Show Notes
The 19 traction channels:
- Viral Marketing
- Public Relations (PR)
- Unconventional PR
- Search Engine Marketing (SEM)
- Social and Display Ads
- Offline Ads
- Search Engine Optimization (SEO)
- Content Marketing
- Email Marketing
- Engineering as Marketing
- Target Market Blogs
- Business Development (BD)
- Sales
- Affiliate Programs
- Existing Platforms
- Trade Shows
- Offline Events
- Speaking Engagements
- Community Building
Transcript
[00:00] Rob: In this episode of Startups for the Rest of Us, Mike and I discuss Traction: A Startup Guide to Getting Customers with special guest Gabriel Weinberg. This is Startups for the Rest of Us episode 199.
[00:11] Music
[00:19]Welcome to Startups for the Rest of Us, the podcast that helps developers, designers and entrepreneurs be awesome at launching startups, whether you’ve built your first product or you’re just thinking about it. I’m Rob.
[00:27] Mike: And I’m Mike.
[00:28] Rob: And we’re here to share our experiences to help you avoid the same mistakes we’ve made. What’s the word this week, Mike?
[00:33] Mike: I have essentially scheduled a personal retreat for Labor Day weekend. Something that’s been on my list of things to do. I’m going to head up to my cottage in the Adirondacks. My plan is to just kind of sit down and think about the business that I’m working on.
[00:45] Rob: That sounds really cool. Do you have any type of outline for the retreat? Remember when Sherry did a MicroConf talk last year, she threw out some questions that you could ask during that time.
[00:54] Mike: Yeah, I haven’t really put together anything.
[00:56] Rob: I think it’s a good move. I think everyone should take one at least once a year where they can get 48 hours away from their family or significant other and their work and their house. Just get out of town in somewhere fairly isolated and you can just sit and think without electronic devices and then ask yourself some questions about your business. We’ve talked about this before, and then Sherry’s MicroConf talk will be out on video here pretty soon. For me I try to do it twice a year, and it is some of the most focused and rejuvenating time of my year because it just makes me look ahead and say, alright this is my plan for the next six to twelve months, and it really helps guide that process.
[01:35] Mike: So what’s up with you?
[01:36] Rob: I really kicked up Drip’s marketing effort about twenty days ago. That was when Drip 2.0 launched all the automation rules and such. We have a twenty one day trial, so basically the next week to ten days are going to be really interesting because all those trials end. I of course have an innate sense of what’s going to happen but it’s always cautious optimism. I’m excited about the potential growth over the next ten days but if people don’t convert, I’m not going to be very happy. We’ll know by probably the next podcast recording. At least I’ll have a sense of how many people are sticking around and whether our trial to paid conversion rate is staying in line.
[02:14] I do have a sense, and it should be the best month of growth ever. In fact, if it’s not the best month of growth ever, I will be disappointed. I guess that sounds kind of optimistic, but the interesting thing I’ve really been noodling on this concept of medium touch sales. We talk a lot about low touch sales or no touch sales. No touch is when people just come and they buy the ebook and they never email you. Low touch is when you might do an email here or there but you have a support person handling it. And then high touch is more of what I consider enterprise sales, where you’re probably going to be doing phone calls, maybe Skype demos, webinars, that kind of stuff. I’m working with this concept of medium touch sales that I kind of just stumbled into. And it’s become worth it with certain price points in Drip. So for me, it’s translating into one on one emails with me, the founder. So it’s not a support person, but it’s actual interactions of how do I get this done, can Drip do this, but not just one-off questions. I’m actually recording some short custom screencasts for people when they ask me how to do something. And I’m recording a lot of them. I’m recording probably a half dozen a day right now. The conversion rate to people who are uprooting themselves and changing email providers with tens of thousands of subscribers is shockingly high and I don’t know how long this will last. I don’t know if it’s just because it’s the early days or because people know me or what it is, although several of the people don’t know me which bodes well.
[03:31] This obviously can’t scale infinitely or anything like that, but doing things that don’t scale at this point is kind of where I’m at with Drip. So, I’m just trying to find out how to prequalify people early because for a $50 a month plan, it’s not worth doing this. But when someone is at 150, 200 bucks a month and up it’s obviously worth me spending some time on it. I’ve been doing it for about three weeks pretty intently, and I’m spending quite a bit of time on it, but it’s directly related to revenue so at this point it’s working for me.
[04:01] Mike: I think that it depends obviously on the price point but also on the lifetime value of whoever that customer happens to be because depending on the price point, they may stick around for a longer time or shorter time. When you’re talking to people one on one, there’s a much higher sense of interest from the other party, just because they are working one on one with the same person. So, if you send an email in to a support line or something like that and you hear back from Joe and then next you hear back from Dave, you don’t get any sort of a relationship built up with the person. There’s no investment. I find that if you have that single point of contact on the other side consistently it helps, but I’m curious to know whether or not you’re getting that solely because you’re the founder or if it’s more the one on one relationship.
[04:44] Rob: I agree. I have the same thought in the back of my mind. If I hired a really good sales rep who handled this and they were very knowledgable about the product and doing similar things that I am, I’m curious to see if it would translate.
[04:55] Mike: Very cool.
[04:56] Music
[05:00] Rob: Today we welcome Gabriel Weinberg. He’s here to talk about his book that releases today. It’s called Traction: A Startup Guide to Getting Customers. So today Mike and I have the pleasure of having Gabriel Weinberg on the podcast. Gabriel is the founder of DuckDuckGo, which is a search engine that got more than a billion searches last year and it’s growing. He’s essentially trying to take on Google and Bing and the rest of the search engine companies around. He was previously the co-founder and CEO of Opobox which sold for ten million dollars in 2006, and now he’s doing a bit of angel investing trying to grow DuckDuckGo which he launched in 2008. So Gabriel, welcome to the show.
[05:39] Gabriel Weinberg: Thanks, pleasure to be here.
[05:41] Rob: The reason we wanted to have you on is you’ve written a book. It’s called Traction: A Startup Guide to Getting Customers. You co-wrote it with Justin Mares. And Traction actually launches today, the day this podcast goes live. So if folks are interested in checking this out, it’s all about how to find customers and get traction in your startup, it’s at tractionbook.com. For more info there’s a sample chapter and you can obviously search for it on Amazon. I guess I’ll give a little background. For the book you interviewed more than forty founders, people like Darmesh Shah, Andrew Chen, Noah Kagan, Rand Fishkin, Patrick McKenzie, Jason Cohen, myself, and you and Justin pulled out traction approaches that people have used to get traction in their businesses. And you basically distilled it down to nineteen different traction channels.
[06:29] Gabriel: That all sounds correct. It’s a long time in the making. I started working on this project five years ago, when I started angel investing and tried to get traction for DuckDuckGo and realized there just wasn’t a great process for doing so, and just started doing interviews and five years later I ended up with this book.
[06:46] Rob: Nice. One of the statements in the book is that traction trumps everything. So how are you defining traction?
[06:52] Gabriel: What we mean is really sustainable customer growth. Generally you could even boil it down to just traction is growth. And if you don’t have growth in a startup, you essentially don’t have a startup, that’s why it trumps everything. Because if you’re growing, then everything becomes easy in a startup including some of the hardest things like getting more customers, getting fundraising and getting acquired, things like that.
[07:16] Rob: Right. And so traction could be seen as a combination of having low churn, having a lot of people coming in through the funnel, using the product and then sticking around and using it over time, and then having more people coming in through the funnel over time.
[07:29] Gabriel: That’s right. You can look at whatever core metric it is for your business that is a meaningful metric, like revenue or active customers or time on your site. Whatever that thing is, it should be growing up into the right. That’s essentially what traction is.
[07:44] Rob: Very good. Opobox was a sort of social network and DuckDuckGo is a search engine, these are more B2C plays, but you interviewed a lot of B2B founders as well. So I’m curious who is this book intended for.
[07:57] Gabriel: It really spans everything. I’ve angel invested in B2B stuff, as you mentioned a lot of my person experience in my company is B2C. Justin’s is the opposite. He’s done a bunch of B2B startups. We basically looked out and saw, okay companies now have some decent methodologies for product development luckily in startup, but they don’t have methodologies for how to get traction. And that was the big hole we were trying to address. And from doing the interviews and extracting our bullseye method, we found it’s just generally applicable and that B2B companies and B2C companies often get traction from the same mechanism. It’s just applied to their particular kind of company.
[08:35] Rob: You mention in the book, and obvious in the interview now, how Lean focuses so much on the product and that’s actually been one of my key concerns with it is that there’s a missing piece there. I don’t feel like Lean has emphasized marketing enough. There’s growth engines mentioned in maybe one chapter of Eric’s book. Engineers already have a predisposition to focus on the product.
[08:55]Gabriel: Here’s the basic story that we see, and that I saw with angel investing is, say you follow Lean to the T and you do good customer development. You launch a product that these customers actually want, which is great, but then you still have no idea how to get a more steady stream of those customers coming in the door. So what we see happens is people launch, they don’t have that immediate traction and they run out of money and die. And the saddest part about that is that the product was actually good. Those initial customers wanted it so the product development piece actually did work. It’s just as you said, it needs something to go hand in hand to actually address more of the marketing piece so when you do launch you know exactly what to do and how to get more customers.
[09:36] Mike: So one of the things you talk about in your book is called the bullseye framework. Can you talk a little about what the bullseye framework is and relate it to the listeners?
[09:45] Gabriel: Basically what we did was interview all these different people and saw the same traction channels, as we call them, coming up again and again. Those are things that everyone is familiar with like search engine marketing, SEO, PR, but then there’s a bunch of ones that people don’t usually use like business development, sales, speaking at trade shows or other conferences. Different startups, widely across the map, were getting traction through each of these different verticals but usually only one dominated at any one time. So keep that in mind. There’s nineteen channels; usually a startup gets traction through one of them. On the other side, you have startups and their founders’ bias towards their previous experience. You mentioned my startups. I came into DuckDuckGo from NamesDatabase or Opobox where there’s a lot of SEO and so I first set out to get traction for DuckDuckGo using SEO, but that was not a good choice. The only reason I did it was because I knew SEO and I was biased toward it. So what the framework really does, it tries to get you to take all these nineteen channels seriously and really consider them when you wouldn’t maybe have otherwise. And so the first step really is a brainstorming step and the whole process after that, a few more steps, the reason it’s called bullseye is it’s meant to hone in on to one channel that’s really going to make you take off for your startup.
[11:09] Rob: What I like about the book is, I’ve had this idea that I either wanted someone to write this book or I was going to write this book. This was going to be my second book, was to try to figure out a bunch of marketing channels and list them out and list some of the ways that people had approached them, list the results, just to have this reference. Because when I sit down either to advise someone or even to start a new idea, I’m always going back to this old marketing plan and trying to say, well which of these ideas is going to work now. And to have something that’s this comprehensive and that tries to boil it down into these channels I think is going to be really helpful moving forward as a reference for all of us.
[11:46] Gabriel: And that’s exactly why I wrote it. I just felt there was a need and I personally wanted to use it. And I’ve used the process at DuckDuckGo over the past five years. One of the other take-aways is that any good marketing channel eventually saturates for you. You’re using adwords, they get more expensive, you usually get priced out of it eventually. Or the volume gets too high. Your company is bigger and it just doesn’t move the needle for you anymore. The problem with that is you have to go back to the drawing board every eighteen months if you’re getting a lot of traction. And that’s what’s happened for DuckDuckGo so I’ve repeatedly gone back and looked at these nineteen channels, done the brainstorming, run tests, and we’ve switched channels with which we’ve gotten traction at DuckDuckGo about five times.
[12:27] Rob: Wow. So another concept in the book, you talk about the fifty percent rule. Mind telling us what that is?
[12:34] Gabriel: Sure. This relates to our discussion earlier about Lean, doing the marketing portion that’s missing from Lean. And if you wait until the end and try to start getting traction after you launch, then you’re in the situation that I was talking about earlier where you don’t have a lot of runway to figure this out. Whereas if you start a lot earlier, two things happen. One, you might be able to figure out when you launch what actually to do to get traction so you might figure out what channel you should use, how much that might cost, what niche you should focus on, what the marketing message actually will be that will resonate with potential customers. So you can figure all those things out, and then two, you are building this list over time from actually trying to get traction so when you actually launch you can immediately use this stuff and take off. We use an example in the book from Marketo marketing platform company that IPOed last year, and they started blogging right away and that was their initial traction channel. Way more blogging that you would normally do if you were just doing customer development. As a result they ended up collecting fourteen thousand emails for an email list and essentially took off right from the moment they launched.
[13:45]The other thing you get from this, and the fifty percent rule just means spend fifty percent of your time getting traction, really meaning it’s just as important as product development so you should be spending half your time doing it. But the other kind of non-intuitive benefit of it is that oftentimes people launch, they go try to get traction, and then they end up having to redo product development cycles because the market feedback tells them that it’s not quite right. They made it for these few customers, but to get a wider audience they have to change a bunch of things. If you actually do traction, spend fifty percent of your time doing it before you launch you often spend both less time on the product but also get to market faster with a good product. You’re actually just making a better product because you’re getting market feedback sooner.
[14:31] Mike: So when you talk about some of the different traction channels, one of the things you say is that a lot of the startups are all using the same ones. What are some of the ones that are less commonly used that you would consider essentially low-hanging fruit that people can go after. And because people don’t go after them as much they might work a little bit better for them because they’re not essentially saturated with people trying to leverage them.
[14:51] Gabriel: So there’s two aspects to this. One is, oftentimes people think oh I’m a B2B company so I’ve got to use these B2B traction channels. Or, I’m a B2C so I have to work on social traction channels. I think that’s actually nonsense. You want to go where your competition isn’t, because that’s where you’re going to have to compete less for customers. So there’s one question of, look at your competitors and see what they’re doing and maybe try to use some of these traction channels that aren’t being utilized for that particular type of company. The second piece is that there are channels which are just generally underutilized. So a good example of that is this one that we actually had to name because there wasn’t even a good name for it, which we termed engineering as marketing. And what this one is building essentially free tools that are complementary to your product, putting them out on the internet, they get independent traction because there’s such a need for it. But it’s a feature it’s not really a company, but the amount of usage from them enables you to get customers funneling off of that.
[15:50]HubSpot has done a great job of this with their marketing grader website. You go there and type in your domain name and they tell you how well you’re doing and they can upsell you on HubSpot. SEOmoz is another good example with their followerwonk tool. But it’s actually pretty generally applicable. Another set of ones that are generally underutilized are the offline ones. So, offline ads like in podcasts, or radio or even billboards which DuckDuckGo actually used one time, and speaking at different conferences and things like that, or hosting your own events. Those are all ones that are underutilized.
[16:26] Rob: I’m a big fan of repeatable and predictable channels. I’m always looking for stuff that is repeatable and predictable. And that’s why I have stuck to things like content marketing, SEO, search engine marketing, paid acquisition, that kind of stuff. Because I know what the numbers should be, and it feels like it’s less lightening in a bottle then maybe something like unconventional PR where you do a big stunt. I’m wondering which of the nineteen that you feel are the most predictable and repeatable.
[16:57] Gabriel: I would actually argue they all can be repeatable and predictable. We have examples in the book. I would say that some are definitely more than others. But take unconventional PR. Yes, there are the big stunts and it’s hard to do those again and again. But in unconventional PR, there are other things that people have done repeatedly like doing a series of viral videos. An example is the Will It Blend? channel; a blender company just starts blending things and they made hundreds of videos. Another version of that is doing unconventional things for your customers that end up becoming your company lore and getting good press as a result of that. Zappos customer service is one of those. And Alexis Ohanian from reddit, Hipmunk has done really well just running giveaways and contests around holidays and sending stickers and other stuff around to their customers. Just going above and beyond ends up getting a big word of mouth share going. I’d push back and say that there are ways to make these repeatable. It’s a little harder in some cases than others. I’ve seen it work in all the cases.
[18:05] Rob: Sure. Which of these nineteen have you used at DuckDuckGo? It seems like that would be kind of a hard business to market because it’s so unconventional.
[18:15] Gabriel: It is definitely hard. DuckDuckGo faces a couple of challenges. One is the general distribution mechanisms that people use for search engines, which is it’s in your browser already or in your operating system, are generally locked out to startups because there are bid up and very lucrative contracts from Bing and Google. So that kind of forces us to go around and do other things. Additionally, the traditional paid ones are similarly bid up and expensive to acquire users. So we’ve had to do some of the less paid ones if you will. We started out in SEO and then moved to social and display ads a lot of Reddit, 4chan even, that was kind of early In our growth. Then we did content marketing. We put out a series of microsites and blog posts, that brought in a bunch of traffic. And like I was mentioning earlier, each of these things worked up to a point, at which point they didn’t move the needle for us anymore. Our volume kept growing. We were growing about three to five hundred percent a year and so we had to keep switching.
[19:14]So then we moved to print PR, and then we moved to TV PR, and then that recently topped out for us and now we’re at business development. We’ve kind of come full circle back to that distribution and we just got a deal with Apple to be in Safari in iOS 8 and OS X. That comes out next month actually and so we’re hoping that is the next one that moves the needle for us. And then we’ll be coming back to the drawing board again.
[19:37] Rob: Wow, congratulations on that deal. That sounds like it’s a big jump for you guys.
[19:41] Gabriel: Thank you. To put another point on that, some of these for different companies won’t work for different phases of your company. We were never going to be able to get that deal early on until we were a little bit bigger and were obviously differentiated in the marketplace to allow them to want to include us. So some things won’t work in phase one of your startup, they might work in phase two or phase three.
[20:05] Mike: I think that’s kind of an exclamation point on this whole book that kind of needs to be there. But then you also had a blog article that you wrote a couple years ago called Moving the Needle and you kind of talked about this where there are certain channels that work really really well for you when you are a certain size, and then once you exceed some threshold that channel will no longer move the needle for you so you essentially have to find something new. And you’re always trying to look for what is the next thing that’s going to take your business to the next level. These nineteen different areas that you call out is a great starting point, but obviously which one is going to work for your business is going to be very dependent on what your business is, what your customer base looks like, and what you’re good at quite frankly. That’s something that I think really needs to be called out. You need to figure out which one of these is going to work for the stage that your business is in right now, because just because it doesn’t work now doesn’t mean that it won’t work down the road or that it could have worked for you six months ago but will no longer work for you in the future.
[21:00] Gabriel: Absolutely right. That’s why we like this process. Everything starts in the brainstorming session, trying to think about what you could use this channel for ideally in any way. You write down all these things, you pick the most promising one, you run some tests, you find one that’s working and you focus on it for a while. And then like you said, it stops working right? But the beauty of it is, if you did this successfully, you have all your old data, you have all your old ideas, you have all your old tests and you’re keeping those around. So the second time around you can say, oh hey, remember that idea we had eighteen months ago? That might actually apply now. That might actually work given the uniqueness of our current situation. We’ve done that a lot. We’ve gone back to old tests and lo and behold, sometimes they work.
[21:41] Rob: So in the book you listed nineteen traction channels. It’s probably not worth looking at SEO, SEM, paid acquisition on this podcast because we talk about it so much, but there were a few that were off my radar for sure. You brought up engineering as marketing which I think is a great idea and I’ve been watching Darmesh do that at HubSpot for a while. So I think people, when they get the book, should pay special attention to that one. The other one that caught my attention was existing platforms, and the summary of that is that focusing on existing platforms means focusing your growth on a mega platform like Facebook, Twitter, or an app store so you get some of the hundreds of millions of users to use your product. You talk about Alex Pachikov, the co-founder of Evernote and how he explains their focus on Apple’s app store generated millions of customers. Could you talk a little more about that? About existing platforms, who’s going after that, and how to properly do it?
[22:31] Gabriel: This idea has kind of broke out in the last five years and it basically says wow, a lot of users are just congregating on these places like Facebook and Twitter and the app stores, like you mentioned, and also browser extension add on stores like Chrome and Firefox. And there are people there everyday, millions and millions of people downloading apps and trying things. Those platforms are exposing those users to new products. Through certain strategies you can jump on that platform and get traction just by virtue of focusing on the platform. And so there’s essentially two approaches to this. One is for every platform, even new platforms, there’s usually a company that emerges or multiple companies that emerge solving things on that platform that the parent platform company didn’t really do themselves. Bitly is a good example on Twitter, Zynga is a good example on Facebook. Pretty much every one, you can see companies forming out of that ecosystem. So that’s one very platform-specific approach. Another approach, the one that Evernote took, is to say let’s focus on optimizing our apps for these platforms and getting noticed. And the best approach to that is getting the attention of the platform and getting featured because the platforms themselves, they made these platforms and they want people to make apps and use them. So they want to promote the best apps to showcase and get people to come to the platform. Evernote really has been the leader in this strategy. They’ve gone to almost every new platform you can imagine, there’s an Evernote app, not just the app stores but browser extension stores, almost every kind of phone version. But they do a couple things to really optimize it. One, they show up first. They’re one of the first apps to launch anywhere, and that really gets the platform’s attention because they want to showcase new stuff for their platform. And it’s not just, oh the app store already exists so that will never happen again. It’s new versions of the app store or the iPhone in this case too. I have an example in the book when the smart cover came out on the iPad, they were one of the first apps to use it. They made an app specifically for it, and then they were promoted on the TV commercial because of that. So really that strategy is about getting featured, getting listed in these top lists, and if you can do that it drives consistent downloads over and over again.
[24:53] Rob: I like this approach. It reminds me of Dan Martel, spoke at MicroConf a couple years ago and he used the phrase OPN which is other people’s networks. And he talked about this approach and how he’s seen a lot of startups grow quickly doing this. I’ve tried to dispel the myth that SEO and search engine marketing is Google and Bing, it’s not just the top two. Because you have search engines like Youtube that are massive, and the iOS app store, the Android app store, the WordPress plug in store essentially is an ecosystem with millions if not tens of millions of searches going on all the time, Amazon. I listed this whole list of things that if you can get in the way of any of those searches, they’re actually less competitive than Google because everybody is trying to target them.
[25:38] Gabriel: That’s actually a really good point and we make this in the book. You mentioned just now, there are niche platforms. If you’re in a startup in a niche, there’s often smaller platforms that have users that you can ride on, if you’re in a design space like Dribbble and Behance, those kinds of things. If you’re really going to make a list for all these different niches, there’s probably hundreds of different sites that you could really get traction from. It’s just a matter of finding out where these users are hanging out and then trying to figure out ways to get promoted on the platform.
[26:06] Mike: And that’s one of the things that we advocate, is that you use a VA or somebody like that to help identify those things because those could be extremely lengthy searches that you have to do, and if you can provide somebody with parameters to go out and do those searches then you can get back an excel spreadsheet or a list of some kind that someone has run a lot of these searches that almost take a human to eyeball stuff and say, is this reasonable to look at or not or is this worth somebody’s time, and then essentially filter that down to a point where the founder or the marketing team or whatever can go and take a look at those things and really determine whether or not they want to go after them or not.
[26:44] Gabriel: Yeah, I use virtual assistants all the time. Another good strategy is to, either through the customer development process if you’re pre-launch or through surveys if you’ve already launched of your existing users, just to ask them directly what sites they visit, where they’re hanging out online, if they’re subscribing to newsletters or podcasts, and just try to see if there’s any kind of patterns there, if people are congregating.
[27:07] Rob: Very good. Well, Gabriel thanks a lot for your time today. If folks want to find out more about the book they can go to tractionbook.com and download a sample chapter. They can obviously go to Amazon and search for it there. And if people want to keep up with you and communicate with you online, whereabouts do you hang out?
[27:24] Gabriel: Twitter, @yegg
[27:27]Rob: Very good. Thanks again for your time, it was a pleasure having you today.
[27:30]Mike: Thanks Gabriel.
[27:30] Gabriel: Thank you both.
[27:33] Mike: If you have a question for us, you can call it in to our voicemail number at 1-888-801-9690 or you can email it to us at questions@startupsfortherestofus.com. Our theme music is an excerpt of We’re Outta Control by MoOt used under Creative Commons. You can subscribe to us in iTunes by searching for Startups or RSS at startupsfortherestofus.com where you’ll also find a full transcript of each episode. Thanks for listening and we’ll see you next time.
Episode 198 | How to Perform an SEO Health Check on Your Website
Show Notes
- OpenStack
- Puppet
- Chef
- FinalBuilder
- Software Promotions
- Dave Collins
- Automated Website Health Check
- http://www.lunametrics.com/blog/2013/04/08/fifteen-minute-seo-health-check/
- Moz.com Search Ranking Factors
- Open Site Explorer
Transcript
[00:00] Mike: In today’s episode, Rob and I are going to be talking about how to perform an SEO health check on your website. This is Startups For The Rest of Us, episode 198.
[00:07] Music
[00:16]Welcome to Startups For The Rest of Us, the podcast that helps developers, designers and entrepreneurs be awesome at launching new software products. Whether you’re building your first project or just thinking about it. I’m Mike:.
[00:24] Rob: And I’m Rob.
[00:25] Mike: And we’re here to share our experiences to help you avoid the same mistakes we’ve made. What’s the word this week Rob?
[00:28] Rob: So we got an e-mail from Paul Rudderman and he has asked several questions in the past. He actually asked us the question about which LEAN startup methodologies we didn’t find helpful a few months back in a pre-show recorded whole episode around that. So, he wrote in and said I wanted to comment slash respond to a recent episode and the topic you guys were focused on. It was episode 193 where you and I talked about solutions for managing remote teams. And he says you mentioned TRELO and some other approaches.
[00:56]My startup Update Zen is a very different solution but good for remote teams if you are not a micro-manager, but what we are calling a macro-manager. So Paul is calling it light weight task management and he says we only allow for 250 character updates. It’s high level, simple status reporting for executives, entrepreneurs, business owners, etcetera. Thank you guys for everything. I really do appreciate the incredible insights, professional and personal, that you share on Startups For The Rest of Us. Be sure to checkout Update Zen and I’d like to thank Paul for writing in. How about you, what have you been up to the past couple of weeks?
[01:28] Mike: Over the past couple of days, I mean wasted the past couple of days, migrating from 1 server to another. But the purpose of it was to essentially document the server configurations so that in the future I can just like outsource management of it and the whole infrastructure to somebody else. But, it was just sort of a mess because everything kind of accumulates over time. It was kind of like a desktop when you’ve had a single server for so long things get messy after a while because you try something out and it doesn’t work. You try something else and maybe you change the way you’ve done things a couple of times. You’ve got 2 or 3 different pieces of software in there that are kind of doing the same thing and, unless you know what’s going on and have it documented, anyone who comes in after the fact is going to have no idea. And, they are going to look at it and say, what is going on? I have no idea how to work with this –
[02:10] Rob: I despise having to move servers. I just feel like it such a waste of time.
[02:14] Mike: It’s my build server but I also use it as my web server.
[02:18] Rob: Okay.
[02:19] Mike: So it’s a RackSpace. Unfortunately it was their first generation web server, so because of that it wasn’t used in like the Openstack framer that just kind of came out in the past couple of years and I couldn’t just do an upgrade of it. Because, with the new system that they have, you could bring a server down, do an upgrade of it and bring it back up, but all of your stuff would be there still. Unfortunately, because mine was a first generation server I couldn’t do that. There were lots of things that I couldn’t do with it so, I had to manually move stuff from one server to another. So I got two servers running at this point and I’m almost done moving everything over and documented everything but it’s been such a nightmare.
[02:57] Rob: Yeah, that’s tough. I don’t know if you’ve thought about using one of the build scripts like, there’s Puppet and Chef and there’s a few others. I haven’t actually used them but my team uses Puppet to configure our EC2 instances. The first one is painful because you script everything out and it’s so hard to get working. But from there, then you just click a button and Puppet will build your whole server and install your whatever, your database and install rails and install all that stuff. And, there’s got to be an equivalent for what you’re looking at.
[03:25] Mike: There would be for certain things, so like the websites themselves but I have like, my build server. I was using FinalBuilder and I’m converting it over because it was FinalBuilder server and now I’m going to be using Continua CI which is their continuous integration product which is kind of like the next level up. It didn’t exist back when I first installed it. So, there’s just lots of stuff there that there’s no way I would be able to do that stuff.
[03:51] Rob: Alright, so we have several new comments in iTunes. In fact, too many for me to read, but I’ll read a couple of them. We have one from Adrenaline from in Austria and he says, “Changed my life, following the advice in this podcast I built a successful software business. I look forward to every new episode, thanks.” And then we have one from Daniel B Nelson, five star review and he says, “This review is long overdue. In fact, I previously typed up a review which iTunes didn’t save. I’ve since gone through and listened to almost all the episodes. Now I save episodes and listen when I really need a jolt of knowledge and inspiration.” And he goes on to talk about how he’s worked for VC backed startups, had his own startups and just the difference our podcasts have made for him. So, thank you guys so much for the reviews and I really do hope you get value out of the podcasts so you can log into iTunes and give us a five star.
[04:38] Music
[04:41] Mike: Today we’re going to be talking about how to do a SEO health check on your website. I think the idea for this originally came from a blog post that was put out by Dave Collins of Software Promotions. He’s talked at a couple of different Microconfs in the past as well. He kind of sparked my interest in going out and doing a SEO health check and I kind of figured out what was going to go into it. What you should be looking for and Dave had some great ideas in his blog post, and I kind of took it a little bit further and went out and did some research and looked at a bunch of other stuff as well.
[05:09] Rob: Speaking of Dave, he’s actually gearing up to do what I think is going to be a really interesting talk on SEO and analytics at Microconf Europe and that will be in Prague. We do still have some tickets left and if you’re interested in seeing Dave and of course Mike and I, come to Microconfeurope.com and there’s a button right there you can click and buy a ticket.
[05:27] Mike: So there’s obviously a bunch of tools that need to be used in order to do a SEO health check of any kind. And the first one we’re going to start off with is Google Webmaster tools. And one of I think, the first things you’ll want to go look at, is go in and look under search traffic and there’s a section for manual actions. And what manual actions is is a place where Google goes in and puts updates in that say, hey we’ve taken a manual action against your website and degraded it for some reason in our search indexes. So if you’ve done any sort of black hat stuff or, even if it is gray hat and you didn’t know what you were doing and they flagged your site and removed it from their indexes – any of the messages that say they did those things would show up in that area.
[06:08] Rob: Yeah, you’ve screwed up pretty bad if you’re looking at manual actions because even back in the day I was doing more gray hat stuff. This is a couple of years ago before Panda and Penguin and when it was working really well still. Even when once that all came through I didn’t have anything that was manual actions or penalties. The algorithm itself obviously had an impact on ranking for some of my sites. But you need to seriously look at what you’re doing if you find yourself with manual actions in this area. It’s like the red alert zone.
[06:36] Mike: The next thing you do in Google Webmaster tools, go underneath the crawl and look at the crawl errors and essentially what these are, anything that is coming up from the Google robots that are saying that they’re having problems crawling your site. And they’ll list out any of the different errors. They don’t necessarily give you all the information that you need in order to fix them but they will give you kind of an indication of a broad statement that says these are the types of problems that we are running into. And can give you at least some clues as to how to go in and fix those problems. But the idea is that if Google’s, robots aren’t able to search your site and crawl it, then they’re not going to be able to index it either. So, there not going to show up in any of the searches.
[07:13] Rob: Yeah. I found this page quite helpful and Google will show you where you have 404s and where you have pages that are erroring out, 500 errors. I was using this a lot when I moved HitTail from the old servers and I moved both the HitTail marketing website and the blog, this is about three years ago, there were a ton of 404s. It allowed me to either put in 301 redirects to maintain that traffic or to actually replace the page and have multiple places where you could find it so that I wasn’t getting these 404s and wasn’t losing that traffic. So, crawl errors is something that I think you should be reviewing on a monthly or maybe on a quarterly basis for all of your sites. It’s just traffic that essentially will likely just go away. You’ve worked so hard to get the traffic to your site it’s a bummer to have people 404ing on your site.
[08:02] Mike: The next thing you want to look at under crawl is sitemaps. If you’re not familiar with what a sitemap is, it’s essentially an xml file that describes what your website looks like. My inclination on this is that if you don’t have a fairly extensive website, if you only have 10 or 15 web pages on your site, then sitemaps is not probably going to do a lot for you. But if you have a lot of them or you’re auto-generating pages of any kind, then a sitemap can really help you. It allows Google to just download that site map and they’ll know exactly where to go on that website for different types of content and it should all be listed inside of that sitemap. Otherwise, the robots need to crawl your entire site and there’s almost a limit to how much they are going to crawl your site. So, it’s like they crawl your site for a little while, but it almost times out. They don’t completely do the whole thing so they’ll get it in spurts and they won’t crawl your entire site all at once.
[08:54] Rob: Yeah, there are several sitemap generators. I think if you’re using a tool like WordPress and you get a good SEO sitemap generator, then it can look at all of your posts, all of your pages and spit out a decent sitemap. And I think with blogs it’s important because you can often have hundreds and hundreds of pages in that blog. So like you said, if you only have 15 pages of content, probably not as necessary. What I found interesting is there are sitemap generators that are just websites and you type in your website URL and it goes and crawls that and spits out a sitemap of your site. And this sitemap is an xml file that Google then can read. I’m not convinced that that is actually beneficial having that xml sitemap auto-generated. What I’ve always done is, if I have a site that isn’t WordPress and that I am going to need to create one manually, then I would go to these websites. I’ll enter in the domain name. I’ll have it crawl, I’ll go in and spot check or I’ll have like a virtual assistant spot check and try to find out if there are any files in my web tree. Like on my web server, any routes or any paths that are not in that sitemap and then add them in manually. Because, those are the ones, that if they are missed by this automated crawler, that you have the potential of Google missing it as well. And it’s only worth it on high value sites. If you have a little niche site with some adcents on it, it’s not worth doing. But if you have a site where getting every person into your funnel, a SaaS app or something that’s selling well and making you money, then that’s the only point at which that level of effort becomes warranted.
[10:23] Mike: Cool, thing the next thing that you’d look at is the Google index. And underneath the Google index you’re going to take a look at the index status. And here you want to make sure you click on the advance button. This is where you’re going to see any pages that are being blocked by a robot’s txt file or any pages where Google think it’s getting blocked. Underneath there you will see the number of pages that are being indexed and you want to make sure that index roughly matches the number of pages you expect to see on your site. So if you only got 10 or 15 pages it’s a lot easier to do this than if you have 300 or 500 pages on your website.
[10:59] Rob: Oh man, a friend of mine had a development version of the site, like a staging version they were working on. So they had the robot’s txt set block everything and they deployed this to production and they forgot to change it and Google –
[11:11] Mike: Oh no.
[11:12]Rob: – stopped indexing everything. In Analytics you can set up traffic alerts and if your traffic drops by more than x percent – and you can even specify. Like SEO traffic drops by more than X percent send me an email. I think he had one of those in and so he went in and removed it and Google re-indexed pretty quickly. But I’ve seen stuff like this happen. I’ve actually moderately done it, moved a staging or development robot txt in there. I haven’t blocked an entire set like that but I have blocked directories that should not have been.
[11:42] Mike: The next thing you want to review is any site messages that are coming up. Along with the site messages you’re going to want to take a look at security issues. And site messages and security issues, I’m going to kind of lump them together even though they are in different places, essentially places where Google could put in messages to you about your site so if they are having any sort of issues connecting or if they identify any security problems with your site so if you’re running specific software that they have been told about and they’ve added it into their crawlers to be able to recognize when there are security issues. Because there are people out there who will use Google to search for sites that are vulnerable to specific vulnerabilities. So whether it’s WordPress and they say, oh well if you’re using this version of a WordPress plug in, I want to know about it then I can go out and exploit it. And Google knows that people use their search engine for this kind of thing so they do put stuff in there that will try and identify that stuff. But it you don’t have Google Webmaster tools installed and running, it’s not going to be able to notify you of these types of things.
[12:38] Rob: Last week Google announced that they are now going to be using SSL as a ranking factor and I’d imagine that would be added to Google Webmaster tools at some point. Whether you have SSL or how that’s impacting you. There’s a really good look at that on the Software Promotions blog. That’s softwarepromotions.com slash news. Dave has a blog post called SSL and SEO don’t panic. The nice part is that if you have SSL then you’re ahead of the game. The bummer part is, like I have SSL on HitTail and Drip but, it’s on the marketing site and everything but they want like 2048 bit SSL and I don’t have that industrial strength stuff in place so I’m going to have to buy new certs.
[13:18] Mike: Well 2048 bit SSL is going to be mandated but I think there is a date where they are cutting it off and after that they are only issuing the 2048 bit SSL search indicates.
[13:29] Rob: Yeah. Got it. So, VeriSign and GoDaddy and all those SSL cert vendors, I’ll bet they’re making a mint on this as everyone comes in and re-buys or buys new ones. And I do feel bad if you’re selling a WordPress blog and you have a SaaS website and you don’t have all your links set up to do this, it’s kind of a pain to retrofit a site and go through and make sure everything is relative.
[13:51] Mike: Yeah, most of the certificate vendors offer free re-issues of certificates. So if you have a certificate that doesn’t expire for another six months or a year or something like that, usually you can go back to them and re-issue the certificate and you should be able to get a higher level of encryption. But I think it might depend on the vendor and kind of how much of a discount vendor they are.
[14:09] Rob: Yeah, well that’s good. I didn’t know that at all, I’ll have to look into that.
[14:12] Mike: Did you know there was a thing called Bing Webmaster tools?
[14:15] Rob: I did.
[14:16] Mike: So, apparently Bing has their own Bing Webmaster Tools. There’s a variety of information in there that you can get. The one thing to keep in mind when we’re talking through the Bing Webmaster tools piece of it is they only have about 15 percent of the searches as opposed to the 65 percent of the market that Google has. So they have significantly less data that they’re going off of but there’s still some key pieces in here that people can take away. So the first one is to use their SEO reports and using those you can automatically scan your website every two weeks. And, they will report back to you what they feel are the 15 SEO best practices for on page optimization. And these are the types of things you can get from MOZ or a variety of other tools as well, but they will essentially do it every two weeks. And they’ll show you the severity of the problems that they identified, the number of errors, page counts, the pages themselves and it will even show you highlighted html snip-its of those problem pages – so it directs you to exactly where you need to go to fix any of the problems it finds.
[15:16]The second thing you can do in there is use there link explorer to find backlinks and if you’re not already paying for a tool like MOZ it will provide you up to one thousand backlinks. Paid tools offer you obviously a lot more than this but if you’re not quite to that level yet, then using something like link explorer can kind of get you to part of the way until you’re at the point where your site is making enough money that you can justify putting money in on a monthly basis to justify paying for a tool that starts tracking all your backlinks. The third thing that you can use it for is use the Bing key research tool and the main difference between this Google’s Keyword tool is that the Bing keyword tool gives you actual organic search queries, rather than just the number of queries that trigger the key word if it’s used in ad words –
[15:58] Rob: Can you imagine that? Actually giving us useful information? This is crazy. What is Bing doing?
[16:02] Mike: Well, they only got 15 percent of the market, they’ve got to do something.
[16:05] Rob: We’re number two, we try harder.
[16:07] Mike: That’s the big deal here, is that they give you the actual search queries in the Bing engine. Obviously it’s not worldwide or anything but you can kind of extrapolate that and say well if it’s 15 percent here then multiply it by what, seven and a half, something like that to figure out what the worldwide traffic is for those things. So I think that is a reasonable extrapolation, I’m sure there are cases where it completely falls down based on certain markets or the types of people who use Bing versus Google etcetera. But it can at least get you in the ballpark.
[16:36]And then the last thing in the Bing Webmaster tools is compare what you’re seeing in Bing against Google for a quick sanity check. Because there is always going to be things that Bing sees that Google doesn’t or that Google sees but Bing doesn’t. In the cases where they are showing you similar information, you want to be able to get some sort of a sanity check between them to figure out kind of what direction you should be going in and what you should listen to. And, whether or not one of them is completely off base or not because they might show you wildly different numbers and you have to read between the lines a little bit to figure out why Google is saying one thing and Bing is saying something else.
[17:09] Rob: Right and the idea here is that there are paid tools that can do some of this stuff but having two free tools that are actually pretty powerful and can give you insights to your website’s health is kind of nice to have. If you’re super limited on time then yes, only use Google’s. But if SEO is a huge part of your strategy then having both a Google and Bing Webmaster tools account and making it a point, putting even a 30 minute calendar reminder even if it’s once a month or once a quarter, for you to log into both of these skim through everything. I would say, if SEO is a critical part of your business then this should be a once a month thing. It may only take you five minutes for each of these webmaster tools accounts to zip through if nothing is wrong. But when you find something that is wrong, you’re going to be able to preemptively fight it and if you just have that recurring thing on your calendar it is going to save you time at some point and you’re going to be thankful that you are investing that time.
[18:01] Mike: So let’s move on to the next one. The next one is Google Analytics and what you want to use Google Analytics for at the very least to review your landing pages traffic levels. One thing I found is pretty helpful is that if you compare last week to the last month. And essentially what it does is it allows you to identify some sort of trends within the traffic levels and whether or not your landing pages are gaining traffic or losing traffic. Within the last week it will help you gauge whether or not you’re getting any kind of traffic spikes or when those traffic spikes were based on some of the different marketing campaigns that you’ve done. And if you don’t have landing pages, you need to make some. Because this is where you can get a lot of your targeted leads. Landing pages are where you typically capture an email address from people and then use it to follow up on them either with a newsletter or direct email campaigns and things like that.
[18:49] Rob: But landing pages in analytics is different. It’s actually just saying these are the pages that people first landed on in your website. So sometimes it may just be a blog post. However someone first found you during this time period.
[19:03] Mike: Yeah, that’s true. You could use it for that too. But I was referring specifically to looking at the traffic levels for the landing pages that you set up and whether or not you’re driving traffic to those. Obviously if you’re doing paid adwords campaign or paid advertising of any kind and driving traffic to those pages, it may very well be that you decided to stop doing something like that and maybe something got turned on and you didn’t realize it and you’re still paying for something that you wanted to turn off. So, at least by reviewing the landing pages that you are actively trying to push people to then you get more of that information and you get a bigger picture of what’s going on. And as Rob said earlier you can also set up custom alerts inside Google analytics to notify you of traffic spikes or traffic nose dives because it looks at the data and keeps an eye on it notifies you when it recognizes things that match certain criteria that you set up.
[19:54] Rob: Yeah, I have these on several of my sites. You have to tweak with them a bit because you’d be surprised how much your traffic goes up and down. And so I think I set a threshold of ten percent when I first started but then every week or every day I was getting this email when it was down. So if you’re getting it every day then you start to ignore it, then I had to move it up to 25 percent swing week over week. You have to find out what number works for you. You don’t want to make it too big because then you lose too much traffic before you get notified. But if you make it too small you kind of become numb to the number of emails they send you.
[20:24] Mike: The other thing you can do is you can set it up so that those are small enough so they are riding on the edge and have those emails go to a VA who logs in an looks at them for you and then if it’s really out of whack they notify you – kind of like an escalation.
[20:38]The fourth item on our list is to disavow shady inbound links and both Google and Bing support this ability. So if there are websites that are linking to you which are collectively shady websites they might be linking to you and bringing down your page ranks. If that’s the case or there are things that you’ve done in the past where they were definitely black hat and you’re trying to right the ship, so to speak. You can go in and you can disavow those links. I’ve never had to do this, Rob have you ever had to do this before?
[21:07] Rob: No, I haven’t either.
[21:08] Mike: Okay.
[21:09] Rob: When I acquire HitTail and then Panda and Penquin came out, there were links that were built under Google’s guidelines that suddenly became, quote, unquote bad links. People used to have contests back in the days and they would say put our badge on your website, right? And so from every page of your site you get all these backlinks and that created value for you. And HitTail had something like that like a badge or widget that people could visually put on. And once Panda and Penguin came out, that started negatively impacting it. But they didn’t offer the disavowed shady inbound links at that point. It was another 6 months or 12 months before you could do it. I would have gone in an disavowed a bunch of them but what I did is, I talked to a SEO guy and then I tried to find places that were linking to me and I thought were negatively impacting the signal and we manually contacted them and asked them to remove the widget. And enough people did and I guess I built enough healthy links or authority links after that that it just kind of went away. There was a warning for a little while, it wasn’t a manual action but it was basically saying, in webmaster tools that you have too many links from these multi-page blogs that were negatively impacting stuff. So while I haven’t disavowed anything I would have at that point were it available.
[22:20]Now I also heard anecdotally that you really want to use this with caution. I think it’s easy to over do it and panic and think that every link is bad and then disavow a bunch of links that can have a real negative impact on your ranking so I would use this with caution. Probably consult with someone who knows what they are doing before doing this.
[22:36] Mike: So the fifth item in our list is to review the MOZ ranking factors. And what those are, every 2 years MOZ will go out and they survey 120 leading search marketers and they provide their opinions on what the different ranking factors are that are used by search engines. So they essentially come up with this list and compile it and kind of aggregate between the different people about what their opinions are and what Google and Bing and other search engines are using as the ranking factors for people’s websites.
[23:06]And if you go out to the MOZ.com/search/ranking/factors you’ll see this list and it’s a list of about 80 different things and they are weighted as well. So the very first one is the page authority followed by number of Google plus ones and the number of unique C blocks that are linking to the page etcetera. And you just go down this list and start looking at the first 20 to 30 things to see if you’re concentrating on the wrong things in your marketing effort, because really you want to concentrate on the things that are going to give you the most value, the biggest boost for your page rank. If you’re not concentrating on the top 20 or 30 things then obviously you can go down to the bottom of the list and there are some things that will negatively impact your website. For example the response time of the web page in seconds. If it’s too low then Google will actually start dinging you for those types of things. So you do want to be careful about what sorts of things you are paying attention to and which ranking factors you’re not.
[24:00] Rob: Did you notice the URL length in characters can also have a negative impact. And, total length of your full domain can have a negative impact. Pretty crazy stuff. And this is stuff that Google never talks about and in fact, when people have brought it up specifically because they will look at the MOZ list which is from MOz’s own research, people will bring this up and Google will say no, that’s not true or that doesn’t work, but that’s how the stats are showing. So, I don’t know what to make of that.
[24:27] Mike: Yeah, I do wonder about that, because I have a lot of auto-generated content where the page URLs tend to be fairly lengthy and I’ve actually gotten into some trouble here and there just because I’ve run into cases where the URL length ends up being 250 characters long and it got too big and the application crashed and said windows barfed on it and we’re not going to allow you to create a file more than this number of characters long, it’s like whoops. So I can see how Google would go in and say we’re not going to pay as much attention to these web pages that have a URL that’s too long.
[25:02] Rob: Right. You have to take this list with a grain of salt because it’s all correlation rather than causation, it’s hard to prove that but MOZ has been doing this for a lot of years and they have more data than anybody I know of on this. So it’s definitely useful to see the factors that impact both positive and negative aspects of ranking.
[25:21] Mike: And the last thing on our list is check your domain authority using something like Moz’s open site explorer. It used to be at opensiteexplorer.org but I think they moved it on to the moz.com domain. So using the opensiteexplorer it’ll give you an idea of what your domain authority is. You can even plug it in and have it go to specific pages and tell you what the page authority is all this information is also embedded inside of Moz, so if you have a Moz account you can get a lot more information on it. But they also link back to things like social metrics, like Facebook, Twitter and Google plus information that is linked back to your website. There’s a lot of good information that is embedded in there, obviously this informations free its an attempt to get you to buy in to a Moz subscription which I have one, Rob, I think you have one as well. They do have a lot of good information that is freely available on the opensiteexplorer, but you do get a heck of a lot more once you subscribe to Moz.
[26:15]And I think the last thing I wanted to bring up is, I wasn’t going to mention this because it is listed as the very last thing on the Moz ranking factors but I did realize it’s listed there as a negative. If you have a low website speed they will actually ding you for it, it’s not as if it’s slow they are going to give you a zero. They are actually going to take away points from your website ranking for this. If you have a slow website, it’s definitely something you want to take a look at. There’s a free tool out there. You can go to tools.pingdom.com, plug in your website and it will show you all of the different things that are on your website that are loading and it will tell you the time that it takes to request that from the server. It’ll tell you the time it takes to download it and then display it. It’s got a very lengthy graph if you’ve got a lot of elements on your website. Take a look at it, it’s free, it allows you to drill in and figure out what sorts of things are taking the most time on your website and give you at least an idea of how to fix those things.
[27:10] Rob: Yeah and be careful when you’re going through and fixing based on their suggestions. I did this about a year ago, based on some advice from my SEO guy and some of the compression and stuff that they ask you to do can break things. They asked for some gzip compression and there was some Javascript that worked fine but there was CSS compression and things started looking quirky but only in a weird mobile browser. Suddenly we started having issues so I had to back a bunch of it out – it was kind of a pain. You just can’t take this advice that they give you whether it’s from Pingdom or from any tool telling you how to speed up your website. Sometimes it’s not without cost. All the tools that are improving time are not necessarily being aware of not breaking your site in some UIs.
[27:57] Mike: There’s definitely a difference between something that’s more of an optimization than something else that is fixing an error or some kind. So if you’re getting 404 errors for elements that are on your page because it’s requesting CSS files that don’t exist, or anything like that, obviously those things will make it easier for that site to be pulled down to the client, but then there’s are other things like you said the Gzip stuff that could out right break your site just because it’s not able to pull that in. So if you listen to all this and you’re still a little bit strapped for time. If you don’t want to go through a lot of these steps – for the truly lazy there are 2 websites you can go to. There’s SEOsitecheckup.com and quicksprout.com. And both of those you can plug in your website and get a free SEO check up report. And they give you a lot of helpful information that tells you the sorts of things that you should pay attention to. If you haven’t really done very much website optimization and you’re looking for a very quick checkup to give you some ideas of what areas you should focus on go to both of those tools. Try to match up between them what things overlap and those are probably the things you should pay attention to first and then you can go back and take a look at the other things they recommend and decide if they whether or not they make sense for your site or not.
[29:06] Rob: The nice part about running a bunch of these tools, especially the free ones, is there’s always something new you don’t know about and that’s the nice part and not nice part. Because the nice part is you can then go fix it but of course it’s adding something else to your to do list. And you have to weigh all this stuff. If you’re not getting much traffic from SEO or organic traffic doesn’t convert very well for you, then you’re going to want to spend a lot less time doing this. And you’re going to want to do the 80 20 of the stuff, right. Cause you can go off forever and kill hours, weeks of time on this. But taking the low hanging fruit out is going to accomplish the majority of your goals and seriously help improve your rankings. Not just for your head keywords and your home page but your overall – if you put out a lot of content it kind of lifts your entire domain authority if you can improve some of these issues.
[29:55]And that wraps us up for today. If you have a question for us, call our voicemail number at 888 801 9690. Or, email us at questions@startupsfortherestofus.com. Our theme music is an excerpt from We’re Out of Control by MoOt used under Creative Commons. Subscribe to us in iTunes by searching for startups or by our RSS startupsfortherestofus.com where you’ll also find a full transcript of each episode. Thanks for listening, we’ll see you next time.
Episode 197 | How to Sell a Web Application (with Guest Thomas Smale)
Show Notes
- Thomas’ company, FE International
- Thomas’ guest post on Rob’s blog on how to build a SaaS business you can sell
- The post Thomas referenced on how to value an online business
Transcript
[00:00] Rob: In this episode of Startups for the Rest of Us Mike and I discuss how to sell a web application with guest Thomas Smale. This is Start-ups for the Rest of Us, episode 197.
[00:09] Music
[00:17] 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 build your first product or you’re just thinking about it. I’m Rob.
[00:26] Mike: And I’m Mike
[00:27] Rob: And we’re here to share our experiences to help you avoid the same mistakes we’ve made. What’s the word this week, sir?
[00:31] Mike: Just before we got on this podcast I was interviewing somebody on oDesk to hire them to do some development on AuditShark. Get to the end of the interview and I was like, “Okay. So explain this all to you. Do you have any questions for me?” “No, no questions.” “Is this something that you’re interested in?” and he’s like, “Well, not really.”
[00:49] Rob: Wow, so he just turned it down?
[00:51] Mike: I hadn’t even gotten to the point where I was actually selecting a candidate, but yeah. He just said, “Yeah, it just sounds like I’m not really interested in doing the work that you want.” I’m like, “Alright.”
[00:58] Rob: Saves you time.
[00:59] Mike: Normally there’s people who’d be upset over that, but I was just like, “Man, thank you so much for saying you’re not interested, because you just saved me so much time and effort that I probably would have had to sink into this ongoing relationship.” I’m thankful he was upfront and just said, “Yeah, I’m not interested.” Move on.
[01:13] Rob: Rather than leading you on and then dropping off the map and not responding to your emails, you know, which is typically what happens.
[01:19] Mike: So I’ve learned to start asking that question though, because it really helps weed people out. Because if they’re not interested, that’s fine.
[01:26] Rob: Right. So Drip 2.0 is what I’m calling it. That’s all launched now, and that’s basically Drip with all the light-weight marketing automation built in. So Drip is now becoming a tool that is, I’m considering it it’s like an above MailChimp and Aweber in terms of power, and it’s below the Infusionsoft and the OfficeAutopilots. It’s gotten a lot of really good publicity. I published a couple blog posts in the past week.
[01:50] One on the Drip blog that’s about how marketing automation is the future of email marketing, and the other one that I was surprised as much uptake it got is called the Biggest Gamble of Your Career. It’s over on softwarebyrob.com. It’s the first real blog post that I’ve done on my journey, because I tend to now document what I’m doing on this podcast. I really stopped blogging like I used to maybe 18 months ago, two years, I really slowed it down.
[02:13] This is kind of the first revealing of what’s been going on behind the scenes that I’ve done in a long time, and it sure seemed to strike a nerve with folks. It got a lot of shares and sent quite a lot of interested folks to try out Drip, so it feels really good. I mean this is something we’ve been working on since January, and finally to get it live last month and then really be able to start promoting it. Feels like we’ve hit another milestone with Drip.
[02:36] Mike: Very cool. What else you got going on?
[02:38] Rob: We got a tweet from My Egg Noodles, and he says, “A question I’d love to see you address on your podcast. Should your first hire focus on sales or marketing, or on product? The founder is comfortable with both. It would be good to get your thoughts on all product types.” What do you think about that?
[02:54] Mike: Well, I guess it depends on whether you’re- by comfortable, what does that really mean? Are you much better at one or the other? I think I’d look for the things that you procrastinate on doing and find somebody to do those.
[03:06] Rob: That’s a good way to look at it. The other thing- the other it depends is how far along is your app? Because some apps, or products as he said, because it may not necessarily be software, some products they become done. They become mature after a while. They may only be a single feature, and they just do it really well, and you don’t need to build much else. So if you hit that point then there’s really not a lot of ongoing development on it, whereas other products become more complicated and you branch into new audiences and they need a lot of development.
[03:37] I think if you’re in a market where you have competitors, and you’re trying to stay ahead of them in terms of product development, or you just know you have a lot feature requests from serious customers and you need to build a lot of stuff, I would have to say that I would lean towards hiring someone to do product while the founder does the sales and marketing. Of course it’s not the case in every case. I think like with HitTail, as an example, after I fixed a bunch of bugs couple years ago after I first acquired it, it didn’t need a ton of new features. So if I would have hired anyone, it would have been sales and marketing, because it just didn’t have that dire need of product development. I think product development for product development’s sake is a big mistake that some founders make. They just want to build more features because, well, that’s what we do, right? We’re creators, and a lot of times if you’re satisfying a market and you have that fit, you don’t necessarily need that new feature. It’s not actually going to move the needle for you at all.
[04:28] Mike: Yeah, I mean sometimes those new features can just cause more problems for you than anything else, because then it creates confusion over what the product does. I would almost say that in some ways MailChimp falls into this category for marketing automation. They’re great as an email service provider, but they came out with Mandrill, I think it was, for sending out transactional emails, and I never even looked at it, because I knew that I was just like, “Oh, well it’s MailChimp. That’s what they do is they do mass emails.” So it wasn’t to me their core focus. They may very well do it perfectly fine and maybe even better than other people at it, but I never even gave them a second look because that’s not what I knew them for.
[05:08] Music
[05:11] Rob: Today we interviewed Thomas Smale. He’s a website broker who runs FE International. Very pleased today to have Thomas Smale with us on the line. Thomas, thanks so much for staying up late there in the UK to join us on the podcast.
[05:26] Thomas: Yeah, hey. Thanks so much.
[05:27] Rob: So Thomas is a website broker. He runs FE International. They broker the purchases and sales of SaaS apps, downloadable software, WordPress plugins. Thomas, I’m assuming you also do niche sites, e-commerce, the whole gamut of web properties. Is that right?
[05:46] Thomas: Yeah we do all sorts if it’s online, we’ll do it. But we’ve done quite a lot of SaaS related apps recently.
[05:52] Rob: I really like the way Thomas operates. He’s very knowledgeable in terms of the buying and selling process. I like that he’s, unlike some other brokers that I’ve dealt with, he is very upfront with his thoughts and just seem to be very knowledgeable when I’ve dealt with him. I have looked at a few things that he’s had for sale. I haven’t acquired anything recently. I’ve also referred a few friends of the show will email and say, “Hey, I’m in a… and I need to sell an app. What should I do?” and I typically refer them over to Thomas, just because I do trust that he’s going to handle everybody with kid gloves. So that’s why I wanted to have him on was to lend deeper insight, because though I’ve bought and sold a lot of apps and sites over the past several years, Thomas does this every day, and he has a company with six employees. Thomas you said you have six employees in London alone. Tell us where you have offices now.
[06:38] Thomas: Yes, we’ve got an office in London. We’ve got a couple of guys who work out of Europe. They work from home. We’ve got a small office in San Diego, and we’re also in the process of setting up an office in Boston. So there’s eight, nine of us at the moment, and we’re kind of actively hiring probably to fifteen within the next six months or so.
[06:57] Rob: Right, so you’re still quite a bit- I mean, you’re a start-up.
[06:59] Thomas: I guess with an advisory business you don’t necessarily need tons of staff. It’s more of a high-end service, I guess, rather than man-hours.
[07:09] Rob: Right. I kind of want to limit the conversation since our audience tends to focus on software. Like talk about SaaS, downloadable software, WordPress plugins, add-ons, that type of thing and not talk so much about e-commerce, niche sites and info products. I’d like to take it from a couple perspectives. I think we’ll start off with someone who is thinking about selling an app, because I get so many more of those requests than I do of people who are thinking about buying apps. But I think I’d like to maybe start off with, I guess, your credentials in terms of like, how many apps do you broker in a year buying and selling? Or how many total have you brokered? What numbers do you have to give us an idea of your experience level?
[07:48] Thomas: Yeah, sure. We’ve been around around four years now. I think the company’s been focused on brokerage for the last two, at least, maybe three. I’ve always brokered prior to that, and currently we also run a few of our own sites. I’ve run software products apps myself, so kind of got a wide range of experience. In terms of deal experience, last year I believe we did 78 transactions, but I’m generally speaking the size of those should be anywhere from 20, 30 thousand all the way up to the low 7 figure range. This year-to-date I believe we’ve done around 40 sales, total volume around 4 million. So we’re probably tracking by the end of the year 7, 8 million in sales, maybe 10, depending on how we get on. Then I would say of that 25 to 35% would be SaaS or apps, or whatever, and then the rest is quite evenly distributed across niche sites and e-commerce. So I’d probably say 20 apps a year.
[08:50] Rob: Couple apps a month, which is quite a bit a volume, because, you know, when I first got into this buying and selling I felt like, “Oh, this is such a liquid market, and there’s all this stuff moving all the time.” But there really aren’t that many sales when you get up above the $20,000 range.
[09:03] Thomas: Yeah, certainly when it comes to apps. I know across, well we were speaking just before the show about the other brokers out there, there aren’t all that many established brokers in the space we operate would be 50,000 to a million is 95% of our business and the same for other business brokers in the space. I know that we, of all the businesses we do, we are quite specialist in apps, so the market really isn’t that liquid, especially when it comes to brokerage sales, whether there’s a bigger market privately, I don’t know. But I would certainly say you’re correct in saying that there’s not hundreds of thousands of apps selling every year, especially through brokers.
[09:42] Rob: Which side is weaker, the demand or the supply side? Meaning are there a lot of apps out there and not enough buyers, or there a lot of buyers and not enough apps?
[09:50] Thomas: Yeah, I would definitely say, especially in the last twelve months or so, we’ve seen a lot of demand for- with buyers that is- for apps, especially SaaS in particular, and there’s a recurring element popular with buyers, I guess that the cash flow is slightly easier to predict. Macro tend to kind of if you go up to being, it’s like public companies and SaaS companies are trading at high multiples, so I guess it’s attracting people down the scale. I guess on the supply side there is certainly a lack of quality supply. There’s certainly supply there, but whether or not there any good or not is kind of a different matter. I think my reasoning on there not being that many is there’s a little bit of a grey area between- our average business will have anywhere from 100,000 to, say, 2 million a year in revenue, which is a kind of area that attracts a broker is too small for a merger and acquisition, small advisory firm.
[10:43] Anything smaller than that, it’s just not really big enough for a broker by the time you’ve gone through the process. As soon as you’ve got anything off the ground, once you start scaling through the process you can get to the stage where you might be looking to raise funding. So maybe as soon as you hit, say, a million dollars in revenue you might want to start raising funding. I think a lot of people as well, if you get to the stage where you’re making, let’s say, a couple of hundred thousand a year net, the exit isn’t always necessarily that attractive, because you tend to find with SaaS or software products in particular there’s a lot of burden on development up front. You can put two years into development before it’s even ready to go. So actually letting go of it- if you compare it to a niche site, where you might put 50 pages of content, build some links, and then it could be quite profitable, certainly wouldn’t really require any upfront work. It’s quite hard to let a business go for three times multiple, or whatever they’re selling for.
[11:37] So overall there’s definitely some solid and strong consistent buyer demand, and it think increasing as well. But then on the sales side there’s definitely a lack of quality supply. There’s certainly out there people looking to sell apps, but they might not be profitable, and that’s not really what I deal with. There may well be a more liquid market lower end, kind of a starter pathway. Where you’ve built the software, but it’s not profitable yet.
[12:02] Mike: It seems like there would be this large number of people who build an app, but they don’t really have an audience or they’re not able to get the sales, so they’ve got almost nothing to show for it. There’s no revenue there, so as you said, it’s not attractive to a broker. But if they can get things rolling, if it is a SaaS app and they’re able to get to a certain point it seems like if they’re able to 100, 200 thousand dollars a year in revenue then the inclination for people would be to grow that as high as they possibly can, which may very well take it kind of out of that brokerage space. I wonder if that’s some of the issue that you’re running into there.
[12:34] Thomas: Yeah, exactly. That some of what I was trying to explain. I think you get to a little bit of a grey area where it’s sort of a smaller, not profitable, so a least for a broker it’s not particularly attractive. And then beyond that, if you’re growing year on year and the business is going well why sell? Probably the most common reason we’ve seen people sell perfectly profitable businesses lately, I’d say the first reason would be the general time of commitment. They might have a full-time job, they might have another business, or they got other personal issue, whatever you want to call it. Then the other one, which is quite common, especially with people with a technical background, is they get it to a certain level, we tend to see maybe 100 to 500 thousand in revenue, so not insignificant, but not multimillion dollar exit stage. But because they have a software, financial background they don’t have that sales ability, so pushing it beyond the initial 100 to 200 customers is beyond their expertise, and you’re in that little bit of a grey area outside the “sell it” or “figure out a way to sell”. For a lot of people, especially technical founders, they tend to find that selling it and then starting something new is what they prefer to do.
[13:42] Rob: Yeah. That’s interesting. There’s a couple points that you raised that I’d like to touch on. One is you mention valuations. You mentioned like a 3 X valuation. Talk us through what types of valuations you see things selling at, and that includes- I’m actually interested to hear the difference between the SaaS and software stuff versus the e-commerce and niche side and info product stuff.
[14:02] Thomas: Yeah, so valuation is, especially from the broker side, is one of those consistently debated topics. We do enough sales now that I’ve got a pretty good grasp on valuation of where business come in. Generally speaking, this is where a lot of confusion, because a lot of brokers or individuals do it in a different way, but generally a business is sold on a multiple of- this is a small business, whereas you get larger you tend to have a multiple of EBITDAR, which is a slightly different calculation. But for small businesses, so if you’re going for a business broker sub 2 or 3 million, it’s generally a multiple of SD or SDC, which is Seller Discretionary Earnings or Discretionary Cash-flow.
[14:41] That is effectively a calculation of the net profit of the business. So taking into account all your revenue and then take off your operating expenses and everything like that. Then you add back, which is kind of a financial way of representing how much the earner’s benefiting from the business, you add back in what the earner’s getting paid. So let’s say you have 500,000 a year in revenue, and then you’ve got 200,000 a year in costs. That might be payment processer, hosting, affiliates, refunds. Then you pay yourself 200,000 a year as an owner. That then get added back so the actual profit is higher than whatever. So obviously with a small business, generally speaking, again I’m not a tax accountant or a lawyer, but generally speaking the administer made the business look the least amount profitable as possible when it comes to taxes.
[15:29] So owners tend to pay themselves more than they need to, or they will takes some benefits in the business. So you might if you’re 500,000 take off 300,000 in genuine costs so you get to a net of 200,000, but also 300,000 in costs 100,000 is your own pay, your insurance, your car, so it increases to 300,000 in that case. That’s your baseline number, and that’s generally where, at least a good broker, should help you wouldn’t expect to do that calculation yourself. Generally you’d expect to send your broker your profit and loss account, whether that’s QuickBooks or whatever accounting you use, especially you’ve got bigger sidings at least 100,000 in revenue you would hope you’re doing your account properly in that respect. Then from there, you have the financials, which is obviously number one variable is your underlying SD number or the SDC, or whatever. Then that is multiplied by a number, and that number is determined by- the main factors would the sustainability of the business, so is it growing? Is it in decline? As a rule of thumb if the business is in decline you’d expect to get a lower multiple than a business that’s growing.
[16:39] Is the business really hands-on and personalized? So if I owned thomassmale.com and thomassmale.com was a software product that let people sell their businesses in an easier way, than that’s going to be a lot harder to sell than if I had sellmybusiness.com, which is a software product not attached to me about selling a business. So if there’s a personalized element to it, it can be a little bit more difficult, or if it’s got any particular alliance. So especially with technical founders you tend to find they are the ones doing all the programming, so if they developed it all themselves and there’s no backup program or thing like that, then that can restrict the multiple.
[17:15] Although I’ve certainly seen recently that’s becoming less of an issues, and the kind of buyers we’re seeing at least, tend to be quite happy with the technical burden, and they tend to know what they’re doing on that front. We would come to that as a broker, I would come to the multiple number. You certainly wouldn’t expect to do that yourself, and if you are hiring a broker it’s certainly worth asking around and making sure that whatever valuation you’re given is actually based on some form of precedent. The number we use is based on sales we’ve done, so we have an internal database for the deals we have done, and we track all the different variable in that deal to figure out what the multiple’s going to be. It’s a somewhat scientific approach, yet with a little bit of gut feeling. It might be I think it’s worth 3 times the SD number, but expect to be offered 2.5 times, for whatever reason, or maybe expect the cash-down number to be a 2 times level. We do it based off the transactions we’ve done recently. There are other methodologies. I just tend to find that I like to be honest to people and give them a number I actually think it’s going to sell at. There’s no point in quoting a number that I’ve never seen before. Then when you actually get to the number itself, I mean it’s very difficult to give it a blanket multiple, because it really does depend on the business. But all variables being equal with SaaS app, recently we’ve been seeing multiples of almost exactly 3 times, very rarely goes much above that, and it rarely goes below that.
[18:44] In the range of, say, 2 and a half to 3 times, and that’s of the SD number. What a lot of people don’t realize is that you do add back your own salary, so a lot of people think their business isn’t actually profitable, then their net might actually be zero, but they pay themselves 200,000 a year. So that business could actually be worth 600,000. One thing that some people get a little bit confused with, a bit of a misconception, is that any kind of underlying IP doesn’t add value, it’s literally just a multiple of your SD, SDC number. If you’ve got just any sort of IP generally does not add any value at all. A lot of people think you can take a multiple and then go, “Oh yeah, and the software source code is worth 100,000, the domain is worth 50,000.” I have seen people try that methodology, but in my experience that’s not how buyers work, at least.
[19:31] Rob: Right. Yeah, that’s something I’ve been trying to explain to people for a long, long time, because back in- as I started acquiring stuff in 2007, 8, and 9 is really when I started diving into it, quickly realized that money talks. Right? It’s the revenue, it’s the net profit that really speaks to it. As developers we might spend six months of our nights and weekends and then feel like we have something that’s worth something, and unfortunately, until you hit a point where you’re actually making a profit, it’s not. What I find interesting is I’ve- historically when people ask, “What’s the range of what a SaaS app or downloadable software might sell for?” and this is over the past several years, I always say between 1 and 3 X. 1 and 3 times net profit is what I’d say. I find it interesting that it’s up closer to 3. That actually feels like a decent multiple. That’s not a bad amount of money to get for your app.
[20:20] Thomas: Yeah, I mean one caviat I’d say is- I guess as far as brokers go, we’re very fussy what we take on. I like to keep a success rate that’s almost 100%. It’s very rare for us to take on something that doesn’t sell. So generally speaking, we’re not going to be talking on the lower quality apps that might sell for 1 time. There certainly are apps out there that would sell for 1 times, but that just wouldn’t be through us. I guess we’re somewhat spoiled in that anything we do list is going to be good quality, and it’s in our best interests obviously. Good buyers want to buy good businesses. It’s not to say that they don’t sell for 1 time to 1 and a half times, but if you sell in the right place, we generally expect to get 2 and a half to 3 times of all the verticals we look at. When we’re looking through our present transactions- we put together a blog post recently on comparables, so niche sites, e-commerce sites, service-based businesses, SaaS apps, are the highest multiples of all the different verticals we sell. We’ve got a reasonably good sample size, so I say that that with a high degree of confidence.
[21:22] Butmy thought on that is mainly because the recurring revenue factor, I think especially for buyers who are new to the space, if you’re looking at a worst case scenario and you’ve got the recurring revenues in there, even if you can’t grow the business at all, you’re still going to get a returner investment after X number of years just from the current clients, minus the churn. Whereas if you buy a niche sit that has all it’s traffic from search engines and it just relies on 50 articles, if your ranking drops, say, 50% overnight, you get hit by a Panda update or a Penguin update, or whatever, might even drop more than that. You’re then pretty much down to zero. Whereas at least for SaaS you’ve always got that client baseline. I’m borrowing any technical disasters, and assuming the quality is decent you should get quite a decent ROI without even having to grow it.
[22:10] Rob: Right. Your blog is at feinternation.com/blog and we’ll link that up in the show notes, because it’s a very in-depth article. I actually tweeted it when it came out, and it got a lot of attention on Twitter, because you do have data, right? You have data that nobody else does.
[22:27] Thomas: Yeah, it’s based off our data. Other brokers with other people might have different experiences, but that’s based on our internal data. Like I said, I think we’ve done enough sales that we have quite a high degree of confidence in that.
[22:38] Rob: Yeah, it’s kind of cool you have an example. You have a travel blog that sold at 1.5 X. You have photography software that sold at 3.7 X. Do you have multiples here based on category?
[22:49] Thomas: No, we don’t publish the multiples. What we published was an index, just because the multiples [crosstalk] don’t like to publicize, because if I started saying every SaaS business will sell at 3 times, and then I speak to someone and it’s actually worth 2 times because the product is their name and it’s on a bit of decline then it becomes a little bit of an issue. So we’ve used an index, and if you look at the index you can see that SaaS sells the highest.
[23:13] Rob: SaaS is highest. E-commerce is just below it. Membership and subscriptions is very close to e-commerce. Then you have content and media, which I’m assuming is like blogs and –
[23:23] Thomas: Yeah, and niche sites.
[23:24] Rob: Niche sites. Okay, and then lead gen is below that.
[23:25] Thomas: Yeah, one caveat is you have with that is, obviously, we’ve had to categorize it into the different things, and there is some crossover. But the way it’s categorized, if you read the post, kind of hopefully should make sense.
[23:36] Rob: Sure.
[23:38] Mike: So one of the things that you mentioned is the low-quality apps that people have. Obviously you’ve touched on a couple of different things as to why it would kind of drive the multiple down. What sorts of things should people address to help clean up their app if they’re looking to sell it, because obviously you want to sell it at the best possible rate that you can? So what are some of the things that people can, essentially, focus their efforts on to help improve the amount of money that they’re going to get from selling their app?
[24:04] Thomas: Yeah, that’s a good question. That’s actually, I don’t know if all of you read Rob’s blog, but that’s what I guest posted about a few months ago over there. It’s actually what I spend a lot of my time doing. I tend to be a first protocol for sellers when they come in the door inquiring about selling their business, so I like to spend a lot of time dealing with people who want to sell but aren’t necessarily quite ready. I might help them put together a plan for making it more sellable. I’m not necessarily going to sit there on the phones trying to sell more product for them, but I help them in getting to a position where it’s sellable. If you go through some of the key points, there’s actually tons of different things you can do, but if you want to focus on a few, the first one is transferability, how transferrable is everything. For example, payment processor, you can to go really down to the technical side of code, so if you’re a technical founder. You built it all yourself, you might have taught yourself programming, if you haven’t documented your code properly then that’s going to be difficult to transfer.
[25:03] Again, that’s the whole personalized side of things. If you’ve got your name all over it then it’s going to be a little bit harder to sell, and so look to depersonalize. We’ve done a few sales recently where people might get a lot of sales from their own blog or their own reputation, or whatever, so that’s something that will be into consideration when it comes to multiple. So depersonalize it as much as you can. Make sure if things transferrable so payment process kind of keep it clean. Try and keep the business consistent. A lot of people have this misconception that when you’re coming up to sale because your underlying net number is the most important, they try and bump it with fire sales, or trying to sell a load of annual subscriptions, or anything like that. So the actually worst thing you can do prior to sale is sell everybody on a 3 year subscription, because obviously when the buyer takes it over that’s not cash-flow they’re going to benefit from, and you tend to be expected to rebate that. So try and avoid selling really long annual subscriptions, because it can quite problematic, and just try and keep the business consistent. It’s good to see a business is on a general incline, but you don’t want to see anything that’s drastically jumped up. It just looks suspicious, and it’s very rare for that to be genuine.
[26:14] And vice versa don’t do anything stupid that will lose revenue. So if you’ve been meaning to do anything for a while, get it out the way. Just don’t try and sell it in a period when you’re in the middle of redesigning, or anything like that. Probably one of the biggest headaches for brokers is general documentation. When it comes to accounts, make sure your accounts in line. Ideally have them- something like QuickBooks or something similar. Hopefully you’ve got an accountant, or whatever, who can help you prepare those. Having your books in order is absolutely essential. We certainly don’t take on anything if you can’t provide accounts, and if you can’t prove those numbers. There’s no point in saying, “Hey, Oh! I make a million dollars a year.” But you can only prove 500,000. So make sure you can prove it all. Make sure it’s properly documented in an easy-to-understand way. It’s easier for a broker and easier for a buyer to understand if you’ve kept clean records. Then keep track of all your data, it’s something that you tend to find technical founders are quite good at. They might struggle on the sales side, if I’m making generalizations, but on the flip side when it comes to general data and metric tracking, they tend to be quite good. Simple things, like make sure you’ve got Google analytics on the site, or whatever analytics you want to use.
[27:24] Make sure you track conversions, track goals, track your financials properly, like what I was just saying, and track all your metrics. This is something that quite a few, especially smaller apps don’t seem to do, and that’s make sure you track your things like- a buyer will always want to know- we tend to provide a table, almost a page of general questions people are going to ask, particularly about SaaS businesses. That’s just basic things like know what your churn rate is, know what your customer lifetime value is, how long does the customer stay in months. There’s absolutely tons of things in there. Make sure you know. This is where a business that is a little bit older helps. If you’ve got a business that’s only 6 months old, it’s impossible for you to know lifetime value of your client. You got no idea how long anyone stays around. So the older it is and the more dates you’ve got the more likely you are to get a higher multiple, because it’s a little bit more predictable. You don’t necessarily need to be able to calculate that number yourself, but at least be able to provide that data to the broker.
[28:23] We spend a lot of time playing around with Excel, trying to like figure out these numbers, but it’s definitely important you can at least provide it. So don’t necessarily worry if you can’t work it out yourself, but track everything, and generally just try and be as transparent as possible. Don’t hold things back or try and hide things, because that really is something that can completely kill a sale. Probably the number one reason don’t sell is because its been so misrepresented. If you’re honest and upfront with the broker or with the buyer or whoever, you can generally find creative ways around problems. But if you try and hide things, that’s probably the number one reason it’s not going to sell.
[28:58] Rob: I like one of the other points you mentioned in that blog post on my blog was to build and utilize a mailing list. Since I own Drip, which is obviously a mailing list manager, I thought that was an interesting point. Having a mailing list is- I know it’s an asset, right? I’ve banked a lot on newsletters and having a list of folks over the years, but I guess I hadn’t thought that a potential buyer would necessarily value that.
[29:24] Thomas: Yeah, a mailing list can be quite a valuable asset. When you’re looking at mailing lists in general, just any sustainable part of the business, people say whether that’s a mailing list, whether it’s, I don’t know, say, a weekly webinar with your subscribers. Anything that kind of keeps people coming back or provides a sales funnel, so when it comes to mailing lists if you do a free trial, or whatever, if you’ve got a great process in place to convert people from a free trial to a paid account then that’s great. Whether that’s through a mailing list, whether it’s through webinars, whether it’s through telly sales, or whatever, just have things sustainable. I mentioned mailing lists as something that most people have but don’t really use very well. It’s surprising how many people have thousands of customers, but they’ve never emailed them. So even if you’re not the best salesman in the world at least email them once a month, even if you’re just linking out to general industry news, because people- buyers especially- if you’ve got an active mailing list it tends to be a positive signal that the product’s good. I would always be a little suspicious as a buyer if you say, “Hey, look. Yeah, everyone loves the product. We got a thousand customers, and they all love it.” But no one speaks to you, no one replies, you don’t email them. That’s where you can kind of get a few difficulties.
[30:34] Mike: So Thomas, when people are going through this process, roughly how long does it take to broker a sale, between the time that somebody first talks to you and the time that the application, or the product, is actually sold to a buyer?
[30:47] Thomas: The biggest headaches for me is that the actual process can be all over the place. So we’ve split into two parts, getting it ready for sale is where there’s all sorts of variants. It could be, if everything’s in order, and people have hopefully read that post I’ve put on Rob’s blog, and they’ve got everything in order it can take us two weeks to prep. Quite often people will come to me, and it might not be ready to sell at all, and there might be a two year gap. I was speaking to people four years ago who are coming back now saying, “Hey, look. I’ve gotten everything you’ve said.” Once you’re at the stage that it is sellable, so we’ll make that assumption, it generally takes us with SaaS businesses usually two weeks to prepare everything, so getting through the financials and getting through some initial questions, so like a kind of discovery phase. I tend to say to people, “We’ll work as fast as you do.” So if you provide everything, get through all the basic due diligence process before we list anything. So generally two weeks to get it to the sell stage.
[31:41] Depending on the size of it, how quickly you get offers kind of really depends where you sell. We would expect to see offers come in, assuming it’s not a huge business where they can take a little bit longer, you’d expect to see some offers within the first month. You’d generally expect to accept an offer by the end of month 2. That’s why there’s quite a big range. Sometimes you could get an offer within a week, other times it might take 6 weeks. The process from there, so let’s assume you’ve got an offer and taken it to the next stage, assuming you’ve qualified the buyer properly, or your broker has hopefully qualified the buyer properly to make sure they can actually complete on the sale, they’ve got the cash.
[32:20] They’re not going to run off scared or anything. You then get to a due diligence phase, which for, let’s say a $300,000 business, you would expect that to take 3 to 4 weeks, maybe a little bit less. It depends, again, on how well documented you are, and that’s just things like verifying your income, verifying your traffic, verifying your metrics, verifying your code base. All those kind of things, so expect due diligence to take 3 weeks, 4 weeks. It can be a lot quicker, but it’s definitely not a stage of the transaction you want to rush. Then from there you get into contract negotiations and hopefully if you’ve done everything properly, the vast majority of the major terms will be outlined in the initial LOI, which is a Letter of Intent, we use as kind of a formal offer. So you submit an LOI and then it’d be accepted as an offer, and this is where we would- we got an internal team full of legal experience who would draft a purchase agreement. Then we’re not lawyers, and you certainly not rely on your broker to say the contract is fine. Always speak to an independent legal, and then however long that takes. Generally not too long. We’ll get contracts out pretty quickly, depending on the complexity of it. Obviously some contracts can take longer than others. Assuming the broker’s done their job properly up-front, that process shouldn’t take too long. The transfer process with SaaS businesses, they tend to be one of the longest in terms of transfer time, just because they can be quite complicated. You’ve got recurring subscriptions in there, so sometimes it can take some time to transfer the payment process to get up to speed with everything.
[33:50] But that process, on average, I would say 2 weeks, and then from there you would obviously at that stage hopefully get paid. Then there’s generally going to be a support period. My general rule of thumb is 3 months, especially with technical SaaS products in the 6-figure range, but that’s really something that’s negotiated up-front. Generally you wouldn’t want to stay along much longer than that for free. It’s quite common to negotiate in a consulting period, be on that at a fixed rate. If you’re a technical founder you might agree to an hourly rate for technical work. You might say, “Hey, look. I want to sell the business because I haven’t got any time, but I’ll happily commit to coding future features for you at 100 bucks an hour.” So hopefully that’s sort of agreed up-front. The process on average is 3 to 4 months, but that’s a realistic average if you want to do everything properly. It certainly can be done quicker, but we tend to find that if we stick to a consistent process there are no nasty surprises along the way, which can happen if you try and rush it through in, say, 2 weeks.
[34:48] Mike: So it sounds like 6 months is really not all that bad, considering you hear about some of these larger acquisitions for multiple millions of dollars, and they take a year at least, sometimes 2 to figure out before it even comes to the public.
[35:02] Thomas: Yeah, absolutely. We would generally hope to get it sold quick in the 6 months, but if you bank for 6 months, that should be more than reasonable. I tend to say to people if that hasn’t sold in that time, which is quite rare with how fussy I am, but if something hasn’t sold in that time, it’s probably not going to sell at all, at least through that particular broker or sales channel.
[35:21] Rob: Very cool. Really appreciate your time today, Thomas. Where can folks get in touch with you if they want to find you on the web?
[35:30] Thomas: Yeah, so if you can go direct to our website, you got feinternational.com we’ve got a blog that you mentioned which is forward slash blog. My direct email now is Thomas, T-H-O-M-A-S, at FE International, but then if you go on our site you’ll see pages if you want to buy a site, we’ve got pages there, sell a site, the same if you generally want to contact. But if you email me I’m always happy to help people if they’re looking to kind of prepare for a sale, whether it’s 6 months, 12 months down the line. There’s no obligation. I don’t charge for that initial advice, and I’m generally, I like to think, quite friendly and responsive.
[36:03] Rob: Indeed. That’s what I’ve enjoyed about you. You respond to email at odd times of the day because you work until late.
[36:11] Thomas: Yeah, tend to have quite an international client base. I guess one of the problems for being an entrepreneur is you tend to be available 24/7.
[36:17] Rob: Yep, exactly. Well thanks again for coming on, Thomas, and I hope some folks get in touch with you.
[36:23] Thomas: Yeah, thanks very much.
[36:24] Mike: If you have a question for us you can call it into our voicemail number at 1-888-801-9690 or you can email it to us at questions at startupsfortherestofus.com. Our theme music is an excerpt from “We’re out of Control” by Moot used under creative commons. You can subscribe to us in iTunes by searching for startups, or by RSS at startupsfortherestofus.com where you’ll also find a full transcript of each episode. Thanks for listening, and we’ll see you next time.
Episode 196 | How to Use a VA in Your Startup
Show Notes
- Rob’s Drip Explainer Video for SaaS
- Rob’s Startup VA Course
- Episode 68: How to Hire and Manage a Virtual Assistant
- Tier 1 email support
- Chat support
- Filtering your email
- Calendar mgmt and appointment scheduling
- Travel arrangement or planning
- Data entry
- competitor research
- lead generation / prospect research
- transcribe audio or video
- (HT) article approval
- audio/video editing (screencast editing, marketing vs documentation)
- Publish audio/video to blog
- Blog publishing management
- Twitter/Facebook/social media presence
- Turn blog posts into emails
- moderate blog comments
- find images for blog posts
- slide presentations
- proofreading/editing
- checking voicemail
- sending client invoices
- Upload videos to youtube or other
- Create slideshare presentations
- Migrating from one software tool to another (MailChimp to Drip, InDinero to Outright)
- Member management for membership website
- Concierge service for your app (installing tracking code for free, 5-day email mini course compilation)
Transcript
[00:00] Rob: In this episode of Startups for the Rest of Us, Mike and I discuss how to use a VA in your start-up. This is Startups for the Rest of Us, episode 196.
[00:08] Music
[00:15] 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.
[00:24] Mike: And I’m Mike.
[00:25] Rob: And we’re here to share our experiences to help you avoid the same mistakes we’ve made. What’s the word this week, Mike?
[00:30] Mike: I’m getting ready to go on vacation next week. It kind of sucks because I’ve got a new version of the website for AuditShark that kind of really focuses on the desktop edition that I want to push live; but I don’t really want to push it live and then go on vacation for a week.
[00:43] Rob: Yeah, and you could potentially introduce 404’s or introduce something that Google – if it misindexes it and you’re not there and you don’t notice it. Because anytime I push a new site live, I’m going to be in Webmaster Tools once a day, just to kind of give it a once over and be like do I have any errors going on or anything like that, so. I probably wouldn’t do it, either.
[01:01] Mike: The thing is my build process pushes everything to a development area and then if everything is okay it copies it over to production; and right now my development area is having DLL issues. It just can’t figure out what’s what. I’m concerned about fixing it and then pushing it over to the live server because who knows what the heck’s going to happen there.
[01:20] Rob: I have a couple updates. One is, you know, we’ve rewritten HitTail and Rails but namely I couldn’t find developers to do classic ASP; so I wound up doing all the changes. You don’t have time and so stuff that needed to get fixed wasn’t getting fixed because it would sit in my queue and I have, frankly, more important things to do. So, couldn’t find developers; the servers were expensive and now I have three Rails dev’s, so it just made sense. It took just about two months of code time to completely rewrite it in Rails, which I was pleased with, that was the estimate. Then it took about another three to four weeks of other detail stuff, like getting the migration going, because you remember the database is really high IO and it’s about 200 gigs in size, so very hard to move. You know you can’t just back it up and put it across the wire. What do you think the fastest way is? We literally spent probably two weeks trying all these different ways to move that across the wire because we didn’t want to put it on a hard drive and FedEx it again. So what do you think the fastest way is to accomplish that?
[02:23] Mike: Do you have to move everything over, all at the same time? Is that the issue?
[02:27] Rob: Yeah. We do. We did it last night. So, yeah, we had about, let’s say a 10-hour window to move it all.
[02:33] Mike: I don’t know what you actually did. I probably would have thought about maybe writing some sort of little extension or something like that that runs on the current server so that you could call to it from the other one and make your queries from there, until you get all the data moved over.
[02:47] Rob: Yeah.
[02:48] Mike: That’s probably what I would have tried. I don’t know how well it would have worked, though, because you are using ASP. You probably could have thrown like a .net handler or something like that on there and it probably wouldn’t have been a big deal.
[02:57] Rob: We tried that. Yeah, we did that.
[02:58] Mike: Did you?
[02:59] Rob: We did that. And I did it in .net. Yeah, essentially that and it wasn’t fast enough, but that was the first thing we tried as well. We started doing exports and trying to figure out a way to get the data out because the biggest bulk of the 200 gigs is indexes, and it’s all the stuff that comes with the database and since we’re moving it from SQL Server into PostGres, you don’t need that, right? You’re not just going to copy it across and restore it. You just need the data out of it so we tried the remote copy, like you said, across the wire. Then I started writing a little thing to basically do a dump of insert statements, kind of like when you do a MySQL dump, how it just writes out insert statements into a text file? I did that and there’s about 180 million rows in one of the tables so we did that and tried to break it up into 10 million rows at a time and then Zip those files and then FTP them and then import them and that was taking a really long time to run so we kept honing on that and in the end we found that the biggest hang up was on the insert side, right? Inserting into PostGres, not actually getting it out of the database. So we found out that PostGres has just a basic copy to function, right? So it’s just a bulk import and you have to put it in a certain CSV format and in the end that was it. The end file for the biggest table was 150 million rows in CSV file,15 gigs CSV, and the punch line is that Zipping it would have taken longer than just copying it across the wire because the connection between Amazon EC2 and our old host was so fast, because they’re both in Virginia and they must both be on trunk lines. It took like six minutes to copy a 15 gig file across. So it’s crazy. So we didn’t even have to zip it and then it took 30 minutes to copy it in. So, it was cool.
[04:42] Mike: Interesting. Yeah, I know that if you’re inserting into a transactional database and if you can get away without the indexes, then you’re golden. I mean, it’s the indexes that take so long when you’re building those tables.
[04:55] Rob: That’s right.
[04:56] Mike: One of the things that I’ve found is, some of the enterprise software that I install, it just creates these one megabyte databases and then it expands it and it adds in like two or three gigs-worth of stuff, but in doing so it creates like 2 or 3 thousand chunks that are only one meg in size because of the way SQL Server is usually set up out of the box, and you have to do all this extra waiting time, and what I have found the easiest thing to do is pre-create the database and you allocate several gigs-worth of space more than you need. Then you just run the install and it will just push things in faster because it doesn’t have to reallocate space on disk.
[05:28] Rob: Right. Yeah. And we did, we actually dropped the indexes before inserting, just dumped it all in and then we had to recreate the indexes. So inserting took 20 minutes and creating the indexes took like six hours. That was my adventure last night, so by the time this goes live, which is about a week and a half away, we should have all the kinks worked out, still have a few minor issues, but it feels good to be closing down on the days of classic ASP. The other thing I did yesterday is I recorded an explainer video, you know one that kind of explains how your app works and what it does. It’s for the homepage of Drip, and I’ll link it up in the show notes. I did it with the figures that you move on and off and the hands are actually in the video. It was pretty fun, actually. It took a while. I need five of these videos because I’m creating a different one for each kind of niche or market I’m going after and I didn’t want to pay the bazillion dollars. After getting the first one done I kind of have a script that I can reuse and paper that I can reuse and all that stuff. I was shocked at how hard it was to find good artwork. That was probably the most time-consuming thing. Aside from the actual recording.
[06:28] Mike: I watched a preview of that video. It’s really well done. It was very seamless, first of all. It very clearly explained, in what? It was like a minute and 25 seconds, exactly what the problem was that it solved and it was very clear because you didn’t have to scan a wall of text and try and figure out if it was applicable to you because it was just like the first 15-20 seconds it really talked exactly to the pain point and it gives you that ability to clearly push your message in a much shorter time frame. As video, I think that it will capture people’s attention.
[07:01] Rob: Yeah, cool, thanks. I appreciate that. That was the intent. I have a long-form sales page now in Drip, but I was trying to figure out how to convey that Drip now handles marketing and trial emails and post-sample download emails, if you’re letting people download a sample chapter, and customer emails. It’s across that whole spectrum, trying to figure out the best way to communicate it. What I’ve noticed is that as I’ve talked one on one with people who are coming on with Drip, a lot of folks in my network – I’ll explain it to them via email and they’re kind of lukewarm, but then I’ll show them a screen cast of what it does and I’ll just kind of walk through a five-minute, seven-minute look at their specific use case and how I would implement it in Drip and almost every time people are like, oh my gosh, I’m leaving Mail Chimp or whatever other provider I’m on and I’m coming to Drip because of that. So I realized that there’s something about the actual demo and showing the concepts that I needed to do and I feel like screen casts are just a little bit too boring, right, for your home page? 80 seconds was my goal. I told the story instead and I’m pretty pleased with the way it turned out so far.
[08:04] Music
[08:07] Rob: We got an email from Jacob Norton, and he says, “Have you guys done an episode talking about how to use virtual assistants and when to get one? I’m thinking I’ll need one in the future, but I’m not sure what exactly I’d have them do or when I’d need one. I get the feeling I’d want to do too much on my own to make it worth it. I know you’ve done an episode on how to hire them, but I don’t recall this being discussed.”
[08:25] So, he’s referring back to episode 68, we talked about how to hire and manage a virtual assistant. Then I also created a video course, it’s up on Udemy, and that’s at startupvacourse.com, and there’s a lot in there about how to hire and there’s some in there about why you would need one and how to manage and how to delegate and all that kind of stuff.
[08:49] But today I wanted to talk through, basically some ideas of how to use a virtual assistant in your startups, specifically. If there’s one article I could recommend it’s chrisducker.com. You’ve heard of Chris Ducker, he’s an expert in the VA space. He runs a big virtual assistant staffing firm. He has a couple good ones. One is called “101 Ways to Use a Virtual Assistant”. I actually took some ideas from his as well; but frankly, most of the ideas in this episode are from my experience, and I’m sure, Mike, I know that you share a lot of these as well. It’s my experience using virtual assistants and how, the ways that I’ve found I’ve gotten the most benefit out of them as a startup founder.
[09:28] So we have 26 ways total. I was thinking that maybe first we’d start off, you know we had one question that was kind of parallel to this and he says, “when should you get one?” Do you have an opinion or thoughts on at what point you should think about getting a virtual assistant?
[09:43] Mike: I think it depends a lot on your situation. I think the inclination, for me, would be to start looking for one when you feel like you’re doing a lot of busy work. Whether that’s answering emails, looking at some of your different stats, if you’re going back and forth between a bunch of different platforms. What you can have a VA do is kind of aggregate some of that data. Anything that’s labor-intensive where you could theoretically write an application to do all that stuff for you but it’s not cost-effective to do it. Especially if it’s stuff that you’re only going to do once. So, for example, if you’re trying to gather data or do research of any kind. Those are all things that, yes, they take time, but they’re definitely things that you could outsource to a VA and have them do it. I would look to see what sorts of things you’re doing and wait until you get to a point where you’re going to probably regularly need one. I think that if you try and hire somebody and you bring them on, you have them do one or two tasks and then you never use them again or you don’t use them for six or eight weeks or something like that, your chances are really good that you’re going to experience a lot of turnover with those people. That’s good in the respect that it gets you experience delegating some of that stuff, but it’s bad in that you don’t necessarily get experience delegating to the same person over and over again.
[10:57]So you’re almost restarting the relationship every time you have to hire somebody for it. Then you get into the situation where you are spending so much time doing hiring that you’re not actually delegating enough stuff to them to make it worth your time investment. So part of it’s a learning experience and part of it is saving you time. And you kind of have to balance between the two.
[11:15] Rob: That’s a big part of it, I think, is finding someone that you can work with on an ongoing basis, even if it’s one or two hours a week, which is how I started with my very first virtual assistant. It was very low commitment, and it worked great. I didn’t have a ton of tasks at the time. I had enough money that it didn’t really matter to pay someone $5 or $10 an hour. I think it’s hard to be too early unless you have nothing that you could hand off to someone; but if you look at your task list, like Mike said, and you find that you have anything that you feel like someone else could do, especially someone who has kind of knowledge and administrative knowledge, I think that’s the time to start thinking about doing it because your time is limited, especially if you’re launching something on the side and so you need to try to take as much advantage of your hours as you can.
[12:00]I think the other thing I’ll say before we dive into the actual tasks that you can delegate is when I say virtual assistant, I don’t mean a specialist. I don’t mean a developer. I don’t mean a designer. I don’t mean a really, really good audio or video editor. I mean a general administrative virtual assistant, kind of like someone you would have working for you in an office, like an administrative assistant. Maybe a little more technical skill than that, but as soon as you get into someone writing code for you, then I call them a developer, I don’t call them a VA anymore and as soon as someone’s doing heavy design work for you, then in my mind they’re a designer. So, while I do have some light technical tasks in this list that we’ll cover, most of them do involve things that just a light technical person could do. If I’m going to hire a VA, it’s going to be for recurring tasks. That’s where you’re going to get the most value out of it because you can explain the task once and then every week, every month, it’s done for you.
[12:54]So, the number one item on my list is tier one e-mail support. That’s if you have an app or you sell an e-book or you have a membership website or a WordPress plugin, if you’re still handing your own support after maybe, let’s say a month or two after you go live, then, even if it’s only a trickle of e-mail, it’s not the time that you’re giving, it’s the distraction, right? The distraction is what you can’t afford to give to this stuff. So, that’s a point where I encourage a lot of people to get VA’s to help them with email support. And every time I’ve done it the person, I’ve heard this so many times, well, no I only get like an email a day or a few emails a week, it’s not that big of a deal and then as soon as they hire someone and it’s off their plate and they’re not answering the same questions over and over and doing non-founder activities, it’s always the same thing, it’s like wow I should have done that sooner.
[13:40] Mike: A lot of these tasks, you look at them and, at a glance you might think that you’re the only one who can do them because, especially when it comes to some of the e-mail support, for example. If you’ve got a very technical product, especially if you’re marketing to people and saying, hey, you get to talk directly to the developers, that’s something that you kind of have to not do when you’re outsourcing your tier one email support to a VA because they’re not a developer, so they’re not going to be able to answer some of those questions. As Rob said, anything where you’ve got this repetitive process in place, that is manually labor-intensive, and that can be data entry or it can be something where you have to have somebody interacting with your customers, either one of those it doesn’t matter, there’s obviously different skill levels involved, but you still have to have a human doing it. You can’t delegate it to a computer. That’s definitely a place where you can leverage a virtual assistant for answering some of those support e-mails.
[14:31] Rob: We used to do support for The Micropreneur Academy several years ago, and I hung on to that for a while because I felt like, man, this is our community, these are our people, how can I possibly find anyone who’s going to care as much about this as I do and answer these questions well; and we found someone. Andy is our support guy, and if you’ve emailed Academy support you’ve talked to Andy. And you know what, Andy does a better job than we’d do because he’s focused on it and that’s what he does all day is handle support. He handles support for that, Drip, and HitTail and he’s now a core part of my team. I wouldn’t have given him all that responsibility from day one, until I got to know him, but what you’ll find is that if you find someone who does a decent job, they’re probably going to do a better job than you will as a founder because you’re in so much of a hurry all the time that you can’t do the focused, step-by-step stuff that a virtual assistant, a trained one who’s actually focusing on things, can do probably better than you can.
[15:25] Mike: Well, the other thing is they can also afford to spend an extra five or ten minutes polishing up an email to send it to somebody who’s emailed in to support because they have the time to do it, whereas you’re distracted. I mean any time you’re answering those support emails you probably, not only have you got it in the back of your mind, “oh I’ve got to answer these support e-mails”, but then you go into start answering them and you have it in the back of your mind, “oh, I’ve got all these other things to do.” So you’re continually distracted when you’re trying to respond to these customers. So, you’re right, a virtual assistant is going to do it a lot better than you will, just because they’re not distracted.
[15:56] Rob: The second task you can think about delegating is chat support. So if you have like a chat widget on your website, this is another no-brainer one. You’ve got to train your VA and teach them how to answer questions, and answer questions specific to your app so they don’t always have to say, “well, we’ll have someone contact you”. If you get someone decent then they can definitely monitor this during business hours.
[16:17]The third task is filtering through your e-mail. This is one I haven’t done. I’m thinking not support e-mail but actually going into your G-mail account and deleting stuff that’s irrelevant and taking a lot of the work off your plate. Have you done this, Mike?
[16:30] Mike: I have, in a way. So I’ll argue that you actually have. So, you subscribe to a service called Unroll Me.
[16:38] Rob: That’s right.
[16:39] Mike: So that’s essentially Unroll Me going in and automatically figuring out what it should roll up and aggregate and present to you in a list that basically shows you a bunch of e-mails that are probably not nearly as important as a lot of the other ones. And if you think about it, in a way, you’ve outsourced part of your email in that mechanism.
[16:57] Rob: All right. Good point. I know folks who actually have virtual assistants who, you know, in Gmail you can give someone non-administrative access to your G-mail. So they can’t do all the settings, but that they can log in and filter and label and reply and do that kind of stuff. I have absolutely toyed with this idea many, many times but every time I do I go through my inbox and I realize I don’t know how I would delegate any of these emails that are left’ but every year around the first of January when we do our goals episode and I do the retreat, I try to think about how I can make this work. And so I think one of these years it’s going to be something I dive into. Another thing you can outsource to VA’s is calendar management and appointment scheduling. I know a lot of people who do this, especially if they run podcasts where they have to coordinate with guests.
[17:42] Mike: Yeah, I outsource this to a service called Doodle Me.
[17:45] Rob: So you’re finding software replacements.
[17:47] Mike: It’s actually called Doodle.com, I believe, but basically it just integrates with my G-mail calendar and just shows people when I’m available and lets them pick a couple of different times, that way I don’t have to go back and forth with them and I can say, “hey, here’s a link to my calendar. Set up a couple of times that work for you and I’ll pick one that also works for me” because there’s probably stuff that’s not quite on my schedule. Like, if I want to go to the gym I don’t necessarily put it on my calendar but it also integrates and allows me to combine my wife’s calendar and any other shared calendars in there; so it blocks off all those times that I’m not available, which is really kind of nice.
[18:19] Rob: Right. The next one is travel arrangement or planning and I’ve definitely had a couple of different virtual assistants help with some fairly complex travel stuff that I had when me and the family were going oversees. I had him investigate visas and look at passport stuff and then try to get the best plane flights for the best times and then look at some Airbnbs because we were going to four or five different cities. And put together a short list. It was pretty complicated. But, you know, he spent several hours and kind of put together a Google doc together for us that turned out to be useful in the end. So, I think if I’m just doing a straight-ahead flight and I just need to book a ticket, it’s going to take me longer to explain to a virtual assistant than it is to actually do it. As soon as it gets complicated that’s the kind of thing that I would see outsourcing.
[18:59] Mike: Yeah, I think that kind of ties in to the next one, which is competitor research. When I was targeting banks I hired somebody to go out and look for all the banks that were within 50 miles of me. And they came back with a list and it cost me I think $18 or something like that. And I just got a Google docs spreadsheet, which was kind of nice.
[19:17] Rob: Yeah, that is cool. I think another thing that ties into that is number 8, which is lead generation. It’s kind of like prospect research, right. It’s trying to put together a list of people who you’re going to be targeting. Put together a list of potential customers that you’re either going to cold call, cold email, somehow get in touch with.
[19:34] Mike: Yeah, and that’s all just data aggregation but it’s time consuming to actually go do it. You just give them some parameters, say this is generally what I’m looking for. The thing is, you can use it as an iterative process, too. You can say, okay, here’s what I want you to do and do five of them, or ten of them or something like that, and then come back to me and let me take a look at them, kind of validate the quality. And then you can give feedback. Then they can go back and keep going so that way you don’t have this span of 20 hours that you don’t know what they’re doing and they come back and everything’s wrong because you didn’t correct very early on in the process.
[20:05] Rob: Yeah. Another thing I’ve outsourced is data-entry. And whether you have hard copies of something, I’ve had that before where I’ve only had a hard copy and OCR wasn’t doing a good job and I just scanned it and sent it to the virtual assistant and I was like, “look, I’m sorry to do this to you but can you please type this out? Can you get it into a format that I can actually use?” Then I think you do this with a bookkeeper, right? You have physical paper coming to you and she’s essentially paying your bills and entering that into your bookkeeping system.
[20:34] Mike: Yeah, I have her go log in to my different bank accounts and everything. People find this weird that I give my bookkeeper complete access to my bank account as well. She’s got PIN numbers, she’s got signatory authority, so she could actually go into my bank, ask them to open up an account and they’ll do it because she’s on the paperwork and authorized to do it.
[20:55] Rob: People think it’s weird because they’re scared? They think that she could steal from you, I guess?
[20:57] Mike: Yeah.
[20:58] Rob: Next item you can outsource is transcribing audio or video. Now we’ve tended to use a transcription service, but I have had a VA transcribe a couple things for me. I think if they’re not a specialist in this they’re kind of slow at it, so it may or may not be worth it to you, but I’ve definitely known some folks who’ve done that. Something that piggybacks on that is audio and video editing. We heavily utilize that with our podcast, obviously we don’t do the audio editing. In fact our editor both edits and then spits out the MP3 file, puts the metadata into it, uploads it to the server, schedules the WordPress post to go live at the right date and time, and gets the transcript done. She sends it out to a service and then posts it for us. So, it’s not just editing, it’s like the full life cycle, and that’s the only way that we’ve been able to put out a podcast every week because if we had to do those steps they just wouldn’t get done because we’re too busy.
[21:52] Mike: Yeah and in a way she’s essentially outsourcing that part because she doesn’t want to do the transcription, either, which I can’t say I blame her. But, you know, she’s turning around and hiring somebody else to do that. It’s great the way that that whole process works and it gives us the ability to put these out every week.
[22:06] Rob: Right. As long as we don’t have to deal with it. I don’t think we really care how it gets done, you know, as long as it’s done well. Another way,a kind of a unique one within HitTail, we have articles that people can order, right? They’re one-click articles. And they go out to this group of writers, the writers write them, and then they submit them. Early on the articles were going straight back to our customers. Well, some of them weren’t of very high quality. So, I talked to you know my tier one support guy, virtual assistant and said would you be willing to vet these articles and do a little bit of editing if needed or to request rewrites as needed and to basically be an editor, right? It’s kind of like copy-editing and checking to make sure this stuff is decent. And with a little bit of training he’s done a fantastic job. It saves us money because the service that we use to get all the writers, they were going to do it for us, but it was pretty expensive so he’s able to do it at much less cost, we’re able to maintain the control, and he’s really committed to maintaining control because if he misreads an article or it isn’t very good, he’s going to hear about it. So it’s interesting that the motivation is tied, for him, to keeping it high quality so that he doesn’t have to deal with more support requests.
[23:13] Mike: I’ve actually gone out and ordered things to put out on some of my different product websites and have had to have written and then published and then had my assistant go in and take a look at those things that are coming back and essentially critique them and do the back and forth on my behalf so that I don’t have to do it. If something is below a certain level of quality, it’s pretty obvious to anyone and you don’t necessarily need a lot of training to be able to recognize that. So that’s definitely something you could also outsource if you wanted to.
[23:40] Rob: Yeah, I agree, Like proofreading slash editing. All right another one is I put blog publishing management. Basically the idea is I will often go into HitTail and I will see a bunch of keyword suggestions and I will order like 10 articles all at once and I’ll just spend the time to figure out the titles and the keywords that I want and I’ll order them all. Then I’ll let my virtual assistant know, as those articles come in, because they’re going out to writers who are going to write them, once they come in take them all and put them in WordPress in our articles section and schedule them out so that one goes out every week for the next five or ten weeks. Then I’m able to walk away from it and forget about it and he does a good job of it. He goes in and finds an image on, Creative Commons, Flickr, and credits the author, and does all that stuff and takes care of it and as a result I’m able to build this nice footprint of content and all I had to do was just go in and specify article titles and keywords based on suggestions that it gave me.
[24:37] Mike: I used to do this for my personal blog. If I were writing a new article, I’d have somebody go in and take a look at it and do all the publishing and then submit it to a bunch of different websites where it would get at least a little bit of publicity. And back links and things like that, but I haven’t really kept track of that stuff lately. I’ve really got to do a better job of that.
[24:57] Rob: Another thing I’ve seen outsourced from startups who have VA’s to basically manage their social media presence like to do their Twitter and their Facebook stuff and they’re either writing original thoughts or a lot of times they’re link aggregating based on a topic and as long as you give them enough knowledge and they understand your business, it’s not that hard to get this kind of thing going.
[25:16] Mike: Yeah I have this set up for my AuditShark Twitter account. Mostly just automated and I have somebody go in and aggregate a bunch of stories from a bunch of different sites and then put them through and just schedule them out into the future and it works pretty well.
[25:29] Rob: Another thing I’ve seen people do, and I actually do this as well, is you know there’s this RSS to email thing where it’s software that will take your RSS feed and then put it in emails and send it out in order to keep your list warm and talk to people on your newsletter. I don’t like those things because I don’t think they make the e-mails look very good. I don’t think they do a good job of kind of teasing and putting the image there and then making people click through to your blog. It really requires, typically requires, a human’s involvement to do it. And so that’s a really good task for a virtual assistant. If you train them where the cliff hanger is, you know where the point is at which point the email should leave off. This is kind of a no-brainer task for them to do this every week as blog posts go live.
[26:09] Mike: Yeah, and that kind of falls back into the blog publishing management because you could just add that in as part of your process and say, “okay, here are the 10 different steps that you do as part of posting something to the blog”. Then step number 9 might be to take it and turn it into an e-mail that goes out to a different set of subscribers.
[26:26] Rob: Exactly, and relating to that is moderating blog comments. As soon as you get any type of traction you’re going to start getting a lot of comments and that’s something that’s just enough of a distraction that it can be a pain and it’s a no-brainer to outsource that. Something you referenced earlier is finding images for blog posts, that’s an item I had here. Now there’s also one, slide presentations. It’s funny, I found a guy who called himself a virtual assistant but he had some good Keynote skills, so I used him to help put together my last couple of Microconf talks and he did a great job of finding images and getting just enough animations in there. I tweaked stuff at the end but he probably saved me 10 hours of work, each year. So for me that was just a total no-brainer.
[27:09] Mike: Yeah, that’s a huge time saver. And what I find is that it’s really helpful to have it done far enough in advance of any presentation that you have to do so that you can get used to what those animations are and then tweak them; because what you’re really trying to do is, you really want a VA to get you at least 80% of the way there. So in this particular case you create the content, you hand it off to somebody, and you can even create it in Word, which is what I’ve done. Hand it off to somebody, they give you back a mostly finished presentation and then you essentially tweak it from there. So if there’s animations that you don’t like, you can rip them out or put different ones in and it still gives you time to work with the content a little bit, but the reality is that they probably saved you 10-15 hours worth of work of putting together that presentation and you don’t have to do all the little tiny toggles and stuff that they had to in working everything together.
[28:01] Rob: Exactly, and so number 20 on our list, if you’re still dealing with voicemail, have your VA check it and just take the message down. Last few here. One is sending client invoices. I think that’s a no-brainer, right, if you’re still invoicing your own clients. Something’s wrong. Uploading videos to either Youtube or other video hosting. I do this all the time, holy cow, I’ve been recording screencasts lately. A lot of the screencasts I record are for training purposes, internal, and so I never edit those and I just use screencast.com. The hosting is not that great, but it works. Recently I’ve been creating a bunch of documentation screencasts for Drip, so I’ll walk through a concept and I need it to be edited pretty tight. It doesn’t have to be as tight as a marketing screencast, where it just has to shine and everything has to be polished but it has to be good enough that it’s respectable and professional. So what I’ve been doing is recording it and then giving that source file over to my virtual assistant and then he edits out the little bleeps and the um’s and the ah’s and stuff and then he uploads it to the video hosting and gives me the embed code. Next step I’m posting it to the knowledge base but the next step is to train them how to post it all the way to the knowledge base. Then it’ll be pretty much me recording and then magically seeing that go into the knowledge base a day or two later. That’s a great feeling. It really is a great feeling to be able to know that if you have to create a new knowledge base article that it’s you sitting down and recording for five minutes instead of the five minute of that and then 30 to 45 minutes of editing and then the upload. I mean, just all that stuff together, you save yourself a lot of time at that point.
[29:40] Mike: Yeah, I think people underestimate how much time you lose in doing all the context switching or just getting interrupted. And it’s easier just to outsource a lot of that stuff and just put a process in place and hand that off to a VA.
[29:53] Rob: Another thing I’ve seen Startups use VA’s for is to create SlideShare presentations from existing content. SlideShare is a pretty good marketing platform if you publish decent slides on a decent topic. If you already have good content on your blog or in an Infographic and you just need that translated into SlideShare, that’s kind of an easy way to do that. Another way I’ve seen them used I’ve actually used them is migrating from software tool to another. Do you remember when you moved from Indinero to Outright?
[30:20] Mike: Yes.
[30:21] Rob: I think you had a VA do it for you, didn’t you?
[30:22] Mike: Yes, I did.
[30:24] Rob: Yeah. Also, you know I moved from Mail Chimp into Drip and now that we’re moving more and more people I’m using the same virtual assistant to do that. So if you have a SaaS App there’s always that switching cost, but what’s interesting is you can cut some of the sting out of that if you have someone who you can show how to do that and then let them do the repetitive steps. Last two here, number 25 is member management for your membership website. Realistically it’s close to tier one support if you have a membership website, but especially with our software, WishList Member, which let’s just say it leaves a lot to be desired, there’s a lot of manual processes that have to happen so there’s some intense stuff that our virtual assistant has had to learn in order to keep that going well. There’s a lot of manual processes and some repetitive things that need to get done every month and even every week. So that’s something that I would think about outsourcing to someone.
[31:14] Mike: Yeah, the interesting thing is if you take a look at the Micropreneur Academy and how everything’s set up in there, the vast majority of the things that happen, most of them are systemized and outsourced to somebody because they’re labor intensive. It’s not just that they’re repetitive tasks, but it’s also that there are decisions that need to be made while performing those tasks. So you might need to process a payment or an email or something like that but there’s all these little things that factor into it and it’s very difficult to write code that’s actually going to take all those things into account. It’s easier to just give somebody some guidelines and say, “hey, if this happens then do this, but generally just use your best judgment about what to do in these specific cases.”
[31:56] Rob: And the 26th way to utilize a VA in your startup is to have them do the concierge service in your app. So, with HitTail we need tracking code installed or we used to need tracking code installed, and that was no-brainer for me to have the virtual assistant do it for free in order get people using the app and same thing with all of the five-day mini-course compilations and creations that we’re doing with Drip. I did those very, very early on. I did both of these things just to get enough experience with it to learn how to teach someone and then it was a no-brainer to hand it off. I am a big fan of concierge services in general. I think it sets you apart from your competitors and getting someone in there to help you with it and like a VA is a great way to do it.
[32:40] Mike: Well, Jacob, hopefully this episode helped answer your question. If anyone else has a question for us, you can call it in to our voicemail number at 1-888-801-9690 or you can email it to us at questions@startupsfortherestofus.com. Our theme music is an excerpt from “We’re Out of Control by MoOt” used under Creative Commons. You can subscribe to us in iTunes by searching for startups or by RSS at startupsfortherestofus.com where you’ll also find a full transcript of each episode. Thanks for listening, and we’ll see you next time.