Show Notes
Transcript
[00:00] Mike: This is Startups For The Rest of Us: Episode 86.
[00:02] [Music]
[00:11] Mike: 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 Mike.
[00:19] Rob: And I’m Rob.
[00:20] Mike: And we’re here to share our experiences to help you avoid the same mistakes we’ve made. So what’s going on this week, Rob?
[00:25] Rob: Well I was down in Los Angeles hanging out with some friends and I managed to hook up with Jason Roberts who lives in Pasadena. Jason Roberts is a co-host TechZing. My wife and our two kids went over to his house and his wife, Sandy, cooked us some burgers and we just had a really good time. It was cool to meet his family, you know, you heard about them on the podcast. Yeah, they’re just like — just like he describes. They are all blonde. They look Swedish. But we had a really good time. So thanks. Thanks to Jason and Sandy for hosting us and we got to just — it’s so good, you know, to sit down and just talked tech and we talked startups and we talked podcast. We talked behind the scene stuff. He’s going to do a lot of meaty stuff sitting around a pool, drinking glass of wine and watching the kids.
[01:04] Mike: Did his wife get in on that discussion?
[01:06] Rob: She and my wife actually did and they started talking about how they neither of them listen to our podcasts and then Sandy joked and said, “You know, we should record a podcast about what it’s like to be married to a startup founder.” And we’re actually looking at putting something together like that and I think it’d be really interesting for Jason to interview the two wives or perhaps my wife to interview them as a couple to find out the dynamic. So anyways, we’re talking about doing something like that just about kind of how to have a family and keep sane and trying to launch your startup and there’s — there’s a lot that could be learn from hearing other people’s experiences.
[01:41] Mike: I think I remember Scott Hanselman. I think he had his wife on at one point and they were talking about either possibly writing a book or actually they were in the process of doing it and putting something together that was along the same line. But I definitely recall something from the Hanselminutes Podcast about that.
[001:59] Rob: Cool. Yeah,I know he’s had his wife on a couple of times but I didn’t know that they’re writing a book till today.
[02:04] Mike: Yeah, I could be misremembering that.
[02:06] Rob: How about you? What’s going on?
[02:07] Mike: Me, in Ohio right now, Columbus. I got a free room upgrade for Father’s Day. So I’m in a king size suite. Kind of spent some time with the kids by the pool and got a pool cover for the pool which I didn’t think it would make that much of a difference but it adds about ten degrees to the pool.
[02:24] Rob: I couldn’t say —
[02:26] Mike: It’s in the mid 80’s.
[02:26] Rob: Yup. At some point, it gets too hot. When it gets to be about one, it’ll get up in to the one like 109 or 110 in Fresno for a few days during the summer and the pool gets too hot to swim in like its feels like a hot tub. It’s not that it burns you but it is not refreshing at all.
[02:41] Mike: Ahh.
[02:41] Rob: Well hey, we have some new iTunes reviews just in the past few days, some of the good ones actually. One is from a Rich Hart. He says, “Great advice and cut AuditShark lose.” [Laughter] People are — people are starting to make comments in the iTunes reviews which I think is funny. He says, “Mike and Rob, I absolutely enjoy your weekly podcast. It’s always timely relevant and informative. Since I’ve started listening, I’ve created an internet business. Cut my teeth with using VA’s and find myself pushing everyday to make something happen.” Then he comments he says he thinks it’s time for you to let AuditShark in to the wild.
[03:12] And we also got a great comment from Zach and he says, “The art of enlightening others, I have to say I’ve learned more from these guys than I ever learned in business school. It just goes to show there’s no substitute for experience. Thanks, Rob and Mike” And then I like his comment. He talks about how we commented on needing a conference coordinator for MicroConf next year and he says, “I disagree. What you need is a franchise.” So [Laughter] we’re — become McDonald’s. He says, “You’ve already built the model, why not spread the love. Imagine hundreds of mini MicroConf’s across the country managed by local micropreneurs. The mini MicroConf’s remain small, personal and retaining the value of points express by past attendees.”
[03:35] Anyways, interesting suggestion. Don’t think we have any plans to do that right now. That would be more like franchising it in to almost a meetup group. So I mean Lean Startups certainly has experience a lot of success with that. I think there are several hundred Lean Startup Groups around the world.
[04:01] Mike: Yeah, I think so. You know, micropreneur meetup groups is really any difference is just there’s a huge difference between having a full-blown conference versus something local where people get together on probably a more regular basis.
[04:13] Rob: Right.
[04:14] Mike: But you and I talked about putting on something even smaller than MicroConf and just the level of effort, it’s just hard.
[04:21] Rob: Right. It’s hard to justify it, right? If you’d just do a regional conference, you can’t get the same level of speakers. You can’t get the same level of attendees. If you try to do it one day, people won’t come in from further away than, you know, a few hours drive and you just — you kind of lose a lot of what we considered to be the magic of MicroConf. With that said, there are several meetups. And I’d say I’ve probably been contacted by six or eight people who say they are basically doing like a micropreneur meetups. And there’s — there’s one in Australia that we’ve already mentioned. There are several kind of in the Midwest and a few on the east coast. So there are things springing up. Yeah, maybe long term we’d figure out a way to better help facilitate that.
[04:53] Mike: I’ve been to a couple on the east coast. Usually it’s more me kind of organizing it or saying, hey, I’m going to be in this area for the next week or two weeks or whatever and then people going to reach out and three or four or five people want to get together, then we just go out some place to have dinner or something like that.
[05:14] Rob: Right. And the meetups I’m talking about are more like accountability meetups and sometimes they get a speaker to come in or they’ll share knowledge that that one of them maybe discovered over the past few weeks. I’ve actually done some video Q&A with a couple of them as well where they’ll just Skype me in and then we’ll have like a 30-minute thing and they’ll talk about the projects and we’ll just chat about it. Any updates from you this week?
[05:34] Mike: Well, I had an interesting discussion with Patrick McKenzie this past week about AuditShark pricing. One of the things that he’s been doing lately is he set up this training area of his website and I just — I signed up for it because I like hearing the sorts of things that he talks about. The first one was a video that talks about how to make your first product experience awesome and then he followed it up with I think it’s called the Black Arts of a SaaS Pricing which was pretty interesting. And it’s kind of timely because I’m looking at pricing for AuditShark right now.
[06:02] So I e-mailed him and just say, “Hey, this is what I’m doing. What do you — what do you think of it?” And he had some interesting takes on it. His idea was actually to instead of doing like a per server pricing for AuditShark, essentially use different levels. So you know, maybe the first level and say — he was just throwing numbers out there but say $50 a month for up to five servers and then up to $500 a month for twenty five servers and then I think the next level was fifty servers for $500 and then five hundred servers for $5000, then above that, contact us for enterprise pricing.
[06:34] Rob: Are those the specific tiers he laid out?
[06:36] Mike: Yeah, those are the tiers that he laid out which I found interesting because of the numbers and I was like, well it seems to me like one server and $50 would probably be more appropriate than, you know, five and fifty but I was also looking at that thinking to myself, well, if you do one in $50, it doesn’t give you a lot of leeway to do some of the techniques that he kind of outline which was if you change your pricing tiers and then measure kind of the before and after conversion rates and you also calculate the profit margins from each of those, it allows you to change the numbers on the page without changing the actual prices.
[07:12] I found that interesting. I didn’t realize it until after the facts but obviously I said, “You know, you don’t need to reply to this. And this just got my internal thoughts.” But then I started beginning to think about that. I was like, oh that makes sense. You can just change those numbers without changing the pricing because obviously changing the pricing on your page is kind of a big deal but if you just change the features that you’re associating with each of those pricing levels, it’s not nearly as big of deal.
[07:35] Rob: Absolutely on with HitTail just within the last month as about a month ago based on some advice and discussion in one of my Masterminds some guy said, “You know, you should raise your pricing.” We kind of discuss how to do that and what I did was I kept my pricing the same and I lowered the number of visits that each tier gets. It is the same pricing just like you’re talking about. That’s resulted in zero changing conversion rate which is awesome because it means that I’m essentially making more money, right? Because I’ve essentially raised my pricing because these people are signing up, you know, they’re being upgraded in to higher tiers. I can totally see that. I hadn’t — I’d never thought about the advantage of having that when you’re split testing pricing but it’s definitely a good tip to have.
[08:12] So I’m intrigued, I’ve actually giving this quite a bit of thought because there’s been several apps that I’ve been — been kind of working with some entrepreneurs and they’re looking at having that strict per seat pricing that you and I have discussed, you know, you’ve always kind of have that number per month, per server or per seat for AuditShark and we batted that around. Even over the past week, I thought about like the advantage of tiers and that you can essentially segment customers. So it’s not just this linear escalation of pricing but it’s to add one more server, you know, they only had ten bucks a month but they actually have to jump up a tier in essence, right?
[08:48] And now, as soon as they go to eleven or they go to sixteen, they kind of go over your tier than they do have to make a substantial jump. And that’s how most apps work now, right? That’s how SaaS apps work. I mean if you look at, you know, Basecamp or Highrise or any of these, it’s not a gradual — it’s not a per user cost. It’s actually doubles. It’s – the rule of thumb that I’ve always use as you pick a price and then you double it and you give them more than twice the amount of stuff they get at the lower plan. And so his pricing though it sounds like he was doing 10x.
[09:15] Mike: Yeah.
[09:15] Rob: He had 5500 and 5000. That’s typically a broader range than I do. I mean I would think of 4999, you know, 199 but —
[09:23] Mike: It was five servers for $50, twenty servers plus some sweetener for five hundred or two hundred servers for 5000 and then two hundred plus was call.
[09:31] Rob: Got it —
[09:31] Mike: That’s what it was. It wasn’t 550 or 500, it was — the point I was kind of getting at was at the very low end, it was not one server, it was five and that was kind of the starting point. He said that the idea was that if you have ten servers, you’re likely a very, very different business from somebody who has only two, you know, regardless of whether they are high-value servers or low-value servers. You know, somebody with ten servers has — well, like what he likes to refer to as a metric ton of money. And he said that it doesn’t really makes sense to charge linearly from one to ten in his estimation.
[10:02] Rob: Then that totally makes sense. And that’s why there’s a couple of guys that like I said I’ve been talking to and I’ve recommended they do tiering as well. And I think I’ve always look back at the FogBugz model. I’m realizing that I’m not a fan of that model and I see lot of disadvantages to doing it that way.
[10:16] Mike: I think that with FogBugz once you get past a certain point, it actually becomes much, much less expensive. So for example, I’m looking at their pricing now, from 24 to 150 users, they have a tier which is 599 a month or 719 a month for both FogBugz and Kiln. And then the next level up is a 151 to a thousand users and that one is $1,199 per month for both FogBugz and Kiln. So you can —
[10:42] Rob: So that’s insanely cheap.
[10:44] Mike: Yeah, I know it is. That’s — I found that interesting that they —
[10:46] Rob: Yeah.
[10:47] Mike: … kind of go to that at the higher end, they’re not charging–
[10:49] Rob: I agree.
[10:50] Mike: … targeting exponentially more.
[10:52] Rob: Yeah, that’s tough. That’s a tough sale for me. They either know something about their numbers that we don’t or they’re leaving money on the table with that. I wouldn’t discount stuff that much at the high end because like Patrick says and this is been very obvious in every business I’ve ever had, the people who are at the higher end tend to have more money to spend. And in general, you can’t just charge them more per seat, right? You can’t charge the little guy in a less per user and then as you go up, you actually charge more. I mean you have to give — you do have to give some kind of discount but it’s a huge mistake in my opinion to have an enterprise plan where 80% discount or something, you know, if you have a thousand users. That’s the way everyone does it and your competition does it, that’s how you have to price it and that’s fine and that maybe the case here. But I’ve never had a business where as it gets to the high end, I give substantial discounts.
[11:36] Mike: Yeah, what I find really odd is that it’s $30 a month for both FogBugz and Kiln and then if you just kind of extrapolate that and say well for a hundred users that would be $3000 a month but on their pricing tier, that’s unlimited and in fact, their low ends tier goes from 24 to 150 people and that’s only $700 a month.
[11:56] Rob: So they give a really big price break as you go up.
[11:57] Mike: Yeah, when you started getting in to enterprises they expect like —
[12:03] Rob: Yeah.
[12:03] Mike: … a 50% discount, you know —
[12:05] Rob: Right —
[12:05] Mike: … that’s — that what they expect.
[12:06] Rob: And I bet FogBugz competition which is where it’s like Atlassian and a few others, I bet they do the same thing and I bet this is more of a competitive move. If you publish pricing on the web, you’re going to have to be competing with those folks whereas if you have a product that, you know, doesn’t have a direct competitive, then it’s a lot harder to do that.
[12:10] Mike: Yeah, I think that Atlassian specifically targets enterprise customers with their pricing.
[12:30] Rob: Yeah, they do.
[12:30] Mike: So there’s — there’s this considerably different but it also requires considerably more resources in order to run it.
[12:35] Rob: Right. Okay. So no final notice on your pricing but it sounds like you’re working on it.
[12:40 Mike: Yeah, I’m working on it and I’m definitely going to move towards a some sort of a tiered pricing model, you know, I’m having my designer rework my sales page, my pricing page a little bit so that it’s got four different levels there instead of three. And as somebody pointed out to me when they were kind of reviewing the pricing page was that I had green check marks and red X’s next to some of the different sets of features and they’re like that looks like a warning flag to me of “Oh, don’t choose this because of this.”
[13:08] Rob: Right.
[13:08] Mike: Which I found interesting so I’m going to — I had talked to the designer already and said, “Look, you know, you got to remove those red X’s and they have to be like grayed out X’s instead. So —
[13:18] Rob: Right. But once you get started with your pricing stuff, I would guess that first ten or twenty customers you have, you’re going to be negotiating pricing and then you’re going to trying to figure out what works for them and then you’re going to learn more as you go. I mean the bottom line is when you’re starting out, you’d just have no idea what people are willing to pay. You can ask them all you want and make a best guess at it but we’ve known several founders who, you know, go in to it in the first twenty or thirty customers all get different pricing based on how they’re — how they’re able to pay.
[13:46] Mike: Right. Yeah and honestly, we’ll probably do the same sort of thing when I launch AuditShark. I mean I’m going to go to the people and you know, I probably won’t specifically publish pricing out there. I mean I’m going to go to my list and start talking to people individually and start signing them on. They’ll probably all have different pricing and till they get in and start using the product and then I can get feedback from them to say, “Now, that you’ve seen it, is this worth what you’re paying?”
[14:10] Rob: That’s the thing. Yup, you have to figure out if you’re providing the value that because you can convince someone with marketing to charge them, you know, a little lot higher than you otherwise could but then when they get in there if your churn rates really high because they’re like, “Ahh, this isn’t worth it” then you need to adjust pretty quickly and it’s such a heavy learning experience the first several months you have an app out because it’s just so young and you’re trying to figure out which way to where to go that try the most value for them.
[14:32] Mike: Right. And I think you can definitely short change yourself in many ways on that on some of the pricing. I mean you can say, “Oh well yeah. I’m only going to charge you $10 a month” when you should really be charging them a hundred and they’re getting a hundred dollars worth the value out of it.
[14:44] Rob: Right. And but I think the thing is early on like when you only have ten or twenty customers, some people are going to get in and they’re going to get, you know, a lot more value. You’re going to under charge them, bottom line and you’d just have to do that and just grandfather them in and move on. I mean that’s just the way it goes, right? Because you’re not going — this app is not going to have ten or twenty customers. You’re hoping to have hundreds if not, thousands of them. And so if you’re really mucking around with pricing early on which you should be to figure out that the optimal, you’re going to make some mistakes both high and low as you go forward. And so I don’t think, you know, if someone is paying ten bucks a month that they really are getting hundred dollars worth of value, well, good for them. Thanks for being a charter customer. I mean that’s —
[15:18] Mike: Thanks for the feedback. I mean that’s —
[15:19] Rob: Absolutely.
[15:19] Mike: … what you’re doing. You’re basically paying for them in a way for their feedback. I mean sure they’re giving you money but you know, feedback.
[15:26] Rob: Right, right. And I don’t believe in large betas. I believe in very small betas and you can give discounts to beta people. I wouldn’t use that as a reason to kind of under charge everyone. You know I’m saying? I mean I might bring in a handful of people four or five and give them a discount but I think beyond that, you really got to start getting to where people are basically getting the value out of it that they’re paying.
[15:45] Mike: Right.
[15:46] [Music]
[15:49] Rob: So I got a e-mail this week from Tope. He’s a long-time Micropreneur Academy member and he’s a founder of App Design Vault. And this is a great e-mail. He says, “Just got an e-mail from AppSumo today and it made my day. HitTail was featured alongside my product App Design Vault.” And then he took a screen shot of it and attached it. “I’m a lifetime Academy member and a lot of what I learned went in to the marketing and the DNA of App Design Vault. I quit my job seven months ago and making — and I’m making a full-time living from the business. So definitely seeing your product and mine in the same context is a good thing to see. Thanks for all your help on the podcast and the Academy. Thanks. Tope.”
[16:25] So this is just — it’s another one of those success stories like this is a stuff a love hearing, right? This is [Laughter] why we’re doing the podcast. This is why we started the Academy. Frankly, App Design Vault kicks ass. I’ve always love this idea. It’s basically iPhone App design templates. And he’s got a great call to action on their home page. If you’re an iPhone app designer, it’s a no brainer. He says, “Give me your name and your e-mail. I’m going to send you an app design worth $70 to your inbox just for doing this.” And then, you know, he says, “Join over 2000 users who are making their apps rock.” And it’s just a big gallery of all kinds of different iPhone app design templates. This is just such a great market to be in right now, right? Because instead of actually building the app, they’re selling the tools for people to build apps and since it is such a growth market, everyone is talking about it. There’s just a lot of search going on and there’s a lot of people talking about it. So I love — I love the niche and he executed it well. So thanks — thanks for letting us know, Tope.
[17:15] Mike: Yeah, that’s really cool to hear. I mean I saw the AppSumo e-mail come in as well and I saw HitTail right next to App Design Vault and that was — it’s pretty cool to see. I mean it’s that point —
[17:24] Rob: It is.
[17:24] Mike: It’s nice to talk to people but then to see the social proof I’ll call it, it’s very cool app.
[17:29] Rob: Yeah. So you have that — the AppSumo deals are going to pretty well. They run their deals for longer now. It’s kind of a different set up. They used to just do one day and they would e-mail everybody but it’s like they have the list segmented now.
[17:39] Mike: Uh huh.
[17:39] Rob: So it’s kind of several weeks that I have to wait to really — I can see daily updates but it’s not like this big massive traffic like it used to be. Used to basically be on e-mail support all day for eight hours [Laughter] because you get so many questions because their list is like 6 — 700,000 people. So when they e-mail out to, you know, it’s — it’s a rush of traffic. But so far, it’s doing very well and sales are going well.
[18:02] Mike: Yeah, I hadn’t thought about how to manage a list like that but it does make a lot of sense that they would segment their list like that so that way they probably evens things out a bit. So it’s kind of space little things out and they level out the traffic a little bit.
[18:14] Rob: Right.
[18:14] Mike: It’s very cool. I somehow landed an accountability partner for AuditShark this morning.
[18:20] Rob: Sweet. How did you that?
[18:22] Mike: I didn’t actively try for it. Somebody contacted me through my blog and basically in a very nice way said that “I’m going to e-mail you assuming that it’s okay with you, I’m going to e-mail you every week until you get AuditShark launched and out the door.” So I thought that was really cool. And I had — we had an e-mail exchange back and forth a couple of times to kind of let him know where I was with AuditShark and what sort of things were going on. I sent him an e-mail link to the temporary sales website that I’ve been working on just so he could kind of see what it looked like and where the things are at. And he said he liked it. He had some good suggestions for it. So I’m going to take some of those in to account and you know, rework a couple of different things.
[19:02] One of the things that I got was that I keep hearing from people that they think that I’m waiting until everything is perfect with AuditShark before I launch it and you know, people are saying, “Oh, you got to launch it. You got to launch it.” And it’s not that I’m holding off until everything is perfect and that, you know, all my I’s are dotted and T’s or crossed. It’s just things are just not ready. I mean I can give it to somebody right now and it would work and would do what it needs to do, the problem is that the back end of it is kind of builds around this idea of a set up policies and a library of these control points that you select and you can push down to your machines and pull it back the results for.
[19:40] But the problem is I don’t have that library built and I don’t have a good way to get things in to that library. So that’s what the tool developers that I’ve hired are working on right now is they’re working on the tools that will build those control points and build the policies that will then go in to the library. So I’m hoping that they’ll be done with that within the next four or five weeks but the UI is complicated So you know, until that stuff is done though, I can’t really move forward with pushing the product out which sucks in a way but at the same time, you know, I’ve also got other things to work on while they’re doing that.
[20:11] Rob: Yeah, I think I mean to summarize, you built AuditShark yourself for a couple of years. You spent two years. You were – or maybe a little more than that and you were focusing on banks and you thought that banks were going to be your market. You had it in there and as it got towards at the end, you found out there were a couple of things. One, that your — kind of your customer development, your discussions with banks were misunderstood, right? They were talking about one thing. You interpreted it differently. When you finally got to it, it turns out you hadn’t actually built what they wanted. And B, the sales process was going to be so high touch that you decided you didn’t want to go down that road.
[20:45] Now we can go to on all types of discussion about whether, you know, what you could have done earlier to avoid that and all that stuff but that’s fine. Once you got there, you realized, I can’t do this. I’m not going to go forward with this and so you decided to pivot. And then you were saying, “Okay, I have this code base that does something and it can help some group of people. Where is that market?” And as MicroConf came around, you started asking folks there and it turns out you’re going to be probably pivoting towards servicing people who have web servers and app servers and you’re going to be scanning for like vulnerabilities and that kind of stuff. That takes retooling of your app, right? Bottom line like you needed then figure out what the new feature set is. You don’t have to rewrite the whole app but you absolutely have to either you or have someone else write some code to now get AuditShark to do what this new market needs.
[21:15] Mike: Yeah. And the thing is there’s not a lot of that piece that needs to be done. It’s just the fact that there’s this library in the back end that needs to be populated somehow. And the —
[21:39] Rob: Right.
[21:39] Mike: … only good way to do it is to manually do it at the database
[21:42] Rob: So there is work that has to be done whether it’s code or not and some work has to be done to make it fit this new problem you’re trying to solve. You’re now trying to reachieve problem solution fit, right? Or achieve it. Period. So now you’re trying to achieve it with this — this new market, this new group of people and that is going to take time. You do a lot of consulting. You consult, you know, most of your — of your full time hours during the week and you’re also doing a blog and a podcast and doing this other stuff. So it’s not as if this is your full-time gig. So the fact that it takes you a couple of months to pivot is not surprising to me but it does seem like a lot of comments are coming through that are saying why haven’t you launched yet.
[22:19] And while this has been a long, you know, a long process, a two or three-year journey of you figuring this app out. Some mistakes were made. At this point, I don’t think you can launch like you have to get this stuff done before you do it and of course, I would love for you to pull a bunch of all nighters and launch next week but that’s just — that’s not realistic. If you think Mike should talk to more customers or get in to more detail or do more customer development, that’s fine like I can deal with that as like a more valid opinion. I just don’t think it’s reasonable for you to say, “All right, you should just launch tomorrow because the app is actually not done. It doesn’t solve the problem that you’re trying to solve at this point.
[22:50] Mike: Yeah, that’s definitely accurate. There’s a couple of tools that need to be built in order for the product to really work in this market. And right now, it’s just not there.
[22:59] Rob: Our relationship is never really been about like keeping each other accountable with our apps like I don’t come to you and say, “Hey, I need feedback” or “I need you to keep me accountable on this” and you haven’t either and that’s why the accountability episodes where we really dove in to AuditShark, we’re kind of weird because we don’t necessarily have that relationship. We do have a business partnership with MicroConf, the Academy and the podcast but aside from that like I don’t particularly like unsolicited feedback, let me put it that way. So when people give me unsolicited feedback and they tell me how they think I should run my business or how they think I should develop my product, I don’t like it and I irritated with those people in general.
[23:31] And so I don’t feel like I should sit here and tell you unsolicited, “You should do this, that and this with AuditShark” because it implies that somehow one of us knows better than the other or something like that. Now if you came and said “Rob, you know, I really want your feedback” which you have. You’ve actually done that offline several times where after the podcast, you’ll show me your sales site and you say what do you think? But to sit here in a public form and for one of us to kind of dictate to the other, “Well Mike, I think you’re doing this wrong and you should do this, that and this” I just, yeah, I just don’t know how – how helpful that is and you and I don’t particularly have that. We just don’t have that relationship, right?
[24:02] Mike: Yeah. I mean you made some points. I mean I’ve gotten some unsolicited feedback from people saying, “Oh, you should do this and this and this.” And I’m looking at that feedback saying I understand where you’re coming from because I haven’t share all of the information with you but you’re so far off in left field but that’s just not even remotely close to accurate. And I don’t even know where to address how many problems there are with what you just said. So it is hard and you know, I try to share as much as I possibly can on a podcast but I obviously don’t share everything. I think this particular episode we’re doing a lot more just because we’re focusing more on, you know, what sort of things we’ve been working on but I don’t think that everybody wants to hear about AuditShark every episode or HitTail every episode. I mean that’s not —
[24:40] Rob: Right.
[24:40] Mike: … what this podcast is about.
[24:43] Rob: Right. The issues that we discuss here a lot deeper and a lot more complex than we probably play them out on this podcast. I got a good e-mail. I thought it was funny. It kind of relates to this topic of maybe someone outside your business thinking they know more, you know, they know what’s best for it. I got — I got an e-mail. A guy was canceling HitTail and he said, “Thanks for canceling my account. If you guys offered a plan of $4.95 a month that allowed the X visitors a month rather than, you know, whatever your currently offering, I’ll definitely be back. At this certain level that’s when I started to see proper visitors and feel free to passes feedback on to your people, I’m sure you’ll get a lot more business doing this as well.” And so basically he’s saying to lower your pricing. Funny thing is I get — probably get an e-mail like this maybe one or two a month from the several hundred people that signed up for trials. That’s right —
[25:27] Mike: Is it your lowest plan $10 a month?
[25:29] Rob: It is.
[25:30] Mike: So he’s saying that this extra $5 a month is just not worth it.
[25:34] Rob: That’s what he’s saying, yeah.
[25:36] Mike: Oh, okay.
[25:36] Rob: And it’s so hard to make money at $4.95 a month for anything but the implied message here is that the best price is less than– it’s always less than whatever you’re charging. The best price is always that, right? And whenever you get these e-mails and the second thing is always imply to charging less will always result in loads of customers. And neither of those is accurate as we’ve known.
[25:57] Mike: As single support e-mail would totally blow that $4.95 out of the water.
[26:01] Rob: I know. When you are living and breathing and inside something and you know all the numbers in the metrics, I know that I do not want customers at $4.95 like it’s just wouldn’t work. It would lower my lifetime value too much. So I will pass, you know, on customers who want to pay $4.95 and if they’re able to get value out of it at $9.95 and up — I mean I have customers paying a hundred dollars a month and are very happy with the app and I want to get a lot more of those.
[26:24] Mike: No, I totally understand and I completely agree. It’s so hard to explain to people that they’re wrong because they don’t have the data but you don’t necessarily want to share the data with everybody either.
[26:35] Rob: Yeah, I don’t — I didn’t want to say explain to them that they’re wrong. I don’t know if it’s about right or wrong. I think it’s more about how you, you approach the business, right? It’s like if you want to take your business up market and try to make it like more valuable and find the people who are willing to pay the higher end prices, then you go about things a certain way. But if you’re trying to go for a freemium product, I mean that — frankly when I bought it, it was — there were some freemium users and people were saying “You should start a free plan and you’ll get a bunch of customers and…” I’ve never seen it work with bootstrappers.
[27:01]I can’t think of a single bootstrap company that has ever kept their free plan around. A lot of people launch with it and then they winded up cutting it out. There’s that Why Free Plans Don’t Work blog post that Ruben did on my blog that was on softwarebyrob.com. It was quite a successful post because he pointed out this fallacy that we can use the same approach as like a venture funded company trying to do the freemium model and what freemium can work is very, very difficult to pull off. So I need these most people’s images of how a product should be launched and the pricing and all that stuff is sorely warped if they haven’t actually done it themselves.
[27:35] Mike: Yeah, I considered a free plan for AuditShark but I couldn’t think of a good way to actually make it work and provide enough value that people would view it as a valuable service but limited enough in such that they would want to upgrade and I just couldn’t come up with anything this kind of — it’s not worth of time and effort, really.
[27:54] Rob: Right. So anyways, I think kind of to close that loop. We were talking about AuditShark and whether you should be launching right at this very minute or whether you are in process of pivoting and that you need a little bit of time to pivot. If there’s one thing that I would say, I would like to see you talking to consumers like actually talking to them on Skype or pretty intense e-mail conversations. But before you build something, I want to make sure — I would like to make sure that you’re building really what they need.
[28:19] Mike: Yeah. At this point, I mean the product is what it is and there is not much but the core of it is going to change. I mean it can pull back results from a machine pretty much anything that you want. I think what I really need to find out is what sort of format they’re looking for the data to come back. I mean what underlying problem is that they’re to solve and for the most part of the people that I’ve talked to have said that they want some level of assurance that somebody is looking over their shoulder and making sure that they’re not doing something dumb on their machines. I really feel like there’s a big difference between what the small people want versus the big people want.
[27:01] So like the large customers, they basically want to save money because to them a data breach is obviously is a huge deal but it takes them forever to close the loop on that and notify customers whatever the statistic was. There was something like $43 per record loss. So you lose a hundred thousand records and you know, there’s a couple of million dollars in cost associated with that because you’ve got all these other things that you need to do and this is more for like losing credit card information. But for a small customer that, you know, let’s say that you were using AuditShark for, you know, your server and what it would cost you if your entire HitTail server was cracked open and hacker stole all the data. I have no idea how to even estimate what that would cost. I mean I have no idea how many customers but let’s say that it’s a thousand customers for easy math and you know, $43 a record that’s, you know, $43,000.
[29:44] Rob: Right.
[29:44] Mike: Is it realistic to say that that’s how much it’s going to cost you? You know, I don’t know. I’m not — I’m really not sure when it comes to things that are not credit card related. I mean you can look at all these studies but it’s very skewed because those much smaller businesses don’t report that information. They’re not statistically significant, you know, because regulators don’t come down on those small companies. So it’s just very hard to translate those larger customers and the fees that they pay for those data losses into the much smaller customers. So I think the motivations for buying AuditShark are going to be radically different.
[30:18] Rob: Right. That’s what you’ve started to pin point, you asked that question in the survey kind of why would you need this, what would your pain point be. Your working that in to your — your copy, your marketing materials and that’s what I’m saying. I think that going deeper into those issues and trying to figuring out if there is one or two or maybe three issues that you kind of segment people in to that they’re trying to combat and figuring out which one of those to attack first but keeping it as simple as possible. I mean it’s like, you know, I’m coming back to the HitTail feature I just released with the articles. I started off with this awesome spec and I drew it up like a true developer should and it was gold plated and had all this logic in it and I looked at it said “God, that’s going to take a month to build.”
[30:57] And I just threw everything out and I said I’m not going to — I was going to offer three different levels of quality. I was going to offer all these choices of length. I was going to offer all these — there are all these features, you know, with the market place, rather market place I’m working with that I could choose and I basically just hard coded all of those in the code and I made one length, one quality level one price. You click the button to order or not. And as a result, I could totally simplify that you and I are in the entire integration. And it sets, you know, it’s a really minimal feature. Basically, I stripped it down and I think that’s where you’re probably headed or I hope you’re headed, you know, it’s to figure out what that minimally viable feature set is in order to get that those first customers onboard.
[31:37] Mike: Yeah, I’m not so worried about the feature set because like I said I mean the product’s library is what it is. I mean the product does what it does. I’m not changing that at this point. How I portray to the user is a little different. I mean I may need to massage that stuff a little bit but I mean in a fundamental level, it tells you whether something is configured properly or not. There’s an error message that could pop up as well or there is something that comes up and it shows up as purely information. So you know, like the operating system it’s Window 2008. Okay, well that’s not right or wrong. It’s just it is what it is. And then you’ve got, you know, you might say, well it’s the latest service pack installed, yes or no. And if it’s not, that’s a bad thing. If it is, then that’s a good thing, you know. So you’ve got your okay’s versus not okay results. And then the fourth thing that can come out is honestly an error. And that covers pretty much every single case you could possibly think of for pulling back configuration information.
[32:27] [Music]
[32:30] Rob: So I think I’ve selected my next product idea.
[32:33] Mike: Oh yeah? What’s that?
[32:34] Rob: Yeah, well at this point, I’m going to keep it under wraps.
[32:38] Mike: [Laughter]
[32:39] Rob: The thing is I’m months — I could literally be six to twelve months out for even starting to work on it because I’ve got — I’m trying to stay focused and I’m dying because you know, like us entrepreneurs, we totally want to do the next thing because the next thing is way cooler than anything we were working on now. Yeah, right now I’m like focused with an exclamation mark, right? I’m like trying not to wander off the path like HitTail. I’ve just gotten the funnel optimized. I’m starting to market it again after a few months off and things are really starting to take off. They’re starting to do well how about I said that way. As much as I’d like this next idea and I think that it could provide value to a lot of people, I don’t want to have a bunch of ideas going at once, you know?
[33:14] Mike: Yeah, I talked about it in our previous podcast where I said that me having AuditShark going and then this Altiris Training site, then my forum —
[33:21] Rob: Yeah.
[33:21] Mike: … software is kind of being reworked and I’ve actually had sales requests and questions and stuff come in for all three of them in the past week and it’s just — it’s a juggling act. It really —
[33:32] Rob: Yup.
[33:32] Mike: … in a way kind of sucks. You know, it’s my own fault for putting myself in this position but I’ve had people sign up for the — the training site and there’s things that are just not ready yet. And then I’ve had people come in and say, “Hey, can you get the demo up and running for your forum software? I really like to see what it looks like specifically so that I don’t have to buy a site unseen.” There’s all these things going on and as I said before, my worst fear is that everything is going to kind of come to a head at the same time and that’s starting to happen. So I —
[33:58] Rob: Right.
[33:58] Mike: … I would definitely hold off. [Laughter]
[34:00] Rob: Yeah — and the thing is I mean I say I think I’ve settled them my idea. I haven’t settled any idea. I’ve settled on the fact that there maybe a need for certain thing is and what I really need to going to do is start talking to people, getting out there and if there really is a need and verifying and all that. And frankly, I don’t have a ton of time to do that right now and I don’t have the focus to do it. I totally could outsource it like I could sketch stuff up and send it to a developer and have them starting building it. But I just — I don’t want — I don’t think that’s a right decision right now. I think that I need to do more on research upfront to make sure that it’s solving the problem and I need to basically not be doing either those things because I really — I’m struggling to fight off the urge to start this product and I should just stick with HitTail for now.
[34:41] Mike: Yeah I have several other things that I have thought about and I’ve got them in a Google doc somewhere and I’m just looking at them. Every once a while, I look or I’ll glance at it and say, “Man, I’d like to do that but there’s just not now”, you know.
[34:52] Rob: Yeah.
[34:52] Mike: And I don’t think that there are market opportunities that are going to go away anytime soon.
[34:56] Rob: Right.
[34:56] Mike: So I feel like I’ve got time.
[34:59] Rob: I am coming up on a one year anniversary of owning HitTail.
[35:02] Mike: Oh cool.
[35:03] Rob: … that crazy? Anyways, you had I think one more thing you want to chat about.
[35:06] Mike: Yeah, actually. Do you have like a build server for any of your products?
[35:10] Rob: I used to.
[35:12] Mike: You used to —
[35:12] Rob: I don’t have at this point.
[35:13] Mike: You don’t okay? Okay. Because I was wondering how you – right now I’m starting to run in to some issues because I’ve got multiple developers working on, you know —
[35:20] Rob: Oh yeah.
[35:20] Mike: … the same code base.
[35:21] Rob: Yup.
[35:22] Mike: So merging code and making sure the check-ins from different people are all —
[35:26] Rob: Yeah.
[35:26] Mike: … working and it’s starting to become kind of a pain in the neck. I did start taking my build server and moving it out, you know, in to Rackspace that I didn’t had it hosted locally so it could do everything out there. And it’s one of those things where it’s like I would love to have that build server up and running right now so that it could do all those automated checks and everything else. I just don’t have the time in it.
[35:46] Rob: Does it — do any of your developers have the expertise to — I mean isn’t it CruiseControl? Is that still the standard because a couple of years ago, last time I set it up that’s what I used. And most developers knew how to — most .NET guys they know how to install that.
[35:57] Mike: Yeah. I’m using Final Builder. So –
[36:00] Rob: Okay.
[36:00] Mike: … it’s a little bit different. You know, I don’t know. I might be able to hand it off to one of my guys.
[36:04] Rob: Kind of give it off. Yeah. Obviously —
[36:05] Mike: Yeah.
[36:05] Rob: Obviously, you have to check it and make sure it’s done right but that might be — might be the better solution. You’re using Source Control at this point, right?
[36:11] Mike: Yeah, yeah.
[36:11] Rob: Were they able to merge? Okay. So it’s not like they have standard copies.
[36:15] Mike: Right, right. And I mean everyone is using Kiln and you know, they’re checking their code in and the issue that I’m running in to is just it’s like certain times not everything is being checked in so that in compiles on their machine but it doesn’t necessarily compile for anybody else.
[36:30] Rob: Right.
[36:30] Mike: So that’s one of the issues.
[36:32] Rob: That’s a big one. Yeah man, as soon as you ramp up to two developers from one, it is such a big deal, right? It is like a big leap. And then going from two to three, it’s not as big of a leap because you get these processes handed out.
[36:45] Mike: Right. And that’s what I’m trying to figure out is how do I put this process in place without actually having to do [Laughter].
[36:50] Rob: Yeah. Now, I hear you.
[36:53] Mike: So I mean part of it, you know, making sure that the code is good quality and everything else. So I’m going to have to do some of that anyway. I mean I’m going to have to review the code which is not that big of deal. It’s just making sure that it’s all following the rule. So I think there’s FxCop or something like that. I used to use it. It’s basically to make sure that all the code was following specific standards but I haven’t used it in a while. But I was had the issue. It would flag a lot of different things and say oh, this is wrong or that’s wrong and it’s like, no, that’s fine, don’t worry about that. And I never really dug in to it enough to figure out how to tackle some of those switches. So maybe — maybe you’re right. Maybe I just hand it off to one of these guys and say, “Hey, can you, you know, work with the build server and just straightening out all the stuff?”
[37:32] Rob: Or you could at least give it a shot.
[37:33] [Music]
[37:36] Rob: So if you have a question or a comment for us, you can e-mail it to us at questions@startupsfortherestofus.com. Our theme music is an excerpt from “We’re Outta Control” by MoOt, used under Creative Commons. You should subscribe to this podcast in iTunes. You can search for Startups or you can go to StartupsfortheRestofUs.com and subscribe via RSS where you’ll also find a full transcript of each episode. Thanks for listening. See you next time.
Episode 85 | 21 Free And Low Cost Solutions For Running Your Business
Episode 84 | Five Traits of Successful Founders
Show Notes
- Ultimate WordPress Coming Soon Plugin
- The Winner’s Brain
- The 5 traits:
- Opportunity Radar
- Optimal Risk Gauge
- Focused Goal Laser
- Effort Accelerator
- Talent Meter
Transcript
[00:00] Mike: This is Startups For The Rest of Us: Episode 84.
[00:03] [music]
[00:11] Mike: 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 Mike.
[00:20] Rob: And I’m Rob.
[00:21] Mike: And we’re here to share our experiences to help you avoid the same mistakes we’ve made. What are you doing this week, Rob?
[00:24] Rob: I’ve been working pretty hard on refining some parts of the HitTail article, the one-click article feature I mentioned last week. So I got some good feedback from early users. I had about ten, ten orders so far for articles. And it’s crazy and so I’m saying it’s a two to three-day delivery window but with the amount of writers that are available through this partner that I have, one article came back in three hours.
[00:47] Mike: Wow. [Laughter]
[00:48] Rob: That — is it — yeah.
[00:49] Mike: That’s crazy.
[00:50] Rob: They’re only — they’re 400 -word article so I’m, you know, specifying it pretty low because at this point they’re kind of just SEO blog post type things but they’re high quality writing. I mean they’re all, you know, native English speakers and that kind of stuff but yeah. But I think the average is probably been like eighteen hours. A lot of them are coming back in less than a day. There was only one that was on that really assertoric topic that took — it took like almost two days for someone to claim it and they wrote it like six hours or so.
[01:16] Anyways, that’s one good. It feels really good to get that out and get it out in to the wild and to make some refinements to it based on suggestions. So I’m feeling like that’s wrapping up pretty quickly and got to kind of be moving on now to more marketing stuff because this is really — this completes the operation retention that I talked about last week. And so I am really redoubling my efforts and kind of refocusing on doing things more in public. I’ve kind of been under the radar for a good month or two, really, I haven’t done much. Other than the podcast, I haven’t done much of anything in public. And so I’ll be heading back to that.
[01:48] Mike: Yup.
[01:48] Rob: How about yourself?
[01:50] Mike: I read an interesting blog article on the SmartBear Blog by Jason Cohen and it talks about the mid-market briar patch and how going after to been market is generally, not always but generally a losing strategy as opposed to going after the enterprise or small business market because if you’re going to go after small businesses, then obviously the way to do it is generally through SEO and you know, online marketing techniques. But if you’re going after the enterprise market, then you’ll have to scale up and it cost a lot more time and effort and energy in order to land those customers. So some people look at that and they say, “Well, I don’t want to go after that out. I’ll go after the mid-market” which is kind of what I try to do initially with AuditShark and the article basically goes on to say that the mid-market is essentially a briar patch because you spend just as much time, effort and energy going after the mid market as you do going after enterprise customers because by the time those customers are mid-market sized, they already have all these processes and purchasing procedures in place and everything that makes it just as difficult to raise them as it does to get in to an enterprise customer but your return on it is like a hundred times less or thousand times less than it would be if you’re going after an enterprise customer.
[03:03] So you’re much better off going after those enterprise customers than the mid-market customers because it’s the same amount of effort but your return on it is, you know, a hundred extra or a thousand extra or something like that.
[03:15] Rob: Got it and this struck a cord with you because of your early direction with AuditShark of going after banks, right?
[03:20] Mike: Yeah, definitely because I mean my target market for banks. I mean I talked about it upfront was, you know, anywhere from fifty to a couple of hundred employees. It was a little bit more difficult than I originally anticipated. I thought it’ll be a lot easier just based on my early experiences talking to a couple of banks. It turns out that it’s just a lot more effort and it’s just not cost effective to do it.
[03:41] Rob: Right. So what’s in line with exactly his premise at article and that’s cool. Hey, we talked a couple of weeks ago and I had mentioned that I wanted to start mentioning some, some Micropreneur Academy members more often, people who have had success because literally dozens of folks that I know have launched products and, you know, either quit their jobs or enough money to quit their jobs and just don’t and just basically have two incomes coming in. I know a few folks doing that.
[04:07] Anyway, so there’s a guy name John Turner and we mentioned him last week. seedprod.com is his URL and he has a WordPress theme, the ultimate coming soon plug-in for WordPress and it allows — it’s a lot, you know made a lot for the startup movement of having the landing page and collecting e-mails so it ties in a lot before we say but he’s starting in a very elegant way. You know, at one point he turned down a job with, I think WooThemes. I mean he turned down a job with a pretty big WordPress development company. So he — this guy is a very sharp WordPress developer. He has built over the past six months specifically, he’s been working on a little longer than that but he launched and his growing revenue and frankly, you know, he’s not at the point of having recurring revenue up to the point of quitting a job but I think like last month he has enough that seriously considered doing so.
[04:57] So but it just really impressive and cool to see someone come in to the Academy, used the lessons that we’ve laid out and really take a lot of way from. He expressed that he learned a lot from the Academy. So a folks are, you know, interested in that type of thing and so maybe we’ll mention it every, every few episodes just to give people idea of what’s going on there and who’s coming out of it. I’d like to kind of do some little spotlights here and there. But if you’re interested in finding out more about it, it’s at micropreneur.com.
[05:24] Mike: Yes, I’ve looked in to what he’s got for a plug-in and the model that he used to kind of promote was really interesting. He actually didn’t even mean to build a product out of it, what he done was he released this plug-in for a WordPress as a coming soon plug-in and he got — I forget how many tens of thousands of downloads but it was a significant number of downloads was — I think he started out with — about 10,000 and that’s when he decided that he was going to turn it in to the WordPress plug-in in to having a like a professional version of the plug-in. And it’s more or less like an up sell and at this point, I think his free version has something like 70 or 80,000 downloads according to WordPress.
[06:03] Rob: .org.
[06:04] Mike: There, they just, you know, show you how many downloads are and some ungodly number. I mean it’s ridiculous. I mean that’s where a lot of his sales come through because there are certain things that are in is professional version of his plug-in that are not in the free version. I mean I think that’s just a really great way to do it. I mean it seems to fit really well with the WordPress community.
[06:24] Rob: Right. That’s this kind of a standard way I’ve seen evolving. I shouldn’t say standard. It’s kind of becoming the standard way of releasing the free — it’s almost a premium model but the audience is so big and if you can actually get found in that WordPress.org search engine, it’s a lot like ranking high in Google. I mean it’s just another discovery engine and so you can get enough kind of free users that, you know, it can turn in to a reasonably high income stream for folks like us who are solo entrepreneurs. I mean if you are some enterprise company, this wouldn’t even be a blip, right? The amount of income you could make from it but that’s that not the game here.
[07:00] Mike: One of things I’ve been working on lately is I’m working through the website designer with the new site design for AuditShark, my new developer for AuditShark has just kind of come onboard. He’s got about a day’s worth of effort in so far. So he really hasn’t done anything yet but you know, he’s certainly starting to pick some things up and you know, we’ll see how things go. I’m hoping things work out on this side just to help get things moving a little bit quicker.
[07:25] Rob: And at the same time, I think I’m going to have to let my developer go who’s been working on HitTail for a little while. He had just seemed to — he’s a solid developer but he’s not working as far as I’d like and sometimes he just kind of disappears and doesn’t answer e-mail for a few days. So, you know, I have higher standards at this point so I may be looking for another developer which is tough because HitTail is in Classic ASP and it’s not easy to find good Classic ASP developers because of them have moved to .NET by now.
[07:51] [music]
[07:54] Mike: So what we’re talking about today?
[07:56] Rob: Today, we’re talking about five traits of successful founders. So I’ve been listening to the book Winner’s Brain and it’s by Jeff Brown and Mark Fenske. And basically, these guys are two researchers. So they are, you know, they’re fairly academic in the research but they’ve written kind of a layman’s book and it’s about people who succeed and how their brains are different from, you know, a lot of other people and it’s not just people who succeed and it’s people who perform at high level.
[08:22] So they not only took all the research in the space but they also look at interviewing people like Kerri Strug, she was a gold medal gymnast, and a bunch of other high performing athletes, musicians, that kind of stuff. They — as far as I know I think they may have one or two entrepreneurs in there but it really is a lot of it is focused on performance and achieving goals and so, you know, in my opinion it totally applies to what we’re trying to launch companies and such.
[08:49] Now, there are five traits that they named. There’s actually — there’s eight lower level traits that they go through and they called them Win Factors and we’re not going to talk about those because they’re pretty — there are kind of low level stuff. There is like self awareness, motivation, focus, emotional balance but they are the higher level skills that we’re going to talk about today.
[09:06] And the first one, I’ll just dive right in to it. It’s called Opportunity Radar. Basically, their premise in the book is that having these five traits dramatically improves your chance of succeeding at achieving goals whether that goal is to win a gold medal, whether it’s to, you know, play at concierto at some place or you know, what we’re saying here is whether to launch a company. I mean it kind of all goes — goes in that same thing. So the first trait that we’re going to talk about is Opportunity Radar. And the way they defined it is as someone with good opportunity radar recognizes that opportunities don’t always come in gift wrapped that more often than not, they come wrapped in a problem or in an idea that everyone else has missed.
[09:47] So as I was thinking about that I was realizing like in our world by the time something is written about in Inc magazine or Fast Company, it’s too late, right? The opportunity has passed because everyone knows about it. You have to do these things when they are still hard. Do you remember in like the late 90’s or mid 90’s, websites are really hard to build, right? You had to hand code the HTML, there weren’t many resources. It was just hard to do. [Laughter]
[10:11] So I was in college at the time and I remember building static HTML websites and it was really hard to do them. It was hard to make them look good and if you knew how to make them look good, you could charge a lot of money to do that but to build a similar thing now, would cost one tenth of the price if that. Same thing with web applications, when they start coming around dynamic code and such with Perl and C++ and then there was, you know, PHP and Classic ASP. Those things were a pain to work within the late 90’s and now, today, you can build stuff five times, ten times faster. But if you went back and build that old functionality, you know, the opportunity has gone. You have to take things way up to the next level and be at the edge of the game and be building things that are hard today.
[10:53] The last example is like buying apps and websites before there was Flippa. You know, that’s something I did. I’ve continued to do it on Flippa but there is a lot more competition, a lot more people talking about it now. It’s not that the opportunity is gone but being able to recognize that opportunity four or five years ago, you’re just going to be much better off if you’re able to recognize that when everyone else is not flocking to it, you know, it’s a gold rush mentality that’s being in there before everyone else is starting to mine for gold as well.
[11:19] Mike: That kind of reminds me of Bill Bither story. Bill Bither was one of the speakers at MicroConf and he talked about how his company Atalasoft had — he started it when .NET was first coming out and he started building .NET imaging components because he looked at that, you know, upcoming opportunity and realized that .NET was probably going to be the next big thing and because it was this new platform that people were going to need tools and libraries in order to build other things so he build this .NET imaging platform and he ended up selling it last year for something like $10 million.
[11:55] So you know, definitely having that opportunity radar and recognizing when those things are going to come up, obviously, can potentially make you millions of dollars but at the same time it doesn’t have to. I mean it can be one of those things where you’re in the right place at the right time and you recognized something that other people are just kind of missing or you recognize that, you know, there’s something there and it may not be, you know, the next Facebook but it could certainly justify putting in some time and effort in order to make you a full time income or you know, supplement your income.
[12:25] Rob: Right. And I think another example of that is this whole micropreneur movement that we’ve kind of spearheaded here it’s that getting in to WordPress.org and getting, you know, 10,000 or 20,000 downloads and then turning that in to an income stream even if it’s 5,000 or 10,000 bucks per month that’s a great income stream for a solo individual but it’s an opportunity that everyone else meaning all the other businesses, you know, small business, medium sized enterprise, they’re ignoring it. It’s fitting in to a niche that other people are missing and so many other micropreneurs that I’ve seen succeed are doing that, right? That’s why we kind of push people to look for a niche and what do that niche — I mean often times I’ll say, you know, it should be a vertical niche but sometimes that niche is more horizontal or something like a launching plug-in like John Turner has is a bit horizontal but it still has that niche of being in WordPress and being easily discoverable and having a decent user base.
[13:18] So it’s in that opportunity right up always be on the look out for opportunities, noting things down. I mean I don’t think everything has to be a novel idea like I know that it doesn’t, you know, I still have DotNetInvoice that is completely not a novel idea and that still does well for me. HitTail is, I mean is reasonably novel but it’s, you know, has a unique algorithm but it’s not like some groundbreaking new technology that no one else has ever conceived of. It’s really just an opportunity and space that other people have overlooked.
[13:46] Mike: I think one of the things we should definitely mention here is that just knowing that having the opportunity radar is a good thing, as a little different than how do I develop that and I think that one of the things that you need to look at when you’re trying to develop your opportunity radar is to figure out what problems people have and if somebody is trying to do something and they’re having a hard time doing it and they ask for your advice and you can’t find a solution either, then chances are there maybe a good opportunity there and you should definitely start looking around to see if there are other people who have similar problems but, you know, opportunities as you said at the very beginning of this, they don’t land on your lap, they don’t come gift wrapped and you know, you do need to look for them a little bit and a lot of people will focus on the problems that they’re having not necessarily developing a solution to the problem. They want to find a solution to the problem and if you get in to the mentality of looking for problems to solve versus looking for a solution to those problems, then you’re going to hone that opportunity radar a little bit.
[14:43] Rob: Absolutely and if you don’t already have an idea notebook, you really, really need a place where you can capture them because you will forget to create ideas you have I guarantee it. Nothing please me more than going back through this little black notebook I have and seeing ideas that I really like, you know, that I came up with a few months ago and it’s — some of them are terrible. 80% of them are terrible or they just aren’t going to ever pan out and when I go back through it I can totally tell that they are but that for that 20% that is pretty darn good, it’s like kind of having this gold mine in my opinion of just being able to run through it and think about what’s the viability of this idea and kind of taking — taking it to the next level, you know, in a mental exercise.
[15:20] So trait number two for successful founders is having an Optimal Risk Gauge. The idea of having an Optimal Risk Gauge involves being able to recognize what risks there are, determining how much risk you can tolerate and whether or not you are willing to pay the consequences if you fail. So some questions that we see pretty commonly are things like at what point should I quit my job, how much income should I have before I do that and how large of an idea should I attack, you know, is this niche good enough, how mush risk is involve going to the niche.
[15:52] And all those things, yes we can — you can try to put some numbers together. You can put calculations together and try to engineer it but ultimately you have to have a risk gauge and you have to know how much you are willing to put up with. That’s one big reason that I always say, try to keep your app, your V1 between four and six months of your time because most people should be willing to risk that. If you’re not willing to risk that and you probably shouldn’t do, you know, launch a software product, do startup at all.
[16:18] Some people look out and say, “Well, I’m going to do a twelve to twenty four-month product” and to me, that’s just an outrageous amount time and we see a huge drop off for people actually able to complete that. So taking about in terms of four to six months and are you willing to make that risk, you know? Are you able to calculate how much it’s going to be and tolerate it if that time does go to waste?
[16:38] I took some big risks early on. I shouldn’t say big but they were, you know, four to six month, seven month risks, a few thousand bucks which at that time was quite a bit of money but the biggest one I took early on that did pan out was when I bought DotNetInvoice. So I paid 11,000 bucks when I first bought it and that was a huge amount of money at the time. Now, I still want a salary and doing a little bit of consulting and stuff. So but at the time, I determined that I was willing to take that risk, right? But if I lost it, I would be very disappointed but that I was willing to pay the consequences if I failed.
[17:08] And you know what? Flanking that money down and buying DotNetInvoice turned up to be a great thing for me because when there were bunch of things wrong with it, right? There were like twenty four show stopper bugs after I bought it, bunch of other things. Revenue wasn’t as high as they told me but once I closed, the fact that I was on the hook for that money that I had spent made me ultra motivated to get those things fixed and to get them fixed very, very quickly. And that resulted in, you know, I’ve talked about before but I basically was able to triple revenue in the first few months and that got me to the point of making back that eleven grand in, it was less than six months if I recall. You know, being able to gauge the risk that you’re willing to do, being able to gauge the risk of the action you’re about to take is a super valuable traits of entrepreneurs.
[17:52] Mike: And of course, you’ll have a problem with a risk gauge is that humans are notoriously terrible in actually estimating what the risk levels are and I don’t know specifically why that is. I think that it’s because we put it in our heads that there’s a certain amount of risk involve in something and we try to relate it to other things and unfortunately, because we’re bad at doing some of that Math in our heads say, oh there’s one in twenty chance of this or you know, one in thirty chance of that. You’re like, oh that doesn’t seem that high but then when you start trying to do those numbers in your head, it turns out that that’s actually a reasonable amount of time that those things are going to happen.
[18:32] The whole point is that it’s very hard to figure out how to put those assigned numbers to those risks and I don’t know if it’s a good idea that’s to actually try the assigned numbers to the risks of the things that you’re doing but it is important to think about what you’re willing to lose and what you’re willing to put on the line and whether or not there’s an opportunity for you to get any of that back. So if you spend, you know, six months trying to get something off the ground and it doesn’t work, you have to remember there’s — there’s two things that you’ve lost at that point. One is the money that you put in to and the second one is your time.
[19:04] And I think that the time is probably a lot more important than the money because you can always make more money later on and if you start to become successful then, you know, the money is just going to flow naturally with your other successes and will probably far out strip whatever money that you put in to those failures but the time is something that you’re never going to get back. So it’s really important to make sure that you’re not risking a heck of a lot of time when you’re doing those things.
[19:29] Rob: Trait number three of successful founders is a having a Focus Goal Laser and that’s being able to stay focus on goals long enough to execute. I think we all know people who decide on something and then wonder. I think we all know ourselves to do that at times. And this is again while we come back to that four to six-month time frame of if you set a goal out one year, I’m going to work every night and weekend to build an app for a year. The odds of you achieving that goal, they — they go down.
[19:56] What’s interesting is that I’ve found three things have really personally helped me stay on focus lately over the past probably two years. One of them is being in Mastermind Groups. Those biweekly meetings have kept me on task and motivated and wanting to hit these goals that I set in the previous meeting. So that’s been a big motivator. The other one has been the podcast, this thing you hear me talking on right now and the fact that I’m able to come down together with you, Mike and the listener and basically kind of publicly commit. I mean I don’t come out say I’m going to have this thing done by this particular date but just being able to look forward to talking about what I’ve done is actually a big motivator to me and to be able to talk about both the successes and the failures. I mean if you recall back in February, I had a major disappointment with in terms of trying to hit some revenue goals and there were three or four episodes in a row where I was just down at the times about it and just talking about how I didn’t know how I was going to pull out of it and eventually, I did but it’s a good venue to be able to think that stuff through.
[20:54] And then the last one that helped is I came out of MicroConf both years but specifically this year, super charge. It’s been about five weeks since MicroConf and I have not — I barely been on Twitter, I barely been on Hacker News. I’m so not distractible right now because I have this amazing focus goal laser on HitTail and on getting these things done and it came — it’s stemmed out of a few conversations that I had with a few of the speakers and some of the attendees that just got me so laser focused on getting the stuff done. So that’s been what’s helped to me stay laser focus. I think you need to have the, what the author said is like you have to hone this ability over your lifetime and that it will wax and wane and I’ve totally seen that. The entire months go by where I will just struggle to stay on focus with the goal and you have to know yourself well enough to come back to those things that do help you get focus on your goals again.
[21:52] Mike: I think one of the things that you talk about there was with the Mastermind Groups I mean you are essentially you have this accountability to the people that you have in that Mastermind Group and you know, one of the things that I have seen is that when I’m putting things together for different people to work on for AuditShark or doing different things for, you know, like the mailing list and things like that. What I’ve noticed is that if I know that there is somebody depending on me to get something to them that helps with my focus because I know that they can’t continue until I finish with my part, take enough time to make sure that those are done right. But at the same time I know that it needs to get done. So I’m motivated to get those things done and by the time I get them done, there’s somebody else who needs something. And putting yourself in to that, you know, perpetual motion machine where you’re constantly in a state where you have to move forward. You can’t just slack off. That’s really important to try to achieve and I think that that will help a lot of people with, you know, maintaining that laser focus on getting things done.
[22:53] Rob: So trait number four is Effort Accelerator and this is being able to move from intention to action. So it’s being able to have an idea and setting goals like number — like trait number three said but then actually being able to move from that intention in to action. So we all know people who are thinkers versus doers. And I think actually in my life at times, I’ve been more of a thinker than a doer. I think that reading TechCrunch and Mashable and kind of Inc Magazine and Fast Company, all that stuff, you can really get in to the entreporn thing and be just the thinker, the dreamer but moving yourself in to action and actually taking a step towards getting something done anything, doing anything in public that doesn’t just require you to, you know, kind of sit in your basement, write some code and read articles that other people are writing but to actually do something that’s risky and that scares the crap out of you, that’s what the effort accelerator is about.
[23:42] So I actually knew this really smart guy and I’ve known several in my life but I knew an exceptionally smart and creative guy when I live in Sacramento. He was a filmmaker. He was a musician. He wrote stories like he just was super creative but he never really finish anything. And he would talk about — he’s actually in a band with me and he would talk about writing songs and making movies and we would see clips of stuff and I’d hear like a verse he would write. And was really impressed with what he did but he would never put a chorus to that and he would never commit to sitting down and being disciplined and turning that that intention in to action.
[24:13] So it’s not that — he’s not a bad person and it’s actually not a bad trait to have as long as you know that about yourself and he didn’t know that and he would talk about like, “Yeah, I’m going to write this song. I’m going to write the stories.” And we would sit around and said, “Man, I know that you’re not going to do that just having to look back at the last year of your life.” So knowing that about yourself is a huge deal because it’s being able to then combat that everyday and to realize that that is your natural inclination is to lean towards being a thinker than you rather need to find kind of a job or a place in life where being a thinker is really good or you need to figure out how to just do yourself in to being a doer if in fact, you know, you want to do things like to start a company.
[24:51] Mike: One word that you mentioned that was entreporn which is not entrepreneur but essentially it’s the idea of going out and reading all these books and articles and magazines on things that you want to do but never actually getting around to doing any of them. There are certainly an ad been flow when you’re running your own business of that type of activity but there are always times where you are much more creative than productive and vice versa. So the point that you made a little bit there was that there are people out there and you know, there are mentalities of people can get in to where they’re doing a lot more of the thinking about stuff rather than actually doing that one of those things is, you know, consumption of what other people are creating.
[25:31] You do need to make sure that you’re not falling in to that trap of constantly thinking of ideas and thinking of things that you’re going to do versus actually sitting down and taking the next step in doing them.
[25:42] Rob: I wrote this blog post. It was in 2008. I’m looking at it. It’s about four years ago. It’s called the Single Most Important Career Question You Can Ask Yourself and it basically comes down to the dichotomy of consumers versus producers and it says “Are you a consumer or are you producing things?” It totally fits in to this dichotomy, right? And it’s not that you aren’t 100% a consumer or a 100% a producer. Most will have a mix of both but if you really want to get things done, you have to stir yourself. You have to figure out how to motivate yourself to consume less and produce more because everyone I know who — who’s doing it like who is executing, who is starting companies, who’s being successful, they consume way less than the other people I know. They are so focus on their business that they’re totally motivated and they’re, you know, they kind of have that single focus laser vision.
[26:31] So the fifth and final trait of successful founders is a Talent Meter and this is being able to gauge yours and others competence and incompetence. So there’s this phrase the authors used and it’s the “double whammy of incompetence” which I love. It says that when you’re incompetent and you don’t know that, that it’s twice as bad. And I would actually say it’s exponentially as bad. I know that I am incompetent at certain things and hopefully, I don’t have a lot of incompetence that I’m not aware of because being aware of something means you can either avoid it. You can outsource it. You can try to improve it.
[27:08] There are a lot of options but it’s when you think that you’re great at something and you know, you go on American Idol thinking you’re a great singer and you really aren’t and then everyone laughs at you, man, that’s kind of a lame example of it but thinking that you really are, you know, the person who’s able to write the code and design the website and execute all the marketing for your startup when you have a major deficiency in one of those three areas, it’s a bad thing, right? Being able to gauge yourself and others in a competence and incompetence and it’s going to come in to play when you hire, when you outsource, when you find partners and when you’re trying to overcome your own weaknesses.
[27:44] I think most things on the podcast that we talked about like most of the questions we get comes down to — I typically say if you know that you tend to procrastinate, then lean towards the side of this, you know, then overcome that. I mean I can’t — I can’t even recall how many times in the last 84 episodes that I’ve said that exact phrase “if you lean towards this, then do the opposite” and so the presupposition in there is that you know that you lean towards this. I mean it really does come back to, they call it Talent Meter. I call it Self Awareness. It’s being able to know yourself and to gauge yourself and gauge your abilities both the positive and the negative ones and then really focusing like we talked about on the strengths finder episode really focusing on the positive ones and writing those to the success and shaping your success so that your positive traits fit well in to that and not trying to chase some success where, you know, you have to overcome all your negative traits in order to get there.
[28:38] A good example would be if I wanted to be an Olympic gymnast, that would be a terrible thing for me. I’m 6’2 and a half and I’m rail thin and you know, I don’t have a lot of upper body strength. I mean it’s basically, yes, I can set that goal up and I can work towards it but I’m setting myself up for failure by not realizing. You know, I’m kind of incompetent. I’m not set up to succeed in that arena whereas if I know I’m much more I have an engineering mind set and I’m goal-driven and I’m focused, then I can set up my startup ideas. I can even choose the ones that fit really well in to that framework and I wouldn’t go after something like a social network or something that we take a ton of creativity to build because those aren’t my strong suits.
[29:18] And so being able to evaluate yourself and know whether you’re a really good product builder, whether you’re a really good engineer, you can engineer marketing well so you might wanted to do more SEO and AdWords types of stuff or whether you really in to interacting with customers and interacting with the community in which case you’re probably not going to use those engineering-type marketing approaches but you’re going to go more towards, you know, relationships and partnerships and starting community type of stuff, that’s where this talent meter comes in.
[29:44] Mike: And I think there’s two different things that are kind of going on here is one is that you have to know what your strengths and weaknesses are be able to acknowledge them and the other one is being able to gauge how you relate to other people in those strengths and weaknesses. So for example, you know, the example that you gave was going on to American Idol and thinking that you are a strong singer when you’re not. And there’s thing two different things going on there.
[30:08] One is you are not a god judge of your own strengths because chances are good that there’s a lot of other things that you’re good at. And two is not being able to relate your strengths and weaknesses to those of other people. So I think there’s two different subtle differences between them but they are certainly important to keep in mind.
[30:25] One of the things that I find is in a way very fascinating is that when you start asking people, you know, how attractive they think they are in relation to other people or how smart they are, you know, studies statistically show that the majority of people say that they are above average and statistically that’s just not possible. The Math does not show that that’s correct but people still feel that way. So it’s very difficult sometimes if you’re in that position to be able to figure that out and I don’t know what the answer to that is to be perfectly honest. I mean I don’t know how you would go about addressing that problem. Do you? Can you think of anything?
[30:59] Rob: I think — yeah, I think you have to look at where you’ve succeeded in the past, what you’ve really enjoyed doing in the past and focus on the areas that you’ve been naturally drawn to. So if you’ve had great successes with on engineering Math mind set then that’s going to lean you towards, A, writing code. B, focusing probably more on the engineering-type marketing stuff which is, you know, funnel optimization, SEO, AdWords. I mean more of the Patrick McKenzie and you know, quite a quite a bit of the stuff that I do or I’ve done a lot of in the past.
[31:28] Mike: But I think — I don’t know if that solves the problem because you may be very good at marketing but you have never really had a lot of success at it because you haven’t tried and it makes it difficult to be a judge of that or figure out whether it’s something you should try or not.
[31:46] Rob: Yeah, I don’t think you had to — have to — have actually try the marketing. I just think, you know, I’ve known for a long time what I have certain strengths and certain weaknesses. I mean I would come out and say that I don’t enjoy managing people. I would call that a weakness of mine. So I don’t think you necessarily have to fail at something but you have to maybe do it and really not want to do it or be, you know, be kind of force away from it. And then I think that you do succeed in and you find yourself having a lot of success doing and getting a lot of enjoyment out of, you need to keep track of that stuff and see how that can fit in to a new business venture.
[32:18] So yeah, you maybe never done marketing but if you really enjoyed the things that are, you know, similar to that, you really enjoy talking to people and building a community and partnering it up, then that’s probably the kind of marketing that you want to look at doing and you want to look at doing things more through social networks and building partnerships and such rather than getting in the nitty-gritty of funnel optimization and churn rate and conversion rates and that kind of stuff.
[32:42] Mike: Yeah.
[32:42] Rob: I keep naming the same examples. It’s a little overly simplified but it’s hard without having some right in front of us, you know, to say like what really are your successes and what do you really enjoyed doing and then trying to actually translate those in to things.
[32:54] Mike: Right. But I mean I think what I’m trying to put in to words as more of one of the lines like software developers which is, you know, a lot of our audience consists of software developers and they are software developers because they like to an engineering and building things and they like writing code. And the problem is once they get in to doing things like marketing task like building mailing list and form that in web pages or finding somebody to make something look good for them, those are the things that they don’t necessarily enjoyed because they’re not good at them. What I wonder is how much of that and again, it can be activity related but, you know, how much of that is they just feel uncomfortable doing it in relation to the coding versus they just have an — had a lot of experience at it. So you know, is it something that they should try or not?
[33:40] Rob: Yeah because the first time you try anything, it’s going to scare the crap out of you. I mean the first time I outsource something, I was scared when I wrote the guy the $500 check. You know, it’s like this is a lot of money, what if this doesn’t work out, there’s all these doubts. And then you either get better at it or maybe you discover that you really aren’t good at it and really don’t enjoy it.
[33:56] So yeah, there is a certain level of needing to try things that are outside your comfort zone and seeing if you enjoy it and you feel like you would, you know, enjoy doing that long term. Yeah, I’m not sure there’s an easy answer to that one but I do hear what you’re saying. It’s like if you’ve never tried something and you’re scared of it, how do you know whether it’s going to work out even based on past experience.
[34:17] Mike: If you tried it a couple of times and not really been successful, how much of that is because you’re afraid of putting in a lot of effort in really making a good shot at it or is it just you really not that good at it.
[34:30] Rob: Right. My advice, join the Micropreneur Academy because we talk about all the stuff in there and we can give feedback right? You can interact with us, you can e-mail and you can get on the forums and ask questions. So I do, I do think like someone needs to have that third party, you know, whether it is the Academy, I was kind of joking but it’s like or Mastermind Group or some other folks who there — who there in the crunches with you can give some feedback on things.
[34:51] Mike: Uh huh.
[34:53] Rob: Awesome. So the five traits of successful founders are number one, Opportunity Radar. Number two, having the Optimal Risk Gauge. Number three, Focus Goal Laser. Number four, Effort Accelerator. And number five, Talent Meter. And again, those are from the book Winner’s Brain. It’s by Jeff Brown and Mark Fenske but I really do like the concepts that I’m taking away from it and I am, you know, taking quite a new notes.
[35:17] [music]
[35:20] Mike: So hey, by the way, did you notice that we are up to almost 200 reviews in iTunes?
[35:26] Rob: That’s crazy. I’ll tell you what, our review competition with texting really paid off because we were — were we under a hundred when we started? I mean it really did take a big jump.
[35:35] Mike: Yeah, it did. I think right now — I checked yesterday or the day before and we were up to, I think it was a 192. But it was pretty close to 200.
[35:43] Rob: Some awesome comments too. We have something from Craig McKeachie. It’s in iTunes. It says, “Skipped the NBA. Listen to this podcast. I received an MBA from a school that ranks in the top ten percent of US universities for return on investment and got a great deal out of going through the program. But I can honestly say, I’ve gotten more actionable real world advice from this podcast and it’s a thousands of dollars cheaper.” Awesome. Thanks, Craig. He also came to MicroConf.
[36:08] Mike: Uh huh.
[36:08] Rob: And we have one from a Dan Delario [Phonetic] who says, “I still can’t believe you can get this kind of advice for free. Thanks, Mike and Rob.” [Laughter] But wait there’s more. Richard Chen says, “I’ve been listening to the podcast for a year. I only wish I knew about it sooner. Rob and Mike are down to earth guys give valuable, practical advice to any internet business bootstrappers. Best podcast of its kind.” Awesome. And the last one Jonathan Richman [Phonetic] from just yesterday says, “Outstanding practical advice to a very candid look at starting your own company with great insights and advice to anyone who can use it immediately.” So thanks a lot, guys. Keep those reviews and comments coming in iTunes. You can just search for us, search for startups and we’ll be one of the top three.
[36:47] So if you have a question or comment, you can call it on to our voicemail number at 888-801-9690 or e-mail it to us at questions@startupsfortherestofus.com. Our theme music is an excerpt from “We’re Outta Control” by MoOt, used under Creative Commons. And you can find a full transcript of each episode at StartupsfortheRestofUs.com. Thanks for listening. See you next time.
Episode 83 | HitTail & AuditShark: Integration Marketing, Logo Design, Survey Analysis and Leaky Funnels
Show Notes
Transcript
[00:00] Rob: This is Startups For The Rest of Us: Episode 83.
[00:04] [music]
[00:12] 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.
[00:22] Mike: And I’m Mike.
[00:23] Rob: And we’re here to share our experiences to help you avoid the same mistakes we’ve made. What is the word this week, sir?
[00:29] Mike: I am undertaking a lot of work to create work for others right now.
[00:32] Rob: Yeah. [Laughter] Yeah, this is the work that you can’t outsource, isn’t it?
[00:36] Mike: Yes.
[00:36] Rob: It’s outsourcing your work you can’t outsource outsourcing your work.
[00:39] Mike: Yup.
[00:40] Rob: So what have you been up to?
[00:41] Mike: So I’ve been going sort of a hiring binge lately. I hired somebody to build out the AuditShark sales website for me. And essentially just come up with the design for it. I’d say for the last year or so, I basically have the same sales website out there. I really haven’t spent a lot of time or effort on it. Right now, I’m kind of focusing my efforts on building something that actually looks good and addresses the paying points that have been kind of brought to my attention that people are willing to pay for from that Wufoo survey that I ran. So I hired somebody for that and right now I have a job opening for another .NET developer to add to the person who I already have working full time on the AuditShark code that he’s working on. So hopefully, by the end of this week, I’ll have two people working on that and the other person will be working on the website. And then I’ll have to start generating the content and stuff that’s going to go in to the framework that he’s building for the website.
[01:34] Rob: You have a WordPress site up right now, right? Just a WordPress theme that you customized like a year ago or something —
[01:39] Mike: Yeah.
[01:39] Rob: And you had the logo design, you know, by someone. So what’s the rationale at this point to go back to the drawing board? Do you have like a much better design for it or I guess why would you spend a time now to go back and do that rather than use what you have?
[01:53] Mike: There’s a few different reasons. One is to kind of switch it off of WordPress and I’ve started integrating KISSmetrics to kind of all throughout my website. And one of the things that is — I don’t know. I won’t say it’s a real pain in the neck to do it with WordPress but I don’t like the — the look and feel that comes out. I’ve seen the — the particular theme that I’m using quite a bit out there and it’s starting to wear on me a little bit. So I’d like to have a little bit more control over it. And the other thing I’d like to do is I’d like to make the sales site and the application itself look a little bit more like they were built together because right now, they just don’t. But you know, it’s — it’s something that I’m going to have to do eventually and if I get started now, then it’ll be ready in like the next couple of months because it’s not like you can just say, oh well I’m going to redesign this and a couple of days it’s done. I mean it takes time to get it done.
[02:44] Rob: Right.
[02:44] Mike: So I’m spending the time now to find somebody to do it and then, you know, hopefully, in the next couple of months that it’ll — that it’ll get done and I won’t have to worry about it.
[02:53] Rob: Got it. And in the meantime, are you continuing — you had some survey results and you had fifteen or twenty e-mails I think and you were going to contact those folks and kind of do some customer development interviews to find out more in depth about maybe their needs and how you would structure your copy on your marketing site as well as potentially what you would build in to the product. Have you continue with that?
[03:16] Mike: Yeah. So I started talking to people and getting a little bit more of an understanding of specifically what they’re looking for. And one of the things that I’ve come across is that in both the copy that’s on the website and in my discussions with people, it’s not inherently obvious exactly what the product does and why it’s important. So one of the things that I came across was that the fact that AuditShark will dynamically look at your machine and figure out what it’s supposed to be looking at is now something that’s clear.
[03:45] So for example if you have a patchy installed in your website, then it will run all these different things on your machine to make sure that the patch is lock down and you know, if it’s a Unix or a Linux machines, it will track different places to find out what user accounts had been created and then we’ll monitor those overtime to make sure that they haven’t changed because one of the things that people should be looking at in order to secure those systems is our new user accounts being created. And if so, you know, what are those user accounts? It needs to notify you and those are the things that you should regularly do at some point anyway but most people don’t. But if a new user popped up on your machines, obviously, that’s something you would probably want to know about. If you did it, that’s fine but if you didn’t do it and you just get this notification that says, oh, there’s a new user account that’s been created and has got, you know, UID of zero, well, that’s probably a problem.
[04:36] Rob: Got it. Hey, I have a question. How many hours do you estimate that you’re going to have to spend to basically kind of repurpose the code that you have the AuditShark code or expand it to fit the new product idea that you’re exploring? Or do you know that yet? You know, the full feature set.
[04:50] Mike: I don’t specifically know that yet. I mean a lot of the stuff is going to stay the same and I haven’t even really look at what needs to fundamentally change in order to meet that new model. I don’t believe it’s a lot but not a lot is not quantitative I’ll say. I would say maybe fifty to a hundred hours but it’s probably fifty to a hundred hours that I mostly likely would have spend anyway because there were a lot of things that just weren’t done. So if the things would work and they would do what they’re supposed to do but there are use case scenarios that I hadn’t accounted for yet and this particular one is one of those — use case scenarios that I had thought of them like, hey, I think the people would want to use this for, you know, their web servers and I didn’t have a use case scenario for them being able to install at on a web server. It was solely around them installing it and like an active domain environment and then running there.
[05:42] So this is a use case scenario I had always scoped out and thought of ahead of time and I don’t look at it as being extra work that I wouldn’t have done had I gone in this direction. I think I would have done it anyway. It’s just the matter of timeline I guess.
[05:54] Rob: Right, that makes sense. Have you thought about just putting up a landing page? While you’re doing these interviews, you know, you do have a decent idea what people might want but you could get a pretty attractive landing page that’s not use by anyone, you know, like off of themeforce.net. They have, I don’t know, like seven to twelve bucks in there. There’s some pretty nice one of these days. You know, John Turner has — he’s an Academy member and he’s doing really well selling his ultimate coming soon plug-in which is cool because you can then have a theme on the back end and then just have this plug-in that’s, you know, swaps at a landing page as your home page. But I guess you’re moving away from WordPress but for now, you know, you could keep the WordPress install and use his plug-in and just have a few senses describing the specific paying points.
[06:34] Mike: Uh huh.
[06:34] Rob: And then push off the website construction until — the marketing site construction until after you’ve had more time to talk to these customers and potentially have even gotten started on updating the code with the final feature set and then kind of set someone off on — on building it. Have you consider that route?
[06:50] Mike: Not specifically, I mean one of the things that I was a little bit concerned about in doing something like that is the SEO that I’ve done on my existing web page but I don’t know is that’s a huge hurdle to overcome. The bigger issue is kind of putting things on to that coming soon page that makes sense in — and or in line with what people are looking for. You know, some of that I think I’m still kind of straightening it out but I think that there’s probably enough interest in what I’ve talked about so far. I mean virtually every single person who answered the survey with I think two exceptions out of about thirty that said, “Yeah, add me to your mailing list.” That side of it I think turns out pretty well. But I don’t have a good reason for not doing that so —
[07:30] Rob: Yeah, I mean —
[07:30] Mike: … that’s probably something I move forward with.
[07:32] Rob: I see two kinds of benefits to doing that over going at in building the full pledge site right now.
[07:37] Mike: Just a correction though, I’m —
[07:38] Rob: Yup.
[07:38] Mike: … I’m not having the whole site built up. I’m having basically a template build for me with all these different HTML and CSS Snippets for different things that I may want to put in to the site —
[07:48] Rob: Yup.
[07:48] Mike: … and those will go in to like a full blown .NET web application that I’ll kind of put together. Why I put the contractor on is just basically building out the design for it but not the actual content.
[07:58] Rob: So I guess that I want to see the benefits in the landing page. Does it focus you’re — you’re just going to get more e-mails from it, period. You know, any visitor you send there is going to read it, read the few bullet points you have and then either give you their e-mail or not or is it if build out more of a full site after navigate through to give you their e-mails. So you have a higher conversion right there. In addition, I think — I think you’re right. You’re still kind of an early in the journey of figuring how exactly what AuditShark is going to become. And so not too hard to put together some bullet points a few senses to describe again. Probably harder to build out, you know, the full three, four, five page site with the tour and all that stuff.
[08:31] Mike: Right. That’s a good suggestion. I think I’ll do that. What about you? What have you been up to?
[08:31] Rob: About a week and a half or two weeks, I mentioned that I had rolled out Chinese character support and actually Chinese Search Engine Support which is the two different things but they’re related.
[08:45] Mike: Uh huh.
[08:45] Rob: I rolled them out with HitTail. So now, like these search engines like Baidu and this one called the Sogou and just a bunch that I can’t pronounce frankly, they now worked with HitTail which is cool and I have an “enterprise client”. My first four figure a month client trying it out now.
[09:02] Mike: Cool.
[09:02] Rob: So we’ll see how that appends out. I’m like cautiously optimistic. I tend to be skeptical when like really good things happening or like a “big break” but it could be — it could be a nice one, you know, it can be good for revenue. So he’s about seven days in to a trial. I just touched base with him so…
[09:18] Mike: Cool.
[09:18] Rob: That’s kind of the update on that. Now what I’ve really been working on for the past seven to ten days is this one-click article support because I mentioned last time that one of the main reasons that people were — were canceling their HitTail accounts was because it was adding stuff to their To-Do list, right? It gives them the suggestions that they should target but they don’t want them to go out and either try to write themselves or hire a writer. And so there are a few services that basically have these big pools of writers and you know, they offered to write articles for you and there are a few of them with API’s.
[09:51] Mike: Oh really?
[09:51] Rob: And so — yeah. So integrated with — with one of them that has 80,000 writers, not all are active but they have huge pool of writers. And so, you know, it’s kind of a no brainer for someone like me to — to integrate there. There are some other services, a lot of by the services that integrate with them and kind of use them as their back end Mechanical Turk almost, right? It’s like the turnaround is one to two days depending on the length and get a full pledge article and there’s like a bunch of different pricing tiers and all that stuff. But I made it super simple. I’m calling this an MVF. It’s a Minimum Viable Feature.
[10:21] Mike: [Laughter]
[10:21] Rob: Instead of actually — and when I sketched to that, of course, you know, I’m the developer entrepreneur. I was like “Oh man.” I want there to be all these choices and you could do 300 to 400, 500, 600-word. You can say I want SEO or not. How many times should it, you know, should these keywords appear in there. I want the people to be able to submit it and then review it and preview it and accept it or reject it and that — you know, there’s always options available to their API and I kind of cranked up at estimate and realized there’s no way I want to build all of that. So I just — I chucked it all. I said, “When you click this button, we charge your card on file 18 bucks for one 400-word SEO article and it comes back in two days.” And there are a few options, you know, you can change the title and change the keyword and do a few other things but it is super, super stripped down and if this works and it appends out and A, it helps retention and B, it actually, you know, generates the revenue because obviously I’m marking up the service a bit so there’s a little bit of margin for me.
[11:15] If that works, then I will go on and expand it and certainly add it, then adding it, you know, and making it a 300 and 500-word options. It’s not actually that hard at this point. I mean I kept all that stuff in mind while I was coding but I just — to do all UI work to support that would also really make the form a lot larger. So I pushed that live yesterday and it, you know, I’m super stoked that that’s finally done. It’s just — it’s kind of the biggest new feature that I built since I acquire the HitTail.
[11:39] Mike: Uh huh.
[11:40] Rob: And I haven’t launched it like I haven’t announce it to anyone. It’s soft launched now. I had placed one order myself just to make sure everything works. And so far that’s good. And then I think I’ll slowly start e-mailing customers in like ten or twenty person chunks and just kind of see how it goes before I really do a big blast in the promotional campaign.
[11:58] Mike: Uh huh. Now, you’re going to be measuring how many people kind of go through that funnel whereas you start telling more and more people about it.
[12:05] Rob: Yeah like how many people see the page —
[12:07] Mike: Yeah.
[12:08] Rob: … and click versus not. Yeah, I will be. Yup. So I have — I have KISSmetrics to install. I also have Google Analytics. But you know what? Good point I should actually install maybe Crazy Egg or even Inspectlet. Inspectlet is like the inexpensive version of ClickTale where does a screen recording of people doing stuff.
[12:23] Mike: Uh huh.
[12:24] Rob: And Inspectlet supports JavaScript and divs and all that because I have — it’s basically a Lightbox that pops up. So I probably should do that just to watch people on that specific page. I may —
[12:34] Mike: Yeah because if they’re not seeing it, then they’re not going to, obviously, click through it but you want to make it visible without being I’ll say intrusive.
[12:40] Rob: Yeah. And I’m planning on adding like a little new, you know, icon at the top in HitTail, you know. There are grids that you can sort and you can page and do that stuff but there’s not a lot of adornment on purpose because we want it to be simple and fast but if I put a big new icon at the top, I’m hoping it’ll draw to people’s eyes.
[12:58] Mike: Cool. Hey, did I tell you that I’ve did a contest on 99designs for new AuditShark logo?
[13:03] Rob: You did. You mentioned that to me.
[13:05] Mike: I finally went through and actually approved one and got all the files and everything transferred. So I’ve got that. I already sent that off to the designer who’s working on the sales website template that I’m going to using and hopefully, he’ll be integrating that in shortly. And I’m hoping to get some screen shots and stuff back just to kind of see what he’s working on in the next couple of days. But the logo I think turned out really, really well. I ended up with I think 110 different designs to choose from. There were probably three that I thought were in my top three. [Laughter] It was basically those three that I kind of work through a couple of different iterations and there was a fourth one that I kind of threw in at the end just making in to the finals.
[13:46] If you’re not familiar with how 99designs works when you’re doing a logo contest, basically, you pay a specified amount whether it’s a bronze, silver or gold contest and you pay more for the gold contest than you do for the bronze. And the one I did was I think $500 and the people who just start submitting their designs to you and you get to rate them and comment on them and send them back for revisions or whatever and they’ll just keep submitting them to you as long as you are I’d say pretty diligent about providing feedback about what you like, what you don’t like when it gets to a certain point, I think that’s about three and a half days in, they kind of draw the line. You have to pick your designers, who you want to move on to the finals.
[14:24] There are certain designs that people would come up with and you just don’t like anything that they come up with. So — those are the people you wouldn’t want to bring on to the finalist stage and then of those, I just picked four to go on to the finalist. And then of those four, I picked one of their designs and I had them tweaked a couple of things and what was it — I think five or six days and it was done.
[14:41] Rob: How cool. How much to that one have cost in?
[14:43] Mike: It was 499. So —
[14:45] Rob: Cool.
[14:46] Mike: … $500. One of the things that was kind of interesting was I put it on Twitter that I had been drawn in this contest and somebody called me out on it over episode 71 via Twitter. And if you will recall episode 71 it was “Things you shouldn’t pay for early on in your business.”
[15:02] Rob: [Laughter]
[15:03] Mike: You have that?
[15:03] Rob: You know, it’s funny. I was just going to mention this because that’s one thing I don’t pay for. I don’t have logos for anything, like I do it on purpose now. Like the Academy has no logo. The only reason HitTail had a logo is because the designer who’s designing had said, “I need to put a logo here.” And I said, “Just put a text.” And he said, “No, I have to do it.” So he just did one off logo. But yeah — so I was going to ask you about that and give you a little crap about it but I’m glad someone else [Laughter] headed me off.
[15:27] Mike: No, I mean he did and — you know, it’s a good point. I think a lot of the things that I said, there are still a whole true. I mean which was primarily if it’s not making you money and it’s not going to make you money, then what difference does it really make? But at the — at the other end of the spectrum is, you know, I would still have to have something there and I would have to have some. The very least stylize text and you can look at stylize text and say, “Well, that’s a logo.” And as like, “Well, I don’t really want that.” It was more of a personal preference on this particular product. In looking what I ended up choosing, I think that it fits really, really well.
[15:59] Rob: And here’s the thing, you can make general rules like we talked about 71, you shouldn’t spend money on stuff, you know, before you need to spend it. But the bottom line is there are a couple of things, one, as an entrepreneur, you can have some indulgences. If you really wanted a nice logo, then go buy yourself a nice logo, you know. But when you’re doing it, you know that it’s not going to dramatically increase your click-through rates to your signups or anything.
[16:19] Mike: Right.
[16:19] Rob: Just know that going in to it that you spent that 500 bucks and it’s not necessarily going to have a high ROI but if you needed that to like feel excited about the project, then do that. That’s not a big deal as long as you know it.
[16:28] Mike: Well the other thing that does — as you said, I mean if it excites you about the project to actually do that and it really did. I mean seeing the logo kind of help energized me a little bit and put me in the right frame of mind to kind of go on and tackle a lot of other things that I kind of had on my plate for AuditShark. So I think it was helpful for me but at the same time one of the things that I think is important about AuditShark is because it is kind of a security product, I think that it lens credibility to it by having a nice logo. In many cases, a logo is probably not necessarily going to land you any sales but at the same time I think for this particular product, having a logo is going to help it land sales that might have otherwise been on the fence.
[17:06] Rob: Right. You can definitely take it too far and you know, I talked about indulgences and doing stuff just to get you excited and you can spend a hundred of hours or a thousand of dollars doing something stupid just because it gets you excited. And obviously you don’t want to go that far. But you’re not doing that here. And I would agree with you like we’ve talked about different ways kind of a tiers of building sales websites and at the very bottom by an HTML template right above that you can buy a premium WordPress theme. Above that you can get a — a kind of a low end custom-design and you can go a higher end and we’ve done — I’ve definitely done all of those tiers and I know that they impact click-through rates and they impact conversion rates but for some of them like when I read at HitTail, I paid top dollar.
[17:45] I paid the most that I ever paid for a design ever, [Laughter] you know, in all of the sites that I built. And that was a little bit of an indulgence but it was also a little bit of me getting really excited about the idea and wanting something that I could be proud of. And third, it was like you said, it was about building some credibility for this thing because it is kind of an — it bring you something to another level, right? It’s not some really tiny niche product. It’s something that you do want to have a lot of credibility and therefore, there are some — there’s some give and take there. There’s some things that may be on the boarder of, you know, how early you should have them done and how much you should pay for them and if you have the money and you really are going to — kind of go bigger and go with the bigger idea, then some of those things can be done earlier on or you can invest more money than you otherwise would have if you might be going after, you know, more of a niche idea or you’re a more cash strapped.
[18:30] Mike: Because I know that there’s money here, I think it makes it a little difference. So if this was a new idea that I didn’t know if it was going to fly, that’s when I would probably be a lot less likely in a way to spend the money on, you know, the logo. In just drawn in the survey, I’ve got anywhere from 1500 to $2500 worth of commitment so far based on, you know, the survey. I can definitely see that there’s money there. So it doesn’t bother me to spend $500 on making it looked nice.
[18:58] Rob: Right. Now, you said something that you said because I know this is going to work and I think, I personally think that’s taking it too far at this point.
[19:05] Mike: Uh huh.
[19:05] Rob: I do feel like you’ve gotten some positive affirmation of your hypothesis —
[19:09] Mike: Uh huh.
[19:09] Rob: Like to me, at least maybe I’m a pessimist or something, in the back of my mind it’s like, no, you still need to prove this out.
[19:14] Mike: I guess no, it’s probably not necessarily 100%. It’s I’m fairly confident that I’m on a right track. Not necessarily that this is going to work and I know exactly what I’m doing. It’s more of that I’m on the right path. That’s more what it is I think.
[19:26] Rob: You’re encouraged, yeah.
[19:28] Mike: Yeah.
[19:28] Rob: And that I would agree with.
[19:29] Mike: Uh huh.
[19:30] Rob: So I went in to a little indulgence of my own last week. I was knee-deep in code doing that one-click article feature and just for kicks, I wanted to try a little bit of paid customer acquisition so I set up some Facebook ads and had kind of a blast with it. I forgotten how much work it is to set up and maintain Facebook ads because they just burn through people so quickly.
[19:53] Mike: Wow.
[19:54] Rob: For those who have — yeah, for those who haven’t —
[19:56] Mike: I like the — stock price as it goes down, right? [Laughter]
[19:58] Rob: Oh my gosh. Tell me that’s a disaster. [Laughter] Anyways, that’s a whole other podcast but —
[20:03] Mike: Yup.
[20:04] Rob: … but it was fun. With Facebook ads, you target a demographic and you tried to get the demographic to a certain size and then you really got to go for the visual — the visual and the headline or — for the most part, all accounts to get the — the attention. But then you basically, a Facebook just shows the ads over and over to the same group. If you niche it down properly, then your number of people that you’re displaying it to is not huge. And so Facebook will repeatedly show it to those people. And so if your click-through rate goes high, your cost per click goes low but then pretty soon, your click-through rate just plummets because people get blind to the ad because they’ve seen it so much.
[20:36] So realistically, like if you put an ad up and you have, you know, an audience size based on the demographic you’ve chosen of around a hundred thousand people, it’s like two or three days and the ad is done. And so, I put up three or four ads, A/B testing a bunch of different stuff and they were just gone in like two and half days. And then I put up another — I put up like nine the next time. And I had a bunch of, you know, image I was — images. I was using different headline combinations and testing and it was fun.
[21:01] I was spending about twenty to thirty minutes a day on it and in total, I’ve dropped — I guess it got pretty good click-through rates about 50 cents a click and I spent about 300 bucks. Yeah, it was a fun experiment. I wound up getting a bunch of customer, well, a bunch of trials, anyways. And that my current trial to paid conversion rate it looks like I will be about — it was about six months of a cost of the average revenue to acquire a customer. So if that makes sense so I —
[21:28] Mike: Yeah.
[21:28] Rob: … it’s about six months of my average revenue number in order to acquire each of those customers assuming they convert the way my other — my other customers do from trial to paid. So now, I want to get that down to below that. It should — I wanted to be more around three. Since I’m bootstrapping, I don’t have this huge pool of cash to dump on it but —
[21:44] Mike: Uh huh.
[21:45] Rob: … it was a fun experiment. I shall of — it was way too much work. The thing was is for the amount of work and even, you know, kind of the money I was investing there are so many other options at this point that would work better than that.
[21:58] Mike: I can see that. So when you’re I guess doing this Facebook ads, I mean do you have a lot of control over how much I guess gets spent or how much they get showed to people? I guess how much control over the process do you have?
[22:11] Rob: So first, you specify all types of demographic information, right?
[22:15] Mike: Uh huh.
[22:15] Rob: What they’re interested in and what they have in their profile and their age range, their gender, you know, all these different stuff. And then you can do cost per click and then Facebook will just show it as much as they think — they have an algorithm obviously that shows it and if your click-through rate is high right off the bat, then it’ll drop your cost per click and they’ll show it a lot more because they want to make — it makes them money and it makes you money.
[22:38] Mike: Uh huh.
[22:38] Rob: And then you can also choose cost per thousand, right, CPM —
[22:42] Mike: Uh huh.
[22:42] Rob: … where it just — it’s not cost per click but it’s actually cost per thousand impressions. And that way with a little different, they still had an algorithm but they seem to show it a lot more. They kind of didn’t care about the click-through rate, right? Because that’s not they’re billing on and so that was — allow me to get to add in front of more people and so I tolled around with both of them. I got on this one, I got the better click-through rate using the cost per click and in the other campaigns I’ve done, I’ve had CPM worked better. So it varies from time to time. I’m sure there’s — as a rule, certain people can get a phenomenal click-through rates or CPM I’ve heard and I’ve seen that happened on one or two campaigns. And then from there, you set your daily budget. That’s how you — how much you show, right? Once it’s out of money, then it stops showing.
[23:25] Mike: Got it. Yeah, I was just kind of curious how Facebook’s model for advertising stuck up against like Google AdWords. So…
[23:32] Rob: Yeah, it’s definitely getting more sophisticated. It was pretty simple about a year or a year and half ago but they’re adding more features and I think the algorithm is getting a little better. I mean I imagine now they have IPO’ed, you know, they really need to kind of take this up a notch.
[23:45] Mike: Yeah. And I would imagine that they probably have a lot more data about the users that they’re showing this too to figure out whether or not that’s going to fly for them or not. So…
[23:45] Rob: Yeah, it’s so with me.
[23:54] Mike: Yeah, I’ve been doing some data analysis on my end for the Wufoo surveys that I’ve did for AuditShark and one of the things that I found that it’s interesting but not surprising is that the people who have Window servers are willing to pay roughly twice what the Linux admins are for the same thing.
[24:12] Rob: Interesting. Yeah, that makes sense, right?
[24:14] Mike: It makes sense but it also makes pricing difficult, you know?
[24:17] Rob: Yeah.
[24:17] Mike: I mean I had roughly the same amount of people who had Window servers as had Linux or UNIX servers. So it’s —
[24:17] Rob: I was going to ask you that.
[24:26] Mike: Yeah.
[24:26] Rob: But that’s some — you know, I was talking, I mean this was a couple of years ago but Joel Spolsky had said — we’re at the Business of Software Speaker dinner. He and I were sitting two chairs down from each other and there was this whole discussion about Linux versus Windows users and all that stuff.
[24:40] Mike: Yup.
[24:41] Rob: He basically said that their Linux users of FogBugz were only — it was a very small percentage. It were somewhere around 15% or 20% but the day, at least for them for their market and actually accounted for a substantially higher percentage of their support issues. They must have — some people had said, well it’s because they are more hobbyists, you know, they’re in to PHP or whatever so they’re not going to be in to the Microsoft stuck looking for a cheaper solution and they don’t or maybe not as enterprise. You don’t know what they’re doing as much. Other people had said, well maybe your Linux product isn’t as good or it crashes more something and he, you know, contented that it didn’t. So that’s an interesting thing to think about too. I wonder if there will be any kind of ease of views or higher support burdens if you go Linux versus Windows or go both.
[25:27] Mike: Yeah, that’s one of those things that — it worries me a little bit just because if — if I kind of go down on the price in order to gain those Linux customers is that they’re going to kill me on support side of things.
[25:38] Rob: Yeah, seriously. And so you’re not going to charge 99 bucks for Linux and 199 for Microsoft Window?
[25:44] Mike: [Laughter]
[25:46] Rob: I would have to lean towards going Windows only when you launch then.
[25:49] Mike: Yeah.
[25:49] Rob: I got to go for the higher end to start with, right?
[25:52] Mike: Right, right.
[25:53] Rob: Especially if you have the equal amount. I was going to say if you have more or the same amount of Windows.
[25:57] Mike: Yeah. I think I have to go back and double check the spreadsheet but I think that they were — it was roughly equivalent in terms of the respondents. And I know that there was one person who had come in and said, “Yeah, I pay for it” but it really skewed the numbers because they had like, you know, 75 Linux servers or something like that. So that made up the bulk of them. But in terms of the actual number of people who chose them, it was significantly less. But yeah, I mean the distribution I am looking at it now. There were eight who had said Windows on this spreadsheet. So on this particular one, there’s eight of them in here that say Windows and then sixteen who said Linux, you know –
[26:36] Rob: That’s not 50-50. [Laughter]
[26:38] Mike: It’s not but the people who had Window servers tended to have more. So for the couple of exceptions there was the one that like I said have 75 that skewed at pretty far on the direction of Linux but otherwise, it was — it was mostly the — and the other thing is people going to answer more than one thing. So there were several people who had both Windows and Linux.
[26:56] Rob: What are you going to do? Do you think you’re going to come out Windows only and do the higher price to start with?
[27:00] Mike: I’m still trying to figure it out because one of the things I’m looking at is a lot of the competitive products that are out there I mean because I asked what are you currently use for monitoring on your server because Ted from Moraware had I kind of ran my survey past him first and just to get some feedback on it and he’s like, “This looks good.” The one thing I’d asked is what other monitoring solutions people pay for already because that might be kind of a self selecting crowd of people who are willing to pay for those types of things which —
[27:26] Rob: Sure.
[27:27] Mike: … gave me a great idea. I was like, oh, well if you’re already paying for those things then, you know, it would makes sense for me to either integrate with them or partner with them in ways that would allow me, you know, use my software alongside of theirs, et cetera. People pointed out what other tools that they use to monitor those servers. So I got a lot of information that I probably wouldn’t have gained otherwise and you know, just been looking at some of those offering or what they do. And some of them I just never heard of before and then other ones like, you know, Pingdom and Cloudwash . I mean those things, you know, pretty straightforward and I call them more well-known. You know, it’s just interesting looking at all that data.
[28:02] Rob: Yeah, it is. And you know what that helps you is this concept that I’ve been telling in one of my talks called Integration Marketing and there’s a few entrepreneurs doing it really well right now and I’m actually diving in to that my next marketing/technology challenge with HitTail is I have four different companies that want to integrate with me so — that I will either create an API and have them ping in and grab some keyword suggestions or you know, go out and integrate with their app market place.
[28:31] And the cool part of it is that I’m only integrating with people who already have customer basis and are willing to either e-mail or blog about the integration. And so I get this link and a mention and it sends a bunch of traffic, you know, it’s not — it doesn’t have a long fly wheel effect but you know, it — what it brings is this nice big chunk of people who kind of signs up for the — for the product and since it’s a SAS app, you get the recurring revenue from them. It’s not I mean really the cause is to do the integration, you know. So either I pay someone to write the code or I write the code myself and that’s where you in your survey have just asked about future integration partners, right?
[29:07] Mike: Uh huh.
[29:07] Rob: And if they’re already using Pingdom and these other things, whether you actually do a physical code integration with them or you just basically just to have these customers and I’ll them know about you and you have your customers and kind of do a joint venture e-mail type of thing. That’s a great way to go. It’s kind of a low cost guerilla marketing tactic but it works out really well. That’s the next steps for me after I get this whole article thing launched and I’m going to do a little promotional over the Chinese character thing as well and then move on to these things which had been on the book since like February. I started getting contact to them in November-December from a few shopping cart vendors and a couple other companies that will remain nameless right now but I’m pretty excited about — about doing that. These companies have few of intensive thousands of active paying customers. So —
[29:52] Mike: Uh huh.
[29:53] Rob: … could be — could be a nice — nice expansion of the customer-base.
[29:56] Mike: Yeah, definitely building an API that people can kind of interface with and [0:30:00] get data in or out of your product is helpful in leveraging your product is more of a platform, you know, as more people do it, it’s just gives you a larger breath, increasing your luxe surface area I believe.
[30:13] Rob: Right, from texting. But you know, in terms of the API I would never go out and just build an API and say, “Hey, here’s API. People can use it” because that’s an — that requires marketing too, right? You have to go out and recruit people to do it.
[30:25] Mike: Right.
[30:25] Rob: Only reason I’m building one is because I have four people onboard ready to do it now and I vetted them. They have, you know, between 500 and tens of thousands of paying customers and they are ideal integration partners because they are like shopping cart vendors who are great candidate for HitTail because e-commerce sites get a lot of value out of it and then there’s a few others that are marketing type software that were just the keyword suggestions really, you know, would work well and a couple of them, again, I am integrating in to a very consistent and a couple of them are going to pull for me and need an API from my end. So but yeah, I would never just go out and build — you do see this kind — it was like the web 2.0 thing, right, was to become a platform and build an API and I don’t think that’s a good move straight upfront. I mean I think you have to — you have someone to need it before you build it.
[31:09] Mike: And those people who need it, you simply work with them to figure out what it is that they need and you build —
[31:13] Rob: Exactly.
[31:13] Mike: … from that stuff in to an API and then as other people start using it and leveraging it, then you build out other things on top of it. You don’t —
[31:21] Rob: Exactly. Dude, that’s right. And my API right now it’s all built. It’s one call, one method call, get suggestions.
[31:28] Mike: [Laughter]
[31:29] Rob: You know what? There’s authentication and then they’ll get suggestions because that’s all I need right now. And now and some days someone will lead some dynamic tracking code and then — then we’ll build that out so it’s an MVF as well, Minimum Viable Feature. I think I need to write a blog first about MVF because I Googled for it. I’m not — someone surely has talked about this before and of course, it’s nowhere to be found.
[31:47] Mike: [Laughter]
[31:48] Rob: Maybe we’ll rank for it with the transcript to this podcast.
[31:51] Mike: Yeah, maybe. It’s funny that you mentioned building an API because with AuditShark a way a lot of the data is pass back and forth that’s all done through web services. So in a way, I almost have an API that’s kind of sit in there. It’s just not documented for anybody else to use.
[32:08] Rob: And you need the authentication later on their security authorization authentication.
[32:13] Mike: You do but I use a token for just about everything.
[32:15] Rob: Oh nice.
[32:16] Mike: And that token is built in to the product. I think it can be pretty easy to surface that in other locations but I think mine is probably different than most API tokens and that my token is only valid for about an hour. So —
[32:29] Rob: All right.
[32:30] Mike: … most — most services you signup for, they have this API token and you know, you can click a button and reset it at any time but otherwise, it’s valid until the end of time. My system when you pass things back and forth establishes a token which is randomly generated for you and that token is valid for the next 60 minutes. And if it times out while you’re in a middle of doing something, then the next function call will basically say, “Hey, this token has timed out, you’re going to have to request a new one.”
[32:55] Rob: Nice.
[32:56] Mike: So —
[32:56] Rob: Yes, it sounds like you have something that built in already.
[32:58] Mike: Yeah.
[32:59] Rob: Yeah. Have I talk about operation retention?
[33:01] Mike: No, what is it?
[33:02] Rob: This was like the big movement. In January when I relaunched HitTail, I got this big influx of traffic and then thirty days later when the trials ended, I got to start seeing the conversion rate from trial to paid and then I started watching the churn rate of paid customers how many canceled per month. And right away, it was not good. I was just clutching my eyes as I watched [Laughter] these numbers go in the wrong direction and they were just bad. They weren’t anywhere near the goals that I had. So I’ve started doing a bunch of marketing and a bunch of people coming in but I have this leaky funnel, right? And it was better than the old HitTail design. It was better than the old HitTail trial, all that stuff but it wasn’t where I wanted it to be.
[33:41] So I sat down and wrote in my notebook. I said “Operation Retention.” All I’m going to focus on, I’m going to stop all marketing. I’m going to stop anything that takes my time and I’m going to focus on getting the churn rate down, driving the trial to paid conversion rate up because the number of visits to trials was great like that’s — it’s totally in a rate of where it should be. I could tweak and get a little more out of it, you know, just test copy and A/B and stuff but their big glaring bottlenecks the big holes where the trial to paid conversions and the cancelation rate early on.
[34:14] So I wrote down eight things. I contacted customers. I had my VA contact everybody who canceled to ask them why they canceled. I put together a spreadsheet and I figured out that there were seven or eight main reasons people were objecting and some of them included things like it adds things to my To-Do lists. I want to have to be able to one-click an article and that’s why I built this feature. Other said they said things that alluded to the fact that they didn’t understand how the product worked. So they would say like, “Well the suggestions are all around the same topic and that doesn’t help me” whereas that’s actually a really good thing. And so I realized I needed to educate. And so there were three or four that were like that where I needed more education. I needed the people who were using it to understand how it works, to understand the benefit they could get out of it.
[34:55] So I listed these things out and one by one, I’ve been scratching them off and with the release of the one-click article feature, it’s done. The education I did through screencast during the trial and so people they had a few e-mails during the trial and I basically just had a question in there and would have – and once they answered and then the link went off to a screencast. Now since I started operation retention, my trial to paid conversion rate is up 100%. It has doubled.
[35:21] Mike: Wow.
[35:22] Rob: Yeah, in three months and I’m super stoked about that as you can imagine. And then the other thing the churn rate is one half of what it was when I started. So I’ve 4x’ed the funnel in essence.
[35:32] Mike: Nice, very nice.
[35:33] Rob: Yeah, I’m going to go in to more detail about it. I’m probably going to write maybe a book chapter under it. They just, you know, there’s a lot of stuff that I tried that works, some of them didn’t work. There are still tweaks to be made and it is kind of a minimum viable effort, an MVE at this point. Now, I’m just getting ridiculous with that.
[35:50] Mike: [Laughter]
[35:50] Rob: But no, it’s like some of the screencast, I mean they’re not like fantastic. They’re not well produced. It was me sitting there recording for forty five seconds and then just pushing it on to the server because I wanted to get the stuff done as quickly as possible. But even with that kind of home brood effort of really not having stuff professionally done and not spending a ton of time thinking it through, they had dramatic impact on, on these numbers. So, I’m super stoked. I’m also — I’m just stoked that it — I’m stoked that it worked. I’m stoked that kind of the hypothesis was validated. And just that, you know, all the stuff that we talked about it holds true, man.
[36:20] Mike: Very cool.
[36:21] Rob: You’re building the funnel, plug in the holes.
[36:22] [music]
[36:25] Mike: So if you have a question or comment, you call it in to our voicemail number at 1-888-801-9690 or you can e-mail us at questions@startupsfortherestofus.com. Our theme music is an excerpt from “We’re Outta Control” by MoOt, used under Creative Commons. You can subscribe to the 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.