Show Notes
- Planet Money Episode 412: How to fix the Patent Mess
- Sign up today for MicroConf 2013
- HitTail
- DotNetInvoice
- Liam Cavanagh – Microsoft
- MailChimp
- InfusionSoft
- USERcycle
- Postmark
- Copy Hackers
- Flippa
Transcript
[00:00] Rob: In this episode of Startups for the Rest of Us we’re going to be talking about nurturing leads in your funnel, planning for growth and how to buy a website. This is Startups for the Rest of Us: Episode 103.
[00:11] Music
[00:20] Rob: Welcome to Startups for the Rest of Us, the podcast that helps developers, designers and entrepreneurs be awesome at launching software products, whether you’ve built your first product or you’re just thinking about it. I’m Rob.
[00:29] Mike: And I’m Mike.
[00:30] Rob: And we’re here to share our experiences to help you avoid the same mistakes we’ve made. I have just had two cups of coffee. So this is going to be an energized show. But I killed the 90 minutes earlier this morning troubleshooting a server configuration issue on HitTail. And when I was younger I was in a few bands play guitar and sing and stuff and I learned that the best art comes out of like intense emotion. And so what I did is I channeled my anger over this server configuration issue and I wrote a poem. It’s called An Ode to Microsoft Security Patches. “Dear, Microsoft. Please stop resetting the permissions on my Windows temp. This is exactly why people talk about your Operating System with such contempt. Your security patches broke my app again. I hope I don’t ever have to go through this crap again. The worst part is that the patch was applied weeks ago and now, up crops this error to spoil my work flow. A miniscule change to a single webpage costs 90 of my precious work minutes to go up in a blaze. In retrospect, my biggest mistake was not assuming that the error message had been written to be intentionally opaque. The end.”
[01:40] Mike: Bravo.
[01:41] Rob: Oh, the poem was like 3 minutes.
[01:43] Mike: Oh, really?
[01:43] Rob: Seriously, off the top of my head, yeah.
[001:45] Mike: Wow.
[01:45] Rob: No, I used to — I used to write songs. So like rhyming stuff is not — was not a big deal. So yeah, I know the 90 minutes was focused on being very angry at a Microsoft Security Patch that resets permissions on a directory every time it runs and [Laughter] and like every six months we run in to this same issue and I finally documented it to the point where I’m not going to lose two hours next time. But that’s frustrating.
[02:07] Mike: Yeah, it’s interesting because that’s one of the things that is little known to people is that when Microsoft is running their patches, they have a tendency to reset permissions. They use some — I’m pretty sure they use some sort of like kernel level stuff that goes in and allows it to change permissions no matter what so that the patch can be successfully applied but it doesn’t necessarily revert those permissions to whatever they were before but that’s something that we — in selling the security and compliance software to people in the past, I’ve pointed it out as like, “Look, permissions can get reset and here’s one of the ways that they can get reset and that’s what this compliance product can help you find out and determine whether those things will change or not and give you notification.” So I highly recommend that you go to AuditShark.com —
[02:49] Rob: [Laughter] Sorry.
[02:49] Mike: … to sign for the free trial.”
[02:51] Rob: Awesome. I will go to that right now [Laughter]. It would have paid for itself this month for sure.
[02:56] Mike: And it will let you know several weeks ago that that it happened.
[02:58] Rob: Yup, very good. So I heard you had dinner with our Podcast Editor last night.
[03:04] Mike: Yeah, I did. It’s a good time. We ended up going up to some place in Manhattan. I forget exactly what the place was called. We were just talking and she had mentioned to me that she’s gotten so good at editing the podcast that when she pulls it up in Audacity, you know how there’s all the graph of exactly what it is that you’re saying. It just shows you like the wave —
[03:21] Rob: Wave —
[03:21] Mike: … of thing?
[03:22] Rob: Uh huh.
[03:23] Mike: She can tell just by eyeballing it where one of us is saying either “Mmm” or “You know.”
[03:28] Rob: That’s awesome, yeah.
[03:29] Mike: And she also said that if she — she would never survive the Podcast Drinking Game if she had to use the non-edited version.
[03:35] Rob: Oh, yeah, that’s — that’s brutal. I don’t think people realize how [Laughter] poorly you and I actually speak before the editor goes through and edits like the same where I worry. She’s edited the, what, 90 something of the episodes, right? I think we only edited the first 5 or 10.
[03:49] Mike: Yeah, she’s done —
[03:49] Rob: That’s so out of —
[03:50] Mike: She’s done a lot of them.
[03:52] Rob: It’s a lot of us to listen to in slow motion.
[03:53] Mike: [Laughter]
[03:55] Rob: Very cool.
[03:56] Mike: Also speaking with the Podcast Drinking Game, Will Samuels wrote in to say that, “You should have to drink whenever Mike says essentially.”
[04:03] Rob: I’ll agree to that.
[04:04] Mike: All right.
[04:04] Rob: I also noticed a few other ticks that you and I have and I’m not going to say them on the show because once I notice them it started irritating me whenever we do it. So there’s an episode of Planet Money which is one of my favorite podcasts. It’s an NPR podcast and it just came out today. It’s episode 412. It’s called How to Fix the Patent Mess and they interviewed a Stanford professor who’s written a book on Software Patents and the mess that it is and he has some proposals for how to fix it. Awesome episode like first — I think it’s the most — he has written an entire book on the subject and this podcast was the most comprehensive view I’ve seen of actually trying to fix this and one of the amazing things that he had said is I think he talks to someone at Google and Motorola and there’s kind of just this number out there and is that the estimated number of patents that if you were to build the smart phone that you’d be infringing upon is 250,000 patents.
[04:58] Mike: That’s insane.
[04:59] Rob: Yeah, and then they run through a bunch of the patents that are even worse. You know, you and I brought up some of them but there are some that are so broad like VO — like Voice Over IP is patented streaming of anything over the internet, anything, like any type of media file is patented by someone. You and I’ve just talked about one-click ordering and that kind of stuff but these are way worse like these are true innovation stifling patents that had been granted. Anyways, if you’re interested in hearing more about that, check out episode 412 of Planet Money.
[05:28] Mike: I wonder sometimes if companies like Google and Microsoft and IBM and Apple aren’t just stock piling some of these patents in order to help keep them away from like the legal trolls.
[05:39] Rob: Oh, they absolutely are. You know, that’s why Google bought Motorola. I mean it’s pretty much widely known to be a patent defense operation like they spent billions. I don’t remember what they paid for, 4 or 5 billion? And it’s widely known, widely expected that that’s why they did it was to get their — that huge cache of patents. Money is not going towards innovation.
[06:00] Mike: No, right.
[06:01] Rob: In fact, it’s not going towards paying people to build things. It’s not going towards R&D. It’s going towards having these documents sitting in a basement somewhere, in a vault so that they have it as defense.
[06:10] Mike: Well, somebody gets that money eventually. It’s got to go somewhere. It’s not like they pay this money and then it just disappears in to a black hole, you know, it’s a financial system.
[06:19] Rob: It goes to lawyers.
[06:20] Mike: So I do have an announcement that I wanted to make. You and I have started talking about MicroConf 2013. So if anyone is interested in actually going to MicroConf, then you’ll have to go to www.microconf.com. Sign up for the e-mail list and you’ll be on the first round of notifications for that. We do expect to sell out. So unless you’re on that list, you may not actually be able to get a ticket and then the other thing is that if anyone is interested in or knows of companies who would like to be a sponsor for MicroConf, just go ahead and drop me an e-mail or use the questions@startupsfortherestofus.com. I’ll follow up with you on the details.
[06:57] Rob: I’ve been making a bunch of tweaks along with my small team of bandits to HitTail and we went from a 30-day trial down to a 21-day trial. I went in and mime some data and figured out that most people get enough hits within the first 21 days to make it where they can decide whether or not to continue with the service. And to be honest, we’re testing stuff now. We’re starting to mock with pricing and some other things and it’s just painful to wait 30 days to find out if your experiment is working because then you — you shut it off and you have another 30 days of either good or bad that’s going with it. You can’t really turn the ship fast enough when it’s 30 days. I’d love to get down to 14-day trial but I don’t think I’ll be able to. Anyways, for those out there who do have longer trials — when I first acquired HitTail, it was a 60-day trial and I went down to 30 without too much issue. But if you have a trial longer than 21 or 14, I would highly recommend trying to get as low as possible just allows you a lot more flexibility.
[07:51] Mike: Was that about the time you were “struggling” to make premium work?
[07:55] Rob: Indeed, it was to quote the Wall Street Journal —
[07:58] Mike: Yes.
[07:58] Rob: Very nice. The other thing we did that I’m pretty stoked about is we launched a 7-day long tail SEO e-mail course. So if you could just go to HitTail.com, you’ll see in the bottom right there’s just this little like JavaScript widget and it’s performing well. I know it can do better if we optimize it. We’re going to do some split testing or a bunch of stuff but already it’s picking up a lot of people who were coming and visiting the site once and leaving. As you know 98%, 97% however many of — we always have a huge chunk of people that come and just bail. So to get people on to an educational 5 or 7-day e-mail course is a big deal. If you don’t have one, you should think about doing it. It was a bit of effort and it’s why I waited until I had my new team member onboard to be able to pull it off. But now that it’s up, it’s absolutely noticeable on our conversion rates and just people returning to the site.
[08:48] Mike: Cool. Where did you get that idea from? Did you pull it from WP Engine was doing or did you talk to Patrick McKenzie about it? Because I know Patrick’s got a course that he recently launched on E-mail Lifecycle Management. And I’ve actually been checking it out recently and it’s — it’s actually very, very good. It’s got —
[09:03] Rob: Yup.
[09:03] Mike: … a lot of great information in that.
[09:05] Rob: Yeah, I know it is good course. No, I mean I’ve done this forever. Remember my talk from BOS? It was all about this. It was all about putting an e-mail follow up sequence on your site and it was at investigation of the impact some of the stuff. So we’ve done this on DotNetInvoice for years. I do it on Apprentice Lineman Jobs. It’s been on my list since I first acquired HitTail. I just didn’t have the bandwidth to do it and —
[09:25] Mike: Great —
[09:25] Rob: … yes, I’ve also checked out Patrick’s course. It’s — he gave me access to it. It’s very detailed, a lot of good info there.
[09:32] Mike: Cool. Yeah, about the other thing I have as I talk to Liam Cavanagh from Microsoft about data synchronization techniques and I spent about an hour, hour and a half on the phone with him just talking about how to go about it, what I’m doing today, what sort of things I should be careful of in the future or whether or not the Microsoft Sync Framework is right for synchronizing data between the databases and based on the discussion I feel like basically on the right track but there are some of the fine points that I need to iron out. So I’m still working on that but, you know, he definitely helped me along. So if anyone wants to follow up with Liam, he said he’s more than happy to talk to people about data synchronization.
[10:09] Music
[10:12] Mike: So today, we’re going to start taking some more listener questions. And the first question comes in from Austin Rehorn [Phonetic] and Austin says, “Hi, Mike and Rob. I’m a long time listener of the show. I look forward to it every week. I took the advice from your show and took my product to market last month. I’ve received a ton of interests but nurturing and converting leads has been a struggle. My question pertains to marketing automation. You guys have spoken to the subject before but Rob has been talking a lot lately about lead conversion ideas he has for HitTail and I’d like to know what tools you’re using. I’m a HitTail customer. I love the product. I’ve signed up for the SEO e-mail campaign and I would like to know what you use to send this out each day. Keep up the amazing work, guys and a belated congrats on your hundredth episode. Thanks, Austin.”
[10:49] Rob: What timing, I just mentioned the long tail SEO course and Austin mentioned that. When I think about lead nurturing like he’s talking about, I actually think of two separate groups of people and then there’s a third that is after they buy and those are kind of your customers in the first several months and retaining them. But the first two segments are people who visit your site and have not yet signed up for trial. And then people who have signed up for your trial and typically obviously that’s between 14 and 30-day trial you want to keep it there. Both of those groups should receive an e-mail follow up sequence. With the first group who just visits your site to try to have a nice looking form somewhere that that pitches them on some valuable thing that they get by giving you their e-mail address and then you send them an e-mail or five over the next several weeks and you educate them. You don’t sell to them very hard. If you look through the HitTail e-mail sequence it is much, much more education. Probably 80, 90% education and then there’s a short pitch for HitTail and like the third e-mail and onward. But the first two almost have no mention or links to the HitTail pricing stuff.
[11:54] And the other thing is when someone signs up for a trial, most apps I know don’t follow up with me very well. They typically say, “All right, here’s the trial stuff.” And then right before I get billed they might say you’re about to be billed. And again, at HitTail we have a very detailed. It’s actually a — it is a lead nurturing system that depending on how many suggestions you’ve received, what you’ve done in the app, different kind of stuff, we look at your account and we send you a different e-mail at various days during your trial sequence. Now, that kind of stinks when I moved from 30-day to a 21-day trial because I really do have to rework that, you know, I did a bunch of that last night. In general for the front end kind of just prospects that are just visiting your website, we use MailChimp at this point but I have to admit, one of my top ideas if I do wind up branching out and building a new app is to build something that helps with this problem because I don’t think there is actually a good one-stop shop that can do this kind of thing. And so I’d say MailChimp is probably the best there is right now but keep your ears peeled on the podcast if you’re interested in seeing something similar to this.
[12:55] In terms of the free trial e-mails, if you can just do a simple follow up sequence also through MailChimp, they have the auto-responder and follow up area but if you need to actually look at your data or see actions people perform and then send them different e-mails, you’ll either have the customer code at or have to use the more expensive system. There is a system called Infusionsoft that’s a few hundred dollars a month and I think Ash Maurya is working on one as well. It’s called USERcycle and it does a similar thing. It’s for this process although — you know what, I think his is for that third segment that I didn’t talk about which is customer. Once they purchase, it’s about retention and it’s about messaging people who haven’t done this or who have done this, you know, sort of specific action kind of like looking at their customer happiness index and e-mailing them based on that. I think the bottom line is especially if you’re still at early phase of your product, you probably don’t have enough customers to really worry about retention yet and I think you’re just going to want to go the easy route and look at MailChimp to begin with.
[13:49] Mike: One of the other things that he mentioned in his question was “What sort of tools you use?” And I know you mentioned MailChimp but MailChimp is typically use for sending out mass e-mails or scheduled e-mails. What about when you had mentioned that you’re analyzing how many keywords they get and then sending e-mails directly to them based on input data I’ll say from your product. So how do you go about sending out those e-mails?
[14:11] Rob: Yup and that’s like a console app that looks at the user’s data and then send it through Postmark which we have mentioned numerous times on the show but it’s basically service that helps with deliverability and it helps you get inside and do, you know, what e-mails are bouncing and it shows every e-mail that you send out of your system basically so you can track what’s going on and both you and I are a hard core proponents of Postmark and I use them. I send thousands of e-mails through them every month.
[14:37] Mike: Now do you track the — I know that in Postmark it will take a look at the bounce backs and stuff and you can look at those. Do you have anything programmatically tied back to your application to identify those or is it just you kind of eyeball it once in while?
[14:51] Rob: I eyeball it once a while. Luckily Postmark will not send to something that’s bounce in the past and so you know, one of the signs of kind of a bad spammy mailing list is if you don’t keep your list clean. If you don’t keep it pruned and so if you keep sending e-mails to the same address and they keep bouncing, your list will actually — you’ll start getting spam marks from web host and AOL and HotMail and big e-mail handlers, they will notice that you’re just sending a bunch of junky e-mail and so a Postmark helps you not do that. So even — even if I do have a big list of prospects and half of them are bouncing – that never happens but if that were the case, Postmark won’t send those e-mails. It keeps track of it for you. It’s pretty cool. There’s a small percentage that bounce back and stuff. It’s not worth — at this point it’s not worth removing them from the database or anything like that because if they’re in a trial and it’s bouncing, the odds are that they’re probably not going to become customers and if they’re a prospect and it’s bouncing, the odds are they’re not going to sign up for a trial. So I don’t go through and prune those out now because, you know, Postmark does a good enough job but yeah, I think if I was at 10X scale to where am now, then I would do like you said and probably monitor something and pull them out of the database.
[16:00] Mike: Okay, so the bottom line to answer your question, Aus, most of this is custom tools that have been set up but uses online services like MailChimp and Postmark to send those e-mails out to people and follow up with them.
[16:12] Rob: That’s right and by far the most time intensive part is writing the e-mails and thinking them through and crafting them and thinking what do they want to hear at a certain date. Four days end of the trial what should they be thinking, what should they receive, that’s the harder part. Finding MailChimp or having some code that has a big case statement that decides when to send what, that didn’t take that long to be honest.
[16:33] Mike: Now, do you take in and I’ve kind of considered this in the past but I’ve never actually been down this road but would you take in to account what days of the week those e-mail get sent?
[16:41] Rob: I don’t.
[16:42] Mike: Yeah. It’s one of those interesting things when you’re writing blog post and stuff like that. You kind of consider that when you’re going to post it base on when you think you’re going to be able to get the most views and in terms of deliverability, you want to make sure the people are going to actually see it and probably read it but it can be hard to schedule some of those things.
[16:59] Rob: I agree. I’ve seen a setting and I don’t remember if it was in MailChimp but it was some mail management program I was using and it said, you set up a follow up sequence or an auto responder sequence and then you could stay only deliver on week days and it will bump people forward it back, you know, one day to get them to a week day. So it’s kind of an interesting feature. I don’t know if that’s in MailChimp but if it’s not, certainly something that I would use because people are going to tend to open B-to-B emails much more often during the week, basically during the work week.
[17:29] Mike: Very cool. So thanks for the question, Austin. Hopefully, that helps you out.
[17:33] Music
[17:36] Mike: And our next question comes from Michael and he says, “Hi, I started my first company when I was 17 and I’m now just past 30 but I have not yet launched any online business. I’d love to hear your thoughts on which strategy to choose when launching several niche sites for the same product. As a couple of examples to set the scenario, books on gardening, you could have a site with gardening about blogging and then you could target people who are looking for gardening or gardening tips. And then the second niche would be startups and entrepreneurs blogging about experiences, hurdles, et cetera. For second example, using products for jigsaw puzzles, the first niche could be nature and wildlife themed jigsaw puzzles. The second could be large puzzles and third would be boudoirs themed jigsaw puzzles. As you’ve recommended many times before, marketing to a niche is much easier. You get better SEO and better conversion if you target specific people.
[18:24] However, one of the advantages and drawbacks with using the single site with sections for each niche versus launching multiple sites, large bookstores like Amazon and Barnes & Noble obviously have one book site with multiple sections and this is probably the best way to go of if you’re big but my separate niche sites be better if you’re small or is a hybrid approach better? The answer is probably it depends but I think a discussion on what it depends on would be interesting to hear. Thanks for great show. Best regards, Michael.”
[18:48] Rob: So I think this would have been easier to answer three weeks ago and the reason is three weeks ago Google launched their new update and it’s called EMD Update. And it basically took exact match domains and dialed them way down in how important they are for your site rankings but more specifically, they said they dialed them down for sites that don’t have a lot of authority. So they kind of implied that if you do — if you do have a site with a lot of links and it’s obviously an authority site, then your exact match domain may still help you a lot but if you have a site with very few valuable links and it just seems like you’re kind of a small niche content site, a thin content site and you happen to be ranking purely on that domain, sites were just disappearing off the first 20 pages of Google because of this. They may not be kicked out and they’re not been penalized. They’re essentially just reworking the algorithm.
[19:40] So three weeks ago, I would have said do many niche sites because you’re going to want to get a nature, you know, naturethemejigsawpuzzles.com and wildlifejigsawpuzzles.com and largejigsawpuzzles.com and go that route. But then you have five or ten sites, depending on how many launch that you have to build links to promote, build up the page rank, build up the link juice and I think these days, I question if exact match domain benefit is still were doing that. So I would probably test it these days because since things are changing so fast, I would consider getting naturejigsawpuzzles.com but I would also get jigsawpuzzles.com or obviously, you can’t get that domain but you know, a different domain, put all the puzzles on it because then you’ll have one place to focus building links. You can create a lot of content there and if someone comes, you can always do up sells and cross sells pretty easily. But then I think if your Nature or Jigsaw Puzzles one then more niche site took off, then I think maybe you’d want to, you know, lean towards that approach.
[20:38] But my guess is these days, it would be better if you did have related products on a single website. No, I don’t think this holds for software products, right? If you have three or four different software products that aren’t highly related, I don’t think you should just create a company website and have them all there because there’s a certain amount of selling that has to go in to selling a software product and having your sales website trying to sell four different products, it’s just a mess because people come and there’s no single call to action, they’re kind of waiting through all your products and trying to figure out what you’re doing, whereas with jigsaw puzzles it less that, right? Actually having a selection of jigsaw puzzles is much more of a benefit than when you have software and you know, trying to sell four or five different things that actually, you know, tends to confuse people more.
[21:20] Mike: I guess my thoughts are probably pretty similar to yours. It definitely for jigsaw puzzles I would probably lean towards having a different website for each of those themes I’ll say. And then you can also cross sell them to in to different products like you can have basically a cookie cutter set up for all of your website. So let’s say you have five or ten different niches for different types of jigsaw puzzles, they can be virtually identical except on each of those sites, a single theme is emphasize and then you can say, “Oh and we also have all of these other ones.” And then in that way regardless of which of those sites they come across, they still see everything but you’re allowed to essentially cross sell the other type of jigsaw puzzles because they’re going to be on that site and they’re going to click around and they’re going to look through from all of the different jigsaw puzzles that are themed wildlife or nature or whatever. But they’ll say, you know, you can have the section of these other jigsaw puzzles or other themes and people are going to browse through those. And you can kind of get that residual traffic without people having to actually go back in to Google and leave your site to find another one that has for example large puzzles.
[22:27] I think that that would definitely help you in that case but I think, you know, what Rob is exactly right for software products. It’s a lot more difficult to cross sell those types of things when those products aren’t as well related. Most of the examples that Michel gave were for, you know, for either books or jigsaw puzzles, most of those are things that are easily repeatable and you basically put it a different skin on it whereas with software, that’s really not the case. I mean HitTail doesn’t come in red, green and blue, for example. I mean it just doesn’t really matter. It’s not material to the function of the product and it’s difficult to replicate that type of software in a new package.
[23:06] Rob: Yeah, I think with certain types are goods. Having a broad selection is actually a benefit and jigsaw puzzles is one of those things and books is another and like we both said with software having a wide selection of software is probably — if you’re a small operator, it’s not actually that beneficial. It tends to be more confusing and overwhelming to a consumer who’s trying to parse through to figure out “Does this software really do what I wanted to?” Whereas if someone like for jigsaw puzzles they’re just like, “Oh, it has a picture of Angry Birds. So I’m going to get that.”
[23:32] Mike: So Michael, I hope that — I hope that answer your question.
[23:34] Music
[23:37] Mike: Our next e-mail comes from Jessie and he says, “Hi, guys. First off, I want to thank you for putting out the show every week and sharing your experiences. I’ve got a lot of insight as a listener and I appreciate the down to earth approach that you guys have. My question is that if you want to go and launch a niche info product for programmers. I had some success and now I’m working on the second info product that we marketed to the same audience and the content would be of interest to the same audience. I’d really like to build a brand, offer more products, start doing training, et cetera. Should I put the different products on their own websites with separate domain names and hope that my name on the covers enough to deliver everything together or shall I offer everything under one store front with the brand name and show my repertoire that way. I really appreciate your thoughts on this one. Thanks, Jessie.”
[24:14] Rob: So a similar question here but given that he specifies that the info products and he wants to just kind of start a line of products that are marketed to the same audience and the content would be of interest to the same audience. I would probably approach this one with a single website and I would have a featured product, biggest daylight right off, you know, on the top in the header when people arrive above the fold, that whole thing is your new product. “We just launched this. Look at that. Here’s our call to action. Please buy,” that’s the whole deal. And then down below mentioning your other products or on a separate page, you know, your other products page, you mentioned all the stuff you put out last year or you know, six months ago or whatever. So, you do have a catalog of your products there and you can do cross sells, up sells, even down sells if you want.
[24:59] It’s not — you’re not trying to sell eight things at once. You really are trying to focus on your newest thing but certainly each product does have its own product page so that if someone decides that they like, they can tweet that individually. That individual product page could be go up on Hacker News if it got popular or whatever. So you’re almost kind of building six or eight little individual sales pages for each product but your home page is really promoting one product at a time with just cursory mentions of your products in case someone wants to kind of sift through and look at your back catalog.
[25:29] Mike: I think I agree with most of what Rob said I would definitely lean towards having a single domain name and then somehow shifting people who have come to buy that one book in to possibly getting them to buy the other one as a bundle or you know, having a couple of different bundles there if you start releasing more then two or three or four different products. And those bundles could obviously all be on the same website under the same brand and the brand can help you sell more of those books or info products and by bundling them together, you can get people to pay for all of them as opposed to paying for just one or two of them.
[26:06] I think I remember hearing that one of the best things that the author at Copy Hackers have ever done was to essentially split the book in to several different books and then charge for each of them individually. That’s another option for you is to take the existing work that you have now and you know, separate it out a little bit to I’ll say generate more content and then maybe bump the price down a little bit, maybe from $30 to $20 but have two or three or four different copies of it that people can buy. “And oh, by the way, you can — if you want to buy the entire bundle, you can buy it for $40.” And what that allows you to do is it allows you to raise the total price that people are paying but on a per module basis. The cost is less.
[26:46] Rob: I think you also get the benefit and that you’re going to do a bunch of promotion for this first product and if it sold well, you’re going to have just residual traffic coming in from all the links that you’ve built and from people talking about it. And so if in a month you launch a brand new product and you put that above the fold, then people — and it is related to that audience, then people are naturally going to be stumbling upon it and you’re not going to start from zero visitors each time if you were to create a different website for each product. And since you’re not going after a long tail SEO it sounds like, I mean you’re not really going for that big wide birth approach where you launch ten or twenty different sites and try to just focus on keywords, I feel like the single site approach is definitely a way to go since your products are so interrelated.
[27:27] Mike: So Jessie, I hope that helps to answer your question. Our next question comes in from Matthew and Matthew says, “Hi, Mike and Rob. I was curious to know what your thoughts are about general liability policies for SaaS companies. My company analystratings.net does reporting on financial news. There’s always a possibility that we could script a report and have a company get mad at us and file suit. How do you go about getting liability policies and what would you look for when dropping?” Matthew, I think that the things to recognize when you’re looking at these liability policies is that what you should probably be doing is talking to an insurance broker because an insurance broker can walk you through exactly the types of questions that you have and what the most likely scenarios are for that.
[28:07] The other thing I would do is I would probably leverage disclaimers pretty much on every single thing that you send and I’ve seen them in all sorts of things like all the investments that I’ve done over the years. There is — on every single one of them there’s a disclaimer that says, “We are not responsible for typographical errors.” And basically when you go to an insurance broker and you start working with them, they’re going to put together especially in the case of like professional liability or general liability policies, they’re going to put together a price quote that is directly related to your business, what you do and how you operate. And they will typically ask you some very detailed questions about exactly what you do and how you do it and whether or not you have disclaimers for that kind of stuff. And if you don’t, you can say yes and then change everything so that you do respond positively to that question. That’s probably what I would do but I’m not a lawyer. I’m not an insurance broker. Definitely go talk to insurance brokers and a good insurance broker will actually bid your insurance plan how to multiple insurance companies so that you can get a comparable rate quote from multiple companies because what one company will provide you for insurance, the pricing maybe almost the same but the actual specifics of what they cover could be radically different. So you really have to pick through them pretty well and understand what your risks are and where you’re vulnerable to being sued and what the insurance companies are going to pick up if you are sued.
[29:33] Rob: A lot of the questions that come to the podcast I answer them with it depends on your risk tolerance and I think this is another one that falls in to that bucket. But it does sound like analystratings.net does have perhaps a little more risk than some typical SaaS ideas. So if it’s in the back of your mind you are worried about getting sued and you are worried about not having some kind of I guess, you know, right it’d be Arizona Missions Insurance or something like that, I would absolutely do what Mike said and talk to a broker. I don’t think you’re going to need to pay that much to get several hundred thousands dollars in coverage. Again, it all depends on your comfort level of how much you think you could potentially lose in a suit but if you have to pay 500 or a thousand dollars a year to get several hundred grand worth of a business coverage, if that’s worth it and that helps you sleep at night, then absolutely. That’s something I would move forward with.
[30:25] Mike: So Matthew, hopefully, that helps to answer your question. Our next question comes to us from Graham and he says, “Hi, Rob and Mike. I’m a huge fan of your podcast and blogs since I discovered them a few months ago and I’ve been plowing through the archives everyday during my hamster wheel commute. I’m a software developer/project manager and totally connected with your comparison of salary employment and consults with the hamster wheel. From your episode 15, you mentioned a number of things to consider as well as places to find apps for sale. As this podcast is two years old now, I’m just wondering if the same techniques and sites were the best places to find apps for sale. I’m just getting my feet wet in the space and learning that as I’m searching for a SaaS app or a website and the $500 a month range of revenue, I’ve been looking around for a while now but my search has been empty so far. Thank a lot, Graham.”
[31:08] Rob: For starters, I do think what we said in episode 15 still holds. Certainly there have been some updates since then but in general, the approaches are still the same. I think it has gotten more competitive. There are a lot of more people talking about this kind of approach now than they were two or three years ago. You know, we were I’d say a bit ahead of the game in talking about this kind of thing. So just because it’s more competitive though doesn’t mean there — there’s still hasn’t money to be made. Now, most people give up on, you know, Flippa or any other type of website buying approach because, number one, there aren’t flexible enough. Meaning that you have to be able to — if you find a good deal, even if you aren’t super excited about X niche, if it’s a good deal and it’s something that fits your moral and ethical compass, then you need to be able to pull the trigger because that maybe the best deal you see for the next three, four, five or six months and I definitely had to look long and hard to find every good deal that I found.
[32:02] So I think that’s the first thing to remember is that it’s not going to be something you go out and the first week you’re going to find some great deal and slam dunk and going to be able to require something. So it will literally take months of education and it’s not like it’s full time but, you know, you kind of have to make it a side gig to do this to spend your time educating yourself on the process. The next thing I’d recommend is checking out an e-book written by a Micropreneur Academy member name Dave Rodenbaugh and you can find that at websitebuyersguide.net and basically, he goes through all the detail, approach that he used. He’s bought a number of websites successfully. He sold a number successfully. He’s really knows what he’s doing when it comes to buying and selling stuff. And he had asked me maybe a year ago if I was going to write a guide like that and I said I just don’t have the time and so he went out and did it. I wrote the forward to it and I highly recommend it. It’s the best guide I know about making decisions, doing due diligence, executing the sale, all that kind of stuff. It’s very in-depth. If you really want to get in to it that — I think it’s — I don’t even know. It’s 30 or 40 bucks but it’s going to save you a lot of time in sifting through listings and that kind of stuff.
[32:02] The third thing to remember is in my opinion the best deals are made off of Flippa and you may hear about an app on Flippa but then you wind up contacting them after the auction ends and it doesn’t sell and negotiating a private sale. Or you may just hear about them through other means. You just make it known to people that you’re out there buying apps and they contact you and there’s kinds of these back channels and when you’re the only buyer, you’re always going to get the best deal what that last approach certainly takes more time and effort. In my experience has landed me, you know, kind of the biggest and best and the highest quality sites that have — that turned out the best for me.
[33:42] Mike: And along those lines, one of the things that you can do is you can start taking a look at different niches that you want to go after and if there’s a product that you have in mind and you start doing your due diligence on that to make sure there is a market for that products and you start finding competitors but they’re not very good in terms of their SEO marketing and maybe their product is okay but they’re just not marketing it very well, you can go ahead and, you know, just directly post them and say, “Hey, I would like to buy your app. Are you open to having a discussion about this?” And in some cases, that’s a good way to go as well because then you’re bypassing Flippa. You don’t have to sit there and sift through a bunch of listings. You’ve kind of already done your due diligence in Google AdWords or various other tools to find out whether or not there is enough traffic to make something like that worth it and you can figure out is this a decent product that I can essentially just buy out right or is it something where it’s going to take some time and effort for the marketing to kick in but the product itself is solid. It’s just they’re — they’re just not doing marketing very well because they’ve got a developing background and that’s on their brain.
[34:47] So if you can identify places like that where it’s something you are already interested in and maybe it isn’t listed on Flippa, maybe the people don’t know that they have an option to sell it, definitely approach them because it’s very possible that they’re looking to get out from that particular product because they don’t see it going anywhere.
[35:06] Rob: Also keep in mind that looking for a SaaS app is a challenge because most sites that are sold are just websites. They’re not SaaS apps. So you’re going to be looking for a needle in a haystack and looking in a range of $500 a month is the lower end and that means you’re going to have more competition if one does come up for sale. It’s kind of like in real estate, if you’re looking for a single family home to buy or to rent out or maybe a duplex, there’s a lot of people in that market. But as soon as you get above four units, you start buying five and six-unit apartment buildings, you have the money or the backing to do that, suddenly you have a lot less competition. So we’ll understand if you don’t have the means to do that right now, that’s fine but keep that in mind down the line. If you can put together any type of financing, partner up with someone who has that kind of money. You can definitely open up to a less competitive and larger market.
[35:52] Music
[35:55] Mike: If you have a question for us, you can call our voicemail number at 1-888-801-9690 or 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 can subscribe to this podcast in iTunes by searching for startups or via RSS at startupsfortherestofus.com where you’ll also find a full transcript of each episode. Thanks for listening. We’ll see you next time.
Episode 102 | 4 Levels of Income Generating Web Apps
Show Notes
Transcript
[00:00] Mike: This is Startups for the Rest of Us: Episode 102.
[00:04] Music
[00:12] 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. How are you doing this week, Rob?
[00:24] Rob: Doing good. We got some really cool new reviews of the show in iTunes. C Snipes [Phonetic] said, “Every episode is a gem.” He said, “This podcast is dense with valuable experience and insight especially for small and early career tech entrepreneurs. Mike and Rob are experienced personable down-to-earth guys. Conversations are focused and relevant.” Then Don Felker said, “Best startup podcast.” He said, “It’s one of the best podcasts I’ve listened to in years. Great simple advice for micropreneurs and single founders. I highly advice listening to it.” You know, Mike when I’m down and sad and all alone, I go in to iTunes and I read all our reviews. It makes me feel good, man. It makes me feel good that we can…we can talk to people. Well, that we can talk to each other but that it resonates with people on that, you know, that they get value out of what we’re saying on the show.
[01:09] Mike: Yeah, that is pretty cool. I love getting e-mails from people whether it’s just praise or people asking questions and just sending things our way. So that’s really great to hear. Definitely, we want to say thanks to everybody for all that support.
[01:22] Rob: Yeah, it says a lot about our listenership. Our listenership is smaller than, you know, some major podcast like Mixergy or This Week in Startups. We rank really well for the term startups and we have per listener, I think we have a lot more ratings and reviews in iTunes. So it’s very cool. How about you? What’s going on this week?
[01:40] Mike: Well, I’ll be on Brooklyn over the next couple of months quite a bit, probably five of the next nine weeks I’ll be spending in Brooklyn, New York. So if anyone is interested in meeting, just drop me a line. You can shoot me an e-mail either questions@startupsfortherestofus.com or mike@micropreneur.com, either one will get to me and we’ll just kind of schedule a time to meet up or just shoot me a message on Twitter or whatever.
[02:01] Rob: Very cool. I am speaking on the Google Campus this weekend. I’m speaking in a Google Developer event that’s designed to get developers together and get them fired up about using like Google API’s and Maps and all that kind of stuff.
[02:15] Mike: Oh. I thought they were going to be replacing Marissa Mayer with you.
[02:20] Rob: Yeah, that’s what [Laughter] — that’s what it is. Wouldn’t I do a great job with that?
[02:24] Mike: Of course.
[02:25] Rob: Let’s say just stand there and look gorgeous and that’s all.
[02:26] Mike: [Laughter]
[02:29] Rob: Yeah, in terms of the speaking gig at Google, I was actually reticent to do it. I was invited a couple of months ago by a guy here in Fresno who had seen me speak and you know, as a rule, I don’t enjoy speaking at Developer events because when I say things like the code doesn’t actually matter that much and the idea doesn’t actually matter that much, it’s a lot about marketing, they don’t tend to want to hear that. So I’m not like a popular guy and it’s not even about being popular. I just — I don’t feel like it resonates with them because they, you know, in general, developers don’t want to hear that message. So it took some convincing but frankly, I’ve never been to the Google Campus there in Mountain View. I really wanted to be convinced till I do it and since it’s, you know, a talk I’ve given before that he said would resonate with the crowd and he knows the crowd and frankly it’s only 40 minutes, so you know, how bad it goes, I can [Laughter] I can flop pretty bad for 40 minutes and still feel okay about it.
[03:18] Mike: Cool. On my end, I’ve lost a couple of Altiris Training subscribers which is a little bit sad and unfortunate. But one of them actually didn’t drop from being a subscriber so much as they tried it out and that it’s the first person who tried it and said, “No, we’re going to actually pass on it. So we’re going to take a refund,” which a little disappointing but some of the content isn’t they’re — they were looking for and they were very adamant about me staying in touch with them so that when the content is there that they’ll check it out again. So that was at least good to see. But they’ve, you know, had high praise for the content that was there, just wasn’t particularly relevant for what they were using.
[03:52] Rob: Oh, interesting. So you need to add more content then if you want to keep customers like them around?
[03:56] Mike: Yeah, it’s just they were looking for more advance content and a lot of the stuff that’s there right now is for beginners and you just can’t find some of the stuff online — I mean you can find it but it’s — it’s a lot like the Academy. You know, it’s not like there’s anything in the Academy that you can’t find elsewhere but it’s highly consolidated in to one location. So you don’t have to go looking for it and you can get your questions answered very concisely and very quickly. And what they’re looking for is just some topics that I haven’t even touched on or talked about yet. So that was fine. It was the first person who said, “Hey, to be honest, this just doesn’t going to work for us.”
[04:31] Rob: Right. So do you think you’re going to invest some time in to adding more content in to keeping them around?
[04:37] Mike: Well, these people are already gone so once I developed — I can develop about half of the content that they want. The other half, I don’t actually have the abilities to do because I’ve never actually done some of that stuff that they’re asking for, so I have to figure out how I’m going to address that issue and I’ve got some ideas. I’ve got some consultants I could probably lean on or some other partners that I could talk to and say, “Hey, can I pay you to put together some videos for this or that,” and it might cost me a couple of hundred dollars to have them put together some videos that are some over views or some detailed description of how to actually solve certain problems but a couple of subscribers would — to completely offset that those costs.
[05:14] Rob: Right. Did you see the thread on Quora? It was about one of the most ridiculous technology patents ever granted.
[05:22] Mike: No, I did not.
[05:22] Rob: And it ties in a little bit with our discussion last week. Some of the mentions are some of the things we mentioned last week like Amazon’s one-click patent, the pull to refresh feature present in many apps. They said it’s actually patented by Twitter. Making links in an e-mail clickable. They say, “All links and phone numbers in e-mails can be made clickable, even when the original e-mail sent by the user didn’t make them clickable links. Sounds trivial but Apple patented and they sued HTC over the patent —
[05:50] Mike: Wow.
[05:50] Rob: … which is kind of frightening. Is that crazy? Buying stuff inside an app. They said, “Yup, even if an app says ‘Click here to buy the full version’, they are ‘infringing a patent’. Rovio got sued over this by Lodsys which owns the patent.” And I’m pretty Lodsys is one of you might call patent trolls. They aren’t actually building anything. They just owned a big portfolio patents and they make their money by suing people for it. So and there are few others. There’s — none I hadn’t heard before about that’s surprising.
[06:19] Mike: I’m surprised about the Lodsys patent where you have to click here to buy the full version. I mean doesn’t that blast out of the water the entire share where the industry from like the ’90s? And wouldn’t that patent have expired by now or couldn’t you point to the entire or like pretty much all the ’90s as being one of the situations where it’s like oh where there’s past examples of where this already existed so it can’t be patentable?
[06:41] Rob: I’m sure the lawyers tried. Rovio definitely has them. So I bet it’s only dealing with the mobile app or something to that effect.
[06:50] Mike: Oh, maybe —
[06:51] Rob: You know what I’m saying? I’m sure there’s a loop hole because they — I mean you can read the Venture Beat article and it looks like Rovio had a heck of a time with them. So it’s certainly was not as easy as saying, “Hey, there was prior art.”
[07:01] Mike: I saw something else. It was Rackspace and Red Hat or in staunch opposition to any software patents and we’ve kind of talked about this before. But, you know, they are completely against software patents of any kind and it was surprising to see that Rackspace had come out so strongly against them. I mean I kind of understand why but it’s interesting that those there were the only two major companies that have kind of thrown their names in along those lines.
[07:24] Rob: Right. Well and there’s been a bunch of things floating around. Silicon Valley of Paul Graham and like a commenter said, “We’re going to agree not to sue like even if we patent something, we’re not going to do offensive litigation.” I think Twitter had said that they weren’t going to use their portfolio for offensive stuff only for defense. I mean it’s pretty crazy. There weren’t software patents until 1998. It was only copyrightable before then and so we definitely have existed without software patents. And anything else going on with you?
[07:50] Mike: I suppose an episode wouldn’t be complete without an AuditShark update. I’ve talked about my database synchronization issues in the past and I had somebody from Microsoft contacts me who said that they thought that I was using some software that they wrote. So that was, you know, really cool to see but I’m finally at the point where after 3700 lines of sequel code and another 2000 lines of C Sharp code, I’m finally able to synchronized the databases or at least I have the databases in a state where I can synchronize them. I still can’t do it natively thru my code but I’ve got other tools that can synchronize between them so I can actually get started with building policies and pushing them to the clouds so that people can use them at this point. So I’ll be starting on building those this week and then hopefully by Monday, people will be able to start using them.
[08:35] Rob: Right. So what does that mean in terms – so that’s a technical side of it, what does it mean in terms of like the users that you have using it?
[08:43] Mike: It means my entire schedule has been pushed back by like six weeks because of this problem.
[08:47] Rob: So you’re going to be back where you kind of were six weeks ago before this thing cropped up and then —
[08:52] Mike: Right.
[08:52] Rob: … you’re going to resume. You’re going to continue with your — your early access users and hopefully, get a few more on board in the next couple of weeks?
[08:59] Mike: Uh huh.
[09:00] Rob: Very good. I was looking at a list of marketing task because, you know, I keep going back to that HitTail marketing plan that I wrote out about, what, nine months ago. It expanded for a while and then boy, for the past couple of months, it’s really been — I mean it’s a huge plan, right? It’s like 12-pages long. I’ve mentioned it before and I keep just plucking ideas off of it and implementing them as I basically as they strike my fancy. You know, it’s like, oh I want to do that. I’m going to try that out and see how it works. And some of them worked and some of them haven’t. I made a list. I started reordering them this weekend and I just put them in to three different categories like the “more traffic bucket”, the “higher conversions bucket” and the “higher lifetime value bucket”. And looking at them in this way was really eye opening because suddenly I realized that when you first launched an app, it’s more about more traffic, right? Because you have zero visitors, you know, and you want to get 500 to thousand, 2,000 just so you can start seeing pattern so you can get some customers. I mean it’s just such a scramble to get that initial flywheel traffic going.
[09:56] And then at the point now, I don’t actually need to do any of the more traffic thing right now for HitTail because I have plenty of traffic coming through that now needs to be optimized. So almost everything that I’m picking up the list now is either to increase conversion rates whether from visits to trials, trials to paid or to increase the lifetime value of customers. So the more traffic stuff is going on the backburner now and everything else is moving forward. But I think depending on where your business is at. You know, if you’re listening to this like give that some thought. It’s not always about traffic. It’s not always about conversions. It will bounce back and forth between these two things and almost for sure, if I get this converting really well and dramatically increased it over the next couple of months, I’m then going to want to go back and I’m going to want to double my traffic again, right? Because then — and then you can just take even more advantage of the higher conversion rates that you’re getting.
[10:47] Mike: Yeah, that’s very cool. I mean I hadn’t necessarily thought about breaking those in to, you know, all the marketing tasks in to the different results that you’re expecting to get from them but it does makes sense.
[10:58] Music
[11:01] Rob: So this week, Mike, we’re talking about Four Levels of Income Generating Web Apps and this outline is actually inspired by a recent episode — I was listening to the Podcast Internet Business Mastery and they looked at four levels of niche websites. And the way, you know, they’re in to the more like knowledge marketing information, marketing stuff and so he looked at having a niche website and then an affiliate website and then building authority website and then building kind of a personal brand website. So nothing to do with software but as I listened to it, I realized there are similar levels or tiers of web apps. So I kind of wanted to run through and give my recommendations, our recommendations on where we think you should start, pluses and minuses and some questions you should ask yourself to determine which level you might want to choose first and go through it from there. So again, there are four levels we’re going to be running through.
[11:46] Before we do that, I actually wanted to make an honorable mention. It’s level zero and this is — I’ve owned several sites like this that are not technically web apps but they’re more on just niche websites like AdSense sites, affiliate sites, smaller content sites that just get traffic via like SEO or affiliate traffic or some kind of flywheel traffic that continues to come every month that get really cheap visitors. The comments so you don’t need a high lifetime value to make a decent amount of recurring income and — this is not web app. So I don’t want to include it in our levels. I did want to mention this is something that I’ve seen people cut their teeth and learn internet marketing doing this kind of site. Examples of the site, there’s one — we’ll include this in the show notes but one of them is scootersmopedscyclesreview.com and the other one is whatsthebest-mattress.com. This gives you an example and these are — these are not great examples. I mean I don’t own these sites. These are just random sites I’ve found.
[12:41] But this gives you an idea of what like a really niche site is and how you can go in to such a tiny niche with such low competition that you can just create some content around that and instantly rank in a search engine and get enough traffic to make a few bucks month. They can then be use to maybe fund, you know, ideas down the line and I don’t know if you’ve done that. I’ve definitely done that and I had some niche sites that were making 4 or 500 bucks a month which is not, you know, it’s like wow, I’m going to quit my job money but I could use that money especially early on that helped me quit consulting with — along with some other, you know, sites I had and it also helped fund some development and some of the advertising on, you know, some CMSthemer and some other early websites I had.
[13:22] I’m going to dive in to number one. It’s the first level of income generating web apps and this first level is a “low competition niche application”. So it’s a low competition web app. It’s in a tight niche. So the thought behind this is you can almost use another word for it. It could be like an entrenched web app or a web app that has a good source of traffic either from something light SEO or from affiliates or from, you know, WordPress.org searches or it could even be — if it’s a mobile app and not a web app, it can even be just from the App Store but it’s some type of recurring quite a bit of traffic, something where you don’t need a high lifetime value to support it. And so frankly, any iPhone app that gets a decent chunk of traffic through the IRS App Store could be called the low competition niche app because there’s not a lot of competition trying to fight of. I own a couple of apps like this. WeddingToolbox is like that.
[14:13] The entire market is not very big. The competition does not tend to be that that brutal, right? It’s not like I need to go out and do all types of info graphics and hardcore in-person marketing and heavy sales in order to keep WeddingToolbox as a profitable app. And then another example I thought of was Dave Rodenbaugh’s WordPress plugin AWPCP which is another WordPress Classified Plugin. And again, it’s low competition. He gets traffic through Google and WordPress.org and it is in a small niche and these are great. Now, these are don’t tend to be “I’m going to quit my job” apps. You don’t tend to make 10 grand a month off of these things. They tend to be very stable and inconsistent and you can build up a nice flywheel of traffic and they can either help fund larger ideas or if you combine a few of them together, they can be really good at helping you essentially quit your job and gain the freedom you probably been looking for.
[15:06] Mike: The nice thing about these types of things is that it’s very similar to the honorable mentioned that you talked about earlier which was just using those to kind of cut you teeth on internet marketing and learn the things that you really need to know in order to essentially take your future products to the next level. So it’s really hard to jump in to something as large as, you know, HitTail or a lot of these other applications and just jump in, feet first and go with it without necessarily knowing anything because you’re going to make a lot of mistakes and you know, you don’t necessarily want to make a lot of those mistakes early on or you want to minimize them as much as possible so it’s not to waste your opportunities.
[15:43] Rob: Exactly, that’s a good point about learning internet marketing from a simpler idea with lower competition because you can learn a lot and then apply that later on to more competitive apps. The low competition niche app is what we talked a lot about in the Academy. I mean this is is where we’re tying to get people in having, you know, some type of success early on. It builds confidence and it teaches those early skills that they can then use to leverage and to potentially if they want, can leverage in to larger niches. So the second level of income generating web apps is a “competitive niche app”. So first level was low competition niche app, this is a competitive niche app. So this is something that needs more active marketing than in a low competition niche.
[16:25] So examples of this do include like you mentioned HitTail. It’s not just going to have a simple flywheel of traffic coming in. It’s going to need more active marketing to grow. Pluggio, Justin Vincent’s app is a good example, Buffer app, anything in a hot niche like Twitter Client or anything like that, it definitely going to be competitive. Frankly, Bidsketch by Ruben Gamez which is proposals — when it was first launched, it was proposal software made for designers. So it was a niche app but it was a competitive niche and it wasn’t a huge market. And for the first year or 15 months or so, he really aimed after that and he actually made the leap in to the next level, you know, that we will talk about in a second.
[17:02] Mike: So the third one is a “competitive large market”. And examples of applications that fall in in to the competitive large market are things like HootSuite or Radian6. Other applications like SalesForce, that’s a very large market for CRM Software but it’s also a very competitive, you know, there’s lot of customizations that can be done. There’s a lot of different players. The market tends to be very fragmented but there’s also a lot of money to be had here because there are so many customers out there who been used a CRM. Other applications or things like HubSpot which has a very large horizontal market and HubSpot is use primarily to gain inbound marketing and then you’ve got things like Stripe which is use for taking credit cards from people.
[17:45] And Stripe is in a very competitive market as well. I mean there are tons of different players out there like Chargify, Recurly and all these other different billing services that will allow you to accept payments on behalf of you. And then there’s also things like we’ve just mentioned, Bidsketch being in a competitive niche. But now, Bidsketch is more in a large market that is competitive and there is so much higher growth curve to that, much higher I’ll say ceiling to where to Bidsketch could go as oppose as to where it could have gone 12 or 18 months ago.
[18:18] Rob: Right and there are certainly some overlap here like, you know, I mentioned Pluggio and Buffer as competitive niche apps, right and they’re in like level two. And one could argue that they should be on level three because it’s a larger market but I’m actually saying that they cater to a kind of a vertical niche within Twitter apps whereas HootSuite and Radian6, they’re like a horizontal Twitter app, right? So, big market and they kind of try to be everything to everybody whereas Pluggio and Buffer are very specific things. It’s like purely for buffering your tweets, purely for scheduling your tweets. It doesn’t do all the fancy stuff that the bigger guys do. And frankly, you know, you could argue the same thing with HitTail like HitTail I consider it to be in a fairly competitive niche. It’s a vertical. It really is towards search engine optimizers. It’s towards internet marketers. People understand digital marketing.
[19:02] You could say that’s a large market but it’s not a horizontal tool like HubSpot, right which is a — it’s also online marketing but it’s just way, way bigger. It’s a much larger market and as a result, if you enter in to a competitive large market, you either had to really, really know what you’re doing or you better have a ton of money backing up. And every — aside from, you know, Bidsketch, every app on this list has millions if not tens of millions of dollars that they’ve raised to compete in these markets. And to be honest, there is a, you know, range of the HootSuite market is obviously larger than Bidsketch’s market. I mean in terms of just the sheer number of people who would potentially use it.
[19:41] So there’s definitely a range even within each of these levels but again, the competitive large market is not something that you can just dive in to as a newbie and I think a lot of people make that mistake. I know I did early on by choosing ideas that were in these horizontal markets and just figuring — you know, if these guys can make it work, so can I. But these guys have way more experience than you and they’ve either launched the app successfully, grown the app successfully or they have just a huge amount of money backing them up and they can make, make a lot of mistakes.
[20:09] Mike: I feel like a lot of developers fall in to the trap of going after the competitive large market because they look at these other products that are out there and say, “Oh, well that piece of software sucks. I could build something very similar. It would ten times better.” And the things that come to mind or things like Service Desk Software or any sort of CRM or bug tracking and —
[20:29] Rob: Project Management —
[20:30] Mike: Yeah, Project —
[20:31] Rob: QuickBooks, that type of stuff. Yup.
[20:33] Mike: Exactly and it seems like it would be easy to build something that would be competitive and it’s really about the marketing at that point. It’s not about the product.
[20:41] Rob: Yeah, exactly. And you know, you mentioned that for a lot of developers make a mistake at going in the level three, I think a lot of devs and just lot of people in general make the mistake of also going in to level four which is we’re calling the “disruptive apps”. And these are basically the moon shot luck shot lottery try apps like Facebook, Twitter, Google, Pinterest, basically anything that doesn’t really have a revenue model and that you definitely need to raise funding to get off the ground. Basically, you know, something that really doesn’t — doesn’t tend to be sold on value. It’s going to tend to disrupt and it’s going to be one in a thousand that might work or 1 in 5,000. I mean just a very, very long shot whereas if you go in to a low competition niche app that level one we just talked about, seriously, like 1 in 10, 1 in 5 if you get good at it. Maybe even better, 1 in 3, you know, a really good odd but the payoff is just not tremendous.
[21:34] But to a single person, if you’re trying to quit your job or you just want to make a car payment or house payment like that actually has a big impact on your life but we don’t see that, right? When we watch the Tech News or we read, you know, Inc. and Fast Company and they’re talking about the disruptive apps. That’s what everybody wants to talk about and so we, who are in the startups space tend to be to gravitate towards this — this disruptive app mythos.
[21:56] Mike: And I think the thing to point about the disruptive apps is that it’s disruptive the first time because — primarily because there isn’t a business model there like before when Google was first getting started, everyone looked at all these different search apps and I think there were 13 of them or there were 12 on the market already and Google was the 13th. And at the time there was no business model there for search engines. There just wasn’t and somebody took a chance on them. They went forward with it and eventually they figured out, “Oh well, we can do advertising in here and if we do good enough at search, we can get paid advertisements betted in to the search results.” And now if you look at something like DuckDuckGo which is kind of headed by Gabriel Weinberg, that you might point to and say, “Well, is that a disruptive app?”
[22:42] And I would almost argued that it’s not because there is a known business model that fits that is going to generate revenue whereas 12 years ago when Google was first getting started, there was no specific business model. They didn’t know how they were going to make it whereas with DuckDuckGo, they have a decent idea and I know that they’re not going in to the direction of specifically selling advertisements in line with all their search results. They’re going in a slightly different direction but they at least have an idea of how they’re going to making money whereas with Google, the plan was not to make money. They wanted to build it as quickly as possible, get as large as possible and then figure it out. So that’s really kind of what separates, you know, the disruptive apps versus a lot of these other ones because with the disruptive apps, they don’t know how they’re going to make money until they get to a point where they say, “Okay, well this is the direction we’re going to go.” They just don’t have those ideas upfront.
[23:31] Rob: And when we talk about these four levels of income generating web and I should say mobile apps because they kind of fit in it to this as well, what we really mean by level is like level of difficulty. So given those four levels, put together a couple of questions that you should ask yourself to figure out which level you should choose because once you’ve decided on the level, it becomes a lot easier to choose ideas that fit within that mark and that are going to be more geared towards your level of expertise at the time. So we have four questions and the first one is, “Are you looking for side income or are you looking to ultimately have fulltime income?” And even if you say, “I’m looking to have ultimately have fulltime income,” you could still choose something in, you know, the level one which is that low competition niche app because you can combine several of them together. I mean that’s originally how I built the fulltime income and I’ve since kind of transitioned not out of box because I still own a lot of apps but I have some apps that would now provide fulltime income on their own.
[24:25] So to get you started, start thinking “Am I happy with my job? And I do want to stay here for a few years and I’m really just looking to get a side income with kind of the minimum amount of work,” and you should definitely think about level one. And if you really are a head strong to get out of your job as soon as possible, then it’s probably better thing to think about heading. Either thinking of heading in to level two or thinking about tackling level one, you know, several of them in series. Not at the same time but one after another.
[24:53] Mike: The second question to ask yourself is “Do you have a concrete idea or do you need to dive in and figure out what’s working and then delving down on it?” And the idea behind this question is really figuring out whether you know exactly what is it that you want to do or do you want to try a couple of different things to see what’s working and then head hard in that direction. And if you’re not really sure, you can try a couple of different things that are in that low competition and maybe they’ll grow from there in to, you know, the level two because I almost feel like a lot of this when you’re going from level one to level two to level three, the difficulty is essentially synonymous with the payoff as well. I mean in a low competition you’re making much less money than you would in something that’s a level two which is a competitive niche app. And these things you have to figure out where you want to start, what level are you comfortable attacking first and progressing from there?
[25:45] Rob: Third question we have is “How much time do you have on a weekly basis to devote the idea and how much money do you have to fund it?” Because obviously, level three and level four are just an entirely different order of magnitude than one and two. So it’s really something that you need to think about. If you’re going to work part time outside of your job and you just have, you know, a hundred or a few hundred box a month to put in to it, then you’re really — I mean I would honestly recommend starting with the level one, maybe a level two but I think that’s even where like starting with level two if you never had a success and you’re just trying to learn the marketing, it can become frustrating pretty quickly because without the resources to experiment boldly, your learning is going to take a long time.
[26:27] You know, you either need to be able and willing to pay for education through — actually learning it yourself through the hard knocks or you need to be willing to pay for it through like online classes and that kind of stuff will short cut you and it will get you, you know, ahead of where you are if you just learn it by yourself. But, it still does and it absolutely requires quite a bit of time of an ongoing basis to do a level two or above, lower as level one as just intends to be more of an upfront investment and then you can — you can tend to put it on to autopilot and move on to your future ideas and use that to then fund those.
[27:00] Mike: I think that’s a key that you — you just touched on which is being able to put something on autopilot because a lot of these other ones once you get above level one and the level two and level three, you really can’t put it on autopilot. You really have to keep on top of it and make sure that you’re continuing to try and move the business forward because if you start slacking it off at all, your business is going to — in some cases it will nose dive and in other cases it will simply taper down overtime as soon you neglect them. And the fourth thing to ask yourself is “Have you successfully executed with an online marketing in the past?” And if you or just starting out, you’ve never built a product before or and never tried to bring in product to market completely on your own and I do want to point out that this is completely different than being on a team of 10 or 15 people and then pushing the product out the door as part of a software company.
[27:47] When you’re doing everything yourself, it is a completely different story to try and tackle a large market versus trying to do it yourself. I mean there are worlds of difference in terms of experience with online marketing than if you’re coming from just a programming background. So although it may look easy, it really isn’t. You, having some of that background and some of that experience is definitely going to help you. So if you’ve never done it before, you’re much better off starting in level one or level two so that you do get that experience and you can build app to go after a level three if that’s ultimately what your goal is.
[28:21] Rob: Yeah, I heard an interview. I think it may have been with Dan Martell. He made the statement that once you’ve started a company like a million dollar company that has a million dollars in annual revenue, if you sell that or you otherwise, exit that you never want to do that again because now you want to go for a ten million or a hundred million dollar company. And that actually resonate quite a bit. I think that’s something to be noted here is that well, you don’t have to move up these levels. Once you’ve gained the experience and depending on your personality, if you really do want to continue learning, you will kind of master these levels. I certainly feel like I got bored in the low competition niche apps and moved in to the more competitive niches and I’ve known several other entrepreneurs who are doing the same who are just — but it’s just that you’ve done it a few times and there’s kind of nothing new to learn and I think as developers who are, you know, fairly intelligent people, you want to continue to learn and expand your horizons and that don’t feel like since you start in level one that that’s where you need to stay or that’s even where you’re going to want to stay past having the first few successes.
[29:24] Mike: I think part of it is just wanting to be challenged and fulfilled in your job or in your career. Nobody wants to do the same thing over and over. So starting out at level one and then progressing from there is it seems to me like it’s a natural progression. I can see people who want to live a specific lifestyle and they just want to stay in that level one or level two area where they don’t necessarily need to stay on top of things all the time or they can shift their focus away from it and live their life and have it as a lifestyle business versus something where they have to continuously stay on top of it, work 40 hours a week, continue to do it day in and day out in order to continue making that business a success.
[30:03] Rob: So those were are thoughts four levels of income generating web apps. If you have other thoughts or questions, obviously, feel free to post them on the blog or send them to us at questions@startupsfortherestofus.com. We actually got a few questions this week. They seem to be piling up. Mike, I think we’re going to have to do more Q&A episodes here soon. We’ve got another drinking game submission from Micah Alcorn [Phonetic]. Thanks for that. He says that the quote is “People should drink whenever we get a question that says ‘I’m a business guy with a brilliant idea. How do I find a technical co-founder?'” I like that one and the cool part is he says, “By the way, I am a business guy with too many ideas. My solution is to learn to write code on nights and weekends, build prototypes, test hypothesis and then outsource. Thanks, Micah Alcorn [Phonetic].
[30:45] Mike: Well, I got a couple of comments from people as well via e-mail. One of them was from a guy from Microsoft who apparently realized that I was using some code that he has written to synchronize the databases. So he said that if I ever needed anything or have any questions just let him know. So I’ll definitely hit him up for that. And then another one was from Scot who had a specific question for me about AuditShark and he said, “Hi, Mike. I was listening to the podcast this morning and you talked about the appeal AuditShark has for those who’ve been hacked. A friend of mine works for Core Security which is a Boston company that does penetration and security testing for enterprises. What do you think about companies like Core as a reseller or recommender for AuditShark? Great show. Thanks for putting all the effort in, Scott.”
[31:24] And I wrote him back and I basically told him that in order for me to sign on multiple resellers for product like AuditShark, I think that would be a pretty big challenge for me right now and not necessarily in terms of to time but I think that early on, it would be really difficult because there are a lot of different things that go in to it. I feel like long-term, it’s a viable strategy but when you’re early on, the problem is that you have to be able to justify what type of market there is for the products and provide the prospective partners with enough guidance about how to reach their audience effectively, how they can sell it, what types of companies are good fits for the particular product. They really need to know what the level of work, risk and reward is that they’re undertaking and that’s really hard to gauge when you’re first starting out with the product. So I would be hard press to provide a lot of those details to somebody. Those are a lot of good questions and I don’t necessarily know the answers to those yet. The really big one is that how much time and training is it going to take to get that partner up to speed on the product and how do you keep multiple partners from stepping on each other when they’re going after the sales and you know, just an example of that is let’s say that I give everybody a 25% discount on the software.
[32:32] Well, each of them is going to start competing and using the MSRP and drop it down up to 25% and they’re going to each try and maintain their own margins. And you would think that when these partners are trying to compete against each other for let’s say the same account, that, you know, they’re going to either run in to these cases where they’ll say, “Well, you know, I’ve got a better relationship with you. So, you know, you’ll buy for me.” And that’s not generally the case. I mean a lot of times what will happen is customers will buy from whoever gives them the cheapest price which is why Dell is as large as they are because they sell pretty much every product you could possibly imagine. And if you got to Dell’s website or you call Dell, I guarantee you that they will sell you just about any given software product out there, you know, just look at the Fortune 1000 or look at all the software companies and I can almost guarantee that Dell will sell every single one of their products. And the reason is because Dell just does so much volume that they are able to get these giant discounts from various software vendors.
[33:28] So when you have that type of relationship, what you’re doing is you’re putting the partners in an uncomfortable position where they’re competing against each other. And that makes things really hard because those large customers, those large value added resellers even if they don’t actually add value to the deal, sometimes they’ll do things like they’ll bundle hardware and software together and they won’t necessarily differentiate between what the costs are and it looks like the customer is getting great deal. And they may or may not be but what ultimately ends up happening is that they end up pushing the other resellers out of the deal So then they’re essentially destroying your reseller channel. So those are a lot of the things that you have to be careful of.
[33:28] There’s one reseller now that I’m working with that somebody that I have really good relationships because we have — we share a lot of core values and beliefs about how to run our business but for me I think it’s more a matter of starting out really slow and picking the right partners as oppose to just trying to get as many partners as possible and then working out the kinks so that it can be ramped up effectively. Going down the road of resellers is something I’m looking at but it’s not necessarily I’m going to go in to this direction and go as fast as possible. It’s really about working out the kinks. Trying to figure out what’s wrong, what’s right, what is and is not going to work and then once I’ve figured out all that stuff, then kind of ramp it up.
[34:44] Rob: Right, we hear a lot from different surveys and studies of startups that premature scaling was one of the biggest causes of startup failure. And in my opinion, trying to find resellers at this point would be far premature. And I think it’s pretty obvious, you still need to develop more features and really to get their product market fit, problem solution fit. I mean find that product that people are dying to have and then once you’re doing well, selling them one on one, then you start developing that that reseller channel. Beyond that, I’ve done some reseller stuff and affiliate stuff and it is quite a bit of effort. It’s a lot more effort than people realize in terms of exactly what you said. It’s like training, getting them onboard, getting them pumped up, reminding them they’re suppose to be selling your stuff, handling issues who, you know, that they do support that you do support. There’s more to it than just finding some people and having them magically sell a bunch of copies of your software every year. So I don’t see it as much of a super bullet as I think I’ve heard people mentioned. So those are two things to keep in mind.
[35:42] Mike: Well, I think that the one thing they’re pointing out about that is that most people look at affiliate sales and they say, oh well, resellers will make 30 or 40 or 50% or something like,” because that’s a typical margin on a lot of those affiliate deals. But when partners have sales reps involved and they’re actively trying to sell those, they’re going to start cutting in to their commissions in order to make the sale. So then they’re competing against each other and I’ve seen situations where even on 6 and 7-figure deals, the commission isn’t only about 2% of the total sale. So you take $1 million deal and 2% of that is about $20,000.
[36:18] It is not that much with regards to the size of the deal and $20,000 it sounds like a lot but the reality is how long is it going to actually take you to land a $1 million sale and it’s not going to be overnight. It’s going to be several months. So if you spent several months trying to land one deal and you get $20,000 out of it, was it worth it at the end of the day? And for the partners, many times the answer is no. It just isn’t. So that’s something you really have to keep in mind when you start ramping up the partners. When you only have one, those issues are just not existent. You don’t have to worry about them. But when you have 10 or a hundred or a thousand, it’s a completely different story.
[36:54] Music
[36:57] Rob: So if you have a question for us and you’d like to hear us discussing on the show, you can call our voicemail number at 888-801-9690 or 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 can subscribe to this podcast in iTunes by searching for startups or via RSS at startupsfortherestofus.com where you’ll also find a transcript of each episode. Thanks for listening. We’ll see you next time.
Episode 101 | Key Takeaways from Business of Software 2012
Show Notes
- Podcast Awards
- The Whicher – Tournament A/B testing
- Business of Software 2012
Transcript
[00:00] Rob: In this episode of Startups for the Rest of Us, Mike and I are going to covering the key takeaways from this year’s Business of Software Conference. This is Startups for the Rest of Us: Episode 101.
[00:10] Music
[00:19] Rob: Welcome to Startups for the Rest of Us, the podcast that helps developers, designers and entrepreneurs be awesome at launching software products, whether you’ve built your first product or you’re just thinking about it. I’m Rob.
[00:29] Mike: And I’m Mike.
[00:30] Rob: And we’re here to share our experiences to help you avoid the same mistakes we’ve made. Well, we are getting some submissions on the drinking game and in fact, Glenn Bennett submitted a comment on the blog and he said “Here’s some help with winning the drinking game; Alternatives to ‘a shoutout include Special thanks To, Many thanks to, Thank you to, We’d like to acknowledge,” and my favorite and I think I’m gonna start using this one, Mike, “We appreciate the acknowledgment of our podcast by…” insert name here. [Laughter] It’s just somehow, it’s a different sentiment.It is the same thing but so what — what’s really going on this week?
[01:01] Mike: Well, I was talking to our Virtual Assistant. She said that she got an iPhone 5.
[01:06] Rob: Awesome. Now, we had given her some Apple credit last year. Is that right?
[01:10] Mike: I think it was actually the year before. She hadn’t use them.
[01:12] Rob: Right.
[01:13] Mike: And because she is — kind of a Mac person and she got an iPhone 5 and started using it and ran in to a couple of issues here and there. It was mostly minor stuff that if you’ve been using an iPhone for a while, you’ll probably set those things up. She was switching from a BlackBerry to an iPhone. So that was kind of, I’ll say a rough transition. [Laughter]
[01:31] Rob: Yeah, I imagine. Yeah, it’s a big, big jump.
[01:35] Mike: But I actually got an iPhone 5 as well and I don’t know. The transition for me was pretty seamless. I basically just restored my iPhone 4 to my iPhone 5 and everything worked fine and the only issue I ran in to was that all of the ‘Save Passwords’ for all the applications, I had reenter in the credentials. But I think that’s more because the certificates no longer match up because it’s a different device and it just says, “No, you have to enter new password.” But that was really the only issue that I ran in to.
[02:04] Rob: Cool, that’s not bad. So I have a 4S and I’ve just upgraded to the new what iOS 6 I guess and there have been a few kinks with that. The podcast app is still pretty clunky. It’s getting better but it has quite a few bugs. I don’t know if you started using it. Apple needs to get their act together with that. And then the Maps App, I’ve heard a lot of complaints about because they remove, you know, Google Maps and inserted their own and it works fine for me for what I’ve used it for but sure, there’s been a lot of issues.
[02:33] Mike: I understand that there’s going to be complaints here and there but I was on my way to the Business of Software Conference and I forgot what the address was. So because I went from the iPhone 4 to the 5, I didn’t have Siri on my 4 so I pulled it up while I was driving, just talked in to it and said, you know, “Find the Intercontinental Hotel.” It found it. I just clicked the route button and it gave me turn by turn directions and talked to me and told me exactly where to go. And I had a GPS but I wasn’t using it because I’m like, oh well, I’m just going to Boston. I know exactly where I’m going and then I just thought to myself, wait a second, I know they’re doing construction. They’re rerouting some traffic. How do I actually get there? And it brought me right there. I mean I don’t —
[03:13] Rob: Yes.
[03:13] Mike: … have any problems at all. But our VA lives in New York City and she said one of the big things that she ran in to is that it doesn’t have a public transportation on it which I —
[03:23] Rob: Got it.
[03:23] Mike: … can see how that could be a huge issue if you live in a big city and that’s what you use. So —
[03:28] Rob: Right.
[03:29] Mike: That I can see being an issue.
[03:30] Rob: Yeah, they definitely have some catch up to do against Google and — So hey, I want to ask a favor. If you’re listening to this podcast and you enjoy the podcast, I’d love for you to go over to podcastawards.com. It’s an annual podcast award competition and people are nominated, different podcasts were nominated. And Mike and I would love it if — even if we were just nominated and made it to the finals, it’d be a great thing. We have never even — I hadn’t heard of it before this year but as I look back in history, it’s actually a pretty, pretty popular thing. So if you have a few minutes, head over to podcastawards.com and right — scroll at the bottom of the page and you know, if you’re able to nominate Mike and I for the both People’s Choice and the Business Podcast Award, we would very much appreciate it. We’d love the recognition and the potential to grow our audience there. What else is going on this week?
[04:18] Mike: One of our listeners named Justin Sikes dropped me an e-mail about an attack on Adobe’s servers where somebody got in to one of their built servers that was doing all of the code signing for, you know, a lot of their different builds. So, you know, it was probably doing stuff for packaging of their flash application and various other things. And it had access to their certificate server and because of that, somebody was able to hack in to machine and start signing their own code and then distributing that as if it was signed by Adobe. People will get these e-mails from these hackers and it would say, “Oh, please run this,” and if they ran it, it would say that it was actually signed by Adobe Software. And if they would look at it and just by kind of glancing at, you say, “Oh well, this is signed by Adobe. It must be trustworthy,” and you click on it, then it will infect your machine with all this malware.
[05:09] Rob: That’s bad news. You know what? I think maybe they should have been using AuditShark.
[05:12] Mike: I believe so too and I feel a blog post coming on about that.
[05:15] Rob: [Laughter] Yeah, indeed way to news jack it I don’t know if you refer that that term newsjacking but it’s jumping on the news quickly in writing a relevant blog post assuming your app or your, you know, your story that you’re trying to tell is relevant to that. So sounds like good opportunity.
[05:31] Mike: So how about you?
[05:32] Rob: Two things I wanted to mention. One, HitTail is continuing to grow through — I’ve kind of found a couple of flywheels that I’m really tapping in to heavily. I’ve also been quite pleased with that new hire that I mentioned the contractor who’s working about 20 hours a week for me. He’s taken on a lot of responsibility and suddenly the other day I found myself on Hacker News for the third or fourth time in the same day and I realized, wait a minute, I don’t have enough to do. I actually to start some new initiatives like it’s to the point where I’ve basically off loaded the bulk of the day to day work on HitTail and I can either, you know, start some new marketing initiatives, this brand new stuff that I haven’t done because it’s too time consuming or I’m evaluating some of the acquisition opportunities and looking at potentially branching out. And it’s nice because it deals to a growing and the goal is that with these flywheels that he would be able to take them over from me. So it’s a forge in to a new territory here but quite please with how that’s going.
[06:25] Mike: That’s very cool.
[06:25] Rob: Yeah, and then the other that I wanted to mention I’ve just thought it was a cool idea I heard it on TechZing. I think it was an episode or two ago and it’s — the URL is thewhicher.com and it’s W-H-I-C-H-E-R. So it’s like ‘which way’ thewhicher.com. And it’s basically tournament split testing. So you can submit like five different versions of a logo and then have someone vote, do you like this one or that one. And if they pick that one, then it, you know, moves it down and then it’s that one or the next one, you know, two or three and then it’s three or four. And so it’s just a pretty cool idea. So I figured, you know, our audience could potentially find some value in that and I just enjoyed checking out some of the examples they had. So thewhicher.com.
[07:10] Mike: Cool. I think I’ve heard about that as well.
[07:12] Music
[07:15] Rob: So you went to Business of Software last week. I did not go this year, you know, it’s just — I’ve talked to Mark Littlewood four or five months and he said he was going to look in to angle it more towards enterprise stuff and they get some people who are like having IPO’s and just like a larger software audience, larger software companies, 50, 100 to 500 employees. And so I was kind of like torn. It was going to be a really big jaunt for me to try to swing everything and you know, in years past I’ve probably would have done it but I just felt like I don’t know that this is actually — that I’m actually going to get that much value at going this year. Now, from what I heard, I watched the Twitter stream and I’ve talked to a couple of other folks who went, it didn’t turn out that way that it was — perhaps a better year this year but I am definitely interested in hearing your take on that and of course, at this point I’m chomping at the bit looking to go in 2013 again. You, I imagine got a lot of sleep as usual.
[08:06] Mike: [Laughter] Absolutely — very, very little actually.
[08:09] Rob: Yeah, that’s how it always go. You still wind up — up till 2 or 3 in the morning, right, chatting with everybody?
[08:13] Mike: Yeah, I think I drew the line I think at 1 o’clock in the morning and I just said, “Look, I got to go.” [Laughter]
[08:19] Rob: Yeah because you stayed at home, right? You have like a 45-minute drive or did you stay in town?
[08:23] Mike: No, I stayed at a hotel that was about —
[08:25] Rob: Okay.
[08:25] Mike: … two miles away.
[08:26] Rob: Got it.
[08:26] Mike: So it wasn’t very — it wasn’t really far. It was short enough to drive. It only took me about I think maybe less than 10 minutes to drive from my hotel to where the conference was but — it was in a slightly different location. It wasn’t at the Seaport Hotel this time. It was at the Intercontinental Hotel —
[08:40] Rob: Right.
[08:40] Mike: … which is literally just up the street. I mean it’s about two or three blocks away but still same general vicinity. But while I was there, I had 15 people asked me if we were going to be doing MicroConf again this year.
[08:51] Rob: Whoa, nice. So I guess we’re not probably not going to have problem selling out again this year. [Laughter]
[08:57] Mike: I would guess not. I mean there were – and it was really funny because several of them had told me it was about two or three days in to the conference, they’re like, “Hey, you know, just want to let you know I was at MicroConf. I loved it.” And I’ve been telling everybody about it [Laughter].
[09:09] Rob: Oh no and you’re like “Shh, quiet. We [Laughter] only have 128 tickets.”
[09:13] Mike: Yeah, yeah.
[09:14] Rob: Yeah, we’re going to have to figure something out because just the e-mail list is growing fast and I don’t know, with only, you know, 128 tickets it’s — I almost bad that — for the people who can’t go who really want to go, it’s going to be a bummer. So we need to talk about alternatives and ways we can potentially expand it without just allowing of growing the conference to a huge size because that we will obviously want to keep that kind of that intimate feel that we’ve had for the past couple of years. If you’re listening to this and you’re interested in MicroConf, go to MicroConf.com and we do have an e-mail list and we’ll be — we’re going to start talking about it probably in the next few episodes and get in to more detail and thinking about the plans but it’s very likely going to be in Las Vegas and it’ll very likely be between I’d say somewhere between March and probably May of 2013. It’s a conference for self-funded startups and single founders. So are you ready to dive in to your Business of Software takeaways? Obviously since —
[10:05] Mike: Yeah.
[10:05] Rob: … I didn’t go and I actually was in Chicago for most of it. Aside from seeing the Twitter feed, I really don’t know much of what happen. So I’m interested to hear your take.
[10:14] Mike: What I do is kind of like what I do at most conferences what I’ll do is I’ll create a new folder and ever know and then for each speaker. I’ll just sit there and start taking notes. And there’s a lot speakers where I have more notes than others and I think part of that is just because there are certain speakers were I had more takeaways that were things that I didn’t necessarily know before or that I wanted to reiterate to myself later on. So for example, there was not so much that I took down notes from Peldi for example because I’ve heard him speak before. I’ve read a lot of his stuff. Same thing with Joel Spolsky and then there’s people like Kathy Sierra where I’ve got, you know, a few notes here and there and there’s others where like for example, Dan Lyons. I had almost no notes at all because most of it what he talked about was just his stories about running his blog as the fake Steve Jobs which was extremely entertaining but there wasn’t necessarily a lot of actionable material there as well.
[11:11] Rob: Right and given that they have, what, 14 speakers it’s not like we can cover all of them and all the takeaways in a single podcast. So we will probably have to skip around to maybe, maybe your highlights or well, some of the more key points that came out of it.
[11:22] Mike: Right, right, yeah and I definitely tried to cut that down for this podcast because this podcast would probably be, you know, 10 to 12 hours long [Laughter] if do.
[11:29] Rob: Right, right. So kick us off. Was Kathy Sierra the opening speaker then?
[11:33] Mike: Yes, she was.
[11:34] Rob: Excellent, so it looks like her talk was called Making Badass Users.
[11:38] Mike: Yeah, I don’t know if that was the actual title of it but it was something along those lines like any titles that you see here in the outline, those are all just kind of a high level summary. But her talk really focused a lot on how our software — I mean how the things that we put out there, people talk about them because it makes them look good. It’s not necessarily about, you know, the software itself or how great the software is. It’s about how well it helps people do their jobs and how well it portrays them in their job. So for example, if you’re making a piece of software that, you know, does really good bug tracking. It makes you a good product manager because you can assign things to different people and get a lot of things done. And it’s not about the software being good at what it is doing, it’s about making the person good with their job is.
[12:20] Rob: Exactly. Now, I love Kathy Sierra. I mean she’s totally dialed in on this — on building apps and at making badass users and actually as a historical note, she as far as I know came out with the phrase of you have your app make people awesome at X. And when you and I were throwing around the original topic for this podcast and try to write the intro, that’s where we took “The podcast that helps developers, designers and entrepreneurs be awesome at launching software products.” It was from a Kathy Sierra quote.
[12:48] Mike: Uh huh. Yeah, that’s exactly right and it’s interesting the way that, you know, that kind of plays in to a lot of the different things that, you know, we’ve done over the years and you know, how this podcast turned out.
[12:57] Rob: Yeah, totally. So this sounds very similar to her talk two or maybe it was three years ago she talked to BOS. Did you ever see that talk?
[13:05] Mike: I did. And it was —
[13:06] Rob: Okay.
[13:06] Mike: … it was similar but it was —
[13:08] Rob: Okay.
[13:08] Mike: I guess she expounded on it a little bit more. I mean I think she got the impression that, you know, it wasn’t just about making your users awesome, it was making them awesome in what they do. So it was kind of diving in a little bit further. It’s like well, why does that work, what is it about your software that makes the users awesome? It’s like well there’s nothing really about that, it’s just making them awesome on what they do. That’s really what it is and she had a bunch of conversations with people and talked about how, you know, you shouldn’t confuse loyalty with bribery. So if you’re putting special deals out there or trying to get people to, you know, like you on Facebook for example, don’t confuse the fact that you’re bribing them with loyalty to your product. I mean you’re bribing them for Facebook like. It’s not that they love your product in some cases. I mean don’t get me wrong. There are cases where, you know, if you’re not compensating for that Facebook like and they do like you anyway on Facebook, then sure, you know, that could be construed as them actually liking you guys.
[14:04] But one of the things that she said that really struck home to me was that, you know, people don’t tell their friends about your product because they like you, they tell their friends because they like their friends.
[14:12] Rob: And what is that mean? Is that they’re trying to help their friends out?
[14:16] Mike: Yes, so she had this whole — it wasn’t really a comic book series but it was a series of slides where there are somebody talking about doing something. I think the example she used was Pinterest and it was basically, you know, people are not telling their friends about a given product or service on the internet because they like that service, they’re telling it because they like their friends. They want their friends to be happy. They want their friends to see new things and you know, they like their friends. So they’re going to tell them about this new service because they want their — to kind of expose their friends to this new thing that will help their friends’ lives be better. It’s not because they like the products or like they like Pinterest. It’s because they like this — they like their friend.
[14:53] Rob: Got it. So it’s not enough just to get the job done and just to help someone with the task at hand but she’s saying you have to just blow them away. You have to make them awesome. You have to make them a badass user because that like psyches them up and energizes them and gives them energy like so much that they want to go help their friends and they want to like evangelize your product to them?
[15:11] Mike: Yeah, that’s right. One of the other quotes she said was “People are loyal to themselves and people they care about.”
[15:16] Rob: Got it. That makes sense. Did she go in to any specifics of how to do that because this sounds like totally cool but how do I do that? Like let’s say I have HitTail, you have AuditShark, what do we do next, you know? [Laughter] Is there – or did she recommend a book or anything of getting more specifically in to how you go about doing that?
[15:33] Mike: Kathy is by far the person I have liked the most notes from.
[15:37] Rob: Really?
[15:37] Mike: There was a lot of discussion about designing for the — the post user experience. So after a product has been used by the customer or the prospective customer, what is it that you want the end user to say to their friends about the product? And it’s really about taking product’s planning to the next step. So I think at MicroConf Patrick McKenzie had talked about designing the user experience like the — like the invasion of Normandy and it was, you know, and Patrick’s talk was about basically scripting out exactly what you want your users to see and when they saw it so that the things that they needed were — that were relevant to what they were doing would show up when they needed them, not before or not after but like right as they were doing something. And it helps them get through the product especially if it’s a complicated product and in a way that really moves them through and makes them successful at whatever their task is. And I think that Kathy Sierra’s take on it was you really wanted to design for the post user experience.
[16:35] So after you’re done walking the user through the product itself and they’ve used your product, what do you want them to say to their friends? What do you want them to say to their coworkers? And I think that relates a lot back to what Patrick’s talk was about because if you script out that user experience, they’re going to talk about the products to their friends about how easy it was or how they should check this out because it will make their lives so much better or so much easier. And I think the two are very, very much intertwined. They definitely, you know, relay to one another like that.
[17:06] Rob: Very cool. So for listeners out there, if you weren’t able to catch the live stream, it looks like if you to businessofsoftware.org, they’re going to have all the talks edited, processed and posted online in the next month. So it should be by the first week in November. So that’s — sounds like Kathy Sierra is a good one for folks at your mark and then probably watch once that’s online.
[17:27] Music
[17:31] Mike: Jason Cohen’s talk was really interesting because that was all about data and metrics and how they can make you do totally the wrong thing. And it was really interesting because one of the first things that he showed was an A/B test that I think he used Google Analytics but it showed an A/B test between two different pages and page 1 was, you know, some variation and page 2 was supposed to be some variation. And if you look at the graph, page A did, you know, significantly better than page 2 and it was over the course of like a month and something like 24,000 data points which you would think would be statistically significant but when you started digging in and looking at actually what was being tested, what he said was there was a company that he was working with in Austin where they were very, very driven by data metrics and split testing and they split tested all these different things and after about year, they started looking at their split tests and their conversion rates and saying, “Well we’ve split tested all of these things.
[18:31] We’ve always chosen the one that is supposed to go on the right direction, yet our conversion rates between last year and this year are really not any different. So what’s going on?” So what they did was they took a page and then they took a copy of it and they split tested between the two and they found that over the course of the month, one of them did like significantly better than the other one. And the problem was that they did not find a statistically significant result like they didn’t wait long enough is really what it came down to.
[18:58] Rob: I see. So he’s not saying that A/B or split testing doesn’t work. He’s just saying that it’s more complicated than most people probably think. They think they can throw up a split test and just look at it as it approaches. Boy, this one is really creaming the other one so it must be better. There’s actually quite complicated formula for doing split testing and I know that when you use Google website optimizer and it’s now actually integrated in to Google Analytics that you’re supposed to wait until the end of the term. They actually declare a winner at some point but it always takes longer than you think it’s going to and so what he’s saying is you have to wait until they declare. You can’t just can’t make a call early on. Is that —
[19:37] Mike: Yeah.
[19:38] Rob: Is that a big takeaway? Okay.
[19:38] Mike: Yeah, they really is and he added a link. We’ll link to it in the show notes but it was basically the A/B hamster where there’s a hamster and they show it. They given an organic carrot and a regular carrot and it’s over this course of like ten different choices for the hamster. And 8 out of 10 or, you know, something like that, it chooses the organic carrot. So you’ll think, oh well hamsters like organic carrots but the fact is that it wasn’t a statistically significant margin. So unless you waited long enough, you really wouldn’t get an answer.
[20:12] Rob: Very cool and you know, I think we should know as we’ve — you and I have just been assuming people know who the speakers are like Kathy Sierra is an author and a consultant and she is a big time in the UI and UX user experience stuff. Jason Cohen is well a serial entrepreneur and he just raised funding for WordPress Engine. He has sold a couple of companies for cash and is just a super intelligent capable dude who’s done a lot of good thing for entrepreneurship and he shares that with people on his blog and at SmartBear.com. So Dharmesh Shah, he’s the founder of HubSpot in addition to he had a company before that but I think they cashed out on as well. It was retro funded but he also blogs it on at Startups.com and has one of the largest startup followerships, you know, online. So he speaks every year. I mean he’s a fixture of Business of Software and I always get tons of value out of his. So what he talk about this year?
[21:03] Mike: Well, he talks a lot about setting the culture for your company and determining, you know, the future of your company based on who you hire. And one of — I took on a couple of different quotes from him and one of them was “Strive not just to build a great startup but strive to build great entrepreneurs” and his comment about that was that when you’re hiring, you’re not just competing against other startups when you’re hiring. So for example, you’re not just competing against Google or Microsoft or Fog Creek or any of these other places, you’re also competed against people doing their own thing. So they may decide, well I don’t want to work for you, I’m going to build my own stuff. So that’s something to keep in mind when you’re hiring because, you know, you have to be able to offer an entrepreneurial culture to people so that they don’t want to go create their own stuff. They essentially want to work within your own company and be paid to do it as oppose to saying, “Oh well I’ll take a really, really low salary for a while and build my own thing.”
[21:56] Rob: Right. So for those of us who don’t plan on hiring employees soon, were there takeaways not regarding like company culture and that kind of stuff?
[22:04] Mike: Well there is one about finding the right types of customers and he said you don’t just want customers, you want crazy loyal fans and it kind of related to setting up barriers of entry and he related it back to HubSpot where they’ve grown the company. And one of their big barriers to entry for other people is that people who sign on with HubSpot love HubSpot. They love HubSpot for not only in what they do but for what they allow them to do and you know, he basically said that this is a strong barrier to entry because it dissuades competition. When you suck and your customers hate you, it’s really easy for competitors to pop up but you’re going to have a lot less competition by virtue of the fact that your customers love you because when people are out there looking for ideas of things to build, they’re essentially drawn to these companies that suck. They’re like, “Oh well, I can build something better than them because they’re terrible and their customer support is awful,” or “Their product sucks.” If you are really good in a lot of different areas, people are just dissuaded from building a competitive products to whatever it is that you have because not only is your company good but your product is good as well.
[23:12] Rob: Right and then people like you and so they don’t want to jump ship. I mean I think PayPal is a great example of this and so is Quicken or QuickBooks. I guess it’s Intuit that makes them but you know, you see — I mean there’s Stripe and Square coming out of the woodwork. There’s several other payment processes that are coming out the woodwork to kind of compete with the dislike of PayPal as well as — well, I won’t say everyone, most people don’t like QuickBooks and so there’s all kinds of, you know, financial apps that come out including Mint and inDinero which we talked about before, LessAccounting, all those guys. I mean they’re just a really wide open market. But if QuickBooks which owned like 90% of the business market at one point, the small business market, if they were obviously delighting their fans and making their users awesome, it would be much, much harder to get in to that market. So that’s cool.
[23:58] Mike: Next was Peldi from Balsamiq and he talked about a lot of different things. Most of it was things that I’ve heard from him before. The two takeaways I got from his talk was that right now he’s in a midst of researching organizations that have a flat hierarchy because one of the issues that he’s running in to is that as he’s trying to grow Balsamiq, he’s running in to problems where he’s the bottleneck. He’s basically making a lot of the high level decisions and he’s trying to move more to a situation where the employees are making the decisions and he is trying to remove himself from those day to day things. He’s looking at other companies where they have much more of a flat organization and one of the things that he pointed out was I think Valve Software has like a PDF or an employee handbook or something like that where it tells developers what their life is going to be like when they’re working at Valve and it pointed out, you know, that there is much more of a flat organization where there is not as much management and that the employees essentially dictate the direction of the company, not some top level management and you know, he’s looking at that just kind of a model and was asking some people in the audience for feedback and said, “Hey, if anyone wants to come talk to me about this particular type of arrangement for business, now it’s working out. You know, I’d love to talk with other people about it.”
[25:14] So I thought that was really cool. I hadn’t really considered the idea of building out a company in a very flat organization like that and I’m really curious to see what sorts of companies are possible with that arrangement. I mean could you imagine being in a, you know, a 500 or 1,000-employee company where there isn’t really a level of middle management it’s just like everybody is kind of doing their own thing and doing what’s best for the company and the management is just kind of air?
[25:39] Rob: I can’t imagine that but only because I’m never seen it done. But I believe it’s possible. I just believe — I don’t know that it’s ever been done before but it’s certainly cool to see Peldi thinking about it because he’s the kind of visionary that could put something like that in place. You know, it would definitely be — I mean that’d be something that would turn to a Harvard Business School case study if he could pull that off. I’ve heard of some companies and I’m trying to think — I think Xerox PARC was one guy, the Palo Alto Research Center and they invented the, you know, what — Ethernet and the laser printers and the mouse and that’s what Bill Gates and Steve Jobs had walked through when they picked up on that stuff. That was I’m pretty sure a flat hierarchy and I think there was one guy leading it and there was a bunch of researchers. And he only got up to — he got up at about 75 people, maybe a hundred and he could manage them and they were all doing their own little individual research projects. You know, you just don’t know because they weren’t turning a profit, right? They were funded by Xerox to do a research whereas Peldi is looking at creating an actual like a for-profit company that does that. So obviously, interested to see how he does it.
[26:42] Mike: Yeah, I mean — from the talk it certainly seem like they were companies out there that were doing it but there just wasn’t a lot of publicly available information about —
[26:51] Rob: Right.
[26:51] Mike: … how it’s actually done. So —
[26:53] Rob: That makes sense.
[26:53] Mike: I think he definitely identified some companies that were doing it and he just wasn’t quite sure how it was being done. So…
[26:58] Rob: Right.
[26:59] Mike: The one really awesome quote that I heard from him though was about VC funding and he said, you know, here’s the quote. He says, “As soon as you take VC funding, you get a boss and a kitchen timer.”
[27:08] Rob: That’s awesome, indeed and I have, man, I’ve talked a lot of entrepreneurs. It’s not that VC funding is bad, it’s just that you need to know what you’re getting in to before you go after it and that’s probably a pretty good analogy of a boss and a kitchen timer because I definitely have a timeframe. Most funds only go out to ten years and so they’re going to put you in the trash can or want you to cash out, you know, if you go — if you go up past that point.
[27:30] Music
[27:33] Mike: So after that was a guy named Mikey Trafton and he was from — I’m not real sure. It’s either Blue Fish or Fire Ant. I think Blue Fish was the company he used to own and then Fire Ant is his new one. And he was talking a lot about building a great culture and gave a lot of tips on how to attract better employees who are good culture fit and they ran in to some issues back when the economy crashed and he was going to have to let some people go. But because he had focused so much on hiring people who were a good culture fit for his company, when he basically called everyone together in a meeting, he said, “Look, we’re going to have to let people go if there’s any way that anybody is willing to start taking pay cuts, then you know, we can hopefully, keep some more of our people on.” And he said that by the end of that day, every single person that worked for him had come in and said, “I’m willing to take a pay cut so that, you know, other people don’t get let go.”
[28:24] Rob: Wow.
[28:24] Mike: It’s just, you know, a very amazing and compelling story about how if you build your company in such a way and hiring the right people who are a culture fit not necessarily a skill set fit that your company will be better for and you can pay them less. I mean that wasn’t, you know, the moral of the story but if you’re hiring those people, then they’re going to be willing to, you know, kind of put their necks on the line with the company to help you out when things get rough.
[28:50] Rob: All right, very cool.
[28:51] Mike: So next was Dan Lyons and if you haven’t heard of Dan Lyons, he was the fake Steve Jobs for the longest time. And I didn’t get hardly anything out of his talk. He did talked a lot at the very end about how to get in front of the press and how they weren’t going to let you get away without their pound of flesh. But one of the things that kind of stuck with me was that the advertising trend that he identified which was, you know, this TV dollars where people used to throw tons and tons of dollars at getting TV time and then on the web it’s, you know, you’re getting dimes and he called them digital dimes. Then now it’s trending towards mobile pennies where you’re getting much, much less for your advertising dollar which changes the landscape of, you know, how advertising is done in that particular medium. And he didn’t have any specific conclusions about who is going to profit from that or who is going to ultimately survive but it was just the matter of this medium is changing, advertising is changing and either you migrate with it or you end up dying.
[29:52] Rob: Right and for those who haven’t of Dan Lyons, you said he was fake Steve Jobs, he had a blog where it was called like Fake Steve Jobs and he was blogging as if he were Steve Jobs. And he’s a reporter and a columnist for some other job, then even wrote a book called Fake Steve Jobs and then eventually he came out, you know, a couple of years and said who he was. And yeah, so that makes sense. I mean he’s not a startup founder so never a lot of, you know, advice for some starting up but definitely would have knowledge about the media and advertising.
[30:21] Mike: Next was Gail Goodman who — she’s the CEO of Constant Contact and Constant Contact is a lot like MailChimp or AWeber and you know, helps companies that want to establish an e-mail relationship with their subscribers and give them updates about different things. And she talked about this the SaaS “long slow ramp of death” which her thinking was that eventually Constant Contact when it was founded back in the late 90’s would end up with this hockey stick growth and it never really turned out that way. It was funny because she had talked about having this flywheel that, you know, as opposed to a hockey stick and you’ve been known in the past to talk about, you know, accelerating the flywheel and things like that so that–
[31:02] Rob: Right.
[31:03] Mike: … you can build upon your earlier successes and you know, that propels you forward. Well she used the kind of the same analogy so that basically that throughout the history of Constant Contact there’s never been a silver bullet where they found one thing that works really well. It was just continuous incremental improvement and they are at the point now where they’re on track to do, I think she said $250 million worth the business and $40 increments from her customers.
[31:29] Rob: Wow, that is incredible. Constant Contact is the e-mail marketing software I know about. They’re the first one I’ve ever heard of. Yeah, they’re MailChimp like you said from the late 90’s and so they certainly have a lot of legacy stuff to deal with but I can totally see that being around for 13, 14 years would just bring it to that point I can’t imagine — I mean a SaaS business that generates that much revenue $40 a month subscriptions. It’s really impressive. I actually heard and watching the Twitter and the folks I’ve talked to that her talk was quite good. So that’s definitely I want to have your mark to watch in its entirety when it’s released here in he next month.
[32:05] Music
[32:08] Mike: Next was Paul Kenny and runs his — it’s a kind of —
[32:12] Rob: Isn’t it a sales consulting operation where he like helps people who come to your company and help train your sales people and help train you how to sell your product that thing?
[32:21] Mike: Yeah, but he talked a lot about how you can learn from what customer say to you so when you’re selling in to a customer and they say no, you can essentially learn a lot more from a qualified no than from an unqualified yes. And he said that the sales conversation with no resistance rarely ends in a deal being done. So if you’re talking to customers and they’re not raising objections, they’re not really questioning you about anything, chances are really good that they’re not going to buy from you either. So it was all about how to help the customers either raise objections or identify what their objections are and then kind of put them back in their core to, you know, help you get the answers that you need to identify whether or not your product is a good fit for them because there’s almost never a time where a product is 100% awesome fit for a particular customer. Sometimes it takes a little bit of hand holding and convincing to say, “Okay. Well this is how this product can fit in to your environment and this is information to kind of get you over the fears and objections that you currently have.”
[33:22] Rob: So here’s what I like about Paul Kenny. I’ve seen him speak every year I’ve been to Business of Software and in general, I don’t like sales people as a rule, right? I don’t think of most us do but Paul Kenny is the nicest guy and he is a great sales person and he’s not the slick slimy sales person you think of and he says that when he gets up there. He says, “That’s a bad representation, a misrepresentation and customers don’t like you when you act like that.” So he talks about how to be smart and be nice and how to do it right without fitting in to that stereotype. And so I just really respect what Paul Kenny has to say every year even though I don’t do enterprise sales which, you know, is most of what he focuses on. I still learn something from here every year and I wind up taking notes because it gives me more insight in to just the overall selling process. Even if it’s not face to face, everything he says, almost everything he says applies to, you know, what stuff that I do online or via e-mail as well. So awesome, I bet that was a good talk.
[34:16] Mike: It really was, you know, I’m skipping ahead a little bit hear but Dan Pink was the last speaker at Business of Software. And he had a lot to say about sales reps as well where he basically broke down the numbers of the population and said that basically 10% of the population is in sales of some kind and he had a bunch of studies and showed some of the statistics and showed some case studies where he was able to show that, you know, from the day that he had that the best sales reps are not the extroverts. Because everyone hires extroverts, you know, especially for sales reps because like, oh they’re outgoing, they’re going to be able to go out and get the sale and everything else but what he showed was that I think the dollar amounts that he showed where introverts get an average for every hour that they work is about $120 and extroverts get about $125. But the people who fall in the middle get around a $155 which is a pretty significant margin above either of those numbers.
[35:10] And you know, he had a couple of different theories for why that was but he was showing that the people who are in the middle tend to relate to other people a lot better and they can kind of fluctuate up and down the scale a little bit versus the people who are at extreme ends. If you’re really introverted, you’re not going to ask for the sale. If you’re really extroverted, you’re going to push too hard for the sale whereas those people in the middle, they’re much more likely to be able to talk to people and reason with them and listen. He’s like, you know, that’s one of the big problems with sales reps is they don’t shut up. [Laughter]
[35:42] Rob: Cool, so who was after Paul Kenny?
[35:44] Mike: That was Noam Wasserman and Noam is a — I think he’s a Harvard professor. And he had a ton of data on startups and most of it was on the reasons for failure within VC back companies. And he had something like data from 4,000 startup companies and about 35% of the ones that failed, failed because of product development or market problems and you know, basically product market fit problems and then 65% of them failed due to people problems. And one of the really tell in statistics that he had was that the people who stepped away from their CEO and Chairman of the Board roles made roughly twice what the other founder of companies did. So if you are a startup founder and you kept both the CEO and the Chairman of the Board role, then chances are you’re going to walk away with about, I think it was $3 million. But if you walk away from both the CEO and the Chairman role, then you would make roughly $6 million from, you know, startup.
[36:44] And again, this is average over the course of 4,000 startups but it was really interesting that the number was doubled like if you step away and the rational behind it was really because the people who have the ideas and the motivation to kind of get the company started are not the same types of people that are going to be able to get the company sold.
[37:04] Rob: That’s fascinating. That actually ties in to something I was reading the other day and the exact details escaped me but it was something to the effect of every fast-growth startup needs three roles over the course of its lifetime and it was the visionary which is right at the very beginning, having the vision and pushing the crew, you know, working long hours and just getting the product to where they can sell it and then there was like the entrepreneur and that’s kind of getting things up, scaling things, getting it to a sustainable business and then there was like the executive or the manager or some role like that and that’s, you know, the person obviously who scale sit up and builds an organization and makes — puts a lot of process in place. And it was saying that most of the time these three roles are not the same person. It’s very rare to see someone who can do all three and so, this actually ties in to that quite nicely.
[37:55] Mike: Yeah, and it was really interesting some of the things that he had talked about was equity split between the founders. I have some of the numbers here but he basically had a bunch of statistics about who split equity with the company within a month of founding and he said 73% of the founders split the equity within a month of founding. And he said 33% of it is an equal split, 21% has a huge gap of equity with there’s a greater than 40% difference between what the founders get and then there’s 90% have a large gap which is 21 to 40% difference and he had examples of all these different things. And one of the things that he talked about was is it wise to split equity basically within that first 30 days.
[38:39] And one of the examples he said against that was ZipCar where Robin Chase and her founder for ZipCar which I think they went IPO and have this like massive organization at this point but they basically talked about it upfront, had a handshake agreement where they were going to split the company 50/50. And over the course of the next 18 months Robin Chase did the vast, vast majority of the work and the other person put in virtually zero and now the company is massive but, you know, that other person who just agreed to it via a handshake, you know, got 50% of Robin share because they just, you know, Robin wanted to get that out of the way and didn’t ask the right questions. And I think her comment was something along the lines of that was the dumbest handshake she ever made.
[39:19] Rob: Right, that’s tough and that’s a lot of that goes in to that is vesting, right, is that you shouldn’t, everyone shouldn’t vest immediately. You should have a 3 or 4-year vesting plan even for founders so that if founder drops out or stops working on it that you essentially you fire him. You let him go from the company and then they stop vesting and they do keep some portion of that while they were working but, you know, after that they basically don’t own anymore of the company.
[39:44] Mike: Yeah, so one — the rest of is talk was about some of the founder dilemmas including that equity and whether static split is okay and if so, when is that okay and you know, what the investor or monetary dilemmas are about starting the startup so whether you’re bootstrapping, self-funding or taking outside money. It was a very fascinating talk but it was also a very — because he’s a professor, it seemed like it was very much a classroom setting. [Laughter]
[40:10] Rob: Yeah, that makes sense. There was a lot of positive buzz on Twitter about it. A lot of people were saying, you know, that it was a good talk. So if you’re saying it’s a classroom setting that mean it might have been boring or a little —
[40:21] Mike: No, definitely not. It was just something —
[40:23] Rob: Okay.
[40:23] Mike: … you would expect to hear on a lecture hall.
[40:25] Rob: I see, a lot of stats and such.
[40:26] Mike: Yeah, a lot of stats, a lot of declarative speaking style.
[40:30] Rob: I see.
[40:31] Mike: He actually walked up and down the aisles a little bit as if he was teaching in the classroom.
[40:36] Rob: Right.
[40:36] Mike: You know.
[40:36] Rob: That makes sense, that’s his style.
[40:38] Mike: Yeah.
[40:38] Rob: Oh cool, I have to take a look at that one. So next up was Noah Kagan. You know, I’ve seen — both you and I have seen him speak in the past and he always has is own unique style for sure and he pushes the boundaries. I saw a couple of tweets that were – I don’t know, they were calling in to question [Laughter] his — the tone of his talk. One of them said like “This was the most insensitive and insulting talk I’ve ever seen in a professional conference.” [Laughter] Obviously, he always has a lot of good stuff, a super smart guy. He’s founded AppSumo and he has grown it to 7 figures plus and knows marketing and knows how to do that. How do you find the talk? Was it cool or did you feel uncomfortable at any point?
[41:14] Mike: I think calling out people in the very beginning about trying to find the thinnest person in the room and the heaviest person in the room was probably a little uncomfortable.
[41:22] Rob: Got it.
[41:23] Mike: But I think a lot of the talk it revolve primarily around the fact that he had gotten away from his root so like he had started the company. He started AppSumo with the concept of bringing great deals to people and bringing people things that they would want for their businesses and that they just didn’t necessarily know existed. Bringing them cool stuff and he had gotten a way from that such that he was basically just spamming people and that’s what he said. I mean those were his words. He’s like “We got to a point where we were spamming people and I didn’t even want to be on my own e-mail list.” And he basically just said that was a huge mistake and I guess he went from within the course of like two months where they had like their best month ever and then with two months later they had their worst month ever and —
[42:10] Rob: What —
[42:10] Mike: … he let go a bunch of people. He let go half of his staff and sent out — actually and e-mailed apology to people saying, “Look, you know, we’ve gotten away from our roots. This is what I’m going to do to change it and let’s get back to delivering stuff in your e-mail box that you actually want to see.”
[42:26] Rob: Wow. Yeah, that’s crazy. I saw either a Twitter or post from him right after that where he basically said go to AppSumo.com and look and there was — I went and there’s a personal letter from him that basically said what you said a kind of apologize and just said, “We’re getting back to our roots.” And now I’m looking at it and looks like there’s a — there’s like a letter. It’s almost like a blog right now. I mean I guess they still have products it seems like he’s trying to go back to the roots and figure out a different approach. What a trip, what a — like a vulnerable thing to do in front of that audience.
[42:56] Mike: Yeah, it really was and I understand how people, you know, there were some people who took some of the things that he said and said, “Whoa, that’s, you know, totally inappropriate.” It obviously wasn’t the intent.
[43:06] Rob: And it wasn’t the point of the talk either, right?
[43:08] Mike: Yeah, it’s like —
[43:09] Rob: Yeah.
[43:09] Mike: I mean you could take just about anything that anyone says either on this podcast or in a conference talk and either blow it out of proportion or take it at the wrong way and really focus on that one little section of it but I think in general he — it was more of a good broad message about making sure that you stay true to the users because they’re the ones who put you there. It’s not — it’s not about you. It’s not about your product. It’s about you servicing the people who buy your stuff basically.
[43:36] Rob: Okay, so looks like we have one left. I guess Bob Dorf was after Noah?
[43:40] Mike: Uh huh. So Bob Dorf is a colleague of Steve Blank. Both of them argued that business plans belong in the Creative Writing Department at colleges which I thought was really funny. He said startup enemy number one is the business plan. It was interesting because the, you know, the way he said it and I don’t know of the whole history here but it was along the lines of when Eric Ries was going through their classes, they basically said, “Hey, we’ll fund your idea but you have to basically use our methods and prove out this theory that we have,” and it was all about the Lean Startup movement which is kind of really where all of that stuff comes from. So it’s very interesting to kind of see the mentor behind Eric Ries about how that process is done and you know, how to always be innovating and in constantly seeking customer feedback and challenging the business model that you’ve put in in place and using the same approach just not everyday of the week. His comment about business plans was no business plans survives first contact with customers just askWebVan.
[44:40] Rob: Nice.
[44:40] Mike: He says —
[44:40] Rob: So we talked about business plans and that you shouldn’t write them.
[44:43] Mike: Yes.
[44:43] Rob: All right, cool.
[44:45] Mike: You know, the one really stark quote that stuck with me was he said that “A startup is a contemporary organization designed to find a repeatable process for identifying customers and building what they want” which I thought was just an incredible way to describe, you know, what a startup is and how you should go about building your business around that concept so that you are always building stuff that people want as oppose to building stuff that you think people want that they don’t really care about.
[45:10] Rob: Right, right. Well, it sounds like it was quite an eventful BOS. I’m sorry I missed it this year and I certainly looking forward 2013. Any other highlights or things that you should mention that, you know, don’t fit to kind of this outline we put together?
[45:24] Mike: I ended up missing the lightning talks but, you know, other than that I mean a lot of the conference was just talking to other people and what they were doing and what they were building and you know, giving ideas and getting ideas from different people.
[45:37] Rob: Very cool. Any discussions about AuditShark?
[45:40] Mike: Yeah, I did have a few discussions about AuditShark here and there and one of the things that stuck with me was I was talking to Noah and Adii and Noah had asked me about what I was working on and I told him AuditShark and he — you know, I’ve started to explain what it was and he’s like “Who would want that?” And I said, “Well, you know, one of the things that there’s a very start contrast between people who have been hacked versus those who haven’t.” And since Adii was standing right there, I said, “Adii, would you have bought AuditShark which is security software for servers before you were hack,” he’s like “Absolutely not.” I was like “Would you buy it now because last year at MicroConf you almost didn’t come because your server was hacked?” He’s like, “I absolutely would buy it.” And —
[46:18] Rob: Right.
[46:18] Mike: … it got me to thinking. I was like, “Well why haven’t I kind of latched on to that earlier?” Because —
[46:23] Rob: Right.
[46:23] Mike: … I’ve thought about that before I just haven’t really — I don’t know why for some reason it didn’t occur to me like that would be an awesome marketing angle to go after and say, “If you’ve been hacked, this software could help you prevent that from happening again.”
[46:35] Rob: Right and that’s the thing, right? Because before you’re hacked, it’s more of a vitamin and then after you’re hacked, you know that it can happen again and it’s much more of kind of an aspirin thing like it’s more of like you feel the impending threat because you’ve seen the realities of what can happen. That’s it, that’s a good insight and you know what’s funny? One hallway conversation, one simple question from someone, can do that and that’s what this conference is. Whether it’s BOS or MicroConf or you know, a Lean Startup get together. I mean it’s just — it’s like this one sentence or this one introduction could make the whole conference worth it. So although there’s tons of stuff in the talks themselves just run through, I always find that the hallway conversations have as much or more value than the talks themselves.
[47:16] Mike: Yeah, I mean just that one comment from Noah just like that paid for the whole conference. That’s just like that one insight is like oh, it’s suddenly just something clicked to my brain and it’s like that is a very, very good marketing angle that I could use to get in front of the right type of customers for AuditShark because even at the beginning of this podcast, I’ve mentioned about Adobe being hacked. I didn’t thought too much about exactly what happened with that but my understanding of how they were hacked was that they’ve like many companies that are large they had built their server and they’re supposed to check and then they put it on their environment but unfortunately, they don’t ever checked their servers again or at least that was the implication from the article. And that’s what AuditShark is designed to do. It’s designed to go in to those servers and check to make sure if they’re still configured the right way. And apparently the server had slipped through and for some reason did not go through the right process so it had never been checked to see if it conformed their security standards. And that’s exactly what AuditShark is designed to do.
[48:13] Rob: So all you have to do now is find the list of companies that had been hacked, bam! That’s your marketing list.
[48:17] Mike: Yup.
[48:17] Music
[48:20] Mike: So I think that about wraps us up for the Business of Software overview. If you have any questions or comments, you can call it into our voicemail number at 1-888-801-9690 or 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 can subscribe to this podcast in iTunes by searching for startups or via RSS at startupsfortherestofus.com where you’ll also find a full transcript of each episode. Thanks for listening. We’ll see you next time.
Episode 100 | Startup Advice From 9 Successful Founders
Show Notes
- Jason Cohen – A Smart Bear Blog & WPEngine
- Jeff Atwood – Coding Horror & Stack Overflow
- Derek Sivers – CD Baby
- Dharmesh Shah – Hubspot
- Erik Sink – Source Gear
- Andrew Warner – Mixergy
- Ruben Gamez – Bidsketch
- Patrick McKenzie – Kalzumeus Software
- Dan & Ian – Tropical MBA & Lifestyle Business Podcast
- Peldi Guilizzoni – Balsamiq
Transcript
[00:00] Mike: This is Startups for the Rest of Us episode 100
[00:03] [Music]
[00:12] 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 are here to share experiences to help you avoid the same mistakes we’ve made. So what’s this week Rob?
[00:25] Rob: The word is episode 100 sir.
[00:27] Mike: That’s two words.
[00:28] Rob: I know but we finally made it. 99 episodes ago we sat down at these very tables recorded over Skype. What was it, maybe three years ago, two and a half years?
[00:39] Mike: Yeah.
[00:40] Rob: And didn’t we record 10 episodes before releasing a single one to iTunes?
[00:43] Mike: We did.
[00:44] Rob: We were already scared about it if I recall. If people would really want to listen to it but sure has changed over the years.
[00:50] Mike: You know it’s funny because I remember spending so much time doing the editing upfront. It’s not obvious I don’t think when you go back and listen to it but the first episode I think we wrote down every single word we were going to say on the podcast.
[01:03] Rob: Yeah. It’s very very stiff. You’re right we read most not all of it but most of it. There was not much chit chat just kind of and around BSing. Well hey as of today this is obviously a special episode. What we’ve decided to do is invite on nine of the most successful founders that we know and have them give you some startup advice. We will be getting to that a little bit later. But before that, we wanted to chat about some podcast metrics. 100 episodes in and we’re just checking we have feed banner tells us we have just over 2,700 subscribers. So those are people who listen through the RSS feed and we push about 750 gigs, almost a terabyte of audio bandwidth every month. That equates to around 19,000 downloads a month. Since we put out multiple episodes, you don’t really know how much each one is individually downloaded unless you look at logs. But certainly a far cry from when we started off with my mom and your wife listening to the podcast in episode one.
[02:01] Mike: My wife hasn’t listened to a single episode. Has your wife ever listened?
[02:04] Rob: No.
[02:05] Mike: No.
[02:05] Rob: I’ve cut her a few clips of some particularly like things that were related to what she was doing or something funny that you said or something. But no she does not listen. I have friends who listen but not the wife. No one in my family listens actually.
[02:18] Mike: That’s really funny.
[02:19] Rob: So how about iTunes reviews, where do we stand after 100 episodes?
[02:23] Mike: So after 100 episodes, we’re currently sitting at 222 iTunes ratings.
[02:28] Rob: Wow! That’s from all over the world, right?
[02:30] Mike: Yeah.
[02:30] Rob: So, thank you person on the other end of this ear buds listening to us now. Thank you for supporting us, thank you for listening, for subscribing, giving us reviews, giving us feedback, posting comments to the startupsfortherestofus.com blog, giving us questions via email and voicemail, all these things that if we didn’t have that kind of support, we wouldn’t continue to do the podcast, period. The reason we do it is because we love interacting with other entrepreneurs and we love just building that community that allows us to sit down and chat each week and hopefully share some of our knowledge, to learn from you who’s sitting here listening to it now and have events like Microconf and I don’t think we could have pulled off without this podcast.
[03:13] Mike: Oh definitely not. And speaking of comments, I mean we are up to 418 comments on the blog.
[03:19] Rob: Yeah that’s awesome. So yeah, we really want to thank you guys.
[03:22] [Music]
[03:25] Rob: Diving right in. As I mentioned before this episode it could be titled ‘Startup Advise from Nine Successful Founders’ and these are some of the most successful founders that we know and you’re probably are going to recognize almost all of the names. What we did is we contacted them and asked them some questions and allowed them to answer just one over either voicemail or an audio format. So to kick it off we have Jason Cohen. He has been a serial entrepreneur. He sold at least two companies for cash. He has been very successful. He started WP Engine a couple of years ago and it’s growing quickly. They are in the tens of employees if I recall and have raised series A, I mean they are on the up shoot. So anyways Jason Cohen responded and he answered the question, what’s the most common mistake you see startup founders make?
[04:14] Jason Cohen: Founders tend to do whatever is comfortable for them, which is whatever they are good at. Developers want to write code. Designers want to build A/B tests. MBAs want to build spreadsheets. The trouble is that by definition the toughest part of your startup is going to be in the things that you are not good at, because you don’t have good ideas. You won’t execute it that well. You don’t have a passion for it. You want to procrastinate it and so on. So those are exactly the kinds of things that will probably make your startup fail. If you write code, it’s probably not your code that will cause your startup to fail. And yet that is where you want to spend all of your time.
[04:48] But getting people to a website willing to pay a specific amount of money for something, that’s probably the hardest and most important part of a new startup. That’s where you need to spend your time. Not writing code. Not worrying about your M.V.P. Not at the beginning. Now in any other large project you tackle the big scary unknown stuff before you go fill in the details you know you can build. And startups are no different from that. So, I know you can write the code. You know you can write the code. That’s exactly why it’s not valuable or useful to write the code. It’s all the other stuff that’s scary and hard. So you gotta tackle that hard scary part first and then you’ve eliminated the biggest risk to your startup. And that sets you up best for success.
[05:27] Mike: So next we talked to Jeff Atwood and who hasn’t heard of Jeff Atwood? But Jeff Atwood he’s the blogger behind codinghorror.com, he was also the co-founder of Stack Overflow, the Stack Overflow podcast and various other ancillary endeavors related to that. We talked to him and he submitted what he thought was the most common piece of advice that he gave to startup founders. So here’s Jeff.
[05:53] Jeff Atwood: Well, I don’t get asked a lot for advice from startup founders. But when I do one of the first things I ask them is “Why the hell are you asking me about this?” Because I feel like it’s the first role of a startup founder to ask your own community what they think of the product. Like, I don’t use your website or your product, probably. And I’m not really probably even in the audience for it most of the time.
[06:19] So, if you’re asking me that seems already sort of misguided and you should be asking your community what you should be doing. You should be talking to your community. You should be talking to the people that use your…your website, your application every day. And asking them what they think. And they’re going to appreciate it a lot more than I do because they’re the ones giving you money or time or whatever the resource is and investing in what it is that you are doing. And not engaging with your community is sort of the number one flaw I see the startups that I’ve advised make.
[06:51] And for some reason they just don’t prioritize it. And I’ve never been able to figure out why because I always found that the community on StackOverflow and StackExchange was the number one source of inspiration for things to do. They certainly won’t hesitate to tell you when they think you’re doing it wrong. Which is often useful.
[07:09] And a lot of the feedback isn’t actionable which is true. So, I would say, on average about 10% of the feedback you get from the community is useful in some way, which means you have to look at 10 posts, 10 units of work to find the one that’s actually potentially useful. So, it’s a lot of work and maybe that’s why some startups don’t want to do it. But, I feel like if you’re not engaging with your community either nobody cares in which case your problem is not that your product has flaws. The problem is that nobody cares about your product. And that’s what you need to fix first.
[07:43] So, the main piece of advice I end up giving a lot of startups… the mistake I see a lot of them make is not having a clubhouse for their community to go to talk about the thing together with each other and also to help each other. The community scales a lot better than you and your small team will. So, make sure you’re listening your community.
[08:01] Rob: Next up we have Derek Sivers. Derek founded CD Baby somewhere in the middle or late 90s. And he grew it to a very successful company, he sold it for 22 million dollars somewhere around 2007, 2008. He has been a pro startup advocate; he shares a lot of knowledge on his blog sivers.org. I highly recommend that you check him out. He’s also working on his next idea. He blogs about all these at sivers.org, so I do encourage you to check it out. Derek answered the question, what’s the most common piece of advice you give to startup founders.
[08:37] Derek Sivers: Have you heard the phrase, hand out your shingle? It’s an old phrase that refers to declaring yourself to be in business, especially a service business like an architect or lawyer or doctor. You’d start your business by making a little sign saying “ARCHITECT” and then you’d hang it on your door now declaring yourself to be in business. So, I think the first thing you should do when you have an idea is to hang out your shingle.
[09:01] Get your idea out into the sunlight to the opinions of the world. And, don’t just ask for feedback on your idea. That’s too hypothetical. But by actually declaring yourself to be in business, by asking people to pay for your service or product, you’ll get much better feedback then just asking for feedback. It’s an old truism that is you want advice, ask for money, but if you want money ask for advice. So, by hanging out your shingle as soon as you have the idea it means you will also start small. Don’t develop the idea too far before putting it out into the world.
[09:37] Businesses always turn out much different than you planned. So, let your plans be shaped by actual public demand, instead of your initial idea. For me, I started CD Baby before PayPal existed and there was no way to charge credit cards online if you were just a musician. So, I launched CD Baby as a payment processing service for musicians. But, only two weeks into it a customer whose card I had charged never received their CD When I called the musician to find out why they said “Oh, hey man, sorry I totally flaked out. I forgot. I’ll do it tomorrow. Wait no not tomorrow, next week. “
[10:13] So, I had to change my plan to handle the CD warehousing and shipping. But, this was a hit. Everybody wanted this order fulfillment service I was providing, right? But, soon my customers, the people that actually bought CDs, were coming back to CDBaby.com every week to see what was new. So, whereas I thought I was an order fulfillment service. My customers were telling me I was actually a retail store. And I’m glad they did because that retail store went on to make me a net profit of about 15 million dollars over the next few years, all because I hung out my shingle when my idea was only a week old. And I let the customers shape it into what it needed to be.
[10:52] Mike: Next up we have Dharmesh Shah. Dharmesh is a very frequent speaker at the business and software conference. I don’t think there’s been a business and software conference yet that he hasn’t spoken at, at least not the one that I’ve been at. He’s also the co-founder of HubSpot which is based out of Cambridge Massachusetts which does a lot of inbound marketing. Here’s what Dharmesh had to say about the most common piece of advice he gave to start up founders.
[11:16] Dharmesh Shah: Once an entrepreneur has what she believes is a reasonably good idea. My advice is generally to get started. Start executing on that idea. A common mistake entrepreneurs make is they wait for that perfect idea. The exceptional idea, that game changing, life transforming, paradigm shifting idea. And the reality that it‘s actually very, very rare for an entrepreneur to start with an exceptional idea. What more commonly happens is they start with a… what they believe to be a reasonably good idea. They start the business. And as they’re working on that reasonably good idea the exceptional idea, kinda of, come about as a result of kind of iteration and tweaking. So sitting on the sidelines its very very rare to just through raw analysis and talking to people, it’s very rare to actually come up with an exceptional idea. The way to get to a great idea is to start with a mediocre idea. A reasonable idea and then tweak it from there.
[12:07] The other reason not to wait on the side lines waiting for that perfect idea is that even if you happen to get lucky. Of the 5 idea that have occurred to you, let’s say, one of them happens to be the exceptional idea. Chances are you wouldn’t know that the idea that you were thinking about was actually exceptional. Because chances are as you talk to smart people that you trust getting feedback on this what you believe to be what might be an exceptional idea. You’re going to get push back. You are going to get reasons from smart people that say “Here’s why this particular idea is just not that exceptional. Here’s why it’s not going to work. Here’s why it’s already been done or tried two or three times before.” Even with exceptional ideas they rarely rarely stand that kind of scrutiny. The only real way to know that an idea is exceptional, try to actually implement it. It doesn’t have to be the perfect solution but just enough to learn what it is about this particular idea that works and doesn’t work and tweak it from there.
[12:57] So my advice is if you have a reasonably good idea and you’re looking to do a startup, my advice is…start up. Get going. Figure out how to tweak that idea as you go.
[13:07] Rob: Our next guest is Eric Sink. Eric Sink worked on the original Internet Explorer team for Microsoft in the 1990s. He left to found his own company called SourceGear which makes a product called Vault Source Control and a number of other spinoffs of that. Erik was instrumental in my getting educated as a software marketer. He has a blog at Ericsink.com where he blogged especially prolifically from about 2000 to maybe 2003, 2004 on the topic of software marketing. He had an angle like no one else at the time. His articles were later published into a book called Eric Sink on the Business of Software and I have it on my bookshelf. I have been a devoted follower of Eric Sink and actually it was a big pleasure to meet him two years ago at Business Software. We were both speakers and I was able to make his acquaintance and thank him for all the advise he shared with me unknowingly. This is Eric Sink. He called in to our voicemail line so it will be a little different call quality but he was also answering the question, what’s the most common piece of advice you give to startup founders.
[14:15] Eric Sink: The advice I give is to understand how to evaluate risks. As a startup founder, as an entrepreneur you’re going to make all kinds of decisions and they’re going to be risky decisions. And typically what we do is we turn to advisors. We ask people what they would do and we ask them about their experience. And the problem with that approach is that invariably our advisors have more experience than us, which means they’ve gotten burned. And invariably they become more conservative over time. And in some cases they’ve forgotten that their early successes happened because they took risks and beat the odds.
[14:53] So, sometimes it’s the lack of experience that provides the courage we need to take risks. Advisors need to help us understand what would happen if we place a bet and lose. But, as an entrepreneur the bet is yours to place. And you need to go in informed about the risks. And then you need to choose whether you want to take the risk or not, but the decision is yours. It’s kind of like in that movie called Stealth, which was an otherwise awful movie. But there’s this great point in the movie where one of the pilots says, after being told that he has very little chance of success at something, he says “I didn’t get this far by being in the 73rd percentile. I like my odds.” And he goes ahead and does it anyway.
[15:38] And sometimes entrepreneurship is just like that. It’s about being told how you could get burned and taking the risk and winning. And that’s where your success is going to come from. And what I often tell people is that if you don’t like the sound of that, if that doesn’t appeal to you. Then maybe you should stop being an entrepreneur and go get a job. Because the reality is that is what entrepreneurship is like. Taking risks and beating them more often than other people do.
[16:06] Mike: Next up we have Andrew Warner. Andrew Warner founded a company called Bradford and Reed when he was in his early 20s. He grew the revenue pretty high, ended up selling the company around the time he probably got very burned out by the company. Surely, after that, he decided that he was going to build another company called Mixergy and right now you can find him at mixergy.com. Andrew is a really tough guy to get in touch with. He’s running all over the place. So we finally caught up to him and here’s what he had to say.
[16:36] Andrew Warner: Hey! It’s Andrew Warner on a run because that’s my advice to you. Take up running or something like it. Because don’t you ever get into times in your life where you can’t get anything done right because you’re not confident. And you’re not confident because you haven’t been able to get anything done right at work. Well, times like that you need something outside of work that’s completely within your control. That you can just totally rock and then go back into the office or the desk and that confidence will carry you through. So, for me that’s running. Even if I stink at work and everything is falling down and we’re losing money, I can go for a four mile run. Cross that four mile line and feel “Hey! I got it! I can do this. I can do anything.” And that carries back into work. So find your version of running. Keep cultivating it even when you don’t think you need it. And then it will be there for you when you do need it. I’m Andrew, again, and Rob congratulations on 100 shows.
[17:31] Rob: Next up is Ruben Gomez. He is a long time friend, founder of bidsketch.com which is proposal software for agencies. Ruben was one of the charter members of the Micropreneur Academy. This was before he launched his product and I had been giving him advice via email and became somewhat of a mentor and advisor for Ruben and I’ve taken great pleasure in seeing the success of BidSketch. Now he’s at the point where he’s mentoring and advising new startup founders. So it was a natural fit for us to ask him what’s the most common mistake you see startup founders make.
[18:12] Ruben Gomez: So the biggest mistake that I see people make is that they’re not clear enough about who their customer is. So, that generally means that they don’t understand their customer well enough and they’re just being too broad about who they’re targeting. So, if I asked them who is your customer? They may say something like, small businesses or freelancers. Ok. Freelancers is a better example but it is still too broad, right, because there are all sorts of different types of freelancers. You have freelance writers, freelance designers, freelance developers. Each one of those has a different problem. They use different language. And they just read different blogs and websites. So, the more specific you can get and the better you can understand your customer the easier it makes everything. Not just website copy but also generating traffic and actually coming up with a solution to solve their problem as well.
[19:06] Mike: Next we talked to Patrick McKenzie. If you’ve ever looked at a bingo card creation software, you can’t possibly have missed his website, bingocardcreator.com. He also runs a blog and a software company called kalzumeus.com. He is a frequent speaker at MicroConf and he has also spoken a couple of times at the Business and Software Conference. Here’s what Patrick said, here is the common piece of advice that he gave to startup founders.
[19:33] Patrick McKenzie: So, probably the most common pattern I see among startup founders is that they have a brilliant idea. They make software to instantiate the idea. They then try to find a customer for it. They can’t find the customer. They come to me and ask me how do they improve their marketing.
[19:46] And, they have things almost exactly backwards. The first thing they should be doing is finding a customer. And understanding that customer well enough to understand what the customer really needs, particularly in a business situation. What they need to increase the revenue of their business or decrease the costs from their business. Then after you understand what the customer really needs you can create products which answer that need. Which might be a software product, a service offering, what have you, a combination of all these. Create the product that directly addresses that need. And then since you have a deep understanding of who your target customer is and where they’re coming from, you can take that deep understanding and let it inform your marketing strategy.
[20:27] For example, if you know that your target customer is going to be the office manager at a professional service business, this lets you A) Target your marketing copy towards the concerns and the aspirations of the office manager, in particular, rather than the aspirations of say the business owner or the person who will actually be performing the services for the clients. And it also lets you find out where that target customer hangs out. For example, office managers actually go to conventions to see how they can do their jobs more efficiently. They are probably not reading Hacker News all day. But they might have particular industry specific websites.
[21:02] They also probably identify more with specific industries than they do with the general title of office manager. So, if you are trying to reach them you would probably go into the industries where you’ve had previous…demonstrated customer success or demonstrate customer need. More adjacent industries and shop it to them directly. Find out where those…folks in those industries hang out. Address them directly. This will make life much easier than trying to retrofit a new customer population on top of a software or service offering that you have no evidence that anyone in the world other than you would ever actually pay money for.
[21:34] Mike: So up next we have Dan and Ian from Lifestyle Business Podcast. And they answered a question about what are some of the common mistakes you see startup founders making.
[21:41] Dan Andrews: Hey! Mike and Rob its Dan and Ian from the Lifestyle Business Podcast. First off big ups on the 100th episode of Startups For The Rest Of Us. We’ve been fans since way back in the day like back when tight gym shorts were popular. You guys have done some amazing stuff and kept us encouraged along our journey as well. So, thanks so much for what you do. We’re going to answer this question; What are some common mistakes you see startup founders making? And Ian is going to kick us off.
[22:06] Ian: Hey, guys congrats on the first 100 episodes. I’ve got a little quick tip. I think it’s important for first time or early developers to focus on less sexy niches with your skill set. So, realize that your skill set may be more valuable to less sexy niches then it is to the shiny niches. So, take those skill sets and attack a market that’s begging for you. One that’s maybe a little less established because there will be less competition and more opportunities.
[22:33] Dan Andrews: Yeah, and that’s basically how Ian and I made a living the last 5 years. So, it’s worked in our case. One other thing that I see people failing to do is change their social circle. Way back in the day Rob said “Hey, Dan you’ve gotta read Never Eat Alone by Keith Ferrazzi. And I put it off and I put it off. And I think that book actually is a great roadmap for doing this kind of thing, which is, you can’t go it alone. You can’t be the only guy who…you know, all your friends have great jobs. And they want you to play fantasy football all the time. They want you to show up to all these parties. At a certain time I think you need to change that social group to get encouragement and perhaps most importantly great critical feedback on the kind of stuff that you are doing. So don’t do this thing alone. Focus on getting a great group of people around you that are going to support your entrepreneurial journey.
[23:16] Ian: That’s right if you have a house pet that doesn’t support what you’re doing, take it to the pound.
[Laughter]
[23:21] Dan Andrews: Alright guys. Congrats on the 100th episode and we’ll be sticking around for the next 100.
[23:26] Rob: And rounding out our esteemed panel of guests, we talked to Peldi Guilizzoni. He is the founder of Balsamiq Markups. He started it as a one person software company. Maybe what do you think , Mike, like four, five years ago?
[23:40] Mike: Yeah. I think it was around 2007.
[23:42] Rob: Yeah and he has since grown to well into the seven figures in revenue and he has at least a dozen employees, he’s based out of Italy and has just had an amazing story to tell and he has always been more than willing to share his experiences. In fact if you read the early posting at balsamiq.com in the blog, he went into in detail, step by step everything he did when he launched. That was a big inspiration for a lot of folks who came after him, really helped them grow their businesses. So he is now an advisor, I’m pretty sure he does some angel investing as well and just generally a nice guy who has spoken at Microconf, spoken at Business Software. We asked him what’s the most common piece of advice you give to startup founders.
[24:28] Peldi Guilizzoni: The most common piece of advice I give to a startup founder is to resist your natural urge to work in a vacuum. Include your customers as much as you can in everything you do. When you are just starting, for instance, do customer development. Find the people who have the pain you are trying to solve before writing any code. Only start coding when you have a group of people lined up to buy your product as soon as it is ready.
[24:53] When coding release everything as quickly as possible. Stop yourself from thinking through every possible use case. Build only the main use case and release it quickly. 90% of the time you see that it’s enough. If it’s not enough add the little piece that’s missing and go back to listening. Forget secrecy, buzz, or trying to make a splash. Those are all exhausting short term things which don’t matter in the long run. A tight feedback loop with an enthusiastic community is so much more valuable. It’s the best form of marketing and it is something your competition can not easily replicate. Good luck!
[25:31] Music
[25:35] Mike: So again we want to say a big thanks to everyone who submitted answers to those questions and especially to you the listeners. This podcast wouldn’t be here without you. It’s really inspirational to hear the stories from you guys, the question that you have and to be able to know that we are helping you out and that obviously we do get some satisfaction out of helping you guys out. So feel free to send in any more questions you have and we look forward to hearing you over the next however many episodes that there are for Startups for the rest of us podcast and hopefully you’ll listen to the end. Rob take it away.
[26:07] Rob: If you have a question or comment, you can call it into our voicemail number. Its 888-801-9690 or email it to us at questions@startupsfortherestofus.com. Our theme music is an excerpt from ‘“We’re Outta Control” by MoOt, used under Creative Commons. You can subscribe to this podcast in iTunes by searching for startups or via RSS that’s startupsfortherestofus.com where you’ll also find a full transcript of each episode. Thanks for listening to us for 100 episodes and we will see you next time.
Episode 99 | Outsourcing a New UI, Two-Sided Markets, Handling Incoming Calls, and More…
Show Notes
Transcript
[00:00] Rob: In today’s episode of Startups for the Rest of Us, we’re going to be talking about outsourcing a new user interface, questions about patents, handling incoming phone calls, and leveraging social media. This is Startups for the Rest of Us: Episode 99.
[00:14] [Music]
[00:23] 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.
[00:32] Mike: And I’m Mike.
[00:33] Rob: And we’re here to share our experiences to help you avoid the same mistakes we’ve made. So, what’s the word this week, Mike?
[00:39] Mike: I am encountering massive contractor woes.
[00:42] Rob: Oh no. Do tell.
[00:44] Mike: So I think I had mentioned that I ended up letting one my contractors go, right?
[00:49] Rob: Yup.
[00:50] Mike: That was one that kind of ended up out of the picture. And then another one his grandmother went into the hospital and since his mother relies a lot on him for a lot of things. He basically, he didn’t drop off the face of the planet. We’ve talked about it a little bit. But basically his work effort has dropped to pretty much zero because he’s dealing with family issues which I, you know, go deal with your family issues. Those are kind of more important than other things that are going on. Another one is in the middle of applying for loans for like car and a couple of other things. So he’s got to deal with banks and everything else, so he’s really not available. Another one has just kind of drop off by the face of the planet. So it’s basically just me.
[01:27] Rob: Seriously. Wow. Yeah. I’ve had this happened to me before where everyone but a large number of people kind of flake or even just got caught up with other stuff all the same time and it’s a real bummer. It seems to happen in 3’s.
[01:41] Mike: Yeah. I think you’d mentioned before that happened to you a couple of months ago I think.
[01:45] Rob: Yeah. It was about six months ago and it was like a VA, a developer, and another developer within about three weeks of each other. But you know what, they were people who had not worked for me for very long. Have these guys been around for a while or are they recent hires?
[02:01] Mike: Well a couple of them have. I mean one of them has been around for along time and then the other two had been probably a little bit more recent. But one of them has been really good and the one I let go obviously wasn’t so good.
[02:12] Rob: Are these contractors do they do consulting full time or do they have day jobs and they’re doing their work on the side?
[02:19] Mike: They pretty much do this full time.
[02:20] Rob: Got it. That’s surprising then cause that’s like one of the questions I ask upfront. I tend to want people who are going to do it during the day and who are going to give it their best effort instead of doing it in the evenings and weekends. And I also found that people doing it at the evening and weekends since it’s not the primary source of income they do tend to take it less seriously. And if they have a rough patch, they’re just going to bail on you. But it sounds like two of them are temporary and they’ll be back.
[02:44] Mike: Yeah. Yeah.
[02:45] Rob: I’ve been reading or listening to a book called The Facebook Effect. It’s the flipside of the story that you see in the film, The Social Network. The Social Network was largely guessed at by Ben Mezrich. Ben Mezrich is kind of this author who goes after these really big sensational stories. He wrote The Social Network as almost like a narrative right where it reads like fiction. But he had to make up a bunch of the interactions cause it was a fiction book, so he has to have conversations that no one really knows what happened. And so then the movies obviously took it to the next step and just use that and dramatize them.
[03:21] And so the movie got a lot of criticism early on for people who are saying really it isn’t very accurate. I mean it’s kind of just somewhat made up thing. So anyways, The Facebook Effect is an authorized book about Facebook. So it’s going to naturally slant the other way since it’s authorized because this reporter have the cooperation of Mark Zuckerberg and a bunch of other people. And so he’s naturally more of a fan of theirs and slanted to their benefit. But it was really interesting to hear the kind of the flip side to the story about basically all the lawsuits that came about because of Facebook and how many times Mark Zuckerberg and Facebook were sued and to hear his side of the story.
[03:56] So it’s definitely not anything you’re going to listen to and it’s going to help you launch your micropreneur endeavor, build a product or anything. But if someone is looking for entertainment and then to get maybe a different side of the story I definitely was fascinated by it. And I was also impressed with some elements of Zuckerberg’s ability to dig into the social graph and frankly his persistence in the early years of getting Facebook off the ground.
[04:17] Mike: That’s really cool. I mean I watched The Social Network probably less than a month ago. There were a lot of things that went on I just really questioned how accurate they were. I figured they were some embellishment, but I didn’t necessarily figure out how much or kind of look into how much. So that made what you just said kind of make a lot of sense that it was dramatized forHollywood. But you know it’s interesting that there’s something else out there that you can kind of read the other side that’s a little bit more I’ll say official.
[04:45] Rob: Yeah. And to be honest, The Social Network is one of the few movies I purchased in the past five years and normally I just do streaming and rental and stuff. I really like The Social Network as a film. It like motivates me and I actually like the way the characters are portrayed. I love the dialogue. It’s written by Aaron Sorkin who is probably my favorite writer, television and film. So I actually like the movie at a lot. I mean even Aaron Sorkin said he’s never used Facebook. And it’s kind of hard to write the movie about the product without at least having an idea of the product cause it’s a pretty key part of the story.
[05:17] Mike: Yeah. I can definitely see that.
[05:18 ] Rob: What else is going on with you? What’s the update on AuditShark?
[05:23] Mike: That’s a pretty disappointing story right now. I mean between the contractor woes and trying to rework the database that I talked about last week, there’s two different sides of the database that have to be worked is the client side application and then the service side application. And to date I haven’t really distributed the client side application to anybody yet because there are authentication issues that I’m still dealing with. I just don’t have a mechanism for people to log into it and authenticate to the server. It’s not that there’s any security problem. It’s just there’s no security on it right now.
[05:54] So there’s no way to synchronize things between your local database and the server which is why I’ve been working on this stuff. And unfortunately until there is that mechanism in place I really can’t publish policies out to the server easily because there’s a web interface for building them but you have to go looking the database to find the guid of different things that you’re looking up and different objects. And it’s just not intuitive and it’s really really hard to use. I mean the customers just definitely couldn’t use it. So I would say I’m pretty far behind in terms of where I’d like to be right now. It just kind of take time to plug through it. I mean the early access customers that I’ve talked to and have it install and its up and running on their machines, it’s just not really doing anything.
[06:36] And it’s not going to be able to really do anything until I get to the point where the synchronization stuff is working and I can push those policies out to the server. And I had thought that being to do it on the server itself through the web interface was going to be enough. And later on I kind of realized that’s just not the case because you need to have the guid of some of these different objects to work with and nobody has access to them except for me because they’re not surface through the user interface for the customers.
[07:03] Rob: Right. This is why you do early access right. It’s like so good to be in the hands of the customer because as of two weeks ago you’re like I’m pretty much done with this thing and then they start using it. And this always happens, always, always with every project that I’d launched. So it’s good that they come up. If none of these comes up, it’s like I keep waiting for the other shoe to drop. If you launch it, it’s like wait a minute. There’s no bugs. These people aren’t using it. If we haven’t found kind of like the major design flaw in the first week then I’m skeptical. So you say it’s disappointing but to me it’s almost to be expected. I guess it depends on how much time it actually takes you to fix. That could be the disappointing part. If its 40 hours of coding that’s a real bummer. It is what it is. I mean it’s certainly common stuff.
[07:45] Mike: Yeah. About 40 hours is probably ballpark accurate.
[07:49] Rob: Yeah, that is. That’s going to be tough. Hey we already got suggestions for our Startups for the Rest of Us drinking game. We got them from our editor. She has first look at all of our podcast. She says I’m all for a drinking game for the podcast. Drink when and then she list nine things. When Mike says to be perfectly honest. I think that’s a great one. When Rob says shout out. When either Mike or Rob tells people to be succinct and then goes on for another minute about being succinct. When either Rob or Mike mentioned their kids, mentioned their wives, mention the weather, say the word AuditShark, HitTail or Do Net invoice. When Mike says not a whole heck of a lot. When either say that about wraps us up. So awesome suggestions and as Mike says last week if you have any other suggestion we should incorporate into this Startup for the Rest of Us drinking game please do send them over.
[08:42] Mike: Have you noticed that I did not say to be perfectly honest or not a whole heck of a lot so far.
[08:47] Rob: I know. You didn’t. I guess that about wrap us up for that segment. Oh nailed it. I want to give a shout out to, how else do you say that.
[08:56] Mike: I don’t know, head ups. I have no idea. I don’t know what you’d say.
[09:01] Rob: Well we want to extend some special thanks to Eric Foster fromPortland,Oregon. He left a very complimentary call on our voice mail line. It was just kind of thanking us for the podcast, telling the things he liked. Yeah, we really appreciate hearing from you even if you don’t want us to publish it on the podcast. It just meant for us it still is great to hear people’s voice and maybe it’s more convenient to if you listen in the car just to dial up the number at the end and that was really cool. Thanks Eric.
[09:26] Mike: You know I forgot to mention on last week’s episode that I’m headed to the Business of Software Conference. And that’s a little unfortunate because by the time this episode goes live people will already be at the conference and they won’t hear me say hey if you’re there get in touch with me.
[09:39] Rob: Yeah.
[09:40] Mike: Oops.
[09:42] Rob: Yeah. It would have been nice to have it last week. So BOS next week. Very cool. Well I’m not going this year so I hope to have a full report in the following episode which I think will be 101; episode 100 listeners keep your eye out for it. We have some special guest coming on to assist us with that.
[09:57] Mike: I’ve been catching up on a lot of my podcast while I’d been traveling lately. And I listen to an episode of TechZing earlier this week and I was extremely disappointed. It was the wives episode where your wife…
[10:10] Rob: Yup.
[10:11] Mike: Yeah and it wasn’t the episode itself that was disappointing. I mean I though the episode itself was actually quite outstanding. But what I’m disappointed about is that you don’t bring out your feminine side on this podcast.
[10:21] Rob: Oh my gosh. [Laughter] And if you haven’t heard that, listen to that. Let’s see. She also said I like Project Runaway, right?
[10:28] Mike: I thought it was the Bachelorette.
[10:30] Rob: No that’s Jason Roberts cause I gave him crap about liking the Bachelorette in comments. And he said, “Hey, she said you like Project Runaway so you’re not one to talk.” Well Mike…
[10:41] Mike: I was listening to that episode and I’m just thinking to myself I am so glad my wife didn’t go on that episode.
[10:49] Rob: You know I got no editing say over what was said and actually Jason and Justin didn’t either.
[10:54] Music
[10:56] Rob: Let’s dive in to the listener’s question.
[10:58] Mike: So the first one comes in from Jeff Nobel and he says first off love your show. It’s really the very best podcast in the micropreneur vertical. I think we’re the only micropreneur vertical, isn’t it?
[11:10] Rob: Yeah. I think so.
[11:11] Mike: Naturally we’re the best but we’re also the worst. So it says “I can’t tell you how much I learn driving back and forth to a job I hope to eventually not drive back and forth to. I started working out a project over a year ago and I’d been working alone until about two months ago when I asked a friend to join me. I’m a senior software engineer. My friend is a great asset on the business side. I’m concurrently dealing with two issues so naturally I have two questions. The first is I currently have a site I paid a contractor for very early on the project but it just doesn’t work anymore. I had way too much content and the old design doesn’t give me a place to put it.
[11:42] I’m not a web designer and I know my limitations. If I go with the contractor via oDesk what’s the best way to work with them. Do I send screenshots of what I have and scribble what I’m looking for? Do I give remote access somehow? And if so, how do I protect my code? How can make sure that the html they provide will cut off well with master pages and is developer ready.” And there’s a few other related questions here. But I think there’s some basics of working with contractors via oDesk to get web pages build. And Rob you’ve done this a lot as well as I have so why don’t you kind of give your feedback first.
[12:13] Rob: Sure. So it sounds like he hired someone to build a site for him and the site is breaking like the layout comes apart when he adds dynamic content or something. And so frankly the first contractor didn’t do a very good job. It sounds like to me because this should not happen. So my thoughts if I had a site that did this and I felt like the first contractor was easy to work with and was good, the original person who built this, then I would frankly go back to him and let him know that you know what’s going on and the site actually isn’t working and figure out if you guys can work something out.
[12:46] Again assuming that he was reasonable, easy to work with, and you had a decent relationship. Maybe you don’t pay full rate for that stuff maybe you pay a discounted rate or he does some stuff for free. Because realistically just throwing up a site that doesn’t actually fully work, you know when I was working for people. You didn’t do that. I guaranteed my work. The second thing if that doesn’t work out, I would look on oDesk. I’ve found some several good CSS and html and designers on oDesk. If was in your situation, I would find someone who look reasonable, hire them. And I would probably start, yes I would give them access to the server. You asked do I get remote access or how do I protect your code.
[13:25] If you have a bunch of custom code with a custom database maybe you need to think about that. But really if it’s just html pages the odds of someone stealing your html pages is very small. So obviously, it depends on your risk tolerance. But I mean I’ve worked with 15 or 20 contractors in the past 5 to 7 years and almost unequivocally especially if the site is not live, yes, I give remote access. Because the more of a barrier and bottleneck you are trying to manually shuffle pages back and forth or something, the less it’s going to get done and the more frustrated both he, the contractor and you are going to be. So in terms of sending screenshots or what you’re looking for I tend to record a screen cast if I think that that’s going to be helpful, you know, if I can talk through what I want.
[14:13] If I need something more written then yeah I would actually probably I would consider marking things up like a paint program like paint.net or Photoshop. You know taking screenshot of your current situation and then marking it up or I would even print them out. This is going to sound so Archaean but I would print them out and I would handwrite comments on them. I’ve done that before. I found it a lot faster and I’m a lot better at that than using a paint program and then scan them back in and send them as a spec.
[14:41] I don’t know that you need much more than that. It really does depend on your changes of course. But that’s how I would begin to approach it. And yeah it depends a lot on your success with this project depends a lot on how good the contractor is that you find. And so that’s the key and we’d talked a lot about how to do that in the past.
[14:57] Mike: I’ve gone through some of this recently and what I ended up doing was I actually hired two people. And it sounds like Jeff is a position where he has a full time job, so he’s already spending job in the car and at work everyday. And that’s cutting into his time. So because this type of stuff is not necessarily core to your product, I mean it’s important to make your product look good because that’s what helps to sell the product. But I feel like these are the types of things that you should definitely outsource completely. I mean you shouldn’t be spending your time taking the designer stuff and put it into the program. What you really should be doing is and this is kind of what I did. I actually hired two people.
[15:37] I hired somebody who was just a designer and then I had him hand his stuff off to a developer, who put into a visual studio projects and created all the master pages and the basic layouts of everything. And then as I integrated that stuff into my code, into my source code, for the actual application then if there were problems with anything I would send them back and just kind of go through that process again. I put those two contractors directly in touch with each other. I said if one of you had questions, go to the other, talk to each other, log the time. I’ll pay you guys for it. That’s fine. And then just walk through that process.
[16:12] In terms of access to my server, I did not give them to my access to my server. What I did was I set up an automated built system where when they were working with things it would automatically deploy it into a development area that would go live but they didn’t have direct access to the server. So if anything in that deployment broke, it was up to them to essentially push code back into an [0:16:32][inaudible] source code repository and then the build will automatically kick off shortly and then it would deploy it to the web server and then they could see those changes live on the server.
[16:43] So that’s kind of how I dealt with most of things. But I think that making something look good is something that you definitely want to outsource to contractors that are going to do that. Because it’s not to say that it’s a waste of time but it’s just not the best use of your time.
[16:55] Rob: Right. And I think in terms of accessing the server I think he’s concern because he has existing code. It looks like he might have some custom code that’s been written. And you know he has how do I protect my code. I mean to be honest there is no way to protect your code. I mean try to give people access only to a single directory. But it’s never been worth my time to do that. Cause what are they doing to do? They’re going to take your code and do what sell it on the black market. Like no one wants it and if they try to compete with you, you need to be able to out market them. There’s going to be competition anyway so.
[17:26] Mike: I wasn’t worry about that so much as I was about them having access to like the other products I have on my server and production data from other products.
[17:35] Rob: That’s totally different. Yup, I agree. He has a non-production site and he just has you know I’m assuming he has this custom code for this web app he has. Now for you I agree if I have like a production like the HitTail server I don’t give contractors access to that. But I have a subversion repository that has the code in it. And when I get a new contractor I do just a simple four-hour project and if we communicate well and I trust him, he gets access to the whole thing. And he could feasibly pull the entire HitTail code base down to his box. You know at this point what is he going to do with that. That’s the question I have for you. What is the risk? So I’m not saying there’s no risk but for me if I’m going to have people working on my stuff they need to have access to it.
[18:20] Mike: Yeah and I think to kind of get around the server side access as well. I mean you could, if it’s a Linux box I mean there’s tons of places where you could just standup a Linux server for a really cheap price for a month or two months or however long it takes for this project to go. If it’s Windows it’s probably going to be more expensive. But again if you have somebody working 10, 15, 20 hours a week and you start weighing the cost of them for let’s say the 10 hours a week that’s a $100 a week. You got $400 a month. What’s the Window server going to cost you for a month, $50 or $60? It doesn’t seem to me like setting up a staging server for them to use that they have full administrative access to is a big deal.
[19:00] Rob: And then I think the last question of this part he asked about I purchased templates long ago. They looked great till I put dynamic content in them and then the whole layout came apart. How do I manage that with oDesk? And I think the bottom-line is you need to find a good designer/html CSS person and think about it as an ongoing relationship. So don’t think here’s this two week gig, go do this, and then you leave and you move on and then you’re stuck without someone to maintain it. This stuff always requires maintenance.
[19:31] All the designers I worked with who do designers CSS work for me I’m pinging them once a month for little changes or tweaks or fixes, browser issues. There’s always new stuff. There’s maintenance that comes up. So don’t think about this as a single project. Think about it as an ongoing thing. It will have an upfront stuck of hours. But then beyond that try to build a relationship with this person, you are going to be working with them ongoing a few hours a month. That’s a great part about oDesk is that it’s fairly easy to do that. You just ping them for a task and then you get only billed for what they work on. So that is one of the big benefits and I think keeping that mindset in place helps you get the setup from the start.
[20:10] Mike: And what you just mentioned they’re extremely important in terms of browser compatibility. Cause there’s been all kinds of things that I run into where I’ll see something or somebody will say something say hey this doesn’t work. I go in my browser and say what are you using? I’m using IE9. Okay. Well I just send it over to verify it, then just send it over to the designer and say hey this isn’t working in IE9 what can you do? And he just sends me a new set of CSS files. I just add them back to the site and I’m done.
[20:38] So Jeff’s followup question to that is my project relies on data from users. It’s a site that shares information from one user to another. I supposed forums may have some of the same issue but in your opinion what’ the best way to populate the site when it’s new. My biggest fear is that people will find the site once its launch, see it’s basically empty and then bounce, goes the graft. One idea I had was to populate the sites content locally myself and focus on marketing locally only in the beginning. But I worry that the overall products will suffer in markets that I have not put effort into yet. The web is a big place.
[21:09] Rob: Now you talked a little more with him, right. And then did you get an idea more of what he’s talking about, some specifics.
[21:15] Mike: I did. The best example that he gave me was something he called GasBuddy. Cause he didn’t want to share exactly what his product was or product idea was. So the best example that he gave was GasBuddy where if you’re not familiar with GasBuddy, it’s essentially an application where you go in and you can find cheapest gas prices in your area. And what that really relies on is people who lived around the country seeing these prices entering them and helping to keep the information up to date.
[21:46] So let’s say that you lived in an area of the country where nobody was using it, if you’re the only one using it then you got no data to go off of and you’re left with this chicken and egg problem. Where you’re relying upon the users to provide data but until they start providing that data, you’ve got nothing to share with people. So it’s definitely a chicken and egg problem.
[22:05] Rob: Yeah. If was going after something like this similar to GasBuddy, first you do have to have it populated. You’re exactly right. If people come in and there’s nothing there, they’re going to bounce. So a couple of approaches that come to mind is the first thing that you need to some type of motivation for people to take that. Even if its 5 or 10 seconds you need to have to motivation for them to do that. So gamification is a buzz words these days. You know it hold some value to have like a leader board of like these people are the leaders in these cities or these geographic areas whatever you divide them up to be.
[22:37] And people can compete against each other and they get a badge on the site if they’ve done the most updates. It’s kind of like being a mayor inFour Square. And Stack Overflow is another great example. They really focus on offering some type of benefit even if it wasn’t monetary. You know it was just prestige. It was just being good at something and being publicly recognized. So that’s an idea of how to get people motivated. Now I think initially that doesn’t mean anything if there’s no one on the site. So you’re going to have to do, well a couple of ideas come to mind.
[23:07] One is to go to Craigslist in each of the, maybe go up to top 10 metro areas. It depends on how much time you had to do this. But you can do the top 10 metro areas or top 20 metro areas assuming you’re in theUS. You can find that list and then go those Craigslist and post and ask people to do this. And initially you very well may have to pay them. You have to figure out a price point that works for you but you have to get that data in there. Since it doesn’t rely on your geography, you can’t just go, typically I would say if you just had form I would go and hire some people.
[23:35] If it’s a form for designers I would go to oDesk. I would hire 5 or 10 designers and I would get some discussion started and i would ask them to participate. Or, if I had an audience of designers, actually a good example isMicropreneurAcademy. There are forms in there and before anyone got in there I didn’t want dead forms before I launch it and so I had five charter members who people I’d been emailing with and I let them early and we had a bunch of discussions. So that the forms were reasonably populated when folks got in and they were like people are already posting.
[24:02] So if you have an audience that can do this, all the better. But my guess is you wouldn’t be asking this if you had an audience. So I do think initially you’re going to have to hire to do that. Now if there’s other sources of data that you could either buy or scrape to kind of get the thing populated initially, that would be another idea if you could do that online. This is really hard app to launch cause it has a true two sided market that you’re trying to get people to post data and take time to do that. Most people don’t want to do that.
[24:29]And then you’re also going to have to try to attract people to come and consume the data right because you’re going to presumably have ads or affiliate links or some ways to make money from this. And it’s a lot of work. You know without experience doing this before it’s going to be tough to get it off the ground well and to get both sides of the market coming at the same time. And it’s also going to be hard to do part-time without some help. So you definitely I think you’re going to need some budget to get people on there helping you.
[24:55] Mike: The other thing that comes to mind is if you’re building a mailing list you could ask them to fill out a profile beforehand and essentially as part of that mailing list maybe you have a thousand or two thousand people in there. And you ask everyone to fill out a profile. And of the people who do fill out a profile then what you could do is you can take that information and concentrate on different clusters of people and populate data explicitly related to where they are in the country or their interest or however your application actually works.
[25:27] And then from there just invite those people to kind of start with and then once they get in there, they’re using it. The people who come in after them are not going to see kind of a blank slate unless all the data that is truly localized. If you’re just relying on the specific group of people providing information that another group of people are going to use then you’re going to have to start somewhere.
[25:49] Rob: Yeah and I guess that’s the other approach you could take is really just doing one local area and doing in the one where you live cause you have real feet on the ground and you have probably friends, acquaintances in the area who can also help out. And so just to test the idea and to see if it’s viable at all, you may want to start with that. And truly starts small with it and then once you plan that out and I figure out how much traffic you can get for that area then you can say well is this worth scaling out to the top 20 cities in the US or is the idea not, you know does it not work. Kind of as an afterthought I think that maybe what I’d do unless the idea specifically doesn’t allow for that.
[26:25] Mike: So Jeff thanks for the call. Hopefully that helps you out.
[26:28] Music
[26:31] Mike: So our next question comes from Joshua [Hermann]. And he left us some voice mails. Joshua also emailed us about a week later and gave us some additional information. So here’s the voice mail that he’d left us.
[26:40] Joshua: Hi, Mike and Rob. My name is Josh and I’m looking at starting up my own business, working with some friends in getting it off the ground. In episode 75 a listener had brought up a question about patenting and if it was important. I was looking at doing that myself. And then in the search ended up finding out that said patent was already filed. Of course at this point that’s making me a little bit weary because my entire business idea kind of based around one of the processes that sounds like that it might be on.
[27:10] Is there any suggestions that you have if it looks like an idea that you know once was noble now is potentially patented by someone else and might get you in a little trouble. Now I love to hear what you guys think. Thanks for the show. It has been a great help for someone like me who’s looking to start up his first software based business. So thank you very much and have a good day.
[27:32] Mike: I don’t know this is kind of an interesting problem with patents. I never applied for patent and I think that you had said at one point that HitTail had a patent application in progress or some of its designs.
[27:44] Rob: That’s right. It did. Yup.
[27:45] Mike: Was it even worth pursuing though?
[27:47] Rob: Not really. I let the patent app expire.
[27:50] Mike: But I think having a patent versus what he’s referring to is somebody else has a patent on something. And he’s wondering what he should be concerned about, are there other ways around it. Should he try to buy the patent? I think there’s a lot of issues here that need to be dealt with. So I think you and I are probably both in agreement on our stance and feeling on patents. I mean software patents especially are just ridiculous. I mean there’s no way that 95% of these software patents should even be allowed in any way, shape or form. Unfortunately, because the patent office really just has no clue when it comes to software, they look at it as if it was a physical product. And they just really don’t know what they’re doing so they’re just rubber stamping a lot of these things without really looking at them in depth.
[28:35] Which we end up with is patents that have been approved for things like one click ordering systems. Sure, Amazon has that and allows you to just order something with one click but big deal. I mean that’s not exactly a novel concept. So I think that there’s a lot of these patents out there that are just garbage patents. But unfortunately as a micropreneur you may need to not only be aware of them but be aware of the risk that you may be getting sued over something that you have invented. So I think that for this particular one though I would be hesitant to give specific advice about whether or not you should try to buy this patent or try to fight it or just ignore it.
[29:15] That’s something that I think that you really need to talk to an IP lawyer about and find out from him what are the risk associated with. Is your idea realistically overlapping enough to the point that you stand a good chance being sued or are those risks minimal? And then judging from your own risk tolerances, figure out whether or not you’re willing to accept those risk and do it anyway or are they high enough that you want to make an attempt to buy the patent or just walk away from the idea and go for something else.
[29:45] Rob: Yeah. This really depends on your risk tolerance. Like Mike said we just can’t give specific advice about something like this cause there’s just liability involved. Let me say that I don’t know of an app that you could build these days that does not break some type of pattern or infringed some type of patent because some of the patents, a lot of the patents software patents that had been granted since 1998 when they became legalized I’ll say. Before that you couldn’t patent software. You could copyright it but you couldn’t patten any elements of it. And I have to be honest I’m heavy heavy opponent of software patents because they’ve gotten so out of control, because they’re so highly technical and because the patent and trademark office has allowed these obvious lot of obvious patent to get through.
[30:28] And some of them are so broad there’s no way that you can build an app without violating them. So I bet every app that I owned violates multiple patents if you actually went and dug. Because there are things that are patented that are like sending data back and forth between a mobile device and server. You know things like displaying search result in a table that’s sortable by clicking links at the top. Well if you have any type of applications that displays search results that’s how we display them and that’s how we’ve always done it. You put it in a grid and everyone knows you click the top to sort. So yes could I be sued tomorrow? Absolutely. Almost anyone could. And if in fact once you hit a certain size your chances of being sued are very high because all the patent issues and patent trolls and such that’s flowing around.
[31:14] So that’s my general thought on the situation. It needs to be fixed and it’s going to be so hard to do so because these patent trolls that are lobbying congress and trying to keep this stuff in place and the law today does say if you have this patent that it’s really hard to overturn. So I think a couple of things to think about if you do something and it never takes off then yeah your odd of being sued are probably pretty low. If you do something and it grows to 500 or 10,000 a month your odd of being sued are probably pretty low just because you’re not really on anyone’s radar. You know as you grow bigger then yeah the odds of you being sued period for anything for any of these patents, not just the one that Josh was pointing out, they absolutely go up. So again it comes down to risk tolerance.
[31:58] Music
[32:03] Mike: Our next question comes from Matt White and he says Rob I know you’re a busy man so I’ll try to keep this brief. I’ve read your book, loved it and started a small shuttle business with some friends. We decided early on that we wanted a phone number on our website wenatcheevalleyshuttle.com. So that people would feel like they can trust us and call to make sure we are real. The problem is we get a lot more calls than we expected and a lot of these people want to book our shuttle over the phone. We usually just do the booking for them but it’s very disruptive to our day. It’s not enough calls to justify hiring someone and I’m not aware of any call center that would want a contract that only sends them 15 to 20 calls a day.
[32:34] We would really like to get as many of these people as possible to book on the site instead. We could take down the number but we’re afraid we’ll lose a significant number of sales that way. We could charge an additional fee for booking over the phone but that only solves the problem halfway because it doesn’t reduce call volume, just call duration. Any suggestions or ideas? Thanks for everything Matt White. So, I think that this is one of those things where you could actually turn to a software solution for it. And if memory serves me correctly if you sign up for a Twilio account, you could probably build essentially a call center software solution that would do exactly this for you and could walk people through the essentially booking your shuttles for them.
[33:16] Rob: Nice like an IVR system interactive voice response where it’s like push 1 to book now and then some numbers for a date or whatever.
[33:24] Mike: Exactly. The other thing that I can think of is if you check with grasshopper.com they do small business phone systems and they may very well have something that’s similar to this that would just be out of the box that you wouldn’t have to build yourself. Twilio provides a lot of developer API that would make it possible for you to build this type of thing but Grasshopper may very well have something that’s already pre-built that you just do some customization to it and that maybe enough. It kind of depend on how much time and effort you want to put into this and how much pain you’re willing to go through doing the development yourself or outsourcing it I guess.
[34:02] Rob: Yeah. I have two thoughts on this. The first is to test and to not pick up the phone for one week and leave a voice mail message that tells people that they should book online that you’re currently not accepting reservations over the phone and see what happens. See, you know, watch the volume and you maybe need to do a two week test. But it may be you’ll know after one day. If suddenly your bookings plummet then you know to undo it. But I would test to see what kind of impact that has because of these calls really are impacting your ability to work then it may be worth your while to lose a few reservations. The other thought I had is that I’m sure you know your net profit margin per booking.
[34:41] And so if you make let’s say $5 per booking which I imagine is low and you’re getting 15 phone booking a day then you don’t spend up to $75 and not lose money. So obviously you want to spend less of that but that does justify potentially hiring someone to just handle the calls. And what I would think about doing, the way I would handle it is I would go to oDesk. I would find someone who takes inbound phone calls. I would post the project and I would say this is inbound call answering and reservation taking on an as needed basis. And I can almost guarantee on people that are on oDesk who do this.
[35:16] And I don’t know to be honest how they build, if they build per incoming call that would probably my guess is they would charge you per call and they just have to be around to answer for these eight or ten hours of the day whatever you specify. So that way if you do make $5 or $10 per call and you’re paying them too then you know scales up and down and you’re paying someone just to sit around. So if you find someone I would tend to look in theUSif you’re in theUSbecause you want the same time zone and give them a Skype number that dials over to them or use Grasshopper like Mike said. But I actually don’t think it’s a very hard problem to solve.
[35:52] Mike: So Matt thanks a lot for your question. I hope that the answers that we gave you will help kind of push you in the right direction.
[35:57] Music
[36:00] Mike: So this one comes from Mark and he says hi guys what’s up. First of all, I have to say I love the podcast. Not only does it provide me with actionable advice. It has also broadened my understanding of what a startup can be. The industry leads us to believe we have to aim extremely high, work crazy hours, and take huge risk but personally that doesn’t sound too interesting to me. I really enjoy work but I don’t want to be enslaved by it. My question is with regards to leveraging your Twitter and Facebook accounts to increase brand awareness, draw traffic to your site, etc. How often should you post update? Share too much ad people might unsubscribe, share too little and you’re wasting opportunities.
[36:32] To give you a little bit more background info on my particular case. I run a site called Beta List that covers pre-launched startups. We currently post about three posts a day and apart from the site itself, RSS, and the daily newsletter, we also share this post via Twitter to 9,000 followers and 700 Facebook fans. So that’s about three posts per day. I’ve been thinking sharing relevant links podcast, videos, popular post on the site etc. but I’m hesitant actually doing this as I’m not sure that’s what people subscribed for. I’m afraid this might hurt my company’s reputation. I’ve asked people and the response was mixed. What’s your experience? Am I worrying too much? Looking forward to your response, Mark.
[37:07] Rob: So my thought on this is especially with Twitter and Facebook, it’s kind of a stream of consciousness mediums anyway that when I subscribed someone on Twitter if they start posting more or they start posting something I didn’t exactly sign up for I don’t even think most people are going to notice to be honest. I think the only time you might run into unsubscribe is the email newsletter if someone signs up for a specific thing, even RSS. It’s just people just take it as long as in their genre and you’re giving valuable stuff like you said you’re going to aggregating links, filtering, sharing podcast videos, popular post like that stuff tends to be helpful.
[37:44] And so I would bet that you will not see many people unsubscribed. Via the email newsletter, I would just take the plunge and test it and put it in, I mean you’re going to need to just try it out. Three posts per day I’m assuming to Twitter and Facebook that doesn’t sound like very much to me at all for an active kind of newsletter that covers a lot of startups. I mean you really have a lot of content to share. I don’t’ feel like ramping that up would be a big deal. So if I were in your shoes I would probably just ramp it up and see what happens and yeah you make it a few people that unsubscribed but my guess is you may also take on new subscribers because you’re putting out as long as long it’s quality valuable stuff and my guess is you might kind of grow a tighter more engaged audience especially if you can give them just better information than they’re getting elsewhere.
[38:26] Mike: Yeah. I would agree with Rob. The only comment that I would make is that if you’re looking to do this on your email newsletter I don’t know as I would send out three emails a day. I would probably send one that includes a bunch of information in it with links back to your site. And part of that is so that you can get those people back to your site to drive traffic for other things because people generally read their emails. I think it’s one of the few mediums that really really works well these days. If everyone screams and raves about Facebook and Twitter and how many followers they have for this or that. But the reality is most people don’t buy things through Twitter or Facebook but they read their email pretty intently because in and I think Patrick McKenzie pointed this out in one of his blog post.
[38:07] That one of the things that you’ll notice with email is that people treat their email as generally pretty important. So when your emails appear next to other things that are important, they’re going to treat that as being more important to them. And I think that’s a good distinction to have. But obviously you don’t want to abuse it when it comes to email because people do read it more. They do treat it with I’ll say a little bit more care when they’re looking at their email. So definitely make sure you scale back on the post per day for the email but the other ones I agree with Rob just start blasting them out there and kind of see what happens.
[39:45] And if things really do tank you’ll probably be able to measure that pretty quickly with 9,000 people and scale that back as needed. But again there’s so much stuff going through people’s Twitter streams that they don’t even see 90% of it. So even if you post three times a day, the only people that you’re probably going to turn off are the people who are on Twitter all day and chances are that’s just a drop in the bucket for everyone else. So Mark thanks again for your question. Our next question comes in from another Mark, Mark Snider and Mark says hey guys I have a question. Do you typically work on multiple endeavors at once or do you try to keep things focus and stick with one idea at a time. Love the show and keep up the good work. Mark fromMilwaukee.
[40:25] Rob: So Mike as someone who is doing Altiristraining.com, forum software, AuditShark, anything else?
[40:32] Mike: I don’t think so. I think that’s it. Well I think it’s hard. I don’t know if I would recommend it to be perfectly honest. I think most of mine are kind of different stages. It’s starting to come to a head I guess but I guess there’s a distinction to be made between running multiple startups versus having different small products. And I think you can attest to that as well. And the other distinction I would probably make is there’s a different between running them and starting them. Because if you’re trying to start multiple side businesses at the same time, it’s really hard to do that but just getting one to a point where it’s maintainable and then start in a different one and then getting that to a point where it’s maintainable is kind of completely different story.
[41:16] Rob: Yeah. I’ve always been pretty hard line about this that I never try to build and launch two at the same time. I never try to revamp two at the same time cause it takes so much focus and commitment and all that and it’s like you said if you get it to the point where it is kind of a maintenance mode it can still be growing but it doesn’t require all that upfront work to get the processes in place, to get the marketing going, all that stuff. Once that’s done it really does, the workload really does reduce quite a bit and it’s much more easier to automate or outsource large chunks of it.
[41:48] I would absolutely not recommend trying to build and grow two endeavors at once but building one for a time and then putting in maintenance and doing another and then even coming to that first one at a later date once the second one is in maintenance mode I actually do that quite often. So Mike, do you feel like with your forum software and Altiris Training and AuditShark that that’s been like a detriment having too many things going on.
[42:11] Mike: I think that for the things that like for the forum software and the Altiris Training website I don’t pay nearly as much attention to them as I probably could. So because I’m not paying attention to them and it’s still I would say early on especially for the Altiris Training site I can probably squeeze more money out of it. I could probably optimize a lot more things but I’m not paying attention to it nearly as much so that’s not just happening. And then for the forum software that’s kind of a rebuild mode where I’ve had a developer whose been working on it and you know I’ve been making high level decisions and just kind of handing them off and saying here go do this.
[42:46] But because it really hasn’t gotten to the point until the past week or so where things I need to start paying attention to it, it hasn’t really been an issue. If I were trying to build all of them or trying to grow all of them at once I think it would be really hard just because of the level of effort that the marketing side takes. I don’t like to put it this way but marketing is kind of time sink. It can take you much longer amount of time to get you to where you want and it’s very very difficult to estimate. I would probably say it’s just as difficult to estimate how much time it’s going to take you to complete something from a marketing perspective as it is a very complicated program and problem because you don’t necessarily know when you end this.
[43:28]You can’t just say well I’m going to do search engine optimization and it will take me about six hours. Well chances are good that it’s going to take you a lot more than six hours. It can take you significantly longer and the problem is you don’t necessarily know when you’re done. And then couple with that it takes a lot of time to see what your results are. So it’s not like programming where there’s a defined end point for that sort of thing. But it may just be complicated to estimate. When you’re doing marketing it may take you two or three hours of work and then you wait a week to figure out okay well did that have any effect and then you have to measure it.
[43:59] So I think that those are two slightly different things and that the marketing side is much more estimate because there’s no hard ending to it. You just kind of have to make a judgment call and say I am done working on this because I have chosen to be done. So Mark thanks for sending in that question. Hopefully that helps you out. Rob, do we have anything else?
[44:15] Rob: That wraps us up for today.
[44:16] Mike: I think that’s a drink too. If you have a question or comment, you can call it in to our voicemail number at 1-888-801-9690 or 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 can subscribe to this podcast in iTunes by searching for Startups or via RSS at StartupsfortheRestofUs.com where you’ll also find a full transcript of each episode. Thanks for listening. We’ll see you next time.