Show Notes
In this episode of Startups For The Rest Of Us, Rob and Mike talk through five guidelines for balancing learning and doing. They help define when learning and consuming too much information can actually impede the progression of your business.
Items mentioned in this episode:
- Drip
- BlueTick
- We Don’t Need Roads: The Making of the Back to the Future Trilogy
- The Snowball: Warren Buffett and the Business of Life
- How Star Wars Conquered the Universe: The Past, Present, and Future of a Multibillion Dollar Franchise
Transcript
Rob [00:00:00]: In this episode of ‘Startups For the Rest of Us’ Mike and I talk through five guidelines for balancing learning and doing. This is ‘Startups For the Rest of Us’, episode 286. 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.
Mike [00:00:27]: And I’m Mike.
Rob [00:00:28]: And we’re here to share our experiences to help you avoid the same mistakes we’ve made. What’s the word this week, sir?
Mike [00:00:32]: Not too much going on. I took a mini vacation last weekend with the family and left around noon or so on Friday. And just got back last night. So I have not been doing very much this past week. Although getting out the door on Friday was a little bit rough because there’s all these things that were happening early in the morning. There were a couple of issues with my build server in the background. And I’m just like ‘Okay, you guys got to handle this.” Some things busted that probably shouldn’t have gone in when they did. But I couldn’t deal with it and I just threw it back at them and said, “You guys need to fix this.” Took them a couple days, but they got through it. That’s good to see
Rob [00:01:06]: Did the team make any progress while you were gone?
Mike [00:01:09]: They did. But I think I had mentioned this last week. One of the developers I have was getting married. He got married on this past Sunday. So he was out of commission. And then the other one was sick this past week. So that’s limited the progress. But there are things that are getting done. It’s just about two-thirds slower than it usually is.
Rob [00:01:26]: Right. And onboarding new early access customers is on your plate, right? So you didn’t get anybody new in the past week?
Mike [00:01:33]: Well I got that on Wednesday and Thursday of last week. I’ve turned people loose a little bit and then, of course, promptly left on vacation.
Rob [00:01:41]: Right. But you’re back in the saddle now?
Mike [00:01:43]: Yes. Things are going well.
Rob [00:01:44]: Cool.
Mike [00:01:45]: How about you?
Rob [00:01:46]: Well I finally pulled the trigger and switched email providers. We had been using just an old Web host—DreamHost. I’ve had an account with them for like a decade, and still use them for some less critical stuff. And for those who aren’t familiar with DreamHost, it’s a big shared host. And they’re massive. And over time a lot of their servers get slower and slower, and since they are so big they just have load balancing issues at times. So what we’d noticed is that over—it’s probably been on and off for like six months, we would see emails taking a while to be delivered to our inboxes. And so someone might reply and instead of getting it in the matter of seconds that you should, it might take an hour or two hours to come through. It was so intermittent though, and we figured a way around it with using POP to check our accounts instead of waiting for them to forward because I guess there’s some throttling going on that Gmail does with forwarding. We had worked around it but in the end, over the past several weeks, there’s been some massive delays within that POP hasn’t fixed. And it was really within the DreamHost servers themselves. Something about the spam filtering was just taking literally hours to run through emails. All that to say, it was just time to move. I’ve resisted it so long because it was quite a pain in the butt. The actual switchover was not a big deal, but I could not find a good email provider. I tried to work with Zoho and I got halfway through setting up all the emails and the domain and all this stuff, and it didn’t have several things we needed and the UI was bad. Google apps, I find to be catastrophically hard to use. It was hours and hours. It was very buggy. I would click save and it would say you saved. And then I would literally go away, come back and it wasn’t saved. And I had to do all [?] work arounds to get it to work. I don’t know of an ideal solution for this. But I do know Google apps has tended to be really solid. And since a lot of use Gmail as the natural client, it seems like the natural fit. But what a time suck that just did nothing for us. I probably, all told, spent 16 hours trying to configure it and then doing the switchover, and having bugs. It probably should have taken four to six. But there were so many rough edges that it is what it is. But I guess I feel good about finally being moved over and everything’s good as of this morning. Cross my fingers that that continues.
Mike [00:03:57]: That’s one of the downsides of all the different mail servers that are out there. There’s no universal mechanism for just saying I’m going to export everything here and import all my settings over to here. Then just toggle a switch and everything switches over. It just doesn’t happen that way. There’s all these little knobs and dials you need to fiddle with and make sure that everything works. And it sucks because you can’t test it quickly either. You have to make a change and then you have to usually wait a little while. And that little while might be as little as 10 or 20 minutes, and then there’s also times where it could take just hours. It sucks.
Rob [00:04:31]: You know one other thing on that email, the bummer is that DreamHost’s administration, the Web based administration of their email accounts is really, really good. The UI is good and they allow you to bulk update stuff. And they allow you to have a bunch of forwarding addresses just in a text area. And it makes it really easy and simple to administer. You see everything on one screen. And I couldn’t find another system that does it the same way. While learning a UI typically isn’t a challenge, when the UI is actually substandard and means you have to do four or five clicks to do what you could do with one click in your existing account, that was really the reason that I hadn’t wanted to switch away. It’s a bummer to take a step down and knowing that anytime I go in to administer it, if there’s multiple clicks with all this front end Java script code running and taking several seconds before the next page loads, it really is a drag that there’s not a better way to do this.
Mike [00:05:20]: So what’s on the schedule for today?
Rob [00:05:21]: Well we put out a call for podcast topics within Founder Café, which is our membership community, and we received a bunch of them a few months ago. And this is one of them. And the question was in essence, how do you balance learning and doing? And so I thought through it and I started pouring out all my thoughts, almost in essay format, which is not conducive to a podcast, right, because you don’t just want to read an essay. But I started seeing that there were these clusters emerging. And so I pulled them out into these distinct guidelines. I have five guidelines that we want to talk through today. I think the first thing that I want to clarify is the question was asked, how do you balance learning and doing, and what you and I realized pretty quickly as we discussed this in preparation for the podcast, is that learning and doing are not opposite things. They’re not mutually exclusive. I think what the person who asked the question was really asking how do you balance consumption, reading books, listening to podcast, learning from classwork, and that kind of stuff, with actual execution. And launching and getting features out the door and talking to customers, and that kind of stuff. How do you balance those because while you’re doing you’re still going to be learning, right? So while we do use the phrase learning a lot in here, what we actually mean is more like book learning or really consumption of material that’s going to educate you. And then doing is the actual execution of that and putting that into play and moving your business forward. And so with that in mind, the first guideline I want to talk about is to remember that learning is the fun part. So for probably everyone listening to this podcast, learning is like a siren song. It’s the fun part that you want to do. It’s the easy part. And the actual doing or the execution is where the rubber meets the road and that’s really hard to do. Especially since these days you can learn via audio when you’re driving, mowing the lawn, you’re doing the dishes, etc. So it feels like a good use of your time. You shouldn’t let that fool you. Learning can easily become a major time suck that masks itself as productivity.
Mike [00:07:13]: And I think that’s a really important thing to keep in mind, just because of the fact that when you are learning you’re going through the process of either reading blogs or you go out and buy an eBook or you listen to a podcast on a particular topic, it’s definitely fun and interesting, but at the same time it doesn’t actually do anything for you. At least not in and of itself. It’s very difficult to measure your progress when you’re sitting there learning stuff because you’re not moving the ball forward on your product, or getting new customers, or anything like that. And it feels like you’re doing stuff. It’s very similar to a lot of the launch activities that we talk about in the past, about getting business cards and a Web site set up, and things like that. None of those things really truly do anything for your business, but it feels like you’re being productive. So it’s very much a trap that you can fall into. And it’s especially true because of the fact that many of us are driven to learn new things and do new things. That’s what most people find enjoyable about being an entrepreneur. You get to learn and do new things. And it can be very much a distraction if you’re not careful.
Rob [00:08:15]: And I think we both say this, not as people speaking down from Mount Olympus who never fall into this trap. I think I say it as a person who falls into this trap way too much. And overconsumes and overlearns, and I have to remind myself to step back and focus on what is it that I’m trying to accomplish with this learning. And that actually brings us into the second guideline, which is to embrace ‘just in time learning’. Jeremy Frandsen, from the Internet Business Mastery podcast, has this phrase that he uses. And he calls it ‘just in time learning’. And in essence it means pick the task at hand. So if you’re running a marketing experiment and you want to try Facebook ads, then go out and learn everything you can about Facebook ads and run it. But don’t learn about those back when you’re still trying to generate an idea or to validate and idea, unless you really need Facebook ads to do it. And so live by this. Embrace ‘just in time learning’ because it is the way to keep your mind from filling up with all this information that A, clogs your mind, confuses you, distracts you, but it also fills it up with stuff that may or may not be valid in six or 12 months. By the time you get to the point where you do need to learn SEO or where you do need to find product market fit, or whatever, all of this advice is not evergreen. A lot of this changes fairly frequently. And the stuff that I think about in terms of the cutting edge learning, I think it’s good for between six and 18 months as a rule. And after that, things will often just be different enough that anything you learned before that, you’re either going to have to learn by experience or you’re going to have to relearn it from someone else.
Mike [00:09:48]: It’s not like when you go back to mathematical equations that you’re learning in college or even high school, where those things, you learn them once and they will never change. The reality is that when you’re sitting there and you’re working on stuff, you deal with so many different things that they will change often enough that it will bite you and you have to go back and relearn them. It’s certainly not that you have to learn them from scratch. But they, as Rob said, they’re different enough that it makes you sit down and dedicate additional time to it. So getting to the point where you know 95% of all the different things about a particular topic, it almost doesn’t matter. And the fact of the matter is that most of those things that you do learn, the practice of those things and the execution is a little bit different than what you’re going to read about. In terms of Facebook ads, for example, you can learn a lot about Facebook ads and general practices, and how to structure and arrange things, but the reality is once you sit down and do them, you’re going to find that there are things that are different enough for your particular business that you need to make some adjustments. So you can do all the learning you want from a book or from a blog or a podcast, and the reality of your product itself is going to be different enough that you need to make those adjustment. Those books are just simply not going to take that into account.
Rob [00:11:00]: And an aside here to compliment this ‘just in time learning’ idea, specifically for you, listening to this podcast, if you’re launching products, it actually depends on whether you’re prelaunch or post launch what you need to be learning about. So if you’re prelaunch what do you need to know? Well there’s kind of a nice little sequence of events that needs to happen. You need to generate an idea, you need to validate the idea. You need to build the product or architect the service if you’re going to do more of a product type service. And then you probably need to start learning marketing. Maybe one or two channels at the most to generate that interest list. And you need to be talking to customers in advance. So those things, in that order, that’s the framework that I used for prelaunch. And then post launch, I think about it as finding enough customers in the space to get feedback. And you do that via maybe one or two marketing channels at most. And you do it with a lot of hustle and by talking to a lot of people. And then you’re going to need to find product market fit based on their feedback. And then that means build something people want. If you’re not a fan or the product market fit terminology or don’t know what it is, it just means you build something that people are really willing to pay for and are willing to stick around if you’re a subscription service. And then, after that is marketing and growth. I feel like everybody focuses on the marketing and growth piece, but it’s like the sixth, seventh, eighth step down the line. And I think take this ‘just in time learning’ to think about focusing on this learning step that you’re at. And really focus on the people talking about that, giving advice on that that’s fairly current, the current market conditions, and devour that. And then execute. Change it up and execute. I mean there’s a recent example I have where I’ve had to do some negotiations. A couple different instances. And I am not trained in that. I don’t have a ton of knowledge in it or experience. I mean there’s all the trite advice people give you. Don’t name the first number, and always do this and do that. But I really wanted to dive into it. So I got two separate audiobooks on it that were highly recommended. And there’s podcasts about a similar topic and I went through and I listened. I took a bunch of notes and I thought through, and then I made real action notes that weren’t just the notes from the thing but it actually related to the specifics of the situations that I was in. And then I looked at those and then I dove in. So that was an example. I didn’t learn negotiating five years ago. And if I had I probably would have forgotten it, might have been out of date. But the fact that I’ve done that just recently has helped keep it fresh and it’s something I’ll know for the time being that I can refresh in the future.
Mike [00:13:16]: And what you’re really doing here is you’re optimizing both for your time and for your performance. Because if you sit down and you are just about to do, as Rob said, for example, negotiation, then you sit down, you read about it and you learn as much as you possibly can, and then you put it into use. Versus if you did it five years ago or you studied up on it. Even in just 12 months ago, you will have had a lot of things that have happened between then and now, and you’re going to forget a lot of those things. So you’re still going to have to go back and brush up on it. And if you didn’t use it back then because it wasn’t necessarily a need, then essentially what you’ve done is you’ve spent a lot of time learning something that maybe you get your skills to 80 or 90%, and then over the course of the next 12 months they taper off and you’ll have to relearn a bunch of stuff. You’ll have to refresh your memory. And it’s simply not a good use of your time. And then, in addition to that, the fact of the matter is that when you go through that your skills are going to get rusty because you haven’t put them to use over that time. So those are essentially two different things that are in play at the same time. You are optimizing not just for your time, but also for your performance in performing whatever that activity is that you’re learning about.
Rob [00:14:23]: And the third guideline is that learning will only get you halfway. That basically, at some point, you have to execute in order to A, actually get anything done. And B, get the full amount of learning. And halfway is an estimate. It’s not exactly 50%. Maybe it’s 40, maybe it’s 65 or 70. But it will only get you part of the way there. What you have to realize is that learning is the easy part, it keeps you in your basement or in the nice comfort of just consuming information. Fires those parts of the brain that probably makes you feel like you’re doing something. But once you start executing you’re going to crash and burn, you’re going to make mistakes. And you’re going to learn more in a couple weeks that you can in months and months of sitting there and consuming material.
Mike [00:15:02]: I think it’s really easy to fall into the trap of trying to consume as much information as you possible can to the point that you’re overconsuming and you’re not putting it into practice. And I know that historically, the reason that I’ve done that is because I didn’t want to make mistakes. So I felt like if I learned more than I would not make certain mistakes. Oh if I had only read that particular book, or if I had only seen that blog post and read it before I got this started, then I would have not made this mistake over here or that mistake over there. But the problem with that line of thinking is that there’s no line in the sand or guideline that says, oh, if you consume all of these things you won’t make that mistake. It’s very easy to forget some of those things or to only realize after you’ve made the mistakes that that particular lesson was going to be applicable to you. So just the fact that you’re sitting there learning, it can be very difficult and frustrating to dive into it when you don’t necessarily feel like you’re ready. I think that, myself included in this, a lot of people just don’t like to make mistakes. So you feel like if you’re going to learn more then you won’t make those mistakes. And I would say that that’s probably not always the case. In fact, it’s probably rarely the case that you’re going to learn enough to make no mistakes.
Rob [00:16:14]: Another thing to keep in mind with this one, tying back into bootstrapping a product, is that realize that learning will be different depending on the phase of your product. So learning’s going to get you halfway and it’s actually going to be a lot harder in the early days, unfortunately. And the reason is because when you haven’t yet built something people want, so you’re pre product market fit, there’s a lot of art, there’s a lot of mistakes, there’s a lot of flailing around, and there’s not nearly as much concrete advice for these steps because there really isn’t a path to finding it. As much as [?] startup, try to lay out a framework, it’s so much trial and error, and even people who’ve done it multiple times, meaning found product market fit and actually started to scale an app, really don’t have the exact formula for it because there just can’t be one. There’s so much trial and error. Which means that consuming more about it isn’t actually going to get you any closer to it. You just have to get to the trial and error. And this is interesting to think about. Back to the negotiation stuff that I was learning about, once I had listened to an audiobook and a half on it, I started to see a lot of overlap. And I actually had a third audiobook that I got, which was too much. And as soon as I started listening I realized I am overconsuming and I am hearing the same things. And I’m being overwhelmed with information. Which of these frameworks and paths should I use because now I’ve heard three different ones? And that’s where you need to step back and say, “Wow, I’ve made it halfway. I’ve made it to pretty much the extent of what I’m going to learn. I’m starting to see diminishing returns from that learning. Now I have to basically stop doing this, and I need to sack up and really kind of get out there and make some mistakes.” I got to be honest, I feel like it’s so much easier to learn about specific tactics after you have product market fit. Because this is where you have to line up marketing tactics, you experiment, you double down on what works. And that’s really the fun part. And there’s a ton of information out there about it. And it’s just so much more of a methodical approach. I won’t say it’s easy. I won’t say it’s fun for everyone. But it is a lot more well-defined than trying to learn before product market fit. And I think people spend too much time trying to get all their ducks in a row in that phase when, I’ll say, it’s impossible to do that at that point because there just is so much art involved in getting to product market fit. And the fourth guideline is to consciously cap your consumption. So keeping in mind this ‘just in time learning’ concept, if you’re focused on a problem, like validating an idea, I typically focus all of my efforts on learning as much as I can about that. I spend a few days. Sometimes up to one to two weeks. Then you have to stop and you have to execute.
Mike [00:18:40]: To me, this is really hard to do sometimes just because there’s so much that you can learn. And some of it’s going to be applicable to where you are right now. And some of it’s going to be applicable to you after you get to a certain point. So back to Rob’s point about the last one, about finding the product market fit for your product, some of the marketing and stuff that you learn and implement is going to be before you get to that point, and some of it’s going to be afterwards. And a lot of the learning is, I’ll say, somewhat generalized. Some of it is going to be applicable before you get the product market fit, and some’s applicable afterwards. And it’s not always clear when you’re learning it which is which. So, sometimes you have to tendency to overlearn because you think that it might be applicable, and it’s simply not. Consciously capping your consumption is a really wise idea because it allows you to learn enough, especially at a cursory level, so that you can start to recognize some of the patterns. And if you find that you are at a point where you’re implementing something and you realize hey, I actually haven’t learned enough to be able to implement this, you can always go back and learn more. You don’t have to continue plodding forward knowing that you’re going to be making these huge mistakes that maybe if you just learned a few more things then it would be better executed. You can always go back and learn more. But you can’t get back that time if you are learning things that are simply not applicable. So make sure that you’re putting a cap on your time that you’re spending on consuming this information. And I’ll be honest, I’m terrible at this. I have a hard time sitting down and scoping out I’m only going to spend X number of hours or days or weeks trying to learn how to do this. And it’s just difficult to do. And it’s partly because some of it’s time management and some of it’s also the fact that it feels nice to learn some of these things and to be able to talk to other people about it. But it’s simply not always relevant to you. So make sure that you’re capping that time so that you are optimizing for the things that you’re doing.
Rob [00:20:34]: And my fifth guideline for balancing learning and doing is to balance learning with inspiration. I feel like you need to strike a balance between these two things. You can only learn and focus on so many things at once. And so if you’re really focused on getting idea validation or whatever, when you stop learning, if you still want to consume things, you can turn your heads towards inspirational content. As an example, recently I’ve listened to a book called “Song Machine” that is about the hit factory that’s developed over the past 20, 30 years, of how all of our pop songs don’t tend to be written by the artist. They’re actually written by these factories. It’s this group of people that are manufacturing hits. There’s this great book called ;We Don’t Need Roads,” about the making of “Back to the Future,” that’s just really well told. “How Star Wars Conquered the Universe,” is a book I’ve read a few times. “The Snowball,” which is the biography of Warren Buffett. “Masters of Doom,” I’ve mentioned. They border that line between really inspiration and just kind of fun listening. They’re really isn’t a ton of this hardcore learning. You’re not learning tactics from these. And I really believe in this idea of getting more motivation, or this extradisciplinary learning that I think you need to get from broader sources. It’s not going to help you directly, but A, it takes your mind off of this focused problem, and it allows you to not get oversaturated with different ideas and confuse you. But it also provides inspiration. It can kill time if you really want to listen to audiobooks, podcasts in the car or while you’re doing the dishes or whatever. I tend to switch over to this once I’m oversaturated on a certain topic and I don’t want to get any more content in my mind. And the other bonus is it often gets me thinking about my business in a way that I normally would not consider. Hearing “Snowball,” hearing “Masters of Doom,” even hearing “How Star Wars Conquered the Universe,” it’s extradisciplinary. So it gets your juices flowing. And I find that little ideas and thoughts will sometimes resurface themselves later on that tie into that experience, that will help me in my business in ways that I couldn’t possibly have predicted.
Mike [00:22:28]: I think this is more of a focus on trying to figure out what sorts of things are going to help you without knowing what questions to ask. Let’s say that you have gotten product market fit and you’re trying to figure out what ways you can grow, you can certainly say, “Well, I’m going to do some paid advertising,” and you dig in and you learn about paid advertising. But what Rob’s really talking about here is that you are learning about lots of other things that are generally applicable to business versus solving a particular problem. So when you start doing that you’re able to get a wider view. And it’s much shallower, but it’s a wider view of business in general, and how different people have gone around solving different problems that they have encountered. And all it does is it gives you that hook that you can use later on in order to come back to later. For example, for “Masters of Doom,” or “The Snowball,” there’s a bunch of different data points that are in there, that if you were to go through and read those books, you’re probably going to remember bits and pieces but you’re not going to remember everything. And that’s not the point. The point is to anchor your brain to certain things where if you’re working on a problem later on in your business, if you remember that oh, I remember reading about this. Where did I read about it? And you can go back into maybe Amazon if you buy all of your books through there or through iTunes and their bookstore there. The point is to be able to go back and use those hooks to figure out where did I hear about that and where can I learn more about it? Versus I have this very ultra-specific problem that I need to solve right now. And that’s a very easy issue to deal with, it’s much more difficult when you don’t have that broad base of knowledge. And this is about enhancing your broad base of knowledge.
Rob [00:24:07]: And there’s a caveat to all this. You can’t just wander off into inspiration land when you only have five, 10, 15 hours a week to work on your product and you’re trying to get to launch. That’s where you have to be disciplined about getting work done and not using inspiration as a crutch or a feeling of productivity. Because it’s really not. If you only have those few hours then you have to focus on that problem at hand and just taking the next step towards getting your product out the door or growing it, depending on the phase you’re at. Mike [00:24:36]: So to recap, the five guidelines are, number one, remember that learning is the fun part. Number two, embrace ‘just in time learning’. Number three, remember that learning will only get you halfway. Number four, consciously cap your consumption. And number five, balance your learning with inspiration. If you have a question for us you can call it into our voicemail number at 1-888-801-9690. Or you can email it to us at questions@startupsfortherestofus.com. Our theme music is an excerpt from “We’re Outta Control,” by MoOt, used under Creative Commons. Subscribe to us in iTunes by searching for startups. And visit startupsfortherestofus.com for a full transcript of each episode. Thanks you listening and we’ll see you next time.
Episode 285 | How to Make Your First Hire
Show Notes
In this episode of Startups For The Rest Of Us, Rob and Mike talk about how to make your first hire. They discuss how to decide if you need to hire full-time or part-time, the pros and cons of each, and some tips on the hiring process.
Items mentioned in this episode:
Transcript
Mike [00:00:00]: In this episode of “Startups for the Rest of Us,” Rob and I are going to be talking about how to make your first hire. This is “Startups for the Rest of Us,” episode 285.
[Theme music]
Mike [00:00:16]: Welcome to “Startups for the Rest of Us,” the podcast that helps developers, designers and entrepreneurs be awesome at launching software products, whether you’ve built your first product or you’re just thinking about it. I’m Mike –
Rob [00:00:24]: And I’m Rob.
Mike [00:00:25]: – and we’re here to share our experiences to help you avoid the same mistakes we’ve made. How are you doing this week, Rob?
Rob [00:00:28]: You know, I’m pretty good. It’s nice to be a week away from MicroConf and kind of get my feet back under me. It feels like … you know, we’re done with queue one of 2016 already and heading into the midyear, so I’ve been looking out: what’s the next 90 days, what’s the next six months looking like, and revisiting the goals and the direction and the vision that I set out in my retreat, which was at the very beginning of January. There was both some personal stuff and some work and Drip-oriented growth stuff that I’m just revisiting and figuring out: am I on track for those? Do I need to adjust them? Are we ahead of schedule, or behind, or whatever? So, that’s been kind of fun, just to go back and review. I think that’s important to do, whether you do it monthly, or quarterly is to review those goals and figure out where you are with them.
And with that in mind, we’re trying to find new growth channels and starting to make some progress on a few fronts. Finally starting to get a little bit of traction with paid traffic, which has been something we’ve been working on on and off for a while with Drip, and seems like we’ve got our foot in the door with a couple avenues that I’m pretty excited about.
Mike [00:01:28]: Very cool.
Rob [00:01:29]: How about you?
Mike [00:01:29]: Recently, I kind of did the same thing. I looked back over quarterly progress because, as you said, it’s the end of the quarter. I look at that, and say it almost sucks because the last three months have just flown by, and it feels like my head is down almost the entire time. But at the same time, things are moving forward. I looked back at some of my annual goals for this year, and for revenue on Bluetick, already I’m to 17 percent of my goal. It’s, obviously, about 25 percent of the way through the year; but I also haven’t really got the product out the door to anyone beyond the people who are doing preorders. The fact that I don’t have the product out the door, really, and I’m still at that point, it’s not like I’m very far behind is really what it comes down to.
Rob [00:02:08]: Right. It’s not atypical. I think most of our goals are ambitious. Do you feel like your Bluetick goal was ambitious?
Mike [00:02:14]: Oh, yeah. It was one of those big, fat, hairy, audacious goals.
Rob [00:02:17]: Yeah. You don’t want to shrug it off and be like, “Oh, well, I just missed it.” I think now it’s like, “Okay, how can I make up that eight percent over the next month or two?” “How can I get to the point where I am actually back on track?”
Mike [00:02:29]: Yeah, and I think that that’ll come with actually launching the product publicly and getting it out there and making it available for people to sign up for; because right now, it’s just based off of what’s going to my mailing list and the little things that I’m doing there. Longer term, obviously, there’s a lot that goes into it.
Rob [00:02:44]: Yeah, and that’s the hard part. When you’re setting these goals, sometimes they are a shot in the dark, especially if you just have revenue goals. If you have milestones of like getting a launch by this date, then it’s a little more easy to quantify. But it’s like do you really know what your revenue is going to be until you’re at a sustainable, repeatable process where you know how many trials are coming in, you know what your conversion rates are? At that point, then you can project it out, but before then it is a bit more of a guessing game. So, I’ve always taken it if I’m ahead of my projected, then I figured I guessed too low. If I’m behind it, then I’m trying to figure out how to get there without letting it destroy me. You can’t let it beat you up or make you feel like a failure. It needs to be motivation rather than making you feel like you’ve dropped the ball.
Mike [00:03:28]: Yeah. The fact that I’m only eight percent behind a quarter of the way through the year, and the product’s just not out the doorm that, to me, bodes really well; because I didn’t expect to have it out there for public consumption until about halfway through the year. In some ways, I almost feel like I’m ahead. You could almost kind of fast-forward to say, “That revenue goal was really for the last six months of the year.”
That said, right now we’re going through, and we’re plugging away at trying to onboard people who’ve placed preorders. I have to be honest, some of the stuff that we’re running into is just flat-out embarrassing. The earliest thing that we tried to do when onboarding – the signup itself was just completely fundamentally broken. I had to do some things on the fly to get somebody on there. It’s generally working at this point. We’re just trying to work through any of the UI and UX issues with people. It’s coming along, but it’s obviously slower than I’d like. One of my developers is getting married on Monday, so he’s out of commission for at least the next week or two.
Rob [00:04:23]: Yeah, that’s always a bummer when you’re pushing hard and something comes up for anyone. Obviously, very important and worth doing, but it’s tough. I think we’re impatient as founders, and we want to hit the goals.
So, what are we talking about this week?
Mike [00:04:35]: This week, we’re going to be talking about how to make your first hire. This is a question that was asked by somebody inside of Founder Café. We’ve mentioned Founder Café before. It’s our online membership site. The question was really geared towards how do you decide whether you need somebody for part-time or full-time, and how do you approach those two, different scenarios; because, obviously, that’s going to be dictated by what your revenue is and what your strengths and weaknesses are in both your skill set and in the business itself in terms of the revenue that’s coming in.
Rob [00:05:07]: Yeah. In your early days, the advice I would give is stay with part-time and contractors for as long as you possibly can. There’s no reason to jump to W-2 employees until you absolutely need to, because it brings complexity. I think in our circles that’s probably pretty well known, but I think if you’re in doubt, part-time contractors give you the flexibility of being able to only pay hourly and flex up and down as you need. There are some pros and cons to doing it that we’ll get into in this episode, but that’s probably a thought that I would start the episode with in terms of thinking about your first hire.
Mike [00:05:40]: To start off with, I know that we’re going to talk about some of the differences and pros and cons for hiring part-time and full-time; but I think what we want to do first is to talk about some of the things that are applicable to both, because I think that there’s definitely a lot of overlap between hiring for part-time versus hiring for full-time.
The first one is to look for self-starters who can dive in and are going to find ways to improve the business and the products that you’re working on. I think this is really important, because you don’t want to hire somebody who is going to come to you and every time they complete a task, they come back to you and say, “What do you want me to work on next?” Then it turns you into more of a micromanager, and it’s very difficult to get away from that. There’s going to be a little bit of that, I think, up front; because they’re going to want to know what the general direction of the business is and the product and everything else, but you don’t want to be in the position where every, single time they finish something you have to find something else for them to do. You really want them to be essentially generating their own tasks and having some sort of awareness of what your overreaching goals are, and then be able to just go do those things without you telling them, “You need to do X, Y and Z.”
Rob [00:06:50]: Well, I think, in an ideal world, you would do this; but I think in the early days when your budget is tight, it’s hard to find people like this. These are the people that everybody wants. I think that there is, perhaps, an approach you can take, even if you can’t find self-starters, that can still work. This is what I did in the early days, and a lot of people who are cash-strapped in the early days do. It’s to find people are really good at a single skill and then slowly basically fire yourself from the jobs that you are doing. The example that I often give is to hire that first tier-one email support person. They may not be that much of a self-starter. They may not figure out ways to improve stuff, but just getting that email support off your plate in the early days with someone who is good at that single skill – there’s a focus lift. There’s a time benefit, and it’s a recurring task that happens every day, or every week. I think if you’ve never hired before and you’ve never even hired a contractor, that would probably be the simplest, little baby step that I would take.
This actually may speak to a point I was going to bring up, which is that hiring is a learned skill. The more you do it, the better you get. When you start, you’re going to be pretty bad at it, and you’re going to have a bunch of missteps. I don’t know anyone who goes out of the gate and hires really well the first time. In the early days, when I was first trying to figure out who to hire and what to hire for – you want to look at your recurring tasks, the ones that are going to be relatively simple to outsource, and then you work way up to the more complex tasks; and this is all based on your budget. The more budget you have, the better people, in general, you can hire; but in the early days, if you really are bootstrapping, then you have to cobble it together and limp along for a while, even if you’re not as efficient.
[00:08:26] That’s one of the reasons some people raise funding. If you did raise an angel round of a quarter million or a half million bucks, it can make this part easier, because then you do have the budget to hire better people from the start. But if you truly are bootstrapping, you want to self-fund this, that’s okay, too. Just know that you’re going to have some limitations in the early days in terms of the quality and the effectiveness of people you can hire.
Mike [00:08:47]: I think kind of a subtext to what you just said is that for something like support, it’s time-consuming, but doesn’t necessarily add a huge amount of topline revenue value to the business. It needs to be done, but it isn’t necessarily you that needs to do it. Because it’s time-consuming, it’s best to start with something like that for you to outsource.
Rob [00:09:07]: Yeah, that’s exactly right. Time-consuming and attention-grabbing. Email support is a bummer because it’s interruptive, and it’s really hard to just batch that because you can’t just do that once a week. Even doing it once a day is not ideal. In a perfect world, you would check every couple hours and take care of that stuff. So, I think there’s the time, and then there’s that focus or attention element. If you have recurring things that take time and attention, those are the first ones you want to look at hiring for.
Mike [00:09:36]: The next thing that’s applicable to both part-time and full-time hiring is that you should always be interviewing multiple candidates. Any time I’ve gone through and hired somebody and whittled it down to just one or two people and then only interviewed one person, it seems to never work out. I feel like that’s because you don’t necessarily have a good basis for comparison of gauging that person’s skills or abilities against the other people who, obviously, you haven’t interviewed. I think that’s one of those recommendations – that you have to interview multiple candidates. If you’re at a point where you don’t have multiple candidates, then that should be a red flag. You need to go find more, or there’s something broken in your hiring process.
Rob [00:10:17]: Yeah, absolutely. It’s pretty rare. I think in all the hiring I’ve done over the years, there’s probably been one or two hires where we knew the perfect person for the job, and it was someone we already knew or were acquainted with. We knew that they’d be fit and all that stuff, so we didn’t interview multiple candidates. But far and wide, the literally dozens of positions I’ve hired for, including – I used to be a development lead and a tech lead and a manager for some companies down in L.A. when I was still doing salary work. It’s got to be approaching, like, a hundred people that I was involved in the hiring process of. With all those, you just have to get a lot of candidates through the door, or at least on the phone. We used to do a lot of phone screenings in advance. Nowadays, you’d just do it via Skype, and you would never actually meet with people in person anyways. But interviewing multiple candidates is absolutely the way to go, and it’s the only way you’re going to get an idea of the skill level and what’s really available on the market at that time.
Mike [00:11:13]: The next thing that’s applicable to both is that a bad hire is orders of magnitude worse than no hire. If you hire somebody who is not a good fit for either the position or for the company culture – and you can have a company culture even if it’s just you and one other person – in those situations, if you’re not able to hire somebody, you’re better off than if you make a mistake in hiring, because those early mistakes are so incredibly time-consuming to deal with and difficult on the business, both in terms of revenue and time spent and opportunity lost.
Rob [00:11:46]: Yeah. The way that I used to combat this – I think over time, I’ve gotten better, naturally, at hiring just because you do it more. You get picker and know what to look for. In the early days, I would recommend that when you hire those first few people, you do all the training via screencast and/or in writing; because you want to have it repeatable. We had multiple situations where we’d hire a VA to help with support and setup and this other stuff, and then that VA wouldn’t work out. Sometimes it was them. They just flaked. Sometimes found out they didn’t have the skills, and having to repeat the training if you had just done it live on Skype or something would be such a pain in the butt, right? Makes it really time-consuming. So, try to make your training as repeatable as possible, especially in the early days; because you’re probably going to have to take a few swings at bat and get a few people through the door, get them trained up before you find that right fit.
[00:12:37] Another thing to keep in mind is that entry-level people are the least expensive, and you can find some pretty good deals, but you have to spend the time to train them on the tasks. Experienced people who already know how to do something – let’s say you’re hiring for email support, and they’ve already done it; or, you’re hiring to manage Facebook ads; or, you’re hiring to help handle integrations and help with stuff. Experienced people are a lot more expensive. If they actually have experience in what you’re doing, they tend to be two times, four times more expensive for the same task; but they can hit the ground running. So, it’s very important to keep in mind “how much budget do I have?” and realizing that trying to find a competent person at a highly sought-after skill set is going to cost a lot of money. You have to think through at what level can you hire.
This is a reason in the early days when you’re bootstrapping, you may need to invest more time, because you don’t have as much money. You may need to work more hours in the early days to get this thing going. That doesn’t mean you have to work the crazy, 80-hour startup weeks forever, but if you’re hiring people and you’re having to train them from scratch, you’re putting in your sweat equity because you don’t have the cash to put up. I see it as exchanging value there, and you have to weigh that out in your own mind.
Mike [00:13:41]: I think the next thing you have to remember is that going from zero to one employees is the hardest. I think this is applicable whether you are a solo founder, or whether you have co-founders. The fact of the matter is that you’re bringing somebody else into the mix that is not familiar with your company, or where it came from, or the roots, or maybe not even the problem space itself. Especially if you’re hiring a new developer and they don’t know the problems that you have been working on and are intimately familiar with, they’re going to have to learn some of those things. They may know their job very well, and they may be an expert in the things that they do, but they’re not necessarily an expert in not just your systems themselves, but also how your business operates and what your customer base looks like.
Rob [00:14:24]: The other thing to think about is as your budget grows, you can hire better people. I do think that you should stair-step your way up as you’re able to because, in general, when you have more money, you can hire better people, like I’ve already said. The other thing that I’ve realized is that in the early days, as a founder, you’re probably going to be the best at any given task because you don’t have the budget to hire subject matter experts. You’re going to have to hire entry-level people, and so if you’ve learned Facebook ads, you’re then going to have to train them. If you know how to do the email support, you’re going to have to train them. At a certain point, that flips. Then you’ll be able to hire people who are actually better than you at a given task, and that’s when things definitely get more expensive; but it becomes so much easier, because you can go out and pay a Facebook ad consultant, or someone who has experience doing this. Or, you can pay a professional senior developer who’s been building and writing code for years and is on par with you. Long-term, that’s the ultimate goal. That’s not your first hire – right – but think about that over the course of several years as your business grows, that you probably want to go from being able to train people and hire people where you’re the subject matter expert; but as soon as you can, get to the other one, because it’ll allow you to move faster.
Mike [00:15:39]: With those things in mind, let’s move on and talk a little bit about the differences between the part-time hires and full-time hires. I think that, generally speaking, as you said before, when you’re looking to hire and you’re first starting to do that in your business, you should probably start with a part-time person. When you’re doing that, if you’re looking specifically at people who are doing contracting, that’s probably the best place to start. I don’t think that you want to go out and look for people who are currently working full-time and then just picking up something on the side. I think there’s a big difference between those types of people versus people who are doing contracting full-time; because they might only work for you four or ten hours a week or something like that, but they’re used to that mode of working. They’re experienced at working remotely. They’re experienced at dealing with people over the phone, or via Skype, or Slack and email; and that’s just their primary mode of operation versus those people who are in an office environment, and that’s what they’re used to. For lack of a better way to put it, that’s how they’ve been conditioned to work. I think that it’s easier to bring on those people on a part-time basis who are doing contracting full-time, because they’re used to being treated like a contractor.
Rob [00:16:52]: Yeah, I can’t underscore this enough: a) someone who’s used to working remotely, and b) who’s not working around another full-time job, or a full-time job and contracting a few nights and weekends. I’ve never had that work out – ever. Every time, their job takes precedent, and they only have a few hours a week to do it, and they get behind on stuff, and they’re just trying to fit you in around other things. It doesn’t work, so I would never – that’s one of the early things I ask now when I go to hire: “Are you currently doing this full-time,” or, “Do you have a full-time job?” because it’s an absolute nonstarter. I think at this point, if I were to find someone who was really good and I wanted to hire and they had a full-time job, I would consider trying to have them leave the job and come on with us; but in the early days you can’t do that, because they might only have three, four, five hours a week where they can work for you. So, try to find people who are a full-time contracting. Upwork is a decent place to do this, because there are a lot of people that are taking that stance.
Mike [00:17:43]: The other advantage of hiring people part-time is that you can generally afford them a little bit better. You can hire experts, and you can get them for a few hours of their time. As Rob said earlier, you may not be able to get the best person in the world, but you may be able to get somebody who has comparable skills to yours or even better, and at a price that isn’t going to break the bank. If you try to hire those people full-time, chances are really good you just simply can’t afford them, and it’s because of your budget.
The other thing that hiring part-time allows you to do is it allows you to practice being a manager. Just like hiring, being a manager is a learned skill, and you need to be able to practice that in order to get better at it, because if you’re not a good manager, then the results that you’re getting out of people that you hire are probably also not going to be good; and it’s going to be due to miscommunication issues.
Rob [00:18:31]: Yeah, and there are pros and cons to hiring part-time contractors where their hours can flex up and down. Obviously, the pros are that you don’t need to have a fixed budget. So, if work slows down or whatever, you’re not paying out of pocket a fixed amount every month, when you may not have that because you’re bootstrapping. Then there’s also the flexibility that, as more work comes in, you can ramp them up pretty quickly. In the early days, you don’t have to worry, necessarily, about career advancement and annual reviews and all the stuff dealing with taxes and healthcare. There’s a time for that. There’s a time where that’s worth it, but in the early days when you’re just trying to get a business off the ground, it’s just so much to worry about.
Now, the cons of this are that – it depends on the specifics, but if you can actually find someone comparable who is willing to work for you as a full-time employee – in the U.S., it’s called “W-2” – there are some advantages to that. One is that, overall, it’ll probably be less expensive if you actually keep them busy full-time, because contractors tend to have a premium that they put on their pricing. Another advantage is there’s a loyalty thing. People who work for you tend to get more involved, tend to care more about the outcome, and they’re going to tend to stick around longer.
Those are the major things to think about when you’re comparing, “Should I hire contractors, or should I hire W-2 employees?” I think that, as we said, in the early days, by necessity, you’re going to want to stick with contractors as long as you can. Long-term, it is tough to grow a huge business solely with contractors. I know a few people have done it, but most of the time, getting that loyalty and that team camaraderie really only comes with a group of full-time employees.
Mike [00:20:06]: To kick us off on the side of full-time employees, I think that one of the important things is that you need to hire before you have a particular need for something. If you wait until the last second – let’s say that you’re working on something and you need a Facebook ads expert, and you say, “Okay. I want to kick that off in a couple of weeks,” and you wait around, and you don’t go through a hiring process. Then it comes time, and you say, “Now I need to hire somebody, because I need somebody by the end of this week.” It can be really challenging to get those people lined up for interviews in advance and go through the hiring process if you don’t do that in advance. Make sure that you are hiring before you actually need somebody to get started on that work. It sounds obvious, but I also think that it’s very easy to underestimate how long that hiring process can take in some cases.
Rob [00:20:55]: Yeah. I think there’s a balance here. If you have a lot of money in the bank, if you’re funded, then hiring well ahead of the need is what people do. They hire months ahead, because they know they’re going to be scaling up. If you’re tighter on cash, I think hiring before the need, like you said, which is really just weeks in advance – it’s kind of like looking out 30 days and realizing it’s going to take you a month to hire. I think that’s perfectly acceptable; but I think that, as a cash-constrained startup or a business, I don’t know if it’s as much as hiring before the need, or it’s as much as hire when it’s really painful. As a founder, you’re going to be taking up the slack with anything, and so as you feel stuff start to just get piled and piled on top of you, hire before it breaks you. Hire before it completely derails what you’re doing. I think looking out two to four weeks on what is going to breaking you soon is probably the way that I think you have to do it in the early days.
Mike [00:21:48]: Yeah, I think Peldi ran his business, Balsamiq, to the point where – he decided to hire when he felt like he was going to die because of all the work. That was really kind of the main point, but making sure that you have things lined up so that you can put a full-time offer in front of somebody if they’re the right fit? I think that it’s important to always be looking. It doesn’t necessarily mean that you need to make an offer to everybody, but at the same time, you also need to be aware that that process can take a while. If it’s a full-time hire, then chances are really good that they’re probably going to give two weeks’ notice to their existing employer, and you may need to not necessarily coach them, but be cognizant of the fact that they may use that as a negotiating tactic, or their existing company may use that to say, “Let me give you more money to keep you.”
Rob [00:22:34]: Yeah. To give you an idea, I think some of the fastest hires that we’ve done in the past couple years have been about two weeks from posting a job to having someone start working, and that’s when they didn’t already have another job already going on. The longest one was probably three months, maybe four, from the time we posted; and we had to post it multiple times. That was for a senior Rails developer, and we were very picky about that. We wanted some very specific skill sets. We actually looked local first, and when we couldn’t find anyone, then we went remote. It was a drawn-out process. That was actually over the Christmas and, I think, the Thanksgiving holidays as well, so that extended it even further. But that gives you an idea of the range when looking for someone.
Another point that we want to talk about is not to rule out remote workers. Obviously, there’s a movement of working remotely, and “37 Signals” talks about this in their book and all that. There’s definitely value in being able to find the best people anywhere in the world, no matter where they live. So, I think there’s a balancing act here, because what we found – I was totally remote for years when I had all the contractors. No one ever lived in the same city. Then as soon as Derek and I started working together in the same city, here in Fresno, it made me realize just how valuable that face-time can be and the advantages of it. So, I don’t think that either one is the best. Everyone going into an office five days a week is not optimal either because of the interruptions and just all the overhead involved with that. I don’t think being totally remote is the best either. The optimal approach, we’ve found, is to actually have an office where all of us are in it two days a week. So we tend to go in Tuesday, Thursdays; and then other people go in as needed, and they have a space where they can work.
All that said, I think the hybrid approach, personally, is something that I would love to have. I’d love to have everybody local, but only meet a couple days a week so that you can go into your home office and actually get all the work done that you need to; because we stuff the meetings, and there’s a lot of interruption and discussion on the other days, but that’s super valuable. That’s when we get a lot of the hard work done.
Mike [00:24:27]: Something else to look at when you’re hiring for full-time employees is to hire for the most time-consuming tasks that you’re already doing first. This is an effort to offload those things. It kind of goes back to what we had talked about earlier, and you pointed out that one of your recommendations for people is to hire for support first. It’s because it’s so time-consuming. If there are other things that are time-consuming for you, regardless of whether they’re really driving the business forward a lot or just a little bit, the fact of the matter is that if they’re taking up a lot of your time, chances are good that there’s probably other areas of the business that you could be spending that valuable time on. It’s probably best to be hiring for those positions first, assuming that you can afford it.
Rob [00:25:10]: Another thing when you’re hiring for full-time is, if you can, like I said earlier, try to hire people who are experienced, especially if you have the budget. It’s tough to burden yourself with intense training, like hiring interns, in the early days. I know they can work out. I’ve heard of them working out. I’ve never been able to justify spending the time to train someone who truly is intern-level. It’s just so much work, and in the early days of your business, you don’t have a lot of time. Time is such a limited factor. With that in mind, you want to look for people who can actually show accomplishments. They’re not just talking about experience. You don’t just read it on a resumé, but in what way can they show you? If they’re a developer, can they show you a source code? If they’re a designer, can they show you past designs? If they’re going to do email support, can you do a short test where you send them three questions about your app? You have them look through and figure out how they would respond to it. You want to be able to see what people have done in the past, not just who they have worked for and for how long.
Mike [00:26:04]: That’s one of the dangers of hiring – is just, in general, that usually their previous experience and the things that they’ve done on a day-to-day basis – your ability to see into that can be somewhat limited. You essentially have elevated the risk by not being able to see their work, and that’s why I think a lot of companies like the fact that there are developers out there who have public GitHub repositories, and they can go take a look at their source code. Then you have Stack Overflow, where you’ve got people’s reputation on there, and you can see questions they’ve answered and how they talk to people and how they answer deeply technical questions. That’s extremely valuable from a hiring standpoint, because you get that visibility. You get to see stuff versus you get a resumé, and everything looks great. There’s no red flags, but you don’t necessarily see any really good strengths either. That’s one of the downsides of going through a hiring process and not being able to see any specific work that they’ve done.
[00:27:00] That brings me to another point about when you are hiring, look specifically for the strengths of people, not just a lack of weaknesses. That’s, I think, a very easy trap to fall into.
Rob [00:27:11]: Another thing to keep in mind is finding really good hires. They typically aren’t looking for jobs. They’re hard to find, and so typically when we’re going to hire, I think through, “Who do I know who knows someone who would be a perfect fit for this?” Referrals and recommendations using your network are the best channel, in my opinion, because: a) it’s going to shortcut the process, but b) that’s where you’re going to find the best people. You have to be careful. I rarely think of, “Who do I know who I could hire for this?” because I don’t like hiring close friends and family. I’ve seen it happen, and I’ve seen it just train-wreck businesses. I’ve seen it train-wreck relationships, so my personal stance is not to hire friends and family; but to hire friends of friends, or colleagues of friends, or folks that your network knows that you don’t have strong ties to. Having a dual relationship where you’re both a friend and a co-worker, or both family and a co-worker makes things way more complicated than I think they need to be.
Mike [00:28:07]: The last item on our list relates to paying for this. I think when you go to hire somebody and you make a full-time offer, you need to think about how you’re going to pay them and whether you’re going to use a payroll provider of some kind. If you have access to Gusto, which is formerly Zen Payroll, I would highly recommend that, but it does vary state to state or country to country. But any larger payroll provider should be able to provide those services for you. In addition to that, you’re probably going to need to offer some sort of benefits, like health insurance and dental and things like that. Those things add up. They can be really costly in addition to the cost of paying for the person’s payroll. Most people don’t realize this, but in the United States, you also end up paying employment taxes, which adds even more on top of that. You could count on adding anywhere from 25 to 50 percent of the cost of an employee on top of what it is that you make them an offer for. So, if you make somebody an offer for 40,000 a year, it could be up to 60,000 or potentially even more, depending on where you live and what sorts of benefits you’re offering.
So, again, this comes down to, in some senses, risk tolerance. Can you afford that? Can your business afford that? You need the business to be able to support those employees long-term, so the revenue has to be there as well. I think that’s where this hiring process becomes such a challenge, because until you get to that point where the business is making enough money to be able to, I’ll say, quote-unquote, “easily hire” somebody, or at least easily be able to afford to hire someone, you might be riding the business a little bit on a razor’s edge in some cases. If the economy goes through a downturn that you didn’t expect and your business starts to go down, you could be in a position where you hire somebody and then three months, six months later, you look at your finances and say, “You know what? We really can’t afford this anymore.” And firing somebody after they’ve only been working for you for a few weeks or a few months is very difficult to do, because it’s not like it was a performance issue. It’s just you made a wrong decision, and I think that that’s more difficult for most founders to accept because they’re the ones who are at fault. It’s not the employee. It’s not as if the employee made a mistake, or is not pulling their weight or doing the job. It’s you made a mistake in the business, and you’ve screwed up.
Rob [00:30:21]: Yeah. I think in terms of the benefits – you know, you mentioned that – that’d be something else. I know a lot of early-stage startups, when you’re below five employees, they don’t offer healthcare; because it is such an administrative – not only an expense; it’s just a big time suck to get that going. So, that’s something to think about. You obviously want to take care of your employees as soon as you can, but it’s something to think about – that it’s not necessarily a need, and it can negatively impact your business if you try to compete with the big boys and get a 401(k) out and you’re under ten employees, and get healthcare for everyone when you’re under five employees. It’s something to weigh and think about both in terms of the cost and the time. And I think what you just said about risk tolerance and having either the cash in the bank, or the MRR coming in to cover is something not to be taken lightly, because having to lay somebody off after you’ve done all the work of hiring them – it would feel terrible, and it would be a very stressful decision that you’d have to make. The nice part about if you do have a recurring revenue business, rather than one-time sales, is that that revenue tends to be more stable; so, definitely a plus of the SaaS or the membership model.
[00:31:24] I think that wraps us up for the day. If you have a question, you can call our voicemail number at: 888.801.9690. Or, email us at: questions@startupsfortherestofus.com. Our theme music is “We’re Outta Control,” by MoOt, used under Creative Commons. Visit startupsfortherestofus.com for a full transcript of each episode.
Thanks for listening, and we’ll see you next time.
Episode 284 | Key Takeaways from MicroConf 2016
Show Notes
In this episode of Startups For The Rest Of Us, Rob and Mike discuss several of their takeaways pulled from talks at MicroConf 2016.
Items mentioned in this episode:
Transcript
Rob [00:00:00]: In this episode of “Startups for the Rest of Us,” Mike and I discuss our key takeaways from MicroConf 2016. This is “Startups for the Rest of Us”, episode 284.
[Theme Music]
Rob [00:00:18]: Welcome to “Startups for the Rest of Us”, the podcast that helps developers, designers and entrepreneurs be awesome at building, launching and scaling software products, whether you’ve built your first product or you’re just thinking about it. I’m Rob …
Mike [00:00:29]: And I’m Mike.
Rob [00:00:29]: … 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?
Mike [00:00:34]: Well, last Thursday, I added my first customer to Bluetick.
Rob [00:00:38]: Just shortly before MicroConf, huh?
Mike [00:00:39]: Yes, the day before my self-imposed deadline.
Rob [00:00:43]: Nice. So, what does that mean [?], then? They’re in early access, and they’re clicking around and sending emails – that type of stuff?
Mike [00:00:50]: Here’s the issue. I had them create an account, and we were kind of pressed for time because they were traveling on Friday, so I knew that we had to at least get them into the system so that I could take a look at stuff on the back end and make sure – because there’s a bunch of jobs on the back end that do a lot of data processing. I put them on. All of those things worked, but here’s your public service announcement for the day: don’t go in and change a bunch of things that are working perfectly well the day before you do that [laugh].
Rob [00:01:15]: Yeah, I was going to say – as soon as you started saying “…he created his account”, I almost completed your sentence, said, “And then everything broke?” because early access is always like that. All the stuff that worked two days ago totally breaks on them.
Mike [00:01:26]: I went in, and I had a bunch of changes made because I was going through and testing things. I was like, “Oh, this is a little bit clunky. It would be nice to make these changes here to make the flow a little bit easier”, and, unfortunately, we busted a couple of things. Of course, since it’s all based on different routes and stuff inside, the [rest?] API, you break one thing and the whole thing kind of falls down. There were a lot of things that worked, and then there were just certain things where there were core features that we ended up breaking which unintentionally. We got everything back and working within 24 hours; but, of course, I was leaving for MicroConf on Saturday, and he was traveling for the next couple of days. But we’re revisiting it this week or early next week, and we’ll go from there.
Rob [00:02:07]: Very nice.
Speaking of MicroConf, we just spent the last – what – three, four days in Vegas. This is our sixth conference in Vegas and our ninth overall, including the ones we’ve done in Europe. This was the first time we’ve had it at The Palms, and The Palms was – I’d say, cost-wise and décor-wise, it’s maybe a slight step up from the Tropicana, where we’ve traditionally had it. I really enjoyed the time this year. I feel like it was a good mix of – we had a lot of returning attendees, as we usually do. We had quite a few new attendees, and that was neat, a lot of first-year attendees. We even had a lot of first-year speakers. We didn’t have a lot of returning speakers from years past, a lot due to scheduling and other stuff like that, and also just wanting to have a fresh year to kick it off.
How did you feel about it overall?
Mike [00:02:50]: I agree. It was nice. I really liked some of the features that The Palms has versus where we had it at the Tropicana; for example, the food court and the fact that you can walk around a little bit more. It feels like you’re actually getting somewhere rather than just walking down massive hallways that almost have no end and seemingly no purpose [laugh]. Did feel like a slight upgrade. I liked the conference areas better; but, you know, it’s not necessarily all about the conference area either. It’s about the people that you’re meeting, the people that you’re talking to and things you’re learning.
Rob [00:03:20]: Yeah, that was the thing. As always, the hallway track as valuable or more valuable than the notes I took from the talks. It was great to see everybody who came. We had about 220, 230 people, and then we sold some “better half” tickets where folks bring their spouse and significant other, so I got to meet a lot of those. That’s always fun, because MicroConf – it’s not like other startup conferences where you’re there to talk about grinding away 90 hours a week. Our families are intimately involved in the startups that we’re doing, because many of us have significant others and/or kids, and it’s kind of cool to meet that person in a startup founder’s life and be able to have them have some glimpse into this crazy conference that that person goes to and maybe meet a few of the folks from it.
Mike [00:04:01]: Yeah, I had some interesting conversations with a bunch of people’s husbands, wives, boyfriends, girlfriends – that kind of thing. It was definitely interesting talking to the “better halves” and seeing what they thought of not just the conference, but the things that their “better halves” were working on as well.
Rob [00:04:16]: Sure. So, let’s dive in. We have several takeaways that we pulled out from the talks. I think we’ll go kind of in chronological order. There’s not enough time to cover every talk, so we’re just going to pull out some highlights. The speaker that kicked us off was actually Des Traynor. He’s the cofounder of Intercom, and he talked about building and scaling products, his lessons learned from four years and 8,000 customers. He had a lot in there. He’s done a lot of talks for Jason Calacanis, like their launch incubator. You hear it on the TWiST podcast, and he just always has such brilliant insight. He’s such a product guy, right? He knows what to build, how to build it, when to build, how to communicate that. He’s really focused on product and how that ties into, of course, marketing and growth.
I’d say the key thing, probably my number one thing – I took several notes from his talk, but one priority list that I really liked – he said it’s these priorities from the top down. The first thing that you should think about in your development cycle is improving a feature. The second one is getting more people to use that feature. The third thing is getting people to use that feature more. So, first it was more people to use it. Now it’s getting people to use it more, like more often. The fourth one is building new features. It’s in that priority order, which is contrary to what most of us do and how most of us think about product development, right? Most of the time it’s build new features, build new features, and that’s what customers and trial users are requesting when, in fact, Des is saying you need to think about improving existing features, getting more people to use them and more often.
Mike [00:05:38]: I really liked there was a grid that he put up that essentially showed what you should be working on and what has the most impact. There were a couple of different columns that he had there, and it was all based around how many people are using a particular feature and how often. You could see things like, in the top right, if everybody was using it and it was very often used, those are the places that you should be concentrating on.
He also talked a lot about how you are divvying up your team and assigning them to different parts of the project, where most software development teams will say, “Okay, we’ve got these 35 feature requests. Let’s put five people on each of them,” and that’ll take up everybody’s time. The reality was that he talked about bringing a bunch of test customers in, or existing customers, or prospective customers and saying, “Here’s $100 virtual dollars. Please vote on what it is that you would like us to implement.” Inevitably, what you find is that most people will vote for a couple of features, and a lot of the rest of the ones are completely unimportant, and you’re wasting a lot of time and effort and resources building those things that people just, quite frankly, don’t care about. His main point behind that was that you care a lot about implementing certain new features, and your customers don’t care at all.
Rob [00:06:51]: Another talk that I think had an impact on the first day was Claire Lew’s talk. She’s with Know Your Company, which is a spinoff of 37 Signals. Her talk was titled “An Unconventional Business,” and she talked about having a business without recurring sales. It’s a software company that allows other companies to learn more about their employees and what they’re thinking and that kind of stuff. It’s a one-time sale up front. It’s $100 per employee, and then there’s no recurring. She talked about how that is unconventional in today’s model of monthly SaaS charges, or even annual charges. She also looked at the sales process and how there’s only two of them. It’s not this big team of people doing stuff.
What were your thoughts on Claire’s talk?
Mike [00:07:31]: What I thought was interesting was the sheer number of demos they do and their focus and emphasis on gaining customer trust versus optimizing for revenue. Obviously, there’s the idea that you could charge a subscription model, or you could raise your prices, or charge some sort of annual maintenance fee or something along those lines. But when you look at what they’re doing, they’re really optimizing for the trust of the customers, and in some ways that reflects on their future revenue. I think Lars called it “expansion revenue,” because as those businesses grow, they will continue to pay the $100 for new employees. Or, if an employee leaves and they hire a replacement, then they’re essentially responsible for that extra hundred dollars, but it’s because they are so focused on getting the trust and buy-in of the CEO and the company executives and many of the employees that it makes a heck of a lot of business sense for those businesses to continue using their product and their software. So, it’s not necessarily recurring revenue but, as Lars said, it’s that “expansion revenue.”
I think that that’s an interesting take on it. I don’t think that most businesses, especially the ones at MicroConf, certainly don’t focus on, “How can we gain trust?” rather than, “How can we get more money?” More money is typically the focus, because it’s commonly easier to get more customers than it is to gain absolute, 100 percent trust of the existing customers that you have; but I also think that that’s probably true because of the way that their product is sold. You really need to be well-trusted by the company in order to just hand over contact lists and contact information for every employee you have.
Rob [00:09:08]: Yeah, and there was some discussion. There was a question during the Q&A and then that evening of folks questioning that one-time sale and wondering how they can make it a subscription business. I would guess long term that Claire’s got to be thinking about how to do that, because it is just so hard to grow a business when there’s a one-time sale; but all that said, I did like her principled rationale that the reason it’s a one-time sale is because they get that commitment from the company to implement this, and they don’t want them to cancel it in three or six months. She believes that once they do this, she wants them to have it forever. It’s a tough balance; and I think, perhaps, they’re in a bit of an edge-case scenario where – you know, personally, I don’t like one-time-sale businesses. I wouldn’t own one myself, and I think most businesses are moving towards recurring; but I wonder if hers could be in that realm of an acceptable exception.
[00:10:00] Another session we had on the first day that folks enjoyed was our Q&A session with [Stelle?] and Heaton, which turned out pretty good. An hour of Q&A is a bit long, and I think we made a little bit of a mistake in the schedule with that. I think I’d probably cap it at 30 minutes. That’s not saying anything about [Stelle?] and Heaton. It’s just too long to do a full hour of someone answering questions. But it was cool. It was like a live version of their podcast, and I thought that it was pretty valuable for the audience.
You were actually moderating that. You essentially read the questions and asked them the question from the audience and stuff. How did all that feel?
Mike [00:10:32]: As you mentioned, I was asking the questions initially, but we kind of primed the pump by having people submit some questions in advance and asked, I think, five or six different questions and then went out into the audience and started taking questions from there. I absolutely agree with you that it may have been just a little bit too long, but I think there’s good reasons for that. When you have a Q&A session like that, I think what tends to happen is that you get the people who are asking the questions who are the most vested and interested in the questions and the answers, and there’s probably a sizable chunk of the audience that isn’t necessarily as interested in that particular one. If you have too many of those in a row, then it’s difficult to maintain your focus and interest in the discussion. You and I have seen this especially with questions that come into the podcast, or when we’re doing internal, worldwide Founder Café calls where, if you don’t necessarily do any sort of moderation on the questions that are coming in, or filter them in any way, shape or form, then what you end up with is a lot of random things that come up that are difficult to maintain everyone’s interest for a long period of time.
So, I think that that’s probably what we ran into. For the podcast, when we do Q&A episodes, we typically decide which ones to manually respond to and do just one-off answers back to people versus ones that we think that are generally applicable to a wider audience. Those are the types of ones that we end up reading on the air in Q&A episodes.
[00:11:57] The one thing I do think is that, for the people who are asking those questions, they’re hyper-interested in those, so after the day, Heaton and [Stelle?] did an “office hours” after the first day, and they had so many people attend and so many questions, that they actually had to do a second day of them. It was only probably 20 or 30 people or something like that; but, still, that’s enough people with that hyper focus that it worked out really, really well for them.
Rob [00:12:22]: Another talk that had a lot of good takeaways was Patrick Campbell from Price Intelligently. He runs essentially a 20-person consulting firm focused on SaaS pricing. One thing -there were many, many takeaways from his talk, because he’s very tactical and he dove into a lot of stuff. He’s such an expert on the topic that it’s actually a little daunting when he says what you need to do in order to really get a good handle on your pricing. It’s a lot of steps; and I think he said it took him, like, eight hours to do it. There was a case study he did with his mom in a business she was starting, but I think that would take a long time for someone like myself, who hasn’t done the extensive pricing research that he has.
One thing that I really liked about his talk is – we’ve all heard of buyer personas, where you take a certain persona. If you have SaaS users, you might say SaaSsy Sam is your SaaS user persona. Then Billy Blogger is your blog user persona, and then you talk about their feelings and the decisions they use to buy and the factors they think about and if they’re price-conscious and all this kind of stuff. He took it a step further, and I hadn’t seen this. He actually added cost to acquire customer, so CAC values and LTV, lifetime value, to each of the personas. That was a real mental shift for me. I have all this in my head, and we talk about it internally about how we serve these three or four pretty tight verticals. With Drip, really it’s three verticals. Then there’s these other ones floating out there. Actually pulling out the CAC and LTV and all the other metrics by vertical is a pretty interesting idea, right, and it’s going to show you who your most profitable and least profitable are. In addition, he talked about you have to write all this stuff down; and that’s something that, while we have a bulleted list of the verticals, we don’t have the full-on list of all the buyer personas. That was a big takeaway for me was to sit down, draft this up and then do some data mining and figuring out some numbers to put to each of these.
Mike [00:14:14]: Next on our list, you talked a little bit about some different, unfair advantages, specifically, four different unfair advantages for faster SaaS growth. Why don’t you talk a little bit about those four unfair advantages?
Rob [00:14:25]: Sure, yeah. I did a shorter talk this year. It was a little bit a retrospective where I looked back and was trying to figure out at a higher level why has Drip grown faster than any of my other software products, like exponentially faster. Then I started looking around and saying of all the self-funded SaaS I know that has grown quickly, why have those grown faster than just the run-of-the-mill SaaS apps. I made a big list and did an analysis, and I talked to a few people and figured out that there really are four unfair advantages in order to have this 2X, or 5X, or 10X growth that we’re seeing in apps like Edgar, or Basecamp in the early days, or maybe Bytes Kits in the early days, or Drip, or like a SumoMe. There were these examples that were pretty obviously growing faster than everybody else.
I started with a long list of unfair advantages and, one by one, I realized that a lot of them actually didn’t make a difference. The four that I narrowed it down to – and you can have more than one – are, number one, to be early to a space. Second one is who you know, so it’s your network. Third is who knows you, so it’s your audience. The fourth is growth expertise; it’s how much expertise you have growing a company. It was fun. It was a little short, 20-minute talk; and I felt like, hopefully, it gave people ideas of stuff to be working on even if they don’t have a product yet; if they’ve already launched a product, how to try to get one of these in the space they’re in; or, to prepare for a future product that they’re launching.
One thing I meant to say, or I should’ve said, is that growth is not the end-all, be-all. Everyone doesn’t need to want to grow all the time. Of all people, we are the lifestyle startup crowd, right, where it’s like – I don’t build these startups just so they can grow. We build them so that we can have fun lives and we can have these great lifestyles. Even having faster SaaS growth in the title, I debated whether to do that, but that’s really what the talk happened to be about. If you’re out there and you’re thinking, “Well, I don’t really want super-fast SaaS growth,” that’s okay. This is just something that was there to help folks who maybe don’t want to travel a ‘long, slow SaaS ramp of death,’ or at least want to move along a little faster.
Mike [00:16:31]: Our next speaker was Tracy Osborn, and I think Tracy’s story was pretty interesting, because she has run both a funded and a non-funded startup. She ran WeddingLovely, and I think she called it something else earlier on. She had gotten funding from 500 Startups and was working on it then, and then later on – did she say that she took it private, or was it a spinoff of what she was doing based on that?
Rob [00:16:55]: It was the same company, so it was still funded, technically, the whole time; but she basically tried to run it like a bootstrapper, yeah.
Mike [00:17:02]: Right.
Rob [00:17:02]: So, once the funding was gone, she didn’t shut the company down. She was then just trying to make it profitable, which is not what people who give you funding really want.
Mike [00:17:09]: Right, yeah. I got the impression that the people who had given the funding, initially they were just like, “Okay, yeah. We’ve decided this is a failure, and we’re going to write it off at this point,” but she still took it forward. It was really interesting to see the contrast between how she approached it before when she had money versus when she didn’t later on.
Rob [00:17:29]: Yeah, I agree. The real takeaway from her talk wasn’t that funding is bad. It’s that flip-flopping between funding and bootstrapping with the same company is bad, because the priorities and the way you build the business is just so different. To be honest, I liked her talk in terms of the narrative. We go for about an 80-20 breakdown of actionable/tactical versus inspirational and narrative-driven, and hers was definitely in that 20 percent. Maybe we’re 90-10 in MicroConf most years, but hers was definitely in that 10 or 20 percent of a good story and seeing a lot of mistakes that she made. Just her perseverance. She kept calling herself in the talk. She’s like, “I was the cockroach that would not die, and I just have kept the company going.” It was an interesting story to hear and kind of a cautionary tale in terms of figure out if you’re going to be funded or bootstrapped and then go that direction.
One thing that I would add, though, is, again, there’s this in-between of fund strapping, where you can raise a small amount of funding, but it’s from people who understand you’re not going to go for that $50 million idea; because WeddingLovely is a wedding marketplace. In that case, you really do have to get big. You have to hit scale in order to make it work. She had just started, let’s say, a B-to-B SaaS app; and she took some funding, then decided to go bootstrapped. I actually think it could’ve worked a little better, but it’s neither here nor there. I just think it was an interesting story and pretty well told on the stage.
Mike [00:18:53]: Yeah, I think the two, main takeaways that I got out of it was, one, her references to being “the cockroach that just wouldn’t go away,” and saying, “Look. I’m going to buckle down, and I’m going to make this work, and I’m going to make this happen. Even if I get slapped down, I’m going to come back, and I’m going to do something else and try and figure out something to make it work.” I thought that level of sheer tenacity and perseverance was very admirable, because I don’t think that you see that a lot. I think that most people tend to throw the towel in just a little too early. Obviously, there’re times where you can take that too far, but it was interesting to see the level that she went to just to even be able to meet people. That was the other thing, the lengths that she went to in order to meet certain people that she knew would help make a difference in her business.
Rob [00:19:38]: Another session we did on the second day was kind of the surprise session that we had not announced. Patrick Collison, the cofounder of Stripe, showed up. He was just there for about 24 hours. He had said that he’d been following MicroConf for a couple years and that he really wanted to come check it out, which was obviously a big compliment to us, given that Stripe is a $5 billion company. They raised $260, $280 million. He’s just a powerful dude in Silicon Valley, even as young as he is, so it was neat to hear that we were on his radar at all and that he would take the time to come down. He met with a bunch of attendees. He got feature requests, ideas and all that stuff, but he did a 30-minute Q&A up onstage about the early days of Stripe.
I really liked how he talked. They bootstrapped that thing. That’s what probably none of us remember. He said they bootstrapped it until it hurt, and then when they eventually hit the point where they could not go any further, then they raised their first round.
Mike [00:20:30]: Yeah, I really liked the focus of them on their early days about what their customers were doing and how they were using the product. One of the things that he talked about was that, because Stripe is essentially an API that you make calls into, what they had very, very early on was they had it wired up so that whenever somebody made a call to one of their APIs, it would actually email them. Obviously, that is not going to scale long-term. Obviously, it can’t at this point. There’s no possible way that it could do that; but early on they were watching what people were doing, what data they were receiving and what sorts of errors people were getting and what data was being returned to them. It helped them focus in to figure out where people were having problems, so that they could determine, “Is the code bad? Do we need to fix that?” or, “Do we need to go back and update the help documentation?” “Do we need to update some example APIs, or example code that’s on the website?” and things like that. It was really interesting to see some of the technical engineering things that they were doing to essentially help them do that product development.
Rob [00:21:33]: As day two started coming to a close, we had Peter Coppinger from Teamwork.com, and he basically talked about their eight-year journey. It was even more than that, because they were a consulting firm before that, but it was about an eight-year journey of their SaaS app Teamwork, which is project management. They were doing consulting at the same time as they were launching it. Then they made a lot of mistakes. He said that, as a developer, really he still wants to code even though he’s the CEO of a 63-person company, and that he still does write some code for it. He talked about just the mistakes that he’s made over the year and how he thinks that they could’ve gotten to their present level, which is 12 million in ARR – he thinks he could’ve gotten there years earlier if they had started marketing sooner, if they had started sales sooner. He said, basically, if you have your head down for too long and are just pounding away at features and such and not looking outside, that you’re going to hurt the business.
Mike [00:22:25]: Yeah. I think that it was interesting to see the number of mistakes and the types of mistakes that they were making. The fact that they were still able to make it work is a testament to the type of product that they were building. I hesitate to say that everybody can make those types of mistakes and still be able to get to where they are. Obviously, there are different types of products and different markets, and they will naturally break out into varying levels of success, but it’s interesting to see the path and the growth curve. Then looking back at it, they can say in retrospect, “Oh, had we done X, Y or Z sooner, then that would’ve seriously helped us.” I think the one big thing is just the marketing side of things. They just paid so much attention to the code, because they were developers, and that’s what they were comfortable with. It wasn’t until they really started focusing and buckling down on the marketing side of things that things really started to take off for them.
Rob [00:23:17]: Yeah, I agree with you. I think a lot of folks, if they made the same mistake, would probably tank. Teamwork had that advantage of being in a big space, and they were there really early. I think it was like 2007, maybe, when they launched the SaaS app, somewhere around there.
Mike [00:23:32]: Yep.
Rob [00:23:32]: And being a SaaS project management product at that point, there was really – what – Basecamp? That’s the only other one I knew. I’m sure there were more, but I think that they did have the wind at their back, and I think Peter’s right. I think they’d be further along at this point if they had made the right choices, but even making those mistakes, they still survived; and not every business could do that. You’d probably need one of those big four, unfair advantages, if you’re going to make all those mistakes, in order to get to where they are.
Mike [00:23:58]: One thing that I thought was really interesting was the fact that they acquired the teamwork.com domain for – I think it was like $675,000. You look back at their growth curve, and you could see this definitive inflection point at about the time that they got that. I don’t think that a domain name is going to be the turning point for most businesses, but I think that in their specific situation, because of the type of software they were – and the previous domain, I think, was teamworkpm.net obviously, kind of an awful domain. They knew that. That was not even a question, but when they got the teamwork.com domain, it really gave them a level of validity and, I guess, authority that people looked at it and said, “Oh, you have teamwork.com. This must be a legit website and a legit app, so let me give it a shot,” versus previously, you look at teamworkpm.net, and it’s like, “Meh, I’m not so sure about this.”
Rob [00:24:49]: Yeah, I get the feeling – there were a couple questions during the talk, and then someone asked me about it later that evening. There was kind of some folks who I don’t know that they believed that the teamwork.com acquisition was the actual reason that the curve spiked up like that. What made it even muddier was that, like the slide – I think when the slide was converted, something happened where he had an arrow to where teamwork.com was acquired, and it was in the wrong place. So, it was hard to tell exactly the inflection point, if it was before or after the domain acquisition. If it was, that’s pretty crazy. That’s a huge deal, and if just getting the dotcom for your business did that, it really is kind of a vote for maybe ponying up some dollars for a domain name.
Mike [00:25:33]: But I also think that that’s just a matter of looking at the website and being able to explain, “Oh, this is teamwork.com.” If it’s a one- or two-word domain, it gives it that, I’ll say, air of authority –
Rob [00:25:45]: Yeah.
Mike [00:25:45]: – you know what I mean – for the larger enterprises, and you’re able to attract larger customers based on the name alone versus, as I said, teamworkpm.net. You’re not going to get Johnson & Johnson saying, “Hey, let’s dump a lot of money into this and sign up for a ton of accounts.” It’s just not going to happen.
Rob [00:26:00]: Right.
Rounding out our conference, the last speaker was Lars Lofgren. He ran growth for Kissmetrics for many years, and he’s spoken at MicroConf Europe in the past, actually. This year, he was talking about the three SaaS growth levers. I’ve seen parts of his talk before, and I really like it. I took a ton of notes from him. It was definitely one of my favorite talks of the two days, because it just reminded me of so many things that we should be doing at Drip, things that I’ve had in mind, or are on a list somewhere. It reminds me of how important they are.
The levers are: fixing your churn and then getting cohort expansion to work, which means expansion revenue as people are upgrading; and, finally, getting acquisition going. So, a lot of lessons from Lars. One of them that rocked people’s worlds is he talked about if you’re really going to try to grow this fast, have world-class churn before you scale. That means that you have product market fit and that you want your churn in the 2 to 3 percent range. He used this expression if you’re above 10 percent, your business is “on fire.” I’ve always liked that expression when he’s used it.
Mike [00:27:03]: And not in a good way either [laugh].
Rob [00:27:05]: Exactly. Exactly.
Mike [00:27:07]: Yeah. Some of the parts of his that I really liked was the fact that he looked at churn, and he said, “Here are all the different reasons why somebody might churn out.” Or, not all of them, but a bunch of them. Then he listed a bunch of churn reduction ideas. Then he categorized each of those and said, “These are bad. They’re just not going to help you.” Then, “These are marginal wins, and then these are major wins.” The things that fell under the “major wins” category was fixing your product onboarding; improving the value of the product; and then 30-, 60- and 90-day onboarding programs. It was really interesting that he broke those down. Then he said things like removing self-service cancellation. That just does not move the needle for you. But if you fix the product’s ability to onboard people, that’s a major, major win; and you’re going to be able to scale up very, very quickly because of that.
Rob [00:27:53]: Yeah, that’s what I liked, is that he called out these tactics that a lot of us might think to reduce to churn, but he said that basically covers up your churn problem. It doesn’t actually fix it. So, things like down-sells, or forced annual plans, et cetera, are not things that you want to do if you want to grow to this scale; because it just covers up the issue, and it will hurt your credibility long term. It hurts your brand, and people start thinking about you as just more of a fly-by-night company rather than someone who’s building something valuable for the long term.
Mike [00:28:22]: The other thing I really like that he pulled out was the fact that there’s a big difference between marketing and sales, and they can be at real odds with each other if you get to a point the marketing team is able to bring in a lot of people into the top of the funnel, but if sales can’t close those because the product is bad. He called it the “alligator funnel,” because you’ve got that top of the funnel, which is increasing, and then the sales are just flat and they’re not going anywhere. Then the marketing teams and the sales teams are essentially pointing the blame at each other, and you have this internal problem. The root cause is essentially because the product itself is just not able to do what the customers need it to do. That was a very interesting thing. I’d never heard that before.
Rob [00:29:03]: Overall, it was a nice ninth conference. I feel like we’re just starting to get the hang of this thing now.
Mike [00:29:07]: Yes. Only nine or ten more, and we’ll be good.
Rob [00:29:10]: We’ll be [laugh] – exactly. No, so it was good. A big thanks to everybody who attended. Obviously, thanks to our sponsors, and thanks to Zander for all the help in pulling it off. I don’t think we’d really still be doing MicroConf if we hadn’t found someone to help us put it together each year, because that takes a lot of the burden and the time investment off our shoulders.
Mike [00:29:29]: Yes, definitely a big thanks to Zander and everyone else who helped out. It’s very nice to have people like that on the team.
Rob [00:29:34]: And if this sounds interesting, we’re throwing another MicroConf in just a few months, July 31st and August 1st of 2016. We’ll be in Barcelona, Spain. If you’re interested, go to MicroConfEurope.com. There’s a little Drip widget in the lower right where you can enter your email address, and you’ll be one of the first people to hear about it.
Mike [00:29:53]: I think that about wraps us up this week. 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 is an excerpt from “We’re Outta Control” by MoOt, used under Creative Commons. Subscribe to us on iTunes by searching for “startups” and visit startupsfortherestofus.com for a full transcript of each episode.
Thanks for listening, and we’ll see you next time.
Episode 283 | Stair-Stepping Into a Different Audience
Show Notes
In this episode of Startups For The Rest Of Us, Rob and Mike talk about how to stair-step into a new audience. They define what the stair step approach is, ways to get into a new market, and how to utilize your existing strengths on your new audience.
Items mentioned in this episode:
Transcript
Mike [00:01]: In this episode of Start Ups for the Rest of Us, Rob and I are going to be talking about stair stepping into a different audience. This is Start Ups for the Rest of us, Episode 283.
Welcome to Start Ups for the Rest of Us, the podcast that helps designers, developers and entrepreneurs be awesome at launching software products, whether you’ve built your first product or you’re just thinking about it. I’m Mike.
Rob [00:24]: And I’m Rob.
Mike [00:25]: And we’re here to share our experiences to help you avoid the same mistakes we’ve made. How you doing this week, Rob?
Rob [00:28]: I’m doing pretty good. I got an interesting little hack that I heard about on a podcast where if you’re sending your new trial signups into Slack — like we send it into a signups channel so we can see whose signing up. If you’re already doing that, you can wire [Zappier?] up to essentially monitor that channel and pull a domain name, or an email address, out of the Slack chat and then push it into FullContact, and it gets the information so you can actually figure out, ‘Hey, does this person or company have a lot of Twitter followers? Do they have big social media presence? What’s their LinkedIn bio and their Twitter bio?’, just to get more information about them. It was surprisingly difficult to set up. It seems like it should be pretty easy because [Zappier] tends to be pretty easy to use, but there was a bunch of finagling I had to do to get it set up. And then, in the end, it seems to work for less than half the trials that come through and actually retrieve any information from Full Contact. So, it’s an interesting hack if you have an hour to set it up and you’re interested in finding out more about folks who are signing up and can do a lot of follow up. But, to be honestly, in the end, I’m a little disappointed with the amount of effort I had to put into it and the results that I’m getting.
Mike [01:34]: Yes, I’ve looked into those services before and it seems like that, in a way – I’ll draw an analogy with something like ReportOf – where ReportOf seems to gather some of the information from LinkedIn as well, and I don’t know how well FullContact is able to do that? I think there is probably a huge discrepancy between people who are using their work email addresses for their social presence on Twitter or Facebook or wherever, versus people who are using their personal email addresses inside of LinkedIn and you’re able to kind of match that up. A lot of times, people will add in their work email address, for example, into LinkedIn because then it makes it very easy for other people they know, or work with, to find them. I think ReportOf is owned by LinkedIn now, if I’m not mistaken?
Rob [2:19]: I think you’re right. Yup.
Mike [2:21]: Yes, so they probably have all the tools and stuff they need to be able to get that information, versus something like FullContact which is probably a little outside of the box.
Rob [2:30]: Right.
Mike [2:29]: But that’s cool. I think these types services where they’re able to gather additional metidata about people based on their email addresses is nice to have when it works. But obviously, when it falls down it’s a little disappointing.
Rob [02:45]: For sure. What’s going on with you? You have a deadline coming up in the next couple days.
Mike [02:47]: Oh yes, hard at work trying to get all the code out the door. There’s a few–I’ll say minor–sticking points we’re still trying to work around, but I’m pretty sure that we’ll be able to finish this off in the next couple of days and hopefully get it in the hands of our first beta customer that is outside of the four walls of my office, and hopefully see what happens.
Rob [03:05]: There are always a few minor sticking points two days before launch, so no one would be surprised by that.
Mike [03:10]: You mean, getting 90% of the work done so you can work on the other 90 percent?
Rob [03:14]: Exactly. Exactly. Well good for you.
Mike [03:16]: We have an interesting question that actually came in from [ArmonMesic?] and it’s actually a little bit on this topic. He says, ‘ Hi guys, really like your show. You’re providing so much value, and after listening to an episode, my motivation is always going up. I’ve got a question for you. I’m launching my first product, and right now I’m sending cold emails to people. Do you have a suggestion of how I can track open rates on individuals? I didn’t find an easy way to do it. Thanks for any help in advance.’
I’ve done this before; there’s a couple of different tools that you can use. One of the things that I’ve used before is Sidekick–and there’s a Chrome plug in for that, and they, I believe, have a free plan which allows you to just see who is opening emails and who isn’t. But actually, your question actually leads a little bit more towards what I’m actually working on now with BlueTick, which is not only tracking how many people are opening those emails, but whether or not you’re getting replies to them and then managing that follow-up process beyond it. Hopefully that helps to answer your question. I would probably start with Sidekick, see if it does what you want it to do. There’s other options out there that kind of operate in this space though, and there’s probably a dozen of them. But hopefully that at least gets you on the right track.
Rob [04:17]: Yes. The other two that I’ve seen are Tout, which is at toutapp.com, and YesWare. I think Tout is web-based. It’s a full web interface. And then YesWare integrates with your Gmail account. Those are other ways you can trap opens on cold emails. So one other thing I wanted to toss in. Last week I mentioned listening to ‘Masters of Doom’. I found out this week that there’s not a sequel to it, but there is a book called ‘Prepare to Meet Thy Doom’ and it’s basically a collection of magazine articles. Most of them were published in Wired and maybe some gaming magazines. And it’s actually a collection of different stories about gaming. So there’s a 10 or 15 minute version. I’m listening to this. I’m sure you can buy it, and it’s 10 or 15 pages, band the audio version there’s one of Flappy Bird. There’s the story Atari. There’s a really good story of Gary Gygax, the inventor of Dungeons and Dragons. Then there is an update around 2004 – 2005 with the guys from ID Software. I just discovered this. It was published maybe six months ago, so if you have listened to ‘Masters of Doom’, or read it, and you’re interested in more like that, the same author has published a book called ‘Prepare to Meet Thy Doom’.
And then on another front, I’m listening to the Snowball audio book again, and that’s called ‘The Snowball” It’s the story of Warren Buffett, and it’s a very thick book. It’s a biography, but it’s was as-told by Warren Buffett to a writer. He said he’s never going to write his autobiography, so he wanted someone else to do it. I found this book fascinating in terms of someone who had this unique talent, this unique advantage. And he really, really likes financial reports, and he figured out how to read them better than anyone else. And then he figured out his investing philosophy and the dude just showed up every day for like fifty years, and he calls it “the snowball”. He just built the snowball over the course of that time, and started with a tiny little bit of cash and managed — I think it was parents and friends when it started, and he just built it up, built it up; a fascinating story of being in it for the long haul, and then playing long ball and looking out decades in terms of building wealth, instead of being in a big hurry for it.
Mike [06:15]: Yeah, I’ve caught bits and pieces of his story over the years, and it is kind of fascinating the way he started out with virtually nothing and then he decided to move away. I think he moved out to Omaha and then I’m pretty sure he moved from New York, if I remember correctly?
Rob [06:30]: Yeah. I think you’re right.
Mike [06:31]: It was just like people would say, ‘You’re crazy for leaving New York, because this is where everything happens!’ And he was still able to manage the business and do everything from a completely different location. And he hasn’t really changed his habits. He doesn’t live in this extravagant house. He runs business in order to play the game. iIt’s not because he wants money or needs money. It’s just he likes it.
Rob [06:52]: Yes. That’s the cool part. I like when folks who are in it for the long haul, and who have this one outlier trait, just double down on that and stick with it for so long. When that turns out well it’s a cool story to hear. And what I’ve heard is–I haven’t read the physical book – but there is an unabridged and abridged audio version, and I’ve heard that the abridged version is just fine. Because even the abridged version, I think, is like 20-something hours. I think the unabridged version may be like 35 hours. Personally, I’ve listened to the unabridged and I don’t feel like I missed anything. And folks who reviewed both of them said that the abridged was just fine. So what are we talking about today?
Mike [07:30]: Today what we’re going to be talking about is a thread that came up inside of Founder Cafe, which is our private-user community. It was a question about how to stair step into a different audience. So, essentially going from an existing business that you have that serves the particular niche, or a particular audience, and trying to leverage that audience, or the things that you’ve learned, into a completely different audience. And I think that there’s a bunch of different reasons that you might want to do this, but let’s do a recap approach to what the stair step approach looks like.
Rob [08:02]: Sure. So, the stair step approach is something that I developed over the course of several years. Eventually, I published a blog post on it, and did a talk on it. If you go to — we’ll link this up in the show notes – but it’s at softwarebyRob.com, or you can search on my name plus “stair step”. It’s not been mentioned in a couple of books, and people quote it in articles and stuff. The idea is that I’ve laid out these three steps–and you could call them stages or whatever, but it’s steps of your entrepreneurial journey as you’re trying to launch a product. I have a couple different versions of it, but the one I’ll really stick to today is the one about launching software products. Step one is really thinking about launching a software product with a one-time sale and a single sales channel. So, think about a WordPress plug in or maybe a mobile app, a Magento add on, even an E-book–yes, I realize that’s not software, but that kind of stuff. And you have a single sales channel, which is typically going to be like the WordPress.org plug in repository, or it’s maybe SEO, organic traffic, or maybe the Amazon store or the Android app store; YouTube; you really optimize and you learn that single channel, and the idea here is to get experience and to get some money under your belt and really just learn the game. Step two is to just repeat step one. Because the thought here is that you’re doing step one on the side, right, while you have probably a full-time job or you’re doing consulting. Step two is to repeat step one multiple times until you own your time. So you have multiple plugins. That’s an example; you can have multiple plugins, you can have multiple e-books, you can have e-commerce sites, or whatever it is. The reason that you just repeat those is because you’re just trying to get more experience and trying to get better at all aspects of it, like the copy-writing and the marketing, and once you have multiple then you have the diversification that you’re going to feel okay about quitting your job, and you’ll also have a lot of experience. You’ll have experience on multiple fronts. It’s you’re a single channel, it’s building a product, it’s launching a product, it’s copy-writing, all this stuff. Once you get to step two you also have a bit of experience, you have a lot of time, you have a bit of money coming in. So then you begin moving to step three if that is something that is interesting to you, and that is basically a recurring sales; typically, in our space, that would be SAS. And the reason I have these three steps is because you don’t just want to jump into SAS on day one and try to build it, because it’s complicated, it’s very competitive, it’s hard to do on the side; there’s a number of reasons, you don’t have the experience. Since SAS is competitive a lot of people will out-market you and out-build you. So, step three is to launch that SAS app and get the golden ticket, which is recurring sales.
Mike [10:23]: So now that we’ve talked a little bit about the stair step approach itself, let’s talk about why you would want to do this. Why would you want to move into a completely different audience, especially when you’ve already worked so hard to build up one or several small products such that they are making a full-time income for you. I think the first one is boredom. I mean, some people just get bored with working on the same thing and they get to a point where the money is not insignificant, and they don’t want to lose the money, but, at the same time it’s not it’s not necessarily bringing in the level of revenue that they want it to. So they look around and they say, ‘Well, I could probably do something better or bigger and in a different market, but where I am right now is probably not going to get me there.
Rob [11:05]: Yes, and this is really common. Especially if you’re starting with a step one idea, they tend to have a natural plateau once the sales channel is tapped out. Let’s say you’ve built something for pet sitters, or just a small niche–salons or barber shops or something. Obviously. those niches can be large, but the amount that you can reach through online marketing means is fairly small in those instances. That’s at a point where you should probably start thinking, ‘Huh, is there a larger market online that I want to reach online that I want to switch to for my next step.
Mike [11:36]: Another reason that you might want to switch is that higher lifetime values for your customers might not even be possible in a particular niche. That comes around a lot from products where there’s this one time sale or I would also say in the WordPress business as well. There are a lot of plugins where you can get the one-time sale and it’s not a stretch in order to be able to do that, but getting people to pay on a recurring basis for WordPress plugins right now is, I would say, a little bit difficult. It’s really not common for WordPress plugins to have a subscription model of any kind. I have seen them, I have paid for them myself, but it’s not common. And, for certain types of customers, they’re just simply not willing to spend a lot of money. So what happens is your lifetime values for those customers tends to be low, and it’s very difficult to increase it without going down the route of bundling, or providing completely different products that possibly overlap.
Rob [12:32]: Yes, I think there are a lot of reasons why high lifetime values aren’t going to be possible in certain spaces. If you think about lifetime value, if you have a subscription business then the lifetime value gets higher the longer people stick around. And if you have a one-time sale product, then you really need to either increase the up-front price–and there’s always a natural limit to that. Again, coming back to the example of pet sitters, they just aren’t going to be willing to pay $500 up front for a piece of software, It’s very unlikely. Their price point is going to be more like a consumer or prosumer. Photographers, I would say it would depends on if they are truly a professional studio running a studio. or if they’re, kind of, doing it on the side, that’s another niche that a lot of folks go after, and they are pretty price sensitive. So the lifetime value in these niches can have a cap. Now if you have enough volume, and if there are a ‘bazillion’ of them online, then the LTV has less of an impact because you can just get so many folks signing up, but that’s pretty rare. It’s a pretty rare niche that you can come in and find enough people that a low LTV, in essence, will work for you because then you have to go after the organic traffic, and you can’t do much in terms of paid marketing in that instance.
Mike [13:38]: Let’s talk about a couple of the really bad reasons for switching. You and I discussed this offline a little bit. Trying to come up with a absolute ‘This is a bad reason for switching’ was a little bit difficult. I think the best one that we came up with was the idea that the grass is always greener someplace else. So, if you’re looking around, and you’re looking at your product and you say, ‘Well this is difficult, and I think over there if I try and develop a product in this market with these particular types of people it’s going to be easier.’ I think that that may probably be the most, or I’ll say the worst, reason for trying to switch into a different audience. But at the same time, if you double down on the things that you’re doing now, in many ways, that is a competitive advantage, because it’s going to be difficult for other people to get into your market and replicate the things that you’re doing. So it kind of cuts both ways, which makes it difficult to come up with a lot of reasons that are just absolute and say this is a bad reason for switching. But there are a lot of places where there’s multiple caveats. For example, if you think that another company is going to come in and shush you out of a particular market. Let’s say your product is reliant on Twitter APIs, or reliant on data from Google. There’s this idea of a perceived threat from them doing something that is going to shut you out, versus how likely that is to happen. I mean, if all of your revenue is based on that one product, they have the ability to shut you down and it looks like they’re headed in that direction then it could just be out caution that you say, ‘Well, let me go and do something else in a completely different market so that I don’t have to worry about this problem.’ But, at the same time, you have to weigh that. It’s not a ‘this is absolutely going to happen’. You do have to take those into account, and there’s mitigating factors there.
Rob [15:19]: Yes. I think that certain people – and hopefully you know who you are. Certain people have the personality where they like to start a lot of things, and when things get hard they jump to the next thing. And I think that’s, kind of, what you’re kind of saying with ‘the grass is always greener’. Some folks are good finishers, some folks are good starters. But I think if you have the tendency to jump around, that’s probably a bad reason to just bail on something. If you feel like you haven’t stuck around to grow something to fruition, and you keep bouncing either from idea to idea or from market to market, that’s probably a bad reason. With that said, there are a lot of good reasons that we have outlined here with higher LTV’s, not an ability to grow, difficult market to reach. There are some good reasons to be doing that. I think a good example of this is what Brian Castle did. He had RestaurantEngine, he had Hotel Propeller, and he built and grew those things, and he put in the time, and he grew them for years. And he hit a point where he realized, ‘You know, I have a lot of skills. I now have an audience and a new space.’ He had the podcast and the blog and such. And he, in essence, moved on to AudienceOpps, and that has grown way, way faster, and there’s a number of reasons for that. But he wasn’t jumping around. He wasn’t bouncing from one idea to the next. He had put in his time, he had learned a bunch. That was really, kind of, a step one idea for him, and now he’s moved on to where his AudienceOpps is growing a lot faster, and it’s already larger than the other two combined. I think that’s an interesting case study of thinking about stair stepping your way not only up, but kind of a horizontal move into a different audience as well.
Mike [16:51]: So let’s talk about some of the options for moving into a difference audience. I think there’s three basic mechanisms for going into a different audience. The first one is to move an existing product that you have horizontally into a different market vertical. Essentially you are using the same technology but you’re marketing it towards a different user base. So there’s a couple of different places where you might be able to do this. So if you have a CRM package that is for web designers, you might say, ‘Well, let me try and take this and repackage it a little bit and put a spin on the marketing, and I’m going to market it towards software developers or freelancers, or something along those lines. It’s a slightly different market, or maybe even a radically different market, but the majority of the technology base is going to stay the same. Most of what is going to change is your market positioning, how you do your customer development, gathering the language that they’re using, and the new website that you’re probably going to use for selling that product.
Rob [17:48]: There’s obviously advantages to doing this. I mean, there’s less technical heavy lifting you have to do. You don’t need to build something from scratch. Faster time to market, because your software is already built, in essence. You need to make tweeks to it but you have the bulk of it. The negatives to this are it is a completely new market. You’re going to need to start from scratch. You’re going to have to do customer development. You’re going to have to build a support pipeline and the website from scratch. It could also be really confusing for some customers unless you pick a completely new name with new domain, and in that case, you are looking behind your SCO, your organic inbound links and your reputation, your brand. You leave a lot of stuff behind. So it depends on if you take the code base and move it over, or if you actually shift everything. Because if people are reading every article that’s saying, ‘Hey, this is CRM software for XYZ audience’, and they come there and it’s for a difference audience, that could be confusing. But, all in all, there is this old marketing saying that says, ‘Try and avoid selling a new product to a new market.” What you really want to do is you want to sell a new product to an existing audience that you have, or you want to sell an existing product to a new audience. But doing new to new is really bad. So this is a way to counter that; to take this existing product and migrate it into a new audience.
Mike [18:57]: And that leads us directly into the second one, which is to buy an existing product. This cuts down on your time to market, because there’s going to be less inherent risk with a business that already exists and is paying customers. But the downside of something like this is it does tend to be expensive. And the growth of that business can be something of a gamble, because you don’t have a good handle on what those customers want or what they asked for. You didn’t develop the product with them, so you don’t have a history of what those conversations looked like. You were essentially starting a lot of that marketing from scratch. So similar to the previous product where you’re taking the existing one and moving it to a different market, if you’re purchasing an existing product, hopefully it has some level of overlap with the existing customer base that you have, or the existing email marketing list that you have. But that’s not always going to be the case, and sometimes when you’re buying products you have to take what you can get. It’s something of a lottery when you’re trying to identify a product that’s out there, that’s available and on the sales block, or even if you’re making unsolicited offers to the people who have a product out there which seems to be neglected. You can make those offers. They may or may not take them. But obviously it’s something of a lottery when you’re trying to find a product that is going to overlap with your existing audience. Sometimes you don’t have a choice and you end up going into a completely different audience regardless of what it is that you’re actually looking for.
Rob [20:19]: Yes, and this has historically tended to have been my approach. I’ve acquired a lot of products, a lot more than I have built and launched from scratch. I like the model because, as you said, it does cut down that time to market. It reduces risk, assuming that you do have an audience that was already interested in it, and you do have some type of product-market fit. But these days it is getting more competitive the more folks learn about the opportunity to buy. And so I still think it’s a viable option, especially if you’re in the position where you do have a little bit more cash than you have time. A lot of our consulting friends, or folks who are doing well in their careers, are in exactly that position. So if i was where I am today – as someone who is 41 years old – and I was doing a high-end consulting, and I didn’t have time to build a product, I still would buy one. That would still be my approach for upping the stair step given the situation.
Mike [21:11]: And the last option for moving into a different audience is to create a completely new product from scratch. Obviously, the pros of something like this is that you start with a completely clean slate. You don’t have any previous baggage, there’s no previous customer support problems you have to deal with. But obviously, the downside is that because it’s all green field you’re building a new product from scratch and it’s going to take longer than you think it will. You’re not only just building the product itself, but you’re building an entirely new business from scratch. So there’s probably a lot of things that you’re going to have to learn, not just about the customers but about the space itself, the competitors, all the stuff that goes with it. It’s not just the technology stack and all of the code and the product itself. It’s all of the customer development as well. Which you’re going to have to deal with that stuff anyway, regardless of the previous options you chose. But with creating a new product, it’s going to be compounded by all the technical stuff you have to worry about as well.
Rob [22:05]: And this comes back to what I said about how you really don’t want to do this too many times in your career. When you’re first starting out, you tend to have to sell a new product to a new audience, because you don’t have a unique or unfair advantage that you can utilize. But, if you can help it, try not to build a new product in a new niche where you don’t already have some reach into it, because that is when it takes literally years to get that snowball pushing up the hill.
Mike [22:29]: So now that we’ve talked a little bit about some of the different ways to get into a different audience, let’s talk about how to leverage the existing strengths that you have. The first one is that some of your existing business processes that you’re already using for your other products can generally be duplicated. These types of processes include : how you handle your support, and some of the software development mechanisms and processes that you have in place. Many of the marketing processes that you have in place. So if you’re doing something like marketing Monday, and you have a checklist of things that you go through on a weekly basis, a lot of those things can be reused and just copy-pasted and then tweeked. So it really helps you to move things forward much faster than if you were to try and create them from scratch, because creating them from scratch is going to be extremely time consuming and a lot of times you don’t need to. You can already take the things you know and that you’ve used before and tweeked, and I wouldn’t say perfected, but I would spend a lot of time and effort making better for your existing products, and then translate them over onto the new product and the new audience, and just tweek the things that need to be tweeked. You don’t need to start from scratch for a lot of those things.
Rob [23:36]: Another way to leverage your existing strengths – your existing knowledge – is that a lot of tools, especially marketing tools, they tend to overlap from one business to the next. So an example is if you’re using Drip to send an email, and you already know how to use it, then when you move into this new audience, you can use it. If you’re pretty good at running AdWords and making those profitable using Facebook ads, using Twitter ads, that’s something that you can absolutely leverage because those are “can-be” audience agnostic. Now, you’ve got to make sure you have reach into that audience on that platform, but that’s definitely something you can use. And tools–like [Kismetrics] and [MixPanel?] and [Intercom] and all that staff, it’s like, well, why would you reinvent the wheel? You already have knowledge of them, you know how to use them, and you know that those work for you. So, just moving those into that new space would be worthwhile.
Mike [24:18]: The next way to leverage your existing strengths is to remember that your network today is bigger than it has ever been in the past. You know people today that you didn’t know when you started, and you should not hesitate to ask those people for help. Now, whether those people you’re asking for help are people that are colleagues, or existing customers, or prospects that you have on your mailing list, you can ask those people questions. You can use those lists to help generate questions and help identify additional opportunities that may be in either related or unrelated spaces. So if you’re looking to move into a completely different market, that doesn’t mean that the people who are currently on your list don’t have those types of problems. Let’s say that you’re serving web designers, again, as an example. Well, web designers may overlap in some way with software developers; they’re people who have both sets of skills. So if there’s a subset of those existing customers, or people who are on your list who may have a problem that you’re trying to target, definitely go talk to those people and try and engage with them to ask them questions about what it is that they need, and whether or not they’re currently paying for specific services, are they happy with them, what other products they use? Use those as customer development opportunities, because you already have the list. You’ve done the hard part of getting those people on your list. Make sure that you’re leveraging that.
Rob [25:35]: Odds are pretty good as well that you have practice being a manager, and delegating, probably outsourcing. As we know, if you’re going to be leveling up, you need to take on more responsibility, and the ideas are probably going to be larger, perhaps more competitive, perhaps more complex. And the better you’ve gotten at outsourcing, delegating and essentially being good as a manager – like having skills and being productive at that – that’s totally something you’ll carry with you from niche to niche, even if you decide to move.
Mike [26:08]: And that actually lends itself to using your existing base of contract or outside help that you’ve leveraged for assistance on your existing products. If you hired someone as an SCO as a contractor, if they worked out, definitely go back to them and use them for the new products that you’re trying to leverage into the new audience. There’s nothing that says that you can’t use those same resources for a new product that you’ve used, and have worked for you, in the past. That said, if they did not work out, or if things weren’t going well, you could also use this as an opportunity to find somebody else for a completely new market, without necessarily hurting people’s feelings as well, if you have personal relationships that you don’t want to burn.
Rob [26:45]: Another way to leverage existing strengths, I touched on earlier, but it’s essentially your marketing skills. If you’re SEO skills, PPC skills, content marketing, email marketing, if you’re a speaker and know direct sales, etc., They all lend themselves to certain types of businesses, and I think something to keep in mind here is not to pick that next niche or that next business because it’s interesting. Pick it because your existing competence in these marketing spaces gives you an advantage. So you can actually be deliberate about choosing that next idea, or that next market, based on skills that you’ve already developed and whether or not they’re going to work in that new market.
Mike [27:22]: Something else you can do there is to use that experience to actively avoid any businesses, or markets, or audiences, where the learning curve for it seems exceptionally steep. You are already starting over with a new audience. You don’t want to make it harder on yourself solely for the prospect of making it harder on yourself. There’s no good reason to do that if you don’t have to. So if there are places where your experience, or the relationships that you have, are going to give you the ‘ins’ into that particular market or audience. Make sure to use those, and to avoid the places where it’s going to cause problems for you
Rob [27:58]: Another tip to keep in mind is to take a long-term view. This is obviously going to take a long time, and any time you switch – whether you’re launching a new product or whether switching markets – it’s going to take a long time. And if you’re doing both, it’s going to compound and it’s going to be even longer than you want it to be. So take a long-term view and make sure it’s a direction that you’re going to enjoy, and it’s not something you’re trying to do to get out of your current situation, like we talked about earlier. If it’s just a ‘grass is greener’ mentality, then you’re signing yourself up for a lot of work. This is not something you’re going to be able to just pivot into in a month or two. This is months and months, if not multiple years, depending on how complex the idea is and the market you’re trying to penetrate, and how much of an audience you actually do have in that new market. So think about it long term and don’t just, ‘Ah, I can turn this thing around in 90 days and have this new product and it’s all going to be great.’
Mike [28:46]: And I think the last strength that you can leverage when trying to when trying to move into a new audience is to leverage your experience with the existing products and do not forget the basics of what got you where you are today. There’s all these things that when you look in a new market it’s very easy to forget where you came from, or the things that you learned very early on, or just gloss over certain details of how to do the basics of SEO, and how to optimize different parts of the sales funnel, or email marketing funnel, or anything like that. Don’t ever forget that those things are the pieces that got you to where you are today, and those are generally transferable from one product to the next just because the process of developing a product tends to be the same. The markets are different. The actual context of the marketing and the copy writing and all that stuff is different when you get into the details. But generally speaking the process tends to be very, very similar.
Rob [29:39]: Well 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 on iTunes by searching ‘start ups’ and visit startupfortherestofus.com for a full transcript of each episode. Thanks for listening and we will see you next time.