Show Notes
In this episode of Startups For The Rest Of Us, Rob and Mike talk about how to make your customers successful. Just putting out a functioning app isn’t enough, the guys talk through some points to help your customers navigate the ins and outs of your app.
Items mentioned in this episode:
Transcript
Mike [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 customers more successful with your product. This is ‘Startups for the Rest of Us’ episode 329.
Welcome to ‘Startups for the Rest of Us,’ the podcast that helps developers, designers and entrepreneurs be awesome at building, launching and growing software products. Whether you’ve built your first product or you’re just thinking about it. I’m Mike.
Rob [00:25]: And I’m Rob.
Mike [00:26]: And we’re here to share our experiences to help you avoid the same mistakes we’ve made. What’s going on this week Rob?
Rob [00:30]: Well, I finally broke down and I started listening to the book ‘Shoe Dog’ by Phil Knight. And it’s the story of Nike. Phil Knight’s the founder of Nike and I just kept hearing about it and I really don’t have much interest in the story of Nike from the outside. But it’s been on my wish list for probably – I don’t know – since the week it came out. And I just kept seeing it and I finally didn’t have anything else to listen to in the tech space and so I started listening to this book and instantly I was struck by how good of a writer he is. Just poetic. Like really amazing vocabulary. It just puts together very well. He’s not like a business guy writing a book. He’s like a writer writing a tale. And so it’s incredibly captivating from the start.
And then the other thing is, you get sucked into the startup story. And right now, I think he’s like five years into running Nike and it’s still like barely breaking even and he has a couple of employees working for him. But he works a fulltime day job as like a consultant like a Dloyd or one of those big three consulting firms. And he’s basically just pouring his money into this thing. And it reminds me of how quick everyone expects success these days with bootstrapped startups because that’s essentially what he was. And it’s – I’m trying to think if it’s the ‘70’s. It’s funny. Yeah. It’s got to be the late ‘60’s or the ‘70’s. And back then it just took a really long time to get traction. And so, all that to say, I’m about a third maybe half way through the book and I’m pretty riveted by the story. I begrudgingly kind of have to recommend it because it’s just a really good book.
Mike [02:03]: That’s interesting. I would imagine that for a company like that it takes a long time to kind of establish the traction. Plus, you’ve got all the manufacturing costs and everything else that as software people we don’t tend to have to worry about that stuff. Our biggest costs at this point are generally like the people who are building stuff not like the raw materials. And then on top of that, you’ve got to pay people.
Rob [02:25]: Right. Well, the trippy thing is he’s not even manufacturing at this point. All they’re doing is importing shoes from Japan. And he has an exclusive import of this brand called Tiger. He has exclusive for the western 20 states or something. And then someone else has the east coast. And that’s what he is. And he’s sold $1,000 his first year and then it’s $3,000 and then it’s $6,000. And each year is a doubling but he’s not actually making any money because he has three or four employees now. Most of them are paid way under market but they’re in it for the mission. That kind of resonated with me too.
I think of it as a bootstrapper. You know it’s funny when seven, eight months ago before the Drip acquisition we were paying people as much as we could and people were all in for us. And it was really fun to be working on Drip. And then when Leadpages acquired us they kind of told us, “Do you know that your people are under market and we should give then all raises?” And I was like, “I actually didn’t.” It never occurred to me because it seemed like a fair wage to pay. But when they actually look at big company’s salaries and they did a big comparison between what we were all making – that includes me and Derrick – we were just all under market.
The term I’ve heard for this. There’s a guy named Jason [Selby?] who I work with now. And he calls it combat pay. And he says those salary surveys are like if you work at HP or if you work at insert name of big fortune 500 company you don’t actually want to work for, then that’s where the salary ranges are. But if you’re actually working for a company that you love and it’s a small team and you enjoy your job, I know I’ve always been willing to take less money to enjoy my job a lot more. So there is a balance and you really see that. Back to ‘Shoe Dog,’ you really see that with them. There’s such a strong mission that people are kind of like, “Hey. Love the gig. Love working with you, Phil. And love what we’re doing.” And so, they’re just willing to work for basically whatever pays their rent. They’re not trying to maximize income.
Mike [04:08]: Sounds like that should be reversed as combat pay working for a large crappy company that you don’t want to be at.
Rob [04:13]: That’s the term, yeah. Combat pay is working for the big company meaning you get more pay because you essentially have a crappy job or a job that you hate is the idea.
Mike [04:23]: Cool.
Rob [04:24]: How about you? What’s going on?
Mike [04:25]: Well, I converted two more of my prepaid orders for Bluetick into paid customers. And then I also added another customer. And I did a demo a couple days ago for somebody who wants to add two or three different sales reps on it. We’re kind of going back and forth on that stuff now. And then, shortly after this call’s over, I have another demo. So, yeah. Things are moving forward in the right direction. It’s interesting using Bluetick to follow up with these people because I’ve had conversations with a bunch of people in the past and I basically throw them all into Bluetick and just let it go out there. It’s nice to see the product is doing exactly what it’s supposed to do. It’s getting the responses then I just pick them up and go from there.
Rob [05:02]: That’s cool though. Well, A: first of all, congratulations and whichever ‘Startups for the Rest of Us’ listener has the first week of March in the pool as to when Mike’s going to hit 25 customers, I think you’re first or second week, I think you’re going to be on a roll there. But that’s cool, man. To get another customer.
Mike [05:18]: That would be an interesting contest to run.
Rob [05:20]: I know. And have a pool with a bunch of squares each day for the next month or something.
Mike [05:24]: Yep.
Rob [05:24]: Good. Well, that’s cool. Good for you. And I think it’s great that you’re dog voting Bluetick with this. I mean, it’s only going to make you notice all the kinks and all the things that are wrong quicker and fix them without people having to tell you.
Mike [05:38]: Yeah. Definitely. There’s places where I’m running into where I want to integrate it into other products like Drip and Pipedrive and Google Spreadsheets and things like that. So I’m using the Zapier integration pretty well. And that’s anytime where an issue comes up that I run into where it’s like, “This is harder than it should be. Let me go fix that.” Obviously, I’ll just wire it up the way I need it to work but then look down the road at how can I fix this and make it better for people.
That kind of leads us into what today’s topic is which is that in having conversations with people, I’m going back to them and saying, “Now that you’re signed on, what is it that you’re having trouble with?” and getting those people on boarded. I’m starting to notice places where I know the application extremely well and if I need to go do something, I can just go do it. But for new people who are getting into it, they’re not familiar with it. Not necessarily familiar with the terminology or things that they need to do or even things that I want them to do. So, part of overcoming that I’ve just been doing some personalized onboarding sessions with them. But at the same time, I wanted to talk a little bit about some of the stuff that I’ve kind of identified and realized like just putting that app out there and having it functional, clearly it’s not enough for a full blown SaaS app. So I wanted to talk through some of the things that you can do to help make your app more successful. And, don’t get me wrong, I will fully admit that there’s certain places where I’ve completely fallen down on this so far. But I also recognize we need to do this at some point and it’s more a matter of prioritization than anything else.
Rob [07:02]: Yeah. And that’s what I like about this episode and the outline you’ve put together is that it’s right from your experience. These tend to be kind of the best topics to talk about. It’s what you’re going through at that moment and you’re trying to gather your own thoughts to come up with a plan. And that allows us to share it with the listeners as you’re going through it which I think is really cool.
So, let’s dive in.
Mike [07:20]: The first one is that you kind of need to take a look at your app and identify three things that the user needs to be able to do or needs to have done in order to be successful within an arbitrary time period. Whether that’s three days, seven, 14 or 30 days. Something like that. Just kind of draw a line in the sand and say, “In order for this user to be successful, I need them to have done these three things by that time.” So depending on your app, it may be at one end of the timeframe or the other but, ideally, you would like to try and get them through that as quickly as possible. If you can get them through in the first 20 minutes, awesome. But for some of those things it’s going to take time. In Bluetick for example, they’ve got a connector mailbox they’ve got to create sequences and then they’ve got to add people into those sequences. Those are essentially the three things that I’ve identified that they need to do those three things in order to get any value out of the product. If you don’t do those things, you’re not going to get value. You’re going to cancel. So I kind of monitor those things. I get a daily email that tells me who has done what along those different things when they last log in. All sorts of other information. But I’m really keeping a close eye on who has done what so that I can reach out to them and kind of help push them along.
Rob [08:26]: I don’t think there are always three. So for an example with HitTail, there really was just one in the early days and it was getting people to install the java script snippet. Because then that collected data and then they were done. As long as they had that data, they were getting suggestions. Long term they needed to be writing articles and doing stuff. But just for onboarding and them seeing value, they needed suggestions. Once the – Google did not provided it – then it became not installing the java script but using the Google webmaster tools kind of OOF process where they had to kind of log it in and suck out the data from there.
So it was really one step with HitTail. Later we added automated article writing that people could do. So maybe you could say it was two. With Drip – I talked about this in MicroConf a couple of years ago. Remember, I talked about the minimum path to awesome. And it was kind of like figure out when your customers get the dopamine rush from using your product and then figure out what the minimum path to that is. And I like thinking in terms of threes like you said. I don’t think it will always be that. I think with more sophisticated products like Bluetick, like Drip it will be three or more. We actually had different paths where if you were sending emails to customers, it was installing the Java script; it was putting some emails in a campaign like an onboarding campaign. And then – I’m trying to think what the next one was. It may have been setting up conversions to see if they converted. I forget what it was. And then for other people it was like if they use Stripe then we had them wire up Stripe so there was actually this fourth optional thing.
But yeah. And then you want to tell people how to do those in the app. We had the little bar across the top that we used to use. We don’t use that anymore. But it was kind of like a wizard that showed up all the time. Then you want to tell them again via email. And then you’ve got to at a certain point once you start scaling up you’ll figure out what the timeframe is that people can most often accomplish these things. With HitTail we realized they can install this Java script within the first five minutes and then they’re on boarded. And that was actually kind of nice.
I want to build another app like that, Mike. Where the onboarding is so [?]. Because then you look at Bluetick or Drip and by the time someone writes an email course, which we of course help them with and offered all this stuff, it’s days and days and you have to keep reminding them. So we realized that even a 14-day trial was probably going to be too short for people to really get any value out of a tool like Drip. That is why we landed at the 21-day trial. That’s kind of where we found it.
So, I like your thought process here. It’s mapping out maybe one, two or three things they need to do. Tell them in app, tell them via email and then figure out how long it takes on average and then that becomes your trial length.
Mike [10:51]: You’re totally skipping ahead of my outline.
Rob [10:54]: Oh, am i? Sorry. I didn’t read your outline.
Mike [10:55]: No. That’s okay.
Rob [10:57]: I got that off the top of my head.
Mike [10:57]: I think it’s a great lead-in though because, as you said, you can send them emails; you can have those in app wizards. I think there’s other ways to get in touch with them too and it depends on what your app is and what information you have about them. You could use SMS messages, for example. One of the things that I talked about was a concept you’d come up with several years ago called the Concierge Onboarding. And I do that for Bluetick explicitly for one step because connecting your mailbox is actually fairly difficult to do. So if I send somebody instructions on how to do it then they very well run into problems getting it done. So the onboarding session is I get their mailbox hooked up for them and I kind of watch over their shoulder, “Do this, do this, do this.” And even having stuff in the app, it only goes so far because there’s certain things that we haven’t implemented yet to make it easier. And we’re trying to get those done but it’s hard to do them. So, for the time being, I’m manually doing that stuff because I have to. But once they’re past that, the rest of the stuff I can rely on other mechanisms. But that one, at the moment, I don’t have any good way around it.
But I think that, more to the point, this is about finding the best ways to communicate and interface with the user to get them to that next step. And the default mode seems to be send them the information and let them do it. And some tools kind of target this market like Intercom that basically sits there in front of the user inside the app and says, “Do you need any help?” Or, “How can I help you out?” But it’s not active. It’s not really pushing the user and not really showing them, “You haven’t done this yet. Let me help you.” Or, “How can I help you?” Or, “Here’s instructions.” Does that make sense?
Rob [12:26]: Yeah. It does. There’s a lot of different ways to do it. I think the simplest one that you should get set up first that doesn’t require any code is to set up the email pings. And I know that some apps take this too far and a lot of apps are doing it now so it’s a little irritating but this was the game changer when I acquired HitTail is that they didn’t have this. And as soon as I added it, it completely rocked the trial to paid conversion rate of that app and it allowed me to start scaling it up.
So adding emails in and this just requires a little bit of time to write some onboarding emails that are like, “Here’s the benefit you get. Here’s what you can do. Here’s the easy step. We’ll do it for you.” And that’s the big thing. You’re talking about this Concierge Onboarding concept that other people claim they invented but, remember, I got into a Twitter thing where I was like, “Dude, you did not invent this.” And you went back through our transcripts from 2012 because he’s like, “Well, I did it in 2013.” And then you were like, “It was 2012 in our transcripts.” So thank goodness for the transcripts to kind of prove we were talking about it.
I remember coming up with this idea and saying Concierge. I loved that word. I’d never heard anyone use it in the context of a startup before or of onboarding. And we combined that and if you imagine, I’ll use the Drip example because this is where we started and we had a bunch of success with it early on. Someone comes in, they install the Java script and then they’re like, “Okay. You need a three, four or five-day mini course. You have not content right now.” This person’s not going to onboard. How do we remove every possible barrier to them getting that course done? So, right in the app, we gave them three choices. Number one: You can click here and we gave them scaffolding. It was blue prints. And so, poof, it prepopulates. Kind of hydrates a five-day email course with the right delays in between them and it has scaffolding kind of built into the email and you can just fill in some content and you’re done. The second option was – I see you highlighting exactly what I’m saying right now. Four bullets down the line.
Mike [14:14]: You’re skipping ahead again.
Rob: But I feel like it works in this context. And the second option was for them to click the button and we would do it for them if they provided us a couple pieces of content. We could build out that course for them. And that’s the concierge part you’re talking about. That’s where you’re actually doing something for them.
And then the third one, they could pay $499, talk directly to a writer. We did not mark that up at all and they would write a course from scratch if the person didn’t have any content. And we found that those three avenues – especially in the early days – very powerful at getting our trial to paid conversion was extremely high right off the bat. Even for an app without product market fit we were over 50% asking for credit card up front with trial to paid. We got that close to 60% at a certain point. So it was definitely a successful effort based on how hard it is to get on boarded in an app like Drip or an app like Bluetick because there is a bit of work to be done.
Mike [15:08]: Yeah. But I think you plan out those interactions and maybe there’s some sort of an escalation process where first it’s something inside the app and then you follow up with an email and then maybe after that you call them or send them a text message. Or send them multiple emails over the course of several days and maybe they get more – I don’t want to say violent – but a little bit more aggressive in terms of the language like, “Notice you haven’t done this. Can we help you?” And you kind of escalate what it is that you’re offering to do for them. Or how they’re going to benefit from them.
And you can alternate between positive reinforcement and negative reinforcement, I think. But the core piece, I think, at that point is to really plan out what the interaction schedule looks like for those users. If they do this, then great. Kind of reward them and move them to the next step. But if they don’t, do this. If they don’t do that after that response to them, try something else. And you kind of escalate what it is that you’re trying to tell them or communicate to them to get them to that next level. And planning out those interactions, I think is really important at this point.
Jenna of ProdPad had spoken at MicroConf Europe about how they used Drip to achieve this with what felt like constant emails. Like if somebody went into the app, they wired it up to Drip to have tags and events fired, it would essentially queue up the next email in a campaign to go to them to move them through this onboarding funnel. And, to me, it looked like, “Oh my god. You are sending these people a ton of emails when they literally just signed up for your app.” And if they don’t do something within 15 minutes, then you send them an email. And, to me, it seemed like overkill but at the same time she showed these graphs and charts that showed definitively that their user engagement had increased and they had these graphs and data behind it to prove it that it really was working well for them. And, obviously, it impacted the bottom line and allowed them to do a lot of other things. But the core piece of it is they got those people engaged and got them to move forward in that activation process.
Mike [17:15]: The next thing – I think this is more of a side point than anything else – but I’ve found that there’s this concept called deep linking inside of an app which the basic premise of that is that if you’re sending people communication via email, then you should provide links to take them directly to where they need to go inside of the app. And this isn’t something that we currently are able to do. But I think that it goes a long way in being able to send the user a button inside of an email that says, “Click here to view this dashboard or this set of data that you need to pay attention to now.” Because otherwise they have to log in then they have to navigate to the page and they have to remember where the navigation is. And for new users, I think, that that’s a little bit tough or difficult for them to follow because they’re just not as familiar with where they’re supposed to be going. If I say, “Go to the reports section,” that’s fine. But if I have 10 different reports there, then they have to figure out, “Okay. I’ve got to log in, now I’ve got to go to the reports section, now I’ve got to figure out which report it was that I look at.” And I think that that is an impediment to them adopting it and in getting to where they need to go and getting in and out of the app quickly to do their job.
Rob [16:58]: Yeah. I think this is a nice to have. It’s certainly not an absolute requirement but I think it’s something that you’ll want to get in after you get the initial kind of onboarding stuff built out. Because if you have to get them somewhere and you have to tell them instructions to click here and click there, you’re kind of dropping the ball. So this is probably something I would do pretty early on.
Mike [18:57]: Along with that goes personalizing the messaging that you’re sending to them. You definitely want to use some sort of a transactional messaging like the direct one to one communication. If you can use their name, great. Also be able to include data from their account in the emails that you’re sending to them. So specify, “Hey. You either haven’t logged in since such and such,” or, “We notice that this piece is still not connected,” for example. But I think you really want to dive in and identify the specifics of what it is in their account that you’ve noticed or identified as potential problems or places where they could get over that hump that will actually start to provide them value. And then remind them, “This is why you signed up for the this.” So that might involve incorporating dated from earlier in the process where maybe you surveyed them and they said, “This is the reason why I signed up.” And then kind of remind them of those things. Like, “This is what you said that you wanted to achieve and you’re not getting there yet.” And provide that information back to them and let them remember why it is that they originally signed up.
Rob [18:17]: Yep. More personalization equals more results. There’s just no question about it. Every test I’ve ever run, that’s where it will get you. I would say start off with a v1 that is less personalized and using a tool like Drip or autoresponders maybe in HeyWeb or MailChimp. I mean, they’re okay but it’s harder to personalize. But if you use a tool that can personalize really well then it makes it almost easy and in v1 you can stuff some stuff in there. Custom fields and such that talk about their plan. Talk about how much is left in their trial and be very specific about it. If you don’t have that control and you do just need to put in a static four or five email sequence without personalization, it’s better than nothing. Do it and make a note to circle back and improve it.
Mike [21:56]: That’s a good point. You can always circle back and go through those pieces again. You can add a little bit more polish to them. But getting them in place and getting the basic system up and running that’s extremely important. And if you can’t get that then, obviously, you can craft the perfect email. But if it’s not actually getting sent it doesn’t matter. So kind of get something in place so that it will go out there and you can iterate on it from there.
One of the last things I noticed was that you almost need to make sure that the user feels good about what it is that they’re doing and it is the right thing to do. And I’m not sure what my thoughts are on an all clear message or everything looks good from our side. But I think that there’s a lot of value in providing testing mechanisms and keeping in mind that the tool itself is not enough. You have to make sure that the user feels confident about what they’re doing and they’re not sitting there thinking to themselves, “Okay. Am I done? Should I click on this? Is this really the right thing? Are all these pieces set up properly? What do I do here?” And if you don’t give that person that sense of confidence then it makes it very difficult for them to be confident in the value that it’s providing as well. And kind of going back to what you had said earlier about having blueprints and the templates and the formulas in place that when you log into Drip, for example, one of the things that kind of came to mind when I was talking to one of my customers was – he’s like, “I’ve got everything set up but I’m not entirely sure what I should be doing.” So he sent me an email that said, “Can you look at this stuff?” But it’s because I don’t really have templates in place. And I recall that when you go into Drip and you set up a new campaign, it walks you through and says, “Here’s options. You can either chose from this blueprint that’s kind of off the shelf or you can create your own.” I think there’s a third option as well. But it gives the user a sense of well-being and, “I’m doing the right thing,” when they chose that blueprint. Because they’re like, “I don’t have to think about this,” or, “I don’t have to build something from scratch where I don’t even have a baseline.” It gives them that baseline.
And the last thing that I would say about this process is that in talking to your customers about the specific things that they’re running into is extremely valuable. And specifically, if you ask them about, “When you logged in or when you first started trying to do this particular step, what were you confused about or what didn’t make sense?” Because, as I said, it’s obvious to you what needs to happen next but, if it’s not obvious to them, then they’re probably not going to do it or they’re going to ask for help. And it’s more of what you had just said. In order to scale up your efforts and get past that critical mass when you start inviting dozens or hundreds of people at a time in to use the app, when they sign up it’s going to be very difficult for them to get in there and use the product and be effective with it. And you’re just going to be overwhelmed with having to follow up with all those people and track them down and say this person didn’t sign up or this person didn’t do this. How do I get them to move to that next step unless some of that stuffs automated? But if you’ve done those manual steps up front, then you can automate it later. But you have to figure out what those things are first in order to get it right later on in order to automate it.
Something else I’ve noticed is that it’s not as important for them to actually do it, especially with the early customers as it is to understand why they didn’t do it. Because obviously you can typically go in and do anything you want inside of your app for them, but doing it for them or showing them how to do it is not going to solve your problems down the road. You really need to understand why it is that they didn’t do it or what didn’t you communicate so that they knew what to do. Because that’s your fault. That’s not the apps fault. It kind of is the apps fault because you designed it but it’s not the customer’s fault that they didn’t know what to do. It’s your fault for not communicating it well enough so that they understood what they needed to do next.
Rob [19:54]: Yeah. That’s right. And it’s basically taking to do’s off of your customer or your users list. And the more you can do that and the more you can make them feel like they’ve accomplished things even when they didn’t have to dig in and do a lot of their own work or do a lot of the work themselves, that’s a good way to go. And the further you can get them along that journey towards that dopamine rush, like I said, you’re going to be a lot better off and you’re going to have more retention.
This may all sound like quite a bit of work but the interesting thing to think about is really early on you literally do this manually. And you can send these emails out of your Gmail account. I did that for the first probably 15 or 20 paying customers in Drip. We didn’t have any onboarding built into the app. We didn’t have any of this stuff we’re talking about. And that got us to, like I said, around 20, 25 customers until we had a little bit of revenue. I think we had $1,000, $1,500 a month. But more importantly I then knew exactly what the onboarding flow should look like. And I had all these emails that I had been boomeranging and using and so then turning that into just an automated course that got spit out was a snap.
In addition, right before we sent the email to the first big chunk of people, which I think was either 300 or 600 people on our launch list, that’s when we realized, “We’re not going to be able to do this manual anymore.” That’s when we invested one week of engineering time. And Derrick and I sat down and we said what is the best way we think to guide these people through. And that’s where we came up with the do it in the app and email them and kind of try to move them through the flow.
So we did spend time building out this whole onboarding thing but you don’t have to do this before you start to scale a little bit. We had a launch list of 3,400 people and I knew that we had to have something in there or else our trial to paid would be abysmal and you don’t want to waste that. You don’t want to waste all those people who are interested about your product because they’ll come in, they’ll sign up. They’re interested, they’re curious. And then if they don’t do anything, then you’ve lost them. That’s the whole point of this episode is to show you kind of the steps to get there. But you don’t have to do this all up front. You should get – like we’re talking about – 10, 20, 30 paying customers and then think about, “What are my next steps? How do I scale this up?”
Rob [25:19]: So I think that wraps up this episode on how to make your customers more successful with your product. 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 Outta Control’ by MoOt used under creative comments. Subscribe to us in 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 328 | Updates on Drip and Bluetick
Show Notes
In this episode of Startups For The Rest Of Us, Rob and Mike give updates on Drip and Bluetick. Based on listener interest Rob dives into details on the continued growth and scaling and Mike talks about what areas he is focusing on to increase the number of paying customers.
Items mentioned in this episode:
Transcript
Rob [00:00]: In this episode of ‘Startups for the Rest of Us’ Mike and I gave our updates on Drip and Bluetick. This is ‘Startups for the Rest of Us’ episode 328.
Welcome to ‘Startups for the Rest of Us’ the podcast that helps developers, designers and entrepreneurs be awesome at building, launching and growing software products whether you’ve built your first product or you’re just thinking about it.
I’m Rob.
Mike [00:27]: And I’m Mike.
Rob [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 [00:33]: Well, as I said on a previous podcast – I think we last recorded about two weeks ago and last week was the interview with Wade Foster. But last week I was at an alternative conference up in Vermont called Big Snow Tiny Conf.
Rob [00:46]: Why do you say “alternative?” Was there bands there playing emo music?
Mike [00:49]: Well, you know. It’s the whole alternative facts thing. So this was an alternative conference.
Rob [00:52]: Alternative facts. Nice. So that was cool. Brian Castle runs that and you were there with what – 10, 11 folks?
Mike [00:59]: Yeah. It was about a dozen people up there. Yeah. It was a lot of fun. The weather was a little bit better this year. The first day of skiing was absolutely phenomenal. And then the next day I got a little bit tired near the end of the day and I’m just like I’m just not going to go back up there because if I do I’m probably going to get hurt. So I decided to skip out on probably an hour or two of skiing which wasn’t too bad. It was a lot of fun. I think that virtually everyone who was there was also going to MicroConf this year as well.
Rob [01:25]: What was your highlight of the conference? I mean, it’s not really a conference, I think that’s a misnomer. It’s like a group. It’s like a mastermind group, you know. Which is super cool. But I think of a conference like with people standing in front and sometimes there’s sponsor tables and such.
Mike [01:40]: Right. Well, I mean the thing is everybody gives a brief presentation or a talk or a topic for discussion and we go through like a dozen of them over the course of those three days. I think the first day we did like two or three and then the next one we did four or five and then the day after that we did another four or five. So we’d ski for half a day and then there’s just talks and presentations and stuff like that for the rest of it.
It’s really interesting to see the types of things that people are working on that you either just wouldn’t think of as a business or you wouldn’t think of how to do those things as – like marketing plans or things that you can do to find customers or to drive sales. It’s just really impressive to see the types of things that people come up with.
Rob [02:21]: Yeah, I bet. It’s nice to get in-depth exposure like that to other people’s businesses. I think that a conference or a gathering of this size there’s a real unique aspect to it. You and I’ve talked about doing a super small – you know we didn’t even know if we were going to lend it the MicroConf name – but it was going to be something like 30 or 40 people. And getting them together over the course of a few days. And Big Snow Tiny is even smaller than that so I can imagine it being a lot of – Especially if there’s good chemistry between the attendees. I bet you could get a lot of varied and good advice from experienced founders.
Because that’s the cool thing right, it’s not eleven people who are dreaming of starting a business. I would guess that everyone there has a business and is making money and you all have different experiences so you’re going to get a lot of valuable – some not valuable probably. If someone’s running an ecommerce site and you’re telling them about your churn rate maybe that person doesn’t have a good opinion or an experienced opinion on it. But I’d imagine the majority of stuff you come away with is pretty detailed and pointed towards your particular case. I’m conjecturing here. Is that kind of how it feels?
Mike [03:23]: I would say so. To kind of correct you on a couple of things, in terms of where people are at, there was one guy named Chris who had started a business literally a week before. And it was based around running Facebook as to drive traffic to a website and then you pay a couple of dollars and you can have a physical letter mailed to a congressional member of your district or a senator or something along those lines. So basically what he does is he looks up the information of where to send that letter and then uses geolocation based on where you’re at and says these are the people that you would send this letter to and, by the way, here’s the template and it’s related to whatever the issue is that you are interested in. So if he drove ads based on EPA stuff or gun control or what have you –
Rob [04:08]: Immigration.
Mike [04:08]: Yeah, immigration. He’s got all these things templated and, based on which side of the issue you’re on, he will give you the template. You can customize it and then he will send it for you for a couple of dollars.
Rob [04:20]: That’s pretty cool.
Mike [04:20]: And he started it like a week ago. He was literally printing them out and putting stamps on them and mailing them. And he’s like, “This is all, I’m just validating, just kind of seeing what’s here.” He’s like, “It’s interesting. It may not turn into nothing.” But to me it was interesting. It was extremely interesting to see what he was doing and how he was doing it. We all gave him feedback and we’re all like double your prices.
Rob [04:38]: Right. Well, and it’s cool to see someone validating like that. Those are the fun days. As stressful as they are because you don’t know if you should do it or not. Like the validating stuff is just new ideas, you know they’re actually putting into practice. So that’s kind of cool someone attended at that stage.
Mike [04:53]: Yeah. And then you’ve kind of got the flip side where like a guy named Chad DeShon was there and he ran a Kickstarter campaign where he did like $2.6 million in sales of board game tables. So he talked a little bit about his experience outsourcing to China and having things brought over. And it was really interesting seeing, I’ll say, both ends of the spectrum where you’ve got somebody who is just starting out. They literally just started trying to validate this idea. And then somebody else on the other end where they’ve already got the money, they’re basically trying to get their logistics pipeline down to deliver everything to people. And it’s just amazing to see the differences between those stories. And they’re both interesting, I think.
Rob [05:32]: Yep. I agree. Speaking of board game tables. If you’re into board games, you need to check out BoardGameTables.com. That’s Chad’s business. Those tables are awesome. I have been eyeballing one for a long time. Just love that you can cover it up and leave. It has a felt surface but it’s sunk down. And so, let’s say you have a big D&D game spread out, it looks like hell and you’re going to run that for months if you have a long campaign. But you can cover it. And that’s the big plus for me is that it looks like a real table on top. Anyways. And there’s cup holders. It’s just designed perfectly to play board games. So a little plug for Chad there. I’ve been a fan of the tables for a while.
Mike [06:09]: So what about you? You went to SaaStr last week, I believe?
Rob [06:12]: I did. Yeah. I was in San Francisco with several folks from the Leadpages crew. And, as expected, SaaStr was – they said it was 10,000 people, I’m not sure if it was actually that many. It didn’t feel that big but it was a big conference. And the most value I got was from the team building, the comradery of hanging out with the folks from Leadpages because I don’t often get to hang out with five or six others at once. We had dinner together. We were doing happy hours together. It was just a fun time where you can really dig into some interesting conversations. There are only so many people in the world that have that much in common with you and know that much about your business and what you do and you know what they’re up to.
I was talking to the CFO and he’s like, “What would you think if we did this to pricing?” And it’s like, “Oh, what a cool thought experiment.” I was able to say, “Well, we tried that and it did this.” Or, “Here’s my opinion.” You would never set up meetings to talk about these kind of high level things that you’ve had. Almost thought experiments, to be honest. And yet doing it can be really fun. I enjoyed that part of it.
I ran into a couple people and I set up a couple meetings with folks. Overall, my crowd, I went through my whole rolodex like of all the MicroConf speakers from the past several years, like is anyone here? And they weren’t. I was thinking may be Heaton or Stella would be there. Jason [Cohen?], Dan Martell. Just anybody – because I would love to connect with them – and they weren’t there.
I ran into a few people but overall it was probably not something I’ll be going back to. It was just too big, the sessions are interviews and panels, which I don’t get a lot of value out of because they’re just not actionable and I can hear them on podcasts. I think you really go there for the networking. And the networking was actually with my own coworkers. So I started thinking it might have been cheaper if we spent a couple happy hours with the same crew.
Just my opinion of it. I respect the heck out of Jason Lemkin and like the SaaStr brand and I like what they’re up to. But a conference that big is just not for me.
Mike [08:04]: I think that’s a great way to get company funded happy hours. I think that’s what you’re going for here.
Rob [08:10]: Totally, right. That was it. So this week, by popular demand, we get requests to hear more about what we’re up to. And we like to do update episodes every once and a while. Frankly we could probably start doing them a bit more frequently. Today we’re going to talk through some stuff that’s been going on recently with me and Drip. And then we’re going to dive into what you’ve been up to with Bluetick. It’s been a few months, I think, since an update and I think there’s a lot to be said here.
So to kind of kick us off, Drip is continuing to grow and it’s growing quickly. And since we were acquired by Leadpages seven and a half months ago, I think we have six times more users than we did, I mean it’s just this crazy fast growth. It may even be more than tha, it might be like seven. It’s a lot. We have seven times the number of trials coming through each month. At every scale you imagine just almost 10Xing in every direction. And so that has been a focus of ours just scaling the technology. We hired a couple more engineers a couple months ago. I just hired one, we’re in front end who’ll start in a month. And then we have an open Ruby on Rails position.
And these are good problems to have. You need to scale stuff up. But what we’re trying to do is continue to ship features because that was the thing for a couple months we almost spent a lot of time just getting enough servers up to keep handling the queues and to keep everything running. We’re definitely – knock on wood – We’re out ahead of that right now. But that does continue to be a focus.
We have basically two full time engineers now. All they do is scaling and performance. And they’re just rewriting, they’re refactoring, they’re adding servers, they’re figuring out what’s going on here. I think I’ve said it before, now I understand how you can get an engineering team of 20 or 30 people on a product because you just have so much stuff that you are trying to keep going.
Mike [09:51]: Yeah. I’m curious about that a little bit more because if you were at a certain scale before and you were obviously at some point running into scaling issues to begin with, you’re looking seven and a half months down the road and you multiply your size by six from where you started. That’s a lot, I mean you’re adding basically an entire customer base just about every month at that point. So what sorts of things have you run into that have been especially difficult or challenging to resolve. Are there things that came up that you would never in a million have dreamed that you would have run into that and suddenly now it’s a problem?
Rob [10:28]: There are a lot of edge cases that come up. So there’s two things, one is just scaling to that level. Another one is when you’re sending tens of millions of emails and you have thousands and thousands of customers, the littlest bizarre edge case is just bound to come up. So we do find ourselves kind of troubleshooting things and trying to figure out how to best handle those.
In terms of scaling, I think there’s kind of three fronts and probably four. One is just the database. We continue to have to increase the size of the hardware that it runs on and give it more RAM and then give it more IOPS they’re called. IO per second that allows reason rights to the disk. And I find about every four months we have to increase something on that. It’s nice that Amazon keeps pace and continues to add larger and larger server instances because I don’t think, at our current pace – again, knock on wood – we’re going to outgrow what they have to offer. But the place that we hit – probably about three months ago – was when there was one aspect of Drip, where you know where you’re going and you just create ad hoc subscriber queries basically. You can just create a segment and you’re like anyone who has this tag and hasn’t visited this page and has opened this email. We just basically let you “and” and “or.” You’re almost building a sequel query it’s just with a nice visual interface. That can get incredibly complicated as you can imagine. Some people will “or” together 10 things and that’s like joining on 10 tables in the database and some of which have a billion rows. So that doesn’t scale. And we eventually hit the point where no matter how much hardware we threw at it for our largest customers it was still not fast enough.
So that was the big one that we really had to have that breakthrough on. And I talked about it on the show a few months ago where we were going to shard the database, which is just catastrophically complicated. And we figured out a workaround and it’s was just way to technical to go into here. But we figured out a way to just completely rethink and rewrite that whole piece of it, the subscriber querying, to where we’re not querying the database live. And we’ve seen 10X and up 100X speed improvements on that. It just completely changed the game. That was kind of the biggest pain point. And I think that improvement alone will give us a year, two, three years of more expansion now, which is a really good feeling to have.
It’s not to say other parts of the app won’t experience slowdowns. Your reports are always going to slow down as you get more data in the database. Other things like that. We are also adding read replicas now. We don’t just have a master database with a hot backup which is what we’ve had for a few years. We’re now starting to add other replicated databases that we can hit and not impact. You’re just reading from them, right, so we don’t impact the main database.
So those have probably been the biggest scaling things recently that we’ve been tackling.
Mike [13:06]: I think dealing with that centralized storage in the background for the database itself, that’s the hardest thing. I’ve seen a lot of different strategies for people doing that. Some of them just say, “Oh, well. We have a separate database instance for each customer.” And I guess that’s one way to go so you don’t have a multitenant database. It’s just each customer has their own. There’s all sorts of other operational challenges with doing that. If you have to make a schema update, for example, you have to make it across every single customer’s database. And that’s not always the easiest thing to do in the world.
It’s just kind of interesting to see the types of things that you’re running into. From my perspective, I’m thinking about the things that I might run into because you had just said, for example, the customers can create their own ad hoc queries. And that’s something that I started looking at and then I realized how complicated it was going to get and how difficult it could end up being because of performance issues. And I kind of backed off from it and I just said, “Look, just make it simplified for now and I’ll come back to it later.”
Rob [14:01]: I think that’s a good call. Yep. I like that we have this feature but it has obviously been quite a bit to keep up with, because as soon as you allow ad hoc stuff people will build crazy stuff and expect it to work. So I would almost lean, especially in the early days, lean towards not having it and having just a few canned things that people could do.
Mike [14:17]: In terms of the other aspects though, obviously just dealing with the scaling challenges alone is one problem, but what about building new features and what about customer support and onboarding. Do you have any things that get escalated from the customer support side that you need to deal with? Because I’ve run into some of the stuff recently where a single customer support problem can chew up easily several hours of time.
Rob [14:40]: Right. Luckily, and to Leadpages credit, pretty quickly after we moved over they started adding support people from their team and then they started hiring – I think they hire externally now. And we went from one support person when we were acquired. One fulltime. And I think we have six or seven fulltime now. And I have had to pretty much do zero work on that. And that’s the kind of thing that- Because how else could we have scaled that. I wouldn’t have had the time to hire that many support people. And they’ve done it with customer success, they’ve done it with sales, they’ve done it with marketing. All those aspects I’ve been able to hand off has freed me up to be able to focus on exactly this. I focus on scaling, focus on shipping features and hiring.
It’s pretty rare that stuff gets escalated. The support team is very, very good and most stuff doesn’t come back to me anymore. There’s just enough layers who know how to make judgement calls and it’s pretty rare something comes back to me. And that’s the support side which feels great, to be honest. As much as supporting your app is something you have to do, it’s not necessarily something, as product people, that we want to do. It doesn’t move the core product forward which tends to be my focus.
In terms of shipping features, we slowed down, I’d say, for the first couple months after the acquisition and then we started speeding back up and we’ve been at a pretty even keel hiring pace of an engineer every month. Maybe every two. That’s allowed us to continue to ramp people up. Like the two engineers we hired a couple months ago are fully ramped up and they’re shipping a lot of features now. So we’re probably at a faster pace than we were before the acquisition even with the scaling. And that’s purely just hiring new senior people who can get up to speed in a month and get it out.
So I’m pretty excited right now. I go through stressful times of, “Oh, no. Are we going to scale? Are we shipping fast enough?” And right now I’m pretty optimistic based on who we have and all the stuff that’s almost – there’s a bunch of features that are almost done. And that’s a good feeling to have. It’s not like everyone is bouncing around. It’s like there’s some things that are literally three or four pretty cool features within a few weeks of shipping right now depending on how we roll those out. That’s exciting because I think shipping features is what we do. That’s the dopamine rush.
Mike [16:44]: Very cool. What else is kind of on tap for you guys?
Rob [16:47]: Yeah. I think just to round it out and wrap up my part. Basically the free plan is still going strong and that’s got us a lot of notoriety in the space. And free plan is a long term play and it’s something that takes a lot of time and focus from a certain group of people to make that work. You don’t just start a free plan and then people magically convert to paid. You have to be very strategic about what’s the limit on the free plan, how do you think about getting people on a value that they get to that limit. And so there’s a couple people – at least two or three – who are thinking about this a lot and customer success is working on it and so far so good. It’s a long term play.
A few people have asked me, “How’s the free plan working out?” And it’s like, “It’s working.” But it’s like you can’t even tell until months after you start this thing until you get enough numbers to actually be able to make a judgement call on it. I can’t say, “Oh my gosh. It’s the most amazing thing ever and we’re going to do it forever.” And I also can’t say, “Oh, it’s not working.” It’s kind of like yeah. The early signs, even though we’re months in, the early signs are that things are going well and it’s bringing a lot of new folks our way.
So that’s it for me. Let’s talk about Bluetick. And for those who don’t know, it’s also an email app but it’s not really email marketing. It’s called Bluetick.io and you want to give the one sentence description of what it does?
Mike [17:57]: Yeah. It’s essentially a way of systematically and automatically following up via email with people that are, I’ll say, later on in your sales funnel. Kind of like after they’ve gotten into your marketing funnel, they have expressed some interest, this will essentially help move them through that early sales process where you’ve got a warm lead who has expressed some interest of some kind. Whether they opened up a bunch of emails or they sent you an email and say, “Hey. We just wanted to talk a little bit more about this.” And then you can use it to push them into like a conference call or something like that. And if they don’t respond to the first email it’ll send them another one and send them another one and kind of move them through that process automatically so you don’t have to think about, “Oh, is this the second email I’ve sent them? Is it the third? How long did I wait?” And you don’t have to manage that process at all. It just does it for you.
Rob [18:43]: You realize that was more than one sentence right?
Mike [18:44]: Yeah. I know, I know. I was giving examples of what it could do beyond that.
Rob [18:47]: I know. So you took pre-orders, you had some folks pay you – I forget. How much was it? The pre-orders?
Mike [18:53]: I gave people the option, more because I was just flushing it out. I said, “You set your own price and then tell me how many months of service that you’re willing to essentially prepay for.” And people paid anywhere from, I think it was around $40 a month to $100. There was one that was at $100. Everyone else was between $40 and $50. So then I basically went back to them, and my final pricing at this point is $50 a month.
Rob [19:18]: And so, have all the folks who’ve preordered from you, have they had a chance to get into the app and dig in? And how is that going in terms of converting them?
Mike [19:26]: I on boarded all of them, and I would say I definitely made some mistakes in that aspect. When I took the preorders I said, “I’ll onboard you and I won’t start charging you until you’re seeing value from it.” And the problem is that because that is such an open ended thing, it doesn’t force it to the top of their priority list. So this month what I’ve started doing is going back to them and saying, “Look, I need to draw this line in the sand for anyone who’s placed a preorder.” And I’m trying to put it towards the end of this month, which I may end up being three weeks out or four weeks out or something like that. But there’s going to be a line in the sand that says, “Look, up until this point, let’s get you on boarded as a paying customer and convert your extended trial into a paid subscription or let’s kill it if it’s not going to help you or, if you just don’t have time.”
Rob [20;12]: Yeah. That’s a good way to go. That’s why free trials work rather than often, especially if you’re a beginner, free plans versus free trial is a different thing. And the difference is free trial has an expiration date. And wether you do a 14 or a 21 or a 30 or a 60 or whatever it is, at some point there is that line in the sand. And that’s some time pressure to get someone to commit or not. I think it’s very good that you’re switching to that.
In the early days of Drip when I had preorder folks in there, I said the same thing. Once you get value out of it we’ll do it. And then about every week or two, I would email them and I had all these emails boomeranging back to me. And when I got a boomerang from someone, I would log in and I would look and see what are they doing in Drip, have they actually imported a list, are they sending email and then I would ping them and I would be like, “Hey. I see you’re not sending emails. Are you interested? Let’s get this moving forward.” And if they had emails, then my questions became, “Hey. Do you think you’re getting enough value out of Drip to pay $49 a month now?” That was it. And then I’d follow up every two weeks and eventually some people converted. I think most people converted and some didn’t and that was okay.
So I hear you. It sounds like you didn’t do that early enough. You said you kind of made a mistake with it. Like you didn’t have enough time – not even time pressure – but maybe enough follow up. Ha, ha. That’s kind of funny. Follow up. You go to run them through Bluetick.
Mike [21:27]: Actually, I am at this point.
Rob [21:28]: That’s cool.
Mike [21:29]: Yeah. I basically set up all the automation for that so it’s not going out to them. And I’ve got a whole sequence of emails that’s being sent out to them. So if anyone’s listening, yes, those are completely automated emails at this point.
But, no, I think for me it was an initial hesitation to really push forward. Because I kind of had it in my head like I made a mental promise to these people like, “You can have this until it provides value.” But that doesn’t do them any favors and it doesn’t do me any favors. It’s not helpful to either one of us. So there really needs to be that emphasis on some sort of a timeline or reckoning so to speak to just say, “Look, it’s got to move forward and if it doesn’t, that’s okay. I just need to know.”
Rob [22:06]: Right. You’ve got to channel your inner sales person and ask for the close. Cool. And you were telling me offline that you added a couple more customers.
Mike [22:16]: Yeah. Just yesterday I added one new customer and then yesterday I also converted one of the prepaid customers into a paid subscriber. I gave him 20% lifetime discount, applied his prepayment as credit so he’ll have several months of the service. And then after that it’ll start charging him on a regular basis. But basically gave him a credit for that and just said, “Yes, now it’s providing value so let’s just start charging you and we’ll cut into that credit.”
Rob [22:42]: That’s cool. Always good to get new customers. Is that your plan? To keep getting – because we had talked about awhile back you were going to do a public launch. But it sounds like you’ve continued to add a couple customers here and there every few weeks. What is the plan right now? Which direction are you headed?
Mike [22:58]: I was talking about this to my mastermind group last month – it was around the last time that we’d discussed it here on the podcast – and they actually talked me out of going through and doing the launch on the 31st of January.
Rob [23:10]: Why is that? What was their argument?
Mike [23:13]: Their argument was they didn’t feel like I had pushed enough people through the system and it wasn’t getting enough usage to help me identify the places where I would run into problems in terms of support or scaling or just answering questions accurately or in a way that doesn’t overwhelm me. I looked back at it at the time and I said, “Well. You know. Maybe you guys are right.” And I look back at it now in retrospect. It was like, “You guys were definitely right.” I really needed to back that off because there’s times where I will burn through an entire morning just going back and forth with people on support calls. Literally – I did it this morning as well – where somebody will say, “Hey. How do I do this?” Or, “Got this problem here.” Or, “I’m trying to import a bunch of people and what’s the syntax for this or that?” And I’ve got support documentation but I’m starting to find that there’s places where it’s just incomplete and there are a lot of edge cases where the questions just simply aren’t answered because they’re not well documented in the documentation. I can go in the code and look at it, and I can tell the person how it is but that doesn’t help them because they can’t just go to the support site and just pull it up because it’s not well documented.
Rob [24:15]: Documentation like KB’s are so time consuming to get started. I remember when we first started Drip it’s just like, there’s so much information that’s imbedded in your head and in the code. And trying to translate that into helpful articles and figuring out what people can help with, it’s hard. It is really hard. And if you recall, our early docs for Drip were me recording screen casts and it was purely a time thing. I just did not have time to write that all out. I got mixed emotions from that. People have said, “This is fine for now,” but often somebody was in an airport and the Wi-Fi wasn’t fast enough. And then another person was saying, “I don’t want to watch a three-minute screencast. I just wanted to skim an article.” And of course, creating an article takes a heck of a lot more time. I later circled back and paid someone to turn those screencasts into articles. Not to just transcribe it but to actually turn it into a well-written thing, take screenshots. And then we had a customer success person who had some free time. He then became the KB czar and he just started cranking out KB things. But as a one person show, you just don’t have the time to do all that.
At best, in my opinion, you’re going to respond via email and then you’re going to take that response, you’re going to paste it into a KB article and it’s not going to have screenshots and it’s not going to be fully flushed out but it’s going to be something. And I think that’s probably where you need to start.
Mike [25:33]: That’s, honestly, like what most of my KB articles are right now. People ask me how to do something and I took some screenshots and I sent it over to them. And then I took those same screenshots and I posted them into the KB article and said this is how you do this.
Rob [25:45]: Yep. That’s how you do it.
Mike [25:47]: It’s quick and dirty but it works and it doesn’t suck up a huge amount of my time. But then there’s things where, “How does this need to be formatted?” And I’m like, “I don’t actually know because that’s a library that I used.” So then I have to go figure it out and then come back to them with the answers. And, of course, while I’m doing that I also add in a couple of unit tests. Be like, “Hey. Does this actually work?” Because if the library gets updated, for example, and whatever gets through I want to make sure that those things still work later on.
Rob [26:12]: Right. So you’ve backed off from the public launch. And here’s the thing. Your mastermind group has more intimate knowledge than any of us. Including me. But certainly more than any of our listeners in terms of exactly where you are, how things are going. Just because they get so much more in-depth information about it. I think I know the folks in your group and if they’re recommending that I actually thing that’s probably the right way to go.
Did they not think you had product market fit and you still need to tweak some things and get some more features out? Or is it that – feeling like support. I think you mentioned that support might not be able to scale or something. And that sounds kind of like maybe work a few extra hours or hire someone to help you part time with that. I would probably dive in and not try to prescale stuff like that. You know what I mean?
Mike [26:59]: Yeah. I think what they’re looking for is me to get to somewhere between 20 and 30 paying customers before I flip the switch. I think there’s a difference between having people who are on the system and using it in name but not really exercising a lot of things versus somebody who’s paying for it and they’re probably using it a lot. And if they’re not using it, they’re going to cancel. So there’s that, I’ll say, scale that you get by virtue of just having people pay for it because they’re not going to pay for something they’re not using. By constantly using it and finding bugs or edge cases or integrating it more fully into the automation systems that they have in place, that finds those edge cases.
And it also helps me flesh out some of the marketing stuff. I worked with somebody yesterday who said, “Hey. It would be really great if, when somebody finishes this email sequence, if it could go over to the pipe drive and just automatically close out that deal or whatever.” And I’m like, “Oh. Actually you can do this and you can actually do it now. You don’t have to wait for anything.” And I sent them screenshots and I basically walked them through and said this is exactly how to set that up.
But that’s not something that is going to come up until I get to that point where lots of people or a kind of critical mass of people are using it that let me know that, “Hey. I have this question. How do you do this?” And then those different use cases can end up on the sales website to help attract more customers. It kind of feeds back into itself at some point.
Rob [28:19}: Yeah. That makes sense. I do think that that 20 to 30 paying customer mark is about the point where you really know that stuff is working. And then, of course, you realize when you get to 100 customers that you really didn’t know that stuff was working. But at least you know something. It was somewhere between 20 and 30 with Drip where we basically started doing those launches to the 300 to 600 emails on our list at a time. Sounds like you still have more work to do.
That’s the thing. It’s like launching is – You could launch today. You could just send out an email and get everybody in. And you may bleed everyone out because you don’t have product market fit or you might not be able to support them and so they get pissed off and leave. Or your onboarding may not be good enough or in existence and so you’re not going to convert them. Yeah. I don’t necessarily agree with that. I think the danger in stuff that you and I have talked about over the years with Audit Shark is that the launch just keeps getting pushed out. That you never get to that 20 to 30 customer mark. So I guess at this point your number one goal and focus should be getting to that mark. Is that the idea? It’s like getting one person a week, two people a week, whatever it takes and when you hit that then you’re able to pull the trigger.
Mike [29:28]: Yeah. [Heaton Shaw’s?] got a newsletter that he sends out – I don’t know whether it’s the same newsletter or not but he’s sent out something to his email list basically saying what’s the one thing that moves the needle for you at this point. And I read it and I thought about it and the one thing was basically moving people from either a trial into a paid subscription or just adding paid customers because those are the types of people who are going to be actively using it, versus the software sitting there in the background and possibly not doing very much for them. My focus at this point is just adding paying customers. One of the people who signed up yesterday, I started redoing some of the signup stuff on Friday so he couldn’t signup on Tuesday when he wanted to. So I ended up pushing him off and I said, “I’ll give you an invitation code. We’ll get you set up and then we’ll process your credit card later.” So I ended up doing that but he was thinking, “I’ll just log in and then I’ll hook up my billing stuff.” And I was like, “No, the billing stuff inside the app isn’t there yet.” And I honestly don’t care. It doesn’t need to be there right now. I can do that stuff manually. But I’m actively looking for ways to avoid touching any of that stuff because the product works. It does what it needs to do. So at this point it’s a matter of getting that marketing message right, getting the people in and getting them using it. And that’s my focus. Finding people who will actively use it.
Rob [30:46]: Yep. And I think, as your number one goal, I would focus less at this point on trying to scale documentation, or on trying to have stuff that people can find and you’re going to need to do, I think, a lot of hand holding for the time being. And I know it chews up time and you can’t really work on the product necessarily but that one on one time for those first 20 customers is going to be extremely valuable. I think if you have your launch list, you could start emailing one of those at a time. Like maybe do it in blocks of five or something. But pick five off the list. If you’ve surveyed them and you can tell which are most interested, you could start with the most or you could just go with the most recent and email five of them individually and be like coming from Mike to one person. Not a BCC. And be like, “Hey. Super interested in getting you onboard. You signed up for this. Here’s the big thing. Still in early access,” and trying to get, one at a time get people on boarded. Is that what you’re up to at this point?
Mike [31:43]: Yeah. This past week, I replaced a couple of pieces on the main page where previously it just had the email of course and it didn’t really say much about how you could sign up. Now I’ve replaced that and there’s a request invitation area right at the top of the main page. And if you enter in your email address it kicks you over to another page where there is a survey and it asks you to fill that out. Those replies go directly to me and it gives me some marketing information. But if somebody signs up for that and then goes through and fills out the survey, then I know that they are essentially more interested and I can pay attention to those people a little bit more.
You talked about emailing people individually. I can literally export my list of subscribers from Drip and put them into Bluetick and then just say, “Hey. Go ahead and just start emailing these people individually. Because that’s what it does. It emails people one on one. And I can send them into a sequence and try and get a response from them of some kind depending on what it is that I’m trying to get them to do. Whether it’s that survey or have a call or what have you.
Rob [32:44]: That’s cool. I like it. I think you’re making progress on the right things.
Mike [32:49]: Yeah. And it’s hard to figure out what is the right thing to be doing today or this week. At a high level, I know it’s get people in who are most likely to convert into a paying user because that’s kind of proxy for getting value out of it. But there’s all these other little things that kind of factor into that. And then, as I said, somebody can email you something and then it burns through three or four hours of you trying to figure out how to best help them and how to let them know this is what they need to do or this is how to do it. Or trying to do it for them and then show them after the fact.
Rob [33:19]: Two thoughts that I have with that. Number one: I think every task that comes onto your plate whether you’re pulling it off your Trello board or whether an email comes in. I think you need to ask yourself will this get the next customer on boarded or will this get the next customer paying me? And if the answer is yes – if it’s from a customer who’s trying to onboard and they’re struggling – then you do it. But if not and it’s from an existing customer who says, “Hey. Can you add this feature?” You can totally log that somewhere. But I would not stop then and build the feature. You know? Because your goal right now is to get to 20 to 30 customers. And so I would try to laser focus and ask that with every task that you start.
Mike [33:57]: Yeah. All the stuff that is taking up the most time is people that they’ve paid and they’re going through that onboarding process and its mostly, “How do I do this?” or, “Can you do that?” And some of it, like I said, it’s, “It would be nice to be able to do X, Y or Z.” And usually they can already do it. It’s just not clear how they get to that point so then I have to explain it and kind of mentally note it to say, “Look. I’ve got to explain this better.” Or explain it in a way that doesn’t make me have to repeat myself 25 times.
Rob [34:26]: Totally. No, that’s right. And that is something that, as you get more and more customers on boarded, it’ll become pretty obvious. Certain things will come up once. Don’t do anything about it. But if certain things come up five times, well now you should carve out a KB doc. Even a few paragraphs or whatever it is. Or improve that tool tip. You know, there’s something in the app you can do.
Mike [34:45]: Yeah. When the feature requests come in, I’ve been pushing people off and saying, “Yeah. I’ll put that on the roadmap.” Or usually it’s something that’s already on the roadmap. And then, because I use FogBugz for bug tracking, I’ll go in and I’ll create a tag with that person’s name. And then if the case inside of FogBugz ends up with enough of those tags that say these five people or these 10 people want it, then I’ll push it more towards the top of the list as being much more important. But if It doesn’t then it’s usually something that either surfaced up internally that maybe somebody mentioned in passing or I see it. And those are not technically all that important. Just because I want something in there doesn’t mean that it’s going to be genuinely helpful to everybody or everybody’s going to use it.
Rob [35:24]: Here’s the other thing that kind of comes to mind. You said the statement like, “It’s chewing up time. It took me a few hours to do this dealing with the customer.” I feel like you should hire someone to do something. It’s either going to need to be the engineering side or it’s going to need to be support or it’s going to need to be help with onboarding. It sounds to me like help with onboarding may be that number one. Because support, I think right now, is really heavily intertwined with onboarding.
Mike [35:49]: Yeah. There almost the same thing.
Rob [35:50]: Yep. So I think support and onboarding – again, when I think back to my experience with products like having someone there in the early days, typically I would do support for about the first 60 days of a product. Maybe 90. And then once we hit 20 or 30 people, I was finding someone to help with it. And then maybe a year – I’m trying to think into Drip when we hired Anna – but there was a real game changing moment when I was able to bring someone on who was a higher level. Who wasn’t just an email support person but could actually get on calls with people and do the onboarding. Which is something as the founder and the product owner you think, “Surely no one can do it as well as I can.” And what I found out is that Anna was way better at it than I was. Because she’s just more of a people person and she’s just better on the phone, she’s better on calls.
Sure, the first month she couldn’t do it better than I did because I knew the product inside and out. Two months, three months in it was game changing. So she became the defacto. She was onboarding, she did some light support, she did strategy stuff of like, “Here’s how you want to set it up.” She also did sales. And we never called her that. She was always customer success. But she did the upfront like, “Hey. Someone is thinking about using Bluetick. Walk them through a demo.” And it wasn’t a salesy demo. It was a, “Here’s how you would use this. Tell me about what you’re up to. Blah-blah-blah.”
And so, if you think about it it’s like sales/customer success/customer support. But we called it customer success because it was all about finding the right customers and making them successful. And this sounds like some magical combination that doesn’t exist but I’m now seeing a lot of folks who are able to do this. Especially at Leadpages. We hired two at Drip. We were a team of eight fulltime and two contractors and two of them were customer success because we found it so incredibly valuable. There time was just a multiplier for all of us. And now that we’re at Leadpages, they must have 10, 15 customer success people who are not just answering email queries all day. They’re actually involved.
So that would be my advice to you is that if you have any budget, even for part time, is to look for that person that can take that piece away from it because that’s the piece that you and I as product people I think are least good at. As much as you and I enjoy talking and we have this good podcast, we’re not great on the phone. We’re not great demoers. We’re not super people person like some of these folks are naturally. So I’ll throw that out there. What do you think about that?
Mike [38:04]: I think it’s a good idea. I’ll say my hesitation would be the fact that I think when people first get on to it and start using it, that’s when they have the most questions and then it tends to die down rather quickly. And I feel almost compelled to answer those questions a lot more because I know that they’re busy and if they email me in the middle of the day and they’re having a particular problem I almost feel like I need to drop what I’m doing to help get them through this particular problem because if I don’t they’re more likely to go find something else to do and either not come back to it for a few days or potentially not come back to it for a week or two. So that’s my only hesitation with that. And I don’t know what the scheduling would be like for somebody who would be doing that because I couldn’t afford to have them fulltime.
Rob [38:46]: Right. So you’d have to get someone part time. You’re worried about urgency.
Mike [38:51]: Yeah. I guess there’s other ways to solve that too. For example, I could say, “Okay, I’m only going to onboard people like Thursday’s,” for example. And then hire somebody and say, “Hey. Look. You only have to work the second half of the day on Thursday,” for example, “and that’s it.” It’s like these four hours. And then onboard first thing in the morning. And then let them come through with questions and stuff. And if it comes up after that, the next day or several days later, it’s probably not a big deal. It’s not as time sensitive. But if I have literally just signed them up and two hours later they’re emailing me with something, I feel much more compelled to answer right away.
Rob [39:27]: Yep. I think that’s a good way to think about it. And it’s tough. I realize it’s easy for me to say, “Hey. You should hire someone who’s really good at this with all your free time.” Because that alone is a big deal, trying to find someone. But I think that your number one goal should be getting new customers in. When I look at multipliers here, like what’s going to multiply your time right now? And what’s going to multiply and greatly accelerate you getting to 25 or 30 customer? I don’t think it’s writing more KB articles. There’s a lot of other things it’s not. And answering individual support requests, that’s a step towards it but I don’t think that’s going to help you get there faster. But throughout this conversation I think that’s kind of my one take away. And I realize it costs money to hire people. There’s all this stuff. But if you think creatively about it, I think there could be something there.
Mike [40:14]: I do think that like going back to the one thing though I don’t know is that onboarding side of things is necessarily the only thing either. I feel like it’s more outreach and going to the mailing list and trying to individually follow up with those people and say, “Hey. You expressed interest in this. Can we have a conversation about it?” Or go to the list of other people that I have who I’ve previously talked to and said, “Hey. When you get Zapier integration done, let me know.” And going to them and saying, “Hey. Let’s get you started on this because this stuff is there now and it’s working.”
Rob [40:42]: Totally. And I think you could still do that. You could still be feeding the funnel and you’d hand it off to this other person, in essence. And from the time they sign up it essentially goes into someone else’s responsibility.
Mike [40:56]: Yeah. I’ll have to think a little bit more about how to arrange that.
Rob [40:59]: Yeah. It’s a thought for listeners. You and I have not talked about Bluetick since the last time we talked about it on the podcast. So it’s not like we talk about this all time. I’m going just based on the last 20 minutes of information. But that’s kind of my impression of where I would probably go next. Because it doesn’t sound like code is your limiting factor right now. Would you say that -?
Mike [41:20]: Yeah. I would agree. I’m doing small bug fixes here and there but other than that there’s not major stuff being implemented at the moment.
Rob [41:29]: Right. And that’s how it feels because you and I, I think naturally we’d be like, “Well, you should hire a developer. Hire the developer so you don’t have to do that work anymore.” It doesn’t sound like that’s the right thing to do right now. I don’t think that’s going to multiply your time. It sounds like there’s a lot of support, customer success and potentially sales that needs to happen. And I think you doing it right now is great. I think very soon you should not be doing it as much. And you are going to have to shift back to the code. And when you do that, this person would be able to seamlessly ease into basically handling all that stuff for you which I think would be a good thing.
Mike [42:01]: Yep. I agree.
Rob [42:02]: Sounds great. Well I think we’re over time, actually. But again, from what I’ve heard from folks who listen to these episodes, they really like to hear what we’re up to and kind of dig in. So hopefully folks stuck around with us all the way through this point.
Mike [42:15]: Well, as you said we’re out of time so I think that wraps us up. If you have a question for us, you can all 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 comments. Subscribe to us in 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 327 | Supporting 700+ services w/ Wade Foster
Show Notes
In this episode of Startups For The Rest Of Us, Mike interviews Wade Foster of Zapier, about supporting over 700 services. Wade gives a brief history of Zapier as well as how they went from zero to 1.5 million users in 5 years. He also shares some early marketing techniques he used.
Items mentioned in this episode:
Transcript
Mike [00:00]: In this episode of ‘Startups for the Rest of Us,’ I’m going to be talking to Wade Foster about how they support over 700 services with Zapier. This is ‘Startups for the Rest of Us’ episode 327.
Welcome to ‘Startups for the Rest of Us,’ the podcast that helps developers, designers and entrepreneurs be awesome at building, launching and growing software products whether you’ve built your first product or you’re just thinking about it.
I’m Mike.
Wade [00:27]: And I’m Wade.
Mike [00:28]: And we’re here to share our experiences to help you avoid the same mistakes we’ve made. How you doing this week, Wade?
Wade [00:32]: I’m doing great. Thanks for having me, Mike.
Mike [00:34]: Awesome. It’s great to have you on. I wanted to give a very brief intro to you and to tell people a little bit about who you are. You’re one of the cofounders of Zapier. Zapier is, essentially, the glue that holds together a lot of different applications and passes data back and forth between them. But I guess with that said, I’ll turn it over to you because you’re probably going to rephrase that much better than I possibly could.
Wade [00:54]: Oh, yeah. The old, “What does Zapier do question?” Glue is a good word. Connector, integrations is a good word. Honestly, it’s just this work for automation platform that lets you hook up basically any app you might be using in your business. A simple use case might be I get an email and it has an attachment. You can set up a little rule in Zapier that automatically saves those attachments to Dropbox. Something more sophisticated might be someone fills out a lead form on my site that’s being powered by a tool like say Unbounce and it pushes it through a tool like Clearbit that grabs a bunch of social data for it. Then based on some conditions it maybe decides, “I’m going to send this into my CRM and have a salesperson follow up with it.” Or maybe I’ll send it into a tool like Rob’s Drip and say, “Let’s nurture this user.” Something like that. So it can do a lot more sophisticated things as well.
Mike [01:47]: But it’s all about automating workflows in a business process and you really don’t necessarily see the product itself. You see all the results of it though. It’s always working in the background for you.
Wade [01:58]; Yeah. Exactly. Zapier is an invisible product in the sense of when it’s running. You set up the rules in Zapier. So there’s a UI for setting up the rules and how data should flow from app to app. But once you have that set up, Zapier just cranks away. So if you’re technical, it’s kind of like a Cron job more or less but on steroids.
Mike [02:13]: Cool. So why don’t you give us a bit of a brief history of Zapier. When did you start on it? How long did it take before you went from this whole idea of having it to going through a little bit about the validation process and then actually launching it as a product.
Wade [02:28]: We started Zapier in late 2011. So I guess a little before that, Brian and I, who’s one of my cofounders had been doing a decent amount of freelancing messing around with various projects. And one of the things that came up a handful of times was these little integration projects. So push these PayPal sales into QuickBooks for me. Or push this set of leads into Salesforce for me. Stuff like that. It was kind of annoying work to do because no one particularly likes doing API work it seems. But it was really valuable for these customers. So Brian messaged me on chat and said, “I think we can build a tool that lets these business owners or nontechnical use case users set up these sorts of integrations without having to employ a developer, an engineer.” And I found myself nodding my head saying like, “That makes a lot of sense.”
We actually teamed up with Mike, who’s our third cofounder and built off the original version of Zapier at a hackathon, a startup weekend if you’ve ever heard of those. And things went really well and we’re like, “Let’s really give this a go because this seems like something that folks could use.” We were back in Columbia, Missouri at that time and we decided, “We can’t go at this full-time because we need to have money and things like that.” You don’t just raise a bunch of money in the Midwest typically.
So we kept our day jobs. Mike was still in school. Kept finishing up school. And we worked on this nights and weekends. We tried to find ways that we could figure out if people wanted this. The best ways for that were looking into user forums. I distinctly remember Highrise, the CRM, having a thread that was several years old asking for Google contacts integration and had hundreds of comments on it where people wanted this thing. We’d go find for little bitty signs like that that showed, “If we could build something like this, people would be interested.” So that’s really kind of how Zapier got its start.
Mike [04:24]: Cool. One of the things that I’ll just point out is it’s pronounced z-a-p-i-e-r not z-A-p-i-e-r, right?
Wade [04:28]: Yep. Zapier makes you happier is the trick we always share with folks.
Mike [04:32]: Oh, nice. That’s a good way to remember it and let people know that’s how to pronounce it. Because I’ve honestly mispronounced it for years.
Wade [04:39]: Yep. We’ve heard z-A-p-i-e-r; z-A-p-i-A; z-a-p-i-A. Yeah. We’ve heard every pronunciation under the sun.
Mike [04:46]: Cool. That was back in 2011. Fast forward six years and how many apps are you managing right now in terms of the integrations?
Wade [04:55]: Sure. There’s 750 plus. I think 788 is the exact number. It changes daily. There’s a lot.
Mike [05:03]: How are you actually managing those? Are you responsible for every single one of those or is it really the developers behind the applications that are responsible for them?
Wade [05:13]: The vast majority are built and maintained by the vendors behind these companies. So you look at companies like Slack or HubSpot or Gravity Forms or Pipedrive or Drip. Those vendors have built and maintain their integrations on Zapier. Now we do a lot of work to help and assist with that because ultimately Zapier is our service so we feel responsible for the quality of those integrations but these days that’s how it happens. Originally we did build out the original 50 or 60 or so apps. But once we launched our developer platform, we started to expand the universe of people who could add apps to Zapier.
Mike [05:52]: I think that’s an interesting point to bring up just because when I was looking at Zapier and trying to think about how I could integrate Bluetick in it, my initial thought was that I had approach you guys and convince you that you should build an integration for Bluetick into this so that then it would be available through your platform. And you’re saying you’ve got this developer platform that allows the developers themselves to just build something, right?
Wade [06:15]: Exactly. Yeah. Early on we realized we were getting so many requests to add services to Zapier. And we just realized that there was just no way we’ll be able to keep up with the demand for this because we would have so many developers saying, “Build my app. Build my app. Build my app.” As much as we would want to do that, that was just not going to be possible for us. So we’re like we need to build a way that lets them do it themselves because the interest is so strong. So, in 2012 we launched v1 of our developer platform to kind of kick start that process.
Mike [06:48]: Yeah. So, this developer platform. Can you tell me a little bit more about what the process is for a developer who has an app and maybe they want to get it integrated into Zapier so that people who are using Zapier can send data back and forth between Zapier and that app and the other applications that you guys support? What’s the process for somebody getting started with that?
Wade [07:07]: It’s relatively straight forward. It’s self-serve. So you go to Zapier.com/developer and you can basically just start building against it. We have an API that we kind of call a standard, I guess for a lack of a better word. So if it fits those types of standards, it’s going to be super easy to set up because we automatically configure a lot of this stuff for you. If you kind of do authentication by OOF2 by the book, more or less, we auto set that up for you. If you’re end points are rest based JSON endpoints that can sort by descending order chronologically, you’re going to basically be able to just plug stuff into Zapier and it’s just going to work.
However, lots of services don’t have those things set up in what we would call the standard way, I guess more or less. I say standard because there’s lots of ways to do this stuff.
Mike [07:57]: It’s called a guideline.
Wade [07:58]: Guidelines.
Mike [07:59]: Recommended guidelines.
Wade [08:00]: Yeah. Right.
Mike [08:02]: And it’s not even –
Wade [08:03]: That’s not a problem, right. So we have this whole scripting environment where you can manipulate the requests to match our recommended guidelines, if you will.
Mike [08:13]: – yeah. And the two things that I came across when I was doing the integration with Bluetick and Zapier was that one: I didn’t realize how easy it was to get started. If you have a Zapier account, you just go into the developer platform and you can just create a Zap and there’s – I didn’t realize this – but there were three different ways that you can build it. You can build it as private so it’s just you that can see it. Essentially what that means is if somebody doesn’t have a Zapier integration you could almost create it for them. And then just not share it. You can keep it to yourself.
And then there’s the invite only which is where you would probably use it to invite some of your beta customers. And then there’s the global. And it’s interesting there’s that progression there. But you could build your own Zapier integration for somebody else’s product technically.
Wade [08:55]: Yeah. You totally can. People use that private state for like hobby projects and small little things all the time. That invite only stage gets used by slightly bigger companies to hook in apps that are their own internal tools, more or less, and invite their own employees or teammates in to use them with no intentions of ever having a public app on Zapier. You can have apps in any of these stages or intend to have an app in any of these stages at Zapier.
Mike [09:24]: And you essentially make sure that when people are pushing out new versions of it, they’re not breaking existing functionality, right?
Wade [09:31]: Yeah. We have this whole process. One for when you want a public app it goes [?] and things like that. I think that was one of the lessons we learned early on is that we would push out apps just because we wanted to move that number of apps supported count up. And we would probably skimp on a QA quality check sort of thing. But we realized over time that’s not helping anybody. It’s helping our ego, maybe, but the end user might suffer for that.
So we pushed folks through a quality check. And then when migrations or changes are made to apps that are live, there’s a whole migration process to mitigate some of those breaking changes for folks who are relying on it.
Mike [10:10]: Now how long does it take for somebody to go through that process? Let’s say that they’ve got an initial version out there integrated into Zapier’s developer platform and they want to push it live. Is there additional manual buttons that need to be pushed? Or is it all more or less automated?
Wade [10:25]: It really depends. If you have an API that already fits those guidelines that match us, you can physically do this really quickly. We actually have a video of our CTO adding Etsy in under six minutes because our API fits those guidelines that we have. You can actually do the integration super quickly if you’re familiar with it. And then if you’re not familiar, you have to read some docs and figure some of that stuff out which can take a little bit of time. And then, of course, I mentioned the QA process. So that you nail it the style guide right out the gate. Pay attention to all the rules and configurations that we suggest. You can nail it the first time around and that might take 24 to 48 hours for someone to go through the review Q & A process.
If you’re not matching those guidelines, it might be a little bit of work. It could maybe take a couple days of people time. If that’s the only thing you’re focusing on to maybe get that ironed out. I know, Mike, you just went through one so maybe you can comment for you on what your experience was.
Mike [11:24]: Yeah. My experience was probably more painful. I think you’re right in terms of the people time. But the reality is it’s not like that was my sole focus. There’s lots of other things that I was doing and working on. And changing, like with my product, the entire product is built on my API. So in order to make it work with Zapier, it was actually much more painful because if I made any changes to the API then I had to go into my client code and change all that code. And then I had to go to Zapier.
So it was actually significantly more painful. And the work around I ended up coming up with was I just created a custom Zapier endpoint and anything that needs to be done, I just send it to there and then I’m not affecting my client site code inside of the app.
Wade [12:05]: Yeah. That’s a consideration lots of apps will have if they already have users relying on a particular input and it doesn’t match our API guidelines, well, something’s got to give right there. I think your solution is actually a pretty common one what folks adopt just to say this is the way it needs to be done for Zapier so let’s make an endpoint for that.
Mike [12:24]: Cool. Moving on a little bit from the technical aspects of it. You went from zero to one and a half million users in five years. What made that possible?
Wade [12:35]: I think this is the magic of having 700 plus apps on Zapier, honestly. Every new app that we would add to Zapier, or later on that somebody else would add to Zapier later on, was a new user base that we could tap into. Really early on we started developing kind of playbook for doing marketing alongside of our partners. So every time a new app is launched on Zapier, we’re trying to get an announcement in their monthly newsletter or their feature launch newsletter. We’re trying to get listed in their integrations directories. We’re making sure that their onboarding email sequence, when they send out the advanced tips email, that Zapier is included there.
So we’re doing all sorts of things with them to try and continually just tap into their user base. We sent up landing pages for all the potential integrations that could possibly exist so we can start driving search traffic to it. Just lots of different ways that we can just try and tap into this existing user base that already exists and get those to us. That’s really been the bread and butter for us.
And then it’s five years of work. You just kind of make progress every single day and push yourself to be a little bit better each day and that kind of compounds upon itself.
Mike [13:54]: Yeah. It sounds to me like the couple of different things that you had going for you was one: I guess from external to Zapier. We call it integration marketing but it’s really integrating into other apps and, honestly, Zapier is one of the big ones that is pushed because you have such a large user base and there’s all these other apps that you are essentially cross promoting your app between them because it gives you that viral component. And that sort of plays into it as well and you’re in the middle so you get the benefit of both of those things.
Wade [14:22]: Yeah. Totally. You can leverage the fact that we have a big user base to reach to our user base. Like we launched that to an email list of a million plus. Plus, if you’re creative, you can go to the apps that are on Zapier and say, “We now have an integration through Zapier. Let’s do some marketing around this.”
Mike [14:39]: You know, what’s interesting is I’ve actually used – I don’t know if you’ve heard this before – I’ve used Zapier as essentially a search engine to find solutions to problems.
Wade [14:47]: Yeah. That’s more or less what’s happening more and more these days. It’s like our app directory has tons of stuff. We have a lot of content around the best apps for certain categories of things. So people more and more kind of look at Zapier and say, “If they’re on Zapier, they’re probably a pretty good app.” It probably means their open; they play well with others. There’s some other nice signals that they’re getting from our directory.
Mike [15:12]: One of the things that you talked about very early on was the fact that you had been working with different customers to try and do integrations from your previous company where you were just doing web development for people. What were some of the earliest things that you found that got you some initial traction with Zapier?
Wade [15:30]: I mentioned the forums earlier and that was probably the best thing for getting a handful of folks. So that Highrise forum that had hundreds of comments. I remember one on Evernote and I remember one on Dropbox. I remember one on Salesforce as well, that had these forums where people would ask for it. And I would drop into these forums and say, “I’m working on a project where I might be able to solve this for you. If you’re interested get in touch here.” And I would drop a link back to Zapier in a contact form. And a decent chunk of people would say, “This is what I’ve been looking for. It doesn’t look like I’m going to get an official support for a native integration so this seems like the next best bet.” And we would get a decent chunk of folks coming in that way. One link in a forum might drive 10 site visitors and five of them would fill out that form.
So early on that was just perfect for us because it was just the right amount of people we needed to test our assumptions, build out the initial apps we needed on Zapier.
Mike [16:31]: Now that sounds like an extremely high ratio of people who visited and filled that out. I mean, you’ve got 10 visitors which does not sound like a lot. Most people would look and say, “I really want to get 100 or 1000 or 5000.” But you’re saying that 10 was what really did it for you? That’s all it took?
Wade [16:48]: Yeah. For us, I think it was those forum posts were so – If you go back – I don’t even know if you could find them anymore. A lot of people have nuked their forums. But the comments in there were so visceral to these people. It’s like, “I need this integration so bad.” It was so needed for them they took time to write on a forum about it. Just the fact that we were offering that, I think, people were like, “Oh my god. There’s a way I can get this.” So they went through, clicked through and if it seemed like it was going to solve their problem then they were more than happy to give it a try. And so I think that’s why the conversion rates on those 10 visits were so high. It was just like, “This is a thing I’ve already raised my hand and said I’m begging for this. I need this really bad.”
Mike [17:32]: Right. The fact of the matter is that they saw your explanation in the forum and then they clicked the link and now they’re at a page where they’ve almost already raised their hand and said, “Yes. I’m interested in this.” And then you put it right in front of them and say, “Here’s a form to fill out to contact us and then we’ll talk.” So they’re already interested. They’re kind of past that point. So that’s kind of an interesting data point.
Wade [17:52]: Yeah. It’s like, you know, people who are like, “I want some Girl Scout cookies.” And we just walked up and said, “We got some. You want to buy them?” They’re like, “Yes, please.”
Mike [17:58]: Yes. I’ll take 400 boxes of Thin Mints.
Wade [18:01]: Yeah. More or less.
Mike [18:04]: So, obviously, it sounds like that one worked out for you really well. What are some other marketing techniques that you tried that just completely bombed? I think that that’s an interesting conversation.
Wade [18:13]: Good question. I think later on as we got bigger, we started experimenting with some of the different tactics you hear. And one of the ones that we tried was running joint webinars with a lot of our partners. This one was one we really struggled to make super effective for us. And I think it might be because we have this freemium low cost sort of thing and webinars took a lot of time and effort to put a nice one together and to get enough people on them. And so maybe that’s why it didn’t work. But ultimately we would do these things and we might get a decent chunk of folks to show up. Like we’d get 200 or 300 folks to register and maybe half of that would show up. But a lot of them would already be signed up to Zapier so it wasn’t helping us get new users. We were hoping that the partners, the app that was in mind, would promote this more heavily to their user base. But a lot of times they would just talk about it on their blog or on Twitter or something like that which didn’t ultimately drive much traffic to it.
And so, it was just a lot of time and work for relatively low amounts of people coming to us. We were just hoping to get it scaled out more. We still do some of these mostly just to make some of our bigger partners happy. But when we were really trying to do it, we did maybe a dozen of them and we really maybe only had one that was any meaningful result for us.
Mike [19:38]: Yeah. It sounds to me like if the intent was to help out the partners who are integrating into your app then that would have been beneficial for them but not necessarily for you because most of the people who are attending are already users of Zapier. It doesn’t really make a difference.
Wade [19:53]: Yeah. It was like these people, maybe they’re looking for some extra use cases for Zapier but that’s the kind of stuff we could have solved with an email and said like, “Here’s 10 use cases with this particular app. Go try these out. They’re probably pretty good.” And you don’t have to take time to put on a real time event sort of thing.
Mike [20:11]: Right. Cool. One of the things that comes to mind is that Zapier is primarily a remote company, correct?
Wade [20:17]: Yep. 100%.
Mike [20:20]: So last week’s episode, Rob and I talked about some of the pros and cons of a local versus a remote team. And Rob also talked about kind of hybrid approach that he used with building Drip. What’s some of the biggest challenges that you’ve found with running a remote team? You’ve got what, around 70 employees right now?
Wade [20:35]: Yep. I think the biggest challenge is it really forces you to be more disciplined around communication and information sharing. So you think for us, we hire all around the world as well. So we’re in about a dozen time zones. Right now, I have teammates that are sleeping or not working. If I’m doing work that is going to affect them, I have to make sure to document that either in code like in GitHub or it needs to be Trello or Quip or somewhere that they can take advantage of it. So when they come in and start to pitch in on the projects I’m working on, they can pick up where I left off and not have any dangling threads outstanding.
So I think really just being intentional about building that communication fire hose so that people can tap into the information that exists but don’t necessarily have to tap on someone’s shoulder to get it.
Mike [21:25]: Kind of related to that, have you ever thought about opening an office some place or is it your intention to just keep the company remote forever? Or at least until the foreseeable future?
Wade [21:32]: Yeah. We’re all in on the remote side of things. The benefits for us just so far outweigh some of the challenges. And the main benefit of course being the people that you get to work with. We’ve got some fantastic folks that are working with us here at Zapier that, if we limited ourselves to a 30-mile radius around where we live, we just never would have an opportunity to work with them. And it just makes recruiting easier because you can recruit from anywhere instead of that 30-mile field which turns out anywhere is a lot bigger than 30 miles around where you live.
Mike [22:07]: Yeah. And think that that is an interesting contrast to how Rob built up Drip and his team. His view on it was that they hybrid model for them worked really well where they did have an office but they also had everybody coming into the office a couple of days a week because the collaboration opportunities and the comradery really trumps that being completely remote and in different time zones.
And I’m not saying that one mechanism is better than the other, but I do want to point out that it seems to me like, depending on who the founders are and how they best operate and the types of people that you hire, either one can work equally well. It’s really just a matter of how well you put together the team and how well everybody gels together.
Wade [22:48]: Yeah. Absolutely. We’ve had folks that we’ve brought in at Zapier that didn’t work out. They realized a couple months on the job like, “Remote’s just not going to work for me. I just need to be around more people regularly.” It’s been relatively few but it has happened. And I think that’s just you as a founder but then also you if you’re going to be going to work for somebody has to just be honest about what’s a good work environment for you. What makes you thrive?
Mike [23:16]: So, along that line, what would be your advice for people who are looking to hire either remote contractors or remote employees? Are there things that they should be specifically looking for? Like traits in those individuals. Or are there specific red flags that you can think of?
Wade [23:30]: For us, the things that we really like are folks who have shown a propensity to start and finish projects independently. This could mean that they’ve got a side project that they’ve done a pretty good job with. It could mean that at their last job they started a pretty new initiative and saw it through. You know, kick started with the principle impactors. Just anyone that kind of just gets stuff done is a big one.
We look a lot for folks who are really good at communicating through written word. So folks who aren’t curt but know how to, hey, like an exclamation point or an extra emoji or smiley face goes a long way to giving those things that you don’t get like body language when writing is your principle medium.
I think probably the last thing that’s important which could sometimes be tough to judge because it’s kind of outside of what’s legally askable but it’s really nice if folks have a social circle outside of work. If they principally use work as their social outlet, it’s really going to be tough in a remote setting because there’s just not any people around to be that. But if they have family or friends or meetup group that they go to regularly. If there’s a co-working coffee joint where they’ve got a lot of friends or something like that that they can get locally. That really helps out too.
Mike [24:53]: You know, it’s interesting because that actually came up. We kind of phrased it differently. I don’t think we worded it quite as well as you did. But the basic idea was that feeling of isolation and, specifically, looking for what somebody has going on outside of work to maintain a social life. That’s a really good piece of advice I think.
Wade [25:10]: Yeah. We have a ton of families at Zapier and it seems like a lot of them get through family. But we also have folks that don’t have families and have friends or other social outlets to make it happen too.
Mike [25:21]: Cool. In terms of red flags, what are things that you would look for that say this person would probably not be a good fit for a remote working environment?
Wade [25:29]: Well, that communication one is a big one. If they feel like, “Let’s get on the phone to discuss everything.” Maybe your remote environment is set up to work through the phone. But that’s not how it is at Zapier. We do everything through Slack or some other written medium. If they can’t communicate well in an email or their always like, “Let’s get on a call to discuss that.” It’s like is this what it going to be all the time. You can’t get on a phone call with someone who’s half way across the world very easily to discuss a thing. You’ve got to figure out how to do it written and asynchronously.
I think that’s a big one. And really it’s the opposites of some of these things. It’s like do they not get stuff done. You can ask them about a time they shipped a project. Or if you’re hiring for a customer support role, talk about the customers you supported. And you can pay attention to what do they think is impressive versus what do you think is impressive. If they’re like, “I helped out 10 customers over email today.” Well, for us that’s not super impressive. We’ve got folks that are doing 60, 70, 80. So that’s totally different volume of work.
So you can just ask those behavioral interview type questions to figure out is this the type of person that gets stuff done? Or do they tend to not be that motivated, I guess?
Mike [26:43]: So when you’re actually going through the process of hiring somebody, do you do phone calls for them or Skype interviews? Or is it all through email?
Wade [26:52]: We do both. We have an application form that asks some questions that we think will elicit responses that tell us how they will do the job. And then we do a follow up phone screen that makes sure they understand the role. Makes sure we understand who they are and get a sense for is this the type of person that is going to be a good communicator, they’re going to get stuff done, that they can empathize with other teammates. Kind of some of the values that we have here at Zapier.
And then we have a second interview which is a skills test interview where we actually have some scenarios that we’ve built out that represent the work of that role at Zapier. So we run them through that skills test. And that skills test has probably been the best addition to our hiring process because it really makes sure that folks do have the underlying skills to be successful at Zapier.
Mike [27:43]: One of the things I’ve encountered is that you make the process sound rather lengthy and the reality is it sounds like it’s only about three to four steps long. But I think for somebody who’s building something in their living room or from their kitchen table that process sounds overly long and overly burdensome for them. But at the same time, if you don’t go through that process, it’s very easy to fall into a situation where you’re made a bad hire or somebody’s not going to work out. And then you spend three months stringing things along instead of just ending it and saying, “We need to part ways because this isn’t going to work out.”
Wade [28:17]: Yeah. And you know, from start to finish, it could go really fast. When we decide to review the applicants from the time where we’re like let’s schedule that first phone screen and go through that skills interview process. We’ve had that done, start to finish, in less than a week before. So it can go really fast if you’re dedicated to making it happen.
Mike [28:37]: I guess the next question I have for you is that you’ve established a substantial sized company now. You’ve got 70 employees. You’ve got one and half million users. What’s one of the biggest challenges you see for the business moving forward?
Wade [28:49]: I think the big thing is most companies don’t fail because of some sort of external factor. Most of them fail because the people inside the company, and likely the founders, honestly. So Brian, Mike or myself, mess something up. We do something that hurts the culture. People turn against us or we make some dumb decision that drastically affects our ability to ship a good project or ship good product. Something like that. I think I’m just constantly paranoid about trying to make sure that Zapier is a fantastic place to work and that we’re bringing in high caliber folks who can make sure that we are making good decisions and that we’re making good forward progress and shipping things fast and all the stuff that we want.
Mike [29:35]: Is that something that kind of as an executive team you guys meet and talk about? Or is that just something that you guys kind of keep in mind moving forward as you make decisions about the company? I’m just wondering how much of it is keeping this in mind versus being intentional about that.
Wade [29:48]: We actually do try and do this intentionally. So once a month when the executive team, we ask two questions of each member on the executive team which is: What is the biggest problem you and your team are having right now? And then a second follow up question to it is: What’s a problem that might pop up down the road if it’s not addressed now? And honestly, that second question is way more important to me because the problems that people talk about now are the stuff you already know about. It’s like, “We know that that’s a problem. We’re working to address it.” We’re going to get that fixed up.”
That second one is the stuff that people haven’t articulated yet. It’s stuff they haven’t shared. And usually it’s phrased such as like, “What’s a problem that will pop up?” But honestly when they answer it, it’s stuff that’s already popping up now. They’re sharing things that I’ve already seen this happen once. And so you know when you hear that, it’s like, “We need to start fixing that stuff now too.” So it really helps you cut off the problem areas before they get enough room to cause a really big issue.
Mike [30:50]: Yeah. I think that’s a really good question to ask yourself. I have a couple of things that I have on my monthly to do list that just kind of pops up on the first of each month that just says look at the biggest problems you’ve had this past month and then review what the goals are moving forward to reevaluate things and find out if there’s anything that needs to be either reprioritized or anything like that. I think intentionally thinking about what could be problem down the road that would almost be a business killer is probably something good to add to that list.
Wade [31:20]: Yeah. And I think the combo, like asking them together, is what’s really interesting. Because you get kind of those things that you already know about and you already see, and then you get it contrasted against some of the stuff that maybe you don’t see. And when a company gets to a certain size, those types of questions are really helpful. Especially for me. I don’t have the visibility to everything at Zapier like I used to. I used to do everything so I used to know everything that goes on as we’ve grown –
Mike [31:46]: Now that you’re CEO, you know nothing.
Wade [31:47]: – yeah. Right. It’s just a little tougher. You have to work harder to get some of those insights that you just learned by almost osmosis in the past.
Mike [31:56]: Right. You’re a little bit more removed. There’s a layer of abstraction between you and the actual problem so you’re trying to interpret things more than anything else.
Wade [32:03]: Exactly. And it’s like, “That is a problem.” So maybe I’ll actually step in and do some of that work. Like, “There’s a problem in support.” I’ll go back and do some support. I’ve got that skill set. I can jump in and see like, “How is that causing problems? How can I better understand this so that we can come up with a good solution here?”
Mike [32:20]: Cool. So I guess to wrap things up a little bit, where can people follow up with you or keep in touch with you?
Wade [32:25]: Yeah. Two places. Email: Wade@zapier.com. And then Twitter, I’m pretty active as well. @Wadefoster. I’ve got open DM so you can DM me there too.
Mike [32:33]: Great. Well, thanks for coming on. I really appreciate you coming and talking to us and sharing the experience that you had with Zapier.
Wade [32:39]: Yeah. Thanks, Mike. I’m really excited to be here.
Mike [32:41]: If you have a question for us, you can call it into our voicemail number at 1-888-801-9690 or email it to us at questions@startupsfortherestofus.com. Our theme music is an excerpt from ‘We’re Outta Control’ by MoOt used under Creative Commens. Subscribe to us in 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 326 | Building a Local vs. a Remote Team
Show Notes
In this episode of Startups For The Rest Of Us, Rob and Mike talk about the pros and cons of having a remote versus local team. They also discuss a hybrid approach that Rob used with Drip that he believes is superior to either methods.
Items mentioned in this episode:
Transcript
Rob [00:00]: In this episode of ‘Startups for the Rest of Us,’ Mike and I talk about building a local versus a remote team, and we also weigh in on what I think is the ideal way to build a startup team. This is ‘Startups for the Rest of Us’ episode 326.
Welcome to ‘Startups for the Rest of Us’ the podcast that helps developers, designers and entrepreneurs be awesome at building, launching and growing software products, whether you’ve built your first product or you’re just thinking about it. I’m Rob.
Mike [00:31]: And I’m Mike.
Rob [00:32]: 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 [00:37]: Well, there’s a little bit of snow on the ground and, fortunately for me, next week I’m headed out to Big Snow, Tiny Conf in Vermont. So I’ll be headed up there with a guy named Jeremy from Forecast.ly. And then there’s about a dozen other people who’ll be meeting us up there, and a couple of days of skiing, and mastermind’s during the evenings. It should be a lot of fun.
Rob [00:55]: Sounds great. Who puts that one together? Is that the one that Brian Casel puts together?
Mike [00:59]: Yeah. It’s Brian Casel of Audience Ops and Brad Touesnard of Delicious Brains. The two of them put that together, and they also have a couple of sister conferences I’ll say. One of them is in Colorado, and that one is mostly put together by Dave Rodenbaugh but Brian and Brad are involved in that. And then there’s also Big Snow Tiny Conf in Europe which is done by Craig Hewitt. Brad I believe went to that one. That was last month. But the two in the U.S. are actually being held during the same week.
Rob [01:26]: Sounds like fun. And you’ve gone to at least one in the past, haven’t you?
Mike [01:29]: Yeah. I think I’ve gone to two so far. This is the fourth one. So this will make my third.
Rob [01:34]: That’s cool.
Mike [01:35]: Cool. What about you?
Rob [01:36]: I am also off to a conference next week. I’m repping Drip and Leadpages at SaaStr in San Francisco. So Jason Lemkin’s SaaStr has grown up to I think it was 5,000 attendees last year, and it’s supposed to be more than that this year. So it’s quite an event, and not something that I’ve ever gone to purely because of that. You know how we built MicroConf into the conference we wanted to attend. A 5,000-person conference is not a conference I like to attend. I just don’t love big groups of people. I’ve heard a lot of good things about it on a number of fronts in terms of the networking opportunities, just that everyone’s there, blah-blah-blah. I’m interested in checking it out, exploring that, and I’m already setting up meetings, and just meetups, and trying to figure out who’s going to be there that I can connect with that I haven’t seen in a while. It should be an interesting experience for me as someone who doesn’t particularly like these big – it’s a big multi track conference, and it’s a lot of the Silicon Valley stuff that doesn’t necessarily jive with the way that we grow and build businesses. So it’s going to be the assumption that everybody’s raising funding, the assumption everybody wants to get to 100 million, the assumption that if you’re not doing that, you’re crazy. That kind of stuff. With that said, there’s a lot of value still that can come out of – I really like Jason Lemkin’s thinking. I respect his outlook and opinions on so many aspects of growing SaaS businesses, and there’s a lot of folks who are going to be on stage that, I think, have a ton of knowledge and experience to lend to anyone starting a SaaS company. I do like that it is focused. It’s not just startups. I’ve been to some startup conferences where you’re just standing amid the health care startups, and the food startups, and the drone startups, and 3D printing startups. As much as I like those things as a consumer, I have really no interest in doing any of them as an actual business, and so I find that it’s less relevant. The more focused a conference can be, the more interested I am in it. So that’s it. I’m going to be out in San Francisco for four or five days just kind of getting it done.
Mike [03:31]: Yeah. You’ll have to let us know how it goes and see if we should multiply MicroConf by 100.
Rob [03:36]: I know. It’s just such a different conference. It’s not better or worse, it’s just a different way to approach an event. It’s such a different way than MicroConf. And it should be interesting.
Mike [03:47]: I just realized how terrible I am at math because it’s not 100 it’s –
Rob [03:51]: It’s 180. Because we have what, 220, 230 at MicroConf? And the fee is 5,000 – Yeah. So anyways, it’ll be good. I’m genuinely looking forward to it. I love San Francisco. I’m from about 30, 40 minutes east of San Francisco. The Bay area is my town, San Francisco is my city, and so I’d love to get back there, and I will probably see at least parts of my family who can make it out to see me in the city. I don’t want to sound like I’m not looking forward to it because I very much am. I’m just a little bit skeptical I guess that how much value I’m going to be able to get out of an event that’s that large. I’m excited to go in with both feet and see the rubber meet the road and see what I can get out of it.
Mike [04:32]: You just mentioned how close some family, and where you used to live in relation to San Francisco. I used to have a little joke in my back pocket where I would tell people I lived about an hour east of Boston just to see if they would catch on to the geography.
Rob [04:44]: Well, yeah, right. Because you’re west. East is in the water.
Mike [04:48]: Right.
Rob [04:50]: Indeed.
Mike [04:50]: So what are we talking about this week?
Rob [04:52]: This week we design an entire episode around a listener question. And the question is from Johannes Akesson. He says: “Hi Mike and Rob. Johannes from SQL Spreads at sqlspreads.com. One idea I have for a topic is the pros and cons of a local versus a remote team. I’ve been thinking a lot about this. So far, I have used mostly remote employees and only local subcontractors. I’m in the phase of growing my team and I’m thinking a lot about this. Should I go for a complete remote team, a mix, or 100% local? I see pros and cons, both from the companies and from a personal viewpoint. With a remote team you’re more flexible to work from different places or from home. It can be more cost effective and maybe easier to bring in part-time employees. With a local team, I see a lot of benefits like better collaboration, building a group of people pushing each other, etcetera. It would be good to hear your experience in this area.” So that’s what we’re diving into today. I don’t know that I had many opinions on this a couple of years ago. I think it was kind of like, “I’m building a lifestyle business.” This is four or five years ago. So everyone should always be remote and this gives me the most flexibility. And then as I dug into Drip and realized, ‘Boy, to really do this right I actually think you do need people to be able to see each other face-to-face, and not just once every three to six months at a company retreat or whatever. So, we’re going to dive into the pros and cons of being remote versus local, and then I want to dig in and talk about kind of the hybrid approach that we used with Drip that I think is by far better than remote or local. Ready to dig in?
Mike [06:17]: Yeah. Let’s get started. Why don’t we cover remote first?
Rob [06:20]: Yeah. Let’s talk about a couple of the pros of having a remote team. The first, and probably the biggest, advantage to it is that you can hire the best people no matter the location. This relieves you from having to live near a bunch of good software developers, and sales people, and customer success people, and HR people. It means that you can basically look worldwide and probably find better people than you can in your locale.
Mike [06:46]: I think there’s another advantage here which is also the cost of being able to hire people who are at the skill levels that you need and you don’t necessarily have to pay local rates for them. So whether that means going overseas, or just going to parts of your home country where it’s on the outskirts, it’s outside of a major city and you don’t need to basically outbid larger companies for the same level of talent. If you can give people that freedom to work remotely then it works well for them, and it also helps you because you don’t have to pay as much for the people who are just as talented as you would get assuming that you lived in a large city.
Rob [07:22]: Yeah. It’s a good point. And I think that’s the second advantage of going remote is that you don’t have to pay the wages of a major city – if that’s where you live – and you still have the advantage of being able to get people on your team. In essence, if you think about it it’s just like arbitrage. It’s like you might be able to live in a major city and then hire in a less expensive area. I’ve seen companies do it the other way, though, where they’re in a really inexpensive area and then they’re hiring out of San Francisco. I was always thinking to myself, “Why would you do that? I know there’s good talent there, but you can find talent outside of the Silicon Valley.” It was a really funny kind of almost reversal of how you shouldn’t do this. They turned the pro of going remote into a con.
Mike [08:02]: Yeah. That is odd. But sometimes, depending on the talent that you’re looking for, you may need to do that. It just kind of depends on who you’re looking for and where those people are located. You can’t always find specific types of people that you’re looking for in remote areas.
Rob [08:18]: I think the third and final advantage of remote that we’ll talk about briefly is this gives you as the founder a lot of freedom. You don’t have to go into an office every day. You can travel and it doesn’t matter. It doesn’t impact the business any more than if you were to be at home, or wanted to work from a coffee shop, or wanted to work from Europe for a month. Aside from the time zone, no one is going to notice the difference. So it really gives you the most flexibility and, I think, kind of the most freedom as a founder if that’s something that you’re looking for.
Mike [08:47]: I think there’s actually another pro here which is it gives freedom to the people that you’re hiring, so that – depending on what they’re circumstances are – they may want to — let’s say that they already have a fulltime job and they want to work part-time because they’re saving for a wedding, or they’re trying to go on a trip next year, or something along those lines. It gives them the flexibility to work a full-time job, and then, in addition, work on your things, or be a consultant and work on your stuff part time. There’s a lot of advantages to being able to hire somebody for part of their time, not necessarily all of their time. That’s, obviously, much more on a contractor basis, or a limited basis, but a lot of times it’s very difficult to build your business and then you happen to have an extra $10K coming in every single month and you say, “Okay, now I can hire somebody.” It doesn’t usually work out that way. You usually end up in a situation where you need some additional help and you might have a couple thousand dollars extra a month, but it’s obviously not enough to hire somebody fulltime. So you have to decide, “Am I going to hire somebody part time, or am I going to hire in advance of the revenue in anticipation of that?” And that’s obviously a little bit dangerous, but it gives those people some flexibility as well.
Rob [09:54]: Yep. That’s a good point. Let’s talk about the negatives, the cons of hiring remote. I think the first one, and the one that I noticed the most when we were remote, and then when we switched to a more localized approach, is that it’s hard to collaborate. Period. Even with the software and webcams and all the cool technology. The Slack. All that stuff. The digital whiteboards. It’s just harder to collaborate. There’s nothing better than being able to look face to face. Especially on the really hard problems where it’ll take you three, four, five hours of going back and forth in discussion, and these hardcore meetings, and these chance encounters, and overhearing a discussion. Those things just aren’t replicated the same way when you’re remote.
Mike [10:33]: Yeah. It’s hard to put your finger on exactly what the problem here is, because if you could then it would be a lot easier to say, “Okay. Well, let’s solve this in this particular way.” But there’s a lot of subtleties here to that collaboration problem which are not easily pinpointed. You talked about some of them where – the digital whiteboard, and SKYPE and headsets and cameras, and stuff like that. It helps to some extent, but I don’t think that it’s quite the same. You don’t get the same feel working remotely with somebody as you do if you’re working five feet away from them, or even 25 feet away if you’re in a larger office space. It’s not quite the same feeling when you’re trying to collaborate on particular problems. It’s also hard to get on a SKYPE call for several hours, to be honest. It’s difficult to maintain your focus on a particular problem, because there’s usually so many other things going on, and you’re at your computer so naturally there are other distractions that will come up like email. And if you are just at a whiteboard, for example, then there’s no popups coming up. There’s no additional notifications. There’s no other people pinging you on SKYPE or Slack or anything. You can kind of get away from that if you’re physically located next to each other, but you can’t do that when you’re collaborating over a computer.
Rob [11:45]: Yeah. I believe that, hands down, you will build a better product, and you will solve problems faster and better, if you’re all in the same location. I just don’t think there’s any way to argue with that. Now there are other pros and cons of both of these, but that one has just become ingrained in my mind over and over and over, in terms of being able to collaborate with people. This is not something you can schedule. You can’t say, “Well, every quarter we’ll get through and then we’ll get together and we’ll plan the next 90 days. Or every month we’ll get together for two days.” It isn’t the same. It’s not the same as being able to interact and collaborate on a day-to-day basis on an ad hoc basis where you’re hammering out a bunch of stuff. Especially in a startup, with as frequently as things change. I can imagine being in a fortune 500 where you have this waterfall approach, and you probably could plan out months at a time and things move so slowly that there’s no need for those ongoing conversations. But when you’re remote, it makes it harder. The second con, or negative, of remote is – it’s a subtle thing – but it’s this lack of comradery, or lack of team unity. I know you can get together every three to six months and all hang out in a house and it’s really cool, and the buzz you feel from that does carry over for the next week or two. But you’ll notice that it fades, and that being together every day – like we were in Fresno with the Drip team – it really was like that kind of all the time. It’s weird to say, but we went out to lunch once a week. That was staff meeting. We hung out outside of work because we liked working together so much. We developed friendships. And there was just this thing of everyone being on board with the mission of the company, and doing the best for the team, and it meant there was a lot of cohesiveness in our thought, and a lot of unity and everyone trying to help each other out a lot and getting things done very quickly. Going out of our way to help each other in a way that when you’re remote, yeah, you’re totally – you’re friends, you’re colleagues, you’re cordial. But, again, there’s that unspoken – that thing that you just can’t get when you’re not around folks in person every day.
Mike [13:45]: The next thing is a little bit country specific, and this pertains specifically to the United States, but it you have people that are located in multiple states, then you are considered to have what’s called a tax nexus. And a nexus is essentially every place where you have an employee working for you, you are considered to have a nexus there, and you are supposed to be collecting taxes from people who order your software in those locations. Now there’s a lot of subtleties here that you have to deal with in terms of whether or not you’re offering software as a subscription or it’s a downloadable product. But that said, it complicates the issue when you have contractors and employees working in different locations, whether it’s in your country or in foreign countries, and sometimes, these tax nexuses can be established even if you just have an employee who’s working in another country, for example, and then you are then subject potentially to collecting taxes for people who order your software in that country. It becomes a complicated headache to some extent, and governments certainly don’t make this any easier. They want their money, to be perfectly honest. But they don’t really consider the ramifications for much smaller businesses, or ones that operate entirely online because, quite frankly, that’s not really their concern. Their concern is the retailers, and they’ve never really quite caught up with the times in terms of being able to make an easy way for you to collect taxes based on sales over the internet.
Rob [15:09]: Yeah. This is something that most people don’t talk about, but if you start hiring people randomly, especially in the U.S., if you hire 10 people across 10 states, your tax nexus becomes very large, and it becomes very complicated. It’s not just the amount of money you’re paying. It’s a tremendous accounting headache just to track all of that. So really be, I would say, be careful before hiring new employees in just any random state, because it will get complicated on you quick. The fourth negative, also relates to this, is the additional administration time for every state that you run payroll in. I know that with paychecks, as I even tried to add states, it was a nightmare. With Gusto it was a little easier, but someone on my team had to go out and get the unemployment number from the state which is some random website. Then there was the disability number. And then there was the actual state income tax number. There’s all these numbers and each of them took 30 to 40 minutes of filling stuff out just to get some type of approval. And then it took three weeks to get it. And then I couldn’t run payroll while we were waiting on that. It was just this whole project that I wasn’t counting on. So as you add states, count on four to eight hours of killed admin time right at the start. And then plan on dealing with a bunch of kind of bureaucracy, in essence. Then they screwed one of them up and it didn’t work. Again, it’s just one more thing that really isn’t moving your business forward. And it sounds like a small thing of like, “Oh, I’ll just kill a day doing that.” But it’s a lot more of a pain in the butt than I think you realize. And then every time you run payroll now you’re paying all these multiple states – Gusto does that for you – but anytime there’s confusion, or a dispute, or whatever it’s more manual interaction that you’re dealing with. It’s just that added accounting complexity.
Mike [16:50]: I’m just going to point out that every time something goes wrong, which it inevitably will, it chews through several more hours of your time. Let’s say that you chew through four to eight hours just setting things up, and then you have to wait for three weeks for things to go through with the state, they might not have been correct. Or they may have left out something. I remember having to go just to the Department of Motor Vehicles here in Massachusetts to get my license when I transferred it over. I ended up going back four times because they said, “Oh, you just need this and this.” And I’d have to go back and they’d say, “Oh, you need this other thing.” I’m like, “Well, why didn’t you tell me that last time I was here?” Finally, by the third time, I just said, “Is there anything else I need? Is there a list of everything that I need?” And they said, “Oh, yeah. Here it is.” And there were two other things that they didn’t tell me about. It’s the exact same thing when you’re trying to pay payroll taxes, because there’s all these things that they’re not going to tell you about, and every single state has a different mechanism for getting all that stuff done. Some of them require certain things. Some of them don’t. It’s just a mess. And, like you said, if any little thing goes wrong, or if one state changes rules a little bit, or requires a sign-off, or a signature, or a new piece of paperwork filed. Sometimes it’s quarterly, sometimes it’s annual, they expect you to know what those things are and they won’t tell you in advance. There’s no mailing list or whatever you can sign up for that says, “Hey, here’s all the things that you need to know about running a business in such and such state.” None of them do that. It’s kind of a fighting against the machine at that point. It’s just awful.
Rob [18:11]: Yep. I’ve run into it. Another negative of remote is that it does take a unique employee to make it work. Not everyone is able to work remotely for sustained periods. A, it can be isolating, even when you’re working remotely with a team. B, folks get distracted – and especially over long periods of time. Like, you hire somebody, six months they’ll be good, a year they’ll be good. Two or three years into it a lot of people really run into challenges of just being able to stay focused, stay motivated without folks around them. Because it’s the norm to be in an office. As sad as that might be, or as disturbing as that might be, that’s how we’ve done it for the past 80 years since offices were invented, or 100 years or whatever. So people are used to having that interaction with other folks and, as a result, I’ve known founders who have hired people and they’ve worked out really well on the technical side, but they haven’t been able to be productive and to really produce long term as a remote employee in essence.
Mike [19:06]: I think part of that goes back to what you said before about one of the cons being a lack of unity. It’s just that comfortability that you get, the socialness of working with other people. Because as you said working remotely is very isolating and if you don’t have a mechanism in place, or a system in place, for getting out – whether that’s you or the people who are working for you – then it can be very easy to fall into this trap where you basically fire up your laptop every day and you work for eight hours and you don’t leave the house for days or weeks on end. Long term that’s going to be detrimental, and that’s part of why offices work so well, is because you get that social aspect that, as humans, we kind of need that. Whether that is social engagement at work or outside of work. But if you don’t leave the house to go to work then it isolates you that much more. Especially if you’re sitting there for long hours working on code, or different things, and you’re not really talking to a lot of people. It can be very difficult both for the founder and for the people who are working for them.
Rob [20:03]: And then the last couple cons for going remote or having a remote team. The first is time zone complexities, and this depends on how remote you are. If you hire someone in Europe or in Asia and you’re in the States, you’re talking nine to 12 hours’ difference, if you’re on Pacific time versus Asia. I think it’s even 14 hours’ difference. That becomes kind of a pain in the butt when you have this day or two-day delay because everything’s asynchronous. We’re trying to hire within three time zones, three hours’ difference of Pacific when we were in Fresno, and I felt like that was a pretty good way to manage it. I think trying to do an eight or nine hours off reduces even more of the ability to collaborate, and the team unity, and that kind of stuff. So depending on how you arrange it, this may or may not be a major con for you. And lastly, this kind of plays into needing unique employees, or unique team members, to be able to pull it off. But, unless you’re on top of things, some people will naturally start to slack off. It may not happen in the first week, it may not happen in the first month but over time things will come up, and they realize that they don’t need to, necessarily, clock in and clock out, because I imagine you’re not running a startup like that. I think that you can see people start to become less and less productive over time unless you do hire people that are really able to stay focused, or there’s some other thing that’s motivating them, because if they look at it as a job, there’s always something else that they can be doing. They really need to be bought into whether it’s working with the team, or the vision that you have, or loyalty to you. Because if you don’t have that, people will inevitably try to find ways to basically not put in the full-time work.
Mike [21:42]: Yeah. I don’t think that that’s necessarily intentional. It’s just a matter of how things tend to work out, in terms of the workloads and the ways that people put time in. So, if you’re working remotely it’s very easy to get up a little bit later and then call it a day early, for example, and you don’t think very much of it because sometimes you’re just thinking about things after work or you start including that extra time. It’s difficult to track it as well. Most of the time the founder’s got other things going on that they’re not going to track that. For them, their sole focus is working on the business and trying to get things up and running and, quite frankly, micromanaging employees or contractors is not at the top of the priority list. You don’t want to have to do that. This can be a problem longer term. I think in the early days it’s much easier – and by early days, like early on working with somebody – you tend to not see this very much. But as time goes on it can become a problem, and then it becomes difficult to address because you don’t have the clarity of when they’re working in the office, and not that them being in the office equates to productive time, but it’s difficult to judge how much people are actually working or how much time people are putting in.
Rob [22:52]: Yeah. I like that thought. I agree with you. The sentiment is that most people won’t do this intentionally, but it can happen pretty easily unintentionally.
Mike [23:00]: Yeah. And then it becomes uncomfortable to bring up.
Rob [23:03]: Right. And that’s the thing. If you’re going to build an organization and you’re like, “Boy, we’re a startup and we’re going to be cranking on this for a good solid two years, and then we’re going to sell, or then we’re going to IPO” or whatever it is. Then a lot of these things don’t matter. These are longer term things that if you want to build a business that’s sustainable, and that is actually generating revenue, and you’re thinking out two, three, four, five years, some of these things will creep in. And these are not often talked about because so many of the startups that we see remote workers and how all that works just haven’t been around that long. There are a few. There are a couple. Like Basecamp comes to mind and Buffer. But most of the big high profile ones, or even just the ones that we hear about in our circles are like, these are like one and two-year-old companies, and there’s a lot of stuff that’s going to creep in after that. Let’s switch over to talking about local, and just doing the traditional having an office, you hire everybody in the same locale. When I say everybody, I mean almost everybody. Sometimes there’s a really specific position that you may need to hire remote for. But imagine it’s like someone who’s kind of an independent contributor and they don’t need to work with the rest of the team on a day to day basis. So, I’m saying mostly local here. The pros to this are kind of the cons of being remote is the ability to collaborate, look eye to eye, work on hard problems. The comradery and the unity of being able to go out to lunch with people, of being able to be in the room and have conversations and plan things. And number three, I’ve found that that all builds into the team basically being more invested in the business outcome, or in the outcome of the startup, than if you were to build a completely remote team. I do think there are ways to work around these and to, even if you are remote, to try to get as much benefit as you can from these. But I don’t see that there’s any way that if you’re remote that you can possibly nail these three as good as being local in the same office.
Mike [24:48]: I think some of that has to do with the fact that you’re not getting the feedback from the business, or the founder, when you are working remote. For example, if you added some code to the product that really made a difference for a particular piece of it, and you work in the same office, it’s much easier – and probably much more common – for somebody to say, “Hey, great job doing that. I really appreciate that you did that.” Versus if you’re remote, then those people have to make it a point to kind of go out of their way to provide that feedback to the people who are working remotely. So, as you said it’s not that it can’t be done, it’s just that it’s more difficult and you have to put forth a conscious effort to do it. In those cases, it’s more likely to get swept under the rug, or just not addressed, or you’re not giving that feedback to people because you’ve got other things that you’re thinking about that are probably overtaking a lot of the other things that come to mind including that feedback to the people who are working on stuff.
Rob [25:39]: Right. And, of course, you can do this in Slack or via email or something, but it doesn’t have the same impact as looking someone in the eye and, in front of everybody else, being like, “You totally rocked this. Nice job.” Something we did at Drip when we were coming up, and we still do, is have stuff we call “launch juice”. It’s fire cider. It’s a nonalcoholic, very strong – I think it’s like habanero and honey and apple cider vinegar. And we do a shot of that when we do a big launch of anything. So, major features. So maybe we’ll do a shot once every month or two. And that’s just a really cool thing that you technically could ship bottles and shot glasses out to everybody and then all get together on video, SKYPE and then do it together. But there’s just something about being in that room, pouring them, and being like, “Cheers team! We totally rocked this.” And doing it together that you just can’t quite get with a remote team. All right. So let’s talk about some of the drawbacks of being local. The first one is that it can be really expensive. You can higher salaries, especially if you live in a major city. The second is the talent pool may be thin if you don’t live in a major city. If you need to hire six developers and several support people over the course of a year or two as you’re growing, if you don’t live in a major city that’s actually a lot harder than it sounds to find people who can all make it to the same office that are of the quality that you’ll want. And I think the third one that comes to mind is just the expense of having an office and of having to manage all that. And maybe there’s even the admin costs of having to find that and sign a lease, and the commitment, and how all that shakes out. Again, referring back to my experience with Drip, we were in a good position that we were able to find really inexpensive office space in a little local tech hub called Bitwise Industries in downtown Fresno. It was a revitalized warehouse building, in essence, and so our lease term was not very long. Our lease cost was exceptionally low compared to other founder friends who I talked to. But I would have done a co-working space, and just rented out more and more desks, or rented out more and more office space, rather than sign some big three to five-year lease, because that would never have felt comfortable to me. But this is another thing that you have to think about if you’re going to be local that is not even on your radar if you’re going to be remote.
Mike [27:49]: The other thing is that you have probably a lot more competition for the types of people that you’re looking for. Even if you are in a smaller area, the pickings are thin in terms of trying to find those employees or local workers. But at the same time you’re also competing against other companies that have open job listings. I remember when I had an office over in Hudson, Massachusetts here, because we were in the same region as Monster.com, all of our job listings that went out to Monster.com inevitably got pushed down by, quite frankly, them, and several other large companies that were in the area. And it was very difficult to get noticed by people who were out there actually looking for jobs. Then once you did get noticed you tended to get a lot of people coming from the recruiters saying, “Hey, let me try and help you fill this position.” which just drastically increases the cost for that position to just find somebody. So there’s a lot of things that go into it that just increase the costs overall. The other thing I’d probably mention here is that you’ll find that there’s probably less flexibility for the people who are coming into your office and saying, “Yeah, I’ll come in for a couple of hours to actually do an interview.” And those people are looking for the type of 9-to-5 job that they’re willing to come in the door and spend eight hours there and then go home at the end of the day, versus the types of people that are looking for a remote position. Maybe they’re looking for it because they can only work a couple of hours in the morning and then a couple of hours in the evening. And the scheduling flexibility that those people are looking for is different than the type of scheduling the people who are local are looking for.
Rob [29:27]: Yeah. I think that’s actually a really good point and something I left out. Another pro of going remote is that people look at being able to work remote as a big perk, and so you may be able to find people who think differently about work, or just who are more willing to come work for you and wouldn’t necessarily – there’d be too much completion if they were only local. So, that remote ability allows you to basically land folks who you otherwise wouldn’t be able to. Cool. I think those are kind of the pros and cons as we see them. The approach that I want to lay out that we stumbled upon with Drip was this hybrid approach. It’s where we spent about 40% to 50% of our time in the office and then the remainder of the other 50% to 60% remote. And by remote, I just mean we worked from home or from coffee shops, but we found that it was crazy in terms of our ability to collaborate. We would all come in on let’s say Tuesday and Thursdays, and so we had all the touch points, we had the unity because we did the lunches, we had the comradery. The team was invested in the business outcome. We were all in one state. It’s like the Goldie Locks zone is what we found. It eliminates the time zone complexities, the tax complexities, and it allowed us to solve really hard problems when we needed too on a recurring basis. But we also were able to go home and do maker time. And that was a big deal for developers especially to be able to two and a half to three days a week – depending on what they wanted to do – and be able to basically be on their own. Of course, we were all communicating via Slack and stuff, but it really helped them get stuff done on the days they weren’t in the office, and then to use the office days as the days to have the interpersonal and the collaboration time. I think that if I were ever going to grow another business – which presently I have absolutely zero plans of ever doing it again – but if that were ever the case, I would strive really hard for this in-between, hybrid approach of having people that are local enough that a couple of days a week together is a possibility.
Mike [31:26]: I think with the hybrid approach you’re kind of trading certain cons for pros in some situations, and then trading certain pros for cons in other situations. For example, if you have that situation where you’re coming into the office a couple of days a week, yes, you get the pros of being able to collaborate with people, and getting the team unity, and lots of other things that you wouldn’t get from a remote team. But then you’re also accepting the responsibility that you still need to hire people who are reasonably remote. You can’t just expect them to commute for four or five hours or whatever. So, you’ve still somewhat limited yourself in terms of the geographic region that you’re hiring in. But there are a lot of benefits to, what you said, that hybrid approach. Some of it has to do with concentration and being able to just take a couple of days and focus on the problems, and then revisit it and come back to a physical meeting place where everybody’s working together and get all that comradery that we had previously talked about.
Rob [32:17]: And I’ve got to be honest. I think before really building the team at Drip, and at our peak – I shouldn’t say at our peak, because we’re actually higher than that now in terms of employee count – but when we were acquired we were at about 10 people, and there were two contractors, eight employees, and five of us were there in Fresno and five were remote. But before growing that team, I hadn’t realized the value of this collaboration and the comradery/team unity piece, but it became very apparent to me as we grew the team, the value of those things. And that’s why I think we landed on the whole hybrid approach.
Mike [33:52]: Well, Johannes, I hope that answers your question. If you have a question for us, you can call it into our voicemail number at 1-888-801-9690 or email it to us at questions@startupsfortherestofus.com. Our theme music is an excerpt from ‘We’re Outta Control’ by MoOt used under creative comments. Subscribe to us in iTunes by searching for “startups” and visit startupsfortherestofus.com for a full transcript of each episode. Thanks for listening and well see you next time.