Show Notes
In this episode of Startups For The Rest Of Us, Rob and Mike discuss a talk giving by Jason Cohen at the Business of Software Conference. He tells you what things to focus on to create fulfillment at the work place for you and the people you hire.
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 the three tenants of fulfillment at work. This is Startups For The Rest Of Us Episode 359. 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 Mike’s trusty sidekick, Rob.
Mike: And we’re are here to share our experiences to help you avoid the same mistakes we’ve made. What’s going on this week, Rob?
Rob: I’ve decided to just start throwing curveballs at you every week in the intros.
Mike: You totally messed me up there, you know?
Rob: I know, Josh is going to edit out.
Mike: I don’t care if he edits it out. We screw up the intros all the time, it’s not that big a deal.
Rob: This is not a new thing. For me, things are going pretty well. I was bummed to miss Business of Software last week, had to fly home with our kids but I am getting geared up and pretty excited for the Zen Founder book that Sherry has been working on for months and months and months. I’m a second author on that and I have contributed stories and revisions and stuff. She’s been doing the work and it’s turning out really, really well. We still have only have a tentative title.
One title suggested by our son which I thought was great is ‘the entrepreneur’s guide to keeping your asterisk key together’, it’s kind of appropriate. It’s about how to stay sane while running a business; a startup and then even other types of businesses because there’s just stress involved even if you’re running any type of thing that’s not a startup. It’s good, it pulls a lot for material. Just talked about over the years there’s a lot of new material in it. I think it’s going to be good.
We’re taking the tact of it’s not an info product, it’s going to be a book so it’s going to be whatever it is, $25 or $30. It’s not going to be this $99 or $200 dollar thing, just going for larger audience, kind of like I did with my first book, Start Small, Stay Small. That really served to get the message out to as many people as possible. I’m stoked about it and if that sounds interesting, you should head over to zenfounder.com and there is a landing page for the book there where you can buy to preorder it or even just sign up. If for some reason you can’t find it, there’s an email capture widget in the lower right, a Drip widget where you can enter your email and certainly we’ll be emailing all this once the book is available.
Mike: I really like the working title, even though I know that it’s not final but I think your son is a budding copywriter.
Rob: I agree, yeah. When he said that, I was like “Dang, well a, don’t say that word, but that is really good.” He’s 11 years old, so he’s right on that cusp where they start doing that stuff.
Mike: Yes, my kids are infatuated with any movie that has cuss words of any kind and they just simply want to watch them over and over. They just want to skip ahead to that one part.
Rob: Yep, makes sense. How about you? You were at BOS this week.
Mike: Yeah. It was really good. I really liked a lot of the talks. Honestly, there was not a bad talk among them. Usually, you’ll go to conferences and you know, there’s one or two that are sort of interesting, kind of on the cusp of, “Could’ve done without this one.” I can’t think of a single talk that I went to that was not fantastic. They were all really, really good. I was just going through the survey afterwards and I was just like five, five, five.
I got halfway through it, I was like none of these sucked at all. I handed in the survey as it was. It was just an interesting experience to be there in front of those people. Plus, Seth Godin was there. That was awesome, I got to ask him a direct question pertaining to Bluetick, got some direct advice there.
Rob: Yeah, was that after his talk? Was he in the hallway? Or was he up on stage when you asked?
Mike: No, he was up on stage asking questions and I kind of explained to him the situation I was in and he gave me direct advice, he was like “Yeah, go do webinars, based on the situation that you are in.” That’s definitely one of my listed things to do anyway but that will probably percolate more to the top just because of source of the advice, I’ll say.
Rob: Yeah, totally. That’s cool, I’m glad to hear that it went well. Sherry said the same thing. She did a talk there that I heard was pretty well received as well. She had a lot of good things to say about it. She had never been to Business of Software. She does have a frame of reference with some WordPress conferences. Obviously, she’s been to several Micro Confs and she just spoke very highly of the speakers as well as a lot of the attendees she met. There’s enough overlap that she knew a bunch of people, she knows Jason Cohen, I know Mark Littlewood threw me in. I think it was really good for her to be at. Then now we got to meet your wife.
Mike: Yes, finally she’s not just a Photoshopped person on my Facebook page.
Rob: I started to question if she was real. You and I have known each other for 10 years or something but we’ve never met the wife. You guys came out because we were staying in Boston’s north end over the weekend, and you guys came out and we had cannoli and whiskey, is that right? That’s a good combination.
Mike: Yes. I don’t know if I would go with a too much of one or the other on any given night but at least not together.
Rob: If you have not had a cannoli in Boston’s north end, you’re missing out. Cool. What are we talking about today?
Mike: Well, today we are going to be talking about essentially a condensed version of a couple of slides that came out of Jason Cohen’s talk from Business of Software and we’ll link over to his blog at https://blog.asmartbear.com.
This particular story or instance is not on his blog but he talked a lot about what constitutes fulfillment at work. This was just a very, very small segment of his talk. Most of his talk was really about decision making and holding onto certain decisions too long, just not making them fast enough. The example he threw out was letting somebody go and he asked the entire room and said, “Is there anyone here who has fired too late? Who you waited too long to fire somebody?” Tons of hands went up and then he asked, “Have you ever fired somebody too soon?” There might have been one person who half raised their hand and that was it.
The reality is that when it comes to those types of decisions, his comment was that holding on too long is really a consistent predictable failure of judgement. He talked through some of the different pieces of what constitutes fulfillment at work and how to make some of these decisions a little bit faster so that you can get your business to a better place. That’s not just for you or just for the business but also for the employees or workers or contractors that you have inside of your business and helping them make sure that they are happy and productive. If you’re happy with what you’re doing, you’re going to be naturally more productive at it as well.
Rob: The part I like about this is this is equally applicable to a founder because it is really easy to stop being fulfilled as a founder. You build this business and you drive for revenue and you drive for these goals and then you turn around one day and you’re like I built this whole thing and it sucks and I’m unhappy and I think that’s a really important thing. That’s obviously a lot about we’re sharing that talk about over on the Zen Founder podcast.
But then this also applies to your people. As soon as you have two or three people on a team, you have to start worrying about their well being, whether they’re happy and fulfilled. You can keep some of them around for 6 or 12 months but long term they need to be fulfilled or they’re going to burn out, they’re going to quit, they’re not going to be productive. This may sound like a topic if you’re a hardcore entrepreneur, startup founder, solopreneur, where you think I don’t need to worry about this stuff. You do, because you will burn yourself out, you will find yourself in the situation I have many, many times over the years where suddenly you look around and you’re like I have lost one of the elements that made me really happy. Knowing what those are for yourself is really important.
In my MicroConf talk this year, I talked about my three which are freedom, purpose, and relationships. Whenever I’ve had only two of those three or one of the three, I find myself slowly slipping into sadness and unhappiness with my work and my life. I get the feeling that there’s going to be some similar type of magic in this talk. Jason Cohen always delivers. Every talk I’ve seen him give is typically one of the best, if not the best at the conference he is giving it at. I actually don’t know, I didn’t see the talk and so I’m interested to dive into what he had to say.
Mike: Yeah, the other thing I really liked about his talk was that when he was going through it, it kind of made me a little bit more aware of how this plays into the people that are working for you. It is very easy to get stuck in the doll rooms or trying to power through certain problems that you’re having or certain challenges that you’re facing and not really think about the people around you because you’re so focused on the stuff that you’re doing. Even though you might be unhappy, you overlook the effect that not just you being unhappy has on other people but also the effect that the work that they’re doing has on them. You can end up with a lot of charm based on the types of people that you hire really related to the situation that you’re putting them in. It really made me think about that a little bit more.
Let’s dive right into it, the three things that he talked about on this slide were joy, skill, and he said need but it really kind of meant business need in that context. What he showed was essentially a venn diagram of joy, skill, and business need. If you see a classic venn diagram of three different circles together, there’s usually places where two of the circles overlap in three different places and in the center you’ve got this one area that all three of them overlap and that’s the part that he referred to as the productive happy fulfillment that everyone needs in their work environment. If you’re happy about the work that you’re doing, joyful about it and you’re skilled at it and the business needs it, then that puts you in a very happy, productive and fulfilled place and you’re going to be able to do that stuff for a very, very long time. By long time, I don’t mean a few hours or days, I’m talking months and even years on end.
Rob: Got it. The business needs it. That means that you feel needed and wanted. You are contributing towards the bottom line, right? That’s the idea?
Mike: Yeah.
Rob: You’re helping the business. I have seen people, I worked at large companies. There were people who were getting paid to do something they can do but it didn’t make any difference for the business and they stuck around because the company was old and stodgy and didn’t want to fire people but those people were not very happy in their jobs, right? That’s that piece. Skill is pretty obvious, it means you have the ability or the attribute to get done what’s being asked of you. It’s like build this application, write this code, and you know how to do it.
What is joy? Go deeper into joy, does that just mean doing that skill makes you happy?
Mike: Yeah, this one is an interesting one because when he put it up there, it didn’t quite make sense to me because I was like isn’t all of this joy? What he really meant by joy was learning. Are you challenged doing this in a way that you are continually learning new things? For example, the place where joy and skill overlapped was you’re building an application for example and you’re learning new things as you go along. It’s kind of past the boiler plate stuff that you’ve always done in the past, you’re doing architecture, you’re figuring out how the different business layers of the application fit together, doing new things so you’re learning as you go through that process and you’re skilled at programming.
The overlap of those two things is really when you end up in a flow state and your mind just kind of shuts off and you’re like, “This is a lot of fun, I’m having a good time doing this.” What I found really interesting about the way he phrased this is he’s like this is also a trap. The reason it’s a trap is because you’re doing it because it’s fun to learn but the business doesn’t necessarily need all of the different things that you’re doing. You’re probably doing a lot of things that are not necessary for the business to succeed but you’re still having fun doing it so you’re able to focus on it for shorter periods of time and that short period of time can be a few weeks or a couple of months but if the business doesn’t genuinely need that piece done, then six months out, the business hasn’t moved forward, which means that it wasn’t really needed for the business, and things aren’t going well and then you become unhappy as a byproduct of not fulfilling needs of the business. That’s where the productivity really comes into play.
Rob: Got it, joy is very similar to learning but as long as you’re learning things that the business still needs.
Mike: Yes.
Rob: The three are joy, skill and need; business need in this instance.
Mike: Right.
Rob: Alright, I’m buying it. I like where we’re at so far, what’s next?
Mike: The next one was kind of combining the scenario we talked a little bit about, combining joy and skill to get into flow. Joy and business need is also an area where you can get into flow because you are learning new things and you know that the business needs it. Whatever the byproduct of that, even if it’s not necessarily something where you need to be skilled at it, if it’s stuff that’s helping the business move forward you feel some level of fulfillment by doing it. You can get into that flow state because it’s very easy to power through a lot of that work.
But, at the same time it is kind of a trap because you don’t need a great deal of skill to do that stuff. You can outsource it, you can hand it of to somebody else but you do it because it’s fun and you do it because the business needs it and it’s going to move the business forward, but it’s also a trap. It’s very similar to the combination of joy and skill where you get into a flow state and it’s very easy to find yourself continuing to do that but eventually you’re going to be unhappy doing it because it’s just not challenging at you at all, it’s not developing your skill set, it’s not using the skills that you already have. It just gets boring.
Rob: I have a couple examples of this. When I had the ecommerce site justbeachtowels.com and I was so excited, it was still a new business thing for me to be doing online business full time and this is 2007, maybe. I guess I wasn’t doing it full time yet but I was starting to get away from consulting. It was fun for me back then to interact with the customers and be email support for an ecommerce website which is pretty low skill need, it’s not even like I was supporting software, it was basic questions. It was making me happy that I was interacting with customers and I was just enamored by the whole thing. Obviously, the business needed it but there was no skill involved, a very low skill.
I did find that pretty soon I got bored and I didn’t have enough time to do everything. I outsourced that. The other thing I did was I was doing a lot of the manual copy paste and some kind of fulfillment of orders, not physically packing them but interfacing with different software packages because they didn’t talk to each other. That was actually, interestingly enough, in a weird nerd alert way, was fun for me in the early days. Man, I got an order for $40, it was so cool for me to see it, participate in it, and to make sure that thing gets sent out.
Again, it’s a very low skill activity. I think a lot of us do fall into this trap at one point or another and don’t outsource stuff that we probably should because if it is something you enjoy and the business needs it, it’s easy to justify. I understand why this is a trap and it’s something that really keep in mind as a founder, because you’re the one that has to make the choice and make the recognition that this isn’t something that you should be doing and then fire yourself from that task and hire someone else to do it.
Mike: I think we can all think of a lot of examples that kind of fall into both of these different areas. The last one I wanted to dig into was the combination of need and skill. Let me give you an example. Let’s say that you are an attorney or even the business owner and the business needs to have a privacy policy and you have to have some level of skill of interpreting the human language in a way lawyer speaks so that you can put that together. You can do that for a little while but even if the business needs that or even if it’s like reviewing contracts because you’ve got a consulting company and you’re working with a lot of people, a lot of clients, and you need a custom contract for each one. You can do it because you’re skilled at it but eventually it gets boring and you’re not learning anything new, you’re really just looking for all the gotchas that could be put into a contract that you need to pull out and re negotiate them with whoever is on the other side.
That’s a very good example where the business needs it, you’ve got skill doing it but eventually it leads to burnout because skill alone leads to toil, you’re going to just be toiling away at something that is not fun because you’re not learning anything new. Although the business needs it, it’s not that much of a need, to be perfectly honest. It’s one of those things where if down the road something became a problem, then it would probably show some sort of benefit. But if the engagement goes well then it’s not actually a business need. That’s really where the burnout factor comes into play. You can do it for a while but not forever.
Rob: Yeah, this is where I think most founders eventually find themselves, in the need plus skill and it’s doing hard things that don’t bring you joy. You’ll find yourself doing a lot of operational work. Or you’ll find yourself hiring the lawyer to do the privacy policy and worrying about vacation days or getting your health insurance signed up or making sure the payroll ran or just stuff that is enough skill or enough intricacy in knowledge that it’s hard to train someone straight away to do that and there’s a desperate and immediate need for it but it doesn’t bring you joy.
This is where, much like the joy plus need thing we talked about where I talked about doing email support, you need to outsource that to somebody. That’s where need plus skill, that quadrant I guess is one that is easily a trap, especially for someone who is a technician and likes to get in and do things themselves. This is the easiest one to just get in and grind it out and the business needs it and you have the skill and let’s do it and it works for a little while until it doesn’t and until you are unhappy and you don’t like running your business anymore. This is when you need to take a step back. Even though it can be hard to train someone to do the things that you’ve been doing, whether that’s the operations of the business, whether that’s still coding on your app when you’re at 10 employees, there’s a bunch things that this can fall into. But, the further and further away you get yourself from these things that don’t bring you joy day to day, the better off and more longevity you’re going to have.
Mike: The example that Jason had given that kind of illustrates the idea of the combination of need and skill was also enterprise sales reps. His comment was they don’t really do this on the side after work. The business needs it but it’s not something that they go home and practice their negotiating skills or practice doing enterprise sales on the side.
Paul Kenny had commented on it on his talk afterwards. He’s like, “Actually, we do think about this stuff and we do try to develop our skills.” I wonder how much a developer can relate to that situation because I think that classically we think of ourselves as developers. We are willing to go home and work on code on the side and develop those skill sets. To us, that’s helpful because we’re learning new things and doing stuff. I would imagine that sales reps, to some extent, do see that in the stuff that they do on the side.
To kind of sum up the different things that Jason had put together with joy, skill, and need. The intersection of all three of these things really creates a productive, happy fulfillment for somebody who’s working there. People will have different motivations, they have different skills, they have different things that make them happy. It’s important to realize that there has to be this balance that can be struck, not just for yourself but for other people that are in your work environment, to help them maintain this balance and end up in that situation where they are in that three pronged intersection between these three things to help them be able to push through certain things. I think it is very easy to push through certain environments or challenges when you’ve only got one of these things or two of these things in play as an entrepreneur but your employees and your contractors, they can do it for a little while but probably not nearly as much as you because you have different motivations than they do.
Rob: The best managers that I’ve seen are the ones that can spot that in other people and figure out their unique giftings. The things that they’re good at and the things that are going to bring them joy. It’s two different things. Just because you can see that a developer is good at managing people, that developer may hate managing people. To try to not force them into things that are going to make them unhappy in the long term, which I’ve seen happen over and over, is a real needle that you have to thread as a founder, or as a CEO, or as someone who’s going to manage other people. It’s keeping in mind, a, are they good at it? B, does the business need it? C, is this person going to enjoy it? The only way you’re going to figure that out is by knowing them better and by having conversations with them, and trying it out and seeing if it does actually make them happy.
Mike: One of the traps that Jason had illustrated was the idea that it’s very easy to, as the founder, put yourself in situations where you’re doing the types of work that give you all three of these things but then leaving other pieces of the project or other work for other people to do that doesn’t necessarily fulfill them. The example he used was for example doing all of the architecture work for a software design and leaving the stubs inside of the functions for other people to fill in the blanks and that doesn’t ever work. We know intuitively that doesn’t necessarily work. If you look at this particular framework, these three things that come into play, that’s why it doesn’t work. It’s not just that you have to recognize the situation doesn’t work, you also have to understand why it doesn’t work and be able to translate that to other types of projects in your environment.
Rob: It sounds like the point of his talk was to drive home how you yourself can stay happy in the long term as a founder and then how you can interact with employees, contractors, and other people you interact with to identify on these 3 axes how they can as well. Is that a good summary of it?
Mike: That’s a really good summary of this particular tactic. What he was really referring to in the greater context of this talk was how to make difficult decisions faster and understand what people’s motivations are for different things. For example, looking at these things in the context of the problem that you are in and trying to figure out whether you need more information or you can just make a decision right now and more about being kind to others and allowing them to work on things that are going to make them fulfilled.
If you’re taking all the fun work for example, you’re not going to have contractors working for you for very long or employees working for you for very long. They’re going to leave, they’re just not going to be happy or they’re just not going to do their best work. You really need to hold yourself accountable to the results of people and what it is they’re achieving in your environment.
He had a thread that went through his entire talk about not just the decision making for letting people go but also making sure that you elevate yourself in a position where you’re more of an editor and letting people do the things that they are really good at. Another piece of this was the whole aspect of making sure that you are hiring A players as opposed to hiring B players who are then going to hire C players.
Rob: I think that about 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. Our theme music is an excerpt from We’re Outta Control by MoOt used under Creative Commons. Subscribe to us in iTunes by searching for Startups and visit startupsfortherestofus.com for a full transcript of each episode. Thanks for listening, we’ll see you next time.
Episode 358 | Bootstrapping into the Enterprise, Avoiding Death by Google, Selling to Outside the U.S. 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 on topics including bootstrapping into enterprise, avoiding death by Google, storing customer pricing data, and selling to companies outside the US.
Items mentioned in this episode:
Transcript
Rob: In this episode of Startups For the Rest of Us, Mike and I discuss bootstrapping into the enterprise, avoiding death by Google, selling to companies outside the US and we answer more listener questions. This is Startups For the Rest of Us Episode 358.
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: And we’re here to share our experiences to help you avoid the same mistakes we’ve made. What’s the word this week, sir?
Mike: I’m headed over to the Businesses Software Conference this coming week. That’s from Sunday to Wednesday. I think that by the time people hear this, it’ll be Tuesday. If anybody happens to be around, feel free to get in touch with me and I’m more than happy to chat for a few minutes and just talk about business.
Rob: For those who don’t know, Mike and I both have very high opinions of Business Of Software, and in fact it’s one of the reasons that we started MicroConf back in 2010, 2011, is that Business Of Software does such a good job with a certain strata.
Originally, it was cellphone and software companies and there’s a lot more folks going after IPOs and raising moneys. It has developed into a lot of B2B SaaS and it’s a larger scale. I was thinking of it like, if you outgrow MicroConf, you could graduate up to BOS. There are a lot of parallels in terms of how we run the show and I have a lot of respect for what Mark’s put together. BOS, it’s like a step up in terms of a lot of things that’s more expensive, it’s larger and it’s for larger organizations but I do still have a lot of respect for it. In fact, I was planning to go because my wife, Sherry, is speaking next week at BOS. I have a ticket and everything and we had plane flights and then our live in nanny, remember her? She moved out.
Mike: I don’t remember her specifically, but I do remember [00:02:01].
Rob: You remember the story, yeah. She actually had a family health issue and she had to move out suddenly to go help out with her family which is obviously a real bummer for them but it means we don’t have her because she was going to fly back with the kids on Sunday and I was going to hang around for the conference. Since Sherry is speaking, she gets priority on this one. I will only be in Boston over the weekend. Are you and I going to see each other, though?
Mike: I don’t know. I was going to talk to you about that. But we’ll talk about it after the show.
Rob: We’ll have to figure that out.
Mike: That’s actually an interesting side note because most people don’t realize that we aren’t anywhere close to each other, and haven’t been for seven years. We used to live in the opposite sides of the country, now you live in Minneapolis and I live about an hour west of Boston.
Rob: Right. We see each other generally twice a year, at the two MicroConfs.
Mike: Yup, and that’s about it.
Rob: Cool. On my end, it’s like every couple of months, doing scaling stuff. Right now we’re trying to take the load off the database, drip it to a large system, we’ve already denormalized tables off into Redis and into other data stores but just wanted time pulling them off to reduce load because we’re starting to get some cue backups, peak times and obviously want to keep things moving through.
Now that I’ve sold the company, I think scaling is my least favorite thing. Before I sold, it was like operations, it was HR and taxes and all that stuff but I don’t have to worry about that for the company anymore because I don’t own it, but I think this has become my new thing that I don’t want to ever do again.
I want to hire good people to do this, not have to do it myself, basically. Not that I’m not doing it myself, granted I’m not writing the code and we’ve had the luxury of, since Leadpages does have so many resources that we actually have some really smart senior scaling architects that we’ve been able to pull over and so I have actually slowly stepped away from any involvement or planning in that which I think is good both because they’re smarter than I am at doing this stuff, as well there’s just other things to be done with a product of this size.
Mike: I think the hard part about those scaling issues is that when you run into them, they are typically things that you can’t solve very quickly and those problems are just going to linger for the entire time that you have that customer base using those particular resources that are getting bottlenecked for whatever reason. You can’t fix them quick enough. I think that’s what the stressful part about it is that for however long it is, if things are going to be backed up and even when you go to deploy stuff that will fix it, you’re not absolutely sure that it’s going to really fix it just because your test suites don’t typically have the load on them that your production system does. It’s just stressful. I ran into my own this morning but not nearly at the scale as yours, I’m sure.
Rob: Right. It’s always stressful because in the early days, you only have few customers and you’re worried about even losing three of them. We’re at the scale where obviously it’s a different thing but still, there’s a lot of stress to it at both ends of the spectrum. What we actually did, it’s interesting, the app is so large and so many servers that it is virtually impossible to simulate the load and to actually test approaches. We test them as best we can and then we push them in. To date, they have all improved, we noticed that things got faster.
About three weeks ago, we split cues apart into their own separate scaling groups and it was certainly going to make everything faster. In fact, each individual thing was faster but since they’re all pointed at the database, it actually started having the database thrash because there was too much throughput to it and it wasn’t traffic guarded, it was just having a big pile up at the database layer, starting to slow things down. We actually reverted that and we recombined the cues about 48 hours ago and it was just a huge shift. Suddenly, everything started going back to where it was three or four week ago which was in a much better position. That’s one of the things that’s hard about it. We haven’t had that happen in the past where we launched something that made it really slow but man, you really got to keep your eye on this stuff.
Mike: One of the things that I did when I started running into some scaling issues, I found some raise conditions but with raise conditions it’s similar but it’s still difficult to replicate. What I did was I created, I forgot what it was, it was like 10 scripts and I just launched them all at the same time, pointed them at the same location and just let it go and then looked at everything afterwards and said to this thing hold up, where did it fall over? It worked great, the thing was responding 30 requests a second or something like that which doesn’t sound like a lot but it was all on my local machine.
Rob: Cool. What else is going on with you?
Mike: Not really much, just spending a fair amount of time on support issues at the moment. I think I have to look at outsource and some of that stuff just because there are two different types of problems that are coming in; one’s general usage and questions about how the app already works. And then there are things where something just isn’t actually working the way that it’s supposed to and those things would probably have to get escalated to me. I have to look at how to delineate between them and then bring somebody in to help serve as a buffer to help maximize my time in the most productive places.
Rob: Yup. Boy, that is one of the first things that I always outsource. It’s easy enough to train and they can always escalate to you and it doesn’t seem like a big burden and I’ve heard folks tell me, oh no, it’s only a few emails a day. But it’s the distraction and the fact that you need to get back to it quick and you have to task switch. As soon as you get someone good in there who’s doing it, they will take more and more and more of that burden off your plate. When it grows to 30 minutes a day, an hour a day, two hours a day, you don’t have to worry about it, it just naturally scales up.
Especially solo founders, but anybody who’s bootstrapping, it just buys you so much time and really support is obviously always super important, but it’s extremely important in the early days for you to be more involved because you’re still doing customer development, and you want to hear the questions so you know what docs to build and what on boarding to build and you want to hear the concerns and the bugs so that you can fix super-fast for these early adopters. You have to transition out of that at some point.
Mike: Yeah. Mostly it’s the time looking into different things and then turning around and getting back to them. As you said, it’s not the time itself to answer somebody but it’s the context that goes along with it. There has been days where I spent two or three hours doing support and sometimes it’s just looking at stuff. Just like this morning, I spent a couple of hours trying to troubleshoot an issue and come to find out nothing was actually wrong, it was just things were backed up.
Rob: Yup, that makes sense. If you hire a support person, obviously part time, and they start wrapping up, then you’re going to basically be their backing engineer, they’re going to escalate to you when there’s a tech thing that they’re unable to do. The next hire I would do, because you’re going to hire a developer I suppose after that, that person should be the backing engineer and it’ll be a drag for a little while but it’ll free you up to run the business and then they essentially are the technical escalation, and that also will just pull a huge weight off of you from having to troubleshoot API calls and dig into people’s JavaScript, and just all the stuff that is, as you said, very time consuming.
Mike: The only other thing I have going on is that I’m probably going to be taking over some of the marketing efforts from my wife’s fitness studio. The interesting thing there is I really just have to make the decisions about what to do and then say, “Here, you go do this.” That’s nice, actually.
Rob: Got it. She is your minion on this case.
Mike: I would not phrase it that way. However you could pick a case for that argument.
Rob: Cool, that’ll be good. It’ll be nice for you not to have to implement. I’ve enjoyed being able to do a little bit of that with Sherry as well. Talking through books in Zen Tribes in Zen Founder stuff and being able to say here’s what I would do but then I don’t have to get in and write all the copy or whatever. Cool.
We are answering listener questions today. We have several, we’re going to kick it off with a voice mail or two. Our first voicemail is from Mark Stevens, and he has a comment on our Build Versus Buy discussion we had a couple episodes ago.
Mark: Hi Rob, it’s Mark Stevens from Ideal Solutions here. I’m a big long-term fan of your podcast. To add my two cents to your episode on build or buy, I’m a big fan of building because that’s quite often where you figure out how to pivot your company and find the product you really want to end up doing. I’m looking forward to hearing Sherry talk at the Business And Software conference next month. I hope you’ll be there and we can catch up. Bye.
Rob: It sound like Mark’s saying he likes to build it because he uses it almost as exploration into perhaps another business idea or even a way to pivot his current business. That’s an interesting way to think about it. I guess in my head, if you’re pre-product market fit and it’s build versus buy, and you found something else that was super interesting… I’m trying to think of you built email marketing software and then you built a drag and drop builder and suddenly you’re like, oh, this drag and drop builder is a better business than email marketing software itself and an ESP. That’s one example I could think of.
Certainly for past product market fit, and you’re already scaling, then you’re not going to do that. It’s probably not going to pivot your company to sell this other product. It’s an interesting thought, I hadn’t thought about that angle of it.
Mike: Like most questions. I think the particular topic that we talk about is very context sensitive, where you are and the journey of the application or the business that you’re building and specifically what it is that you’re looking to either build or buy as to whether or not that’s a road you go down. You have to take it all down, the context of your current situation in mind.
Rob: Alright, our next voicemail is about how to bootstrap a B2B enterprise SaaS app.
Randy: Hey guys, this is Randy from [Nolin 00:11:49] Office. Just discovered the podcast a couple of weeks back and I’ve been soaking in the information, great work. I have one weird question for you, we’re the weirdos trying to start an enterprise level B2B SaaS and bootstrap it and we’re really struggling with the education and consumer buy in process. Any advice or tips you can offer or previous episode you can point it to, I’d love to hear about it. Thanks again, please keep up the great work. Thank, bye.
Rob: Alright. Good question. The first thing I would do is I would go to startupsfortherestofus.com and I would search for ‘enterprise’ and search our episodes because I know that we’ve talked about this in the past, probably not super in depth. It might not be an entire episode but we’ve answered a lot of questions about this. You could probably cherry pick three, four, five episodes and get a lot of our thoughts on this. Aside from that, or in addition to that, Mike, I imagine we both have thoughts on what he’s talking about. What are your thoughts?
Mike: I think the first thing that jumps into my mind is that if you’re really targeting the enterprise, look around at your competitors and see how it is that they’re getting into their customers. If they’re at any level of scale and they’re having any level of success, then chances are good that the way that their selling into their customers is working at least to some extent and look to see if that is one, if it’s appealing to you, and two, you think that it is a mechanism for getting in front of those customers that you could replicate.
I feel like when you’re talking about enterprise level customers, there are certain ways that they are accustomed to buying and acquiring software. If you don’t follow those paradigms, then it can be very challenging to get into those environments. Looking around at what other people are doing and what they’re having success with, especially if it relates to the type of software that you’re selling, that’s probably where I would start.
Rob: Yeah. If you’re going to bootstrap into the enterprise, a, it’s going to be very long road because the enterprise sales circles are long and the enterprise is pretty cautious. They’re going to want to go with experience providers.
First thing I would try to do is to get a single case study that you can point to, and you’re going to point everyone at that during your sales process because without that, no enterprise is going to have confidence in a small team of people to deliver. What that means, you have to go slightly below enterprise and do more of a midmarket company or whether you get an enterprise company to do it for way cheaper than they should, I don’t know that I’d offer to do something for free but that’s a big deal, having logos on your website that you can name drop during sales calls. That will also show you how much of a pain it’s actually going to be.
That first one maybe is a semi-custom, you’re really the scratching and clawing because you don’t have product market fit yet, you don’t know if you built anything people want, you don’t know a lot of things at this point, and so you’re really just trying to get in front of a customer.
The challenge here is when you’re bootstrapping to small businesses and solo founders and all that, you have a volume play and you can talk to 100 people, 200 people and you can get 100 people using your app and then you figure out, you listen to the feedback and you can pivot based on that and you add features based on that. But in the enterprise, it might take you a year or two years to get five customers, and the deals are way bigger but the number of voices that are talking to you, and that you’re hearing from, is going to be a lot smaller. It’s going to be a lot harder to parse out the noise. When you have 100 people telling you, you start to see clusters of features and ideas and directions and then there’s noise around there at the outside edges. Like, okay, we’re not going to do that. When you only have five people, pretty hard to figure out what is signal and what is noise. Thanks for that question, I hope that was helpful.
Our next question is about how not to get killed by Google. It’s from Jukah and he says, “What can we do to avoid being too dependent on Google? If they block you from AdWords or their search results for whatever reason, how does your business survive?”
Mike: Start using Bing.
Rob: That’s the worst advice ever.
Mike: Google’s got their hands all over the internet, so that makes it difficult. There are also large players and depending on what type of business you have, your biggest channel may not necessarily be directly from Google or from search engines. If you have links plastered all over the place, then you’ll get a lot of traffic from people just by virtue of having those links coming back to your site from relevant articles or content that people put out there. There’s also other things like advertising channels that you can use either buy sell ads or Facebook or Twitter or various other places. I’ve heard people having good success with Instagram marketing depending on what type of business you’re running.
And then there’s also channel partners. If you look at a lot of for example the enterprise base, if you go look at some of these websites, there is very little there that tells you really what the enterprise level product does or how it works or gives you a download link. That’s because they use sales reps and channel partners to talk directly to people. They’re essentially bypassing Google at that point.
Don’t get me wrong, Google does serve an important function for them, but it’s not the full source of traffic or customer acquisition for them. By leveraging other channels, it gets you in front of those customers and you don’t have to rely completely on Google. This question really seems centered around relying too much on Google search results and I don’t know if you’re doing regular white hat, or you have maybe some grey hat strategies that you’re going to get heavily penalized by Google or get slapped the classic Google slap. That said, it could happen at any time or they could even just accidently drop you from their algorithms, you never know what’s going to happen. Unfortunately, that’s out of your control. You have to find other ways.
The last one I would say is email marketing is one of those things that’s just simply not going to go away anytime soon. If you have an email list that you’re adding people to on a regular basis, even if they do something like that, you still have that email list to go after and you can still leverage that for the time being until you figure out what to do about it or until some sort of corrective measures take place.
Rob: Yup. I like that. I think it’s diversification is the biggest thing. If you know how to rank in Google, then do that first, and then spend the next six months of your marketing trying to figure out on how to not be reliant on Google. Facebook ads, you named a bunch of ideas there, that’s it. As someone who has had a number of businesses, either severely impacted or completely decimated from over reliance on Google, I’ve never had a large business that Google killed. It was always these micro businesses were really the only marketing channel was SEO and Essence.
I had some apps, I’m trying to think of the biggest one was probably doing a couple grand a month and then it went to $300 a month after whatever Panda, Penguin, or one of these things several years ago.
I can’t imagine having a $50,000, $60,000, $70,000 a month business with employees that was strictly relying on Google. I personally would not feel comfortable building a business like that. I think that’s something to take into consideration as you’re thinking of what businesses to start there, a lot of considerations. Do you want to hire a low price point, do you want employees or not, what customers do you want, and who do you want to be reliant on? There are other factors like a friend of mine built an app that was based on the Twitter API, and this was several years ago. You remember Twitter basically just nuked a bunch of their folks.
Building a business that’s reliant on any single provider is a large risk. That’s the mindset, I don’t think there’s any easy answer other than diversification of leads basically, and like you said, building your own email list is a big way to do that.
Mike: Yeah. I think there’s a subtle thing there with the email list which is it takes the control of your channel out of other people’s hands and put it in your own. You can send those emails and you can put them into a different provider or you can even send them from your own mail client if the worst came to pass and you had to do that, but at the same time, you’re really just shifting where the responsibility is and where the control is for that traffic acquisition source or the revenue generation piece of it.
Rob: Yup, that’s one of the reasons I’ve always been such a proponent of email marketing, why I decided to launch Drip and why I’ve never gone down the road of building a whole Facebook community. Brian Clark from Copyblogger calls it Digital ShareCropping. It’s like building a community on Facebook or on Twitter or on Myspace or YouTube and then you don’t have control of that. That provider can just someday decide, oh, you paid all these ads and you built this following on Facebook and now we’re going to change our algorithm. Even though they are your followers, they’re only going to see one out of five posts instead of every post like they used to. You understand Facebook’s reasons for that. I bet they had customers complaining or whatever but suddenly you are basically at the behest of this large organization who’s going to do what’s in their best interest and not yours.
Once you have an email list, you are so much more in control. I like your point that even your ESP, you’re not reliant on them because you can always export and go somewhere else and send broadcasts and be in touch with your list from the 500 or 600 ESPs that are out there. It’s a good question, thanks for asking. I hope that was helpful.
Our next question is a general question and then with a specific one, it’s about storing customer data and what he should store. I’ll read through it and we’ll see which part of this we want to attack. “Hey Rob and Mike, I’m having trouble coming up with a strategy for tracking my user information for my SaaS app. I understand this may be a little on the technical side for the podcast, but what fields in your customer/user table. What should I be tracking, how is it setup? For instance, do you have a monthly pricing amount field or do you just have a plan field, like plan type = gold and then the gold has a dollar amount attached to it in a separate join table. Are there any advantages, disadvantages to use one method over another? Thanks for the podcast, I have been listening from the beginning and I look forward to each new episode every week. This is from Mike Richards.”
I’ll jump in on one thing. For the monthly pricing amount field versus just having a plan type, we usually have both. The plan type has a plan name because people want to know what plan they’re under, but every individual customer has a dollar amount field on there, some record. I don’t know if it’s a customer table or a join table or whatever it is. But it allows us to have crazy flexibility with pricing per customer. Of course that’s copied over when they first sign up, there is the template for the plan. Gold plan is $30.
When you sign up under gold, it’s going to put $30 in your dollar amount. But let’s say you want to give a free month or you want to give a price break or a discount, there’s just so much you want to do on a per customer basis. You don’t want to keep having to create a new plan every time you do that. Let’s say I want to charge $28 to this customer, just because. You don’t want to have to go in and put you’re gold, minus two, plan. You just want to be able to update that to $28. Same thing if they ask for, hey, I want to add another user to my account. Alright, that’s $3. It’s going to be $33, you don’t have to go and create your gold plus one user plan. You want to just be able to edit that in the row itself.
I’m not going to dive into all the rest of this. You could’ve asked a more broad question but I think the thing to think about is as you’re doing this, it’s thinking about what are you going to want to change in the future and to leave yourself the most flexibility that you can. I think that’s the key thing. You don’t necessarily need to over engineer the code around this, but over engineering a data model, I found, has its advantages because changing data models especially with join tables and adding more flexibility tends to be really hard. You have thoughts on this, Mike?
Mike: Yeah. I would agree with you that storing the dollar amount is definitely a wise idea and then storing the plan name. I’m early enough on Bluetick that I don’t have either of those stored right now. Honestly, it’s painful because I do have early access customers who have a discount that’s applied and that’s solely in Stripe. Even going into stripe, I can look and see how many subscriptions I have and it gives me the price but it doesn’t give me the price after the discount has been applied. It’s a little bit misleading when I look at some of the data because they don’t appear to know how much the person’s going to get charged until after they get charged. I would definitely keep those things in your own database.
The other thing to keep in mind is where you’re going to be managing that billing, is it going to be something custom that you do in your own app or are you going to use an online provider like Chargebee or there’s 30 of them out there. Chargebee is one that I’ve looked at in the past that manages recurring subscriptions and then the other option is to just use Stripe system directly.
One thing I would definitely do is you’re going to have to have some way of matching up the subscriptions for customers in your database up against whoever your payment provider is. If that’s Stripe, there’s a Stripe customer field of some kind and I would store each of those inside of your database so that if you need to, in the future, ever go look up data in Stripe and pull it back into your database, then you have that option. I’ve written scripts that’ll just go out and pull back billing information or things like that that if I need to import the data later, I can, especially if you’re later registering hooks with them to have your application notified that oh, this particular charge happened, update the billing information and local database and be able to show that inside your apps so that the user doesn’t have to go someplace else.
Rob: Yup, that’s a big one. I think for billing, we built our own script, it took a few days and then we’ve expanded that since then, that was a very, very good decision based on how complex metered billing is. I would link towards doing that in the future, I‘m not sure I will ever use a Chargebee or even Stripe’s subscriptions API. It’s too many limiting factors and I’ve heard too many people who are limited by that. Not having it in your code is the thing, it’s not a terrible decision, it’s not a decision I personally will do in terms of using an external billing system.
Other thing we did early on and Derek actually, you came up with this, I think this is a very, very good idea is that our database is essentially the master or the database of record for all charges. As an example, we never went in and refunded Stripe charge directly in stripe. Even when we were at 10 customers, I needed to refund somebody, he put a refund button in the Drip admin area so that when I clicked that, it went into our database marked as refund and then it went out and hit the stripe API.
The point is he wanted all the numbers in our database to be accurate, that we’re like, oh yeah, that one refunded and go in. Or this one tweaked the billing code or this discount or these edge case things. You don’t want those to only be in your payment provider for a lot of reasons but what happens when you want to change payment providers? If we had this switch from Stripe to someone else, it will always be a pain to write the code to do that but we would have all the data and switching would actually not be as hard as it would’ve been 10 years ago.
Mike: Yeah, that’s a really important point, figuring out what your source of authority is going to be. If you’re going to stick with the same payment provider, then it’s not a big deal. I’m running into this now because I just did certain things to get things done and I’m regretting some of those choices, I’ll say, just because I don’t have the data locally so it’s a little bit more difficult to run some of the reports.
Rob: Yeah, that’s always the trade off, moving fast versus doing stuff that’s going to keep you good in the long term but there will be no long term if you don’t move fast in the early days. It really is this perpetual balance.
Our next question is from Andrew Martin and he’s asking about selling SaaS to companies outside the US. He says, “Hey guys, Startups For the Rest of Us has been one of the main sources of information in my journey into learning to be a marketer and entrepreneur. Still working full time but I have a SaaS based company that I plan to fully launch this year. I’m a single founder and at this point, I’ve done all the development and the marketing. With the limited amount of outreach I’ve done at this point, I’ve managed to attract a couple companies that are based outside the US. Aside from convenience related things, like currency localizations etc., are there legal or tax related issues to having subscribers in other countries, is this something that ends up being specific to every country?”
Mike: I think the interesting thing with this question is that everyone does this type of thing a little bit differently and I wouldn’t say that there is probably anyone you could point to that you could accurately say they are the ones who are doing it correctly. It’s just because the laws in some cases are so obscure or the regulations of the different things that you have to file are very difficult to know in advance before you run into them and run a follow of whatever regulation and they jump all over you for not submitting taxes or for not collecting VAT in a specific country that is a particular amount. There’s all these things that are just difficult to know in advance.
I think generally speaking, like Bluetick for example, I’ve over simplified things and I only deal in US dollars. When the billing goes out, it’s billed in US dollars and then it’s converted on the back end using Stripe or whatever the currency is. Whether that’s Australian dollars or what have you, it doesn’t really matter. In my accounts, I’m treating it all as US dollars.
You can optimize things and charge in local currency, in some ways that’s a marketing thing just because people prefer to see their own currency when they’re looking at services that they’re purchasing and I know that it is more effective, I’m not just doing it right now. And then, beyond that, in terms of filings and stuff, really, I would say that’s outside the realm of my expertise or knowledge at this point. I just wouldn’t go into buffering advice on that stuff.
Rob: Yeah, I agree. This can get really complicated. I think it’s about learning what to do that’s mostly correct because I think if you genuinely try to do everything to the letter of the law, I don’t know that that’s going to be feasible for a single founder. I do believe that all of this stuff is country to country, that you might have a unified policy. I know that they have this unified privacy policy and that’s changed twice in the past three years. I had it when I was still independent, I had to pay lawyers to draft the contracts and I kept getting questions, they said Safe Harbor is no longer allowed, so then you have to have this contract drafted, so I paid a lawyer for a grand and now people in the EU, if they were going to use Drip, then they would have to sign this doc. They would e-sign it, it’s a big freaking pain in the neck, to be honest. And then they changed it again. Within the last six months, they’re like, nope. That doesn’t work anymore now. They had given you a model contract after which we modeled ours after. And they’re like, nope, it’s something different now.
I got to be honest, given the choice, if I was talking to 20 US companies and 2 European companies, and it was early and you’re still trying to figure stuff out, I don’t know if I would bother with it right now. It’s just one more thing that adds headache, it adds paperwork and they need invoices whereas companies in the US don’t, there is difference like the Can Spam Laws of the US are different in Canada and they’re different in Germany but not in the rest in the rest of the EU. Each of these things is a pain in the neck and I would be cautious into just diving in because people want to pay you money.
If the only people asking are Europeans and there’s a specific reason for that, that’s fine. But being that you’re in the US, you know the laws, you know things are generally how they operate, I would personally lean towards doing the things that you know about and that your legal counsel and your CPA are going to know about because it’s mostly done at a federal level. I’m not saying not do this but you just really got to think do you want to get into the complexity of trying to track all this stuff and keep track of it.
I know some SaaS founders, especially small SaaS founders doing $10,000-$20,000 a month and they deal with the EU companies and a lot of them are small business, whatever, it’s freelance or something. They don’t even bother with EU compliance agreements, the safe harbor thing, they just need maybe the invoice at the end of each month and you can just have your app generate that and then that’s it. They’re not technically complete and compliant with every EU statute and law but since it’s two really small businesses dealing together, the odds of that blowing up are fairly low.
Maybe that’s part of the risk tolerance question, are you willing to maybe do 70% or 80% of it right with the chance that if you traveled to the EU one day, maybe they would come after you for VAT, I don’t expect that to happen. I guess that’s the worst that could happen or they could take you to court in the EU. You got to think about these things realistically, like what’s going to happen. If you’re not a Fortune 1000 company, is it going to be on their radar? I’ll say it’s a personal preference or a risk tolerance and you got to think about what you’re willing to take on.
Mike: I think a lot of that also boils down to are you making a reasonable effort to do the right thing versus actively skirting the laws. You can say, hey, I did this and I did this and I didn’t know about that over there. I know that there’s this classic legal thing to say, ignorance is not a defense of whatever your actions were, but the reality is when it comes to paying taxes or filing paperwork and stuff, they will let you slide a lot if you just legitimately didn’t know and you looked like you were trying to do the right thing and you screwed up, versus if you were actively doing things that skirted whatever the laws happened to be. If you really are ignorant of what those laws are because you didn’t look them up, they are likely to give you a lot more flexibility and lenience than if you were actively putting accounts overseas and some Cayman Islands account to try and avoid paying taxes. I would take that into account as well.
Rob: That’s a good point actually.
Our last question for the day comes from [Fabrichio 00:33:16], and the question is about the right time to scale marketing. He says, “I love your podcast, I hear it every week driving on the East Rally Roads. Thanks for the good advice and interesting angles. It’s been six years since we started bootstrapping our personal finance software. We soft launched a year and a half ago…” Wow, so four and a half years in development. “In order to have users help us debug, improve the UX, find product market fit and optimize. Marketing efforts were small but brought enough users to iterate and improve.
Today, 5% of downloads become active. They use it at least once a month and 1½% pay monthly or yearly. We feel good about the direction and we get nice reactions from users but still we know there are many things to improve. We’re concerned about potentially damaging the brand if we make broad marketing campaigns when part of the first time users will be disappointed while others might not. We’ve identified some market niches but most missing features are common to all users and have no specific market common denominator so we can target a specific audience. In parallel, we have a big waiting list for other operating systems as we support only windows. When is the right time to scale marketing considering product market fit is a never ending activity?”
Mike: I think the first thing to consider is that you can’t please everyone so you’re going to have to move forward at some point. You can’t wait until you have all the information because that will never come to pass. You’ll never be in a position where you have all the information in front of you and readily available to make the optimal decision. You’re going to make those decisions about when to move forward and with what segments of your market with incomplete information.
I would say maybe take a segment of those people, if you’re really not sure and you’re really uncomfortable just blasting something out, take 20% of them and send out an email to those people and advertise things into them. If you also have a fairly large list, you can upload that into Facebook for example and do some targeted Facebook ads and look alike ads and see if that starts to pan out without going through your entire list. That actually brings another point, if you upload the entire thing to Facebook, you’re going to get much better information about the types of people that you should be targeting in order to get their interest in your ads and then bring them over to your website.
I don’t know if I would worry too much about disfavoring your brand. I’ve had discussions with people about brand strategies and things like that and it seems to me like until you’re much further along, trying to focus too much on the brand itself versus getting the right types of customers into your app, I don’t wanna say it’s a waste of time, but it seems like there are better places to spend your time than on trying to figure out what your brand is going to look like and how it’s going to be perceived. As long as you’re solving the problems for the customers that you have now, it doesn’t necessarily matter that you’re not talking in the right way to people who are prospective customers down the road. It’s going to take several touches before those people sign up for your app or become a customer anyway. Just by virtue of them seeing things, that is probably enough even if it doesn’t speak to them right away.
Rob: Yup. I think those are good points. I think it makes sense to do it when the money makes sense. If you can pump $1 into marketing efforts and you can get the $1.50 or $2, $3 back, that’s when you’re there. That means your churn is low enough that you can then put the money in and then you can use the profits that come out of that to build more features, to get closer to product market fit, and to market more.
I would be less concerned about having users come in and be disappointed, I think you can set expectations up front, I think you can improve on boarding, I think you can add features overtime but I wouldn’t hesitate to start running marketing if you do have a core group of users who are stoked and who are paying you. The percentages, it sounds like you are running a premium deal, 1 1/2% sounds fine. That’s in the range, I typically hear between 1% and 3%. It depends on how long you give folks. I think Dropbox was at 1%, after a year people start paying or maybe it was 3. But that was the general range.
1 ½% is in the middle there, you can obviously improve that but I think you’re on the right track. I personally would start marketing, I’d start getting more people in there and then you’ll know, you look at the first month or the first two months and if people are churning out quickly or their usage is not there, you should know the patterns of what it takes to get someone to a paying user status, you will know if that money’s going to pay itself off pretty quickly. If it doesn’t, that’s when you stop marketing, which I’ve had to do in the past. If it does, then you keep going with it. It builds that snowball, both the feature momentum part of market fit momentum and also marketing momentum. It was a good question. Thanks for sending it in.
Mike: I think that’s about all we have time for today. If you have a question for us that you want us to answer on the air, give us a call at our voicemail number, 1-888-801-9690 or you can email it to us at questionsatstartupsfortherestofus.com. Our theme music is an excerpt from We’re Outta Control by MoOt used under Creative Commons. Subscribe to us in iTunes by searching for Startups and visit startupsfortherestofus.com for a full transcript of each episode. Thanks for listening, we’ll see you next time.
Episode 357 | Courtland Allen – Indie Hackers
Show Notes
In this episode of Startups For The Rest Of Us, Mike interviews Courtland Allen of Indie Hackers, about commonly held expectations new founders have about their businesses.
Items mentioned in this episode:
Transcript
Mike: In this episode of Startups For The Rest Of Us, I’m going to be talking to Courtland Allen from Indie Hackers about surprising discoveries that new founders learn. This is Startups For The Rest Of Us Episode 357. 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.
Courtland: And I’m Courtland.
Mike: We’re here to share our experiences to help you avoid the same mistakes we’ve made. How are you doing this week, Courtland?
Courtland: I’m doing excellent, little bit sick, little bit overworked. Other than that, doing great.
Mike: It is Friday. For the listeners, it will be Tuesday but it is Friday for us. Hopefully, you’ll be better by the weekend.
Courtland: I’m getting into the habit of having weekends. Usually, everyday is the same to me, but my girlfriend is helping me develop better, healthier work habits. Looking forward to the weekend as well.
Mike: Excellent.
Why don’t you give me a brief introduction to you if the listeners aren’t familiar with what you’ve done and what your background is. You’ve run a popular community for aspiring entrepreneurs and founders called the Indie Hackers which has a series of interviews and blog posts and various articles on there that entrepreneurs and founders can learn from. Indie Hackers was recently acquired by Stripe as well, right?
Courtland: Yup, been with Stripe for five months now.
Mike: How’s that going? It’s interesting to hear from somebody who is acquired by Striped. I’ve talked to the guys at Stripe, Patrick McKenzie who’s also a friend of the show and a frequent speaker at Micro Conf has moved over to Stripe as well. It’s interesting to hear about the transition from owning your own thing and going into Stripe.
Courtland: I have to say that Patrick, by the way, is great. I’ve gotten the chance to hang out with him at the Stripe HQ a couple of times that he’s been in the US and he’s been very helpful. I always tell people at Stripe when they ask me how it’s been, Stripe is my first full time job. I’m 30 years old, I’ve always worked on startups and as an entrepreneur since I graduated college. A lot of ways, I was worried before I joined that I wouldn’t like it. But also, Patrick Collison has been so amazing, the way that they handled the acquisition was exactly how you should handle acquisitions in my opinion, which is to be as hands off as possible.
My life hasn’t changed very much since before joining Stripe, now that I’m at Stripe. They made things easier to run. Before I joined Stripe, I was basically financing Indie Hackers by selling advertising. I had ads in the email newsletter, on the podcast, on the website itself. That was something that took up so much time. I got to about $5,000 a month in revenue by the time I was acquired, but I was beginning to spend half of my time on ads. The most helpful thing that Stripe has done is just paid me a salary so I don’t have to worry on any of that, but I’ve been able to focus much more on the quality of the website itself and improving the community. Joining Stripe was a great decision, I think. I’m excited to see where things go in the future.
Mike: Interestingly enough, there’s kind of a corollary there where 100% of your revenue probably came from those ads. If you’re spending 50% of your time on it, then you’ve got 50% of your time free to do whatever.
Courtland: That’s true.
Mike: Wanted to talk to you today just because you’ve got a lot of experience talking to various founders and entrepreneurs. Obviously, you’ve got your own podcast that goes along with Indie Hackers where you interview founders and talk to them about what has gone into their business, what sorts of successes and failures they’ve had along the way. I thought it would be interesting to have you on to talk about some of the commonly held expectations that new founders have that don’t necessarily hold up to reality. Obviously, you’re gonna draw some of the various examples and stuff but also from your own experience and background running Indie Hackers as well.
Courtland: Yeah, totally. I think it’s tricky being a startup founder, especially if it’s your first time, because as a consumer, as a normal member of society, your view into what happens at any company is extremely limited. We generally see information that they put out there that they want you to see, but you don’t really see what goes on behind the scenes. When you start, I think you tend to be driven by your intuition and by what you’ve experienced as a consumer, but it turns out that actually being a founder and starting a company is completely different than it looks. People end up falling in the same holes, same pitfalls, same mistakes that others have fallen into simply because they don’t know what to expect.
I think it’s definitely worthwhile to talk about what’s surprising and what might you not expect that you should expect when you become a founder.
Mike: I think there’s a lot of these types of examples where people will hear them and I say oh yeah, that’s kind of obvious. What’s obvious to you is not necessarily obvious to everybody else. There’s certainly traps that you can fall into yourself that there’s lots of other people who would say well, that’s kind of obvious to me, how did that happen to you? I think that just reiterating some of these and talking through them about what are probably the most common ones that people fall into or experience that are not necessarily things that they think about in advance, is it worthwhile talking about?
I guess with that said, let’s dive right in. The first one that I wanted to talk about was the runway needed to get a startup going. Again, to limit the discussion, we’re not really talking about funded startups. It’s stuff that you’re either bootstrapping or self funding, building on the weekend or on the side in addition to your day job, in an effort to eventually go solo or try to establish a source of income to either be in addition to or to replace your existing income from a full time job.
The first thing to talk about there is when you’re leaving a full time job to go solo, what are the sort of things that you have seen and heard from people that have made the decision to leave their full time job and go solo? Are there mistakes that people make or assumptions that they make that later on they find that are just completely invalid?
Courtland: Yeah, I think probably the biggest mistake is just underestimating the amount of time it takes to actually work on a startup. I have never been in a situation where I’ve had a full time job and I’ve had to run a startup on the side, but I’ve heard from a lot of people who have. It’s extremely difficult to do. Number one, you’re probably going to be somewhat mentally exhausted after a full day of work. Building something on nights on weekends is going to take a toll on you.
I think it really comes down to being ruthless at prioritization. Ultimately, you’re not going to have time to do everything you want to do. Your task list is going to be growing faster than you can get things accomplished. It comes down to being able to prioritize and putting the most important things first and actually being able to recognize what’s the most important and what might seem important that you can actually get away with not doing.
There’s a lot of cool stories as well on Indie Hackers of people who have found creative ways to get around this challenge. For example, Mike Perham of Sidekiq, it’s an open source plugin for developers to basically allow their servers to run tasks in the background. He was able to convince his employer to allow him to work on his projects at work. The reason was that he was basically the CTO of his company, he was in charge of all their technology decisions, and so he built Sidekiq on the side at home and then he used it as his only customer on the job. This way, he was able to discover bugs and actually contribute to it, because it was open sourced, while at work. He kind of cheat the system and figured out a way to actually get more hours into his project while he was working a full time job.
I’ve seen other people do similar things as well. I think the expectation that you will be able to just go to work and come home and essentially put in non-distracted, 100% productive hours over a long period of time is probably not true for a lot of people. If you can find a clever way to allow yourself to work more hours on your project or to work it into what you’re normally doing, then that’s advantageous.
Mike: I really like the phrase you just used where you said “cheat the system” but I also, for anyone who hasn’t listened to that episode, I don’t want them to think that he was going behind his employer’s back or anything. He worked with them to figure out a solution and I think that’s the key takeaway from that, finding creative ways to solve the problem that you have which is not having the time, or you come home from work and you just don’t have the energy left to do it. I’ve heard people who said, “I’m going to get up at 5:00AM and work on my product for two hours before I have to go to work.” That’s a solution to it, there’s other solutions like working one weekend day a week and just work from 8:00AM to 10:00PM or something like that. There’s lots of ways you can squeeze more hours out of the day. I think it’s really about identifying those places where you can leverage creative solutions to the problems that you have.
Courtland: Exactly. I think we’ll probably talk a little bit about this later. Depending on your situation and how much free time you actually have to devote to your project, you should probably decide what you want to work on based on that. What I mean is if you have a full time job and if you have a family and if you have all sorts of responsibilities that give you a limited amount of time to work on your project, you probably shouldn’t pick the most ambitious project.
If you’re going to work on a SaaS application that’s going to require six months to develop and build, then that’s something that’s better suited to someone who has more time. There’s an entire spectrum of projects that you can work on. Indie Hackers itself being a content site didn’t take that much time for me to get out the door even though I was working on it full time, versus something like Bluetick which you’re working on which I can only assume is a completely full time job.
Mike: Yeah, it’s way more than a full time job, to be honest. I don’t want to even go back to my rescue time account every month and look at how many hours I’ve spent. It’s a lot. But that’s because it’s a SaaS product and I also recognize going into it. It was going to take a long time. But if you don’t have the time to be able to put into it, you’re trying to go from ground zero all the way to SaaS which is kind of a holy grail, it’s very difficult to make that transition if you’re not doing a stair step approach, which is what Rob has talked about quite a few times on this podcast and various talks that he’s done.
You have to be able to leverage your way into either larger projects or more lucrative products that you can put out there by using the assets that you created in advance. It’s like going to the gym, you can’t just go to the gym on day one, put in a three hour workout, you’re not going to be able to sustain that. You’re probably going to hurt yourself the very first day, just similar with starting a business. You’re probably going to do things that are essentially going to kill the business before it even really got started
Courtland: Yup, I think that’s exactly what happens. It’s difficult not to do that when it’s your first time because you’re looking around and all the examples that you see are these 300 pound guys at the gym who are established and can lift a lot of weight, these established companies that are building extremely ambitious products. You might think that’s what everybody does, I should do the same, but it’s not necessarily the case.
Mike: I think another thing that people underestimate when they’re trying to figure out what sort of runway they need or how to really get started is they don’t have a good sense of what the expected growth trajectory is for the business. When you’re starting out, if you haven’t started a bunch of businesses or tried to launch a bunch of things, it’s very difficult to make comparisons between what you’re doing now versus what you’ve done in the past to give yourself a basis first comparison that tells you whether or not you’re doing well in relation to previous things you’ve done, or whether you’re getting the traction you need to move forward.
What sorts of things have you seen that people can use as benchmarks to help them establish that sort of thing? If somebody doesn’t have previous things that they’ve worked on, what can they use as a basis for comparison to determine how well they’re doing with their startup?
Courtland: That’s a tricky thing as well. I think it leads into one of the next things we’re going to talk about which is the psychological aspect of being a founder. In reality, being a founder is very unique. If you’ve worked at a company before and you’ve had a job where you filled a very specific role, it’s almost completely different than being a founder where you’re going to have to wear every single hat. The metrics that matter are less, can you fill this one specific role, but are people using your product? Are people signing up? Are you finding users, are you increasing the revenue? That requires you to, like I said, wear a whole bunch of different hats and do a bunch of different things.
I think it’s difficult to compare to anything that you might’ve done before if it’s your first startup. As a result when there aren’t these clear cut comparisons that you can look at, you start to compare yourself to other people, you start to hit on this emotional startup rollercoaster type thing where you use your emotions to tell you how you’re doing. You get an email from a customer and you think oh, things are going great, I’m going to succeed. Or you get a scathing email from a customer who says they’ve run into a bug, you think oh, my startup is doomed.
I think people tend to underestimate the degree to which you fall back to that short sided, short term thinking, into the value of your overall progress. I’m not sure what the exact solution is, it’s different for everybody. I know that being able to talk to people, being able to zoom out and look at the bigger picture, have some sort of a plan can really help you with your ability to evaluate whether or not what you’re doing is going well.
Mike: I think that just having some sort of guidance or advice from people that are not in your own head, they’re able to look at what you’re doing or experiencing a little bit more objectively, is extremely helpful. Whether that’s people in a mastermind group or just other entrepreneurs that you talk to online, or even professional therapy for example.
I’ve been hearing more and more over the past couple of years, people, especially entrepreneurs, going to a professional therapist and talking to them about not just their life but also about their business and how things are going, different techniques that they can use to help get off of the emotional rollercoaster where not only is there the way that they feel about their life very heavily influenced by how their business is doing, but also the things that they do are driven by some of those emotions.
For example, if you’re not getting a lot of traction with your software, I see a lot of people making the mistake of trying to feature their way out of it and they’re building more and more things but none of those things actually get them more customers. They do it because it makes them feel better, but it’s kind of masking the problem which is I don’t have any customers and I’m not getting in front of people. Adding another feature, making something work better is not going to fix that.
Courtland: I like what you said about seeing a therapist which is such an unconventional way of approaching it that most people might not think about. As I mentioned on my podcast, my girlfriend is a sex and relationship coach. We also see a therapist for our relationship. Every now and then, I’ll talk to him about Indie Hackers and about how it’s affecting my life, how much time I spend on it, etc. It’s good to be able to talk to somebody who’s willing to sit down and see the problems that you’re going through and understand how all the different parts of your life might come together in ways that you don’t expect. Like you said, the things you do in your personal life can affect the decisions that you make in your business. The ways that you feel might affect the decisions that you make in your business as well.
Also being able to talk to other founders I think is crucial. A lot of people are in the situation where they had a cofounder. What I hear from a lot of people who aren’t in a startup hub like San Francisco or New York for example is that it’s difficult to find people who might understand what it is that you’re going through because starting a startup is such an unconventional life decision to begin with.
Mike: I think the other thing that factors into the professional therapy side of it is the fact that when you’re talking to a therapist, it’s more of a no-judgment zone. If you’re talking to other entrepreneurs, a lot of times in the back of your mind, there’s always those, “How am I doing in relation to them?” “I don’t want to look like an idiot.” Versus when you’re talking to a therapist, you’re paying them to help you understand how to move forward and solve problems. It’s not about them judging you or saying you should do this or you should do that, it’s more about them helping you understand what’s going on, how does that make you feel, and what you can do to change it if it’s not in line with what you want or what you expect.
Courtland: Exactly. It’s so underestimated how much of a role Imposter Syndrome plays in being a founder. Always thinking that other people are a step ahead of you. In reality, it’s easy to feel that way. If you look at other entrepreneurs and you look around at people who are writing blog posts, doing podcasts and giving advice, it’s extremely easy to find somebody who has more experience than you, more knowledge than you, or progressed further than you have just because people in those positions are more likely to have their messages amplified in the first place. That still takes a psychological toll on you.
For sure, being able to talk to somebody in a judgment free zone where they’re really not someone who’s going to judge you for what you’ve done, or really even somebody you can compare yourself to because they themselves aren’t an entrepreneur can be very helpful.
I think also practicing as an entrepreneur, being able to be vulnerable and open with other people about what’s going on. The easiest thing in the world is when somebody asks you what’s going on with their company to say it’s all going great, even if everything is on fire. If you take the time there to really slow down and let people know and let people into what’s going on with you, I think you’ll have much more fulfilling and enjoyable conversations and it will be easier for you to find people who can identify with you because you’re letting them into the hardships that you’re going through.
What entrepreneur doesn’t have hardships that they’re going through? Nobody.
Mike: One of the things that I found over the years… I have a home office, so it’s extremely isolating. If I go out and check the mail and I actually walk outside more than once on any given day, there’s certain periods of the year, especially winter because I live in New England, but there are entire weeks where I will step outside once, maybe twice, to go check the mail or something like that and that’s about it. If it snows, of course I got to go out and snow plow the driveway.
But what’s your experience been? You’ve said that you just started working for Stripe, so before that you worked for yourself. How did you deal with that early on? Was that something that you recognized early on you needed help with and you needed a support group and people to talk to? Or was it something that you had this epiphany one day.
Courtland: I think what’s been really big for me is transparency. I’ve done startups before Indie Hackers and I always had a co-founder. That had made things a little bit easier for me. I’m sort of an introvert, it’s very easy for me to sit at home, working at my desk, and like you said never leave. With the co-founder, that was a little bit easier because at least he was there too and I could go in the other room and talk to somebody.
With Indie Hackers, I basically started it by myself which meant that there was no one I could talk to in my immediate vicinity, there’s no one in my house who I could talk to about what I was doing. But being transparent online, basically vomiting out every fact and detail about what I was working on, whether it’s through blog posts or Twitter or my email newsletter, I found really helped me feel less alone and a little bit less contained. Even being at Stripe, I still work from home most of the time, but I’m a 20 minute walk from the Stripe office which has hundreds of people in it but I work from home almost everyday. I haven’t been into the office a single time in the last week. I think really having an online community of people who are going through similar things and people who care has been helpful for me.
Mike: What you just said about transparency is actually I’d say a little bit counterintuitive, something that I discovered. I think I knew this all along, but about a month or two ago I did this 21-day series of video blog posts before my launch. Every evening, I’d sit down with a glass of whiskey and I’d record a video and then put it out to my mailing list for three weeks straight.
I was actually very, very surprised about the email feedback that I got. There was a bunch of comments and stuff on the blog itself. I got a lot of emails from people that were encouraging and helpful, hey have you thought about this, you mentioned this problem, have you thought about doing this other thing over there? It’s interesting to see how helpful people are. If you become transparent about the stuff that you’re doing, I don’t think it’s obvious to most people that the benefits of doing that actually outweigh the risks of putting yourself out there and being judged.
Courtland: I agree completely. I think this goes back to what I was talking about earlier that unless you start at a company, you’ve had the consumer lens on your entire life. What do you see as a consumer? You see companies being these big corporate walls, always say we, and they never really reveal how the sausage is made and it’s all very neat and packaged. It’s easy to imitate that.
But in reality, if you let your guard down and you talk about what you’re doing, you talk about what’s hard for you and the decisions that you’re trying to make, there’s just something about that that people really connect with. My early newsletters for Indie Hackers have kind of gotten away from this recently, but every newsletter was basically, “Hey, here’s what I’ve been doing with Indie Hackers, here’s what I did this week, here’s what I’m worried about, here’s what I’m thinking about for the future.”
I would also get a ton of email replies from people who were going through similar things, or people who wanted help. Not only is the process of hearing from people extremely motivating and helpful, but just writing it down, writing down what’s hard and telling somebody else felt great. I think it can’t be underestimated, the advantages of being transparent.
We know people aren’t really going to steal your business model and steal everything that you’re doing because you’re sharing your details. The people who do that are oftentimes not the most competent of people.
Mike: It’s funny you say that because I’ve never seen anybody rip off somebody else’s idea and actually make it successful.
Courtland: No. Someone who’s really a go getter and is really talented is probably not going to be sitting around waiting for somebody to reveal their transparent details of their business so they can copy them step by step. Those aren’t the people you have to worry about, and I think the common fears of being transparent are mostly unfounded.
Mike: I guess the next thing to dive into is what sort of resources do you need to get started? When you started Indie Hackers, you said that it was really just you building this on your own. Was it more work than you expected, less work? You said you got it to around $5,000 a month in recurring revenue just from advertising, but how much effort went into that before you got to that point?
Courtland: A lot of effort went into it. It was by far more work than I expected. I think this is the case with pretty much any startup. There’s always going to be more work than you expect. My favorite analogy for this actually came from an article I read years ago about being a programmer and estimating how much time it takes to get something programmed.
The analogy that I used was a map. If you look at a map and you want to chart a course between two different points, you might just draw a straight line and you might draw a slightly curvy line to avoid some mountains or something. But when you actually zoom in close on that map and you look at that line, it becomes much squigglier because you realize that you have to work your way around all sorts of bends and trees and hills and rivers.
I think the same is true of being a programmer and a startup founder. From the outset, you might think okay, I need to hit these giant milestones. But when you actually get into the weeds and start working on it, you end up having to deal with a whole bunch of unexpected things you just couldn’t see when you were zoomed out so it becomes a whole bunch more work than you planned.
With Indie Hackers specifically, the bulk of the work, at least initially, was just doing the interviews and trying to figure out a repeatable, scalable process for doing three to five interviews per week while also building up a website and trying to charge for ads. That process took months and months. I was working at Indie Hackers for three or four months before I even really started focusing on ads. I’ve seen similar patterns with other people. To the degree that you can prioritize and cut features out of your product that are unnecessary and do only the bare minimum that you need, you should do that for sure because even that will take you longer than you expect.
Mike: Before we dig a little bit more into that, why is it that these things take longer than we expect? One of the things that I’ve kind of come across is that I’ll see my expectations for the quality of my own work tend to be high, and I don’t think that people listening to this are probably too dissimilar to that. We have these expectations for things that we’re going to put out in the world. Because we don’t want to be negatively judged for putting out a product that is sub par, we spend a lot of extra time doing things that are probably not necessary. Whether it’s a graphic design polish, or making sure that all the different edge cases are taken care of. We’ll spend a lot more time on things than we probably should in an effort to not look bad. The reality is you can get away with a lot, especially if ppl are not necessarily paying you for that particular feature or that particular piece of your product. People are willing to tolerate a lot of different things.
Courtland: I think something I personally underestimated before I started doing Startups was how much I would care what people thought. If somebody says something negative about something that I felt, it seems like a dagger through the heart. Just trying to avoid that feeling has led me to spend hours working on things that might not be the most crucial for my business’s success and maybe I can actually let those things fall by the waist side. Definitely, I have perfectionist tendencies that force me to some degree to spend time on things that I didn’t need to spend time on. I think this affects a lot of people.
A good example recently was I had a friend—I recently redesigned my newsletter—she told me, “Oh, your new newsletter looks so great. The old one looked kind of crappy.” It’s funny because I took that as a compliment because I knew the old one looked crappy, at least by my own design standards and I had been able to successfully fight off the urge to redesign it for as long as I did. That was progress for me.
Mike: Other ways that you’ve found to protect—I don’t want to say fragile ego—I think all of us have a fragile ego to some extent where you can get 10 emails that say, “Hey, you’re doing a great job.” And then you get one that says, “This sucks.” That one outweighs the other 10. Are there things that you found that protect yourself from those types of things? I’ve run into that myself, I’m not saying those are the exact numbers. The negative stuff weighs on you substantially more than the positive stuff.
Courtland: It really does. I think that’s just a part of being human. For me, it’s not even negative emails, it’s Hacker News that’s the worst for me. I put a lot of content on Hacker News, which for those of you who don’t know, is a community site for developers. People there are trolls very often. They’ll say lots of negative things, they’ll leave drive-by negative comments without really even thinking and it hurts.
The thing that helps me the most is just getting people on my side. Nowadays, I work with my brother who Stripe also hired to help me with Indie Hackers. When we see negative comments, we’ll both basically talk about them and talk about whether they have any merit and reassure each other. I think that’s extremely helpful. When you’re sitting in a vacuum and there’s nobody on your side, there’s nobody that can talk to you who can take your side and say you’re right, or this person’s wrong, or don’t listen to them, then I think it weighs on you a lot more.
Mike: The thing that you just said about being able to talk to your brother about some of the stuff that comes in, there’s a big difference between something that is simply a troll comment where it is much more of a personal attack versus a legitimate criticism of a piece of your work that isn’t right for somebody based on their situation, or it’s broken. There’s a very big difference between those two things. Sometimes, that line is very much blurred and it weighs on us regardless.
Courtland: It really does. I’m the type of person that almost, no matter what kind of negative feedback I get from a stranger on the internet, it’s going to weigh on me. Whether it’s legitimate or illegitimate, whether it’s private or other people can see it, I’m going to think about it for a while. Like you said, it’s going to stand out more in my mind than 10 positive comments.
I think that it’s something that as a founder you need to be prepared for. I don’t know if there’s a great way to prepare for it other than just to expect it and know it’s going to happen. One of the things that I told myself early on was that it’s very hard to get people on the internet to care at all. Most things that people put out there never get any attention, never get any comments whatsoever. If people are giving you negative comments, then at least they care to some degree.
Mike: We talked a little bit about the fact that everything takes more time than you expect it to. I think there’s also a corollary there, and this kind of especially applies to marketing endeavors or development. I think there’s this false equivalent of time being the same as money when you’re trying to put your marketing efforts out there. Everything that you do that’s marketing related is going to cost you money or a lot of money that you may not necessarily have. You don’t want to risk that if it’s not going to work, so people tend to do these little experiments that are not really statistically relevant but at the same time they do them because that’s the budget that they’re comfortable spending.
I think the general point that I’m trying to make there is that when people do that, they have this idea in their head that I want to do an infographic, and to hire a designer, it’s going to cost me $1,000 to have that done. It’s too much money. I’m just not going to do it. Versus doing it themselves and not spending the money to do it but yes it’s not going to look as good, but at the same time it still gets done and it can achieve the goals as long as they put a marketing slant on it. It’s really about being creative in your marketing efforts in a way that doesn’t break your bank.
Courtland: What do you think is the biggest misconception there in terms of what people expect versus what actually happens?
Mike: There’s two sides of that. I think that there’s your own expectation for what it should be or should look like, versus what people on the receiving end are going to think or look at and evaluate. When you’re doing a new marketing campaign for example, you want to make it as top notch as possible because you want to get the most impact, you want to get the most conversions, highest number of clickthroughs, and all that stuff. Of course your thought is hey, I need you to do a fantastic job on this.
The reality is on the other side, people don’t evaluate those types of things for more than a few seconds unless they get to the point where they’re actually going to click through and maybe read an article that you wrote. But with paid ads for example, there’s a headline. That’s the most important thing on the whole ad. If you don’t nail the headline, everything else doesn’t matter at all.
I’ve seen advertisements, I’ve mentioned this to Rob once, I saw an advertisement on Facebook, it was a snake. It wasn’t even a real snake, it was just this weird thing that showed up in my Facebook feed. It caught my eye. I don’t know how much he was paying for it but the fact that it caught my eye was enough to make me notice it and look over at it and say huh, I wonder what that is, and then I saw that it said Drip on it. Really, that’s what you’re trying to do, you’re trying to catch people’s attention. If you get the right people to look at it, then they’ll come through and they’ll click through and take a look at the other stuff and look at the quality of what you’ve got, whether it’s the writing, or the marketing collateral that goes with it.
Just catching their attention is really the main goal, not having the best designed thing. You don’t need to spend as much money as Buffer does on an infographic, for example. That’s kinda the point I’m trying to make, you can probably get away with a lot less than you think you need.
Courtland: That makes a lot of sense. I think even more broadly, that reminds me of this thing I’ve been harping out a lot in the last few weeks just by talking to people on the Indie Hackers’ forum about their landing pages and about their product ideas how important it is to realize that what you see as a founder and how you look at what you’re putting out is not the same as other people see it. It’s not the same viewpoint that your customers have, it’s not the same viewpoint that your partners might have. Being able to step outside of yourself and look at things from their perspective might be the number one quality that you need to have as a founder.
I’ve underestimated this to a huge degree. Especially early on in my career, I spent a lot of time doing things based on my intuition. Whatever I felt was important had to be what everybody else felt was important. I would work on that, and then I would realize that nobody cared what I thought was important. I wasn’t solving the problem that they wanted.
I think the example that you just gave is a really good one. If you’re crafting an ad or if you’re designing your newsletter, if you’re planning out your marketing campaigns, it’s very important to look at what it is that your customers or that your visitors are going to care about and try to prioritize those things first rather than prioritizing the things that you might intuitively feel are okay as a creator.
I think this is probably true in almost any sort of creative endeavor. My brother’s a writer. One of the hardest things for any writer to do is to be able to step outside of themselves and look at their story and their writing from the reader’s perspective. Sometimes, it takes a few weeks of not writing and stepping back and looking at what you’ve written later on with fresh eyes. I think the same thing can be true as a founder. Whether you’re talking about coming up with an idea, is this an idea that customers actually want, is this something that solves a problem that’s valuable to them, or is this a feature that you really want them to add because you thought it was cool?
Mike: Features is another one that we spend a lot of time building certain features that some customers just don’t even care about. I’ve done this myself but I’ve also talked to people. I think I answered an email this morning where somebody was talking about how they just wanted to implement this one more feature before they launched. The reality is that’s a snowball where you can always look, “I’m going to do this other feature, do this other feature,” and you’re always delaying that launch in order to delay judgment on all the work and effort that you put into it. If you delay it long enough, then you never get judged. You’re really putting yourself in this position where you’re never going to win because the game never starts, I guess.
Courtland: That’s totally true. It’s subtle. You might not be conscious of the fact that you’re doing it to make yourself feel better and to avoid judgment, it’s easy to convince yourself that you really do need this particular feature. Once that’s over, you really do need this other feature. I think this is something that generally if you’re starting a business, it’s advantageous if you have some development skills and you can code what you’re working on yourself rather than having to hire out. It’s also a trap that developers fall into more so than other people, specifically because if you have that ability to do something, if you’re really good at writing code, it feels good to write code and it’s easy for that to be the answer to everything. When in reality, there’s all these other hats that you need to wear, that you need to actually get your product out the door to succeed. Features is a really big trap that a lot of first time founders fall into, just taking too long to launch.
There are other traps there too as well, I think. One of the biggest reasons why I see founders fail and why founders tell me that they end up failing is because they quit early. They essentially hadn’t really put in the time that they needed to solve their particular problems that were [00:32:04] their businesses from succeeding. Often, it comes down to the psychological issue of they didn’t have enough wins under their belt, they were feeling demoralized about their project, it was this long death march, it was building features and never really getting any traffic, trying random marketing efforts and never really have any success.
That gets amplified under fold if you take six months to build a product because you’re continually adding features. Whereas if you build something, a good example would be Josh Pigford of Baremetrics who got his first product out the door and his first customer in something like eight days. He didn’t have time to get demoralized and quit, so not only is it helpful to build things quickly in order to talk to customers and it actually succeed, but it’s helpful for your own morale.
Mike: I think putting something in front of them faster allows you to get the feedback to course correct when you start to go in the wrong direction. As you said earlier, there’s a difference between how you perceive things versus how your customers perceive things. It’s very easy to confuse the two and think that you know what they need. And then when you know what they need, and then when you put it in front of them, they point out all these flaws that you didn’t think of or consider that make you have to go in a different direction. By delaying putting it in front of them, you’re just delaying the results of getting that feedback or results of getting that feedback so that then you have to make the course correction. It’s three months down the road instead of three weeks.
Courtland: I think a lot of it comes down to the curse of knowledge where this really affects creators in any industry, not just founders. Ultimately, if you spend a lot of time working on something, you end up building all sorts of mental models that describe how it works. You’ll understand all of your features better than your customers do, you’ll understand all of your copy better than your customers do, and it can be difficult to tease apart what you understand but it’s not clear to your customers, versus things that are clear to your customers. It kind of gets in the way of you being able to be as effective as you would like.
You’re sitting here thinking oh it all makes so much sense and your customer’s like I don’t get it, you send your landing page to your friend and they say I have no idea what I’m supposed to do here. I think talking to people and getting out of this solo solitary lifestyle where you’re just working by yourself without talking to anybody is extremely helpful. It’s hard to break out of that because as a founder you’re essentially responsible for everything, it’s kind of the default that you don’t talk to anybody and you’re constantly handling this avalanche of work.
Mike: I wonder if there’s a predisposition for software developers to have that mode of operation just because I almost feel like in order to be a software developer, it almost feels like you have to have introverted tendencies because you sit in front of a computer all day, you don’t talk to people, and people who are introverted would be more drawn to that line of work because they don’t have to talk to somebody. But it hurts you when you’re trying to build a business. If your goal is to have this lifestyle where you sit in front of a computer all day and you don’t talk to anybody. That’s the ideal life for you and that’s what you’re working towards. It makes it difficult when you put yourself in a position where in order to be successful, you have to talk to people.
That leads us into a lifestyle of being an entrepreneur and what is it really like versus what you thought it was going to be like when you first started.
Courtland: What you just said reminds me a lot of how I decided to start Indie Hackers. I had three or four other ideas that I was strongly considering, and I knew from my history, “When you’re a developer in the past, you’ve always tended to spend way more time coding than getting the product out the door, and you found every excuse under the sun to delay marketing.” I picked Indie Hackers as an idea because I knew that the product itself was just a blog, the actual work that would go into it would require me to do the marketing, require me to talk to people.
I think that’s kind of a hack that you can use if you’re aware that you maybe are a little bit more introverted, that you have a tendency to put off stuff that you’re not good at or that you don’t like like marketing. Pick an idea where the product itself is easy relative to the marketing part of it, so that you very quickly run into a wall where the only thing that’s left is the marketing.
Mike: That’s really just play into your own personal strength. I don’t think that it’s going to be possible in most cases to build a business where you never talk to anybody. You’re going to have to get out and talk to somebody at some point. A customer is going to have a question, you’re going to have to get feedback on what it is that somebody really needs versus what you thought that they needed. Otherwise, you’re in this position where you’ve put something out there.
As you said, the world doesn’t care. You post something on the internet and nobody cares. That’s the worst thing for a product launch or anything that you put out there, you post it and you get zero traffic and nobody bats an eye because they didn’t even know about it.
Courtland: Yeah, exactly. That’s unfortunately what happened to I think probably the majority of startups. It’s important to be aware that even if you have a successful launch and things do go really well and people do know about it, that’s not the end of the story and it never is the end of the story. I think it’s an expectation that a lot of people have, “I just launched, got a lot of traffic, word of mouth took over from there.” That almost never happens. In reality, you’re still on the hook for figuring out a sustainable growth strategy and a marketing strategy. That job pretty much never ends because in every single stage of your business, the techniques that work change. You have to figure out a new way to get your product into more customer hands.
I think it’s important to be aware of that. In many ways, just being aware of the fact that it’s never really over and that no matter what level of success you achieve, it’s always going to be more work to the next level will help prevent you from becoming demoralized when things don’t go that well.
Mike: Do you think there’s a danger in that where you’re going to be in a situation where you don’t have all the answers because you don’t have all the data for a particular problem? Kind of going back to your example with Indie Hackers, you said that you spent a couple of months on it, three to six months, before you even started working on the advertising side. You were working on it, did you know in advance that this is going to be an advertising model and that’s where the revenue was going to come from? Or was that you kind of had that as an idea but you hadn’t really thought it out or flushed it out or had customers waiting in the wings when you got the product itself done?
I wonder how prevalent that problem is where people delay those types of problems, or spend too much time on them, there’s the opposite of that. They just delay doing anything before they have solved all the problems, then they never get anything done.
Courtland: I think my particular situation was that I was basically doing that. The problem that I really wanted to solve with Indie Hackers was traffic. I wanted a repeatable way to get people in the door, reading articles, and I didn’t feel comfortable moving on towards revenue and finding advertisements to work with until I was confident that I was going to be able to bring more people in. Then at a certain point, I said you know what, the traffic is high enough, I should start making money. I hadn’t solved that problem but I just got to it.
In hindsight, I really could’ve started focusing on generating revenue. I probably should’ve from day one, there’s nothing stopping me from doing it back then. I wouldn’t say that I was spinning my wheels but I was definitely working on something that should’ve been less of a priority. I really should’ve focused on revenue more. I think a lot of startups come down to prioritization.
Working on a startup is more work than it appears from the outset. Every task that you work on will probably give you the idea for three to four more things to work on, three or four more bugs to fix, additional features to add. Your to-do list generally grows faster than you’re working on it. It really comes down to prioritization, how do you know what’s the most important thing to work on and how do you know what you can toss out.
Mike: I think there’s people—I have some perfectionist tendencies sometimes. The one thing that I’ve realized is that—in my younger years—I would look at what a business was working on. An example that jumps into my head was Oracle’s installer was absolutely awful. It never worked the first time I ran it. It was like that for 10 years. It never worked. I always had to go in and mess around with stuff and get it to work. The installer would always fail. I’m like how is Oracle successful when their installer doesn’t even work? Of course, it just made me angry.
I look back on it now and it’s like well, once they’re past the initial hurdle, the installer doesn’t matter. To solve that, oh, just hire these professional consulting services to come in and they’ll install it for you. Just like oh yeah, not only does it put money in their pocket, but it also gets around the problem. They don’t have to fix the problem. Then, it’s interesting to see those types of decisions that in retrospect, oh, that totally makes sense, but at the time it was in theory.
I think there’s a lot of places where that prioritization, there’s creative problem solving that you can do inside the business to get around or avoid solving problems that aren’t really that important to solve for you. You want to have everything perfect, but the reality is you don’t have time because as you said, your todo list is going to expand much faster than your ability to get everything done.
Courtland: Yeah, just getting comfortable with that state of affairs I think is extremely important as a founder, just knowing and accepting that you’re not going to get everything done. You’re better served if you’re aware of that up front.
Also, to your point with the Oracle example, I think probably the most common source of bad ideas is people looking at a product that’s successful, finding some highly visible flaw of that product and saying I’m going to make the UI look a little bit nicer, or I’m going to make this part be a little bit better designed. I’ll do a much better job than Oracle does and not really realizing that the reason why they slacked on that part of that product is because it’s not actually as important as it might seem. As an outsider looking in, it might be difficult to determine what’s important. A lot of times when you see successful companies that are doing well but are crappy looking, it’s because they know something that you don’t about what’s important and what actually drives the business and what’s not, they’re just prioritizing.
Let me ask you, what do you think about work-life balance, Mike?
Mike: I think work-life balance, if you have a home office, is extremely hard. If you’re at your computer, if your computer is in your living room for example, it can be very difficult to draw lines between when you’re working and when you’re not. It just makes things a lot harder than it probably would be otherwise. On those distinctions, especially if you’re a solo founder and you don’t have a co-founder or anything like that, it’s just a hard problem to solve. I don’t know if I have any great recommendations for that, to be perfectly honest, what about you? I think you said that you have a home office, how do you establish any boundaries between work and nonwork time?
Courtland: I, for one, am terrible at establishing these kind of boundaries. I’m somewhat of a workaholic, but I’m getting better at it. I think the key is to realize that as a founder, you’re always going to have distractions. We’ve talked about it a number of times, your to-do list is always going to be infinite. You’re always going to have more things that you can get done, and you’re probably also going to be getting a lot of email which is extremely interruptive. It can sometimes be urgent. You’re going to have to deal with that stuff at times where it might be inconvenient. You don’t have a boss so you can just say I’m not going to work at these points in time, you’re your own boss and it’s up to you to determine your schedule.
I’ve talked to people who have varying degrees of success in doing this. For example, I talked to [00:42:56] a couple of weeks ago. He basically works a 9:00AM to 5:00PM, 9:00AM to 6:00PM schedule, leaves his laptop upstairs, and refuses to bring it downstairs when it’s time to hang out with his family. That works for some people and I think if you have the discipline to set a schedule like that, it can be extremely productive because being always on and always working means that you’re likely to be pretty inefficient. I don’t know if there’s a secret technique or magic bullet for solving that, but it’s important to be aware that your work will never feel like it’s done. It’s not like a normal job where 5:00PM comes around and you’re done on your own. You need to really have the discipline to make rules like that for yourself and figure out what works for you and your business.
Mike: I think that goes back to the prioritization of the tasks on your task list as well. It’s like what is it that is important to you? I think there is a wide range of opinions on this. DHH from Base Camp has constantly railed about the working hours of Silicon Valley and how people should come to work and they’re paid to be there for 40 hours a week so don’t make them work 60 or 80. The fact that you’re working longer hours is not necessarily a badge of honor.
But I think there’s the flip side of it where there are some people, like if they are workaholic and they enjoy the work that they’re doing, then working 50, 60, 80 hours a week, that’s fun to them. I think that there’s this broad spectrum that people fall into and there’s no right or wrong answers, it’s what is right or wrong for you, not for everyone. I don’t think that there’s a general case answer that you can apply to everyone, there’s a wide range of answers and some apply to some people and some apply to others. I don’t think it’s wise to say that this is the way that it should be done for everyone just because it works for you.
Courtland: Yeah, I think it’s also worse experimenting. Sometimes, you don’t know what really works for you unless you’ve tried a bunch of different things. I, for example, thought I really like the idea of being a remote worker and going to different places and working from the beach, or from a coffee shop, or from a friend’s apartment. I tried that early on in my startup career and it just did not work for me, I was very unproductive, I spent a lot of time doing all sorts of side things besides actually getting into the groove that I’d like to fall into. Turns out though, what works for me the best is to just sit at home. It’s kinda boring but I get by far the most work done. I think I wouldn’t have really realized that unless I attempted to experiment. I think it’s worth trying out different things.
Mike: I’m in the same boat as you. I cannot take a laptop and go to a coffee shop and sit there for a little while. I know that it works for some people but it absolutely does not work for me at all. I just can’t get work done. It doesn’t work for me. As you said, you won’t know until you try it.
Courtland: Yeah, exactly. Something that’s been surprising for me also to add to that list is even though I rarely go into the office to work at Stripe, when I do, I have very productive days. I think a lot of it just comes down to everybody can see what’s on my monitor, so I can’t exactly do a bunch of random stuff and watch YouTube videos, whereas at home those distractions are my own private distractions. Again, definitely worth experimenting and seeing what works for you.
Mike: We’re kind of running short on time here, but I did want to touch on one last topic here. That was about what are the expected success levels or income levels after various time frames? I think this is a case where it kinda goes back to what people’s expectations are about either the runway that they need or the resources they need or the time they need to build the products and make it successful.
You’ve interviewed dozens of people so far for Indie Hackers. What is the range of timeframes it has taken for people to start something from ground zero and make it successful to the point that they can go full time on it?
Courtland: This is a good question because it’s difficult to answer because it turns out that when people start out their business, it’s actually a much fuzzier line than you might think, looking from the outside in. Sometimes, it’s very clear cut. They started their business on August 11, launched it, and then it was successful in two years. But often times, people’s businesses succeed based on things they did well before they started their business.
One thing that I get a lot of feedback on is someone will have a company and they’ll start it and get a lot of customers. People will say, “That guy cheated. He already had an audience beforehand,” Or “He already built a list beforehand and he used that to bootstrap his business.” “They already had a lot of expertise in one particular area, and that’s the only reason she was able to start this company. In situations like that, it’s hard to say when was the real start date?
It’s tough because as a founder, you end up comparing yourself to other people’s success. It’s not always visible when they really started doing these things that were crucial to their success. I’ve seen a huge variety of levels. The other thing that’s worth talking about startups is that they kind of follow a power law distribution where a very small percentage of startups will grow way faster and way bigger than others. You’ll always have those people present in the limelight where it’s very easy to compare yourself to them. But in reality, it’s such a huge range that you shouldn’t compare yourself only to the top people.
You should be aware that if it takes you two years to grow your business to the point where it can sustain your lifestyle, that’s perfectly fine, it’s not at all abnormal. If it takes you three years, that’s also perfectly fine and not at all abnormal. I would caution people to not expect or hope that they’re going to find some overnight success, it’s probably not going to happen in a couple of months or six months or even a year.
Mike: Yeah, that reminds me of a talk that Harry Hollander from Moraware Software gave an attendee’s talk at MicroConf a few years ago. He said that if he calculated back to when he started the business to that point which was I think 8, or 10, or 12 years, or something like that, he had just gotten to the point where he would make the same amount of money as he stayed at his previous job. It’s interesting to see that because it does illustrate the point that one, it takes longer than you think it will, but there’s all these other things that factor into it that you didn’t expect when you got started.
Courtland: Yeah, I definitely would not go into startups expecting to get rich or get rich overnight. I think it’s probably the most common reason that people go into it but I’m in the same boat. If I had just gotten a software engineering job after college, I would be doing a lot better financially than I am now having done startups. That’s not true for everyone, some people make a lot of money doing it. But I think there are other benefits worth looking into.
Personally for me, what’s really motivating is I like financial freedom, knowing that I’m basically the one in control of my finances. I like the locational freedom and being able to go where I want whenever I want. I like the time, being able to work on my own schedule. I like the freedom to determine the vision for the product that I’m building. I think all those things are their own reward for me.
I will also caution people not to get too sucked up into this idea that they’re going to be an overnight financial success and make millions of dollars.
Mike: Yeah, all those things that you just touched on, they’re the ancillary benefits of being a founder. You can’t necessarily get them from a full time job. Sometimes you can, obviously there’s financial rewards for having a full time income and you don’t have to pay for your own health insurance for example, that’s fantastic. But the freedom to come go as you choose, and work on things you want to, and not do the things that you don’t. So long as they don’t drive your business into the ground, it’s okay to ignore some of those things. You have to pick and choose your battles and there are going to be times where you’re going to have to do stuff that you don’t want to do and you don’t like to do but it’s part of business and it may not be why you signed up for it but it’s still gotta get done.
Courtland: That’s a really good point, actually. A huge percentage of the things that I do are not my favorite thing. If I was only doing my favorite thing, I would just be writing code all day everyday but that’s maybe 5% or 10% with what I do with my business and what I’ve done with businesses in the past. Whenever I go over that limit, it’s because I’m being irresponsible and not doing the things that I actually should be doing. That’s not to say that I don’t like the other parts of running the business, I think I’ve really begun to appreciate some of the more marketing type tasks, even some of the more extroverted talking to people and interviewing customers and interacting with people.
7I’ve really started to appreciate that. It’s important to realize that as a founder, you’re going to have to do whatever is required of you, and that’s not always going to be your favorite thing. If you prioritize only doing your favorite thing in your business, then chances are you’ll be spending a lot of time on things that your business doesn’t need and neglecting things that your business does.
Mike: Ultimately, I think those things will probably come back to bite you. You can’t avoid the things that are going to make your business successful. You can’t always do the things that you just want to do because they’re not going to benefit the company and it’s not going to make the numbers that you need in order to make your own payroll. You have to buckle down sometimes.
Courtland: Yeah, you really do. I think that’s another reason why it’s important to choose to do something in a field that you care about and that you like. I started Indie Hackers because I like startups, I really like the idea of revenue generating startups that don’t necessarily have to follow the Silicon Valley model of raising a ton of money. I could talk to people about it all day. No matter what, even if I’m doing mundane tasks that I don’t particularly care for, at least I’m doing it in a service or something that I do care for. That’s helped me stay motivated even when the times are tough. Very easy to underestimate how easy it is to quit when things aren’t going your way for 3 weeks straight or 3 months straight or 10 months straight. I can’t recommend enough to work on something that is actually meaningful to you and is not just an opportunistic business play.
Mike: Speaking of opportunistic business plays, how can people get in touch with you? You say you enjoy hearing from people, wrapping things up here, where can people find out more about you or get in touch with you if they have followup questions?
Courtland: I’m pretty active on Twitter, I try to be, @CSAllen. Obviously, I’d love to hear from you on indiehackers.com where we’ve got a community forum there where all sorts of entrepreneurs go to ask each other questions, get feedback. If you create a thread on the forum, I will almost certainly see it and try to give a response, or you can just email me courtland@indiehackers.com.
Mike: Courtland, thanks for coming on, really appreciate having you on the show. Look forward to more episodes of Indie Hackers.
Courtland: Thanks for having me on, Mike.
Mike: If you have a question for us, you can call it into our voicemail number at 1-888-801-9690 or you can email it to us at questions@startupsfortherestofus.com. Our theme music is an excerpt from We’re Outta Control by MoOt used under Creative Commons. Subscribe to us in iTunes by searching for Startups and visit startupsfortherestofus.com for a full transcript of each episode. Thanks for listening, we’ll see you next time.
Episode 356 | Finding Pricing for a New SaaS App, Small Business Banking, Selling to Companies Outside the U.S. 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 pricing for a new SaaS app, creating a new product category, choosing a name, and small business banking.
Items mentioned in this episode:
Transcript
Rob: In this episode of Startups For The Rest Of Us, Mike and I talk about how to determine pricing for a brand new SaaS App, small business banking, and selling to companies outside the US, as well as answer more listener questions. I also ask Mike what his favorite food is without having given him advance notice. Hey Mike, what’s your favorite food?
Mike: I don’t know, I like sushi a lot. That’s my answer.
Rob: I thought you were going to say Whiskey.
Mike: You said food. Yeah, we’ll change that to grain.
Rob: This is Startups For The Rest Of Us Episode 356. 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: And we’re going to share our experiences to help you avoid the same mistakes we’ve made. Aside from eating Sushi this week, what’s going on, sir?
Mike: I’m looking to push a pretty major update to Bluetick. It unfortunately breaks all of the existing routing for the entire app. I’ve been watching to see who is logged in, when they’re logged in, what they’re doing. Pretty much all hours of the day right now, somebody is doing something. It’s kind of problematic to do to just push out a major update like that. I kind of have to wait until the weekend.
Rob: Yeah. It’s a good problem to have, right?
Mike: I know.
Rob: So many people in your app that it’s hard to push updates.
Mike: I know. It’s funny, I was complaining to my wife, “This is totally a first world problem, but I can’t push an update because people are using it.”
Rob: That’s interesting. With Rails, shadow upgrades where it waits for a particular server to not have anybody else. We have load balancers and a bunch of web servers, but we have a process for there won’t be down time, or you won’t lose your session when it updates. Is .NET still the old paradigm of if you load it and someone’s in their session, they’re going to lose stuff?
Mike: I think typically, yes. But because of the way I have things set up, I’m using an Angular App so I have this session information, it’s the token that gets passed back and forth with every request. That’s not really the issue, the issue is that the URLs that are being used inside the app are changing. The next time they go to make a request, because they have all the JavaScript loaded on their client, it’s going to fail. Even though their token information will be the same, it will still authenticate. It’s just there’s nothing to authenticate to because it’s not there anymore. That’s really the problem. I really have to figure out a way to force the client to say hey, there’s a new version of this, you really should click here or just automatically refresh the entire browser and be done with it. That’s really more the issue than anything else.
Rob: Got it.
Mike: I’ve also got a bunch of trials that are set to convert to paid in the next week or two. I made the next step to transition from a 30 day trial to a 14 day trial, so I’m going to see how that goes as well.
Rob: It’s a good move. Shorten that trial. The shorter you make it, the faster you can test. This is my soap box since day one on this podcast. Shorter trials are better. No trials, the best, because it’s so easy to split test. But you want someone to get value so it’s like 14 to 7, you can split test faster, you get your money faster, it encourages people to get on-boarded faster. But obviously the shorter you go, at a certain point, you give them so little time to get set up that you’re going to have less returns, you’re going to have fewer people making it to paid, so you got to find that balance.
Mike: That’s why I went to 14 instead of 7, I think it’s a good balance between giving somebody enough time and giving me enough time to reach out to them and to make sure that they get through all of the on boarding steps. Because if they don’t, clearly they’re not going to get any value out of the app, but I want them to get value before the end of the trial.
If they’re not doing things in the app and they’re not responding to emails or any of my on boarding stuff, then doing 30 days is not going to make any difference over 14.
Rob: I agree. I have tweaked with trial lengths with pretty much every app that I’ve ever run. I have found that you can just ratchet it down, ratchet it down, and then when you go too far it becomes kind of obvious if you have any type of volume going through it and you know your numbers, you know the typical trial to paid. You’ll either start getting complaints that trials aren’t long enough or you’ll just notice that people aren’t getting stuff done on time. I think this is a really good experiment. If you get it down and stabilized at 14, I would totally look at a 10-day next, maybe in a couple of months as you have time. And as your on boarding gets better, you can do that because it gets people through that part of the funnel quicker.
Mike: Yeah, 10 days might be interesting. The only issue there would be it’s part of a week, or maybe it’s not a big deal, I don’t know. I’ll probably test it at some point, I’m sure.
Rob: We have a ton of new iTunes reviews and iTunes reviews are so helpful to this podcast. A, they give us motivation to keep going. B, they help us rank higher and get more listeners. Right now, we have 531 reviews worldwide in iTunes. One from [Bob Moff 00:05:07] recently said, “Filled with so much great content. You will explode.” I like that one.
One from [00:05:13], he says, “The best. This podcast is amazing. I have a small app business and the advice they give is super helpful in my business. I listen to a number of podcasts for small business and passive income and this podcast is the most beneficial to me.”
Another one from [00:05:26] that says, “Thanks for an awesome show for Startups. Thanks for providing a great show for us.”
If you haven’t ever left us an iTunes review, you don’t even need to go in and write anything like these kind folks did. You can just deal with the clunky iTunes interface or Stitcher, click five stars. It takes two seconds, we’d really appreciate it.
Today, we’re answering listener questions. If you haven’t ever sent in a question, you can call our voicemail number which is super cool because then we get to hear your voice. That’s 888-801-9690. You can always email us at questions@startupsfortherestofus.com. We have five or six people today who did one of those things. Let’s dive into our first one.
Listener: Hey Rob and Mike. I just want to say first off, I love the podcast. You are by far the most actionable podcast that I listen to. My question today is about pricing. I have a SaaS company starting up and I know you’ve touched on pricing before in the past briefly. I’d really love to hear you go more in depth on how you would figure out pricing for a new SaaS just getting off the ground. Thank you so much, I look forward to hearing from you.
Mike: I think this is kind of a very general topic. What I did for Bluetick for this specifically, to try and find out what people were willing to pay for, was I asked them. When I put people through the initial validation process and I started taking preorders for Bluetick, I asked them how much value do you think this provides to your business? I gave them a text field. It said you tell me how much it is that you’re willing to pre-pay for and then we’ll multiply by how many months. I got ranges anywhere from about—I think the lowest was $1.29—most of them were between $47 and $50 and then I had one that came in at $100. It gave me a good idea that the $50 price point was probably not out of range for most people. That’s what people thought it was worth.
I think there’s other ways that you can do that as well. One of them is to anchor the pricing to something. You can either anchor the pricing to the value that you provide, and in your copy and the things that you talk to people about. You say look, this is what it’s going to save you, or this is what it’s going to help you avoid. You can use that to figure out what the pricing should be and you can use that copy to help you justify it to the customer.
Another thing you can do is look at what competitors are out there and what their pricing looks like in comparison to what it is that you want to do. And then you can either go higher if you want to offer more of a premium offering, or you can go lower if you want to be more of a commodity choice or a lower end option for those people.
I’d say those are probably things that I would look at. Rob, I’m sure you’ve got a ton of things to say about this. What do you think?
Rob: That’s actually a pretty good summary. A, ask, because you probably should be or are going to be doing customer development anyway so you should ask early and then start—as you’re doing customer trial—pitching different prices to hear how people react. I think that’s a great idea. Competitor pricing is always important because people, if you say you have no competitors, you’re probably fooling yourself because even apps that don’t have direct competition have some other form of competition. Even if it’s an Excel spreadsheet and three hours a week of someone’s time, that can be a competitor to you. You can start just doing even loose math about what is three hours of someone’s time worth in the role that they do this? Multiply that times 4.33 and that’s one month. Now alright, I’m going to charge a fifth of that, or a tenth of that, or something.
Another way, something that I did early with Drip was I kept asking myself how can I build an app where the lowest price point was $99 a month. That was the initial brainstorms or one of the thought experiments I did. By the time we launched, Drip was only at $49 a month but our average revenue per user is much higher than that because it scales up with subscriber count.
That’s another way you can think about it, try to dig yourself out of this I’m going to be a $10 a month SaaS app or a $20 a month SaaS app to start. Those apps are going to be great little lifestyle businesses but they are going to tend to have high churn and it’s really, really hard to grow them past, depending on churn, and let’s say $20k, $30k, $40k MRR. It’s just at that low price point, you have to find so many customers.
I think it’s an interesting angle to come at it from that other direction of alright, I’m a developer and I know I’m building an app for X. I know it’s accounting for lumberjacks. How can I make that worth $49 or $99 a month? Does it have to then, in order to provide that much value, go out and scrape people’s bank accounts? Does it have to do 10 times what Quickbooks can do? What does it have to do? I think it’s a third angle to think about as you’re doing this.
I think the last thing I’ll say is with competitor pricing, I think competitors give you a really nice level set or comparable price of what someone might be paying. That doesn’t mean you have to be the least expensive, that’s the thing. I would tend to argue you probably want to be more expensive than most of the other ones. Maybe in the very, very early days you can’t be. But as soon as you start getting some traction and you’re moving fast and you’re shipping fast, people, depending on the industry, often want to use the new cool thing. You’re going to probably have a better UI, better user experience, you’re going to be more responsive because you’re such a smaller company.
When we priced against the MailChimps, AWeber, Constant Contact, we are more expensive than all of those apps. Some people would say, “I’ll just stick with MailChimp because I can save my 10%, 20%, 30% a month.” Our answer was well, we’re more powerful, we’re more responsive, our support is better. Even over time, as we talked about a couple of episode ago, our pricing is now even a little higher than 20% or 30% over MailChimp or Constant Contact. We’ve earned that right. The price premium is a bit of positioning and positions us as much more of a premium offering in the space. I hope that helps, thanks for the question.
Our next question is about creating a new product category.
Listener 2: Hey, what’s up Rob and Mike? This is Chris Badgett from Lifter LMS which is a WordPress Learning Management System Solution for creating and selling courses and membership sites. I love your guys’ podcast. My question for you, it’s about introducing a new category. We’re growing really quickly, disrupted the market a little bit with a free frontend product and an add-on model, premium pricing, things are going really well.
We’re about to pour gasoline on the fire and really introduce a new category. What I mean by that is something similar to how InfusionSoft introduced the marketing automation category and that was really big. We see an opportunity in the learning space and how we can move into a new category outside of just learning and courses and the membership sites. I’m actually having a hard time naming it. I know what it’s going to be and how it’s going to work, but I want to pick that name kind of like marketing automation or sales automation or those big category names and make it simple and rememberable and not too techy and not using insider lingo and techno babble.
Any advice on naming a category? A new category which is going to involve some education and teaching people about that new category, I would really appreciate that.
Anyway, keep up the great work, guys. Thanks a lot, I appreciate it.
Rob: Thanks for the question. This is a big one and an interesting one. Most people will not face it in their lifetime. I think to start with, you mentioned it, InfusionSoft introduced marketing automation. As far as I know, they did not, they just brought it down from the enterprise. Marketo, Pardot, HubSpot, Eloqua, those guys were kind of around, some of them. InfusionSoft was around before that but it was more like back office for lawyers and brick and mortar. By the time they became marketing automation, there were other players. I don’t know that that’s critically important but it is a clarification I want to make upfront.
Inventing a new product category is very, very hard and very expensive. Since you already have a business and you already have customers, you may be able to gorilla market this to them and have it spread. I’ve been involved, either peripherally or directly, in this type of exercise before. One thing, back in the day, as I was looking for a different term for an entrepreneur who wanted to stay solo and start small software companies.
Micropreneur is this term that I came up with and got micropreneur.com, we launched the academy. All the stuff happened. It was years and years of saying the same thing and talking about it and speaking about it and writing about it and still the adoption of that term. There are some people who used that term, but even with the reach into this space of those people, it still doesn’t resonate with a lot of folks. They don’t call themselves Micropreneurs.
There’s a bunch of reasons why that might be the case, number one, because it’s just really hard to come up with a new term that resonates with people and to define it and have people get behind it. Another reason could be that perhaps the name itself, I didn’t choose it very well, meaning that maybe it’s hard to say, it’s hard to spell, maybe it doesn’t resonate with certain people. I think that’s what the first takeaway is. A, are you sure you want to do this? It’s going to be really, really hard. It’s going to be a ton of money.
Another one, I had a specific conversation with Dharmesh Shah from HubSpot. He and I have known each other for years, blogged, guest posted, we speak at conferences and we talk. We talked about HubSpot inventing the term or getting behind the term inbound marketing. They wrote a book and they pumped money and money and money into it. It was a casual-ish conversation, it may even have been on Twitter, actually. He was saying it was $5 million or $7 million and years for them to get traction with that term to where people associated it with their company. It’s a couple data points, but I will say that this is a lot harder than you think.
Going with that in mind, if you still want to do it, go on with that in mind. It’s still definitely doable. I think that nailing the name and nailing that concept like inbound marketing, certainly those words existed in english language before. But they brought it together and they gave it this tight definition, and then they just kept saying that definition over and over in different ways. That would be my advice for it. Honestly, I would consider—if you’re really going to do this—hiring a design firm or a brand agency or somebody to help you with that name. Because if you know what it is but it sounds like you don’t have the name yet, the name may be 80% of the battle. If you get that wrong, no matter what else you do, you’re going to be hosed because it just has to resonate with people and it has to have a deeper meaning and conjure up the meaning in people’s minds. That’s hard to do, it’s hard to come up with that on your own.
Mike: Sounds to me like this is just one of those classic branding exercises. When you’re trying to come up with a brand, I don’t view it as too much dissimilar from coming up with a name for your product or your company. It needs to fulfill a couple different requirements. It needs to be easy to say, easy to pronounce, easy to spell. You don’t want people to misspell it or get it slightly incorrect and end up in the wrong places on the internet.
I think the fundamental thing that is the most important of that is it must resonate with people and accurately describe what it is that they do or what the product category is in a way that makes them affiliate themselves with whatever that term is.
Coming back to what Rob was saying before about micropreneur and why that hasn’t really caught on, I think people feel like I’m an entrepreneur, micropreneur sounds a little bit like you’re couching how well you’re doing in certain things. People want to be viewed as successful. If you say micropreneur, oh, I’m a small entrepreneur. No, that’s not really the whole point of it, so I feel like there’s certain connotations along with that that turn some people off. You need to make sure that you’re cognizant of what those types of things are with whatever the term that you come up with is.
Something else I think about is is there any real value in being known as the company that established this name or created the name? Is there something else that you could latch onto that isn’t necessarily yours or wasn’t created by you but you can then build enough stuff around it. Like Rob said, HubSpot spent millions and millions of dollars and tons of repetitions saying the same things over and over to their customers and everyone else’s customers that inbound marketing and inbound marketing and inbound marketing. That’s how they ended up making that into a term that people affiliate with HubSpot.
You can do the same thing even if you don’t necessarily come up with a term. I’m hesitant to say that there’s value in being known as the company that came up with a specific term, like you said marketing automation and as Rob pointed out, InfusionSoft is not the company that came up with that, it was someone else. It would be very easy for people to misattribute it anyway.
Rob: Yeah, and last thing is given the importance of this, there are people out there who come up with names, they’re naming experts. A lot of them do it for companies, but if you have the resources, since you already have a company that sounds like it’s profitable, the name is a critical piece of it.
Someone who I heard recently on The Tropical MBA Podcast, it was Episode 401, What’s In A Name? Listen to that episode and figure out if she might be a fit for you. I forgot the name of the company but it was a fascinating exercise. Dan and Ian from Tropical MBA are wanting to rename their brand, their podcast. They want to get rid of the Tropical part.
They’ve now renamed twice. They were called The Lifestyle Business Podcast, and then they renamed to Tropical MBA, and then they’re renaming to something else. You can see how hard this is because for them the podcast is part a movement, it’s part of a new term that they’re coming up with. As their careers have shifted and their businesses have shifted, you can imagine that it’s difficult to pick something that’s going to hang around forever.
The cool part is that question and the thought about choosing a niche and name is actually our next listener question. It’s from ov@socialbee.io. He says, “I have a question that applies mostly to Rob, but I’d like to hear both of your takes on this. Your podcast is geared towards solo founders and bootstrapped entrepreneurs, ‘The Rest Of Us.’ As Rob is now part of a larger organization, he’s switched boats a bit. Would you still name the podcast the way you did if you would have to pick a new name and a new niche now? Or to broaden the question, how do you pick your niche and even your name so you’re sure you don’t outgrow it yourself? Or that if your preferences change, you’re not stuck with your initial niche. Thanks, I’m a big fan and I appreciate your open discussions. Thanks for the great show.”
I’ll insert a little bit here, Mike, just because he asked that part about me and then you can come in with your thoughts. What’s interesting is I do work for a larger organization but I actually don’t feel like I’ve switched boats. I’m still a bootstrap founder at heart. This is the thing, you get into this mindset of if someone has raised any type of funding, are they still a bootstrap founder? Look at Jordan Gal with CartHook, look at Justin McGill with LeadFuze, look at Churn Buster, yes, they each raise small rounds. Are they still bootstrap founders? Yeah, I guess by a technical definition, they bootstrapped to a certain point because they all had revenue and then they raised a small round. Maybe, technically, they’re no longer bootstrapped but at heart, they’re still super scrappy, super cash efficient, and they’re not doing the $100 million company or bust, they’re building real businesses.
That’s the bigger difference I see, it’s partly a mindset thing and it’s partly how you approach problems. Jason Cohen who’s writing WP Engine, I’m an angel investor but I have no inside information. They’re either going to get acquired by a massive company or they’re going to have an IPO here. Big time stuff. He still talks about bootstrapping in a higher level than most of us can, still he’s given the best talk I’ve ever seen on bootstrapping. He bootstrapped WP Engine to a lot in revenue before he bought on any outside funding.
I guess I would probably push back on that a bit to say that since I am working inside a company of 150 people or whatever, that I’m no longer a bootstrap founder. Every problem I approach, I still approach it that way. I guess all that to say is I still love the name Startups For The Rest Of Us. I feel personally, not just because I’m attached to it, it embodies a different way of thinking about startups. Everywhere you look, even as much as I love the Gimlet Media show Startup, it’s just the same stuff. It’s all about the Y Combinators and about these big companies. It’s really well told and I enjoy the story, but it gets old. I feel like on this show, the ‘for the rest of us’ part is really saying this is for people who want to build a real business instead of building slide decks.
I think that’s my initial thoughts. What are you thinking, Mike?
Mike: I think I agree with you for similar reasons. I think that I would stick with the name Startups For The Rest Of Us, I still really like the name. The downside of it is of course that it’s really long. If you have to spell it out or come up with an acronym, it doesn’t suit it very well. I think that the name itself, it resonates really, really well with most people. Here’s why, and I don’t think that we really considered this back when we named the podcast this.
I picked up startupsfortherestofus.com back when I read a PolyGram article about them with Y Combinator and really targeting people who were fresh out of college and didn’t have any expenses and they can send $6,000 to them and basically invest in some of these startups. The expectation was you’ll move to this location for three months and that $6,000 per person is going to get you through. I’ve read it and I was like well, what about me? What about the rest of us who can’t do that because we’ve got a car and a mortgage and family, and we can’t just up and leave for three months.
Honestly, it really irks me at the time. I look back at that and I realized that the gorilla in the startup space is really the funded startups. Those are the ones you hear about all the time, they’re the ones that get all the media attention and love. They’re the ones that get the massive news articles and press coverage that we would like to have but we just don’t.
Really, what that does is it puts people like us and listeners of this podcast into this bucket of people that we’re the misfits, we’re the crazy ones, we’re the rebels, we’re the trouble makers that are going out and building stuff that are not playing by the rules, we’re not doing things by the book. I think that’s why the Startups For The Rest Of Us really resonates so well with a lot of people in the audience, because they can affiliate themselves with that. They’re like I’m not following the script that the Silicon Valley people are putting out there and I’m still being successful at it.
Rob: Yeah. I also think there’s a turner phrase. ‘For the rest of us’ obviously existed in the English language, which is why it came to your mind. It means for those of us who are not privileged or who are not going after what the crowd is doing and what everybody is talking about. Now, there are a bunch of podcasts with similar names, which shows you that that concept resonates with people. There’s Money For The Rest Of Us, Minimalism For The Rest Of Us, Theology For The Rest Of Us, Quitting For The Rest Of Us, Music Appreciation For The Rest Of Us, Success For The Rest Of Us, on and on and on.
I think, to be honest, we may have gotten a little lucky with it. I remember when you…
Mike: Oh, we totally got lucky.
Rob: We didn’t actually know what we were doing. I remember you presenting it and being like, “I have this domain name.” I was like, “Oh, that’s a great idea. This totally fits what we’re doing.” It’s just one of those times when it fits.
I think to address Ov’s broader question, as he says how do you pick your niche and even your name so you’re sure you don’t outgrow it yourself. The niche you pick, you can always outgrow. You can always go from one vertical to a neighboring vertical. You can go from freelance designers to freelance developers. That is not that hard, I’ll say. Or going from a single vertical to going horizontal. We’ve seen people do it. BidSketch went from proposal software for designers to more generalized proposal software for agencies. There’s a number of examples of land and expand, of coming in and serving a single market and then going out.
The niche part is not the hard part, it really is the name. If Ruben had named BidSketch Design Sketch or Design Proposals or something like that, you limit yourself. You have to strike this balance between having a name that’s tight and having one that is so broad that it has no meaning to people, and you’re then inventing your own term and having to educate on that.
With that said, if you look at a lot of the names of big startups, they really aren’t specific at all. They did that by design. amazon.com, this is a very smart guy. I have a sinking feeling that he named it Amazon for a reason. He knew that he wasn’t just going to do books forever, he didn’t name it book website or cheap books or any of those other things. He named it Amazon because he knew he’s probably going to sell some DVDs and some furniture one day. Maybe he didn’t know about Amazon EC2 but EC2 fits under the hat umbrella as well and it’s a completely different thing.
Look at Uber. What does Uber mean? Super, is that right? In German?
Mike: Yeah, something like that.
Rob: Yeah, it’s like above or beyond or super. That fits a lot of stuff. I think the founders of Uber probably knew that they weren’t just going to be a taxi service, although early on they were called UberTaxi and they removed the taxi because they were being regulated as a taxi, and so they changed the name. Now, they could do self driving cars, they can do food delivery. There’s UberEats, you just add the little thing to the end of it.
A lot of startups, when they actually name their startup, they are using these dictionary words or even just nonsense words that have a nice ring to it. There’s a reason for that, they don’t want to get pigeon holed. If you’re naming a company, you may want to lean towards that. Again, that Tropical MBA episode that I mentioned, 401 I think it was, she talks all about this stuff and she has an ebook that is phenomenal if you want to hear more about naming companies. I highly recommend it.
If you are talking about naming a podcast or a blog or you can’t use a nonsense name, I would have some serious brainstorms and then I would try to strike that balance between being so wide and so narrow.
Mike: Of course there’s a danger here, there’s actually a couple dangers. One is if you’re so broad, then you have to spend a lot of time and effort educating people about what the name is. I think the other major danger is that you spend so much time figuring out a name that you don’t actually do anything. Those are other gotchas to be aware of.
Something else that comes to mind is you can always run into a time down the road where you suddenly decide that you don’t like the name. It doesn’t matter that it’s doing well or the customers are resonated with it, you may just decide one day that you don’t like the name. There’s almost nothing you can do about it.
One that comes to mind is FogBugz, from Fog Creek Software. The last I knew that they did not like the name and they felt like hey, if we can change the name to something that made more sense, we would. But at this point, it’s too late. There’s tons of people using it, they’ve got thousands of customers, they’re just not going to change at this point because it doesn’t make business sense. Even though they don’t personally like the name anymore, it doesn’t matter. The reality is the product is still making money, it’s making really good money. They’re just going to stick with it.
You may be stuck with a name you don’t like. If it’s working and then does it really make that much of a difference? The answer is probably not.
Rob: You know, Ramit Sethi with iwillteachyoutoberich.com, that’s the name, he says it’s too long, he says it sounds like he’s a pyramid scheme or whatever. He wishes it was less grandiose. I’ve heard Tim Ferriss talk about how 4-Hour Work Week was really a blessing and a curse. It sold a lot of books but now he has this reputation and he wished he didn’t. There are interesting connotations to it.
And then we can look to Tropical MBA that used to be a lifestyle business podcast. They’ve, again, changed once already and they’re talking about changing their name again. It’s not impossible to change. It’s harder to change a product or a company name, it can be easier to change a podcast where you still have the same subscriber base and RSS feed. You’re not going to lose people. You need to rebuild the brand over time, but it’s totally doable.
That was a good question. Thanks for sending it in.
Out last question for today is from Eric, thanks for sending this in, Eric. It’s about small business banking. He says, “What options would you recommend for small business banking? I’m looking around for a local bank like Wells Fargo, Bank of America, etc. to start with a basic checking account. Would love to hear your thoughts.”
I don’t think of those as local banks, I guess they have local branches but those are large, national banks. What are your thoughts, Mike, besides the sentence that ‘small business banking sucks’? Is that what you’re going to lead with?
Mike: I was, but national banks suck too. Pretty much all of banking sucks.
Rob: It does. You have a ton of experience with it. Do you have any key takeaways of advice, or is it really just go with where your personal stuff is just so it’s easy to transfer money between the two?
Mike: That’s probably the best advice in most cases. Most of the business offerings are going to be pretty similar from one provider to the next. It really matters more along the lines of what services you really need from the bank. Do you actually need to write checks? Do you need to visit a branch? There’s a lot of things that you can do completely online.
Obviously, if you open up an account, at most places, this applies specifically in the United States which I believe he’s writing to us from, you’re going to have to fill out a lot of paperwork that essentially validates who you are because of all of the security laws and SCC things that came along after 9/11. What you’ll need to do though is you’ll need to provide proof of who you are before they’ll let you open a bank account. You can do that online for certain types of banks.
Silicon Valley Bank for example is one where you can do that completely online. Their backend interface kind of sucks, it’s not the greatest in the world, but they have two branches. One of them is on the West Coast, one is on the East Coast, and that’s it. They’ll give you a debit card, you can use it at most places, and that’s really most of what you need. As long as you have online banking and you can take a picture of a check and just deposit it, it probably doesn’t matter. Any bank in the world, you can just order checks from a random checking service where they print out your checks and send them to you. They’re all basically the same thing.
It really comes down to what are you paying for in fees and those types of things. Across the broad spectrum of your business, probably don’t matter much because you’re going to be spending less than $25 or $50 a month on your banking needs, especially if you get over $10,000 or $20,000 from your bank account. At that point, it doesn’t cost you anything. They say you’re a valued customer, you’ve got a minimum amount of money in our account, so we’re not going to charge you for having this account.
At that point, what difference does it make which bank you have? I would say that it absolutely does not. It’s just which national bank do you hate the least?
Rob: Yup, I think those are good thoughts. If I were to do it all over again, I would probably do this mostly the same way I’ve done it which is personal banking is at a particular national bank. I’ve started up a couple business accounts at that same bank. There’s Bank of America and there’s US Bank and there’s Wells Fargo and any of these are going to be so similar. Unless I was extremely cash strapped, m that’s what I would do. You can get a business checking account at any of those banks for $10 or $15 a month if you’re not doing anything fancy. Often, it comes with a savings account for free attached to it.
That’s what I would do, keep it simple. $10, $15, $20 a month, don’t spend so much time doing stuff. The one mistake I’ve made in this banking stuff—well I probably made more—but the one that really comes to mind is I was being super cheap one time trying to set up this account, I didn’t want to pay anything for it, and I set it up with a purely online bank of the internet or something like that. It was just a fiasco, it took forever to get stuff through. Once I had the account, it was fine. But as you said with Silicon Valley Bank, the interface for the one I was using was just awful, it was very limited. Yes, I saved myself $12 a month and I regretted it every time I had to do anything with that bank. I wished I just paid, even if it was $20 a month, to anybody where I could go to a branch or call. It just all fit my other workflow. I would encourage you to not try to save a few bucks.
Maybe there’s a local credit union, I’m not saying don’t use a local bank, because that could be great too. If you can go in and get personalized service, local bank, local credit union, no issues with that. I always try to get the clever solution, I’m gonna hack this and do a really good job. Thus far, it’s backfired on me with banking.
One thing that we will link to in the show notes is a nerdwallet article. This is finding a free business checking account by state, because they’re regulated by state. You could look at this for your state and look through it and see if these places look legit that are in your state, there’s only a handful per state that are listed here. I don’t think there’s any silver bullet here.
Mike: A lot of banks will give you a business account for free for 12 months just for signing up with them. Then after that, they’ll charge you, $10, $15, $25 a month if you don’t have that minimum balance. That’s something else to keep in mind if you want to be able to save some money in the short term until your business gets up and running and you’re able to get cash saved away in there.
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