Episode 87 | Whether to Build Multiple Websites, Creating Residual Income and How to Run a Beta

Transcript

[00:00] Rob: On today’s episode of Startups For The Rest of Us, we’re going to be talking about whether you should have multiple websites for multiple products and some ways to generate residual income. This is Startups For The Rest of Us: Episode 87.

[00:12] [Music]

[00:21] Rob: Welcome to Startups For The Rest of Us, the podcast that helps developers, designers and entrepreneurs be awesome at launching software products, whether you’ve built your first product or you’re just thinking about it. I’m Rob.

[00:29] Mike: And I’m Mike.

[00:30] Rob: And we’re here to share our experiences to help you avoid the same mistakes that we’ve made. What’s the word this week, Mike?

[00:35] Mike: I have completed the code merge that was giving me absolute nightmares last week. [Laughter]

[00:39] Rob: Oh, the merge. So to give the listeners a little background, you had a couple of developers working and like they were both checking coding that would conflict.

[00:46] Mike: Yeah.

[00:46] Rob: Is that right? And you would have to do manual merging? Why wasn’t Subversion or Git handling that?

[00:51] Mike: It’s because it was the Visual Studio’s .Designer files which Microsoft for some reason decides that they’re going to reorder things when they go back in to the designer files. So if you two different people make changes, you’re not guaranteed that the changes in each of those files are going to be in the same places and because it’s kind of an auto-generated file, there’s not much you can do about it. So I actually wrote a utility that would sort the contents of the file and make it so that it was a lot easier to merge.

[01:19] Rob: How interesting. Yeah, I never ran in to that. I think when I was on big teams doing .NET development we use Vault or we did used Perforce but we had the lock file checked. So there if you check something out, it was locked to avoid this kind of thing.

[01:33] Mike: Yeah.

[01:34] Rob: You know, so two people couldn’t edit the file at the same time and maybe that’s why — maybe that’s why they did it at those companies.

[01:39] Mike: It could be. It could just be the type of file too. I mean because everything else merged fine. It was just a couple of .Designer files and a couple of .resx files and you know, I found a utility that would sort the resx files so it’s a lot easier to manage but the .Designer file, I couldn’t find a utility for that. So I just — I wrote one. It took me probably two or three hours to write it where it’s going through by hand. I probably spend six or eight hours before I just kind of gave up [Laughter] and turned to writing a code.

[02:06] Rob: Yeah, that’s brutal. So I guess it’s been about three and a half weeks now, I launched the article feature, one-click articles on HitTail and it’s continuing to do well. I finally sent out an e-mail to all the paying customers. Before that I basically just had a splash screen when people logged in that they would see, you know, articles were available but about a week ago, I finally sent an e-mail to everybody who’s paying and they, you know, continue to ramp up. So I think we’ve done over sixty articles in like twenty five days. So it’s been a nice pace and as a result, the lifetime value of my customers has, you know, assuming this pace keeps up as increased quite a bit. So it’s definitely been, I mean the entire goal really is to increase the lifetime value so I have more leeway when acquiring customers that I can do more creative things and some things are getting little more expensive.

[02:56]So it’s been — been a good experiment. We have had three kind of returns. One I was able – we were able to fix. My admin fixed it himself and then actually, the other one he fixed as well. There’s only one where we had to… gave someone’s money back or we asked for kind of a rewrite. That’s what we’re going to do is have a hundred percent money back guarantee on the article quality. So I actually, to be honest, I expected by the time we got to sixty articles, that there would had been a lot more just manual labor like trouble, you know, support issues, keeping that like an articles or just different things that had happened and so far, it’s just been kind of a walk in the park. I’m knocking on wood right now because I don’t want to jinx it but so far I’m really happy with the level of effort we try to expand versus the revenue that we’ve received from this feature.

 

[03:41] Mike: And you kind of did a soft launch with it too, right? I mean it’s not like you just blast it out to everybody and said, “Hey, there’s this brand new feature that we think you’re going to love.”

[03:48] Rob: That’s true. Yeah, the soft launch was just the splash screen and so it was very slow going because only thirty to fifty people log in a day and so some trickled in for several days and you’re right, I did fixed several issues during that time and so by the time I e-mailed, gee, as close to a thousand people that really had helped that I had fixed those things, you know, that I hadn’t just on a big launch without tweaking it first.

[04:10] Mike: Cool. I think that by the time we record the next podcast, I’m going to have a definitive date for when I’ll be starting my close beta for AuditShark.

[04:18] Rob: I love it. So that will be next week. We can have a count down timer.

[04:22] Mike: Great.

[04:22] Rob: Mike’s timeline.com and it’ll be a JavaScript count down timer. I like the idea.

[04:27] Mike: Isn’t there some website where you can — you go there and you have to pledge something or you give them a picture of you from high school and you have to meet your launch date and if you don’t meet it, they tweet it out and they e-mail it out to all your friends and family.

[04:42] Rob: I like this. If you know that URL –someone send it to me.

[04:46] Mike: About the other thing is I think along with my launch date, I’ll at least know what the date is but I’m definitely going to start my closed beta program on that date and then I’ll probably give myself maybe four or six weeks to give myself time to get some feedback from people and talk to people and get some of the different bugs and stuff fixed but I’m feeling good about it. I mean things are — things at the back end are starting to really come together with the code merge that I did and the guys had been making really good progress on the back end code. And it’s just been more of — I’ll say it, I feel like more like a project manager than actually a developer at this point.

[05:19] Rob: Right. And when your tight on time, sometimes it’s the best way to be.

[05:23] Mike: Uh huh. And I switched over to four by ten hour days for my consulting work for the next month or so. So that will give me an extra day every week to work on stuff and I’m still working on things in the evenings to get everything done. But so far things are progressing nicely.

[05:36] Rob: Nice, four tens. That’s a nice schedule.

[05:39] [Music]

[05:42] Rob: All right, so shall we dive in to our first question?

[05:44] Mike: Yeah, what we got on deck?

[05:45] Rob: Our first one is from Andrew and he says, “Hi, Rob and Mike. I’m in a process of launching my first SaaS product and the help you guys give on the podcast has been invaluable. While researching and developing my app, I came across another product opportunity in the same niche. I’ve already coded the second product and it’s ready for launch. I want to launch this product with the goal of bringing in some cash as well as building another source of potential customers while I finish coding my original idea. My question is whether I should launch this as a standalone product with its own website or as part of a suite of products that would eventually include both applications. There will be a big crossover in the original content I can create and blog around the two products. So from a marketing stand point, I’m leaning towards the later approach which is the single site that has two products. What are the advantages and disadvantages you can see for each approach?”

[06:37] Mike: I think it’s a tough question. I’m not real sure which direction I would go with this but I think that I might lean more towards one site and then kind of split it in to a couple of different subdirectories and that would be more for I think technical reasons than anything else. It probably would also give you a little more credibility in the website itself because it is a new product and credibility is one of those things that is I think a little difficult to establish early on but if you have two different products with different marketing material around them on the same website, then it tends to lend each credibility to the website itself. If you have your own website that is essentially forming social proof for the website but at the same time it can work because you do have the two products there and the people who look at your website and they see that you have two products, they’ll say, “Oh, this company is legitimate,” “They have a legitimate product,” “They have, you know, legitimate customers presumably” and it does reinforce that a little bit.

[07:31] But I also wonder how difficult it’s going to be to do both of them at the same time because I’ll be honest, I mean I’m in the middle of doing multiple things at the same time and it’s very, very difficult. So I think my advice would probably be to start with one product on the site and build it for just the one product and then integrate the second in to it when you’re ready. I don’t think that trying to do both at the exact same time is probably the way to go on this one.

[07:57] Rob: Yup, I agree with that last part. I think trying to do multiple products is the kiss of death and the only way you can do multiple at once is if they’re like information products and you don’t have the support and adding features and all that stuff to go with it. You can kind of write it like an e-book or something or screencast. You can build it and then it’s done and you know, you don’t really need to put a bunch of time in to it. Yeah, I do think it’s definitely a mistake to try to do both at once. And I also would agree that you want to get one of them out there, get it marketed, get — you know, get the blogging going, get the SEO going, get whatever other channels you have going and then introduce the second one to add a later time once you’ve once you feel like you know the market better and really hesitant to put two products on one website. And there’s a bunch of reasons why but I think the most prominent one is that there’s a lack of focus.

[08:42] Anytime I come to a website and it’s trying to sell me multiple things, it doesn’t do a very good job at any of them. So as an example, Mike, you and I, basically have kind of a suite of products if you think about it. We have the podcast. We have a conference, MicroConf. I have a book that’s related to the same genre. We have the Academy. These things were all related, right? So in theory, you could say well we lend credibility to each other so could just have a single landing page that’s like the Micropreneur landing page and then have a drop down list or have four things in the top and have — and have conference, book, you know, online startup school and podcast, But when you think about that, it doesn’t lend itself to a lot of things. Number one, it doesn’t lend itself to SEO very well because the content is not highly focused and Google likes small articles that are focused.

[09:27] And the other thing is it just — it overwhelms people when they arrived at the website. There’s too many decisions, too many choices and people often wind up just doing nothing. There’s too many paths to follow. What I would recommend if it’s at all possible is to create basically a chain or a long funnel and so you figure out which of these products is lower cost and which of them people are more likely to buy first. And then you set up a website for that and you market the crap out of that and you get, you know, people to buy the product. You support the product. You provide way more value than people pay for and now you have these paying customers and now, just like we do at the podcast and just like we do with MicroConf and the Academy and the book, it’s like you can kind of start tying them together. And you can say, “Hey, since you bought this, I provide quality stuff. You have the experience. You know that I took care of you and now, here look at this other thing I created that’s equally as good and it’s in a similar niche.” So I almost see this as a more of a back end product so you’re doing them in serial rather than trying to market them in parallel.

[10:24] Mike: I think one of the situations where I could see this working really well is if the products are, you know, if one of the products is actually a plugin for the other product or there is a huge integrations between them but as you said, I mean you need to start somewhere I mean even with something like, you know, the products from 37signals. You know, you look at the marketing material for them and they’re really on their own and it’s only until you get in to them and you start using them that you see that there’s additional integration points in them and that you can sort of leverage data between them and kind of stay in one interface. It’s pretty well hidden I’ll say. But I definitely agree with what you said that trying to separate them and if they are in the same niche market trying to figure out which one people are going to buy first and then use the second product as essentially an up-sell from the first.

[11:11] Rob: All right, hope that helps. Thanks for the question Andrew. Our second question today is from Ryan Higgins and he’s asking about top performing residual income generators. He says, “Hey, guys. I really dig your show. Appreciate all of the grassroots tips and have employed many in my online work. Over the past three years I’ve had success selling professional services online but I find this time consuming and often very demanding as I promise response to online clients within twenty hours from receiving their e-mails. I’ve also created modest revenue through AdSense ads and downloadable e-books I’ve written on various subjects. To be honest, I much prefer this later business platform as it seems to run automatically whether I tend to it or not unlike the online services part of my work.” So obviously, he’s talking about products versus services, right? It’s consulting dollar for hours versus building a product that’s much more leverageable.”So my question is what are some other creative ways you’ve seen people generate self regulating income online? And keep up the great work. Ryan, a Canadian in Shanghai.”

[12:10] I’ll take a crack at this one first. So Ryan is basically asking about, you know, other ways that he can monetized his knowledge and monetize his experience but not just trade dollar for hours. And obviously, there’s a big challenge upfront when you’re trying to build the products it’s that you need to find out products that people need or want and you have to spend the time to do it and there is a risk that they may not buy. And that’s where, you know, consulting is such an easier road because you can just have someone pay you X dollar for certain amount of hours and you’d just kind of cash it upfront. But on the flip side, that doesn’t — it doesn’t scale at all. It’s not leverageable over time. It’s just it’s not a way to really build a sustainable business. And so I guess Ryan is looking for other creative ways for people who generate online income and I mean that’s — that’s basically like this entire podcast is about and kind of what the Lifestyle Business Podcast and Smart Passive Income and Foolish Adventure.

[13:04] I mean I would listen to all of those podcast. It’s basically about taking your expertise and starting blogs, podcasts, writing e-books, building software, providing value and in a productized form that, you know, helps people get what they need done. And you can see this all over the place. I think maybe the best example I’ll bring up is like Foolish Adventure. If you never listened to that podcast Tim Conley has this thing called Three Product Approach and it involves having a free product and that’s typically a blog or a podcast that you’re giving away for free and then your second product is also free but you ask for an e-mail address so that’s where you build your newsletter up. And then your third product is when you sell. So that’s typically like maybe an e-book. Sometimes it can be a membership site and that’s his flow and he kind of came up with that concept then it gets — it’s really good.

[13:52] So I mean that’s one way to do it. I think that’s a creative way but I think, you know, there are certainly other ways. Mike and I throw a conference and it’s not, you know, massive revenue-generating thing but it is something that that raises our profiles and it’s fun to do and it does make some money now. So that’s — that could be a creative way. Obviously, writing e-books, writing physical books like I did, you know, paper back books and starting online membership websites are all great ways and if you have desire and you have experience in software, then that’s of course what we, you know, that’s something that Mike and I focus a lot on, on this podcast is building apps, building plugins, building something of value. I mean we know number — a number of entrepreneurs who’ve seen a lot of success in the Micropreneur Academy building WordPress plugins for folks, for in all types of niches, building SaaS applications, building desktop applications, building mobile apps, all that kind of stuff. So you know, I hope that gives you some starting points.

[14:43] Mike: One of the things that you mentioned kind of in passing was something I was going to bring up which is membership sites. And it sounds to me like what you’ve said was “I’ve created some modest revenue through AdSense ads and downloadable e-books I’ve written on various subjects.” And if those e-books are on related subjects, then I think you could probably take a lot of that material and put it in to some sort of a membership site where you’re charging people, obviously, to be a monthly member of that site and provide them access to that material but because it is a membership website, I believe that you could probably charge them significantly more than if you’re going to take all that information and just distribute it as an e-book. So essentially you are would be able to migrate the content from your e-book and into the membership website. And I think you obviously you want to add additional things in to the membership website not just, you know, do a direct copy from the e-book that could significantly boost revenue for you from that particular, you know, line of products as well.

[15:45] The other thing I would mention is that if you already created some sort of a modest revenue through some of these e-books, I would look in to trying to distribute them further and trying to get them out there. I mean it seems to me like a lot of the products that people have with things like this is they get to the marketing stage and they don’t do very well with it and they give up too easily and they don’t necessarily find the upper balance of where they can take something. So a lot of times they’ll give up early and you know, just not push it far enough and they’ll say, “Well, I need to look for a new product because this one has tapped out.” And the reality is it may not have tapped out, you know, are you sure that it has. And so those are the things that I would definitely look in to as whether or not those e-books can be pushed further, whether he could do additional marketing around them and increase the monthly revenue from them.

[16:30] Rob: Nice. So I give generalities on this one and you give the specifics. High five.

[16:34] Mike: Virtual high five. [Laughter]

[16:36] Rob: All right. Our next question is from Rasmus in Denmark and he says, “My product and question is around generating a valid amount of relevant traffic within a reasonable period of time to be able to validate my idea. I know you briefly mentioned AdWords to buy traffic but are there other channels or sources of relevant traffic. It would also be relevant to know more about the AdWords source, for example, volume, time span, et cetera as well as what volume you see as a reasonable validity. I know about setting up AdWords campaigns and get throwing keyword limits et cetera. Personally, I don’t have an established audience like you guys have. So how do you validate an idea if you’re starting from scratch? Would love to hear a podcast allocated to this topic. All the best, Rasmus from Denmark.”

[17:18] Mike: So I think that the things that we’ve talked about previously definitely applies to this. I mean, you know, you’re not going to be able to do SEO and drive a lot of traffic in a reasonable amount of time and I’ll define reasonable as in, you know, two to four weeks, something like that because SEO does take time. You’re going to do some stuff and it’s going to take Google two or three weeks to just either indentify your website or to put in to the rankings and then you’re going to have just take time to figure it out what changes you need to make. And it’s just, you know, a long convoluted process. I think you’re much better off trying to identify people who you want to target and then either use AdWords, Facebook ads or Twitter advertisement to try and drive traffic to your website. And from there obviously, a number of different methods you can use to try and figure out whether or not your idea has legs but two that I would look at is one, seeing if they’re actually clicking through for to the buy now button and then another one is if you will put some sort of a survey out there and start asking people, you know, is this something you pay for and how much would you pay for it. Maybe put a newsletter out there.

[18:22] And I wouldn’t do all three these things at the same time. You know, maybe put the pricing page there and after they click through for pricing or through the buy now button say, “Sorry, this is unavailable but sign up for our newsletter or take the survey.” Or you could kind of chain them together and you have buy now button and then sign up for the newsletter and then after that you can ask them to take a survey. But definitely don’t put all three of them on the same page at the same time. You want to chain them together to get better results for that. But those are the types of things that I would look at. I know that Rob and I both have a decent number of Twitter and RSS subscribers for the podcast or the blogs and everything but I don’t see those as very big generators for at least half of the business ideas that I have. I just don’t see those as legitimate ways to send traffic mainly because it’s untargeted.

[19:10] Rob: Yeah, I would agree. Typically an audience like the one we have isn’t actually that great for the products we’re launching. I experienced very low signup rates from blog readers and Hacker News readers when I relaunched HitTail in January and that was not unexpected. I mean I just don’t expect. You know, a lot of people are just getting started out to really want to pay monthly for a service that they probably can’t use until — until down the line. So Jason Cohen experienced the same thing when he launched WP Engine and he said they got — he got a handful of customers from his blog audience. What an audience gets you more of is it gets you the ability to partner up with people, to raise funding. It’s much, much more about relationships than it is about actually, you know, driving traffic and trying to get people sign up for a mailing list for a product that’s not related to it.

[19:54] I have a couple of thoughts on this. First thing is Rasmus, you got to ask is your audience online is your niche that you need to reach? Are they online at all? Because if they’re not then, you know, all this online stuff we’re talking about just isn’t going to work. You’re going to have to resort to a more offline stuff. So if he can determines they actually are hang out online, I wanted to take a step back  and say, don’t just rely on driving people to landing pages and getting their e-mail addresses. Talk to people like try to meet with them in person if they are within driving distant from you. Try to get them on Skype to have a conversation. It is so much more valuable for you and for that person if you can actually have a conversation instead of just a simple e-mail survey or simple e-mail conversation even. I would say that well all the stuff that I’m going to list and Mike talked about is good and it’s good for driving some traffic and getting an idea, getting a list that you can then contact, that’s not the end goal. The end goal is actually engaging with people and having conversations.

[20:48] I’m going to throw out some ideas. I think the first thing you should do is look at if there any conferences within a few hundred mile radius of you that caters to this audience and try to go to that conference so they can meet people in person and have discussions with them, get and idea if what you’re building is at all going to serve them. I would also look for forums that cater to this audience. Obviously, examples to that in our niche since I know them because I hang there or things like Hacker News and you could totally do an Ask HN if you have a product coming out and you can post a link there and that would bring people to the landing page, you know, you can ask them what they think to the idea. You can go on Corra and you can either ask questions or you can answer questions. And you’ll know that none of these are scalable solutions. You’ll never just going to turn a dial in this and bring million of visitors but that’s not the point. At this point, you have to do things that don’t scale and it’s going to take a lot of time. You either need a bunch of time or need a bunch of money and I’m assuming that yet at this point, you don’t have a bunch of money. So I definitely think Corra is under use for that.

[21:44] I also think that creating an infographic right off the bat. I mean you can get an infographic created a pretty nice one from between two and three hundred bucks. I found people both on oDesk and Elance to do that. That’s a great way to drive 30,000 people to your website in 24 hours if it goes viral. And if you make it good, you make it for that niche. You know, it’s a nice way to draw a lot of traffic for a small spend. You brought up AdWords, yes, its the old main stay. If you’re in a tough niche at all that’s competitive, you’re going to pay three to five bucks a click. So AdWords these days for me is more of a last resort but, you know, it could be something you can look in to and I think those four other ideas I’m going to try.

[22:23] One, I would look in to Facebook ads since the demographic targeting is so good and that you can test a lot of ads at once. It’s not about where to go. You can get some pretty cheap clicks there and then StumbleUpon. You can get 10 cent clicks but you can’t just send people to a landing page. You have to send them to some content like an engaging by a blog post that then links over to a landing page. If you send them just to a landing page, they will bail. And then the other two Mike mentioned actually. He mentioned Twitter ads which I have heard some people getting some decent success and then I guess the last one Mike didn’t mention which is Buy Sell Ads and that’s the display advertising. You buy them month at a time and they have your bunch of different niches now and you can spend as little as maybe twenty bucks and you’ll get a fairly low click-through rate because they are banner ads but you can definitely get niche traffic from a service like that.

[23:11] So those were like six or eight ideas kind of off the top of my head. But this to be honest, this process right here is what I did when I was creating the HitTail marketing plan. For the months leading up to acquiring HitTail, I would sit down for fifteen minutes at a time and sketch out a huge list of ways that I thought that I might be able to market HitTail and I just kept stuffing them in to that doc. And overtime it became a really good corpus of all these ideas. There’s about twelve pages of it and I’ve been working through it since I acquired it eight months ago. And I recommend if you’re thinking about launching your product, think about doing the same thing. Make the huge list and then start peeling off ideas and using them, you know, to send traffic at the landing page and some of them are going to work well and then you’re going to reuse those when you get to, to actually launching your product. So I realized that’s a lot of information but I hope that helps Rasmus.

[23:59] All right, for our fourth and final question today, we have an e-mail about beta phase. It’s from Kevin Marshall and he says, “I was wondering if you guys could speak a little bit about closed beta test versus just letting everyone all in at the beginning. I see a lot of startup websites in a beta stage. Sometimes they even close it off at the start and require you to sign up for a request invitation. Sometimes you may get that invitation, yet often you don’t. Overall, my question is how important is it to even have this testing phase? Is a customer more turned off because they see and realize their inner beta or they’re more turned off when they realize that a site they felt was fully polished and ready to roll is not?”

[24:40] Mike: I’ll take a first crack at this one. I think that if you’re putting together a beta and you are telling people that they have to sign up to get an invitation request and they’re not actually sending those out, my inclinations I believe that they’re doing something wrong. I don’t know if that’s a good idea. I don’t think it’s a good marketing tactic. I don’t think that in 95% of the cases that that generates any sort of anticipation or demand for the product. That’s the sort of thing that Apple could pull off or Microsoft could pull off. It’s not something that much smaller companies like us can do. It’s just doesn’t work. The purpose of a beta is usually to flesh out the bugs and make sure that there are no major problems that are going to be encountered by people once you open up the gates. And I think that if you’re going to do a beta, I think you typically wanted to do some sort of a closed beta first. I don’t know if having an open beta is really going to do anything for you because you’re really just not getting the information that you want from people. If you have a close beta, then you can essentially hand select those people kind of categorize them by the type of people they are.

[25:46] So if you had a mailing list and you are asking people information about them before you got them on to mailing list and you can essentially categorize those people. You might say, “Okay, well I want to grab five people from the low end category who would be on the lowest plan five from the middle and five from the top end. And you would essentially arrange it so that hopefully, you can get all five of those in there from each of these categories. But if you can’t, you go to the next person in line and the next person until you find people who are willing to actually sign up and use the product whether they pay for it or not is a different story. I don’t know. I have to give a little bit of thoughts to that but I also think that it depends a lot on the product itself as to whether or not you want people to try and pay for it. It depends mostly I think on where in the product development process you are and whether or not you’re confident that there’s a market for it.

[26:35] So part of it comes back to the purpose of the beta and what your purpose is because different people have different reasons for running that beta. Some people, they’d just want to use it to, you know, flesh out any major bugs or many major process problems that are in the software. So there’s other people who want to use it to actually test the code because they didn’t test it themselves or they aren’t really sure about it and there’s people who are trying to get people in to the beta program to essentially test to make sure that they have a product that was worth selling. And if you’re at that point, then it’s kind of too late for that. I mean you really should have done a lot of that leg work upfront but even if you haven’t, working with people individually is going to give you a lot better feedback than if you just open up the floodgates and try and get a lot of people in.

[27:17] If you segment your audience in to groups of ten or fifteen people what you’ll find is that all it takes is I think the number is twelve people to individually talk to them one on one and those twelve people will give you exactly what you need which is the same as you would get from having more of an open beta from like ten groups of fifteen people because people are going to be much more willing to give you that individual feedback that you’re really looking for if you interact with them one on one whereas if you’re doing something that’s more like a focus group where you have a lot of people in it they say, “Oh well, I’m not going to answer this. I don’t really have time. Somebody else would do it. I don’t have to.” So as soon as your response rate plunges and you have to talk to more people whereas if you — if you get down where you’re talking to people one on one, you’re individually working with these people who you’ve put in your beta program. You’re going to get the information back that you need is, you know, directly relevant to the goals that you put in place for that beta.

[28:13] Rob: Yup, you nailed it with that last one. It’s called the diffusion of responsibility and it’s psychological concepts that when, you know, it explain like when a group of people all get an e-mail, typically, most people will just not do anything with it but if you e-mail each person individually, then they know kind of your eyes on them and they’re much more likely to do something. I would agree with you. You’re going to get far better feedback if you have a much smaller group and you deal with people individually and you let them know whether you’re going to deal with them individually and that your beta list is only five people or your beta testing group is only five people or ten people. If I had a list, let’s say I launched was to 500 people, I would probably invite hand-pick five of them and they would either be friends who are in the niche or acquaintances who are in this niche that I’m targeting who are actually going to use the product and would pay for it long term or you know, if I didn’t have any of those, I would probably just randomly pick the top five of the list and e-mail them and invite them and let them know that it’s a very, very small group.

[29:11] This allows you to do a couple of things. One, it allows you to get a lot of detailed feedback because they’re going to be more willing to give it to you. It also allows you to kind of burn through your beta testers because you haven’t run a beta before what typically happens is you’re bringing a group of people and they look through the app and they look through and a lot of them find the same things, then you go away for a week and you fix all that stuff and you approved it. And then you come back to them and when you ask them again, they will tend to just go in for about three minutes and breeze through and make sure you fix the stuff they asked and that’s it and so you kind of do you burn through beta testers. They aren’t just unlimited resource but if you have that list of 500, you let five in, then you e-mail another five and you say, “Hey, this is like my second round of beta.” You kind of do the same thing with them and you get another around of feedback until you feel like you fix the major bugs and you fix the major usability issues.

[29:58] So kind of just to summarize I would definitely keep it small between five and ten people each round. I would only go multiple rounds if I needed to and I would keep the rounds as short as humanely possible. If you can do five days, seven day iterations, that’s what I would do. I would not do two-month long betas unless it was absolutely necessary. The other two points that I’ll touch on is what’s nice is if you get the beta testers in early and they like the app and you work with them one on one, you kind of build relationships and you build some early users and those early users can be real champions of your product long term. If they get in, they feel like they have a little bit of ownership, they’ll be the first ones, you know, when you launch, you can ask them to tweet it out or ask them to tell their friends. And they’re much more likely to do it then just this blanket list of 500 people because you’ve actually kind of build that kind of relationship.

[30:43] In terms of offering them a discount or comping, I say it would depend on how much work they actually give you. I think upfront, I would say, “Will you be a beta tester, spend some time and know in exchange for a lifetime discount on the product,” and I would just leave it at that and not specify it. And then some people are going to do so much work and give you so much of value that it’s going to just be worth comping them for life period, like I’ve done it in the past. It’s totally a no brainer and then other people are going to do less work and you know, maybe you give them 40% off or 50% for life assuming it’s a recurring product. I think the last point, the one that I didn’t cover is Kevin asked is this phase is even important to have, should you have a beta, a beta round. And I think even, you know, a simple as this article functionality that I just wrote in to HitTail was I mean it’s really just one single feature, even as simple as that was I essentially had a beta phase. It was only a week or two but it led a trickle of customers come in. There were absolutely bugs. There were usability issues. There were some minor things on certain browsers but having that was invaluable for when I kind of unleashed the firehose on it.

[31:50] And so yeah, if I was launching an entire product and I’d only done some usability and unit testing and you know, some integration testing but I really hadn’t had the actual users use it, I would be concerned with mailing out to my 500-person list and letting in a horde of people who I’m trying to sell the app to. I’ll be concern about doing that without having at least one round of testing and you know, preferably if some stuff was found going through another round until it — it just feels like it’s clean and it feels like the app is improved. I can almost guarantee you no matter how good the app is, no matter how good your feel it is, until you’ve done this round of testing and that an actual users use it, you are not going to uncover probably 70% of the issues that are going to rise as soon — as soon as people start doing it.

[32:33] [Music]

[32:36] Mike:  If you have a question or a comment, you can call it in to our voicemail number at 1-888-801-9690 or you can e-mail it to questions@startupsfortherestofus.com. Our theme music is an excerpt from “We’re Outta Control” by MoOt, used under Creative Commons. You can subscribe to this podcast in iTunes by searching for Startups or via RSS at StartupsfortheRestofUs.com where you’ll also find a full transcript of each episode. Thanks for listening. We’ll see you next time.

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27 Responses to “Episode 87 | Whether to Build Multiple Websites, Creating Residual Income and How to Run a Beta”

  1. Guys – great podcast.

    Rob – Really liked the idea of keeping a record of all your sales/marketing ideas, storing them for the future (23:11). Everyone can come up with strategies that may not be useful today but may apply down the track.

    Both – Would like to hear more around strategies for those with limited cash. The listener, Rasmus (16:36) asked the question about getting started without a large following like yourselves. I know you mentioned it wasn’t critical but this may be your confidence and experience talking. How does someone new to all of this make the leap forward?

  2. Hey Rob,

    Thanks for the shout out for the Foolish Adventure Show. I’d like to add a little clarification on the Three Product Approach (3PA).

    3PA can work okay as you described (and it’s a perception that I probably put out to the world), but 3PA works 10x better when product #1 is a direct comparable value to something popular being sold in your market.

    Let’s say there is a video training program on how to use a popular software that sells for $100 for the beginner course. To break into this market, you could create an equal (or better) product and give it away without any barrier to entry such as requiring an email address.

    This gets a lot of natural backlinks, drives large volumes of traffic and can get promoted by the software company itself.

    Then you can later create a second product (which strangely doesn’t need to be as valuable because trust has been built) such as a small package of videos showing how to do something the market really wants to know. All they have to do to get it and get on your newsletter is enter their email address.

    Product #3 is just a conceptual number. You can have as many products as your market wants to buy from you. I would say that your product #3 should be as valuable (if not more so) than what your competitors are selling. In the case of your audience, this could be their main app that they are selling.

    For developers, I would say give away an app that does what a competitor charges for product #1. Then product #2 could be a plugin that extends the functionality or does an adjacent task in exchange for an email and then finally promote the big moneymaking app to the audience that has been built from #1 & #2.

    Hope that helps make 3PA more useful to your audience.

    Oh, one other misconception: you don’t have to wait till you have all 3 products to start marketing and you don’t have to do them in the order above. The order is set for people just getting into a market. If you are already in one, then add #1, #2 or #3 as needed to match your business strategy.

    t

  3. Awesome; thanks for the clarifications Tim.

  4. Tim: I started listening last month. Good stuff. Thanks.

    Getting started without a following:

    I think talking to people in person or as close to that as possible is the best strategy when you’re vetting an idea.

    It’s worth pointing out that you will learn more if you keep your questioning open-ended. There may well be a problem you can solve and build a business around in the niche you have an idea for, but odds are that it isn’t your initial idea.

    I tend to feel that spending money and driving traffic are more specific activities with bigger benefits when you have something more solid. After you’ve talked to people in the market and you speak their language (a little).

    I’ve written about trying to do this.

    http://whitetailsoftware.com/2011/07/how-i-got-a-100-conversion-rate-cold-calling-prospects-for-customer-development/

    http://blog.asmartbear.com/cold-calling.html

    I’m also working on a book. The link for that is on my blog and my name on this comment.

  5. I agree with Robert Graham. Talk to people that are in your niche market and find out their pain points, and develop a product that takes away their pain points.

    When you launch, you’ll have the list of people you talked with as a starting point.

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