Show Notes
In this episode of Startups For The Rest Of Us, Rob and Mike talk about soft skills for entrepreneurs. They define what soft skills are and list 5 of them that you need to develop as an entrepreneur.
Items mentioned in this episode:
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 built your first product or you’re just thinking about it. I’m Mike.
Rob: I’m Rob.
Mike: We’re here to share our experiences to help you avoid the same mistakes we’ve made. How you doing this week, Rob?
Rob: I’m doing pretty good man. I was thinking if folks were ever interested in having two episodes of Startups For The Rest Of Us each week, they can’t quite get that. You and I don’t have quite the time to do it, but I’ve been guest hosting on The Art of Product Podcast with my good friend, Derrick Reimer.
While Ben Orenstein is in Hong Kong, we’ve done, I think, two episodes live but we’ve recorded a third. There’s three episodes in a row where it’s us talking about launching products, theories, how to stay creative, how to build the right features, and how to validate an idea.
Derrick’s in the middle of building and validating his Slack competitor, called Level, so I want to call that out, Art of Product Podcast if you are interested in hearing more in the same vein. Obviously, it’s not the same because Mike’s not on, but it is in the same vein as this type of show.
Mike: Awesome.
Rob: How about you? What’s going on?
Mike: I was talking to Frank Denbow. I don’t know if you remember him. He came to the first MicroConf and he was the subject of the hot sauce incident all over his laptop.
Rob: That’s right.
Mike: I need to remind him of that. I had a call with him earlier this week. He is putting together a small conference in New York City called Inflection. It’s aimed in helping people build a profitable company. I thought that I’d mention it on the show just in case there was anybody who is interested.
It’s a one-day event. It’s on Saturday, June 16, starts at 8:00 AM. I think it’s in the lower east side of New York City. If you’re interested in that, go check it out. You can find the website over at inflection.splashthat.com.
We’ll link that up in the show notes just in case anybody’s interested in going to check it out. It’s very cheap to go to it, I think it’s only $100 for the tickets. He’s really trying to put together—he’s got a great speaker line up already.
It’s really aiming at taking a business that is either just getting off the ground or already has some level of funding whether it’s the founderse or they’ve taken a first seat round or something like that and getting them to profitability. I think he’s really doing a good job for that.
Rob: Frank’s been kind of a longtime friend of MicroConf. He’s been there several times and I’ve always enjoyed having conversations with him. That’s cool that he is setting that up. I wish him the best of luck with it.
This week for me, my brother is in town for California. Sherry and our 11-year-old went out of the country. She’s doing some volunteer work in Central America. There’s some good friends down there that they’re staying with and hanging out with.
I was kind of like, “Oh man, I’m going to be home all week with two 7-year-olds. What should I do?” Of course, Sherry and her infinite wisdom was like, “Find somebody out. Have your dad come out or someone who doesn’t come out very much.” I asked my brother who’s pretty busy right now. He has his own family. They’re actually relocating from the Bay Area down to the Monterey area. He was able to carve it out. It’s been super fun.
I have intentionally gotten very little done this week because I just cleared the schedule aside from this podcast. It’s Thursday morning, I think this has been the first work I’ve done this week. I checked email once or twice. It’s nice to have that flexibility and have been having a great time.
The one big thing that kind of happened this week is I’ve been working with a designer and a WordPress guy to redo softwarebyrob.com. I was using a blog theme. I think it was the original original copy Blogger theme from 2007 or 2008 on there. I just never carved the time out with all the stuff I’ve been doing to update it.
A new version just went live this morning and it uses updated pictures, not the ones from six years ago. The site barely mentioned—I didn’t even know if it did mention MicroConf before this. It was just so out of date, it was embarrassing.
If you go to softwarebyrob.com now, it’s more of a legitimate like, “Oh, this guy is not a clown.” How can I be in technology and have a site that look liked it. It was embarrassing.
Mike: You know what else is embarrassing though? Having the JavaScript pop up and say it can’t be loaded because it’s not SSL.
Rob: Is that what mine’s said?
Mike: Yes.
Rob: What browser are you in? Because we did all this Q&A last time on three different browsers and it works on my machine.
Mike: It’s in Chrome. It’s something to look into. It’s just a JavaScript. which I think I stumbled upon.
Rob: Are you on the homepage?
Mike: Yup.
Rob: Let me make a note of this real quick. This went live 10 hours ago at midnight. I Q&A’d for a few minutes and then I’m glad you’re able to find that.
Mike: Yeah, no problem. Just busting your chops on that.
Rob : Of course. How about you? What else is going on?
Mike: I’m kind of poking around at how to do basically a product launch because I’m looking to put Bluetick out on Product Hunt in the very near future. I’m thinking about possibly doing it as early as this coming Tuesday, which would be when this episode goes out, but it might not be until the following Tuesday.
Just kind of poking around of what it takes, and I’ve done stuff on Product Hunt before, but I would say that I wasn’t probably necessarily as up to date on all the things that needed to be done at that time and how to capitalize on the traffic. I’m looking pretty heavily into those kinds of things right now.
Rob: It’s always good to do a little research on these things because these things change. Every six months, it seems like there’s new techniques, new tactics, and new ways to kind of rank well on these sites and to kind of do it “the right way.” Whether you get the maximum impact from another or not, it’s nice to at least try, and at least try to push it up the rankings there.
Obviously, I’d like to up vote and tweet when you do the Product Hunt launch and I’m on your email list, is that the best way for someone to know about this? Like is it bluetick.io and they can get on your list there or is it singlefounder.com?
Mike: Over at bluetick.io, there’s a mailing list that you can sign up for. I think to get on that, you have to go and sign up for the email course. Justin Jackson has said that the easiest way to basically be notified of stuff like that is to go over to Product Hunt and then follow Single Founder over there, that way if I launch something, then you’d get a notification from there.
Rob: Cool, anything else?
Mike: I don’t usually do this, but I totally blew off last Friday to go fishing.
Rob: Yeah, why’s that?
Mike: Because I felt like it.
Rob: Well, the weather is nice, right?
Mike: Well, a friend of mine and I get together about once a year or so and we usually–we’ll either go out or go fishing or something like that, and last Friday, he reached out to me and said, “Hey, do you want to go out?” I was like, “Sure.” We went out and we went fishing, rented a boat. I think we caught two fishes over the course of five hours which kind of sucked. It was a good day to just go out.
We went to Tree House Brewery, which is a local beer brewery which they have their own local beers. They have about half a dozen to a dozen different things that they’re working at any given time. You basically have to stay in line, for some cases, people standing there for upwards of one and a half to two hours because they don’t use distributors.
They’re brewery is the only place that you can get their beer. You basically have to wait. They’ve used distributors like a couple of times in the past and then they just got rid of them. I think it’s because they’ve realized that they can charge a heck of a lot more for the beer. They make just so much more money.
I was kind of doing some mental calculations, and it’s for every hour that they’re open there, they’re probably making like $10,000-$20,000. It’s ridiculous how much they’re charging. You just see people coming out with cases and cases.
It’s an interesting business model, but you also have like an hour and a half or so to sit in line and talk to the people around you. I actually ran into a guy who is in the software space here in the Boston, Massachusetts area.
Rob: Oh, that’s cool. That’s always nice to do. Those businesses are a trip to me. It’s kind of the Cinderella story of the lightning in the bottle. They do exist, but if you and I started a brewery, it’s very unlikely that we would have that much pent up demand.
But the ones that do, it’s fascinating. You’re right, I imagined they’re minting money to a certain extent at least while they’re popular, because you don’t know, are they be going to be popular for 10 years? Or is this kind of something where they’re popular for a few years?
Mike: Yeah, I don’t know. I think it’s a total crap shoot as to whether–you could engineer that type of thing. I think that you could reverse engineer certain things and say, “This is why I think that this works.” But it’s hard to say exactly why everything happens the way that it does. You can’t say for sure whether it is going to continue to be like that for 10 years.
Rob: Very cool. What are we going to talk about today?
Mike: Today, we’re going to be talking about soft skills for entrepreneurs. I wanted to give a shout out to John Sonmez from Simple Programmer where I’m pretty sure that I got this idea from one of the emails that he sent out. I think one of the emails had said something about soft skills for developers. I just wanted to kind of give a little bit of attribution there.
I kind of put it in context as an entrepreneur, what are the soft skills that you need or that you should try to cultivate and what do they mean to you as you’re trying to run your business?
I thought we’d kind of run through a short list of things that I came up with. I kind of aggregated them from a bunch of different sources based on entrepreneurship, software development, and various other aspects of running a business.
Rob: Cool, let’s dive in.
Mike: To start with, I think it kind of requires a definition of what exactly is a soft skill? According to the definition that came up when I typed it into Google, they say that it is “personal attributes that enables someone to interact effectively and harmoniously with other people.” Seems a little nebulous, I guess, in certain aspects.
The basic idea is that these are the things that you have to probably practice and it’s not that you can’t learn them in school, but it’s probably not that they’re typically taught at a college or a university. There are classes and certain things that could can take, but you’re probably not going to get a degree in any of these things.
Rob: Soft skills are hard to quantify. I think when I was younger, when I was in my late teens and maybe in college, I kind of blew them off. I remember being like, “If I have solid engineering skills, it’s just black and white. I know the answer and I can accomplish what I need to.”
But as you get older, you kind of learn that a lot of people who do really interesting things and can really impact the world, or at least start companies and run them, it takes both. It takes both this left brain and also this right brain, or at least these interpersonal skills. Oftentimes, we’re not taught these even by our parents, I know that I really wasn’t. It took me until my middle late 20s before I picked up a lot of stuff we’re going to talk about today. I think, it’s pretty valuable.
Mike: I think the other thing is that you learn a lot of these things very indirectly. You’re probably not going to go and take a course on time management, for example, but there are things that you can learn or books that you can pick up about the topic. It’s not going to be like a core focus of whatever it is that you do especially if you’re going into entrepreneurship.
Rob: Yeah, that’s right.
Mike: We have five things on this soft skills list and the first one is empathy. With empathy, it really helps you to relate to your customers and understand what challenges you’re having. Some of the different things that I thought would be helpful in terms of trying to develop that empathy is to at least understand what it is and what it is in the context of your business.
When you’re having conversations with people, the first thing is to listen to them more. Instead of trying to talk and get your ideas out there, empathy is actually the reverse. It’s understanding what other people are thinking and where they’re coming from. By talking less, you’re going to just by default, listen more.
It gives them the opportunity to talk and you get to hear what their thoughts are, where they’re basing their opinions on or what they’re basing them on. Maybe some background about how they developed those opinions.
Rob: For those who are fans of the Hamilton Musical, you’ll know Aaron Burr’s line where he says, “Talk less. Smile more.” It’s actually seen as a negative thing because he won’t take a stance and he’s being a politician. But I have changed that line for my kids and I will say, “Talk less. Listen more.” It’s fascinating advice. It’s easy to give and hard to implement for all of us especially people who are smart, ambitious, tend in a lot of circles to be the person driving the ship.
If you’re a founder, you’ve probably been one of the smarter people in the room for most of your life. But just because you’re smart doesn’t mean that you should not listen to other people. Other people have really good ideas, but if you just take the time to listen to them, you can implement them.
The other thing where this really helps is if you get that angry customer email, angry tweet, or whatever it is, to be empathetic as a superpower, to be able to understand where they’re coming from and realize, “Hey, they’re probably just frustrated today. They’re not really personally attacking me even though it feels like they are right now.”
The best customer support reps and the best customer success folks that I’ve worked with really are able to dial in this empathy aspect.
Mike: The other interesting piece of developing empathy is that you can be right and still give off the vibe that you don’t care because you come across as arrogant or that you know everything. Part of empathy is sometimes you already know the answer to a question that somebody is going to ask and empathy is simply listening to them anyway instead of saying, “Here’s your answer,” or talking over them or trying to say commands to them like, “Hey, you need to listen to me and you need to do this.”
Some people just want to be heard and then you can give them whatever the answers are because then it sounds like you have or it appears to them that you have listened to everything and you fully understand.
Even if you already know the answer in advance, you can ask a couple of prodding questions, I guess. It positions the conversation differently in their mind. As long as you’re conscious of those types of things, then it allows you to not only project that empathy, but also to get people to go along with you; whereas if you were to come from that source of authority or commanding authority, they may take offense to it and tune out and not want to listen, regardless of whether you’re right or wrong.
Rob: If you want to see an example of that happening, exactly what we’re saying, go on Twitter and watch people discuss maybe a controversial topic or just an often misunderstood topic and you’ll quickly see that people in this world don’t have enough empathy for one another. That’s a good example of kind of what not to do as you’re running a business or in conversations is jump to conclusions and start attacking.
Empathy was the first soft skill. The second one is time management. Bottom-line is you’re never going to have enough time or enough resources to do everything you need to do and you want to do in business. You have to learn how to prioritize.
The first thing that I’d recommend is–you don’t need to do this forever, but in the early days, track your time. I literally used to use a time tracker where it had categories. Even when I wasn’t being paid, didn’t need to track my time, but I was tracking it either based on the task I was doing or the product I was working on when I had multiple products.
It was just a little desktop timer and I would select the project. At the end of the week or end of the month, I could look back and I was like, “I pissed away a bunch of time working on this product that isn’t even profitable. Should I sell that thing, should I shut it down or do I just need to be more deliberate and more disciplined about not spending that time doing that stuff?”
It’s kind of like budgeting. I believe you should budget or look at your budget for a certain amount of months until you get a feel for it. I’ve always stopped after that because I kind of have this stuff in my head of where we are and where we should be.
I believe that tracking time is like that. I didn’t track it for 10 years, but I tracked it for probably the first six months I was an entrepreneur, and it really helped me see that pie chart of where I was spending a lot of time and where I was spending a little. It helped me evaluate if that was the right mix.
Mike: One thing I really like to do in terms of time management is blocking off my calendar so that on Mondays, for example, I tend to not take calls of any kind whether they are with customers, doing demos, or anything like that. There’s just a time block on my calendar so you can’t schedule a meeting with me unless it’s super critical or important or I feel like I need to.
But generally speaking, that time is mine, so that I can actually get work done. I do that on occasion where I’ll throw a calendar block in there as well. It just marks my time as “busy” so that I can get other things done.
I do see people who have calendars where they will have like a very regimented schedule and they’ll say, “From from 6-7 I’m doing this, 7-8 this, etc.” I can’t do that as much. I feel like there’s a lot of things that I’m working where if I try to do that, I’m probably going to run over my time or going to be too conscious about what that time frame looks like or those hour blocks. It’s just going to conflict with my brain. I’m just not going to be able to pay attention to it or it’s just going to be distracting. I don’t like to do that as much but there are some people that that really works well for.
Rob: After time management, the third soft skill is negotiation. This overlaps a lot with sales skills. If you understand someone else’s objections and their motivations, you can identify ways to overcome the objections. Whether it’s convince or encourage them kind of down the path that you believe is correct for them. Hopefully, your product being at the other end of that will benefit them in the long run.
I think that’s the difference to me between someone who is an ethical salesperson versus someone who just wants the commission and is going to force someone into something they don’t like, is the ability to truly look and say, “Wow, we actually suit your needs better than your current provider or better than the alternative and here’s why.” And to be able to say that.
Negotiation/sales skills, I think, kind of fall into this same one. The one place to start if you’re going to get into either a sales conversation or negotiation. Negotiation could be with a vendor that you’re sending tons of emails through a company like SendGrid or Mandrill or something and you’re at an enterprise level, maybe you’re trying to negotiate a price there or maybe you’re negotiating the sale of your company. Maybe your negotiating the price of your enterprise plan to someone who is wanting to buy.
The first thing to do is to learn everything you can about the other person like what they’re trying to achieve, what’s important to them, what parts of the deals are deal breakers and which are not. Finding out what a win looks like for the other person is critical probably to your own version of what a win is because you know or you should know what a win is for you, and hopefully you can figure out what it is for them and try to merge those two things.
Mike: Surprisingly enough, I have said it earlier in the episode that there are not very many soft skills where you can take a college course on it. Negotiation and conflict management is actually a course that I took in college, which was taught by a professor that I know and respect, but he unfortunately passed away several years ago, but it was honestly one of the best courses that I had ever taken. I learned a heck of a lot of things in that. Not least of which was the fact that there are certain types of styles of negotiation that I prefer, which generally involves a win-win scenario.
We went through all of the different styles of negotiation and we practiced them in that class. One of the books that was a resource for that was one called Getting to Yes: Negotiating Agreement Without Giving In, which you can get on Amazon. It’s only a couple of dollars, but I don’t know if they have a Kindle version of it. It’s like $5-$6 for a used paperback version. I definitely recommend picking that up.
With negotiation, part of it is figuring out what it is that you want and knowing in advance what you can and can’t live without. If you are blindsided by a negotiation and you end up in one, the best thing to do is walk away and regroup and say, “Let’s schedule this or talk about it some other time.”
I have been in those situations where I was scheduled for a meeting. It was more of just come in and say “hi” and ended up in a negotiation for like what is this contract going to look like and what are going to be the dollar amounts? I was completely unprepared for it and basically did not negotiate very well.
I think that that is very common if you’re not prepared. If you haven’t done your homework on it, then you’re not going to understand where those different lines are for you. You’re not going to be able to keep them in mind and pay attention while you’re going through the course of that negotiation.
Along with that, make sure that you keep in mind what your emotions look like. Don’t let winning a negotiation get so far in a way of everything else that is going on that you can’t pay attention to the things that are the most important.
Rob: Yeah, I agree. Those are really good tips. Another book I’d liked to recommend that I haven’t read yet, but it’s on my wish list and I heard an interview with this guy and the interview was awesome.
It’s not often that I listen to a podcast interview and I’m instantly trying to find more from that guest. The book is , Never Split the Difference: Negotiating As If Your Life Depended On It. The guy was a hostage negotiator for years. I forget if it was with the SWAT team or for if it was with the FBI or somebody. Just really brilliant insights. Again, it’s on my wish list. I haven’t listened to it yet, but the 30 or 40-minute snippet that I’ve heard of him made me want to really dive in. It was another take.
I’ve also read Getting To Yes and it’s very good. I’ve read as I’ve sold multiple companies and software products, I have read at least half a dozen books on negotiating and Getting To Yes was one of the best ones. I’m glad that you called that out.
Mike: I picked up the book that you mentioned as well, Never Split the Difference. I haven’t read it either.
Rob: Yeah, it’s in the queue, am I right?
Mike: The one other thing I would comment on negotiation is that what’s important to you or what you think is important to the other person is not necessarily always the case. There’s times where you can negotiate for something where you may think or feel like it would take a lot to get the other person to agree to it. Based on the situation the person is in, it may take very, very little because they have other things going on, and have to learn what those are throughout the courses of the conversation.
Rob: Yeah. The last thing I’ll throw in is when you’re negotiating, there’s times when you’re negotiating and you’re going to have a relationship with this person after, then there’s times when you’re not.
An example of not is when you’re selling or buying a car. You’re only going to interact with this person at this point and there’s really no relationship past it. You can really go for the highest dollar or the lowest dollar as the case may be depending on which side of the deal you’re on.
But if you are selling a company and you’re going to work with that person for the next year or two afterwards, or you are selling an enterprise deal and you know that your company is going to have a relationship with that person for at least the next 12 months. You can’t just push it so far that you burn the relationship. That’s kind of a final thing. It’s like negotiating, you’ve heard this expression, “Pigs get fat, hogs get slaughtered.” That expression means, if you push for every last dollar and I’ve worked with people like this who just want every last nickel out of everything so that they feel like they got the best deal, but then you don’t want to do business with them anymore.
I’ve totally walked away from people like that where we cut a deal and it’s obvious that they wanted it extremely one-sided. If you’re always that way, you’re not going to have that many people who want to do business with you.
Just something to keep in mind is oftentimes, the best deal is not the best deal for you. It’s the best deal for everyone. It sounds like we can do a whole episode on this.
Mike: I was just thinking that. We could probably do an entire episode. We should do that some time.
Rob: Yeah, cool. How about our next one? What’s our fourth soft skill?
Mike: The next one is management and teamwork. I kind of lumped these together in terms of the management is managing other people, assigning tasks, and making sure that things are on track.
Teamwork is also putting yourself in a position where you have somebody else managing the piece of it and you’re acting as a teammate for them. It’s kind of two sides of the same coin.
The bottom-line here is you can do everything in your business, but it’s really hard to do all of it in a timeline that is efficient and gives you the ability to make money and turn a profit and do all the other things that you want to do.
Outsourcing or hiring or bringing on teammates helps to move things faster. That doesn’t necessarily mean that you hire somebody you might just collaborate with another person or do a joint venture of some kind, which you may negotiate some things there, but you’re still going to need to work with them moving forward to get whatever that joint venture is done.
A lot of management I find comes down to empowering people to make decisions, so that you don’t need to be in a position where you have to micromanage them. Tell them what is it you want to achieve, tell them why you want to do it, what’s important to you along that path, and then let them do it.
If you try to micromanage everything, it’s going to take so much time, work, and effort on your part that a lot of times it’s just not even worth trying to outsource it. You may as well just do it yourself because you have this vision in your head of exactly how everything needs to be done. If you’re micromanaging it, you’re just basically wasting your time. You’re having somebody else do it, and then you’re double-checking everything anyway. It’s not going to work out for you in terms of the time that you’re trying to gain from in and then out.
Rob: I think that’s a mistake that most beginning managers or delegators make. They’re used to doing things themselves and they want the control. I know that I made this mistake in the early days of hiring people that probably weren’t that good. I felt like I needed to give them a lot of instruction.
It wasn’t that they weren’t that good, but maybe they just didn’t have the experience, but I hired them because they were cheap and I didn’t have a lot of money. Like you said, it was probably not worth doing at all. I should’ve tried to find someone with the experience, waited until I had some budget, maybe had them work fewer hours and just on fewer tasks, but have someone who’s more of a fit.
I think one of the things that I’ve discovered about management and teamwork over the years, building this companies, is that a big part of it is getting the right people on the bus. It’s hiring people who work with your work style and hiring people who work well together.
If you do that, even if you don’t have a tremendous amount of budget, you can really get a lot of work done.
Mike: Something else that goes into managing a team is knowing when it’s not working out. Not everything is going to work out. There’s times where you have to cut your losses and move on whether that’s with a contractor an employee, you can do everything in your power to try and make sure that things go well and that you are managing them in a fair and effective way, and that they understand what is it that they’re supposed to do.
Ultimately, there are times when it just doesn’t work out. You need to be able to recognize those and move on in a way that is best for everyone involved.
Rob: The fifth soft skill, which kind of covers or applies to almost all the ones that we’ve talked about already is communication. In every interaction with someone else, it is critical that you have the ability to communicate clearly, to communicate effectively, and frankly, to communicate with empathy with the other person in mind, what their mindset is.
It is not just drilling down, “You need to do this!” But it’s like, “What do I know about this person that I’ve worked with for a year and how they think about things?” “How much control do they want? How much control am I willing to give?” “What kind of instructions do they need?” And kind of tailoring that message, so learning to communicate effectively with people is huge because it saves time and prevents misunderstandings.
This includes, when we think about communication, there’s written communication. It’s your emails; essays, if you’re writing blog post, or anything like that. It’s presenting. It is verbal communication both in meetings or in planning sessions or in brainstorming sessions.
I think a big part of this, I don’t know if this is the whole thing, but a big part of it is figuring out which mode of communication that works best for you and potentially, and I don’t know if it goes as far as to build a team around that, but to realize, “Wow, I really am better at verbal stuff that needs to be part of our culture of our team. They can take a voicemail from me or a voxer, or are willing to jump on a call and chat something really quick because I’m a 10x verbal processor, but my emails really suck,” or vice-versa.
If you’re really good at writing, then build a culture where it’s around Slack or it’s around email. If you’re going to build a company of 200 people, then that won’t work. You can’t dictate it. But if you’re going to build a team of 3-10 people, then a lot rotates around with the founder being effective at what they’re doing.
I do think that are discovering that and knowing it about yourself and potentially improving the other ways as well which is something I’ve done along the way. I’ve traditionally been a good writer. I’ve traditionally not been someone who was good both at public speaking or verbal interactions, in general.
Something that we’ve done in the podcast has made me much more able to process my thoughts verbally and to get stuff out there that’s kind of in my head, and then doing all the public speaking. Early on, it was at conferences from 2007-2010, and then we started MicroConf. Now you and I are in a good way, forced to speak basically two times a year. That just keeps your chops up. It keeps your ability to communicate a message in a way that’s really effective.
Mike: The ability to practice those types of things in some ways, it’s force, but at the same time, you also learn to enjoy it at some point, or at least, I would hope that you would enjoy it if you have to do it enough.
Those types of skills—the presenting skills and the public speaking—those really help when it comes to things like sales presentations or trying to go through an interview process and explain to somebody why it is that they should join your team, or when you’re negotiating with somebody about their salary requirements or what their needs are for them to on-board onto your product and determine what it is that’s holding them back and what their objections are.
All that stuff that goes along with the communication is extremely critical whether you need to follow up with an email or you need to explain it to them in person. Being able to recognize what the preferred mode of communication is for other people, and then adapt to yourself to their preferred mode of communication is really going to be helpful for you to be able to achieve your objectives within the context that they are comfortable in.
You can’t also go via email. I can speak for most introverts who are listening to this. My preferred mode is email, but that doesn’t mean that it works for everybody. Some people actually like getting on the phone and you have to be able to do that. If you want to do a demo of your product, then clearly, you have to get onto a call and do that with them.
There are ways around that. There are some exceptions where you can have videos and things like that, but for the most part, you still have to adapt to the world around you and put things out or present them in a way that other people are able to and willing to consume them.
Rob: That’s really a good point. It’s really hard to hide in a corner if you do truly want to be introverted and do everything via email. You really need a low priced self-service SaaS offering and you’re only going to be able to grow that to a certain size.
That’s not terrible. That’s what I did in the early days, to be honest, until I felt like I needed to force myself out of the shell. It’s not to say that’s something you can’t do, but you’re definitely going to limit—it’s a self-limiting behavior, to not want to improve on the modes of communication that you don’t necessarily enjoy.
One thing I want to touch on, as you mentioned having hard conversations or just having important conversations and there was a really good book recommended to me by Ruben Gomez from Bidsketch that’s called Crucial Conversations.
I’ve read it. I like it. I think if you want to improve your ability to have not just difficult conversations, just important conversations with people, I think it’s a really good look at framing how you should approach them and how you should view them.
To recap the five soft skills we looked at today were empathy, time management, negotiation, management and teamwork, and communication.
If you have a question for us, you call our voicemail number at 888-801-9690 or you can record an MP3 on your phone or your computer. You can email us at questions@startupsfortherestofus.com.
Our theme music is an excerpt from We’re Outta Control, it’s by MoOt used under Creative Commons. Subscribe to us in iTunes by searching for startups. You can visit startupsfortherestofus.com for a full transcript of each episode. Thanks for listening. We’ll see you next time.
Episode 393 | Marketing and Growth Questions Answered
Show Notes
In this episode of Startups For The Rest Of Us, Rob and Mike answer marketing and growth questions as well as give advice on starting a new venture.
Items mentioned in this episode:
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 built your first product or you’re just thinking about it. I’m Mike.
Rob: I’m Rob.
Mike: 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: You know man, I appreciated that you and Zander pulled the joke on me and put unemployed on my badge at MicroConf. It was hilarious. Everybody was commenting about it. It was super fun.
The big question people were asking me was like, “How’s unemployment/retirement treating you?” Now that I’m a couple weeks into it, it’s everything you imagine it would be in a good way. I haven’t felt this relaxed and focused almost, it sounds like an odd thing but for me, it’s like having the headspace to dive deep into topics that I just have the time to do.
It’s the freedom to not need to generate a result next day or next week based on what I do today but realizing that long term, yeah, probably we’re going to do something again, something interesting, but to have the freedom to just float from one thing to the next and do it, I haven’t felt like this since before HitTail, which was the 2010-2011 timeframe, we had our second son and I spent about 10 months where I worked 10-15 hours a week and it felt amazing.
It wasn’t until I got 4-6 months into that before I really started getting bored and anxious and wanting to do the next thing. That’s my first report of how it’s going, it’s I’m definitely not bored yet and I will, at a time when I think I will get bored, but I’m certainly feeling my days at this point.
One example of this, man, is, since we have a live in nanny a year or two ago and she was here for about six or eight months then her mom had a health issue and she moved away. Ever since then we’ve just struggled to have stable child care. It’s been a real problem because Sherry is trying to work, I was going to the office a few days a week and it was always a struggle.
Today, Sherry’s out of town speaking at a conference and one of our kids is sick, one of our 7 year olds. She stayed here at the house, but it wasn’t a big deal.
Obviously, I’d prefer during the day to do my stuff, but I don’t have to. It wasn’t this big scramble of, “Oh no! I need to tell my team that I can’t make these meetings,” or, “I had deliverable that now I can’t get done because I’m hanging out with a kid.” It’s that kind of flexibility that I hope that I relish and enjoy in the coming months.
Mike: I can definitely see that. When I’m out of town, my wife owns her own business, it’s
a fitness studio. She’s got things going on at the studio pretty much all week, so when I’m out of town for MicroConf for example, it’s makes it a lot more difficult for her to manage things and then there’s always stuff that comes up where somebody’s going to have to deal with it.
The other day, one of our kids fell in the driveway, literally just before school. That’s going to be dealt with as well. You can’t just say, “Oh well. I’ll deal with it this afternoon.” You’ve got to deal with it at that point and push other things around in order to work through whatever the issue is.
Two people having their own business in the same household is actually really, really hard.
Rob: Totally. Two businesses and kids. All of that. There’s just too many unknowns and there are too many surprises and there’s too many–schools get cancelled because of snow or some other thing, they have problem with busses, or one kid gets sick, or parent-teacher conference–there’s always something going on that is screwing with your schedule and your focus.
Mike: That’s why the general advice on kids is to get a fish instead.
Rob: A fish instead, indeed. How about you, what’s going on this week?
Mike: Now that MicroConf is winding down, I’m starting ramp up the marketing efforts for BlueTick again and I don’t have to worry about things from MicroConf interjecting in into that. Although, things with MicroConf Europe are going to probably interfere a little bit moving forward, but I don’t think that it’s going to be nearly as bad as with MicroConf in Vegas just because there were the two conferences and the sheer number of speakers that we had to work with but there’s just a lot less going on just because it’s only one conference.
But with the marketing efforts like I’m starting to get into the point where I’m focusing on doing things like webinars and the onboarding emails are getting better, there’s a few product updates that are going to go out there, are going to make things a lot easier for customers to do what they need to do in the app and guide them through it a little bit better because right now, I typically do on-boarding for people manually, which is helpful, but it’s not necessarily scalable.
There’s all these low hanging fruit that I still have not done yet because there were pieces of the app that I knew had issues and most of those have been cleared up, but I was waiting until after MicroConf was over in order to do the big marketing push again.
There’s been a couple of times in the past where I felt like things were ready to start pushing on the marketing and then I started to go down that path and then find something wrong. I’m hoping that that doesn’t happen again, but we’ll see how that works out. Nothing goes as planned but I feel reasonably confident again.
Rob: On my end, I found a couple of new podcasts I wanted to mention that are in the bootstrap
software space or the product space, because I have a Google alert for MicroConf, so if you review MicroConf on your podcast, I will tend to listen to at least that episode. It just so happened that there were a handful of podcast that mentioned it. One of which, I already listened to, but I wanted to call them out here and announce them for folks who were looking for other folks like us. It’s the Micropreneur, Startups For The Rest Of Us, MicroConf Crowd, and who are talking about the things that we’re doing.
First one is called Hooked On Products and this is from Phil Derksen and John Turner. Phil and I have known each other from Fresno for years and then John Turner is the co-founder of SeedProd. He’s been on the podcast.
The next one is Build Your SaaS. It’s Justin Jackson’s podcast. He co-host with his co-founder of transistor.fm, and then of course The Art of Product which is Derrick Reimer, my co-founder’s podcast with Ben Orenstein.
We will link those up in the show notes: Hooked On Products, Build Your SaaS and The Art of
Product, but definitely, if you’re looking for some new podcasts along these lines, those are the early 2018 winners at this point.
We have listener questions. First set of questions, it looks like three questions in the same email. It’s from Michael Palteon, and he says, “I have a couple questions. The first is, I’m working on a SaaS app in a server management/scaling. I have a large LinkedIn network and I’ve started posted the progress of the development on a weekly basis. I know Rob did something once with Derrick when he was building Drip, but I feels like the post or the content only stay on LinkedIn. What’s your view on posting the same content on possibly multiple channels? Like Medium, a blog, or maybe even a podcast versus focusing on LinkedIn.
Mike: I think the danger of focusing on just one place to post them like LinkedIn is that that stuff doesn’t tend to work it’s way out into other areas. By posting it on your blog and on Medium and on LinkedIn, then you start to cast a wider net, but I think that I would also be careful of posting them all on the exact same day, you space them out, so let’s say that you post an article on LinkedIn and then the next week, you post the same article on Medium, and then the next week after that, you post the same article on your blog. That’s going to cast a bit of a wider net because then you’re not only reaching more people in different channels, but you’re spacing it out such that you’re probably going to catch the people who would have caught it on LinkedIn on your blog, or on Medium in other ways.
There’s got to be some overlap between them, but by spacing them out a little bit, you get the advantage of getting it in front of people more than once, but you’re going to have to look into what’s going to be an appropriate schedule for that, and I don’t know off the top of my head what that would be. Obviously, it depends on a lot of different factors.
That’s how I would think about it. I don’t think I would just say, “Oh, just post it here.” Unless you have a newsletter or something like that where you’re telling them flat out, “We’re going to be posting exclusive stuff and it’s only going to be in our blog,” for example, and “You’re only going to get it if you’re on this newsletter.”
If you’re going to do that, do not also post it in other places because then you’re essentially lying to the people who are signing up for your mailing list, they’re not going to appreciate it.
Rob: This is a tough one. I think syndicating to multiple platforms tends to be a good idea. Back in the day, it was the duplicate content penalty from Google. I know that kind of exists these days and Google will pick a canonical version, but it’s this balance of trying to digital share crop on other people’s land which is the LinkedIn or Medium, or build your own following on a blog.
These days, it’s just so hard to do it on your own and to try to get people to come read it because you have to get those traffic sources and it’s harder to share on all these things.
I would probably lean towards doing both that if you do have something long form to put it on your blog, post it on LinkedIn and link back. You can say, “This was originally published on blank,” and link back to your blog. You could do the same thing on Medium.
The thing that I wonder is whether it’s going to help at all, whether you’re going to notice it. That’s something to test. When we did this with Drip, at a certain point, we were building the blog up, then we switched to where we were posting first on Medium just to try to see if we could gain critical mass there. We never did.
We switched back to doing both and it was fine. Posting to both was not a big time investment and so we kept doing it and it had a nominal return, but it was not some mind blowing growth engine or anything like that.
I think you’d either reeling to discover a clever hack or perhaps that time has passed for things like the Medium and the LinkedIn. You’ve got to get in early and get traction and be an early person and get a lot of followers, then you can do it.
You should try it for 60 days and just see what happens, but I have question if it’s going to move the needle at all, and then in terms of maybe doing a podcast, to me that’s a different question altogether, because if you’re going to write it and put it out, that’s one thing.
If you’re planning on just reading them on a podcast, you could certainly try it. Hopefully it’d be interesting, but like podcasting is such a different game than blogging. I think there’s a whole
different question you want to ask yourself is, “Can I make this entertaining? Will people want to listen to it?” That kind of thing versus writing one of articles, people will just stumble upon it.
Michael’s second question is, “I’ve been thinking about starting my own podcast for some time. But I like shows with two hosts. My question is how would you go about finding a co-host for a podcast? I don’t think I’ve heard you guys met and decided to start the podcast. It would also be interesting to hear that as well.”
Mike: Do you want me to take that one?
Rob: Yeah. I think we both know the story. Take it up.
Mike: The way Rob and I met was back in 2005. I had left the startup company that I was working for, went off on my own. I think Rob, you’ve talked a little bit about how you were doing independent consulting around that time.
Working from home alone is isolating and back at those days, there were not very many blogs and there were no communities for people who were a single founder working out of their living room or their kitchen or the basement. I looked around and the closest I ever found was the Joel on Software Blog.
Obviously, a lot of people were reading that, but I looked at that and said, “Well, I would like to blog about my own experiences.” I started doing that and I was looking around for people who are doing the same thing and I came across Rob’s blog.
I didn’t realize it at the time, but Rob was also doing the same exact thing and had come across my blog. We were peripherally aware of each other, but didn’t know each other, knew who we were. I think fast forward a little bit, Rob had ran through a bunch of different products and one of them he sold, he was selling from his blog. I looked at it and said, “Hey. I’d be interested in buying that.” We got in a conversation, I bought it from Rob.
I think it was for the next year or so, you and I traded blogpost back and forth before we posted them just because we weren’t real comfortable blogging on our own yet and just went through it like an iterative editing process and then once we got comfortable, we just went on our separate ways and that was around 2007, I think.
Fast forward a couple of years, you had started the MicroConf Academy and that was based on building a course around all the stuff that you had learned and you are just basically busy or too busy to turn out all the content with it and you looked through your Rolodex and I showed up
on the shortlist somehow and we got to talk and worked something out, and I basically joined you as you the co-founder of the MicroConf Academy. That was 2009; 2010, we started the podcast. Is that right?
Rob: I think so. 2010 podcast and 2011 MicroConf.
Mike: That’s how things worked out. I don’t if there’s a good lesson there in terms of finding a co-host for the podcast, but there was at least some level of familiarity there between us from editing each other’s blogpost and stuff before we got on to the podcast.
I don’t think that you need that. I don’t think you need to go into a business relationship with somebody before that part, but you have to at least be able to get along and know that I think that your general values and ethos are aligned. That’s our story. Rob, are there specific lessons that you can think of for that?
Rob: He’s asking how would you go about finding a co-host and I’m wondering, do you really want to start your own or do you want to find a podcast for the single host and try to get on an existing one.
Jordan Gal and Brian Casel did this. Brian had the podcast Bootstrapped Web first and then Jordan joined him later and made the podcast a lot better. I think you could consider doing that. If someone else is already doing it and they’re delivering and you get a little bit of an advantage of coming on late. That’s probably the first thing I would consider.
The other thing is if you’re starting it to talk about fun stuff like entrepreneurship or hobbies or whatever, then just go ahead and do it and start it and you’ll find people. If you’re starting around your business and you really wanted to be this super professional thing up front, then yeah, I do think you need to spend more time thinking about the concept and looking around.
There are podcasting forums, there are podcasts about podcasting and those that have communities. I think probably getting that intersection of people who listen to those podcast and listen to Startups For The Rest Of Us or go to MicroConf, if you’re going to talk about bootstrapping, then that’s going to be it.
You have to find that Venn Diagram, an intersection of someone who is interested in the topic and able to talk about it and also wanting to do it in a podcast form because it is no small commitment to do this. Ask anybody who podcasts. There’s an amount of time that you have to set aside and an amount of time that you have to that you have to have.
Podcasting is different than blogging where if you blog once a month, nobody really cares. It’s fine. Hey, it’s a good article and I got up on Hacker News or Product Hunt or whatever. If you podcast once a month, you might as well not. Unless you’re Dan Carlin’s Hardcore History which is a four hour thing. That’s an exemption. But for the most part, you need to ship fairly frequently, it is a commitment from that start that I would say if you don’t think you can keep that up, do not waste your time.
Mike: I think that commitment is something that people overlook and you really have to have an episode at least every week in order to start building an audience. I remember back when we started Startups For The Rest Of Us, we were doing it every week and then we decided, “Let’s change this up and let’s do every other week.” We did every other week for three or four months. It was very obvious that the growth slowed down. Once we went back to every week, it went right back up again. You have to be mindful of that.
I know that there’s articles all over the place that say, “How many times you should post? How many times you should create a new podcast and how long they should be?” And all these different things. It really boils down to the function of how much time and effort you have, and what it is that you’re going to do with it, what’s your goal for that? There’s just a lot of different factors, that’s all.
Rob: He’s third question. He says, “It’d be great if you guys could do another run down of the podcast you listen to or recommend.” I’m going to table that one for now because maybe in the next few episodes, we’ll do that. I’d like to revisit, it changes so frequently with me that I think it’d be worth doing.
He asks, “What equipment and recording devices do you use? Many other great podcast that
I used to listen to are no longer publishing new episodes as often and I’m also not sure why this happens to most podcasts.” That’s exactly what we were just saying. It’s because it just takes time and if you don’t have some type of something that you get out of it, whether it’s a personal brand or whether you’re selling conference tickets or whether you’re promoting an application where you’re getting some type of feedback loop, it is too much work to justify just doing a podcast for the sake of doing a podcast.
That’s why I’m sure a lot of these fade is they just figured the ROI isn’t there given the amount of work there is. Aside from that, what equipment and recording devices do we use, Mike? What complex, intricate system do we use?
Mike: Are you mocking me? We’re mocking ourselves.
Rob: We use USB headsets that we have for 10 years. I know sometimes now when I listen to podcasts I hear the plastic in the headsets jangling around. I’ve tried the Blue Yeti, and I’ve tried the Snowball and I don’t like the sound quality nearly as much in the finished product as these Plantronics (DSP) Digital Signal Processing headsets. I’m not going to name the exact model because they’re discontinued and whenever they come up on eBay, I buy them.
I have about 8 or 10 in the drawer in my house because I burn through them because they break. The mute button stops working, they get to janky, their cords are broken. I’ve probably gone through five or six in the past 10 years and I have another stock in this drawer here that Sherry and I share.
But what I would say is if you’re going to do this, you can get the Yeti or the Snowball, those are the recommended ones. You just have to have sound baffling, you have to have a very quiet environment. If you have kids five rooms away, it will totally pick that up.
If you want to do the USB headset where you can move your head a lot, definitely go USB and don’t go the audio auxiliary and then test several out. That’s what I did. I bought six or eight of them at the start and tested them all out. It was a noticeable difference in the sound quality.
Mike: Just some general advice when looking for headsets, you probably want something that’s relatively light. You don’t want something that’s massive and bulky. You definitely want something that has a boom or a microphone that is stable and is going to sit in front of your face.
As Rob had just said, the problems with the Blue Yeti and microphones like that is you really have to be speaking directly at them and hold your head at about the same distance the entire time. It can really be uncomfortable, especially if you’re the type of person that fidgets. I know Rob tends to walk around sometimes when he’s podcasting, I sit at my desk, but I also look around the room. I’m not always looking in the same direction. That screws with the sound quality.
I think that’s what most podcasters who are much more visible about what equipment they use, they talk about these things, “Oh, the sound quality for this and that.” The USB headset works fine. It doesn’t matter that much. You don’t have to go all out on all of these equipment.
I think the USB headsets that we use, I think they cost $40 or $50. It’s not very expensive. I have seen versions of the ones that you are not willing to talk about or disclose like $200 or $300 at this point because they are much newer versions. I’m using one right now that I can find for $60 or so and it’s a slightly different version than you use. It works fantastic.
Rob: Again, that’s Plantronics headsets. It’s not the super lightweight one. You want the one with the bigger mic with the pop filter and all that. Several of them will work for you, I don’t think you have to get so detailed and know exactly which models or whatever we’re using.
Mike: We used to just record over Skype and use either call recorder or Pamela. Pamela was on Windows that would hook into Skype and then Call Recorder is on the Mac. It worked reasonably well, but the problem is they record at both sides, so if your connection drops from Skype or it was not a great connection which happens frequently and feels like it happens more and more frequently these days with Skype, then you may end up recording the podcast again.
I’ve had entire podcast where we’ve had to dump it, not with ours, but with other people’s where Skype just dropped everything. There’s nothing you can do at that point.
We use a service called Zencastr right now. zencastr.com. It records the audio on both sides through the browser, there’s no additional software needed. You hop on it, records on both sides, uploads. I have to send it into Dropbox. It works out well.
Rob: I think the switch to Zencastr was definitely a good move for us. A lot less headaches. I don’t go on to Skype at all anymore. I do all my meetings through Zoom and then recordings through Zencastr. When someone asks to Skype me now, I’ll groan, I get figure out how to make a call because they redo the interface every four months and you don’t even know how to do it. It’s kind of a mess.
Mike: Your response should be, “Do you still have a yellow corded phone?”
Rob: Thanks for the questions Michael. I hope our answers were helpful. Next question is from Alex and he says, “Hello. I am interested in creating my own ecommerce website that will host new entrepreneurs’ products on my site for a subscription fee. Ideally, this will be for those who want cheaper advertising and not at the level of having their products on Amazon yet. My niche is American businesses and my goal is the support of small business. I’m still working out all the details. This is a new business platform but I’d love to hear some feedback.”
What do you think Mike?
Mike: I’m not sure what he’s selling.
Rob: I think this is a tough one. He’s trying to setup a website that can host ecommerce like physical products for people who don’t want to put their products on Amazon yet or on at the level. I just don’t know of any product that’s like that. It’s a theoretical of like they want cheaper advertising, but have you run into anyone in your life who fits this bill?
Mike: No.
Rob: Yeah, and I haven’t either. That’s the first thing I would do, Alex. I think it’s good that you asked. First thing I would do is you need to go out and find 10, 20, 30 people who have this exact need because I don’t believe that there are that many people. If there are, and if they’re not at the level where they want to have their product on Amazon, which is not a very high bar. I’m guessing that they’re not going to have enough money to want to pay a subscription fee to host it on your site.
Mike: Yeah. This is a classic case of saying, “It’s too expensive for me. So it must be too expensive for other people,” and you’re trying to squeeze blood from a stone at that point. It’s not a good business model.
I recognize and empathize with the desire to help the people who have no money, but you can’t do it by charging them, like you have to go up market, charge people who do have money and then turn around and use that to invest in products and services and things like that that can help that people at the bottom.
Honestly, that’s one of the things that we’ve done with the scholarship program this year with MicroConf. We got MicroConf to a certain point and it was growing and scaled up and we got enough people there now that it’s like, “How can we help those people at the bottom who could use that help to get up to our level? How do you bring other people up?” To do that, you need money. You can’t charge the people who don’t have any money. It’s not going to work.
Rob: I’m glad you asked the question because I’m guessing that if you don’t go out and validate this, you can spend a lot time either building it or hiring someone to build it or whatever. The first step that I would do is just figure out if this is viable at all because I think red flyers are going out for both you and I about the idea at least the way that he’s described it here.
All right, our next set of questions are from Linton Ye and he is with jimulabs.com. He says, “Thanks for another tremendously useful MicroConf. As I mentioned to Mike, I started building a course right after last year, 2017 MicroConf. I’ve been trying to follow the formulas I learned at the conference and I’m seeing some good signs. I’d really appreciate it if you could help me with some questions. Background: The product is a video course built for UI designers teaching them React, which is a JavaScript framework. The goal is not to convert them into developers but to help them work with developers more efficiently. As of now, I have 1300 subscribers in my list.” Assuming that’s an email list. “I’m still building the course, but there are around 30 people who have bought the first module for $79 or preordered the entire bundle at $169. About two-thirds preordered the whole thing, about one-tenth of all subscribers replied to my quick question email.”
He has a decent amount of engagement. “The majority of my subscribers came from a few post on Designer News, which is like Hacker News for designers. The post brought almost 800 subscribers last May and June, but the growth of the list has slowed down since then. I’m also doing blogging and guest blogging. I didn’t do much SEO intentionally, but many told me that they found the site by Googling. I have attached a chart of the history of my list with explanation of key events. Let me know if you need more data.” And he has a bar graph for us.
He has questions for us. It looks like maybe three or four. He says, “Does this product feel like something that will work?” That’s an interesting way to phrase that. I’m not sure what work means. It just depends on your goals. Do I think you’re going to sell copies of it? Absolutely. Do I think you’re going to make six figures from it? No. The list is too small. It’s not too small. The list is too small to make six figures from is what I’m going to say. You’ve got to start somewhere.
If you haven’t engaged with these subscribers and that’s the part I don’t know. I would be keeping them warm and then I would be taking other approaches that are probably free marketing at this point. If you watch the talk this year from Adam, that we talked about Adam Wathan. We talked about in the last episode, that was the blueprint of how to do this. It’s a lot of social media stuff and it’s a lot of getting into that community and having a reach in there.
Mike: I was going to mention as well. He talked to me about this product because he attended Growth edition and Adam spoken as Starter edition and Adam’s talk, go over to the MicroConf recap website and look up Adam Wathan’s talk, there’s all the notes there from the Christian Genco took and there’s a lot of detail there that you won’t get the full context of the talk but there’s a lot of stuff there that you’ll be able to take away.
I think that that will really help you figure out how to make certain things work and how to scale them up. But obviously, with your questions, there’s a lot of–it depends in there. How far do you want to take this? How much time do you have to dedicate to it? Do you want to grow into this massive business or do you just want to keep it small and put something out there that you can use a resume builder, but something to point at and say, “Hey, I’ve done this, so I have experience in this area.” It depends on what the purpose of it is.
If it’s a build a business, then yeah, you’re probably making into a business but as Rob said, not with just 1300 subscribers. That’s a great start, but you need to find other channels and I think, as he had mentioned in this email that most of those came from a Hacker News post. You need to find what those other channels are and whether that’s Twitter or Facebook or doing paid ads.
I think the difficult position you’re in is one, the product is not finished and two, you’ve already presold some of it. Preselling an unfinished product, especially with tiers is something that Adam had actually advised against.
Rob: What’s interesting is we’re talking about this list of 1300 people and that’s a great start, and can you make $5000 from this or $6000 or $7000 from that list? Yeah, I think so, if they’re engaged. I don’t think that’s an issue at all. But this is not anything that’s going to replace your income so it does depend on your goals.
His next questions is, “That is priority right now is to finish the course or should I work on growing the list at the same time? Most people have told me that it would be better to spend half of my time on both.” I agree with that. If you are just hammering the course out and not doing any list growth, I feel like you should be partitioning your time. Because keeping that list warm and keeping it going is how you’re going to build this business.
If you go through fits and starts where you’re going to try to grow the list for six months and then you’re going to build a course for four months, and you’re going to stop building a list, unless you’re at critical mass where you do have that 10,000; 20,000; 30,000-person list, that’s when you can start thinking about backing off growing it.
Do you agree with that Mike or what do you think?
Mike: I totally agree, but I think that there’s a little tactic that you can throw in there whereas you’re building the course, as you’re finishing it, you can take little snippets of that and post it on social media in order to help augment your existing list. Whether that is specific post on Twitter or on Facebook or you put something out on Medium that says, “Hey, I’m working on
this and this is what I’ve learned so far.”
Educating people about how to do something and talking about the struggles that you’re going through as you’re going through that process, that has a tendency to resonate with a lot of people. It’s not to say that everyone who joins your list is going to become a customer, but if they’re interested in the stuff that you’re teaching, not just the process but the content itself, those people will eventually turn into customers.
It also gives you the ability to take those things and email them out to your existing list and say, “Hey, just an inside view of what this looks like and where it’s at.” That will help keep the list warm as well, because the last thing you want to do is spend 80%, 90%, or even 100% of your time just finishing the product and then four months from now, you haven’t send a single email to your list and you drop an email on them that says, “Hey, this thing is now available, please buy it.” You and I have seen people do that for SaaS applications and software and it doesn’t work.
The reason it doesn’t work is because they’re like, “Oh, I totally forgotten you even existed.” They’re not excited about it.
Rob: Right. His next question is, “What else could I do to grow my list. Blogging and a free email course seems to work okay, but it takes a lot of time to create the content. I have seen others using ads. What you recommend?” My thoughts on this are the way that you typically do this is through social media, through blogging, through podcasting, through getting out there and doing a bunch of free marketing. That’s because most people don’t have a ton of money to spend
in the early days.
If you have money and you’re interested in running ads and that’s something that excites you then go run ads. Go run ads on Facebook or buy ads on Designer News, he talked about sponsor email newsletters and test that stuff. That stuff is always fun for me.
I’m some type of twisted individual that I enjoyed paying to see if I could get a sustainable flywheel. Other people hate that. If that is their business, they don’t want to do it. You look at how Rob and Mike built their list? How has Justin Jackson built his list? Through being out there and recording a podcast every week. Justin Jackson, he’s got a bunch. That’s how he built his list. It took him a few years, but it’s figuring out what it is that interests you that you think you can do long term and that you’re actually going to double down on.
Do I think ads could work? I absolutely do. But you have to ask yourself, is that something that you’re interested in doing? I know Brennan Dunn started with ebooks and courses and blogging and tweeting. It’s was a big social media thing, and then he got it to the point where it’s making enough money and he knew that for every person that gets on his list he gets X dollars back. Then he started running ads.
He doesn’t even need to be that good at running the ads because he had such a high LTV on list subscribers. You could take that approach, too. You build up the social following, you build up the brand, and then later you run the ads, you could do ads from the start. I think any of these will work, it’s a question of what am I really excited to do and to get up every morning and do. If it’s like, “I love the blogging and the rush of trying to get to the top of Hacker News, Product Hunt, and Designer News,” then go all in on that and blog three times a week.
If you prefer to podcast, then go all in on that. If you prefer to do ads like I was saying, which some people get more excitement out of, certainly, I think you could invest time in that.
Mike: His next question is, “Is it realistic to have a goal of 10,000 subscribers in the next year?” He says he spoken to some people who have 5000 subscribers, all of them have been writing and building their list for 3-5 years. “Have you see anyone who was able to grow a high quality list quickly?”
This is a hard question because it depends so much on what you do. Is it possible? Absolutely. It depends so much on the things that you do. These people who’ve been writing and building their list for 3-5 years, what tactics and techniques have they done? Have they systemized it? Have they created processes that are things that are repeatable and scalable and can be done without their input and toggling the different switches? Because if you’re relying out of process that depends on you doing something every single week, it’s less likely that you’re going do it.
It’s not to say that it is impossible and there’s definitely people who do it. We pump up this podcast every single week, almost without fail at this point. But it takes time and commitment and do you have the commitment to do whatever to toggle that switch or pull that lever every single week? If you don’t, it’s not going to happen, therefore it’s going to be pushed out.
Honestly, in a way, it ties back to email follow ups, that’s why I built Bluetick. I don’t have the mental capacity to sit there and write all of those follow up emails every single time because it’s hard to do, it’s hard to make yourself do it if you don’t want to. You need to find those things that you’re going to be able to do on a repeated basis or to automate in such a way that you don’t need to be directly involved in it. It’s still going to create Rob’s flywheel effect.
Rob: Yes. 10,000 subscribers in a year, absolutely possible. I have known many people
that do this. It’s not easy and it’s not just going to happen just by throwing things out, you have to be deliberate about it, you’ve got to be focused, you’ve got to ship either some type of content or some type of thing on a really recurring basis.
Product launches also help. If you do a big product launch, it will help you build the list, joint ventures would be a huge one. If you find anyone else that you could promote their product, they could promote your product, that is going to build the list because even if people don’t buy your product, they will sign up to hear from you about future stuff that you’re doing. Doing a podcast tour, there are a lot of ways to do this and if you really focus, yes, I think you can do it.
I think building a 5000 subscribers in 3-5 years sounds like a nice even keel side business pays where it’s like, “Yeah, I’m going to blog about this this week.” Which is fine, but it’s not. If you’re really aggressive about this and you want to get to 10K, I think you can absolutely do it.
Thanks for the question Linton, I hope our answers are helpful.
If you have a question for us, call our voicemail number at 888-801-9690 or email at us at questions@startupsfortherestofus.com. Our theme music is an excerpt from We’re Outta Control, it’s by MoOt used under Creative Commons. Subscribe to us in iTunes by searching for startups and visit startupsfortherestofus.com for a full transcript of each episode. Thanks for listening. We’ll see you next time.
Episode 392 | 10 Key Takeaways from MicroConf 2018
Show Notes
In this episode of Startups For The Rest Of Us, Rob and Mike talk about their 10 key takeaways from MicroConf 2018.
Items mentioned in this episode:
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: I’m Mike.
Rob: We’re here to share our experiences to help you avoid the same mistakes we’ve made. To where this week sir?
Mike: Well, just following-up on all the post-conference work from MicroConf. We had the two editions back-to-back again. It was an overall resounding success. Most of the feedback that I have seen has been pretty good. The conference itself has been outstanding. If you downsize in terms of certain hotel rooms and things like that, but I think generally speaking, everything went really, really well.
Rob: Yeah, at this scale, we know now that something will always go wrong with someone. When you’re moving 400-425 people, whatever it is, something is going to happen at some point. You just hope that overall—the conference, the speakers do well, and the contents there, and the attendees are cool, and everybody gets along—you just kind of try to manage it.
I felt really good about this year. This is the second year since we split Starter and Growth, and I feel like this was perhaps, had better overall conference experience this year.
Mike: I agree. I definitely agree with that.
Rob: In other MicroConf news, I realized–I don’t know but we had promoted that our 2017 MicroConf talk videos are all available for purchase. It’s $99 for Starter, $99 for Growth, or $149 for both. We will link that up in the show notes, but if you go to Vimeo, and you search for MicroConf 2017, you can just purchase it right there through Vimeo.
I sent out an email yesterday, if you’re already on the list, but if you’re interested in hearing about future videos, we sell the videos in order to subsidize the cost of the recording, because it’s no trivial feat to get a company like LessFilms to fly two guys out with all the camera equipment and hang out for four days, in essence, and then edit all that, and produce it, so we’re selling to help augment that.
If you have enjoyed MicroConf videos in the past, we do have MicroConf 2012 through 2016 that are all live for free, available on the microconf.com website. You can check that out.
Another thing is we need questions for the podcast. I think we’re down to maybe three or four questions at this point, so if you have a question for us, you should record an mp3 and you can email it at questions@startupsfortherestofus.com or you can call our voicemail at 888-801-9690 or you can always email a text question, and we’ll read it on air.
We’ve been doing one or two Q&A episodes a month and those seem to be pretty valuable to folks. It’s nice to have other voices on the podcast. If you have questions, please send them in.
Mike: I assume that our agenda for this week is the takeaways from MicroConf 2018. Correct?
Rob: That’s right. We’re going to pull some takeaways from some of the talks. Unfortunately, I was trying to do the math in my head and I think between Starter and Growth, and the attendee talks, there were 30 different talks on stage–give or take one.
I was trying to do the math in my head, but there’s no way we could possibly talk about all the talks even though the quality of the talks this year was very, very high. I’m not just saying that because it’s a conference we run. I was really impressed with a lot of newcomers who had never spoken on the MicroConf stage, and how typically there are some misses when that happens because MicroConf is such a high-speaking bar, and it’s so different than so many other conferences, but really, people kind of crushed it, almost across the board.
We can’t possibly mention all 30 talks, but we have distilled it down. We’re going to talk about 10 key takeaways that we got. If you want to do a deep dive into the talks, there is a site, it’s at microconfrecap.com. Thanks to Christian Genco for taking copious notes over the course of that four days and then John Hwang who was helping him by recording audio files, there’s kind of like 6-minute versions of some of the talks where they interviewed speakers, and then they’re posting it there, there are photographs of the speakers. They really did it up this year in a way that makes it look really cool.
Mike: That whole MicroConf Recap site that Christian put together is absolutely amazing. You can go over there and sign-up for a mailing list that he’s got there, but every single speaker is listed. There’s all sorts of stuff there.
I was talking with him about this, he wrote an app that would allow him to basically take these notes better and put them out there, which is just amazing that he went through all that effort to be able to take notes quicker, and to be able to publish them faster, and format them in a way that actually looks really, really nice.
Rob: conferencenotes.com. I see a SaaS app in his future. It would be a rough market, but it is funny and it was cool that he kind of put it together. Across the two conference, I think we had about 250 folks at Growth, and we had somewhere around 150 at Starters. Somewhere between 400-425, I think is what we’re talking about who came through over the course of those four days.
I picked out some feedback because we’ve got the Growth and Starter surveys back where we ask attendees to rate speakers and give us feedback. I wanted to call a couple of them out. The first one, you had asked for jokes because that’s kind of our schtick, we tell kind of nerdy, programmery, and often bad jokes from stage, and one comment was, “I thought Rob’s jokes were funny and spot on.” Boom.
Mike: Was that comment from you? Did you put in that?
Rob: No. That’s a good guess. I don’t know. I didn’t recognize the name of who it’s from, but I think they were kind of implying like, “Why you’re asking for other jokes, it sounds like you guys got this dialed in.” I thought that was funny.
But then there was another comment that was like, “Any jokes but the ones Rob was telling.” It was the exact opposite. It was great.
Here’s this other–this would literally like one was above the other in the document. This is to show you, if you haven’t run an event like this or you haven’t worked with a community, the amount of information, and differing information, and differing opinions you can see is illustrated by these two things and I brought them in here because I literally read one above it and I went down, and I was like, “Oh, you’ve got to be kidding me.”
The first comment is, “The Q&A With Patrick Collison, Co-Founder of Stripe was outstanding. It would be nice to see more Q&A sessions with high profile individuals.” Right below that, “The Stripe Q&A seemed really out of place and was probably the worst talk for me. It was unrelatable. If I wanted to hear about Silicon Valley, I would go to a Silicon Valley Conference.” Isn’t that kind of just where you have to sit when you have this many people?
Mike: I think it is, but I think it also illustrates a big problem that as entrepreneurs, we kind of have to navigate where you get all these information that’s coming in and some of it is directly conflicting with one another. You have to interpret or read between the lines a little bit and see how certain things feel versus what’s the feedback is that you’re getting, because a lot of the feedback that you’re getting comes from a certain point view or a set of past experiences and interests that people have.
You can’t always align with everything. You can’t make everybody happy. It’s just not going to happen, but you have to do what you believe is right even if that means pissing some people off or making them upset about what the decisions you’re making are.
It’s a tough road to navigate I think, but at the end of the day, you’ve got to make the decisions to move forward. You can’t just be paralyzed and not do anything because then you’ll just never get anything done.
Rob: To realize that it’s never going to be perfect. You’re never going to please everybody and your apps are never going to be down, your conferences are never going to be down. This is our 15th time we’ve run a MicroConf and you’re always adjusting and trying to make it better.
With that, let’s dive into a few of the takeaways. I’ll start with some of the talks from Growth, in no particular order.
I really enjoyed Nadya Khoja’s talk. It was called the 12 Principles Of Viral Content. Nadya is the Director of Marketing at Venngage. It’s a SaaS app that helps you create infographics and interesting viral content in essence.
My takeaway from here is that there really can be a thought process and almost a system for creating content that is more likely to go viral. I’ve seen Matt Inman, The Oatmeal, he was interviewed by Andrew Warner of Mixergy about how do you make this stuff go viral and he was just like, “Look,” this was Matt, he was like, “I’m one of the best in the world at this. This is really hard to do.” Andrew kept trying to pull a system out and Matt just has one in his head, but he wasn’t totally able to communicate it.
What I liked about Nadya’s talk is that she broke it down into pieces. Just a couple of it—we’re not going to go through all 12, obviously—but a couple the things she mentioned were like, bust a myth, challenge the status quo, reframe the question, bring in a new perspective, mash up multiple topics like Star Wars with Game of Thrones or whatever. I enjoyed this and I also heard positive feedback from folks in the audience about it.
Mike: I think the other thing that I took away from her talk was because of her role at Venngage. They have all these things that they’re doing and they’re constantly doing that stuff. Not everything is going to be a hit, not everything is not going to go viral, but being consistent about trying these different things and putting out different infographics or making different articles, concentrated on different headlines, those all contribute to the overall success.
It’s not about whether an individual thing that you do goes viral, it’s about the number of attempts that you make and trying to get at least some of them to go viral. You don’t need to make everything successful, but as long as a certain percentage of them do well, then you’re fine.
Rob: For her, it’s pattern matching. They’ve tried a bunch of different things and this is what has worked for them, and that’s what I like. I always love those stories on MicroConf stage. It’s like coming out of the experience of someone who has actually boots on the ground doing it.
Another talk that was–well, it was the Q&A I mentioned earlier. It was Patrick Collison, co-founder of Stripe which, at this point, what’s their valuation, you think? $10 billion or something? $8-$12 billion?
Mike: That’s above what it is. I think I saw $9 billion but it’s almost immaterial when you get up to those many zeroes.
Rob: It’s crazy. The reason we have Patrick on stage, one of the reasons, is that he and his brother, John bootstrapped it for months and months. I don’t if it was over a year, but it was a long time before they went and raised funding and really at the core of the company is this bootstrapper ethos.
I enjoyed talking to him. I had interviewed him a couple years ago on stage. You had interviewed his brother, John last year on the Starter stage. It’s always kind of a pleasure to have those guys come into town and hang out with some of MicroConf attendees.
Mike: I do find his outlook on just the world and the technology industry very enlightening and very different, I think, from most of what you find in Silicon Valley, and most of the tech companies that are out there. They see their role as really to foster the tech community because by helping other startups, basically like you are raising the ocean, you’re floating all ships in the tech industry.
I think that that’s a really unique approach that they’re at the scale where they can do that at scale and not really have to worry about the finances and the ROI of certain things. They can just do things that they think are the right thing to do that will help certain parts of the ecosystem.
I think their Stripe Atlas program is exactly one of those things. One of the things that I thought was extremely, I’ll say gratifying in some way, but the fact that they essentially launched those on the same day that MicroConf started, and they started talking about it that day, and again, from the stage as well, it was just really nice to see that that was brought to the MicroConf community.
Rob: The Stripe Atlas LLC, right? Because Atlas had previously been C Corps. I guess, you could change stuff in the S Corps, but realizing that a lot of business just want to be an LLC and have pass through revenue and it took a lot of work for them to do this, and they basically kind of announce it at MicroConf. In essence, it was super cool.
Mike: The other thing I like is the humility of where they came from. The one quote that really caught me off guard on stage when he was talking about their early days, when they were trying to partner with one of the larger banks was he said, “We were like three squirrels in a trenchcoat masquerading as a real business.” Of course, it got a lot of laughs from the audience, but that’s, I think how a lot of entrepreneurs feel when they’re trying to pitch a big business. They’re just the small fish in the giant ocean. They have no power and they’re just sort of lying to everybody about who they are, but they’re not lying about themselves. It’s just that they feel that way.
Rob: I love that image of the squirrels in a trenchcoat. It’s just like in the cartoons. Our next talk was my talk. It was 12 Lessons I learned Moving from Bootstrapped to Venture Backed, where I talk about having bootstrapped really since 2000 was when I started bootstrapping companies and then in 2016, Drip was acquired by Leadpages and I had two years kind of looking on the inside of a venture backed company.
I pulled out the pros and cons that I felt like venture funding lent to this company. Now, I think it hurt the org and how I think it made some of the things we did a lot easier. I was less stressed and we could hire a specialist. We could hire senior talent instead of having to train everybody we could use a dedicated recruiter.
Didn’t have to worry about so much about little dollars—$100, $200 subscription. I used to spend hours and hours trying to find the cheapest thing because as a bootstrapper, every penny counts, but when you have some funding, you can be a tiny bit looser that and that saves quite a bit of time.
Mike: I think what you talked about was a really good contrast between being in a position where you can let things slip through the cracks and it doesn’t matter. I remember years and years ago, I was looking at various things that were going on in the industry. I’ve had a conversation with a support rep, or some piece of software wouldn’t work, or even when I was back at Pedestal, there was a bug that I distinctly remember, I was like, “We really need to fix this. This is a problem.” They’re like, “We’ll just push it. It’ll go out in the next release or the release after.” I was like, “But this is big. This is an important thing.” And they’re like, No, no. Later on.” I’m like, “How can you not care about it?” The reality is it’s not that you don’t care. It’s about prioritization.
I think, as a bootstrapper, your priorities tend to be around preserving money so that the business has financial room to operate versus when you’re a big business or you’re funded, it doesn’t matter so much. You can let things go until later on because they are not so large that it makes that big of an impact in the business or how it operates or customers at their tracks.
Rob: Right. I think my key takeaway, kind of the second takeaway for this episode is that you should never be dogmatic about being anti-venture or anti-bootstrapping or whatever. I did come to the conclusion–kind of in the talk that I don’t think anyone in this room should probably raise venture funding because it brings with it a board, and you lose the control, and it’s really tough but it does come with some pluses.
But that there is this in between ground that has just started to develop over the past, I’ll say, three to five years, and it’s this concept of fund strapping where you raise a small round and you never plan to raise institutional money. You only get from individual investors so you don’t have a board, and you don’t give up control, and you don’t get it to $100 millon to make a lot of money for everybody, and so that “could be” an alternative.
I was saying, at the top of my head, I was like, “I bet it’s like 5% of the people in here maybe should consider this.” Because you have to be growing fast enough, it has to be a big enough market for that to make sense, and everyone else should keep bootstrapping—just like we’ve always talked about—but this was just kind of one more alternative that gets you some of the advantages of raising funding without the disadvantages of going a true venture model because one you do venture, it’s institutional money, and the game changes.
Our next talk was How to Be Funny (Even If You’re Not): Improv-Inspired Copywriting Tips for Software Founders. It was from Lianna Patch and it was hilarious. It was really, really well-done. This was one of my favorite talks.
Mike: I agree. I would have to say it was probably my favorite talk as well. I’m not biased just because she wrote some of the copy that’s on the Bluetick website and in the Bluetick emails, but just her stage presence, her ability to break it down, and be serious about like, “These are the things that will resonate with your audience and these are the things that you should really avoid when trying to be funny in your copy.” She knew that stuff cold.
It’s obvious she practices her craft a lot and deeply understands what is going to work and what isn’t. I think that’s partly because of her improv background as well. She does a lot of that. I think she’d done stand up comedy as well, but she really appreciates the value of being able to put yourself in other people’s shoes and understand what is going to be funny to everybody versus being deprecating about your comedy to other people.
Rob: The takeaway here—there’s obviously a lot of takeaways. Again, microconfrecap.com if you want to see the detailed notes. But the big takeaway I got is humor makes people happy. You want people to be happy while they’re using your app. It gives your app personality. It makes people give you the benefit of the doubt. I really enjoyed this talk and hope to have Lianna back at a future conference.
Mike: I do think that it was ironic that the second question that she got in the Q&A was somebody who got up and said, “I’m in the funeral industry.”
Rob: Man, that was funny. I thought that was the first question. I don’t think he meant it to be funny, but I was laughing hysterically. Her reaction on stage, it was like a face palm. She’s like, “I cannot believe that’s the question.”
Mike: She had a great answer for it though. She said, “It depends a lot on how your audience views death.” I think that’s just very insightful. That’s part of why I like her so much because she has that ability to hone in on what makes it funny and why, and when is it appropriate and when it is not. I think that that differentiates you from people who are jerks about it versus they’re actually legitimately funny. Because they know when to be funny and when not to.
Rob: Another talk from Growth that I wanted to call out was from Ankur Nagpal, From $0 To $10M ARR: The Tactics We Used To Scale Teachable. He founded teachable.com. I imagine many people listening to this have heard of it and has done a lot of hustle to get where they are.
My takeaway was he talked about, they set a pretty aggressive growth pace, and that they found things that didn’t scale every month to hit that growth pace. Then at a certain point, they couldn’t get to that point anymore. They’d have to grow $100,000 of MRR in a month and they couldn’t just throw one-off things like they were doing for the first couple of years, that’s when they had to switch into this kind of sustainable flywheel mode. There was a lot of actionable stuff.
If you want to bootstrap a business and you wanted to let that business grow it to a few hundred grand, that’s great, and this talk probably won’t be for you, there’ll be some takeaways. But if you find yourself in a space like we did a couple of years ago with Drip where suddenly it was like, “Oh, good God. This is a huge market. It’s really big. We kind of need to grow or we’re going to get squashed.” This is the kind of talk that you need to hear. It was super actionable and I appreciated Ankur sharing that with the audience.
Mike: I think it was very insightful that he also showed the scale that they’re at, it takes people to get there, because you can’t just slap together an app, and expect that three people are going to be able to build something that’s going to get to millions of dollars of revenue each year and, yes, you hear those Silicon Valley stories about people who create this app and then it gets acquired by Facebook for billions of dollars, but that’s not common. Most people never go through that. That’s a unicorn story. But unfortunately, that resonates in the news and in the tech articles that you see.
He talked about how the fact was that in order to get to 12,000 customers, it took them 64 people to get there. It’s interesting that if you look at the graphs of the revenue and stuff that he showed, it takes time, and it’s a fairly steady slope. It’s kind of The Long, Slow, SaaS Ramp of Death from Gail Goodman from Constant Contact. She had that talk at Business of Software several years ago. Almost without fail, like you talked to most founders, that’s exactly what it looks like—it’s long, slow, and it’s boring but it’s what gets you there.
Rob: The last Growth talk I wanted to call out was just such an outlier, it was really well-delivered. It was an attendee talk by Chad DeShon. He runs boardgametables.com and the title was Everything You’ve Learned at MicroConf is Wrong*—with an asterisk by it. It was a little tongue and cheek but it was the fact that he basically started a B2C company make selling physical goods with no recurring revenue.
He had points like recurring revenue is so overrated. He talks about how if you get your LTV all upfront, you have more cash coming in and your plan is overrated. It is possible to move downmarket, just listen to podcast at 1x. He says, “Seriously, you don’t have to cram information into your ears as fast as possible. Take a deep breath and relax, it will be okay.” It was great. It was filled with humor but also, it’s a nice sanity check on the stuff that we pour out that yes, it is best practice and will get you to the multi-million dollar SaaS company or the hope you grow, whatever. He had another lens on it and I felt it was a bit of a breath of fresh air in his 12-minute attendee talk.
Mike: I think Chad’s real point is just that just because something is best practice information or that it’s a general practice that most people should follow, doesn’t mean that it’s an absolute, concrete rule that everyone needs to follow, and that will always work. There are cases like his where those things will not work or there are exceptions that you can leverage based on what your product is and what your industry is. You can still do what you want and be successful if you are mindful of those other things–those general practices, but don’t take them as absolute law.
Rob: Then switching over to Starter, in the interest of time here, this is really is a bummer, man. I wish we could talk about more of the talks because there were a lot of other exceptional talks that were given at both conferences. I wanted to kickoff Starter by giving a big shout out and a thank you to Justin Jackson. He emceed and he had basically the kickoff talk that kind of sets the stage for MicroConf. It’s a ton of work to emcee a conference, you and I know, and so to ask him to do it—volunteer basis—it was super cool that he was able to do it and he did a great job.
The first talk was Justin’s. It was called, An Unconventional Way to Validate Your Product Idea. In typical fashion, he tells a story, he talks about choosing the right customer is more important than what you sell, starting small is always almost better than going big, on and on. Other stuff that was, I think, really pertinent to the Starter audience.
I really liked the way he thought about there’s product market fit, product founder fit, and founder market fit, talking about what do you value? Do you enjoy this market? Then talked about customer resource. He kind of laid out a blueprint for validating. I think the talk was quite well-received.
Mike: Definitely, a big thanks to Justin. I do appreciate that he came on stage and he said the things that are not necessarily directly related to making the business itself successful, it’s making sure that it’s successful for you as well. Because as you said, the founder market fit, that’s a big thing. If you get bored by a particular product or industry, you’re not going to want to do it, you’re going to be less motivated.
I think that other founders have talked about that in the past in certain public and potentially non-public areas. I’m not going to name names or anything, but that can definitely happen. If you don’t really like what it is that you’re doing, it’s really hard to be motivated to go through those tough times, and it’s easier to give up.
Rob: Another notable talk was from Adam Wathan, it was called Nailing Your First Launch. Also, good story with actionable takeaways, talked about launching essentially information products about teaching people how to use Laravel, and testing their Laravel, and that kind of stuff, and in just two years, he made about $650,000 from his info-products, kind of a not a cold start but almost. He pulled things in, he pulled my stair-step approach in, he talked about building an audience but gave super actionable things, of actual screenshots of tweets, and kind of what works, talked about picking an idea, testing it, and on and on. This was one of the talks that I heard the most about at Starter–that people loved. It was almost like a case study but it was entertaining as well, so it wasn’t dry. He just had a ton of info here.
Mike: I think part of the thing that resonated with most people is that it was starting from ground zero because most of the people at Starter are at that very, very early stage–anywhere from, “I’m still looking for an idea,” all the way up to, “I just launched but I’m certainly nowhere close to making a fulltime revenue on it. It’s going to a while before I get there.” I think Adam’s talk really resonated with a lot of people because it demonstrated how to get some of the growth and some of the different levers that you could toggle in order to get, and it’s obviously not all of them, but an info-product is a lot different than a SaaS product.
Being able to have the confidence that, “Oh, yes, it’s just a book or just a course,” but $600,00 over the course of two years is nothing to sneeze at. I think that that message alone resonates with people to be able to get to that point in only a couple of years versus the people who sit there and say, “Well, I’d really like to start a business but I’m not sure about it,” and it takes them five years or even 10 years to even pull the trigger and do something.
Rob: Another notable talk was from Alli Blum who has appeared on this podcast, title was, Why (and how) to start thinking about teaching people how to use your product… even if it isn’t built yet. She went deep into onboarding which is her area of specialization.
She calls herself a SaaS onboarding optimization consultant and so she’s knee-deep in tons of SaaS apps. She talked about the mistakes she sees that are super common, the vacation photos approach, the too much too soon approach, the bad intern approach, and then she talks about how to improve upon that, and how to keep it simple, but then really dives into the nuts and bolts of how to put your email together, and then the impact that can have, and then kind of had a case study at the end.
Again, what I liked about this is it was a process, and a very specific instructional thing that if this is the problem you’re trying to solve right now, this is like mind blowingly applicable.
Mike: I think that the whole email onboarding process is something that can be difficult to figure out when you’re first doing it because there’s so many things you could do. It’s a question of where do I start, what should I say here, how do I fit all these pieces together, and you can very easily find yourself in a situation where you’re going too far in a particular direction and you’re not thinking strategically about the whole picture of bringing somebody on-boarded into your app, so you go too far on one direction or the other. Alli’s talk was a great way to balance those things out and provide that instructional manual or the roadmap to tell you, “This is how to do it. These are the steps to go through and this is how it will work for you.”
Rob: Another talk I wanted to call out was from Mr. Mike Taber. It’s called Following up… Without looking and feeling like a dirt bag. You talk about email follow-up, why to do it, what happens on the other end, and why don’t we follow-up. This, of course, is from all your experience with Bluetick. How did you feel about your talk?
Mike: I thought it went really well. I gave a version of this talk in FemtoConf a couple of months ago. I did make some changes to it based on the feedback that I got. Overall, it was still largely the same talk, I just cut out pieces that were irrelevant or didn’t make much difference. I definitely spruced up the slides a little bit more this time around because I think before, there were some things that I think weren’t necessarily as clear, and the new presentation I think helped.
Rob: The key takeaway for me here was you had the four pillars of follow-up success. The first is when to send, second is personalization, third is clearly defining a single action you want to take, and the fourth is to automate it so you don’t have to sit there and do everything yourself.
Mike: I think that last piece there is the one that most people don’t really get to. They don’t systemize it or processize it so that it makes sense and can kind of operate in the background because most of the times, I see people coming over to Bluetick to use it. They’ve done a few follow-ups here and there, but lots of things start slipping through the cracks and that’s really why you need to have a process or a system in place that’s going to help prevent those types of things, because everytime you don’t follow-up on an email, whether it’s the third or fourth one, that’s what’s going to cost you the money.
Rob: Another talk that I thought was quite well-done was Marie Poulin’s talk. It was called The Sustainable SaaS: What Permaculture Can Teach Us About Building Software. She’s in the midst of co-founding a SaaS herself. She has online courses. She has all kinds of stuff, and so again, was able to pull from her experience.
Permaculture, if you’re not familiar with it, it’s a set of techniques and principles for designing sustainable human settlements. It’s a lot about like farming, and gardening, and keeping things so that you don’t need a bunch of outside resources in order to live. It was cool that she kind of had her timeline, 2014 through 2018 of these missteps, and how they line up with things that you would do on permaculture. It was a running metaphor the entire time.
Mike: As a running metaphor, I think it fit really well because the audience itself at MicroConf, whether you’re talking about the Growth edition or Starter edition, the vast majority of these people are coming because they want to build a life for themselves and their families that is going to be sustainable over the long term.
They’re not looking to come in and find a market, build something, get a bunch of money into it, and flip it in two years, three years, four years. They’re looking much longer term and it’s not to say that they won’t sell it in two, or three years, or fours years, but they’re trying to find something that’s going to be sustainable for them moving forward, that they can build a life around that allows them to do the things that they want to, and have the freedom of flexibility that being an entrepreneur should be able to give you.
Rob: The last talk from Starter is Courtland Allen’s talk, Navigating the Startup Landscape. Courtland Allen who has also appeared on the show, he founded IndieHackers, they’ve been acquired by Stripe. He and his brother now work for Stripe and run indiehackers.com. I thought he nailed it. He compared starting a startup to this four different landscapes. One is like an airplane taking off, one is panning for gold, one is climbing a rock wall at a gym, and he had these pretty deep metaphors that run well.
He talked a lot of the myths and that’s what I appreciate about him. He’s done, I think he said 300 or 400 interviews with startup founders. If you go to indiehackers.com, there’s this big wall of apps and revenue, and all that kind of stuff. He’s kind of pulled that out between him and his brother have pulled that out of all of these people. To me, I loved hearing the myths of like, “Well, this is probably how you think. You think that Dropbox just started growing because they had this dual referral system and that’s what everyone always talks about. Here’s what it actually look like,” and then he called some other apps where the common myth is that they grew through this one big thing.
Hotmail, with their email link and the footer or Airbnb where they added photographers and hockey sticked them. It was kind of like, “Yeah, it helped.” But there were also 50 other things they were doing really doing well and they had a huge team of people constantly executing, and eventually they just hit critical mass.
I appreciated the reality check and I also thought his talk was really well-delivered. I thought the metaphor held up and I thought the analogies helped me kind of understand the content better.
Mike: The one I actually thought was really funny in his talk was the startup runway of almost certain death. He had a picture of an airplane going off of a cliff and on the other side of the cliff, there’s an ocean, and it’s got a shark jumping out of the water, and there’s snakes, and a wall of spears, and fire. It was just very on point, I’ll say.
Rob: Yeah, that was cool. Two more MicroConfs down, sir. 14 and 15, I think it took a lot out of both of us this year.
Mike: Yeah, definitely for sure. Although, I do want to say there’s one other thing that we did this year that we have not done at scale in the past, which was we instituted the scholarship program for Starter Edition.
Of all the things that have happened this year, I’m probably most proud of that one because it was a lot of behind-the-scene stuff that we really didn’t talk about on the podcast, and we didn’t talk about or market too much because I was still trying to figure things out. But we had a bunch of sponsors who stepped up and really helped make it happen. I think that it’s something that we could do more often moving forward. In the past we’ve had individuals do it, Patrick Mackenzie has done it a couple of times.
We’ve obviously offered sponsors quietly in the background because we can’t help everyone, but there are certain situations where it feels warranted and you really just want to do the right thing and help people who are in a position to help themselves but they just need that little extra push.
I want to send a big thanks out to Stripe, Sureswift Capital, Brian Marble, Scott Nixon, and Balsamiq Software, and Azlo for helping put the scholarship program together and make it possible for, I think it was between 12 and 15 scholarships that we gave out this year for Starter Edition. Definitely, a big round of thanks to those guys.
Rob: Sure. You know man, you obviously headed this part up, I know you put a ton of time and energy into it, so thanks for doing that. I think it’s a huge win for MicroConf and I think it’s a big win for the community as well.
Mike: I think, with that, we’d call it a day. If you have a question for us, you can call it into our voicemail number at 888-801-9690 or you can email it to us at questions@startupsfortherestofus.com.
Our theme music is an excerpt from We’re Outta Control by MoOt used under Creative Commons. Subscribe to us in iTunes by searching for startups and visit startupsfortherestofus.com for a full transcript of each episode. Thanks for listening. We’ll see you next time.
Episode 391 | The 5 Stages of Your Sales Funnel & Tools to Use At Each One
Show Notes
In this episode of Startups For The Rest Of Us, Rob and Mike talk about the 5 stages of your sales funnel and tools you can use at each stage. This episode is based off of a Ignite Visibility article, the guys give their takes on the points made in the article as well as add additional tool options.
Items mentioned in this episode:
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: And I’m Rob.
Mike: And we’re here to share experiences to help you avoid the same mistakes we’ve made. How are you doing this week, Rob?
Rob: I’m doing alright, I actually have a bit of an announcement to make, my last day at Drip. When this goes live, it would have been a couple of weeks since I decided to leave.
Mike: Does that mean that you are gone or you’re in the process of leaving?
Rob: No, I’m gone. It was totally amicable. Obviously this has to happen at some point. Your company gets acquired and you hang around for the transition. Both Derrick and I worked there for almost two years after the Leadpages acquired Drip and Derrick left in February. That of course got me thinking working on Drip without Derrick was less fun for me and it definitely got me thinking about plans of what I wanted to do and I started thinking about, “Hey, am I going to stick around for all of 2018?” And then in all honesty, the team came together really well.
We hired a CTO, and there’s the senior director of product who I mentioned on the show in the past really came up to speed super fast and suddenly I looked around and I thought to myself, “What am I doing here anymore? What am I contributing?” Obviously there’s value that I bring as the cofounder and as someone who’s worked on it for five and a half years. Realistically, people are kicking ass and taking names and they’re really fired up about it in the company. There’s 60 something people working on Drip now.
What I can contribute is so much less valuable than what I could when we were 5 or 10 people. Five and a half years for me is a really long time to work on anything. The longest I’ve ever worked on something before that, I had a job for two and a half years. We talked about this on the podcast, I tend to do these 18, maybe 24-month things, and then I move on to the next thing.
Drip was a long one because it was big and there was an acquisition and all that. It makes me happy, I really do—I know everybody says, “I left it in really good hands.” I wouldn’t have left if it wasn’t in good hands. This is a pretty big part of my career, I spent like a third of my career—I was doing the math—about a third of my career working on Drip. I still run several businesses and mailing lists on it, so it’s not anything that I’ll be switching away from, I still think it’s the best tool out there to do it.
We mapped out the roadmap for about a year, and there’s a two to three-year vision that we talked through. There’s all the stuff in place that I feel honestly pretty good about. But it is bittersweet. It’s always bittersweet to do anything like this because I don’t get to go in the office and I like the team, I like working with the people. That was probably the hardest part of that decision for me.
Mike: I’ll be blunt about it, you’re unemployed, is that what you’re saying?
Rob: Exactly, that is a very good way. Unemployed and unemployable is probably better. You’re right, man. Should I file for unemployment?
Mike: I don’t know if you can if you quit. You’d have to look into that but my guess is probably not.
Rob: Probably not, yeah. I’ve never even filed for unemployment in my life so I don’t know what that would be like. You’re right, man, I’m just—aside from MicroConf and and doing some writing like I’ve been talking about in the two podcasts—hanging around, taking some time off. I think I want to take the whole summer off and not do anything serious, not tackle anything. I’m still sticking by my, “I’m never doing that again,” thing. I’m not doing that again, man, I just can’t, not from the ground up, it’s just too much.
Mike: Cool. I’m not sure how this really factors into it but I’ve been meaning to bring this up for a while and I kept forgetting. I was driving downtown in the town that I live in the other day, I came across this street, it was Atwood Ave, it immediately made me think of Jeff Atwood. Then, I came across Walling Ave literally right next to it. If I come across Spolsky Boulevard without seeing Taber Street, I’m going to piss.
Rob: Without Taber Street, that’s awesome. Jeff Atwood, the man, codinghorror.com. I used to read his blog years ago. I haven’t read it in a while, have you?
Mike: I pop over there on occasion but he doesn’t blog nearly as much as he used to. The content doesn’t refresh as regularly. He still does really highly in-depth articles on various things. I was reading about the stuff he does. High performance, low power computing things that he puts together because he’s always looking for ways to improve on previous designs with lower cost and better computer parts and things like that. I think it’s a home theater PC, that he’s basically […].
Rob: I love how his pieces are really long which is very much in vogue today, but he has been doing that since he started the blog. I’m thinking his blog has been around since—I started mine in 2005 and I think we started within a few months of each other because we were in some early blogging books together and that’s how he and I ran across each other. An interesting thing, my first big speaking gig was in 2008 or 2009 and it was a business offering, it was a lightning talk, it was the PechaKucha seven-minute thing where the slides flip automatically. I was encouraged to do that by Jeff Atwood and I saw him at one of Spolsky’s events.
Remember when they used to do the Stack Overflow, Dev days, it was $99. I ran into Jeff Atwood, we have never met, and I introduced myself and said, “I’m Software by Rob,” and he said, “I love that blog,” so we connected, we had emailed before. In the back of my mind, I was super nervous going up to him because I never met him and I hold him in high regard, and I’ve never once regretted having that conversation because it really—I’ve never been to BoS, I went, I talked. A bunch of people knew who I was and I was like, “That’s weird, how did they know me?” and it was from this blog. This is early days, this was before all of the podcasts and all this other stuff.
I didn’t realize how small our community actually was. I knew I had at the time probably 20,000 readers but I didn’t realize that a huge chunk of them would be at a conference like BoS. It was a very concentrated thing. That was my first thing that then encouraged me to write a book. I don’t know, there was something about the momentum that that created. I guess the moral of that story is it has always encouraged me to do things that are really terrifying because that one move—I actually left the building, I was walking up to my car, I had seen Jeff Atwood and I left.
I’m too scared or nervous to go up to him. I walked back in from the parking lot and I walked up to him. He was in a buffet line and I just said, “Jeff Atwood, Rob Walling,” that moment, I think it literally changed my life may be a little overstating it but it’s had a pretty profound impact on the course of my professional career.
Mike: Long story short, you met Jeff Atwood a long time ago and now you’re buying roads in my town and naming them after yourself.
Rob: That’s right, indeed, sir. How about you? What’s new this week?
Mike: I recently went through a disaster. I used Chrome for my web browser, and for whatever reason, the last time I went through an update, you get that little green arrow in the corner, it’s just like click here and it will shut down everything and open up all the windows for you again. When it did that, it blew away my local cache for literally every website that I’ve ever gone to. For some reason, I have no idea why or how this happened.
All my two-factor authentication stuff went away, I had to relog-in to all the different sites that I was using whether it was Facebook or Twitter and Amazon, a bunch of stuff. It was all gone for some reason. Fortunately, I have LastPass, so it wasn’t that bad. There were some of these websites, “Use your authenticator,” like crap, I’ve got three of them, which one is this?
Rob: That sucks, dude. It nuked your two-factor authentication, I hate it when that happens, and then all the sites are slow now because it has to recache everything?
Mike: No, the sites don’t seem slow. It’s just that all my cookies and stuff are gone and I use Clicky for my website analytics and I have my own machine, I was logged into it, it excludes all my IP address information. It automatically filters out me when I visit the site and I hadn’t realized that it blew away everything until I went to check my analytics that day and realized that there were tons of actions and “visitors” on there because it was me doing a bunch of testing on it so all my stats for that day are totally screwed up.
Rob: That’s a bummer, man. iOS has done that to me a couple of times where it will install an update and it nukes a bunch of my setting and I’ll be like, “Why am I not getting texts on my MacBook anymore?” and I just go into the settings, off, and it used to be on. It was on last week. I’m not quite sure why that would happen. Obviously, it’s a bug in the upgrade but it’s really irritating, certainly not as bad as what you’ve experienced but that’s a pain in the butt when that happens.
Mike: That’s the only time that that’s ever happened to me, at least that bad with Chrome, but that’s one of those things that it encourages people to not upgrade software or their devices.
Rob: To resist doing it, I hear you.
Mike: That’s why I try to really be careful about doing updates and stuff on my own software. Sometimes there’s the need to sort of break stuff on occasion.
Rob: Cool, what are we talking about today?
Mike: Today, we’re going to be going through the five stages of your sales funnel and the tools to use at each stage. This is an outline that I put together based on an article over at ignitevisibility.com and we’ll link that up in the show notes. I found it fascinating the way that they broke out the stages of the sales funnel and specifically showed different tools that you could use in each one. I looked back through our archives and we don’t have an episode on how to put together a sales funnel, or specifically what it looks like or what tools to use. I thought it would be good to go through this article and talk about what they have to say and then provide our own take on it.
Rob: Cool, sounds good, let’s dive in.
Mike: Stage one in today’s list is awareness. The basic idea with stage one is that unless somebody knows that you even exist, they’re not aware of it, of course. They’re not going to come to your website, they’re not going to download anything, they’re not going to go put their name in for a trial or sign up for a trial, they’re not going to come to a webinar, nothing. You have to make them aware that you exist to begin with.
In this stage, they put a bunch of tools that we talked about on the show in the past and the lists that are probably used in the past, things like SEMrush, Ahrefs, Buffer, Hootsuite, LinkedIn Sales Navigator, and there’s several others in there that are probably much further ahead than most people, one example is Growbots, but that’s $500 a month and they bill it annually. I think anyone who’s starting out, that’s really beyond their price range, but the basic gist of a lot of these things is that there are ways to help put you in front of people or to connect with people. If you categorize those tools, it’s really based around SEO and social media. There’s lots of other ways to find channels of customers, but those are the ones that they kind of focus on with the tools that they showed.
Rob: If you’re interested in more, this is the list of marketing approaches. This is putting together a marketing plan. You can go back to episode 384, just a few weeks back, where you and I tore down the Bluetick marketing plan. You can also read the book Traction that gives you 15 or 20 different ideas for driving traffic and SaaS Marketing Essentials by Ryan Battles. Those are the three off the top of my head that I would read if I was thinking about creating awareness for a new or an existing app.
Mike: I do want to take a few minutes to dive into some additional tools that they don’t use here or call out here and maybe that’s just because their company provides certain services and the other marketing channels are not including those. But some of the things that came to mind was paid advertising. Whether it’s Facebook ads, or Twitter ads, it’s just traffic acquisition in stage one and trying to get people to know who you are. You can also do billboard advertisements for example or you could pay to be in a newsletter that gets sent out regularly.
There’s several that I’ve seen out there where you can take $500 or $1000 and they will include an advertisement, basically a sponsorship for whatever your product is or your service to their newsletter list. And then there’s tools like Canva which helps you provide marketing collaterals that you can either publish on your website or send to people. Another option for social media would be TweetDeck which I think is offered directly from Twitter.
Rob: I believe they acquired it a few years ago.
Mike: That’s another alternative to either HootSuite or Buffer. Stage one is really just about building awareness that you even exist as an option to solve the problem that a customer may have.
Rob: Stage two is about interest. It’s finding out if a customer is interested, keeping them on your website, or getting an email address from them. This is not a full qualification when you think of qualifying a sales lead. This is really just getting one more step past, they’re on your website now, are they going to click around or opt-in to hear more from you.
Mike: One other thing that I want to point out as we go through these is that the way that they break down these different stages, it seems to me like there’s a little bit of a difference between how they would do it versus I would do it, but the basic gist of what they’re trying to do here is say that when you get past the point of where they’re aware of you, they express some sort of interest, but you still don’t know who they are as the vendor.
You have to use tools like Unbounce or Crazy Egg, or visual website optimizer to try and find out are they browsing around on your website, and are they taking an interest in whatever it is that you’re doing. That stage one are those people who you put an advertisement from, maybe they clicked through it to come to your website and then immediately bounced, or they searched for something and they get on your website and they’re like, “Nope, this is not what I was looking for.” They hit the back button.
Whereas with interest, you try to engage how interested are those people who are coming to your website in what it is that you have to offer, whether it’s articles, or educational materials, or an email list, or lead magnets, any of those kinds of things. Are they clicking around the website and actually reading? Because if they’re not, they’re not interested and they really fall in that first bucket. But if they are, you can see heat maps and things like that that will help you provide a better idea of what is going on.
Rob: Yeah. To summarize, these are people on your website who you don’t know who they are yet. Tools for this are going to be things like Google Analytics which is going to give you a lot of aggregate data. Clicky, which is essentially a competitor, one of the main competitors I know to Google Analytics, it’s real-time web analytics, and then tools for capturing that email address, obviously something like OptinMonster or Drip with its email capture widget, or Kickofflabs. Kickofflabs, they do more than just landing pages and pre-launch pages.
Mike: They have widgets that you can embed into your website that would allow people to sign up and then they can take those and they can add additional metadata to them and then send it over to whatever your marketing platform is. If you have Drip, they’ll pre-populate it based on the email address and then sent it over to you.
Rob: That’s cool, that makes sense. Sumo Media is another one that’s going to help you capture emails. I think Mixpanel and Kissmetrics at this point would also be helpful. They are designed more to measure funnels and actually maybe at this step, it would be less helpful, but I think to cover all five stages of the funnel, one of those tools that gets into—it’s not just aggregate data but you can look at individuals once they’re identified and see where they stopped.
Mike: Another good tool in this stage is Hotjar. I have an account with them, they’ve got a free account that you can sign up for. It’s pretty good if you don’t have a ton of traffic to your website, and it will give you some of that heat mapping information and show you click conversion rates where people are going to let’s say the homepage and you want to see how many people who come to the website are coming to the pricing page for example. It will show you that information.
You can also do screen recordings as people browse around your website, or on certain pages, and it will give you an idea of what people are looking at. That can be helpful for deciding what it is that you should be focusing on or what changes you should make on your website. Stage two is really about tracking what people are doing on the website and then optimizing it to help move them onto stage three.
Rob: I think Hotjar is a good tool. We’ve used it on Drip as well.
Mike: The third stage is called evaluation. I don’t like the phrasing of this solely because if you say evaluations, to me it means you’re doing a trial, but the context that they mean it in is they’re evaluating whether or not to give your tool a chance or which tool it is that they’re going to spend some time and effort looking into, whether they’re going to find a trial for it or they’re going to go to some webinars.
This is just them trying to gather more information about your tool and potentially some others to give them more information. Tools that fall into this category are things like Camtasia Studio, Jing, Wistia, Soapbox, really for capturing videos. Whether it’s a demo of your product, or a webinar, or an educational video of some kind, or even just a marketing video of the founder talking about a specific reason why he or she built the product.
For hosting those things, you want to use something like Wistia or Vimeo, you can also use YouTube. And then additional pieces of the evaluation stage is providing educational content to people. Things like ebooks fall into this category as well.
Rob: Yeah, this is that education stage where you are trying to get people to raise their hand and essentially either sign up for a trial, or sign up for a demo, or continue to ask for more information so that their lead score or their interest score rises to the point where you reach out to them directly.
Mike: As you said with raising their hands, if they do that, then they end up in stage four which is engagement. I hear the prospects have made a conscious decision that they’re interested in finding out more. I would almost say that there’s probably a few more things in between here, between stage four and stage five, because stage four, the way that they lay it out, you’re getting somebody to sign up for your email list or get on a demo, whether it’s GoToWebinar or Zoom or a variety of other webinar tools, something like Bluetick or Drip falls into this category as well.
I feel like CRMs almost fall into this category as well, into stage four because you’re gathering more information about them. You’ve had them signup for your email list and you started populating that data, whether you’ve asked them for information in a form, you’ve had them fill out a survey. Those types of things have to end up some place and the CRM is really the logical place to start putting some of that information so that you can use that information in additional marketing materials to help move them to the next step.
Rob: Some people phrase it as lead nurturing. Obviously, an email tool is going to be a really nice way to do it as well as webinars that will get you that one to many. Like you said, CRM, it depends on if you are truly a self-serve business or self service where people just come up and they sign up for a $10 a month account. Obviously, your CRM is probably your ESP; that was really jargoning. I just put two acronyms back-to-back. Your CRM is probably your email service provider.
It’s a tool like MailChimp, or Drip, or Infusion Software, you actually keep a lot of your prospect and customer data. If you have a higher price point and you really are doing some medium touch sales, then having something like a Pipedrive, or Base CRM, or Highrise, one of the CRMs I think is obviously going to be helpful, and Salesforce obviously. Something like that is really going to help move people through the funnel, and then it attracts your individual one-on-one communication, you obviously need sales people to use tools like that or get a lot of benefit out of them.
Mike: The thing I was mentioning earlier where I feel like there should be more between stage four and stage five is that, here they played stage five as the commitment in the purchase. They list a bunch of ways to take payments. Whether it’s PayPal or WooCommerce, for whatever reason Stripe is not on this list, but they have a couple of shopping carts in there as well. It seems to me like even in stage four, there’s a lot of flexibility for somebody to move forward and back in the funnel here a little bit because somebody might download an ebook for example and then you don’t see or hear from them for two weeks, five weeks, eight weeks because they got busy doing other things.
There’s a lot of circular patterns between customers who come in, they enter in your sales funnel, and then they just repeat in this area for a while before they move on. You may look at it as it just takes them longer to get from stage four to stage five. The reality is that sometimes people can regress a little bit inside of your sales funnel. You have to make sure that you have enough marketing materials in there to nurture those people along to the point that they go to that demo and ask the questions that you want them to ask or you find ways to turn them out on your own.
Rob: Yeah, I think this sales funnel that ignite visibility is in essence more of a services sales funnel because they’re a services firm. I guess it can also be a one-time purchase but certainly if you have SaaS and you have a trial, there’s a step after engagement before the purchase, and I think that’s where this is just a little bit different.
Mike: Yeah, once you get into a SaaSified version of this, then you get into that measuring the trial and seeing how many people are going from the email list into the trial and then how many people are converting from a trial into a paid customer. And then you also have to talk about things like on-boarding, and are they using certain features in your products, are they getting the most value out of it, who is using the features that will turn them into a paid customer, who’s not, how do you get them to use those features, should you make them front and center, or should you provide them a walkthrough videos inside the app.
There’s all these things that you can measure in that area. It could get complicated but it’s very specific to whatever your app is because what somebody does in Bluetick for example is going to be very different than what somebody does in Drip, or any countless other applications in order to be successful with that product.
Rob: Right, and in terms of measuring what people are doing in the product, Hotjar like you said can do a lot of things. I know that Crazy Egg, you can do in-app heat maps. Do you know of any other tools off the top of your head that help you kind of be aware of it? It’s almost in-app analytics and metrics.
Mike: One I would take a look at is probably Segment. You install Segment and there’s a developer edition or a developer tier that is in the people with less than a thousand what they call MT Uses monthly, transactional users or something like, that but monthly total users. What it does is if you have it in the app and you’re only using two data sources they say, then it’s free. Otherwise, it’s $100 a month and the monthly total users could actually kill you depending on how much traffic you have.
If you put it on your website and you’re using that as a source, if you get 10,000 unique visitors a month, it’s counted as 10,000 MTUs. Depending on how big your business is, that could get expensive. But if you’re just doing it in the app, then you’re trying to pinpoint things and optimize things inside the app, you can send the data into Segment, and then from there, you can take a look at another product called Amplitude—which is amplitude.com—and that allows you to take information that comes directly out of Segment or get a JavaScript snippet that you could plug-in and it will allow you to track people through your app and what they’re doing.
Their product is free as well until you get to something 10 million events per month. You have to be fairly large in order to hit their pricing tier but I would imagine once you get to that, it’s going to be really expensive, but if you’re at that level, it’s probably going to be worth it for you because it allows you to drill in and see exactly who is using which features, how much they’re paying, and you can have all that data piped in through Segment from your website or from your backend database and through to Amplitude.
Rob: Very nice, I haven’t heard of Amplitude before so that’s a cool little stack that you hacked together there. We’ve used Segment for years but getting it into those other data analysis platforms I think is probably a head kicker and a real value there.
Mike: Yeah, Amplitude, I just found out about it recently so I’ve been looking into it. It’s interesting to see some of the dashboards and stuff that they have available. It’s an example so you can just see who is using what in your app and how much they’re using it, it gives you real time data so that you can take a look at who’s doing what today, and how many times have they performed this action, or how many times does this thing happen in the background? You can use those customized dashboards to help you make decisions about your own product versus some off the shell tool like Crazy Egg which has one very specific use case, to see where people are clicking. Yes, you can do other things but the dashboard allows you to customize a lot of things and create one that is specific for your own app.
Rob: Cool. To recap the five stages of your sales funnel, number one is awareness, number two is interest, three is evaluation, four is engagement, and five is commitment. 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 Commons. Subscribe to us in iTunes by searching for Startups. Visit startupsfortherestofus.com for a full transcript of each episode. Thanks for listening. We’ll see you next time.
Episode 390 | SaaS Pricing, Sponsoring Events, Subscription Boxes and More Listener Questions
Show Notes
In this episode of Startups For The Rest Of Us, Rob and Mike answer a number of listener questions. The topics in this episode include GDPR, SaaS pricing, sponsoring events as a marketing strategy and subscription box companies.
Items mentioned in this episode:
- MicroConf
- ZenFounder
- RobWalling.com
- FounderCafe
- Cloudforecast.io
- Crated with Love
- Bigfoot Capital Solutions
- Angel List
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, or even your second, or third. I’m Rob.
Mike: And I’m Mike.
Rob: We’re here to share our experiences to help you avoid the same mistakes we’ve made. What is the word this week, sir?
Mike: I’ve spent a lot of time this past week cleaning up my email list, setting up some marketing automations, and working on my website. With the email list, there was a time frame of about six-seven months where I didn’t have I any sort of captcha in place and the form for adding your email address onto the list was embedded directly into the website. Because of that, because it wasn’t being loaded through JavaScript, there were a lot of bots that came through and just randomly entered in email addresses and I did not have double opt-ins enabled for this short-time period. I could very clearly see it in Drip like there were stuff that just should not have been in there.
Rob: Yup, totally. That’s a good way to do it. Like you said if it had been a Drip JavaScript widget, I think it’s just one checkbox in Drip where you can add captcha to it, you add re-captcha, but obviously if it’s embedded form, that’s not so easy. Cool, nice work there. I meant to ask you at the top of the episode through the magic of time travel, MicroConf is happening right now as this episode goes live. It’s Tuesday morning. What do you think you’re doing? Are you hungover or regretting that you stayed up so late?
Mike: No, I doubt it. I learned that back in 2011 not to do that.
Rob: You’re pacing yourself these days especially because it’s four days for us now which is definitely a bigger deal because we have obviously growth for two days and starter.
Mike: Definitely. I head out on Friday so I’m there from Friday to Friday. It’s not just four days, it’s seven days.
Rob: Dude, that is a long time to be in Vegas.
Mike: I know.
Rob: Drink a lot of water, go to bed early, use chapstick. All the things we said last week on the episode, you’re going to really want to double down on those.
Mike: Yeah, last week’s episode was sort of a reminder for me like, “Hey, these are all the things to make sure you remember to do it just so you can fix yourself.”
Rob: Yup. I’m in Vegas one day less than you are and I will be thanking my lucky stars. After about three or four days in Vegas, man, I’m done.
Mike: Yeah. I considered staying until Saturday but I decided against it.
Rob: That would be a tough call. My grandma used to live in Vegas and so we would visit her couple of times a year. I’ve been to Vegas 30, 40 times. I live in California so it’s a super quick hop from Oakland Airport. Yeah, they would always be 2-3 day trip and it was a perfect amount of time, it was like, “Oh yeah, that’s what this place is like—” Then by the time you’re three days in you’re like, “Oh yeah, that’s what this place is like.”
For me, I just came back from a two night, almost three day retreat, it’s the longest retreat I’ve taken in quite some time. I was trying to think, because I took like a one day last year and then in 2016 I took three days and got away but I got strepthrough so it wasn’t exactly a restful retreat, it’s more like recovery. But I really enjoyed it. I drove 2 ½ hours North up to Duluth, Minnesota which is right on the southern tip of Lake Superior. Lake Superior is so big you can’t see the other side. Aside from there being no waves, it kind of feels a little bit like the ocean because there’s no beaches as well, no planes flying over with the little banner saying rent the surfboards and stuff.
But I thought about a lot of different things, probably stuff that I’ll talk about in the coming weeks and months on the podcast. But a good reminder, if you haven’t taken your retreat for 2018, check out The Zen Founder Guide to Founders Retreat, go to zenfounder.com, and Sherry wrote like a 30-page guide that I use religiously, has all the questions, and all the things you should be thinking about if you go on a founder retreat.
Mike: Awesome. What’s the word for this week?
Rob: We’re answering some more listener questions, they keep trickling in at an even pace which is really nice, allows us to do these Q&A episodes pretty frequently. The subject line of this email is, “Loved episode 384, GDPR. I’m Chris Duke. I’ve been listening for a while in my walks through town. This is the first time I probably laughed and shouted out loud. I try not to use the word stupid very much but it is hard these days and GDPR is one of those things that brings it to mind. Not the basic idea, it’s good to make those of us in technology business think about protecting data but the people who think of things like GDPR completely clueless and I have no business coming up with the regulation on something they don’t understand.
I keep thinking about one example, MailChimp. If I tell them to forget me, does that mean they have to forever take my email off of every list? What if removing my data from an application breaks something in the app or someone else that I willingly given permission, has used my email, it’s called referential integrity. Thanks for talking about this, guys. We’ve already written a sequel script to delete data in my SaaS app, we used it as part of our development and testing. That and some clarity on our terms is about it for me. Keep up the great work.” I know the answer to this one, do you know?
Mike: Didn’t we talk about it last week or the week before where the forget me is on a per-provider basis? Let’s say you and somebody else are my customer and people have data for both of them. If they tell you to delete it, the other person does not have to. The person has to go to each of the individuals and it has to do with who’s the data provider and who’s the data processor.
Rob: In the case of MailChimp, If you emailed MailChimp and said, “My email is on a bunch of your customer’s email lists, forget me,” MailChimp would say, “You have to contact the MailChimp customers.” We can’t delete it out of their account or we’re not required to, I guess. Now if you went to meet MailChimp and said, “Remove me from your list and forget me,” obviously they could do that from their own list that they own, but that’s exactly right.
Mike: I still don’t think that it answers the question of how do you remember that you deleted somebody.
Rob: That’s right. Yeah, if they sign up again, I don’t think you’re supposed to block or I don’t think you’re required to block them. Because like you said, you have to keep their email if you are not going to allow them to sign up again.
Mike: The other thing I’ve wondered about is if you could just anonymize their data so it’s no longer personally identifiable and you just overwrite the IP addresses with all zeros or all ones or something like that.
Rob: I think that’s a realistic approach the people should evaluate because in complex systems, you don’t delete stuff. As a rule, you don’t delete rows from database tables especially as you get larger and more complicated. As a listener out there, if you’re thinking about this, just changing their email to something@example.com to gooit@example.com, like you said overwriting their IP with blank stuff and having some probably on a flag or whatever that this is anonymized but I do think that’s an interesting approach.
Mike: No, I don’t even think it says that it’s just an interesting approach, like in certain business situations you almost have to do that because it’s not even just about deleting the data, it’s about knowing historically how different things that you’ve done turned out. Like if you go in and you have to delete a bunch of data for all these people that came in and visit your website for example on a certain month, it skews all of your reporting for all those months so you can’t really see how things went or what happens during that time. All of your decision making moving forward is completely screwed up, you can’t delete it, you have to just anonymize it and be done with it.
Rob: Cool. Thanks for the question, Chris. I hope that was helpful. Our next question is from Kenneth. He says, “Hey guys, as always, love your podcast, been a fan for a few years since I read Rob’s book, Start Small, Stay Small in 2011. Rob’s book was a huge inspiration for me. However, I realized it’s been almost a decade or about eight years to be exact since he wrote it. Obviously many things have changed since then in the internet, it’s totally a different world today.
My question, if Rob were to update or rewrite the book in 2018, what would he change? Would he remove chapters, focus more on certain points include new topics, etc.? That’s about it. Thanks for all the resources, podcast stories, etc., that you guys have openly shared. Been a constant inspiration for me and hopefully one day I’ll be able to share my own story on how much you guys have impacted my life. Best regards, Ken.”
Mike: I think I know the answer to this, you’d rename it to Start Small and Get Big.
Rob: I don’t think I would.
Mike: No?
Rob: No. Because that’s the thing. Obviously that’s what I wound up doing when I was starting small and then going into something much bigger than I had originally intended. But I still think there is a really good case to be made for doing this kind of micro SaaS or micropreneur approach where you just have a lifestyle business and you never need to worry about all the headaches that I dealt with starting in 2013 of growing this company larger. It obviously came with rewards as well but I also think it’s a totally viable approach to start small and stay small. I wouldn’t presume just because I did something that everyone should. You know what I’m saying? I think it’s totally legit that startup business make low six figures and if you’re happy with that, man, that’s a great life.
Mike: I was just pointing out that it should have been renamed to Start Small and Get Big just because on your website where’d you go to sign up for your newsletter, it says exactly that. And then there’s also that in the Drip widget where you can sign up for the newsletter.
Rob: Yeah. Which I did that once Drip started getting big. I realized I’m not just talking about staying small anymore, isn’t even that appropriate. I need to rename that headline anyway. I’ve kind of neglected that unfortunately. That’s on my personal website at robwalling.com.
This question is interesting. I’ve thought about it a bit over the years. To be honest, I had not opened my book, I mean it’s been five years since I went back and looked at it all, maybe more. This forced me to go back and take a copy and flip through it. What I’ve realized is that so many of the concepts are still 100% valid today, it’s some of the tactics that are not. I go really deep. I thought it was like half the book where I deep-dive and then like break out, I forget micro-niche finder, or market samurai, and I click this button, and I have screenshot, almost like it’s some web tutorial but it’s only 5 or 10 pages of the book is that and that’s the part that I would remove because that part changed so fast. It was like probably less than 18 months after it’s published, a bunch of those links and screenshots were just invalidated. Realizing that it’s a book and it’s not a living, breathing online course that I can edit easily, that is part of it that I would pull out.
I would still talk about niching down, I have a lot of concepts in there to still hold but I would remove some of the tactics that—and again it wouldn’t be a huge chunk of them, it would be a small part of the book—but there’s tons of stuff about outsourcing and hiring VAs, the mindset, and product last, market first. All that stuff I still hold true.
I was trying to think of anything else that I would add today, certainly there are marketing channels I didn’t even cover like Facebook ads that are probably mentioned. I would double down. I had a whole section of building your email list, I would probably expand that given how much more powerful I believe email is today and how much more I know about it.
I wrote the book in 2010 in essence, you can say I’ve learned quite a bit about it in eight years so there are parts that I would expand. I have butted this around obviously for years and I get talked about every since I started going even slightly how the data I was going to do an updated version or second edition, I toyed around, I talked to a couple of publishers, talked about doing a little more of a mainstream release. It’s still in the back of my mind somewhere to go back and revise it.
Flipping through the book made me realize I always thought that’s going to be too much effort, it’s going to take a tremendous amount of time, might as well write a new book, but that’s not the case. It wouldn’t be near the effort of writing a new book. As I flipped through it I was like, “Oh, this stuff’s still really good content that’s applicable.”
What do you think? You think I should go back and redo it?
Mike: I think that there’s definitely room for a second edition. It really depends on whether or not you want to go through and have a second edition versus writing a new book. Obviously if you write a new book, it’s going to be a different topic of some kind. But whereas if you’re simply revising the current book, it’s obviously a lot less work and you could probably bang that out in like a couple of weeks. It’s not like it’s that much effort, I don’t think, because really you’re just cutting out a bunch of pages where it’s hyper-specific, and the tools themselves or the URLs have changed, or maybe you replace the tools or you drop the pages entirely, and there is probably a few things that you left out that you want to add, maybe stories that you’ve shared over the years that resonated that with people that never just made it into the book or better examples you have of different things. I think that with the book itself you’re mostly concentrated on your own experiences. I doubt you’d go into sharing things that you’ve heard from other people but like specific examples from other people but I don’t know. It’s a toss up, I guess.
Rob: I think that’s a good point. As you were talking, I realized that was the one other thing that I felt was a bit dated with the examples I used. I used a lot of my own examples because there was really no one else that I knew. It was like Patrick McKenzie, Ruben from Bidsketch, Harry and Ted from Moraware. Then I used a bunch of the sites that I owned in Basecamp. It’s like there just wasn’t that much going on in 2010 when I was reading this in terms of the bootstrapping and the Micro-SaaS in the micropreneur space. Now I have dozens if not hundreds of examples. That’s where I could really beef it up.
I don’t know if I would go so far as to interview people or you and I just know the stories of so many people who have taken this approach, whether they’re Founder Cafe lifetime members, or they’ve come to MicroConf, or they listen to the podcast, or they’ve read one of our books, we just have that knowledge so much more. There’s so much more of a community than there is today. Now I’m kind of fired up about it as you’re talking about it.
It would be almost fun to go back and see, because you’re right if I write another book, it can’t be on that same topic and I wouldn’t even have the interest to really focus on that exact same topic today. But rewriting it and just making it better is actually something that I think would be interesting. Thanks for the question, Ken. I’ll definitely keep noodling on it and see if it leads anywhere.
Our next question is a question about SaaS pricing. It’s from François at cloudforecaste.io. He sent us a couple of questions I think. He says, “I’m reaching out to you again because we’re trying to figure out our pricing model for a new feature. Here’s my question, cloudforecaste.io is currently helping our clients monitor their AWS cost and we are now working on a new feature to help them save money.
The new feature will tell them how they can easily save money by fixing naive mistakes, unused resources, reserved instances, etc. on a weekly basis. We have a hard time figuring out the pricing since the first email is much more valuable because there’s a lot of potential optimization then the email in the third month, or the fourth month, or whenever. The first one’s going to have a lot of value.
The value also depend on the size of their AWS account. Here are a few ideas we have in mind, first one is a percentage based monthly price based on their overall spend. Second one is a flat-monthly price based on their overall spend. Third one is an expensive first email followed by a low flat-monthly price. The fourth one is remove the weekly cadence offered as a stand-alone product, and charge a percentage of what they can potentially save. Looking forward to hearing your thoughts on this. Thanks for the podcast.” What do you think, sir?
Mike: I think this is a really interesting question just because there are situations where people can really undervalue what a piece of software can provide for them. I can definitely see, there is an analogy for this situation which I saw, I think it was an online tool where you could go and somebody would basically build an example of how to use as your services or something like that and they were letting you put in your email address and find out if it had been hacked across hundreds of millions of records. It was coming back too quickly. People did not believe the results that they were getting because it came back so fast. They ended up inserting some artificial delays into it to make it appear like it was doing more work than it actually was.
I’ve heard similar examples in other places as well from different people doing different things and this seems to me like that’s one of those situations where people may look at that and say, “Oh, your software is doing this but I don’t value it as much even though I’m on paper saving a heck of a lot of money.” I wonder if the solution to this would not be to price it like as a stand-alone thing but to price it as, “Hey, here’s a service that we offer and it’s X thousand dollars or a percentage of whatever the monthly prices that’s saved,” and you offered it as such as a service, not as something you can just go in and automatically get this report that shows you all this information. That way gives the impression that you’re doing all this extra work and analysis.
The reality is most of it’s automatically generated but it’s based on all the work that you have done already. Then the ongoing monthly reports could be some flat-monthly price that is related to their overall spend to kind of help them save money. Because that first email, I totally agree that if you’re saving them a heck a lot of money up front, then trying to go down the path of having a SaaS pricing model that is variable in some way that reflects the value that you’re providing to them is really not going to work very well. I think that positioning it as a service as opposed to like, “Hey, here’s this off-the-shelf thing that you can buy that the software will do everything for you, that’s probably the approach I’d at least look at and test it out with a few people first.
Rob: You’re saying like present it as, “Hey, we do this manually type thing,” maybe not coming out and saying that but like, “This is a valuable service the we offer,” and don’t imply that software is doing all of it.
Mike: No. I wouldn’t say that, I would say that it is not something that you can go in, you can just click a few buttons, and automatically get the report. You have to talk to somebody in order to get it.
Rob: I see. Yeah.
Mike: Yeah. That way you can look at that and you could almost give them a ballpark estimate or price based on what you’re seeing from the stats and say, “Hey, this is the price that we have for this and we think that you’re going to save probably in this neighborhood.” You could give them a range like they’re going to save $10,000-$20,000 a month. You can tell them that and you say, “This is going to be $5,000 and just ballpark looking at what you’ve got, this is what we think you will save.” Then when you give them the actual report, it will show them exactly the steps they need to do that will both give them $17,000 a month in savings.
Rob: Yeah, that makes sense. I think that’s a pretty good approach, actually. I’m kind of torn on a couple things, I think the percentage based on how much they spend, it’s very logical, I’m curious to see what customers think of that. I guess it all depends on what the percentage is. I guess it makes a lot of sense, you can tell I’m torn on it. I like that you have better flat pricing but I actually do think the percentage could make a lot of sense because when we were tiny, and bootstrapped, and AWS bill was $5000 a month and if you said it was 1%—that’s $50 a month—that would probably have been a no brainer for me. Then of course once you’re doing $30 or $40 a month it is worth more, and at $300, $400 a month kind of feels equivalent. That’s probably what I would lean towards as this percentage.
I think trying to make the first email more expensive, I think it’s kind of a tough call. I don’t think I would go that way. But I would consider making this kind of an annual only thing that you give, they can get a sample email or they can get the first 20% of what the email looks like. You give them some information to prove that it does something.
Then like you said, they have to talk to someone in order to get this and it’s relatively high-priced and you do annual. The challenge with annual is their spending’s going to go up and down over the years, so how do you build a whole year when metered in a sense, with that you can either do it on a credit-based system or you can bill them where they are today and then bill them just the incremental each month, if they’re up or down you can keep it there.
I think this is an interesting thing with their two data the points in essence and I think talking to either existing customers or prospects is going to be your next step to basically say, “We’re going to do it based on a percentage and it’s going to be quarterly only or it’s going to be annual only. Do you want to sign up?” That, you are going to see if the rubber meets the road at that point.
Our next question is about sponsoring events as a SaaS marketing strategy. This is from Ed Freyfogle who is a speaker at this year’s MicroConf Europe. He says, “Given that you’ve run many events, I’m wondering what you think of sponsoring events as a marketing strategy? Particularly, I’d love to hear any tangible tips or best practices you’ve seen from sponsors as a way to make the most out of an event in terms of general brand building, but also specifically winning new customers.” What do you think, Mike?
Mike: Obviously, I run the sponsorship side of MicroConf so I have a lot of thoughts on this and I’ll try to keep them briefer than I would if we were doing an entire episode on it. When you’re looking to sponsor events, the thing I would keep in mind is that before you even try to figure out which events you’re going to be sponsoring, figure out what your goal is.
If your goal is to build brand awareness, then make sure that you know that in advance. You don’t try to do things that go outside of building brand awareness. That would include going to events or conferences where it’s not the right audience for building brands, like if you’re selling a marketing tool, going to a developer’s conference, obviously like there’s probably a little bit of crossover if you’re going for entrepreneurs but you don’t want to just build brand awareness with developers if they’re not the ones making the decisions. Because if you’re trying to get customers, you want to be able to get in touch with the decision makers, not the people who are at the other end of it, like the bottom layer of the organization.
The other thing I think to keep in mind is that when you are talking to people at a conference or an event, how close are you to the decision maker? How many hops are you going to have to make between the person that you talk to and the rest of the team or the people who actually make the decision? Because you may be able to run into the people who would use your products but they don’t necessarily care.
For example if you sell transactional email service of some kind and you go to a developer’s conference, those developers may not actually care about deliverability rates. The marketers would, but they’re not the ones that you are talking to. You’re going to have to convince the developer to give you an introduction to the marketer or whoever the VP of sales is that is going to say, “Hey, this deliverability is important to me and we should possibly switch providers in order to get better deliverability.” Those are the types of things that I would think of to start off with, and then beyond that, you want to stand out from the other sponsors.
If you have an opportunity to customize whatever it is that you are doing, whether it’s a specific giveaway to the audience or you are trying to drive traffic or drive conversations with people, figure out ways to do that so you might do like up Q&A session that is informal either during lunch, or after the conference, or during one evening event, something along those lines. If you do give away, you can provide people with that giveaway as a link and then you capture their email address.
The other thing is make sure that when you attend these events, if you try to sponsor an event from afar, it’s probably not going to get nearly the level of engagement or awareness that you’re looking for so make sure that you have business cards to hand out and make sure that you collect business cards or contact information from people while you’re there. Then once you’ve done that, absolutely make sure that you follow up with those people to take it to whatever the next logical step happens to be, whether it’s to having other conversation, or to get on a demo, or to just discuss what sorts of things you’re doing.
The last piece of advice I’d say is to make sure that if you can lead things in that direction to get to a promise of a future conversation and not suck up somebody’s time at the conference, that’s also not a bad thing.
Rob: Awesome, yeah. I’m actually going to leave it there because I feel like you have so much more experience dealing with this topic. I think that was a pretty good little primer there. We’ll probably do a whole episode on that, huh?
Mike: Probably.
Rob: Our next question is a subscription box company asking about technical issues and funding. It’s from Tyler Turk at cratedwithlove.com. He says, “I’m a Fresno-based startup and I have a question for you. I own a subscription box company. I found the company with my wife while attending Fresno State in 2015. In our first three years we’ve accumulated over $500,000 in revenue. I’ve been pretty much on my own from a business perspective doing all the ideation, curation, and even packing and shipping. My wife helps occasionally.”
They’re a monthly box subscription company obviously and it looks like they’re kind of date night boxes. You would buy it and then there’s activities and stuff for you to do with your significant other. Our biggest weakness right now is our technology and product market fit. We have a large amount of subscribers that have been with us for two years or more and the average active subscriber stays about eight months. But our churn is higher than we’d like. I know where the holes are in our website but I lack the technical skills to fix them.
In addition, I think the future of our company is more digital but I’m having a hard time figuring out how I pitch the future technology based on the data from the physical products we sell now, especially since the biggest needs are technical. I feel like I’m in a vicious circle where I won’t be able to raise money I need to scale until I fix our churn problem, but I can’t fix our churn problem until I get funds to fix the technical problems. I have two questions, is a startup from a smaller market with no relative experience in fundraising or network in larger markets, where should I start? Second, how do I transition from a product-based company to a tech company or a hybrid of both using the data I have now to support our pitch?” Do you have thoughts on either of those?
Mike: With these two questions, just before I answer them, I do want to kind of at least comment on one thing. Tyler said that he has a large number of subscribers that have been there for two or more years and the average subscribers stays about eight months but the churn is higher than they’d like.
I’m not sure exactly what the problem is on the website that would have any bearing on that. I’ll say an open question that I might have on that. If you’re sending those emails to them and they are making purchases and sticking around for a while, what is it about the website that would make them go away? Are things fundamentally broken which are causing people to drop through the cracks or is there something wrong with your email provider? I’m just kind of curious about what that is.
But neglecting that, going back to the two questions, the first one which was as someone who have no experience with fundraising or network some larger markets, how should I start? Coincidentally, one of our sponsors from MicroConf this year is called Bigfoot Capital. They provide funding for subscription-based businesses. I think that they’re focused mainly on SaaS businesses but this is a subscription business so it might fall under their wheelhouse, you can go check them out at bigfootcap.com.
Basically what they do is they look at your financials and they have a wide variety of people that they have provided funding to and they give you a loan. That loan is whatever percentage but it’s going to be based on the risk that they see, and you’re probably going to have a much better chance or opportunity of getting a loan to address some of the technical challenges that you have from somebody like that than you would from a traditional bank who has absolutely no understanding of online businesses. They just don’t get it.
He asks with $500,000 revenue over 3 years, they may be able to do something but my guess is that they just do not understand. I would look for some sort of private funding like that. I don’t know about fundraising—Rob, you could probably speak to them.
The second question he has is, “How do I transition from a product-based company to a tech company or a hybrid of both using the data I have now to support our pitch?” I think we’re going to have to make some assumptions here because I don’t really understand what you are specifically intending by that. But my assumption is that what you’re trying to do is take your current offerings that you probably sent to people physically through the mail, whether it’s worksheets, or PDFs that you deliver digitally, basically make them into online worksheets that you can fill out on the website and share them, or through your app, or something along those lines.
With that in mind, I think that you need to test some of these things out and get information from the subscribers that you currently have now. Can you get hard data that really says, “Hey, this is why I left, and it has to do with like the convenience factor.” Because I think that if you try to look at this as a way to simply cut costs, like if you’re suffering from a problem were your cost of goods sold is too high and you’re trying to cut into that, I don’t know if going down the road of automated things and putting all this technical stuff in place is going to really change that because developers are going to be expensive to build all custom stuff for that. I think that you’re really just going to end up burning a hole in your pocket to try and build that stuff.
In the meantime you’re still paying those current costs for the goods that you’re selling. Later on, you’re still going to need to have ongoing updates, and maintenance, and things like that. There’s always going to be a subset of people who do not want to switch from the physical stuff that they are already getting, so then you have to make some decisions about do you cut those people off and abandon them, or do you try to move them over and say, “Look, if you don’t move, we really can’t do anything for you,” or you just force them. Those are the things that I would have to say about that. Rob, what are your thoughts on this?
Rob: Yeah. I would definitely agree on the second part about trying to move into software I think is a great long term play but I would not do that without funding if you’re not technical because it’s just going to be really expensive and you’re going to get more bang for your buck if you take whatever earnings you have and put them essentially back into the business.
I do agree that this is the kind of business where funding is actually kind of meted like physical goods are just really time consuming and really expensive. At a certain point you’re going to need a small warehouse, you’re going to need to pay rent, and the margin on physical goods obviously is nothing like software. This is one of those cases where I think, especially since you have some traction—because if you look at an 8 month lifetime is 12%, 12.5% churn and that’s not terrible. You want to improve upon that, obviously, and it sounds like you have some ideas on how to do it but there are companies raising funding that are pre-revenue in let’s say the $1-$3 million dollar range. If there’s like a proven founder, they can raise $4 million or $5 million pre-revenue. If they’re in Y Combinator, they can raise $10 million or whatever.
The fact that you have revenue, and you have some type of numbers, and you have a business model, and you’ve shown the hustle over three years, it’s a big plus. For angel investors, I’m not saying it’s going to be a slam dunk, it would be great if you had a network but if you raise $250,000, I would say you’re not raising enough. I think you probably need to raise half a million. I mean you really need to look at what you want to do with the money. If you want to do a series A later, then you have to think, “I want this money to last about 12 to 18 months.” If you never want to raise a series A and you want this to get you growth and then take you to the profitability, that I think somewhere between $250,000 and $500,000 is a decent number.
In a couple of ways, I would get on AngelList, angel.co, I would try to connect with either local investors because there is money to be had, I know it’s crazy but there’s money, to be had in the Central Valley of California. It’s lot of farmland but there are a lot of people who’ve made money and want to invest especially in local startups.
Since I happen to have the hometown advantage of having lived there, industries downtown, that’s the tech hub for really Fresno and the Central Valley, that’s why I would somehow get on their radar, they have pitch competitions every once in awhile, I attended one when I still lived there and there were three or four startups that pitched. With your story, I really do think that you could hustle and raise the money. You’ve already shown that you have the hustle to see this business through for three years on your own and sort of me raising funding is not actually going to be that difficult for someone with the focus and the kind of the grip that you’ve shown already.
That really would be my next move if I were on your shoes is to go out and again I would raise an angel round. I would probably stay away from institutional money where it’s someone investing in someone else’s money because they want quite a bit of control and there’s complications with that but it certainly is interesting and a vortuitous place to find yourself in.
Really nice work on this, man. You’ve done something that not many people can do, A, getting in business to last for three years and essentially I guess break even or be profitable, and B, to do it with physical products. Good for you. Thanks for the question, Tyler. I wish you the best of luck moving forward.
Mike: Are we all set for today?
Rob: We are, that will do it.
Mike: If you have a question for us, you can call it into our voicemail number at 1-888-801-9690 or you can email to us at questions@startupsfortherestofus.com.
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