but it’s like we’ve shipped a ton of a new stuff and that’s partially because we’re, in my opinion, actually growing the team slowly and I want people get up to speed so that when you’re constantly adding people, you’re detracting from that people who should be being productive because they have to train everybody and get them up to speed and everything. Looking ahead, I guess I’m just optimistic and enjoying. This is when it’s fun, it’s when you’re getting a lot done.
Mike: I’m surprised that Drip being acquired by Leadpages and Leadpages is a funded company. I’m just surprised that culture is there of hire slowly to make sure that you’re getting the right people as opposed to I think most people when they picture a Silicon Valley startup, it’s like, “Oh, just hire whoever you can possibly get your hands on to get them in there because you need bodies to generate code to put it out the door.”
I do think that it’s a much better approach but there’s a tradeoff there in which you’re going to have to move slower and release less features over a certain time frame because you just don’t have the people. At the same time it’s like, you’re releasing good features and they’re quality so you don’t have to go back and incur a lot of technical debt because those people are coming up to speed at the right pace, so to speak.
Rob: To their credit, Leadpages has let us make that decision and has basically said, “As long as Drip keeps growing and you’re scaling and you’re doing all the right things, like you have been in the past,” Drip’s four and a half years old based on when we broke around on code and it’s probably about three years old from when we launched, and they say, “as long as you keep doing what you’re doing, you can grow as fast or as slow as you want.” They let us drive that, us being Derek and I.
Again, it’s to their credit. They haven’t forced any type of hiring culture on us. Leadpages itself grew rather quickly. I think they hired 100 people in 2016. They hired a lot of people that year. They did do exactly what you’re talking about, the high growth funded startup approach but they haven’t forced that on us.
Something else too is we haven’t had to hire that many because I’m only talking about product and engineering, I’m not talking about support, sales, marketing, finance, HR or any of that because there was already that infrastructure. We have a team of I think 12 full time support people working on Drip right now and I really hired one, it was Andy who’s been with us essentially since the start and since pre-acquisition but I didn’t have to hire those 11 people. It is a bit of apples and oranges because Leadpages had to grow an entire organization and I only have to grow the product engineering org.
Mike: Yeah. That’s true. I have seen cases where a new company will come in and they’ll acquire a smaller company and then a lot of the administrative marketing or sales team ends up leaving just because the bigger company already has those things in place and the smaller company basically gets gutted and they move everybody or let them go because they don’t need those roles filled anymore, it’s overhead. They’ve already got those things in place.
You are definitely in a different position but like I said, it’s nice to be in a position where you can just make the right decisions because they’re the right decision as opposed to being told like hey, you have to do this because there’s money to spend or something like that.
Rob: I agree. The other thing that has been nice with this funding, basically “being funded,” is that we are hiring fewer people but since we are so picky, they tend to be really good and thus, they tend to be really expensive. They tend to make a lot of money where they’re at and they’re worth that and it was something that couldn’t have afforded when we were bootstrapped. I’m pretty much across the board all the salaries that we make and that we’re hiring the people at. They’re worth it, it’s market rate. I just couldn’t afford to do that when we were bootstrapped in Fresno. How about you, what’s going on before we dive into some questions?
Mike: Not much else, really. I’m adding a couple of more customers to Bluetick on the way to my launch. I talk a lot more about that probably in my video series. I’ll leave it there just in case anybody’s interested. I think the plan is to try and add as many customers before the launch as I possibly can. I’ve done a couple of private demos for people here and there. It’s just interesting showing certain screens or how to do certain things and it’s like the light bulb moment, they’re just like, “I want it. That’s enough, I don’t need to see the rest of it.” It’s actually difficult to shut up at that point because it’s like they’ve already said, “Here, take my money.” And you’re like, “Oh no, but you see this, see that, over here.”
Rob: That’s really cool, man. Really good to hear. Alright, we’re going to answer some listener questions today, they continue to come in. We’ve got a couple of voicemails but first, I’m going to kick off with an email from Dan Miller, and he says, “You inspired me to write a book.” He says, “I’m Dan Miller from Canberra, Australia. I’ve been listening to Startups For The Rest Of Us for about two years and my wife, Christy, and I also listen to Rob and Sherry’s podcast, ZenFounder. About a year ago, I decided to take the first steps to move out of full time software consulting. My long term idea is to start a SaaS but when I heard you guys talking about the stairstep approach, I realized that going straight from consulting to SaaS was probably too far of a leap so I decided to turn a bunch of development notes I had taken into a book and this is about on the MEAN stack.”
Mean is MongoDB, Express.js, AngularJS and Node.js, just a technology stack you can use to build apps. He’s built a lot of apps, kept a lot of notes and so he launched a book, it’s called Lean MEAN Web App Machine. Says it’s going to be available soon in print from Amazon and a PDF from Gumroad. His website is miller.productions, that’s not miller.productions.com. I think productions is actually the TLD. So it’s miller.productions and he says, “Thanks again for all your work and creations over the years, you guys really have inspired me. Keep it up. I look forward to following your progress and learning more from you.”
Mike: I do think one thing we probably haven’t emphasized enough about your stair step approach, Rob, is the fact that it’s not even just the experience level involved in building a SaaS but it’s also the resources that you need and the length of time that it takes to get something workable and viable out the door.
I spent six months after I got the initial version done just trying to get it to a point where people would look at it and say yes. Even though I gave you a pre-order and paid for it, I’m still not necessarily comfortable moving forward because the product just really wasn’t there yet and it took a long time to get there. I underestimated how long it would take to get through that process and I think that it’s very easy to do that.
Rob: Right, and lose motivation and you questioning whether you’re going to find customers eventually and you don’t have the runway. There are so many things that stair stepping takes care of and it’s not just actual skill set and money but it’s confidence. It’s just confidence that you’re going to make it happen because you have before on a smaller scale.
Mike: Yeah. I think in my situation it was more just the runway and the timeline and everything that went with it, not so much the confidence. With the pre-orders and stuff I had the confidence, it’s just the product wasn’t there yet. It’s like, “Oh, this sucks.” But getting through that second wave, I’ll say, or that second iteration on the product was extremely helpful. It was a lot longer than I expected it to be.
Rob: He also said he gave us a shout out in the acknowledgment section of his book so that’s cool. He did give a discount code, if you’re interested in buying this. First 50 listeners that purchase the PDF copy can enter offer code startups at the checkout. Thanks for writing, Dan. I appreciate it.
Mike: Thanks, Dan. I think our listeners will really appreciate that.
Rob: Next, we’re going to a voicemail question from Cory Moss.
Cory: Hey, Mike and Rob. This is Cory Moss. I have a side project I’ve been working on for a couple of years and I’ve grown it to about $800 a month. For a big code upgrade coming up, a developer friend of mine is joining my team of just me. He’s expressed ongoing interest so he might be around for a few weeks or he might be around for the life of the product. Given that there are no shares to split, how would you guys offer him compensation? Like I said, it’s a side project, it’s not a company. There are no salaries, there are no titles. I’m not working on it full time and I probably won’t be for a long time and it’s a side project so there’s a little risk. These are really the things that one user has to figure out equity. How would you recommend that I compensate myself for the time that I put in versus how do I make sure he feels compensated even if he only ends up helping me out for a couple of weeks? Thanks for everything you do. I appreciate it.
Mike: Cory, it’s an interesting situation just because of the fact that it’s a small product and I think what strikes me, there’s a few different pieces that I plucked out of this. The first one was that you’ve been running this for a while, a couple of years now and it’s at $800 a month so it sounds to me like the growth is not there yet. It doesn’t mean that it won’t come but it doesn’t sound like it’s on a hockey stick trajectory where you can count on revenue from this upgrade being large enough to sustain both of you full time.
The other thing you need to consider is is this person really interested in coming on as a business partner? Is the product itself capable of supporting either salaries or dividends for both of you and can you afford to just pay him outright? Those are all kind of considerations that you need to think about. But I think that because of the situation you’re in, I would probably lean towards at the very least talking to him and just establishing an initial compensation to see how things work out.
I think that that does a couple of different things for you because if you just jump right into a partnership or relationship of any kind like that, then you can very easily have issues down the road where you find out that you don’t work very well together. Bringing him in on a consulting basis or I don’t want to call it partnership basis but to assist with the certain pieces of it, then it gets you through that and it gets you some familiarity with how you each work and whether or not you’re going to work well together. I would just pay for that outright with the understanding that yes, we can talk about that other stuff down the road but right now, let’s just see how this works out first.
You could also, depending on what the actual profit margin is, you could potentially pay for that out of profits down the road especially if you don’t have the money to pay him upfront right now. If you could work something out, say, “This is how much it’s making, $800, I’ll give you $400 or $600 every month for the next x months until your time is paid off.” That’s another way to approach it. Essentially, you are using, I’ll say worker financing, to get the work done and still be able to pay for it. Because otherwise, you got to front the money and that might be difficult based on what situation you’re in.
But I would try a short term approach where you just do some consulting work together a little bit, feel things out, see if it works out. If it doesn’t, that’s the end of it and you’re good. If it does, then you can discuss where to go next and whether or not the business has an opportunity to succeed both of you putting time and effort into it. And then you can figure out what does that look like. In terms of valuation of what your time is worth and how much you’ve put into it, I would probably look to see how much is it currently worth today and you can guess about how much time and effort you’ve put into it but it may very well put the product completely out of reach of somebody buying into it.
The other mechanism obviously is you could say, “Okay, we’ll buy it in a lower amount and then we both work x number of hours or you put in x number of hours in addition to what I’m putting in, to make up the difference. At that point they’re putting sweat equity into it and at some point, they’re vested at 50% or 25%, whatever the split between you two is. Those are the kinds of things that come to mind but Rob, what are your thoughts on this?
Rob: This is a tough one. Sometimes, handshake deals, honestly, can be a way to go if it’s someone like a long term friend and you really do trust the person. What I mean by that is, Chris said there’s no stock to split. He probably owns it personally, it’s not an entity on its own and it probably goes straight to his schedule C income on his tax returns so there’s nothing to give out. But I question if starting a LLC or even going so far as to formalize a partnership, I don’t know if that’s worth the effort given how little revenue it makes and how slow it’s growing.
I guess that’s where I would use my judgment. For example, if suddenly I had a side project and it was doing similar amounts of money and someone wanted to explore this opportunity, I do think that there would be a certain number of weeks or months where it would make sense to do the trial like you said and then if things work out and things do start growing, then you formalize it. That is something we did with DotNetInvoice. It was never really its own business entity but in the US, you can do something called just a partnership agreement. I think you can file that with the state, I don’t even remember but you basically sign a partnership agreement and there’s not stock but you can do an equity split.
You can just say I own 90%, you own 10% or whatever. And again, you have to ask yourself then, what if he only sticks around six months, is it worth the 5% or the 10% or whatever number you’re giving him. Because you can do restricted stuff and I don’t know how this is getting far beyond my understanding of technically, if it took you to court, is there a way to restrict partnership ownership, I don’t know. I’ve heard of restricted shares and stuff like that.
With DotNetInvoice, with Jeremy, the guy who I partnered on it with, he came along later as very much similar to this and it was doing $2,000 a month or something, we just signed an agreement and we view this legally binding between us but frankly, I don’t know how it would have gone over in court. We just didn’t expect that to happen and we were good friends and we’d worked together for a decade doing consulting.
It was a handshake deal that we put in writing and both signed and then he basically got more and more equity over the course of a year as he contributed more. He, in essence, did vest when that was the idea of it. I’m not saying you should or shouldn’t do that, to be frank. It was just how we handled it because we had that relationship and it worked out. I owned DotNetInvoice for several years and then since then, when I divested myself of everything as Drip got bigger, I actually gave the product to him, my ownership half. We just dissolved the partnership and now he owns it.
There’s a lot there and this is a complicated topic. I’m glad you called in and I hope that’s helpful, Cory. As we said last episode, people who send voicemails, you tend to go straight to the top of the cue. Cory just called in in the past couple of weeks.
Our next question is from Juka and he says, “You pointed out that it might be a bad idea to expand your product into a new feature area because you probably won’t be best of breed in both.”
I think he’s referring to me talking about how we’ve kept Drip focused on email marketing, marketing automation and we haven’t attached all these other apps to it. We haven’t built a shopping cart or landing pages or affiliate management like some of our competitors have done. Continuing with this email, he says, “Since that’s what he’s planning to do. I’d like to get into more detail on this. For example, using two separate best of breed products will most likely be more expensive than one product that does both things. Wouldn’t people appreciate the lower total price and the tighter integration as well? Personally, I’m starting out with time tracking and planning to add invoicing and accounting and later on maybe even stuff like payroll, CRM, etc. I don’t have much of a vision for my product besides that it’s meant to help people deal with stuff related to running a business. But I also want to make it very good. I think I’m headed towards having best of breed time tracking and I think I can implement the other stuff well too. What’s your take on this?”
Mike: I think when you’re looking at this specific situation, the thing to keep in mind is whether or not the features that you’re adding, could they stand as a completely separate products on their own or is it something that really needs to be integrated into the product that you currently have?
There are certainly products that go out there in the marketplace and over time as people make more requests, they expand their footprint and they get more functionality and then they cost more and they tend to move up and away from the customer base that they originally started with. There’s nothing fundamentally wrong with that but you do have to recognize that as you add more features and become much less of a point solution and become more of a, I don’t really want to call it a platform, but a one stop shop for accomplishing all things within a particular silo, then you start to eliminate yourself from contention for consideration via certain segment of the population because they’re not interested in all those other things. They need one or two pieces of it but not the whole thing.
You could make it modular and say buy this or buy that and do ala carte sort of thing but then things get really, really messy so I probably wouldn’t recommend that. I don’t think that having two best of breed products and making them work really well together is a bad strategy. It does pose some marketing challenges though because how do you present that in such a way that it is obvious to people that you can either buy this or but that or you can get this suite of products that lumps them together. That’s probably a better approach.
That way, you silo it all underneath a corporate umbrella where everybody is coming to you for solving problems in this particular niche and if you need the CRM, you get this. If you need the invoice and accounting, you get this piece over here and by the way, you can lump them together and instead of paying $50 for each of them, you can pay $75.
That’s similar to the strategy that Intercom has gone with a lot of their products. They have four different products right now and you can buy them individually or you can buy them in a bundle and it costs you less money to buy them all as a bundle. But otherwise, you get them individually. For you as a consumer, the benefit of that is in theory, the company behind it is all working on the same code base or on the same teams and they have much better access to the code behind it and the teams and can do a much tighter integration that works better than if you were to tie things together using Zapier or custom webhooks or anything like that.
I don’t know if it’s the worst thing in the world to go in that direction but there are people out there who are just looking for a point solution. You have to be cognisant of that facts because that may be all that they want.
Rob: I think if you are in a vertical market, meaning you have time tracking for hair stylists, or for electricians, or for designers, whatever, like a really niched down market, I actually think you could add these other things and be okay, you still will not have multiple best of breeds because you cannot out compete teams who are totally focused on just that space or just that one app.
You can build a good product. It’s keeping up with all the feature requests and the changing environment. You got to think about people who have teams of 10 or 20 engineers and if they’re just focused on time tracking, they are going to out feature you and they’re very likely going to out innovate you and if you have time tracking, you were saying the CRM and whatever else, you’re going to get smoked. You will not have best of breed products in all of those spaces.
Again, unless you’re in that vertical where you really have niched down and then you may have it within that space again, the hairstylers’ space and the designer’s space is a tough one because there’s a lot of people doing it for that. That’s why I’m not saying like designers, developers, or freelancers because there are so many time tracking apps there. So if you’ve picked a vertical, then maybe I would perhaps consider building out an entire business suite. But if you have a horse on a product that you’re going to service everyone, I would say that there is zero chance of that happening.
With that said, if you have zero customers right now and you aren’t already dealing with support and adding features and all that stuff, then you need to launch before you start building anything or building anything further. If you believe you have a best of breed time tracking app, then take it to market and see what happens. I don’t believe that adding on another piece is going to help but you will know once you have 500 customers or 1,000 customers. You’ll know exactly what people are asking for and you’ll know what can potentially retain more customers or broaden your market. That’s my take on it. I hope that’s helpful.
Our last question for the day comes from Tom and he says, “I’ve been wanting to do a SaaS startup for the last few years but I run a consulting firm. Not in the same situation as a lot of other people, I have been a software engineer for over 10 years and my custom software consulting business does several million dollars a year. I have been able to put myself in a good spot financially.” He says he has runway of six to seven years. He says, “If you did have the cash to go full time with a runway of six or seven years, would you recommend going after a larger SaaS business even though you do not want to raise funding? Is a super long runway and a lot of determination enough or are you still going to need to raise several million dollars in VC to tackle something that’s either saturated or creating a somewhat new market?”
Mike: I think that springs an interesting question about the potential for having too much runway. The reason I say too much runway is that if you try to build something and you don’t have enough runway, obviously, you’re going to fail because you run out of runway, you can’t get the product out the door in the time that you have.
But if you have too much, you run into the opposite problem where your motivations to finish things or to get it out in the market as soon as you possibly can so that you can learn things is going to be impacted and you run the risk of waiting too long to launch and packing so many things in there that really doesn’t matter to the customers.
I think that that’s something that you need to keep in mind when you’re looking at this. I would probably cut that down and put it into chunks and say cap it on certain things. Let’s say 18 months or something like that for a particular idea that you’re going to pursue. If it doesn’t start to get any sort of traction, then you kill it and move on to another one. I think that’s a good approach because you do have the runway to be able to make those types of decisions and chop it up but being able get the traction within a certain amount of time is going to be critically important for this.
I do think you got plenty of runway to try a SaaS, even if it’s your first time out because you have enough runway to fail several times along the way or find several ideas that you start and make same false steps and it doesn’t ultimately impact negatively. There’s no negative repercussions for going down this road and failing or having it not work out. Or even just break even. That’s not exactly the situation you’re looking for.
But again, you have to keep in mind that that’s going to be a hard thing to deal with and you will have to think about it because you can easily get to a point where you’re like, “Oh, screw it. I don’t want to deal with this customer support issue. I’m just going to shut the whole thing down because I don’t like what these people are saying.”
Rob: Yeah. You’re in a great spot admittedly, right? Not doing it on the side is just a better way to go. Because it’s not as stressful as trying to hack nights and weekends. I’d been there and I wouldn’t do that again if I had the means. When I’m think of having six or seven years of runway, I’m just going to throw out a number, I’m imagining you have $600,000 in the bank, maybe it’s $400,000 but it’s probably a substantial sum of money.
The question to ask yourself is how much of that are you willing to spend and feel okay about? Because if it really does take you two or three years to get there, you might chew through hundreds or thousands of dollars, will you be okay with that? Some people are okay, it’s risk capital or whatever and they’re willing to put it in and other people, it would drive them nuts to be drawing their savings down like that.
The other question I would throw out is do you plan to do this solo because it’s going to take a lot longer or do you plan to hire a couple of people to help you? Because when I look back at how we grew Drip which is basically, I was in a smaller position as Tom, I didn’t have enough money in the back but HitTail was throwing off enough cash that we basically funded Drip using HitTail. By the time we broke even, I was out somewhere between $150,000 and $200,000. Not just because of my expenses but because I hired people to help us.
If you want to move faster and you think about hiring people, you may not have six or seven years of runway. I’m just going to take this $200,000, set that aside and then the rest of it I’m not going to touch at all. That’s my personal money that I’m not willing to get into and then use that $200,000 kind of as your own little angel round. And put that in the bank, the company bank account in essence, that you start and draw off that as you hire, as you pay for hosting expenses. There’s just going to be other expenses, it’s not just your living expenses, unfortunately. Especially if you’re trying to go into a bigger or more crowded space. That’s my initial thoughts on the money part.
Then there’s the question of if you have never launched a SaaS app and you want to launch into a place where it’s crowded and there’s VC funding and there is all kinds of chaos, basically red water, they call it. Personally, I would not have had the skills to do it until I had done several of my software products, until I had done HitTail. That set me up to do Drip. It gave me the skills and the confidence and the experience and all the things that I talk about with stair stepping.
I guess you have to judge for yourself, I would try not to be overly optimistic that just having six years and determination are going to mean that you can compete in a big space. I don’t think you need the VC money either though, like Tom said in his email, but I do think you need a skillset and some experience and the confidence that you can do it, otherwise you may get six or nine months in, get discouraged and bail because you’re wasting money or you may get two years in and since you’re just learning so much at once because all of the moving parts of SaaS, not just the tech, right? It’s the marketing, the sales and the customer’s success, and the support. All that stuff, trying to learn all that at once, it’s going to be a big learning curve.
Those are my thoughts. I think that you got to do some soul searching and know yourself on this one.
Mike: One thing that came to mind as you were talking about all that was that if you have this much of a runway, you could also consider just buying an app that somebody else doesn’t want to work on anymore, that is already making $10,000 or $20,000 a month and then using your runway to grow that. That takes a lot of the risk out of finding the market and finding customers and it allows you to put yourself in a position where you’ve got money in the bank that you can use to help scale the business. And as long as you can find something that would have the type of trajectory you would like it to have, it just needs some funding and money behind it, you’ve got that to bring to bear. That might be an option as well.
Rob: Yeah. I was totally going to say that. I’m glad you brought that up. That’s actually what I would do. That’s what I did multiple times. You can gain experience that way and it can be lucrative and you do have to put some money out upfront. As soon as I hit the point with consulting where I had a bit more money than I had time, that’s when I started saying how can I spend less time but still get to the same end?
I think some of the best decisions I’ve made in my entrepreneurial career were acquiring DotNetInvoice, acquiring HitTail, acquiring a couple of the other products I did because I learned so much and it gave me the means to basically change my life and then to fund future red water market stuff like Drip. I think that’s a real avenue I would explore myself.
Mike: Tom, I hope that was helpful and thanks for the question.
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Episode 349 | Things to Consider When Building Your Launch Plan
Show Notes
In this episode of Startups For The Rest Of Us, Rob and Mike talk about things to consider when building your launch plan, both from a preparation and execution stand point.
Items mentioned in this episode:
Transcript
Mike: In this episode of Startups for the Rest of Us, Rob and I are going to be talking about elements to consider when building a launch plan. This is Startups For The Rest Of Us episode 349.
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 built your first product or you’re just thinking about it. I’m Mike.
Rob: And I’m Rob.
Mike: 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: Not much, I’m just getting back into the swing of things. As I talked about last week, I was working remote from Chicago at a cello camp for my oldest. Back in Minneapolis this weekend after spending a day and hanging out over the weekend in the Wisconsin Dells, which I’ve never heard of, but when we drove through it, I saw a bunch of resorts there and so I wound up taking my son to a big water slide and stuff on the way back, kind of as a high five for slogging through a week’s worth of cello camp. It feels good, it’s always good.
I like traveling but I like that feeling of getting home, getting settled, having my stuff where it is, my external monitor. There’s just a certain piece that comes about returning back home. The cool part is I tend to be more productive because it’s kind of like my home is a new place because I haven’t been there for a while.
Mike: I hate travelling and trying to get any work done on the road, I just can’t do it. It’s more because of the access to the external monitors and having everything set up the way that I like it and need it to be. I hear what you’re saying about coming back to your home base and getting re familiarized with where you’re at and having to re energize a little bit but I just can’t work on the road, that’s just me.
Rob: What’s interesting is I’m very productive on the road, not in long stretches, I can’t just sit and work for eight hours, but I find that if I sit down for an hour here and an hour there, I get two or three hours worth of work done because it’s hyper focus and I’m just hammering through stuff. Although I don’t have my setup, I feel like I don’t get distracted, no one interrupts me. I feel like there’s a good balance. Last week in Chicago in the dorms, I was hammering on stuff.
I really felt like I got a lot of productive thinking done. That’s the kind of stuff that’s harder to do in the office because you’re just in the day to day slog of things. I do feel like having a good mix for me is probably the optimal approach.
Mike: You just said dorms, was it like in a college campus?
Rob: Yeah, it was on a college campus.
Mike: You’re partying the entire time and living up your college years.
Rob: Partying with a bunch of 10 year olds. I had my 10 year old there. It was fun. I do enjoy that, the college vibe. Obviously, it’s a middle summer, there were no college kids around. I enjoy the feel of campuses, I really enjoyed my college years and so to wake up and be in the dorms and then go to the dining hall. We brought scooters and just the scoot around campus was pretty relaxing and it was a fun time to spend with one kid.
We have two kids. When you’re with them all the time, it’s they like they fight amongst each other and you get frustrated with them but when you pair it down and you do an extended period of time with just one child, it’s like, “Whoa, I’m so jealous of people who were smart enough to stop after one.”
Mike: It’s funny. I had talked to a guy who had, I think he had five or six kids. We were asking him over lunch one day like, “What is the difference between having one kid, two kids, three kids, etcetera?” He’s like, “If you have one kid, it’s really not a big deal. It’s obviously like a shock because you’re going from zero to one, it changes a lot of things but it’s not really any different. Having two kids is like having three because sometimes you have one or the other and then when they’re together, they fight. It’s like having three.”
He’s like, “Three is no big deal, four, you have to buy a bigger car, five is not a big deal and then six you have to buy a bigger house.” It was interesting to hear him map out what the progression was, I’m like, “Nope, stopping at two.”
Rob: Anyways, we’ve gone off on a tangent here. What’s been going on with you before we dive into today’s topic?
Mike: I’m working on my Bluetick launch plan. I’ve realized that my notes were all over the place at the moment, just in various notebooks or different apps and things like that. I got to consolidate them into one specific launch plan and focus on the things that I really need to do and that I’m going to do versus the things that I would like to do because I can’t do everything on that launch plan within the three weeks that I have.
But one of thing I am going to do that’s kind of an offshoot of this is putting together a short video series called 21 Days Behind the Scenes of a SaaS Launch with a subtitle of with whisky to drown the sorrows, because I know that there’s things that I’m going to want to do that I’m just not going to be able to. I’m going to basically record a three to five minute video at the end of each day and document the daily successes and failures leading up to the launch. I’m just going to talk about the highs and lows and put them out there and see if resonates with people and if people enjoy it.
Rob: That sounds super cool. Actually, it reminds me a little bit of what Derek and I did with the Drip startups stories podcast where we just had nine months of audio and I edit it down to a couple hours but this is like more focused and intense and just about the launch. I like this idea.
Are you considering turning it into audio as well because that’d be cool, whether you drip it out as a podcast and an RSS feed people could subscribe to or you just slapped it all into one big audio file and let people download it. I think that could be interesting because I don’t know that I, personally, will watch this much video but I absolutely would listen to the audio.
Mike: I hadn’t actually thought about putting it together in a bunch of mp3s or a single mp3 and aggregating all of the audio together but that’s a really good idea, I’ll probably do that at some point. Obviously, I won’t do it on a daily or whatever. I’ll just have somebody go back through the whole thing afterwards.
Rob: Something that might be interesting if it really was one audio file, would be just to push it out on this feed so listeners could just get it as an app. We just make it other half episode or just an unnumbered episode, people could hear it. We could also do that with the Drip Series that Derek and I recorded, it’s like 90 minutes worth of audio but throwing it into RSS feed, people don’t have to listen to it if they don’t want to, it could be interesting. I can’t believe I never thought of that before now.
Mike: That would be cool. I listened to that as well and I thought it was really interesting to hear. The difference, I think, between what you did versus what I’m doing, I’m doing it more because when I heard yours, I was like, “That’s an awesome idea. I should do that.” I just never did it because I don’t really have anybody else to talk to about some of the behind the scenes stuff and I’m not going to record people on my mastermind group or anything like that.
I was like, “Well, I’ll just hold off.” But then the idea came to me to do a video series of behind the scenes and literally just like the 21 days leading up to it. All of this is like three to five minutes each day and encompassing like, “Hey, how did things go today? What’s up on deck next? How did things go?” I think that would be really interesting for people to hear.
Rob: If people want to follow to that, where do they go?
Mike: At the moment, I don’t have a landing page or anything like that setup for it but I’m going to be putting one up.
Rob: Boo! Boo!
Mike: I just thought of it yesterday, come on, give me a break.
Rob: Are you going to put it at singlefounder.com or do you have a domain or anything we can give people because you realize this is going to go live next week and you’ll already have started this.
Mike: I’m probably going to do it from singlefounder.com at the moment. People can go there, there’ll be a blog post on it and then they can go signup directly from there specifically for that. I’m going to send something out to my mailing list and say, “Hey, if you want to listen to this, you can listen to it but it’ll be separate.”
Rob: Let’s both plan, once you have that landing page or blog post up, you and I obviously will tweet it out. Anyone listening to this, if this sounds cool, seriously, go there and subscribe and tweet it out, let’s try to give Mike some love on this and build a little bit of Twitter buzz around this because I think this is a pretty cool little adventure you’re going on.
Mike: That leads us into today’s episode which, as I said before, these are things to consider when building your launch plan. It’s interesting, I went back through some of our older episodes and in episode 121, we had seven catastrophically common launch mistakes. Do you want to go through one real quick first?
Rob: Yeah, for sure. The seven mistakes we had, obviously you can go back and listen to it in its entirety, but mistake number one was not putting up a landing page before you start coding, number two is not tracking key metrics from the start, number three is saying people are finding you through “word of mouth” which really means I don’t know how people are finding us, mistake number four is running an open beta, mistake number five is launching with a single launch email when you should have between two and six, probably, mistake number six was having a free plan unless you really know what you’re doing and mistake number seven was not growing fast enough because you need to grow fast enough to keep yourself interested or you will abandon it.
Mike: Today’s list is a little bit different than that. These are more longer term things that you need to think about way in advance when you get to the point of building a software product and launching it. What we’re going to go over today is more about the short term things where you have a limited time window of whether it’s a month or two months, it’s an arbitrarily selected time period but in my case, I’ve got three weeks. The idea is to walk through the things that you should be considering when you’re putting together that launch plan.
The first one is to have a written plan. I think that this one sounds obvious but the idea here is to have a written checklist for you to work through so that you don’t have to stop at any point and think, “What should I do next?” Everything is all written out and you’ve already decided on that stuff. You don’t have to make any more decisions at that point. Your past self has already made those decisions.
Presumably, you trust your past self to make those decisions. At that point, you’re just iterating through all of the different things you’ve already decided that need to be done. By virtue of that, it’s going to make you more productive because you don’t have to stop and think about those things.
Rob: I used to not do written plans and I would try to keep it in my head. I would have scrolls here and a notebook and stuff there, just flailing around. When I was doing smaller launches with smaller products, it didn’t really matter because I only had a couple tactics. Once I started leveling up, especially into, I think it was HitTail where I made a big turning point, that’s when I started the Google Doc, it’s the marketing game plan, I think it’s what I called, HitTail marketing game plan. I basically just copied that over to start Drip and it becomes a long list of bullets.
I think now, I look back at Drip which I haven’t used for years but it was 12, 13 pages of pretty detailed, structured thoughts, it wasn’t just random stuff. But it was so helpful as we were going and we could just execute in line. That was the overarching marketing approach of like these are things we should try. But actually, for the launch itself, there is one subsection, I was like, “Do this on this day, do this on that day. Just in line, get these people on board to help promote, email a list here with these five email sequence.”
I really did think it through which sounds like it could be boring or whatever to think all that through but it’s like the timing is so critical and if you forget something until the day before that you should’ve done a week before, you can’t go back and redo it. I really think more folks should have written plans when they’re coming into a launch like this.
Mike: What you just said about the timing of different things is just super important because you can’t go back in time and do something that you forgot about. As long as you’re writing these things down, then at least they’re in front of you and you can think about, “Well, this is supposed to happen a week before but is there anything that leads up to that?” You do some backward planning at that point to determine if there are previous things that you should be doing or that you need to do in order to get to that point.
A lot of times, they’re just like these little things, you need to set up this webpage or you need to design this landing page over here. There are lots of little things that could easily slip through the cracks and you don’t want them to. The reason for that is because they lead to the next one which is being selective about what you do.
The first one on that list is decide what not do during that time because you don’t want to decide to do something or try to do something that is just not going to get done. If you do that, then what happens is it pushes your time back and it introduces these artificial delays.
If you’re already working towards let’s say 21 days or 30 days, if something delays your launch sequence or the plans that you have by let’s say 3 days or 4 days, then you have to decide what to cut out because it’s going to be hard to push back your launch date if you have a lot of other things that are already in place, that are going live on a specific day whether you’ve arranged with podcasters to put out specific episode on specific days or PR releases, things like that. You need to be careful about what those timelines look like.
The third one is to leverage your strengths. Rob, I think you did an entire talk about this at MicroConf one year, but most of this boils down to who you know, who knows you, and your relationships with different influencers. You need to know what your strengths are in terms of not just the product development but talking to people about your product. If you’re the founder of the product, you have a good idea of exactly what it does and how it can be used and who it’s going to be a good fit for.
It would be very difficult to bring somebody in the last minute to help you with those types of things unless there is no additional information that they’re going to need in order to be able to implement their piece of the project or their piece of the launch. If it’s completely standalone, they could do that, that’s great. But you’re going to have to be the person who’s the point person on a lot of that stuff. You need to be able to use your strengths to accomplish some of those goals.
If there are things where you fall short, you may need to bring in that extra help and just be aware of the places where you’re probably going to spend a lot of extra time as opposed to somebody who you just hired to do a very specific thing and hand it off to them and say, “I need you to this and this is everything that needs to be done with it.” And let them go so that it saves you time in the long run.
Rob: This is where cultivating a network, or an audience, or some pretty epic skills really come in handy and these are the things that you only build out over time. Who you know, who knows you, those are the things that you’re not going to solve that in the next 21 days, you need to attend conferences, or been blogging and met other bloggers, or had a podcast and have an audience.
That’s something that takes so long to build but this is where you start calling in favors, and this is where you start talking to your audience about it, and this is where you start really making a few withdrawals from that trust bank account or the relationship bank account that you’ve built up over the years by offering advice, helping people, and giving stuff away for free. This is one of those times where you’re going to start calling back some of those favors and some of the value you’ve given into the world.
Mike: Essentially, that’s capitalizing on that social capital that you’ve cultivated, as you said.
Rob: Exactly.
Mike: The fourth one on this list is relentless execution. Rob, you’ve mentioned this phrase a bunch of different times either on this podcast, or on ZenFounder, or in some of your MicroConf talks. I really like this phrase of relentless execution but you have to make the most of the time that you do have to put into the work that you’re doing. If you’re launching something else aside, you probably only have a couple of hours a day or even a limited time period per week to be working on this launch and you need to maximize the productivity for the time that you are working.
If you focus on that productivity, if you’re making sure that, “Hey, I need to be productive during this two hour stretch that I have.” Don’t let anything interrupt you and make sure that you don’t get distracted by things that are essentially meaningless. The font, for example, on a webpage is off, it’s not really that big a deal, there are probably much bigger things that you need to worry about. Just blog it as an item to come back to and then move on, it’s not on your launch list, go ahead and do something else.
Not everything is going to need to be perfect and it is worth taking those things, just setting them aside and walking away even if it bugs you. I would have a hard time with that. I do have a hard time with those types of things because I look at something and I’m a little OCD and I’m like. “Hey, this just sucks. I can’t deal with that.” But you have to be able to put those aside. If you write them on a list that says, “Hey, I am going to come back to this.” It makes that process of walking away from those things a little bit easier.
Rob: Yeah. During this three-week period, specifically this is where you have to really bring your A game and you need to remove the distractions. This is where I would probably go on a complete social media fast aside from what’s needed to promote your launch, I wouldn’t be reading the news, I wouldn’t be checking Twitter during the day, I would be getting that epic playlist together or perhaps this single song that I would loop for three weeks straight and have that general dose of caffeine every morning, every afternoon. This is where you need to bring everything you have because you have to execute on this and it can have such a huge impact on how the app gets started and the motivation.
If you have a good launch, you’re so motivated to continue. If your launch tanks, it’s tough, it’s tough to pick yourself back up after month and months of preparation for this point. This is where you need to relentlessly execute, as we’re saying.
Mike: The next one is to be a little bit mindful of how you’re presenting your products to people. This is more of a features versus benefits type of idea which we talked about in the past on this podcast. But you need to demonstrate how it benefits users versus how good the product is and what it does. You want to focus on what the users are going to get out of it and how well it’s going to help them do their job and make their lives easier versus these are all the different things that you can do with the product. They can do this, they can do that, etcetera, all those things don’t matter, what really matters is what they’re going to get out of it.
Again, this is something we talked quite a bit about so I don’t want to beat a dead horse, but it is important to think about that when you are putting together this list that says, “Oh we need to create this webpage or that webpage.” If it doesn’t fall into this bracket and allows you to present it in such a way that it’s going to resonate with people, then I would just skip it and move on because those are the things that are brand awareness that aren’t really going to help you, specifically during a launch.
Rob: The next thing to think about is to balance your long term and your short term goals because if you think about it, you can have a big initial splash that leads to waves of signups which tends to be good. Now, realize that that may clear out your pipeline for a while so your second and third months could potentially fall off, I guess, from there. Also, make sure that you have things like your tracking pixels and your analytics in place and you’re going to want to test and verify these.
If you want retargeting pixel from Facebook or from Perfect Audience, if you want certainly Google Analytics, whether you use Kissmetrics or Mixpanel, you want this stuff in place before you start driving traffic because you really want to know how they’re finding you, who’s signing up, who’s getting the most value and who’s sticking around.
Mike: Along with that, you really want to make sure that there is a stopping point where if somebody is not quite ready to buy, at least you have mechanisms for capturing their email address so that you can follow up with them later. If they’re not totally on board right now when you’re doing your product launch, at least have mechanisms to get their email address so that you can put them into an email series, either that’s a short term email course or a longer term follow ups, something along those lines.
If nothing else, you want to be able to at least get their email address. Tracking pixels do help to be able to bring people back but it’s not quite as good as getting an email addresses so that you can send them direct emails later on.
The last one for preparation is to accept critical feedback but be mindful of the trolls. Not everybody is going to be supportive or is even worth listening to. There are going to be some people who are not supportive or dismissive of what it is that you’re working on and you can just walk away from those. You can either listen to them or read them or whatever, have the conversation with them and nod your head and say yes, okay, I’ll think about it and then walk away and just let it go because some people are going to have things to say that are absolutely not worth listening to.
There’s going to be others that you are going to look at and say yes, this is important stuff but is it important right now? You don’t feel the need to act on every single piece of critical feedback. I heard a podcast episode from, I think it was Craig Hewitt and Dave Rodenbaugh a couple of weeks ago on Rouge Startups where they were talking about Craig was going through his launch and Dave have commented that as a strategy for support, you can’t listen to everything that somebody says and implement all of it. It’s really only going to get you about 30% of the way.
That’s so true. What it will do is it will eat away your time when you’re doing the launch and even shortly afterwards. You can’t just listen to everybody and do everything that they want, you have to be selective about it and filter out the things that are going to be important to large numbers of people and take the things that are not and set them aside and then come back to them later and decide whether or not you’re going to do anything with them or you’re just going to let them sit there.
Rob: It’s always tough to balance this when you only have a few data points and somebody complains about your pricing, it’s always something you doubted early on. Once you have hundreds or thousands of data points, you just learn what kind of noise and what the concensus is.
It is definitely hard early on to take feedback and figure out which is most valuable and which you should listen to. It’s just something you got to be mindful of. It’s kind of a learned skill but it also goes away with time. As the older the product gets, the more mature it gets. You just learn where it is. This is a hard one especially for folks who are just getting started.
Mike: That walks us through a lot of the preparation for a product launch. We’re going to talk a little bit now about specifically some of the execution. The first thing that you want to do is you want to look at how to prime the pumps, there’s a bunch of different ways that you can prime the pumps for your launch. The first one is an email list. What you want to do is you want to plan out when you’re going to send the emails, who you’re going to send them to and what you’re going to say in each of those emails.
I think it’s really helpful to print out a copy of the calendar and write on it and say, “I’m going to send out an email to this list on this date and it’s going to say X, Y, or Z.” You don’t have to write out the entire email at that point, you’re really just trying to build an outline of it and work backwards from the times that you want to send those emails.
In episode 121, mistake number 5 was launching with a single launch email, I have at least 2, possibly up to 4. That advice absolutely applies here. You want to plan out the number of emails that you’re going to send, when you’re going to send them, and what the headline is. That’s the place I would probably spend the most time, is on that headline to make sure it gets opened because if those emails are not getting opened, then the contents of the email are almost immaterial at that point.
But planning out when those emails are going to send and then setting everything up so that they are sent at that time automatically in the background whether they’re using Drip or anything else that’s out there. You want to make sure that those emails are going out when they’re supposed to go out because you can’t send them retroactively after the date has already passed.
Rob: Yup. Email launch, that’s the big deal. We’ve talked a lot about that in the past and that’s the thing you’re going to want to focus on a lot. Another thing to think about is when you start your podcast tour. If you haven’t heard of this, this is something I stumbled upon after revamping HitTail and I went on this big tour of all these appropriate podcast. I measured the impact each of them gave me as I went along and I went all these in a MicroConf talk.
The fun part about podcast tours is you’re able to reach a lot of folks through audio which means they tend to be a little more engaged than when reading a blog post. It’s such a small amount of time because you show up for 30 minutes to have a conversation and then a couple weeks later, you show up on someone’s podcast and you reach 5,000, 10,000 people. The thing you’re thinking about here is when should you do this, who to reach out to and how long it’s going to take for that episode to go live. Because if you record a bunch now, some podcaster booked out a few months. Other podcasters record and go live a few days later.
This is where you got to start thinking about there’s a whole bunch to learn about this. We don’t have time to go into how you plan all this but it’s something to consider if you’re up for getting on some podcast, I think that this is something that didn’t really exist. 10 years ago there were a few podcast here and there but there wasn’t nearly the audience for this kind of stuff as there is today.
Mike: The next one is to look where you can promote your launch to things like Product Hunt, or BetaList, or Hacker News. You have to be a little bit sensitive about some of the different communities that are out there because some of them are very accepting of people coming in and say, “Hey, I’ve got a product launch going on.” Some of them are not. It also depends a lot on how you go into those or how involved you have been in those communities in the past. A lot of this has to do with social capital at that point but some of them, it doesn’t matter really matter.
With Product Hunt, you don’t necessarily have to have a large following or a voice in the community, it’s a lot easier to just post with something like Hacker News or Reddit. You have to be a lot more sensitive about that. They are not very receptive to external people who are not members of the community and never really contributed, just coming in and trying to market themselves. Be a little bit sensitive to that but other ones that come up, you could go in and you could try to pitch TechCrunch, or Master Ball, or various tech blogs.
If you know influencers then you can reach out to them, and ask to either do a guest post, or appear on their blog, or if they have a video series or something like that, there are ways to get in front of their audience as well. That’s really the point here, you’re trying to leverage other people’s audiences in order to help bring about awareness of your product.
Anything where you’re getting onto an email list or mentions on blogs. Even if you’re not directly on a podcast, for example, at least if you can get a mention, that’s going to be helpful, you’re going to get some traffic from those assuming that it’s the right target market for that.
Rob: This is also stuff that you have to prep in advance. If you have relationships with these folks, whether it’s the Big Tech Blogs or whether it’s someone who composed the product for you. It’s so much better to not just hit these things cold and then have some type of plan that you’ve worked out in advance. There’s a bunch of blog posts and resources online. If you Google how to do a product launch or how to pitch TechCrunch for your startup launch, you can read through these and get a gist of what works.
These are crap shoots. If you’re relying on either of these for you launch, it’s a really bad sign because you can do it and either get 0 signups or you can get 1,000 signups. Even if you get 1,000 signups, a lot of people are just checking out what’s going on, they’re not actually looking for the apps.
It’s that method that TechCrunch launched, getting linked to from TechCrunch is not going to make your startup, it’s going to send some traffic to you from a bunch of people who like to try out a lot of different apps and your churn is going to likely be very, very high.
That’s not a reason not to do them, this will give you an incremental bump and they’re worth doing if they work but these are the exciting, fun things that when you do them it’s accelerating. I think they’re worth doing and they can definitely make you some money but these should not be the pillar of your launch approach, the email list. Emailing the launch list really is that pillar.
Another interesting approach, and it’s one that I’ve only seen done a few times, but it’s to launch at an in person event like at a conference. I spoke at LES Conf five years ago maybe. Brennan Dunn launched Planscope at that conference and I think Intercom spoke there. I don’t think they launched at LES conf but it was very close to the time that they launched. I just thought it’s an interesting idea if you can time it for that and you can get either a little stage time.
I don’t know if Brennan’s sponsored or if Steven Alan just gave him stage time but he had five minutes where he just stood up and he said, “Hey, I’m launching. Here is my background. I have this app, check it out.” It was for freelancers, obviously. There were bunch of freelancers there.
It’s an interesting idea and I think I’ve seen some folks launch at MicroConf as well. They either tried to attendee talk where they’re able to talk to through their process or mention their app in some say. Obviously, this is not giving you an audience of 10,000 people but since it’s in person, people can come up and talk to you and I actually think there’s a lot of value if you can swing this.
Mike: The big downside to something like that, I think there’s two. One is there’s only so much of you to go around and the audience is going to be much smaller than you would get. The big benefit of that is you get that in person, in depth conversation with somebody that you wouldn’t get if they just hit your webpage or they read an article someplace else and then came to your site. They don’t get to ask questions and you don’t get to ask questions, either. That’s the big thing that I’ve noticed in doing a lot of in person demos.
Right now, for example, with Bluetick, you still can’t sign up for it unless you talk directly to me. I’ve done that very intentionally so that when I’m talking to somebody, if I ask somebody a question, I get to hear them pause, I get to hear not just the words that they say but how they say them. That stuff is very, very important when you’re trying to figure out what is important to them and what’s not. If you get a question that says, “Hey, can I do this?” You can ask them, “Is that important to you?” “No, I was just asking.”
It’s very good to be able to differentiate between those two types of questions and you can do that in an in person situation. It’s just much harder to do that if you get that type of question through an email.
The last one is to put together some explainer videos. I think that this is important just because sometimes it’s really difficult to rely on your sales copy. You may have a group of people who you have treated as beta customers, you’ve talked to them, you’ve on boarded them and you’ve heard what they have to say but sometimes, presenting that in such a way that an anonymous person who comes to your website and sees it for the first time is not necessarily going to understand it as well as if you had that in person conversation with them.
An explainer video can be a really good way to enhance the sales copy that you have and inform people about what the product is going to do for them and how it’s going to work and answer some of the questions and overcome some of the objections that they have, in a way that your text and copy is not going to be able to. I think that relying on those explainer videos as sort of a crutch can really help you especially if some of your sales copy is a little bit deficient or it’s not quite where it needs to be.
I find that a lot of the sales copy is really helpful from an SEO perspective. When somebody comes to your website and doesn’t have any preconceived notions about what something is but the video is really, really helpful. You can show your app and it helps give them that little bit of extra trust as well because they see the app, they see exactly what the state it’s in. It gives them an idea of what it is that they’re buying into versus if you send somebody an email without the screenshots even.
A video is better than screenshots because you can show them this how it works and this is what it will do for you versus telling them what it’ll do and maybe giving them a screenshot. It’s just more in depth and more engaging.
Rob: I have a blog post that we will link up in the show notes called How I Created 4 Startup Explainer Videos for $11. It talks you through the process that I used to create some low fidelity and just crappy bootstrapped explainer videos that we had on the homepage of the Drip website for a couple years, actually.
I do think that there’s a lot of value in explainer videos as well especially if you can execute pretty well on them and they don’t feel cheap and they do show the benefits. Like you said, there’s always a balance to video versus text, some people like to skim but if you create 60 second explainer video, it can have a lot of impact, a lot more than just a wall of text.
Mike: Yeah. I have an explainer video for Bluetick that I did when the product is a different name, and at a different URL and unfortunately, that name is used inside the explainer video so I have to redo the entire video.
Rob: That’s a bummer.
Mike: I did really well with the video and it worked well to explain what it did. It’s just the old name is plastered all over it.
Rob: I think that wraps us up for the day. If you have a question for us, call our voicemail number at 888-801-9690 or email us at questions@startupsfortherestofus.com.
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Episode 348 | Finding Product/Market Fit, Organizing Notes for Maximum Effect, Growing from $100k to $1M, 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. The topics include finding product/market fit, organizing notes for maximum effect, and growing from $100k to $1M.
Items mentioned in this episode:
Transcript
Rob: In this episode of Startups for the Rest of Us, Mike and I talk about finding product market fit, organizing notes for maximum effect, growing from $100,000 of ARR to $1 million and more listener questions. This is Startups for the Rest of Us episode 348.
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 built your first product or you’re just thinking about it. I’m Rob.
Mike: And I’m Mike.
Rob: We’re here to share our experiences to help you avoid the same mistakes we’ve made. What’s the word this week, Mike?
Mike: As I said on the last episode, I kind of finished up almost the tech stuff that I’ve been working on and started switching over to working on the website marketing stuff and currently targeting a public launch date of August 1st. I’m kind of greasing the wheels of the marketing pipeline at the moment and doing everything that can possibly be done in the amount of time that I have.
Rob: Very nice. It’s about three and a half weeks from now.
Mike: Yeah, above three and a half weeks from when this episode goes live.
Rob: From whenever we record.
Mike: Yeah, whatever. Something along those lines.
Rob: It’s a few weeks. You must feel pretty good about it then. You must be pretty close to getting things out the door.
Mike: I do. There’s still a few things that need to be taken care of between now and then so I’ve realized that as I’m putting together the website itself to do some price turning, that there are certain things that need to be in place that are not there yet just so that I can charge different amounts based on different things. Maybe they’ll be there. Maybe they won’t when it goes live but if I need to toggle stuff on the backend, or do certain things, or just give people stuff that they normally shouldn’t have access to for the time being, then that’s probably not a big deal. I’m just finding those little edge cases here and there and reworking some things as necessary to make that happen.
One thing that I’ve realized over the past couple of weeks is that I added a customer, I think a week or two ago, and they had this massive mailbox that went back for years and years and had like almost 750,000 emails in their mailbox. The system generally held up pretty well. I’m pretty pleased with how that stuff is going right now.
Rob: That’s exciting. It’s nice to have some confidence going into a launch like this. You didn’t just up and build a product and have no one use it, not know if they get value, not know all the bugs that you have because you inevitably will until people use it. No app survives first contact with the real customer without having bugs.
You’ve taken this slow launch approach of trickling people in, getting your 20, 25 early customers in. That is obviously a more conservative way of doing it than the Silicon Valley pay $500,000 for some massive launch party. I realized that’s a strong argument. A lot of people don’t do that.
But even if you have a lot of funding, you want to move really fast that you staff up, and you build quickly, and then you just do this big splash launch. You’re like, “Alright, product hunt, man. Product hunt’s going to do it.” But then, if you product hunt and you haven’t already had 20, 30, 40 people touch this app, you just don’t know what’s going to happen.
As engineers, we know all the pitfalls and ways things can go wrong. While this is a slower, more calculated and more conservative way of doing it, this is obviously the approach that we espouse on the show. It’s that more careful, calculated, repeatable way to do it. It’s how I’ve launched a bunch of apps and how you’re launching Bluetick here.
Mike: I think the interesting thing is I’m looking at the app now and I see places where clearly things will start to break or slow down just because of performance and depending on what it is, sometimes, I just look at it and say, “I’m going to let this go.” Versus other times where like, and this mainly has to do with data sorting, paging, and making sure that you’re not returning too many things on the browser.
Those are few places where I’ve looked at and just said, “It can handle it. It’s not great. It’s not awesome user experience, but it works, so for the time being, I can just push it off and I’ll fix it later especially if customers start to run into it or it becomes a big deal. But it works, it’s not going to fall over. I’m not going to stop everything and put it on hold for another month or two to fix those things. I may as well just push it out there.”
Rob: You’re always going to have some part of your app that feels that way. There’s always a page or two that you’re embarrassed about, that you’re concerned it’s going to break, that’s too slow for large accounts. That will never stop.
Mike: I have a single-page application.
Rob: Oh Mike. Listeners can’t see me putting my head into my palm. For me, I’m actually working from Chicago this week. I’m with my son. We’re at his cello camp. We used to go to Oregon for this but now that we live in Minneapolis, it makes sense to come to Chicago. To be honest, it brings back memories, I was at the Oregon cello camp last year. I was signing life changing Drip acquisition documents on my iPhone with my finger from inside the halls of a music building on a small college campus that no one’s ever heard of in Central Oregon. It was just this.
I remember feeling overwhelmed and I couldn’t think straight. We’ve been talking about this for a year and doing negotiations for six months and then I keep thinking to myself shouldn’t I be calm, cool, and collected like at my home office with my laptop but no, I was running in and out. I dropped the kid off at cello, a lesson or a group thing, and then I ran outside and then I read on my phone, oh my gosh, this piece fell through. I’d get a thing to sign to override this and to sign over. It was exhilarating. It was also super stressful. But being here reminds me of that because it is the one year anniversary of the Drip acquisition just a couple of days ago.
Mike: Today, now you can sit there without the dirty looks from the other parents.
Rob: I know. That’s right. It’s Suzuki method of teaching cello and strings and so the parents were supposed to heavily participate and I actually had to talk to a couple of the teachers and I said, “Look, I have something going on right now. I’m in the process. My company’s being acquired. I need you to cut me some slack for a couple of days here.” That was fun.
Let’s kick off today’s episode with a voicemail question. Note to the listeners. If you want to get your question to the top of the stack, send a voicemail because we don’t get very many of them and it’s always cool to hear people’s actual voice. It’s just a better experience for everyone. It feels like The Collin Show. With that said, someone sent us a voicemail with a question for you, Mike, about Bluetick.
Andrew: Hi Mike and Rob, this is Andrew calling from Australia. Mike, I’ve got a question for you in relation to Bluetick. You talk a lot about product market fit. Have you found with Bluetick that you’ve had a general type of customer or have you found already that Bluetick has started to be suited for either a particular industry vertical, a particular customer type in terms of size of the company, or to some other characteristic in terms of the groupings of your customers? Love the show and hope to hear you guys answer this question on air. Thanks. Bye.
Mike: From the customers that I’m working with right now, they fall into a certain set of categories. I’m not saying that these categories of people, the customer profile that I currently have for the people that I’m working with right now is the long term ultimate customer base, I guess, of Bluetick. It’s just what I found so far and what seems to be successful.
They fall into a couple of different buckets. The first one is startup founders who are trying to validate an idea and most of them are trying to do cold outreach and get in front of customers or try and reach out to people that they think would be a good fit for their software. They plug people into Bluetick and it does essentially cold outbound outreach for those people and try to get those conversations started. That’s one group.
A second group is podcasters, to be honest. People who are running podcasts and are trying to get sponsorships for their podcast are using Bluetick to do that outreach to people they think would be a good fit and then start those conversations and then enter into the individual emails back and forth to try and get them to buy into a sponsorship for those podcasts.
A third category is small businesses who have an inbound lead funnel. Most of these are services based businesses where somebody will fill out a form on their website and the customer is approaching them and then they need to fill that request and probably ask for more information or try and get them to the next step. But what they’re finding is that a lot of people will fill out a form on their website or request information and then go dark or go silent.
What Bluetick does at that point is that because it’s a warm contact, it will help bring them back to the table. Very similar to Rob, you guys in Drip have this feature where you can send out a broadcast email and then several days later you can reschedule that same email to go out with a different headline if the person doesn’t open it. Bluetick, because of the way that it works, after the first attempt, if it doesn’t receive a response from the person, it will try again and again and again.
Those additional steps in the email sequence tend to aggregate together and give you a much higher response rate than if you just sent out one email, waited and if they didn’t respond, then you kind of walked away from the conversation. That’s the profile that I’m currently finding success with and people are comparing other products to Bluetick. There’s a lot of different cold outbound tools out there or tools that will remind you, “Hey, you sent an email to this person and they didn’t respond.” But Bluetick aggregates those things together, not just their features, but also the fact that it’s got a mini CRM built into it and helps you give a bigger picture of the whole thing.
That’s where I’m at right now. I don’t know if that completely answers the question but there’s a few different buckets that they fall into and I haven’t found one specifically that is better or substantially worse than the other.
Rob: Yeah, that’s cool. I go back and forth on this. As an entrepreneur, early on in your entrepreneurial journey, it’s like I stuck to apps that really had a tight vertical niche and I feel like that is a good way to keep things simple, you know where to find them. I like that approach. However, there are tools that in order to grow to a reasonable size, they’re in such a competitive space that I guess it could be argued that you could say that Bluetick is advanced follow up in sales for podcasters. You could start out that way and then expand. Land and expand is what it’s called and then go horizontal.
I think it’s too early to decide that right now. Podcasters may be too small of a niche, although it is growing.
Mike: It’s interesting that you say that that’s a small niche. I agree with you that it is but they talk to each other a lot. I get a lot of referral in that. I think that’s partly why I’m getting traction there. It’s because they talk to each other and they’re saying, “How do I solve this problem of getting sponsors for my podcast?” And then they say, “Hey, use this tool. It’s really helpful.”
Rob: That’s the thing. I say it’s a small niche but small is in quotes. If you would’ve build this to let’s say it tops out $30,000, $40,000, $50,000 a month, which I think there are enough podcasters to do that for sure. That’s small compared to a multimillion dollar app or some Silicon Valley exit. But that’s a heck of a lifestyle business if you want to keep it that way.
If you own the niche and you’re the name in doing and then you add things in that that really help podcasters find sponsorships, and then you could even branch out into, well, conferences need sponsorships. That’s the whole reason you built Bluetick, originally, was to help with getting sponsorships from MicroConf.
There are other things you could easily translate into so we’re definitely getting, I’m getting ahead of you on this or ahead of ourselves and I don’t think we need to make this decision or the distinction yet but I do think it’s an interesting conversation that you probably have or should have going in the back of your mind of do I need to go vertical because there’s so much competition. Because you have to be different somehow. You don’t just want to be one of many apps that’s doing the same thing.
You either want to go vertical with it and build the best one for that group of people or you want to have a feature or two that really make you stand out where they say, “Well how are you different with the five other apps that do this?” And you can say, “Well, it’s this and that and this is the approach we take. It’s the light way to CRM.” Or whatever it is that you’ve built in that’s different, that you at least have a talking point and aren’t just a commodity.
Thank you for the question. I like that one. I appreciate it. Our next question is from Aaron Cordova. He’s asking about notebook organization. He says, “How do you organize your notes? I’ve recently started note taking with an iPad Pro and a pencil. Do you have a page per day? Do you organize by topics?”
I used to use my notebooks both for longer term notes and thinking and things I was thinking through and I use it for to-dos. I tried so many to-do apps over the years and I finally switched to Trello. I can’t go back now because Trello keeps it on the cloud, have a record that never goes away. I can never lose it. I can access it from all my devices. I really like to-dos being in an app somewhere and Trello is finally the one that broke me with that.
Now, my notes are really just in a black, a Moleskine notebook and I do not do a page a day because I don’t write in my notebook everyday. I still use Evernote for some work things. I use Trello for to-do lists and I use my notebook when I am on an airplane, when I’m deep thinking, when I’m trying to hash through a problem because paper and pen is just I think so much better with that than sitting in front of a computer because there’s no distraction.
If I were to flip through my notebook, I definitely date my pages and I put a topic at the top. If I’m going to be thinking through one problem, or taking action notes from a book that I’m listening to, or trying to think of what else I’ve written on my notebook recently, I tend to put things in there I want to say for a long time. If I know that it’s just super scratch brainstorm-y stuff or it’s, I don’t even know, like a grocery list or something that I know I’m not going to care about in a month, then I don’t put it in my notebook. My notebooks, I keep them pretty much forever. I have notebooks going back ten years and I do flip through them and I have some fascinating insights that when I look back and think, “Man, your view of the world was so different back then.” Or maybe the world was genuinely so different. Just the founder community and the entrepreneurial community and my aspirations for it.
All that to say, I don’t organize by topics because I just flip to the next page, I put a date, and then I flip through. This means that I don’t particularly have a great organizational system. When I remember, “Oh, I remember Derek and I talked about this and I noted that down.” I have to think in my head. I bet that was about six months ago. And then I do, I flip through the notebook and I find the page.
While it’s not the most efficient way to get there, what I really like about it is the serendipity. Typically, when I’m flipping through that notebook, I’m reviewing like six, eight months worth of thoughts that I have forgotten about. Actually, the act of looking through them often will remind me of like, “Oh yeah, there was this feature we were totally going to build.” Or “Oh yeah, we never implemented that one thing.” Or “I never got back to that person.” It’s like all this stuff that isn’t urgent and doesn’t keep coming back on the radar, but it was a really good idea four, five months ago.
For me, my notebook is more of a time capsule. It’s for deep thinking and thought process. That was actually why I don’t like Evernote for it, because Evernote, I know it’s great if you want to search or any of these note taking apps. Great, if you want to search and you know what you’re looking for, but if you just want to kick back with a cold beer in one hand and a notebook on the other and you just want to flip through and read things almost like a dead tree or paperback book, that’s the experience that I relish and that’s what I love about my notebooks.
That was more information you probably ever want to hear about it and maybe a unique use case. I’m curious to hear what your take is on this.
Mike: I’ve tried Evernote and Trello. I still have my Evernote account. I just don’t ever use it and there’s things in there that I don’t go back and find or look at. The problem I found with both Evernote and Trello is that if I’m using it for any sort of to-do list or task management or anything like that, I end up with so many things in there that it just really falls apart. It’s too general purpose.
What I tend to do is it’s broken down based on what it is that I’m doing. Usually, what I’ll do is I’ll either start with index cards for a set of daily tasks that I need to do and get through and I can just mark them off as I’m getting through them. Occasionally, what will happen is that something will stay on an index card for too long and it will end up on the next day’s index card or the next week’s. If things end up there for too long, what I do is I essentially end up promoting it to some other place.
Sometimes, I’ll have a notebook where I will write down short term notes about something I’m working on, whether it’s really complicated or has a lot of things that I need to keep track of and I’ll write them down on paper. But at some point, like you’ve marked off a bunch of stuff and then you end up with 5 to 10 pages worth of stuff but half the pages are all crossed off, it doesn’t really make sense anymore and you can’t move them around.
At that point, I start moving things over into tools. For anything that is a bug or feature related, it tends to end up in FogBugz. Most of my general purpose tasks, or if it’s a marketing task, or related to a specific project, it usually ends up in my teamwork account. If it’s some sort of a thing that needs to go on a shared list that I use for home stuff, I use something called AnyList. I have a paid account that I share with my wife because it’s a family account so we’ll put our grocery list and things like that on it. It works really, really well for that.
Outside of that, I will also use Google Docs for taking long form notes about a particular problem that I’m working on where I don’t want to write it down if it’s not just a really quick thing or if I need to think about a lot of stuff, I’ll put it in Google Docs.
And then for mental brain dumps at the end of each day or at the end of each week, I have a journaling app that I have a subscription to called Penzu. That system works really well for me because each of those tools tend to be focused on a particular type of problem that it’s solving and it has the tools and the features and all the things that go with it that allow me to keep things organized within that context. Once I start crossing the borders between different context, the tools tend to fall apart. You can use FogBugz for marketing tasks but you don’t really necessarily want to be paying for a FogBugz account to give some contractor or somebody who is not going to touch any of your development stuff. Giving them a FogBugz account is kind of pointless so it’s easier to put that stuff in the teamwork.
I have a tendency to feel like this type of problem, it’s going to be different for everybody. That’s why there’s so many different to-do list apps and note taking apps because everybody works differently and you ultimately settle on something that works for you. The other 99 apps that you tried didn’t ultimately work out. I feel like this is a very context sensitive problem in terms of the type of person you are.
Rob: Yup. And the process you use and how you want to handle it. I agree. Thanks for the question, Aaron. I hope that was helpful. Our next couple of questions are from John. He says, “Hi Mike and Rob. I’ve been listening to your podcast for about a year and I get bummed when Stitcher doesn’t have your podcast ready to listen to every Tuesday before I ride to work. I have a couple of questions. First is what are your thoughts on pay what you want pricing? I’ve created a software called Breakneck Install which is a downloadable application that helps developers quickly create an installer for their application.
There are giants in the market and my product can’t compete with them. I don’t feel like I could charge near what they do which is more than $500 per license. I thought of trying to pay what you want model. One of the benefits I see is not having to worry about licensing issues such as maintaining and creating backend infrastructure to deal with licensing. My fear is that I try this and then decide to go a traditional pricing model which may make future customers unhappy. Do you have any thoughts on this?”
Mike: I think for a product like this where you’re trying to build an installer, it almost feels to me like what you’re going to run into is the market is going to be split between these people who are just starting out and they’re trying to build a product but they don’t have any money so you’re not going to get them to donate money to your cause.
It’s not going to be a viable source of income. If it’s something that you want to do because you have the money laying around and you want to put your effort into something like this, then that’s fine but I wouldn’t look at pay what you want pricing for something like that to really be able to make a dent in your bottom line and be able to let you go full time on it. I just don’t think that it’s going to happen.
There are also a lot of open source alternatives out there that would make something like this difficult. You’re absolutely right when it comes to installers, most of them tend to be very expensive and what you’ll find is that the people who don’t have the money will go for the free open source versions. And even if you give them a paid option that is a pay whatever you want, it seems to me like you’re probably not going to get very much money from that. They’re not necessarily going to be willing to pay software maintenance and things like that.
You’re going to spend a lot more time fixing bugs and addressing individual issues than you are trying to build the product where if you were just selling it to smaller businesses that had revenue and the capabilities to pay $500 to $1,000 per license, you’d be able to make a business out of it.
Rob: I have mixed feelings about this. I’ve never done it so I can’t speak from experience. I can only speak from the experience of entrepreneurs who I’ve seen done it and who I’ve talked to. It can work but you need a really large install base. You need a lot of people downloading so you can’t just say I have a few hundred downloads a month and expect that you’re going to be able to do pay as you go and make any kind of money from it.
The problem is that if you do pay as you go and someone pays you $10, how much support do you now owe them? If they start asking for feature requests, if there are bugs that they discovered, if they’re demanding, if stuff goes sideways, it becomes a challenge. I can see a lot of problems with this and my gut is that it’s not going to work unless you are getting, I don’t know what the number is, but it’s thousands and thousands of downloads per month, because a bunch of people are going to pay you nothing, and then a few are going to pay you a small amount.
When podcasters try this, when other small, downloadable WordPress plugins or whatever try it, they don’t tend to get a lot of money. I don’t know that I agree with your fear that if you were to have pay as you go for now, that you can’t undo that later without making future customers unhappy. I think what I would say is I’d rather call it a beta, or an early access, or put some moniker on it and I would say, “It’s pay as you go while it’s an early access.” Even if you already released it and it’s not an early access anymore, that’s what I would do so that if you decide that you don’t want to go pay as you go anymore, that it just doesn’t work out financially, you can always undo that and it’s a pretty easy thing.
I’ve seen apps go from free to paid before. If you grandfather people who already have it, I don’t really know what complaint future potential customers could have other than, “Oh, I should’ve downloaded it last month instead of waiting till now.” There’s a time where I tripled the pricing of DotNetInvoice from $100 to $300, and a couple of people emailed me and said, “Hey, I was in the process of thinking about buying it. Can I still get it for $95, or $98, or whatever it was?” I gave it to them. It was like two or three people.
One I later regretted, he actually turned out to be the worst customer, the first toxic customers that we had but that’s beside the point. I don’t know. It’s easy enough to try. I see your point. I think if you have something that can’t compete in the marketplace like going freemium or pay as you go is often not the right answer. The right answer is make something that can compete in the market place. Have a differentiator or just set a cheaper price.
If this thing really does do a good chunk of what developers need, they can only get it for $500 elsewhere, then what about charging $99 or $199. You don’t necessarily want to be the low price leader but is there a space in the market. You think about Infusionsoft, Eloqua, all these really expensive marketing automations and Drip came in at the beginning, a lighter weight product that was easier to use and less expensive. I do think that there’s an angle that could be added there as well.
Mike: I think the lower price point is definitely an angle that you can go at because there are certainly ways that you could charge a couple of hundred dollars for an installer. I do like your idea about letting people know, “Hey, this is pay as you go for the time being.” And then make it a point that it is something that you can undo later and move to some other one. Just be upfront and clear to people like, “Hey, this is the pricing for now and it’s going to change. We just don’t know what it is yet.”
Rob: Our next question is about growing from $100,000 of ARR to $1 million. This is from Pawel Brzeminski. He says, “Hi Rob and Mike. I’ve been listening to the podcast for years. I really respect what you’ve done and that you’re sharing all this knowledge with the rest of us. I found your podcast immensely helpful in launching my own SaaS app, which is called Snap Projections. How do you think about growing a self fronted SaaS past $100,000 ARR? So that’s about $8,000 or $9,000 a month. What do you specifically pay attention to in terms of marketing, sales, operations, hiring? Any specific tips on growing in a vertical niche versus horizontal? What would you do differently right now?” It says more of a question for Rob but it would be interesting Mike’s take as well. “Anything specific to watch out for?” His background on them is that they have two people on board, more than 120 clients/customers, relatively low churn, and they’re operating in a niche of financial services applicable to Canada only.
Mike: I’ll be honest. I don’t know how qualified I am to actually answer this question so Rob, why don’t you throw some things out there and maybe there’s something I can think of, I’ll just piggyback on it.
Rob: For sure. It’s a really broad question but I appreciate it. It’s almost like what are the things to watch out for because they’ve already had a decent amount of success obviously to get to even that $8,000, $9,000, or $10,000 mark. It’s like what’s the difference to get to seven figures or what has to change between then and now?
What my experience with this is that it’s going to depend on how big the market is that you are in. I’d bring up Drip because that’s the most recent thing I’ve done. We were in a position where we were in such a large space that we didn’t have to change anything in terms of our market. We didn’t have to go from vertical to horizontal or do any of that because there were enough people who wanted it that we needed to do it. We needed to execute on marketing and hiring in essence. Keeping developers going to build features but really, the product, once we had product-market fit, has always been really solid.
I think that’s the first question to ask. If you really are in a niche of financial services in Canada only, it’s like is the market even big enough to get you to a million or are you going to have to either go into another vertical or go more horizontal and serve a lot of vertical niches or just not even be vertical at all. That’s one thing to think about.
I think you can definitely get to seven figures with a very small number of employees or contractors, somewhere between 5 and 10. I think one thing to watch out for is hiring too quickly or trying to hire ahead of revenue because you want to get there faster. It’s a lesson that I learned. It doesn’t necessarily, especially hiring developers, it doesn’t necessarily make that revenue move faster. If you’re already at that $10,000 point, I always would try to look at what is my bottleneck? Why are we not growing faster? Is it because our product needs more features or is it because we’re not marketing or selling enough?
My next hire would be either a developer, or it would be a marketer, or a salesperson, or we’d start doing demos, or whatever. When we were in that $10,000 to $20,000 MRR range, maybe we just hit $25,000, that was when I realized that not having someone who could talk to people on the phone and essentially do customer success/sales, that was a limiting factor for us and that’s when we brought Anna on. That was a game changer for us. That was a bottleneck for us in that $20,000 to $30,000 range.
You may be there but then again, you may be that salesperson and that’s not a limiting factor and it’s more of your market’s too small and your development team is moving too slow or whatever and they need more help. That’s the thing I think that you need to think about at every point is whether you’re at $10,000 or you’re at $50,000, what is your limiting factor? What’s going to double your growth next month or add 50% of your growth to next month because you want growth. The bigger you get, you have to accelerate growth.
When you’re at $10,000, growing at $1,000 a month is actually a victory. At the time you get $20,000, $30,000, you want to start growing at $5,000 a month so you need to think differently about how am I going to 5x growth between those two points. That often means you’re either growing wider, building features faster or dumping more money in the marketing or getting into paid ads, finding a new channel, because that can be a big piece of it. You may just need more people on the top of the funnel. That may be a thing or you may need to close more people that are in the funnel.
That’s why I use all those rules of thumb that we’ve talked about in the past. If you’re already converting 40% to 60% of your trials to paid and you’re asking for credit card up front, then that’s fine. I would push that aside for now and I wouldn’t try to improve my on boarding and I would say, “How can we just get more people to the top of this funnel?” But if your churn is 10% per month, well then, “How are we going to cut churn by making a product better and by retaining more people?”
It’s looking at each of these things and just bouncing from one to the next and you improve one and then you put more people in top of the funnel and you realize, “Oh, now this other thing is broken.” And you just hop from thing to thing. That’s kind of a brain dump of how I thought about it but I hope that gives us some things to chew on.
Mike: I like everything that you just said there. It boils down to recognizing where the bottlenecks are going to be. One thing that comes to mind is you mentioned something about limiting yourself to just Canada for example, because that’s where the company is based right now and those are the people that they’re targeting. But does the customer profile need to change? Are you targeting one type of customer and you need to move to a different type of customer?
Let’s say small financial planning companies versus individual financial planners. Does your customer profile need to change in order to be able to get more revenue per customer in a way that’s going to help the business grow or are you going to max out? Again, that’s just a limiting factor. Not necessarily through geographical border but the customer base that you currently have and that you’re going after.
That all boils down to the same thing. Is there that limiting factor that you’re going to need to overcome? Whether it’s that or whether as you said, the bottlenecks in the marketing funnel, customer acquisition, all that stuff. It’s finding those bottlenecks.
Rob: Thanks for the question Pawel and apologies that it took us so long to answer it. He actually sent that to us last October. Our last question of the day comes from Matt Sencenbaugh. He says, “Hey Rob and Mike, I’m launching a SaaS app on April 1st,” sorry, Matt. It was a couple of months ago, “with two customers who have already signed on. My question boils down to what legal documents do I need at launch? Terms and service, privacy policy, sales agreement, etc? Do you guys have any recommendations for getting the required documents in a cost effective manner? Finally, just doing a sole proprietor affect this legal question at all?”
I will start off by prefacing that neither Mike nor I are lawyers, nor do we play them on TV so our advice is based on experience. It should not be considered legal advice. You should consult with an attorney to get real, legal advice. I have a quick answer to this one. I could say when we launched Drip and when I re-did HitTail and when I’ve done my other apps, terms and service, and privacy policy are the only two things that I really have and I use as a free plug for these guys, they used to advertise on This Week In Startups but it’s Snapterms, snapterm.com. I think it was $600 for privacy policy and terms. Those are not going to be the best. If you were to pay for a lawyer to do it from scratch, it might be $1,000 or $2,000 but they will work with you more to get tighter buttoned up language. But if you’re launching with two customers, it’s just how much time and money do you want to spend on this.
Mike: There’s a ton of privacy policy and terms of service generator tools out there. There’s even some that are licensed under Creative Commons and you can use any one of those. I think our general guidance, not necessarily, as Rob said, legal or financial advice on this particular thing is what we’ve seen people do is find something that seems reasonable for the time being and then once you get to a point where you can afford it and you have something to protect, then you go the route of having something custom built and custom designed for your situation. None of the tools out there that either generate these things for you or even the ones that you find on a website like Snapterms and you download something that is reasonably customized for you, they’re not going to encompass every single scenario.
Every lawyer, even my lawyer has done this before. He will look at legal agreements and he will take things from different legal agreements that he’s seen based on how they’ve been used in the past. If one of his customers got screwed over by a particular piece of legal jargon, he will sometimes take that and put it into his legal agreements to make sure that his customers and clients don’t get the short end of the stick when it comes to interpreting the documents that he’s put together.
Based on how experienced your attorney is, they’re going to have a wider wealth of knowledge, the longer they’ve been in business and the more agreements that they’ve seen and they’re going to be able to use those to craft the one for you. Maybe you get two or three different lawyers from different firms involved, it seems like it would be overkill but it’s always an option. I’m sure that larger businesses tend to have legal teams so that they can get that kind of experience and breadth and put together something that covers them from every possible angle.
Rob: The part about it’s a sole proprietorship has that impact. It just means that you have more exposure and more liability. I don’t know that it’s risk tolerance. Like we always say, you just have to figure out if you’re concerned about there being liability on your shoulders or in these early days, if you feel like you could get sued for something because the way to remove liability or to push it off is to form an LLC or an S Corp and then have really tight terms of service and privacy policy and all that stuff. Air tight, as they say.
That’s the way to ultimately get rid of it all. It costs a lot of money and it’s again, for me and my experiences, not something that I spend a lot of time or money thinking about in the early days of an app because there is less exposure at the time but you have to evaluate it for yourself.
Mike: An interesting hack for this to find out how much exposure you have is to go to an insurance company and ask them for a quote for liability insurance and find out how much that quote is and then use that to decide whether or not you need to go out and get something crafted from an attorney to help cover you. That seems to me like a pretty good way to get an independent gauge of how risky what you’re doing is.
For example, back when I was doing enterprise level consulting, we would be given admin access at the domain level on somebody’s network and some of these companies were like Johnson & Johnson, Pfizer, NASDAQ, those types of companies. Our insurance rates were outrageous. They were like $500 to $1,000 a month for insurance. It was only two or three of us. That was absurd but my wife’s got insurance for her business and it’s only, I forget, like $100 a month or something like that. It’s ridiculously low.
Depending on what you’re doing and how much risk and exposure you have, the insurance company will charge you more. Just getting a price quote from them would be a good way get an independent verification of how much risk there is without you having to sit down and do a ton of work on it. You’re going to have to provide them with paperwork and documentation and they’ll have an auditor review it but you could use that to help out.
Rob: Yup and if you’re going to do that and get a quote, I would recommend a company that I worked with before. They just made the process really easy. It’s foundershield.com. They themselves are a startup. It’s kind of just an insurance broker but they operate, like, I’m guessing they have some funding because they operate like you would want a startup to operate rather than some stodgy old business insurance company.
Mike: Matt, hope that helps. I think that’s probably the place to wrap it up for the day.
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Episode 347 | How to Recover From Coding for Months Without Talking to Customers
Show Notes
In this episode of Startups For The Rest Of Us, Rob and Mike talk about how to recover from coding for months without talking to customers. Based on some questions a listener sent in, the guys give advice to the classic problem of spending all your time developing and not enough time talking with customers.
Items mentioned in this episode:
Transcript
Mike: In this episode of Startups For the Rest of Us, Rob and I are going to be talking about how to recover from coding for months without talking to customers. This is Startups For the Rest of Us episode 347.
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: And I’m Rob.
Mike: 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: Well, I am back from Sweden. I had a great time attending and speaking at Brennan Dunn’s Double Your Freelancing Conference in Europe. He said it was going to be the last DYF conference he throws and then he’s going to only do small retreats after this so it was cool to meet up with him and his crew.
And then I spent a couple of days with Sherry in Stockholm. We had left the kids at home and we had a great time seeing the sights, painting the town red, and I got a good amount of work done. It’s crazy when you’re in a new environment. I was basically taking the days off, “vacation days,” but there was still stuff going on back here, back in the office so a couple of hours a day, 90 minutes or so, I could just hammer out a ton of email and Slack replies.
I had some really good ideas because I had the headspace to think about stuff so I noted them down and I’m starting to put those in the queue right now. It was actually a productive, I wouldn’t even say it goes far as to say as it was a workation, it was more like a light vacation with a bit of work sprinkled in. That’s, to be honest, my ideal thing because I think when I don’t work for like a week, I feel disconnected and I get bored just travelling and being in places without having something to occupy my mind.
Mike: I’d imagine that’s a lot like retirement as well. I’m not one who just likes to take extended vacations just for exactly that reason. I find myself getting bored.
Rob: Yup. I think that’s where having hobbies, like I do investing, which is fun, but I can only do so much of that in a day and think about it for so long before I need to do the next thing. After the conference was done, we would go see one sight and then we’d go to lunch and then Sherry and I would come back in the afternoon which is when this time zone was waking up and Sherry had a few calls and she was still doing quite a bit of consulting and stuff. It was good. It was a nice mix. I really enjoy that stuff.
I also enjoy getting away for retreats. Like we’ve talked about in the past, taking a full two, three days but seven complete days for me without thinking at all about the things I’m most passionate about, which is a lot of what I work on, is always a hard stretch.
Mike: Cool. On my end, I finally got the two step sign up process for Bluetick all squared away. There’s definitely edge cases in there that I just said, “Look, I’ll deal with this later.” Instead of making the whole thing bulletproof, I made it basically just work. I know that there’s going to be cases where something is going to come up and somebody goes to sign up and it’s going to break. I’m just going to have to figure it out at that point because I don’t really have the time to try and capture every single edge case.
Right now, it’s just going to show some generic messages if it goes sideways and certain ways that I just don’t know about because I don’t know all the different ways that Stripe for example, could say, “Hey, this card isn’t going to work.” I got that all squared away and finally got started working on the marketing and sales websites. I got the price and page all set and I’m working on the tour. I got to create a couple of videos to add in there, probably put one on the home page then work on flushing all the rest of the tour and figuring out whether I want to do just one page for the tour or I want to divide it up into several of them based on what different situations people are in.
I’ve got a bunch of different notes that I’ve aggregated from various customer discussions that I’ve had and different things that they’ve either keyed on or asked about during demos and putting those into specific places in the tour and try to essentially walk somebody through the decision making process for it.
Rob: Good for you, man. That’s exciting. I know it took a lot longer than you wanted to but it’s got to feel good to have that behind you and be able to pull the next thing off the list.
Mike: It is. The thing I don’t like about doing the stuff on the tour side of things is that it’s a completely blank slate and I’m not a designer. I’m sitting there, going through and trying to figure out how should the page be laid out and what should I say in certain areas and how should one thing lead into another. For whatever reason, it’s really hard for me to do that. I can conceptualize what I need to say but doing the layout for it, that’s the part I’m having a hard time.
Rob: Yeah, that is hard. I haven’t done that in years. When I used to do it, I wasn’t very good at it. It’s such detailed work. It’s tough. That’s what you got to do when you’re scrapping being bootstrapped and you’re counting the days until you can hire someone else. Get a contractor, even if it’s a contractor, get somebody because they’re so much faster at it and the end product will look better too.
Mike: Plus it’s all in WordPress. There’s only so much that I can do in WordPress. I’m just going to make do with what I’ve got and then after that, just look for a designer at some point down the road, when I actually have the funds for it.
Rob: For me, my other point of update is we’ve had some recent questions on the podcast about books, or resources to learn how to build a SaaS app and someone had pointed out the PHP spark framework, which I think is pretty cool.
There’s another one in the works now. It’s Marcus Wein. He’s in Austria and he’s working on a SaaS guide book for Ruby on Rails. I actually met him at Brennan’s conference. We talked about stuff and then he cooked up this idea and put up a landing page while we were there. I thought that was cool. He’s getting to work on that book and the URL for that is saasrailsbook.com.
If you’re interested in the fundamentals of how to build a SaaS app and are willing to either learn Rails to do it or you already know Rails and you want to just learn how a guy who’s built dozens and dozens of them would architect it and then all the things that he would think about, go ahead to saasrailsbook.com.
What are we chatting about today?
Mike: Today, we’re going to be diving into a problem that a listener had sent in to us. His name is Zac and he has a product called neverlate.io. He started working on it. He spent about three months working on it and has a basic MVP all set up but he fully admits that he made this classic mistake where he spent several months in his basement working on it and has come out of it and now he’s ready to try and find customers but he has no customers to go to or to show it to because he spent all that time working on the product itself rather than doing any customer development.
He’s tried a couple of different things to generate some traffic. He’s tried some AdWords. He’s talked to a few different people but really, he’s at ground zero at this point and he’s wondering, “What do I do here? What do I do to try and move this forward and make it work?”
Rob: The URL again is neverlate.io. It is an appointment reminder service. Right now, it is very horizontal. It doesn’t say appointment reminders for XYZ niche. It’s just a broad appointment calendar plus it can send automated text messages. I guess that’s it. It doesn’t look like it makes phone calls either. Anyways, I’m just looking at the home page. Obviously, I haven’t used the app, just trying to give the listener an idea of the business. It starts at $29 a month for up to 200 appointments a month and it has a $50, an $80, and a $500 tier.
Mike: This reminds me a lot of Patrick McKenzie’s appointment reminder app. Maybe, that’s where the idea came from. But to give a little bit more details on this, I’ve gone back and forth with him just to ask a couple more detailed questions. When he came back, he basically told me the product is functional but he doesn’t have a customer list. He doesn’t have a channel where he can start to do customer development. As you said, the bottom price point is $29 a month.
In terms of his target market, he’s a little bit unclear on where to go with that. He knows certain ones that he’s probably going to skip so he’s inclined to skip massage therapists, for example, because he doesn’t think that they’re going to be willing to pay more than like $10 a month. And then in terms of sign ups, he’s gotten some from AdWords. He spent about $50 or so in AdWords and he is getting people to sign up for trials but it’s not a lot and obviously AdWords can get very expensive.
In terms of lifetime value, he really doesn’t know yet. He’s thinking maybe a year or so of service so around $350 for lifetime value of a customer. His base question is really just what do I do at this point? Should I spend more money on AdWords? Should I do something else? What are my options and what are your recommendations about where to go with this?
Rob: We have an outline here but to kick us off, you’re in a real tough place because you basically have no customers, no list, and you have a me too product. There’s nothing that differentiates this product that I can see from, I won’t say a slew of others but I bet if I search, I can find a half dozen apps that do exactly what this does. Definitely back against the wall at the present.
Mike: I think that’s probably a situation that a handful of listeners have found themselves in over the years, probably more than a small handful, where you’ve built something and you get to a point where like, “Okay, yeah, I’m ready to take this to people and show it to them because I’m no longer embarrassed about what it is or what it looks like.” But you haven’t gotten far enough down the customer development road to figure out who it is you’re going to talk to.
I think in this case, your first priority is to prove, one way or another, whether or not this idea is going to be viable for you to execute on. I’ll put “prove” in air quotes because you’re really never going to be 100% sure that it’s going to work but you can get an idea of it. You can start looking down the road and you start doing that customer development and try and figure out does this look like it has legs or am I just wasting my time and money to try and to get this to work?
Along that lines, I think the first thing to do is really set a time line. For something like this, it seems like a six months time line is probably an appropriate timeline to set for this. Especially if you’re working on the side, if you are working on it full time, probably less since you have a fully functional MVP, take that time line, set it aside, and say, “Okay, I’m going to do X things during this time.” And set goals for that entire time line.
The first goal that I was thinking you would set up for six months, months one and two should really just be focused on trying to get a certain number of customer discussions, whether that’s five per month of five per week. Really, you can set your own pace and schedule at that. But you’re trying to figure out can I reach these people? How do I reach them? Once you start having those discussions with them, you learn more about who they are, what they do, how much time they spend in different areas, especially trying to solve this particular problem, whether it’s something that they’re willing to pay for.
Once you have that information, you ask yourself, how much are they willing to pay? Obviously, you ask them as well. But you want to find out, are they willing to pay for it, how much, and listen to the language that they’re using. Really, these first two months are just spent doing these customer discussions. Yes, if you can get them to a trial or on to a paid account, that’s great, but that’s not your goal here. Your focus should be getting a certain number of customer discussions because that’s going to give you an idea of how easy or difficult it is to continue doing that down the road.
Rob: Right. If you can’t get into these customer discussions, which are really about learning, as you’ve just said, rather than trying to build revenue, if you can’t find anyone who’s willing to talk to you, that’s a very, very bad sign. It’s a sign that you’ve built something that people just don’t care about, don’t need, don’t want, which is going to be something you could very well run into with any product that you launch. At that point, you have to decide am I willing to essentially continue to add things to this that actually make it unique so that I’m the only app that does this in this way, or to pick a niche and niche down.
Like you said, you don’t want to do massage therapist and I don’t blame you. Is there a group? Is it medical or dental because they have HIPPA so they’re really expensive and so they’re the $500 a month and up and you offer only HIPPA compliant so it’s important reminder for medical and dentist office. There’s probably some others in that. This is where you have to do this research. This is not the time to run Facebook ads to a landing page and see who converts and play it that way. This is an app where appointments are brick and mortar type of things. I can’t think of an online audience like designers, or photographers, or developers, or entrepreneurs, there’s certain audiences that are just online a lot.
Appointment reminder, if you can figure out a way to target an online audience, great, but if not, then you have to go through these much more manual steps. I don’t really see an angle here where you’re just going to rent some Facebook ads and convert people to trial and split test your way out of this. For the whole six months, you’re going to be learning that these first two months are going to be critical. They’re going to, like Mike said, tell you whether or not you should continue.
Mike: Along with that, in these first two months, you’re trying to figure out who that target audience is. I think early on, Zac had said he was probably going to skip massage therapists. Maybe there’s some data he already has to indicate that they’re not willing to pay for that. That’s fine. But are there other professions or other verticals that you can target and try to have those discussions with them and see if that’s going to work, see if that’s an initial traction channel that you can start to establish.
If it is, great. You can move on to the next steps in months three, and four, and five, and six that we’re going to lay out. Your focus at this point is trying to figure out who those people are and if you can establish a recurring channel of them to have those discussions with. If you can’t, then maybe it’s time to pivot to a different channel, a different vertical, or can the whole thing.
I probably wouldn’t can it after trying to find one vertical. If you go to massage therapists and they say, “No, we’re just not interested.” Okay, great. Go to dentists and then maybe pivot over to a solo practitioner doctor’s offices, for example, or plastic surgeons, or something along those lines. Each of those could be a one to two month effort but you’re trying to figure out is there a place where you can get customers on a recurring basis, at least in the early days?
If you go through several of those iterations and you still can’t find them, then that’s the point where you need to re evaluate your position and decide whether or not to just cut your losses and move on.
Rob: For months three and four, assuming that months one and two are successful and you figure out a niche or a group that you’re going to target, months three and four, your KPI is the number of paying customers after you’ve had a direct discussion. This is very, very much not scalable but what you’re trying to do is to learn objections. You’re trying to overcome them via discussions. You’re trying to close deals. It’s still learning but you’re trying to start making the rubber meet the road and actually get some revenue.
What you might find is that you get through three and four and you can’t get enough paying customers to make it worth your while and you have to go back and repeat months one and two and find a new group to target.
Mike: The whole point of this particular piece of it, I don’t know if some paying customers is like the sole thing that you should focus on. Getting them into the app and getting them active and using the app, that’s probably a much more important first step. Obviously, you want to keep them as paying customers and get them to convert from any sort of free trial that you put them in into a paying customer. But even if they don’t, you’re still going to learn from that. The focus is really finding a certain number of people that you can put into it.
Again, you can set those numbers yourself. You can base it on how many conversations you’re actually having because obviously, if you only have 5 conversations a week, you’re not going to get 10 customers a week. That’s simply not going to happen. From that, you can back that off and put people into the app and learn those objections. You can overcome them by talking to them. A lot of times, people will have a question that if they’re on your website and they have a question in their mind, it draws doubts for them. They will not sign up because of that.
When you ask them, “Hey, would you like to sign up for an account right now?” They’ll say yes or no. If they say no, you can ask, “Well, why not? What’s stopping you? What is it that’s holding you back here?” Those are the things that you want to write down. Every single question that somebody asks, you want to write that question down. That way, you can go back to that and over time, you’ll get a base of let’s say 20, 30, 50 people you’ve talked to. Start aggregating the number of questions that they ask and which questions they ask. You can identify which of the questions were most prevalent, which ones the most people had and use that in your marketing copy once you get to months five and six, which is where you are trying to land the paying customers or on board people without having those direct discussions.
Rob: That’s month five and six. It’s moving out of the I’m talking to everyone, I’m doing demos for everyone, and I might able to start getting people to overcome their objections and sign up for a trial just purely based on a marketing website.
Take these timelines with a grain of salt here. We heard from Jordan Gal last week and he was giving demos for six months, eight months. It wasn’t just the two months we have here or I guess we have four months. One and two, finding the audience and three to four is overcoming objections, and five and six is moving towards the more automated way. Their journey took longer. They have a more complex product, probably harder to explain, harder to demo. Appointment reminders tend to be fairly, I think it’s pretty easily understood by the prospect so perhaps you’d have an easier time or perhaps you’ll have a tougher time getting to five and six because again, your product isn’t differentiated from others that they could find with a Google search.
That’s the idea here. This third step, this third piece is trying to move towards having more automated things in flow and maybe you don’t remove demos altogether, maybe you figure out you have people self select that if they’re in the lower pricing tiers, then they sign right up and if they’re going to pay you three figures a month, it’s probably worth having a conversation with that person. You have a contact that’s linked. Even if you show your pricing, you still have some type of thing, how many appointments per month and immediately, you get a paying customer and have an idea that it’s worth reaching out to them with a calendar link, trying to set up a conversation.
Mike: With each of these sets of two months, months one and two is really about trying to get a certain number of customer discussions going and then month three and four are putting people into the app through those direct discussions and then five and six is getting those customers onboarded without having those direct sales discussions. That’s really just a logical progression. As Rob pointed out, your timeline may vary quite a lot. It could be closer to a year or it could be closer to two months. It depends on how complicated your app is, how far along it is, how many people you’re able to have those conversations with early on, how quickly you get traction, and it also depends a lot on what your schedule is.
If you’re working on it full time, you’re going to be able to move faster. If you’re working on it on nights and weekends, you’re probably not going to be able to schedule 25 calls during the week. It’s just not going to happen because you have a full time job and you’ve got other responsibilities. During the work week, it’s going to be very difficult for you.
But all of this is really just establishing this logical progression so that you can determine whether or not this idea that you have or the product and the MVP that you put together is going to go anywhere so that you’re not wasting too much time trying to make something work that’s simply not going to for you.
I think that’s another key distinction that we’ve made on this podcast before, which is that even though something could be a great idea and it is reasonably well executed, it may not be the right idea for you. If it’s not something you’re passionate about or you don’t want to do or you’re just not interested in it, you’re not going to do it as well as if it was something that you were extremely interested in and extremely motivated to do. You’re going to push things off and not be as motivated to move people forward in the sales funnel and do the website, coding, and everything else.
It’s going to be harder for you. Maybe it’s just not the right fit. Maybe some other product would be a better fit. Again, these are all things that you need to evaluate as you’re going through this process.
Rob: We call that in the biz, product founder fit. As you said, is the product a good fit for you, for your personality, for what you want to do for the customers you want to work with, for the features you want to build. It’s a bit of an amorphous concept and it’s hard to know upfront but what’s nice is that Zac said, right off the bat, “I don’t think I want to work with massage therapists.” That’s like, alright, good. It’s a good thing to know that. Don’t go after that market because you’re probably going to find out that you’re not, even if you found success, you’re not going to enjoy it. You’re not going to stick with it for the long term.
Mike: I think that’s an interesting side conversation. Even if that would work, do you want to do it? I think in some cases, the answer to that is probably not. There’s certainly groups of people that I would probably not want to work with or probably would not enjoy and everybody has their own either biases or people that they know in certain industries, they’re like, “I just don’t want to deal with any of that stuff.”
Again, it may work out. It’s just like marketing tactics. There may be some things that you’re really comfortable doing and the next person may not be comfortable with that at all.
Rob: Yeah, there was an app I almost acquired. I’m trying to think. It may have been after HitTail, or I still owned it but it had grown to where I thought it was going to grow and I was looking at other avenues before Drip. I looked at acquiring a bunch of different apps. One of them was going to put me marketing to and having a customer base of designers UX and usability folks. I had no reach into that market. Obviously, I have an understanding of what they do but I am not in that target market.
It was Ruben Gamez from Bidsketch who asked me, “You’re doing a market pivot by going from an SEO tool, which is at least marketing technology, into something that goes after a completely different audience, is that something that you want to do for the next three, four, five years?” Frankly, I have no qualms with working with designers and UX people, I think it would have been an interesting adventure but it would’ve been a huge learning experience for me.
I thought, “If I do this, I’m going to have an uphill battle to learn a whole new space and to learn what are all the sites where people hang out? Where are the blogs? I already know this from MarTech. That is one of the reasons that I wound up doing Drip. Because it’s not the same as an SEO keyword tool but it is another marketing SaaS and I already knew so much about the space because of my heavy involvement in evaluation of tools from my own personal use. It was just a different thing.
I think I still would’ve been successful. It probably would’ve taken longer had I done that. I would educate myself about a market, make myself a name in that market, which I really, really don’t have. And so, it’s just something to think about as you go through your ideas.
Mike: I think one of the last questions that Zac came up with was should I spend more money on AdWords or should I just abandon that and go do something else? I think, Rob, you’re probably in agreement with me on this one. But AdWords is probably not the way you want to go, especially if you don’t have a lot of money to throw into this because you’re going to spend money trying to learn. It’s not that spending money to learn is a bad thing but you’re going to probably spend much more money than you would if you had some customer discussions first and you waited until month three or four to start pumping up the sales funnel a little bit.
After you’ve gotten some of the terminology a little bit, you’ve narrowed down the market a little bit, if you’re just throwing money out there to try and figure out where the market is, it’s going to be very expensive to do that.
Rob: Yeah. The tough part is since the audience is brick and mortar, it’s going to be expensive and hard to find them. There are tools where everybody’s online and they’re always signing up for new things. You can do the curiosity play and get them to sign up and you have a low price point and you could test an idea with ads landing pages in more broader scope stuff if you had the money to do it. I don’t see an avenue to do that here. Just by nature of the potential audiences that we can come up with, I think you’re right.
I’m in agreement that AdWords is probably not where you’re going to get a bunch of learning at this point. Maybe you could run AdWords just enough to get that trickle of calls that you want. And again, it’s going to be expensive to get that trickle going. But if you have no other avenues, yeah, maybe AdWords or Facebook ads, or some type of paid acquisition, but if you can pay $10, $20 to find someone to get on the phone with you, who has some inbound interest, that’s interesting but you know you could just as easily do some cold outbound email or cold phone calls and perhaps get the same result with less money but more time.
Mike: That’s really what this is all about. It’s striking that balance between how much money you have available and how much time you have available. If you have more time than money, don’t do paid ads. Have those customer discussions, learn who it is that you need to target. If you have a lot more money than time, spend on AdWords and learn who but it’s going to be dramatically more expensive without having those customer discussions to guide you.
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