In this episode of Startups For The Rest Of US, Rob interview Laura Roeder, Founder and CEO of MeetEdgar. They talk about her fast success with growing MeetEdgar, dealing with platform risks, and the humbling experience with her second venture.
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Rob: In this episode of Startups For The Rest Of Us, I talked with Laura Roeder about here uncanny ability to power through roadblocks. This is Startups for the Rest of Us Episode 451.
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 and today with Laura Roeder, I’m here to share our experiences to help you avoid the same mistakes we’ve made.
On this show, we talk about building startups in an organic, sustainable fashion that allows you to build a better life for yourself. Every once in a while, we’ll sit down with an experienced, knowledgeable, founder who has overcome seemingly insurmountable odds, and we learn from that founder. We learn from their experience of growing their startup, of facing the roadblocks and turning them into speedbumps. Today is no exception.
I’ve been a longtime fan of Laura Roeder since she started Edgar several years ago. That’s at meetedgar.com. It’s social media management software. Laura grew Edgar to seven figures of annual revenue within the first 12 months. It was one of the fastest bootstrap SaaS growth trajectories I had ever heard of.
But in 2017, 2018, Facebook and Twitter, some of the underlying platforms that Edgar relies on really started to pull some shenanigans with their APIs. Edgar ran into some pretty intense turbulence. We dig into that. I had not heard her talk about this experience on a podcast before. Frankly, I wanted to hear what it was like in the inside and how that felt. She talks about the ups and downs of it in a very honest, raw, and transparent way. I really appreciate that about the interview today.
The other thing we dig into is she went and started another SaaS app, raised an angel round, and rented some pretty major roadblocks with that early on. It’s fascinating to hear, essentially a third time founder, looking around and realizing, “Wow, this may not work like my other companies did. This may not go as well as my prior startups.” You can hear her thought process in what it was like to experience that in today’s interview. With that, let’s dive in.
Laura, thank you so much for joining me on the show today.
Laura: Thank you. I’m excited to be here even though we’re going to talk about some tough topics. I’m a little nervous.
Rob: I know. We were talking before we got on this call that just like entrepreneurship, is about bumps and bruises; sometimes it’s a speedbump, sometimes it’s a roadblock, sometimes it’s hard to tell the difference. You’ve certainly had your share with the past few years.
Laura: Yes. I’ve had speedbumps and roadblocks.
Rob: Yeah, that’s tough. I wanted to start by talking a little bit about Edgar, which is frankly, a widely successful app. I remember that when you launched, I believe, you made it to seven figures within 12 months of launch. It was ridiculous in a great way. I don’t know that I had ever seen a bootstrapped SaaS app hit that level of success that quickly. What do you attribute much of that to?
Laura: So much of it is just right place, right time, right brand. When we launched, we were really innovative in the market. Social media, scheduling tools, had been created, but they were literally just like, “Type your tweet in this tool and then hit send.” That was kind of all they did. The innovations that we created within the Edgar when we launched, it was just very noteworthy, like, “Wow, this is a tool that can do a lot more than any of the other tools can.”
Rob: Yup. That makes sense. You had this amazing success early on. You say, “Right place at the right time,” but I remember you also had worked your ass off to build an audience in that space. You would set yourself up for success. You weren’t just blindly going in and doing this. I think there’s a little bit of nature and some nurture in that one. Two factors came in—multiple factors. I think the thing that I want to chat with you today about is over the years that you’ve been running Edgar, there have been just crazy API changes and partner changes—Facebook and Twitter. I don’t know if other APIs have changed as well. I got the impression from the outside that has to be tough on your business. Has it? Talk me through that.
Laura: Yeah, 2018 has been our toughest year at MeetEdgar. We’ve got hit with a lot of changes at once. Some of them were in 2017 as well. The biggest one was Twitter not allowing repeating content. A big angle of what we do differently at Edgar is we allow you to keep a library of your content that gets repurposed. That’s a big reason why a lot of people use Edgar. All of a sudden, Twitter came out with this rule that said, “If you have the exact same tweet, if you sent it out more than once, that is against our terms of service.” There was no nuance to this rule. If you send out something that says, “Good morning.” Then you sent out something else that’s just says, “Good morning,” four years later, that’s technically against their terms of service.
Things like these are especially frustrating when you’re a tool. Obviously, people aren’t getting their accounts shutdown for sending out “Good morning” twice within 10 years. But as a tool, you have to make sure that you are in 100% compliance with the APIs, with the policies, and the terms of service because we’re putting our customers at risk if we’re not following Twitter’s terms. It would really suck for someone to sign up for Edgar, the tool is doing something knowingly against Twitter’s terms and conditions, well, now we’ve put our customers at risk for getting their accounts shut down.
There have been many tools out there that did that especially for Instagram. There used to be a lot of tools that went against Instagram’s terms and they all got shut down. No big surprise there. We did talk about, “How do we want to handle this. Is there anyway that we want to try to fudge this?” We’re like, “No, we can’t put our customers accounts at risk.” We are going to stop repeating content on Twitter. That was the biggest one.
Around the same time, Facebook stopped the ability for third party tools to post to Facebook personal profiles so you can still post to Facebook pages and groups but not personal profiles. We just got our access cutoff to Facebook groups for a while just from bad luck. All the social media tools are doing a lot more invitations and manual approvals, and that kind of thing as opposed to just open API. We just hit some bad luck for we got stuck in the approval queue. They didn’t have any problem with what we’re doing or anything like that, we just got to the bottom of the list somehow. It ended up being two or three months where our customers couldn’t post to their Facebook groups where a lot of our competitors didn’t have any downtime or had a week of downtime for groups.
Rob: Wow. That is brutal. What a tough space. Take me to that moment. Let’s start with the Twitter stuff because that, I imagine, was just like a punch in the stomach when you read that. That moment where you read the email or whatever it is from Twitter—the press release—what were you thinking?
Laura: You know, I’m such an optimist. I actually didn’t even realized how bad it would be. Because I was thinking, okay, the good part about this is that all the tools are in the same boat. We’re not going to be able to repeat content on Twitter, but no one else either. It’s not like they have nowhere to go. It’s not like our customers can leave us and choose a different tool. I’m like, “This is really frustrating, but maybe it won’t be that bad.”
It did help that I understood why Twitter was doing this. Obviously, why Twitter’s doing this is to prevent spam. They don’t want people setting up Twitter bot accounts repeating the same message over and over. It’s just frustrating that they did it in such a way where they made this just extremely broad stroke that in addition to eliminating spam, is also eliminating just some really standard usage of the tool.
Rob: Yeah, the collateral damage of the Google, Facebook, Twitter, when they change their APIs or change policies, I don’t think that they fully understand what they’re about to destroy. Oftentimes, they are doing it, I think, in a way to take out spam or for the better of their platform or for the better of the internet. I think internally they do believe that. It’s kind of like, “Are you questioning that?” Totally. Maybe not. Are they just doing it to grab more market shares? Is that what you think for their clients? That could be, I guess, a negative motivation.
Laura: Yeah. I think in this case, Twitter was, I do think that they were just trying to cut down on spam. They just didn’t think of it much beyond that. That was kind of it. I don’t think they’ve given out much thought since. It wasn’t something that they announced very widely. I find that most small businesses still don’t know about this, which makes it even more frustrating for us because it kind of makes it seem like we’re the ones enforcing this rule because people have never even heard of this Twitter rule. They try to use our tool, we say, “You can’t use it that way on Twitter.” It can be a frustrating experience for the end user.
Rob: Yeah, I’d imagine. You just talked about three kinds of breakages of your built-on platforms, these platforms can make a change and can really have a serious impact on your business. Of those three kind of, I would say, semi-catastrophic events, did you see an increase in churn? Did you see reduction in topline revenue? How did it impact your company?
Laura: Yes. We saw just a certain percentage of our customer base. Here’s what we discovered. I thought, when they made this announcement, some people are going to leave because some people are going to say, “Well, I use you guys for Twitter. I’m repeating on Twitter and I can’t do that anymore.” What I didn’t anticipate was that a certain percentage of our customers were just like, “This was the only thing I used you for.” I didn’t realize that a percentage of our customers were, “I used you guys for repeating on Twitter. You don’t do that anymore. I’m out. I’m not going to another tool. I’m just not going to use Twitter anymore.” That’s actually a big thing that we heard. There are other social platforms out there like, “This doesn’t go with my strategy. Maybe I’ll post to Twitter manually every so often but I’m out.” That was a surprise.
I thought, “We’ll have an announcement. It’ll change then we’ll see who leaves.” The first month we had to make the change, people left, and it feels like, “Okay. You never want customers leaving, but this feels manageable.” The nature of our tool, like I said, you have a library that at some point, if you’re only sending things once, obviously, that library is going to run out similar to the way Buffer is. It’s like a one time queue. When you get to the bottom of the queue, it’s gone. For Twitter, our tool became that way.
The thing is people load a lot of content into our tool. People had sometimes content for a month, three months, or six months, before their Twitter content ran out. The good part was we had an extra four months or whatever it was, obviously, a revenue from them. But that part, it just kept going. We’re like, “Okay. The people who don’t like the Twitter changes left.” Every month, more and more people would figure it out because obviously people don’t read every message that you send. People will just be like, “What happened? I’m not sending out content anymore on Twitter. Is the tool broken? What’s wrong?” We’re like, “Oh, no. You’re not sending out content anymore on Twitter because you used up all your content. You need to create new content now.” They’re like, “That sucks. I’m leaving.”
Rob: Geez. That was such a big selling point of Edgar above other tools. As you said, like Buffer, you create a content, you schedule it, and you post it and such. I can imagine that hit really hard. Churn went up, which obviously means you’re growth either stalls or flatline, whatever that does.
Laura: Declines, yeah. For us, we had a decline in our user base. It ended up with these three changes together. We lost a significant amount of our customer base; maybe we lost a quarter or a third of our customer base.
Rob: Oh my god.
Laura: It was really big. I don’t want to make it sound like it’s only external things. We made mistakes, we could have responded faster and better. The positive thing is that it forced us to innovate. One example of that, now we have a feature we call autovariations where you put in your blog post and we automatically pull five poll quotes from that post to serve as your status updates. That’s just one way to paste it in the URL and get five status updates to Twitter and all the other social networks, but we didn’t have that ready when Twitter shut down. We didn’t introduce that until nine months later, something like that.
You have to roll with the times when these things happen. But yeah, it was a significant loss for us. We had to make some layoffs in our company which we never had to do before, but we did remain profitable and survived through the whole thing which I’m really proud of.
Rob: Yeah. I would be as well. Honestly, it could’ve been business ending to lose 25% or 30%, whatever the number of customers would end a lot of companies. In fact, the interesting thing is, I don’t hear many bootstrapper who have to do layoffs because it tends to be this very slow growth over time. You build up as higher as your revenue. With SaaS, unless you have an odd event like this, almost like a black swan thing that comes and gets you, your growth is just going to keep steady or whatever. I think you’re in a unique situation that you had to deal with. Have you ever had to lay people off before?
Laura: No. I’ve let people go, but I had never had to do layoffs before. I’m very thankful that we had a really great team backing us up especially our head of finance, Tanya Crino. She was very cautious about seeing this coming. Like I said, we saw the initial way, but then we kept having more and more customer loss. If you Google, “How to do layoffs?” The first thing you see is only do one round. Whatever happens only do one round. Tanya and Sara Park—who’s our head of operations at that time and is now the president of the company—they were really looking at, “What do we need to do so that we can only do one round and so that we can offer some kind of severance?” We were able to offer two months severance to every person who was laid off and help them find other positions at companies we were friends with and things like that.
Another thing that was so fascinating from the layoffs is we have full financial transparency within our company. We don’t share individual salaries, but we share everything else. We do financial reviews with the whole company every month. Everyone can look through all of our expenses and income. People saw the writing on the wall, you know what I mean? These are obviously, very intelligent people working at MeetEdgar. You can’t say, “Hey, we might have layoff soon. Don’t worry. We’ll let you know.” You can’t really say that until it’s a done deal. But people are smart. They see us losing customer base. They’re like, “Okay. This is a bootstrap company. It has to remain profitable.” The only way that’s going to happen is lowering expenses. We found that while, of course, it is a terrible, heartbreaking, and incredibly stressful thing to be laid off from a job, we also were able to maintain positive relationships with everyone who was laid off. Everyone understood that it was something that needed to happen for the company to survive.
Rob: Yeah, which is a big deal. It shows that you handled it with care, thought, and deliberate action. It’s impressive. It’s easy to flab that, I think. It’s easy to accidentally screw that up.
Laura: Yeah, it is. Especially because it’s often something you haven’t done before. We were able to do it in just one go. We didn’t have to do anymore after that. It was hard because the way that you do it in just one go is you have to make deeper cuts than you think you need to. When you first look at this problem, obviously, you’re hoping to just let one or two people go. We had some people that were laid off and then some people, just because it was just a tumultuous time at the company, some people ended up leaving on their own kind of before or after, just along with the tide. I think we had eight people that left. The other, maybe, six layoffs and two people leaving, or something like that.
Rob: Yeah. How big of a morale blow is that to the rest of the team? Do you feel like they recovered quickly or were they pretty devastated?
Laura: It’s interesting because I think it was kind of an emotional rollercoaster for everyone. It’s devastating, and at the same time this means, “Oh, the company’s going to make it.” They have the same numbers. They’re like, “Oh, this is the choice that the company needs to make in order for me to still have a job and the company to still survive.” Obviously, it’s always really hard when that happens, but we were really focused on rebuilding with the team that remained.
Rob: Yeah. I think I’ve been at companies, either worked for them or had colleagues at companies who’ve been laid off, and I think such a big piece of the reaction and the morale comes down to the trust of the leadership. Do they trust the CEO? Do they trust you, Laura, when you’re saying, “This is why. This is what we’ve done. Now, we’re going to move forward and we’re going to survive.” Do they think that somehow you manufactured it? Or made it up? That you haven’t cut deep enough or that you cut too deep or whatever. That’s when there’s this big toxicity comes about. It’s definitely going to be an emotional rollercoaster if they recovered. It shows that you had a good relationship with your team.
Laura: Yeah, I think so. We were able to still have a few people in each department. It didn’t feel like, “And I’m the only engineer now. This is not going to work out.” I think it felt to people like, “Okay, I can see how the company can continue to survive and grow with the team we have left.” Luckily, it wasn’t so dire that it felt ridiculous.
Rob: Yeah. Was that in 2018?
Laura: Yes. In early 2018, yes, that we made the layoffs.
Rob: Okay. You were still acting CEO at that point?
Laura: Yes, although I was actually on maternity leave. Now, I’m remembering the timing. I guess my daughter had just been born when we actually did the actual cut. We have been doing the math and planning up to that. I was actually technically on maternity leave when we had to do the layoffs. I just hopped on and wrote everyone personal emails because the actual conversation happened with our hiring manager anyway. There was only one person who’s a leadership level that we had to layoff, so I had a conversation with them. Weirdly, I didn’t do a lot of the actual conversations.
Rob: Sure. That’s still baller for having a baby and two days later, being involved. It’s tough when the timing works at that way.
Laura: It’s not ideal.
Rob: Yeah, not at all. It’s got to be stressful. Did it take a toll on you personally? Like your psyche and such?
Laura: It was a relief because it made it clear that the company was going to make it. I don’t mean to say that disrespectfully to anyone who’s listening who is working on ur team. It was a very hard decision, but the day that it actually happened, it was a relief to get it over with, get it done, and be like, “Okay. Now, I can move forward.”
Rob: Yeah. Some time after this, you decided to start another company called Ropig. When was that? That was probably mid-2018, I’m guessing.
Laura: I’ve never put the timelines of these things side by side in this way. I think there’s sort of separate compartments in my head, but now that we’re going to put them side by side, that sounds crazy. It’s a lot of tumultuous things happened all in the same year. Ropig launched in March 2018.
Rob: Got it, okay. Launched, meaning, the website went live, product was live, people could use it?
Laura: Launched, meaning the product started taking customers. We’ve actually been working on it for about a year prior to that.
Rob: Okay. You were doing both of these then?
Rob: You were working on both. Ropig was alert management for dev teams. Is that right?
Laura: Yes, exactly.
Rob: Obviously, the punchline—the jump to it—is that you decided to shut it down pretty quickly after launching. Let’s talk through that a bit. I know that you actually raised funds for this. Was that a first? Had you raised an angel round before?
Laura: That was a first. I had never raised money before Ropig.
Rob: Okay. How did you go about that? Did you have a network of people? Did you have to go to […] road and hit the angle groups?
Laura: We raised money in January of 2018. My daughter was born in June of 2018. I was being visibly pregnant when we were raising money. I was like, “I’m pregnant. I don’t want to travel. I don’t want to do it.” I decided that I’m going to get this done my way. By this point, I’ve been an entrepreneur for, I guess, 11 or 12 years now. I’ve built up a pretty strong network. I felt pretty confident that I can raise a small round with my own network. I’m like, “I’m not going to travel. I’m not going to go to San Francisco. I am just going to ask people that I know if they would like to invest in my company.” I looked up the numbers in preparing for this.
I think I contacted about 300 people. These were all people that I have personal relationships with. Some were just acquaintances, but people that I actually knew, not professional investors, people that are either just entrepreneurs, or people who work in tech, or people that maybe did some investing on the side. 300 people just got emailed or texted or Facebook messaged or whatever by me saying, “Here’s what I’m doing. Do you want to invest?”
Rob: Right. You ended up raising $320,000 on a safe? The audience knows, you emailed me. You and I actually had an email thread about Ropig. The only reason that I didn’t invest was because, well, I guess there were two, one was because your pre revenue. I don’t, in general, tend to invest in pre revenue companies just because there’s so much risk. But the second was that it was such a new space. I have confidence in you as the founder that you’re going to execute on it but my gut said it was going to be this very long, very arduous, very painful journey. You would get there eventually, but you didn’t have an audience in the space. I didn’t feel like you had […]. That’s what you and I talked about it in the email. Was that on your radar? Obviously, I must not have been the only person that mentioned that.
Laura: Yeah. A big advantage that I had in MeetEdgar is it’s a social media tool. I had already been in the social media space for years prior doing courses and consulting. I’d already built an audience in that space. With Ropig, the tool was systems admin, people, and developers. It’s not me. I’m not a developer. I’m not in that space. I’m not in that world. Not only do I have no lists built up but I can’t speak at that conference. I can’t go to those meetups. It’s not my thing, it’s not my langauge.
I do think that a big reason why Ropig didn’t work out is that I underestimated how much value I had and continue to give to Edgar in that way. Because with Ropig, I just thought, “Okay, I know I can’t do that but I can just hire people who can,” which is totally a viable strategy and a lot of people do that, but I didn’t raised enough money to do that. The problem was the strategy that I had in my head was really a much better fit for a company that was going to raise a lot of money. Even though I was raising this $300K—that ended up being $320K—I did not want to raise more money after that. I did not want to do big fundraising, I did not want to do VC, I did not want to do any of it. In retrospect, the game plan that Ropig needed to succeed was just not a match for only having a small amount of fundraising.
Rob: Yeah. You didn’t want to do the Series A, the shuffle, and you kind of just want to do this single seed round. I think call-in from customer.io calls it’s fundstrapping, is raising this single round to hit escape velocity. That makes sense. That actually fits my perspective of who you are as an entrepreneur. You are much more a bootstrapper than someone who raises. But raising that one round, really these days, it’s not against bootstrapping ethos anymore. You know what I mean? In some spaces like this one, the alert management tool. It competed with PagerDuty. Is that a good comparison? It’s a very crowded space with a lot of funding in it. It’s competitive. You’re going to need some superpower to get in there. You were saying that you didn’t raised enough money to hire someone to be an influencer. Is that what you were saying?
Laura: Yeah. That’s part of it. I just didn’t raised enough money for any of it. You mentioned that it’s a very competitive space, but it’s also a really expensive tool to build. My husband Chris is a developer. He’s the cofounder of the tool. He also, for MeetEdgar, built the initial version of the tool. He could not build alone, Ropig. It’s not a tool that you can just sit-down-in-your-free time-in-some-weekends-build. We had already spent, we decided to invest our own money, $500,000 of our own money into this project.
By the time we raised the money, we already had a fulltime team of developers just to get the initial product out. It’s alert management. You can’t be like, “It’ll probably work sometimes. It will get most of your alerts.” It’s just not the type of thing that you can have sort of shoddy, half-baked. Also, a lot of the advice is like, “Just ship people a minimum version.” No one really wants a minimum to manage some of their alerts. It just doesn’t make sense. You can’t really just test out some sort of halfway done thing. Like all the advice, “Pretend you have software, but then just do it yourself behind the scenes.”
Rob: You can’t do that with this. This breaks a lot of those rules. One of the reasons is because it’s so competitive in the market. It’s fair. It’s somewhat mature, I would say. An MVP in this market, very very different than an MVP in whatever—the VR space or something that’s still a nascent market. That makes a lot of sense.
Laura: Yeah. I think, that was another thing I underestimated because when we launched MeetEdgar, we had funded competitors. HootSuite had raised a ton of money. We’ve still been able to be a successful company in spite of that. I think I was kind of, “Oh, funded competitors. I can do that. I’ve done that before.” But MeetEdgar is also something that Chris could build on his own. The first version, he just built on his own in his spare time. If we don’t send out a tweet, it’s okay. No one’s business falls apart. It’s just a very different space.
Basically, what happened is once we raised that $320K, so we raised the money in January, we had our launch in March. The launch was just like a dud. We put it out there. We opened the doors and not a single person paid for it. Some people had free accounts, but not a single human paid for it which is a very bad outcome—in case anyone’s unclear—not what you’re looking for a launch. We’re going to have to make some big changes if this is going to work.
Rob: How does that feel? You’re a successful founder. You’re a serial entrepreneur. You’ve built up wildly successful online training course and business around training folks for social media. Then you launch MeetEdgar to one of the bootstrapping Cinderella stories, in my opinion, of getting some figures in a year, and then you launch this third app. At this point, you know what you’re doing. How did that feel when it just went completely sideways?
Laura: I was just like, “We picked the wrong market.” That was something we had been worried about when we were developing it. Basically, the whole idea with Ropig is that there are a lot of smaller companies like us with MeetEdgar where we were using PagerDuty but it really wasn’t designed for us at all. Then we saw a lot of other smaller companies on our space that just didn’t use an alert management tool and sort of dug through the logs manually when they had time.
If you look at the Ropig website or look, I don’t know if it’ll be up when people are listening to this, but we had a whole page. The whole point with the page, it said on the headline, “Why would I need an alert management tool?” I look at that now and I’m like, “Duh!” The fact that I had to build that page should have been a really bad sign. Why would I need an alert management tool? Why are you looking in this website. You’re clearly not going to find anything.
I think it’s possible. Obviously, there’s companies that have done it to introduce people to a new idea, a new concept. Again, maybe none would fit with bootstrapping. A fit with bootstrapping is, “You’re already using a competitor, let me show you how we do something different that makes us so much better fit for you.” I think this hurdle of, “You don’t think you need an alert management tool, but we’re going to show you why we do.” It was a failed experiment.
Rob: Yeah, that makes a lot of sense. That’s the thing with mature markets. You know that PagerDuty wants to expand that market, so they’re probably already putting a bunch of time, effort, and money into trying to convert everyone they can away from digging through logs. I’m just imagining, there is only so much blood that you can squeeze out of that turnip. They’ve already done most of that, probably.
Laura: Again. It’s just expensive. PagerDuty is geared more towards enterprise. Maybe there’s a spot in the market here. Maybe if we have spent another year going to every meetup around the world, and tweaking our product to get a better product market fit, maybe it could’ve happened. It was like that small fundraised combined with a dud launch was like, “This is bad.” Because all of our financial projections were like, “We’re going to be at 1 million revenue in the first year because that’s what happened with Edgar. Isn’t that how all businesses go?”
Rob: Yeah, oh man. You launched in March. You basically stopped operations a couple months later. It was a very quick decision that this wasn’t going to work.
Laura: Yeah. In May, we hadn’t told our investors we are shutting down. Basically, what happened is we launched. It kept going badly obviously because no major changes happened. Again, this coincides with my maternity leave because my daughter was born in June. My cofounder was my husband, also a parent to this baby who’s going to be born. It is not a time where we’re like, “We’re going to work 80-hour weeks now to try to make this work by ourselves.” All the factors in this equation do not add up. I’m just going to shut the machine down so that we can take our expenses to zero. Like I said, we had full time developers on the team. Some of them we were able to move back to Edgar.
It’s funny, you asked me if I’ve done layoffs, I was like, “No, but actually I had.” It’s funny because I didn’t even think of that that was a layoff. It was only one person because the other two we could move over to Edgar. Anyway, I actually had done layoff before. We let the development team go. We shutdown the tools. We kicked off our free users so our costs for running the tool would go to zero. I’m just like, “I’m going to take a few months of maternity leave. Then I’m just going to figure out what to do when I come back.” I don’t know what to do with this. I know we need to stop hemorrhaging money for our no customers and no time to work on this. I’m just going to stop it.
Rob: Put the breaks on. 2018 was not a good year for you. It was great because you had a baby but all the other stuff it sounds like, “Oh, good Lord.” Then you go on maternity leave, you must have been thinking about it for solid two months stressing about it, I imagined. Was it pretty stressful?
Laura: It was stressful. This is what’s interesting about the fundraising. If I hadn’t raised money, it would not have been stressful. For me, that was the element that made it stressful because I was so worried about letting other people down. When you raise money, you paint this picture of how successful it’s going to be which obviously, you believe, especially because all of my investors were friends. I had this dream of writing huge checks to my friends. What would be more fun than that?
If I didn’t have investors, I think, I would have been just like, “This sucks. I don’t want to do this. I’m just shutting it down.” After the launch that didn’t go well, I realized that I just did not have the same passion for this product. This product was much more, “Okay, we see a problem and we think we have the solution for that problem. Maybe there could be a business here.” Our audience with MeetEdgar, “I love entrepreneurs. I love entrepreneurs. That is my world. I love listening to podcasts like this one. I talk about entrepreneurs. I love reading books about it.” That’s our customers that we support at MeetEdgar, so I can live in that world. I have no interest in living in systems administration world. It’s just really not interesting to me at all. If I didn’t have the investors I think I would’ve just been like, “Yeah, this is really not for me.” But because I had the investors, I felt this pressure, “How can I make this work? I need to make this work?”
Rob: Yeah, I totally get that. Had you burned through all of the investor money by that point? Or there’s just some left?
Laura: That was the good news. We had not burned through much of it at all. The launch, we didn’t do paid advertising or anything. The only cost that we had incurred was just paying the developers for that few more months. When we put the breaks on everything, we had the 75% of the investors’ money still in the bank.
Rob: Yeah, okay. That’s a good thing then. How did you finally make the decision? Obviously, you shut it down. I’m assuming you returned the money to investors. How did you come to that? Was it really just like, “It’s going to take too long. I’m not interested in this space.” Talking to system administrators don’t have the influence, was it just all those factors that eventually led to that?
Laura: Yes. I was thinking, “What’s going to happen with this? How can I make it work?” Any path to make it work clearly involved raising more money—a lot more money. At this point, you can’t just keep hitting people up for another $200K or $300K. I would really need to do institutional fundraising. I had got a glimpse of institutional fundraising doing my friends and family fundraising. By the way, not family in my case, just friends. I don’t have any family with money. Friends and friends fundraising. There’s no rich uncle, unfortunately. I wish.
I had met with some institutional people in Austin and San Francisco, had phone calls. I think as bootstrappers, we have this really negative view of institutional money. It was all true with the conversations that I had. Every horrible stereotype I had about traditional VC was just 100% confirmed. They would ask me how big the business was going to be. They were not interested unless it was an ubersize situation. They were not interested in anything less than like, “I’m going to keep raising money, as much money as I possibly can, as fast as I possibly can.” That was the path that they wanted to see. They’re not interested in profitability, just interested in growth. Because I have seen that little glimpse, I was like, “No, this is not for me. No way.”
The thing that finally convinced me to make the decision, I was talking to a friend of mine, and I’m like, “I really think it’s going to be really hard. I don’t know what to do, but I have this duty to my investors.” He said, “You have a fiduciary responsibility to your investors, to return as much of their money as possible. Knowing everything that you know, if you were an investor, would you ask to just get your money back and get out? Or would you want to continue?” I said, “If I were an investor and I knew everything that I know from the inside, I would want to get out.” I would say, “Thanks, give me my money back. I don’t think this is going to work. I’m out.'” That conversation just absolved me of all of my guilt and stress because it made me see that shutting down was being responsible to my investors.
Rob: Yeah. It’s crazy how a conversation or a single question can get your whole mindset to shift and make a decision. It sounds like you knew the right answer too, but you’re burdened by this other piece, and it was the fact that you felt an obligation to your investors. Suddenly it was, “Wait, the obligation actually goes better.” You actually serve them better if you make the decision you already know you want to make.
Rob: That’s fascinating. That’s a good friend. He’s a good friend to keep around. He’s a keeper.
Laura: He is. It was November—I looked up the timeline—it was November 9th that I sent the email to investors saying, “I decided to shutdown and here’s why. You will be getting 75% of your money back.” That felt really good too.
Rob: How did the investors react? Were they supportive? These are folks that you knew, they were at least acquaintances or friends, was there any negative reaction to it or was it mostly like, “Sorry, this sucks. Thanks for the money,” type of thing?
Laura: It was very positive. People said, “It’s very unusual to be able to make this call and return the money. I really respect you doing that instead of just trying to burden through every last dollar.” People were very kind and very supportive which I’m very grateful for.
Rob: Yeah, that’s cool. I’ve found that with angels—angels are investing their own money—they just tend to be more relaxed. I’ve done about dozens of angel investments. I’m nowhere near the VC level institutional money manager in terms of how they view these stuff. I think it’s an interesting callback because you were saying the VC stuff you heard about is true, like the stereotypes you’ve heard are true. That’s why I believe that this world needs funds like Indie.vc and TinySeed to be that in between where we can write checks.
Now, maybe we could’ve written a check as much as you needed. You really did need a legit Series A to compete in the space, but there is an option for people to take money where it doesn’t come with that same stereotypical stigma of, “No, you have to be $100 million. How are you going to get there in three years or less? How are you going to hire 20 people a month?” All this stuff. You and I both know that we can build businesses and help those eyerollable constraints that venture capitalists are going to put on it.
Laura: Yeah. All the investors knew what they were in for. I hadn’t tricked anyone into thinking this was a get-rich-quick scheme. Anyone can afford to lose the money. It was just one of those lessons of always how important it is to be in integrity. I felt like I’ve been in integrity throughout the whole process. I’m still in integrity when I ended the process.
Rob: Yeah, for sure. Laura, we’ve covered quite a bit in this interview. I really appreciate you taking this walkdown bad memory lane of 2018. The positive end of the story is Edgar is doing really well after all the tumult that you went through with it.
Laura: Yeah. We are growing again. We’ve had growth every month in 2019 which has felt amazing. It’s just so good for the team after having such a hard time for such a longtime. I mentioned that it has forced us to be more innovative. I feel like it’s made me a new entrepreneur because I had never been through anything really hard before as an entrepreneur in retrospect. I thought I had, I had little ups and downs, but I had never had, “Okay, we have to do layoffs. We’ve lost a huge amount of our customer base. I’m shutting down this other company,” all happening at the same time.
It’s true that it makes you a lot smarter because you no longer have these false assumption that everything would always go up. You know that if you’re in this for the long haul, you’ll have ups and downs, and that’s okay. It’s not a disaster when something goes wrong. It doesn’t mean that nothing will ever get better and that your company is over forever. I’m really glad that I’ve had this experience of proving that to myself.
Rob: You took several things that looked like absolute roadblocks and turn them into speedbumps that you drove over and to come out to the other side of that successful with the company that’s continuing to grow after all these years. It’s quite a testament to your chops as a founder.
Laura: Thank you.
Rob: Well, we’re going to wrap up today. If folks want to catch up with you, I see your website at lauraroeder.com. Obviously, if folks are looking to manage their social media, they can go to meetedgar.com to see what you’re up to there.
Laura: Yes. I’ll do a MeetEdgar plug. They can enter the coupon code PODCAST and get a free month of Edgar.
Rob: That sounds great. Thanks again, Laura. Thank you so much for coming on the show.
Laura: Thank you.
Rob: I hope you enjoyed my conversation with Laura Roeder. I was truly impressed and impacted by her ability to turn roadblocks into speedbumps, and just her fortitude and perseverance in getting through hard things. These are hard things that we face as founders. She really stepped up, made it happened, kept her company alive, and made hard decisions about the next companies. Really impressive.
With that, we’ll wrap for the day. If you have a question for this show, call our voicemail number at 888-801-9690 or email us at firstname.lastname@example.org. Our theme music is an excerpt from We’re Outta Control by MoOt. It’s 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.
In this episode of Startups For The Rest Of US, Rob does a Founder Hotseat interview with Matt Wensing of SimSaaS. They talk about how to develop a strong cadence of work as a one person company.
Items mentioned in this episode:
Rob: Welcome to this week’s episode of Startups For The Rest Of Us. I’m your host Rob Walling. On the show, we talk about building startups in an organic, sustainable fashion, in a way that allows you to build yourself a better life. I think that startup should provide you with freedom, and purpose, and help you maintain healthy relationships. That’s what we talk about on Startups For The Rest Of Us, that’s why we call it, “For the rest of us.” It’s not the traditional Silicon Valley venture-backed startup path. We have several different formats for our shows. Sometimes we do a lot of tactics, and we teach ideas and thoughts that we’re thinking about; sometimes we interview interesting founders, we answer a lot of listener questions.
One format that we’ve only done a handful of times, and it’s been a few years since we have, is one called the founder hot seat. The founder hot seat is where we bring a founder, live on the show, and we talk through an issue that they’re thinking about or that they’re facing in their business. Sometimes, this is a marketing approach. It’s something they’re wondering, whether they should do this approach or that, whether they should hire this person, this role, or whether they shouldn’t, and to just keep going on their way. There tend to be no easy answers to these questions, and that’s why we can spend 20, 30, 35 minutes talking through the pros and cons of it. Hopefully, the founder leaves with food for thought and perhaps an answer to what they’re looking for; hopefully, you as a listener, just hear two smart people trying to talk through an issue, and troubleshoot it, and think about the best way to proceed.
I’ve long said that being a founder is more than 50% mental. It’s managing your own psychology, and much of this is about making decisions with incomplete information. Today is episode 450 of the podcast. I’m doing a founder hot seat with Matt Wensing of SimSaaS. We’re going to be talking through how to make consistent, needle-moving progress on your startup. Welcome to the show, Matt.
Matt: Thanks, Rob. Great to be here.
Rob: Matt is the founder and former CEO of Riskpulse. Matt, this has the sexiest tagline I think I’ve ever heard for startup, “Multi factor, prescriptive analytics for supply chain performance.” Did you come up with that yourself?
Matt: I did not.
Rob: Some copywriter? No. It totally describes exactly what it does. Anyone who knows that they need it, I bet is like, “Yes, have some.” For someone like me, when I read it, I’m like, “I’m not sure what that actually means.”
Matt: You’re going to qualify out.
Rob: Yeah, no, that’s exactly right, that’s what you want in your subtitle, especially when you’re focused on such a tight niche. In plain English, do you want to describe what Riskpulse does?
Matt: Riskpulse really started out as a forecasting company focused on weather, and really over the last five or six years developed expertise in how trucks, and trains, and even ships, get products from manufacturing sites to market, so supply chain, broadly speaking, but transportation, and logistics more specifically. What we created—right about the same time as data science and machine learning were coming in vogue in the enterprise space—is a way for companies like Unilever, Anheuser-Busch, especially food and beverage, to essentially predict and decide much farther in advance than they used to be able to, how and when they want to ship their products.
If you can imagine manufacturing Hellmann’s Mayonnaise literally by the truckload, then asking yourself the question of, “What’s the best way to ship this from Chicago to Los Angeles?” That’s what Riskpulse helps those companies do now. It’s serving hundreds of companies like that, and actually doing that kind of forecasting days in advance for millions of shipments per year.
Rob: Does it use machine learning, artificial intelligence, whatever the buzz words are these days, you were kind of doing it before was in vogue, it sounded like.
Matt: Yeah, we were doing it before it was in vogue and really didn’t call it those things; we just called it forecasting, and in some cases just bringing two things together. But yes, it does use machine learning. Think of it like, if I go on Google Maps right now as a consumer, and I’m about to actually have a pretty long road trip this summer, if I punched in right now, “How long is it going to take me to get from here to Yellowstone National Park?” It’ll give me a time to get there, but it’s assuming that I never stop, that’s also assuming that it doesn’t really know what the traffic is going to be like a day from now, two days from now.
What Riskpulse does for those companies is that it lets them put in, “I’m shipping Chicago to Los Angeles next week.” It does try to look at all of the external factors like stops, and traffic, and weather, and congestion, and all those things that are outside of people’s control and give them a realistic estimate of when they’re going to arrive.
Rob: Love it. I love these vertical plays where—I guess you’re a horizontal, across industries—but I mean it’s very tight knit shift, it’s a successful SaaS app, and employs, how many folks work there?
Matt: 15 full-time.
Rob: I mean it’s non-trivial, it’s a full-on company at this point, and you actually don’t work there anymore, you found a CEO to take over your duties, is that right?
Matt: I did. I certainly have been thinking about—as I call it succession planning, the grandiose description—had been thinking about that. I have a family, enterprise SaaS is a pretty difficult lifestyle, and I’ve done it for five or six years at that point.
I was looking for a sales leader, ended up being introduced to a very experienced enterprise sales executive, who also had built and scaled companies from kind of the 10-50 headcount range, so very much the same year that we were about to hit. He worked as chief strategy officer with me for almost a year and a half, and then I realized, “This would make a really great opportunity to transition.” I told the board, the board was happy that I had come to that conclusion on my own.
There was no pressure or reason for them to tell me to do anything other than me just saying, “From a lifestyle standpoint, I think this would be best and frankly, for the business.” I really think of myself—in all the businesses that I’ve been a part of—as an owner first, as a shareholder first, and not as a, “I’m the CEO or I’m the CTO,” whatever the role is. That’s not actually what’s going to make you rich, and successful, or whatever your goals are; it’s making sure the right people are in the right places. As a shareholder, I just thought to myself, “Wow. I could have this person take over the CEO role.” I can take more of a sidecar seat which is what I did for about six months, and then ultimately, transitioned out to a board member and adviser at this point.
Rob: Yeah. That’s a mature viewpoint that I think a lot of founders don’t necessarily have naturally. It’s nice that you are able to think about it in that respect and to realize that if your lifestyle goals weren’t meeting up with your company that there’s—I’ve said on the podcast in the past—it’s like, “We started our own company so that we can be in control of that, and so that we can help ensure that we are enjoying what we do on a long term basis.” It’s cool that you’re able to transition away from that, and you started your next effort, which is a SaaS app called SimSaaS, and that’s really what we’re here to talk about today. You and I have gotten to know each other because you’re part of the Tiny Seed batch—the first Tiny Seed batch.
Something that really attracted us to what you were doing is the fact that you’re a repeat founder, that you’ve had success already, that you are a developer so you can build your own software early on; you’re good at product, you are really good at partnerships apparently which is what I discovered recently. Your business development skills, your sales skills, and even copy and positioning, you’re like that triple or quadruple threat, and that’s what attracted us to SimSaaS. SimSaaS, for those who don’t know, again, I just pulled your tagline off your side, but your headline says, “Great teams forecast early and often. Upgrade your gut feelings to forward-looking metrics,” and that is for folks running SaaS apps.
Matt: Yeah, that’s right. SimSaaS is an app that’s built for SaaS founders. What it’s really helping them do is take a forward-looking view of their business. Obviously, there are a lot of tools that are available, ProfitWell, ChartMogul, Baremetrics, etc. A lot of people just use Google Sheets to tally up their Stripe account data and figure out what their current MRR, RPU, and LTV, and all those metrics are.
What SimSaaS does is it takes those historical metrics, also puts them into a simulator, and then generates forward-looking trend of what all those numbers are going to be in the future. I built it, originally, as just a python script prototype a couple of years ago while I was running Riskpulse because I had investors asking me questions that were pretty difficult to answer just using Excel. Things like, “I see your MRR now. I see what your pipeline is but what if your sale cycles get longer? What if your receivables don’t come in when you think they’re going to come in? What if your pricing goes down? What if it goes up? How does your business look then?” Those are very fair questions when you’re going out to raise money, especially or even when you’re making decisions like hiring. It was very difficult to answer those just going back to Excel and saying, “Okay, I’m going to delay our revenue by three months because our sales cycles are longer.” It doesn’t really just work that way. It’s a lot more complicated.
Everything’s connected. We all know all these interdependencies in your business are just very complex. I realized that this is something where software could actually help us, “If I could just punch in six months instead of three months on my sales cycles and have it auto-generate a new forecast, that would be really handy,” that’s what it does. It’s connected to those data sets that the founders have. If you have a Baremetrics account, for example, you can connect that in, and it gives you a fresh and live forecast for all of your metrics as often as you need it.
Rob: Very cool. It sounds like you’re taking a machine learning AI stuff that you did and predictive analytics with Riskpulse and applied it to SaaS metrics. Is that a reasonable summary?
Matt: That is a reasonable summary. I have a friend of mine that’s at Riskpulse that teases me that I’m kind of a one trick pony. You take things, and you forecast. You rinse, wash, and repeat. It was amazing to me when I went out there and looked at the landscape, and I looked at the forecasting components because each of those tools that I mentioned does have some forecasting component to it, but they’re all really simple linear extrapolations of where you’re going to be next month based on this month.
I was kind of surprised that there was nothing more sophisticated than that and just as a quick beside my background, pretty deep involvement with weather forecasting. I actually gave a lightning talk at Business of Software last year, and one of the examples I used was hurricane forecasting. There is a forecast that says, “If the hurricane keeps moving exactly this much North and exactly this much West each day, this is where it will be,” but we all know now based on physics that the real world doesn’t work that way. I think SaaS companies also don’t work that way. There’s all kinds of chaos, and complexities, and sudden changes, that is why so oftentimes, our forecast end-up being wrong which is really frustrating for a founder, that’s what I’m addressing, and you’re right, I took a lot of my domain expertise, and I was able to apply it here.
Rob: Very cool. Today, we’re talking in the Tiny Seed Slack. I was asking, “Are you interested in coming on the show? Is there anything you’re kind of struggling with or really thinking about top-of-mind that we could try to think through to give you some clarity?” In your message, you said, “One thing I could talk about,” with some real conviction, “is how to develop a strong cadence of work as a company of one person managing a huge amount of context switching required to make consistent and needle moving progress on every front over a 12-month period.” In other words, the length of the Tiny Seed Accelerator. “How can I find that groove and sustain it?”
I like a couple of phrases in there, “Consistent needle moving progress,” I think that’s a powerful kind of statement. “On every front,” because we know there’s product, there’s marketing, and there’s sales, and there’s support, and there’s all these things over a 12-month period which is an extended period of time. Do you want to talk a little more about that? That was your summary of it, but what are you thinking about?
Matt: Going back to what you said earlier, which I’m very flattered that I’m capable of making some progress on a lot of different areas whether it’s business development, or marketing, or coding. The double-edged sword of that is that you can end up feeling like, “Am I supposed to just take it as it comes?” Meaning, “This week, these are the urgent and important things. Clearly, that’s the most important box to focus on, and I’m just going to tackle one item from each of those categories of work each week.”
What I’d like to do—I’m leading myself into this—but what I’d love to discover is, “You know what, I’m going to treat weeks or two weeks or months as my unit of work.” I hesitate to say sprint but if you want to think of it that way we can. I’m going to be a little bit more disciplined about, not just my daily routine but maybe even a week over week routine, or maybe even within a month that I set aside a week to work on a product that’s meeting-free because I can’t have that luxury. If I have a week where I know I’m going to have a bunch of meetings anyway, that’s my week to do sales, and business development, or partnerships.
It’s an awesome opportunity to have a year of a fun way to work on your startup, thanks to the Tiny Seed program. Just thinking about as a company of one especially—I can’t parallelize very well, there’s only one of me—How do I sort of acknowledge my own natural rhythms, my own lifestyle, but then also, just kind of the nature of each of these kinds of work and start trying some structures that could help me maybe on a one month view?
Rob: I think that’s important. I like that you’re asking the question of yourself. It shows that you have like an insight into how you work. Obviously, each of us has strengths and weaknesses, and until you identify those strengths, especially when you’re a company of one, I think that you’re at a disadvantage until you know yourself pretty well, until you know yourself as someone who either is that, I’d say, the more impulsive context switching founder who likes to bounce around and get a lot of work and a lot of things all at once.
I’ve worked with founders who do that. I’ve worked with founders who tend to focus too hard on one thing and get stuck on it. Whether it’s a mental perseveration or whether it’s, “I am going to work on this email. I’m going to work on this code until it’s done,” and then like 12 hours later they’re done and they’re like, “That was the whole work day,” and they got stuck on it. You strike me more as someone who moves around a lot; works on a lot of different things as they come up. Do you think that’s an accurate assessment?
Matt: I think that is. I think that’s probably what’s natural for me. People that know me from the Tiny Seed context are probably—I’m in the Slack a lot asking questions. I’m just naturally, a very curious person. I get a lot of enjoyment out of just knowledge; sometimes for knowledge’s sake, sometimes I just want to store it away and say, “That might come in handy later.” I do have a habit—I was about to qualify it as a bad habit—I’m just going to call it a habit for now. A natural habit to want to bounce around, look at a lot of things, have a lot of tabs open at the same time.
I’ve got to write real code. I’ve also got to think deeply about copying it. I think one thing that’s caused me to think about this more is just the deep work, I was going to say mantra, but that theme that’s come up quite a bit lately in the circles. I listen to podcasts, a lot, etc. where it was hard to actually get deep work done in a company of 15 people that were all on Slack at Riskpulse sometimes. Now, I can have this luxury of saying, “Okay, how would I do it differently knowing what I know now? How can I get myself into those groups without ignoring anything that might catch on fire.”
Rob: Yeah, totally. I think you have the luxury right now of, not only being a team of one, but you are still early enough that you don’t have 1000 customers all asking for things, things that are on fire per se. I think there’s a couple of things that come to mind right away. As much as I like Slack for the community, I’m only in may be in two or three Slack groups including that the Tiny Seed one that you and I are in together. I do not disturb Slack multiple times during the day kind of almost premeditated.
I know that my best times of day to work tend to be in the morning until about 11:00 AM or 11:30 PM, then I get really hungry because I don’t tend to eat breakfast. I eat and then I get a little sleepy, so then I will tend to do Slack in the early afternoon, and then I get this second wind. I either do not disturb Slack or I use email a lot more than I think some other people do these days because Slack has given us that. It gives us the instant communication and feedback. I think you could certainly have a team. We had a team at Drip with Slack and it wasn’t super noisy because we only used it for things that needed realtime.
If you didn’t need it realtime, as new people would start I would tell them “Hey, we value maker time,” like that’s a big thing. We’re a software company with three or four engineers out of this full-time team of eight, and then we have a couple of contractors. We were engineer-heavy because the product was such a focus. The way I communicated it was like, “Look, if you need to interrupt a developer, that’s fine. If you need to interrupt someone, that’s okay. But if you don’t need to, if you don’t need an answer within 20 or 30 minutes, send an email.” That was like an intro thing and that was the culture that I had set up at the company. How does that resonate with you? Does that seem crazy or does that seem like something that would be interesting?
Matt: Definitely interesting. I probably over estimate. I’m probably bad at judging whether or not things need to be real time just because of some of those habits. We signed up for HipChat first before Slack was a thing at Riskpulse. It was basically pretty noisy and pretty engaged. We, as a company, culturally had to try to enforce those maker times. Now, I’m self managing. Does that make sense? One crazy admission here is, I don’t think I’ve ever used Do Not Disturb on Slack. I think you’re probably just thinking I’m probably just a bad citizen where I’m ignoring people’s messages and they’re wondering, “You’ve got the green dot.” But certainly, that’s a great little tip.
One thing I wanted to jump off of as well is, I have a similar kind of natural rhythm in terms of my work. I am a very early riser. It’s been tough this Summer since the kids are out of school, everyone is staying up late. Typically, I get up at 4:45 AM or 4:55 AM and I’m at my desk with a cup of coffee after drinking some water by 5:00 AM or 5:15 AM. I have found that my coding abilities and my deep analytical work abilities are really that 5:00-10:00 AM period, which is five hours. It sounds like not much of a work day, but that is one thing I’ve noticed too. I can probably do myself a favor and hide from Slack during those times.
Rob: Yeah, I mean, I can see that five hours of straight work, that sounds like a tremendous amount of time. Think of all the people working at startups or companies, for that matter, that are running Slack and how often developers get interrupted. To have four or five hours of uninterrupted focus time to me, you can get two days of development done in that. Two days compared to just being part of a 20-person development team where stuff is flying all over the place, every minute you’re getting interrupted.
I think that’s plenty of time to get almost a full day’s worth of deep work done from 5:00-10:00 AM. If I were in your shoes, the fact that you’re online at 5:00 AM is awesome. I would say I’m the opposite. I wake up later and I’m tired when I wake up. I’m groggy for 30-40 minutes. I’m typically, at my computer by nine if I’m lucky. This isn’t about my habits, but it’s definitely not—I think you have a distinct advantage is what I’m saying.
One of the things I was going to talk about or wanted to bring up is, when you’re a single-person company or a very small team, I mentioned it earlier, but it’s so important to know your strengths, and to know your weaknesses. One of your strengths is deep work. It sounds like it or being able to write your own code I think is a big deal. Another one is that you’re online at five in the morning. That is a strength whether you realize it or not because I couldn’t do that. I would be trucked, I would get no work done, I would be worthless, I’d just be too tired.
Obviously, I think when you’re this small, you got to focus on strengths and you need to really forget your weaknesses or work around them. Ultimately, you can hire people to take over those or to cover those areas. Again, to come back to me, I don’t enjoy doing demos, I don’t enjoy sales like enterprise sales and all that stuff. It just doesn’t resonate with me and my personality, but it does with you. I would say the fact that you’re a developer who knows how to do sales and how to do these partnerships is another big strength and something that you can leverage over the course of this year.
Matt: Yeah. Two thoughts came to mind. Mikey Trafton, for those who don’t know, he’s one of the founders of Capital Factory here in Austin and he’s a frequent speaker at Business of Software that I’ve gotten to know fairly well. He has these categories of work or strengths and he talks about how you have a super power that is something that you’re insanely good at and for you, it’s kind of effortless. There’s this category of things that everyone has where they are really good at them, but they find it draining. You do it and every else looks at you and says, “Wow, you’re really good at that.” But at the end of the day, or if you do a lot of that, or right after you do that, you’re just kind of exhausted or maybe just worn down.
For me, interestingly enough, I do find that the deep work is that the coding, the design and some of the things I do in isolation are the first kind. They’re the things that I really feel energized afterwards. Enterprise sales, although I’ve done it and I’ve closed 6-figure deals consistently in the past, they are really draining I find. The demos, I can totally relate to that. It’s kind of funny, it’s like one of those things where, “Yes, I can do it, but I do find it to be difficult.” I’ve learned in the past, the one thing I can’t do is I can’t do one of those and then get into any kind of deep work. After I do that, I’m ready to be done.
Rob: That’s really good to know, right? All your demo should be after 10 or 11 in the morning. That’s something so good to know about your daily cadence. That’s what we’re talking about here right? It’s is to bring it back, how do you make consistent needle moving progress on your business, and it’s showing up every day, and having a schedule that is as ideal for you as possible. I feel like if you could not check email—this is very hard to do—but if you could not check email or Slack before you start your 5:00 AM sprint in essence, I’ve never been able to do that I will admit. I always check email first thing in the morning. I always have. I don’t know if I will break that habit.
I think, in a perfect world, you wouldn’t have the distraction, but sometimes you just need to feel—I need to feel okay that nothing’s on fire, or if there’s somebody who needs a quick answer—if they’re relying on me that I get it out to them quickly. But sometimes of course, it takes you off track, you want to do 15-20 minutes of email instead of your deep work. That’s kind of the sacrifice that you have to make if you do that.
Matt: Yeah. I think I’m the same way. I’ll check it first, but I have an incredible ability to unless it’s actually on fire, to just kind of ignore it and wait, but then I get that closure that, “Nah, everything is good.” I think what I would say next is, if we can zoom up one level or going up one level and looking at a week or a month and asking—I’ve got in a program let’s say a 10 months remaining not that anything magical necessarily happens at that time. We’re not working towards a demo day per se, but if those are actually my units, so a daily routine sounds pretty solid. How do you think about juggling or moving between marketing, sales, product development, design, and I can think of one example. You really shouldn’t be building things before you design them. Jumping and writing a bunch of code might not be the best thing to do. If you look at it a week or even a month context, what does that look like?
Rob: Yeah, how do we think through that? It’s fascinating because so many founders at your stage don’t even think about that. I feel like it’s the fact that you have already grown a company to the level of Riskpulse that lead you to think about the longer time frame. I honestly, think it’s less important in these early days, but it will quickly become more important as you get even a couple months down.
Because right now you could literally think just a couple days out or a week out tops and be like, “What are my goals this week? It’s to ship this feature and to get another customer, another five customers,” or whatever the number is, but you’re going to hit a point in the next you know 12 months where you do have to start thinking just a little further. At first, you think two weeks out and then you think four weeks out. Then of course, as you get bigger, you have to think two months out because you have all these people working on things and they need to know where they’re going. When you have 15, 20 people, your horizon has to go out further.
At your stage, I don’t know how much time I would spend thinking about a month out, because it really does feel like a long time given how quickly things are changing right now. I feel like there’s all these friends you can be fighting on, or all these friends you can be switching to and from, there’s development, and there’s design as you said, there’s sales, there’s marketing, there’s kind of internal operations, there’s processes, there’s all this stuff, I feel like right now, just moving the product forward, and doing sales, and/or business development. I almost kind of count that as sales, but I guess technically, it’s more marketing because it’s generating leads that you would sell.
Almost all the other fronts can go by the wayside for the next few months, which is hard to do, but that’s how I would mentally prioritize them right now. Because if you’re not building features, or getting new people using the product, everything else is substantially less important. Does it feel that way?
Matt: It does. If I look back the last few months, in the way that I started SimSaaS, is I really did the new classics soft launch on Twitter, sharing it with all my followers, and it got a good amount of interest. What I ended up doing was having this kind of open season where anybody could sign up, and I learned a lot, and then I essentially shut it back down into a private beta where now I have a handful of folks that I really care what their experiences, they’re definitely my target market, and I’m trying to get them signed up, willingness to pay, that’s the focus.
The lead gen part is kind of just doing its own thing right now, people are opening their email address saying, “I’m interested early access,” sometimes filling out a survey. That feels really good to just be automated. I don’t know if those folks are going to get bored of waiting around for me to get back to them, but I agree, for the next few months, I should just be focusing on a bottoms up acquisition of happiness of these handful of people.
If I do put my second time founder hat back on though, I do have an end-in-view, which is half by the end of third quarter of this year, which is I think a quarter, because of the company enterprise faced. By the end of September, I do want to launch self-service, and I’m not self-service now, so I do think about what do I need to do to get to that point. That is an interesting blend of products, and sales.
Rob: Yeah, for sure. I think to touch on SimSaaS, specifically, you’re in a unique position where you just have incoming interest, and you’re in a unique position that—fairly unique—where you don’t have to do a bunch of marketing right now. Because typically, the advice that I would give right now is, you have to be focused on marketing, and product, those to be the two.
The level of inbound interest you have, and how quickly it spreads, because it is this insular SaaS community, it’s like we all talk to one another, and you appear on one podcasts, and then everybody has heard of you, and then you apply it so well to so many of these companies that I do think, I mean, that’s what I was specifically saying its product, because you’re trying to push more features to keep the customers you have a happy, and its sales to land your inbound prospects as folks who are going to use it. But marketing for now is taking care of itself.
You obviously will hit a point where that changes, but I wouldn’t be thinking out that far right now, because I think that’s 6-2 months out. By the time you get there, you’ll be at such a different place product-wise, and revenue-wise, that you can either decide if you want to go attack marketing, you’d do it if you want to hire it out, you’ll do it because you’ll have the budget. But that’s something as you get closer, I think, you’re going to now. I don’t think you need to be preparing for that yet because it’s a way out.
I even think, what month is it, it’s June, and you want self-serve by September, which is three-ish, three-and-half months out. I mean, I would ask two questions about that, one, why do you want to go self-serve by then? And two, what level of planning does that take, given the fact that you had all the code, and do the design, could you hammer that out, literally in the last two weeks of September. If that still the right decision when you get there? It’s like just in time decision making. It sounds a little flippant, again, if you’ve worked at a 60-person company, it’s like, “You can’t possibly make a decision that close to the wire, because you got to get product marketing on board,” you don’t need to do any of that. I would almost push that absolute decision off until the last moment where it’s like, “Yes, now that’s what I have to do. Now, I’m going to build this.” But tell me if that resonates or if that sounds like, “Nope, I think that’s a bad call and here’s why.”
Matt: This is interesting. I have used SimSaaS to forecast SimSaaS. Self-service, what is it? It’s a way to get more, because I’m going to go with trials with credit cards, and if you think about self-service, it’s really just a way to remove all the friction because I’d love to think it’ll be zero percent friction, but it will remove me as a gatekeeper for people to get on board. Interestingly enough, do I need it by then or is that just kind of artificial? That’s a great question, or am I imposing that on myself, because I think I need it.
One thing that is interesting, I’ll say, is that out of the early adopters I already have, there is a fair amount of investors, or mentors, or even just experienced founders who are already referring other folks to it. Lead volume, again, getting back to marketing is not a problem, do I need to undo myself as gatekeeper? Maybe, what I should be thinking is also taking a bottoms up approach to that and saying, “I am on boarding folks manually right now.” Every time I do that, I just get more efficient at it somehow, and let my own sort of irritation with having to do things manually drive me to make it ultimately self-service, but it doesn’t have to be necessarily.
Rob: There are a number of products now, Superhuman is the example everybody brings up, but there aren’t many products of stay invite only for a very long time. Some do it intentionally for the scarcity, but others don’t. I think, as a single founder, you have a pretty good, almost excuse or a reason to. As long as you’re not finding that more of these leads are waiting so long that they’re degrading, and they’re not converting, because they’ve been set in the queue for too long. I think setting in an arbitrary date for it that’s three and a half months out might be premature.
If you get to the point where it’s like, “No, this is just too much volume,” and you need to automate, then you can do it earlier, or you could do it later. But I don’t feel so strongly about having to have it done by the end of September. I was thinking about it as we’re talking about how the onboarding is somewhat manual, I love the idea of trying to automate a little more each time. Also, hiring a customer success person, if it literally is just light sales, like it’s inbound warm leads who need you to walk them through the product a little bit, give them a little bit of a demo, show them how to use it, get them set up, that’s a customer success role, and that is not that hard to fill, and it’s not that expensive either.
Could that be something that’s a better option, even if it’s a part-time person, you give them 10 or 20 hours a week, starting at a month from now? Does that shape how things happen because now you have someone who’s on your team learning the product, and you’re not in as much of a hurry now to do self-service especially if they’re converting, right?
Matt: Yeah, that’s interesting. I think there’s an open question of how zero-touch any of the stuff can be these days. I mean, I know that there’s 1% say any amount of human touch sales involvement, lifts your ACVs, lift your attention, it’s just a good thing if people want to have a relationship with your company, and that would feed that. I’ve been there, that’s the playbook I’ve run before. I think the other one, which is the company of one, maybe, let’s say to a fault, but even more strict is, now that’s all going to be automated in the product. I don’t know which one’s the right approach.
Rob: I was going to ask you, which one do you want to do? Because the right approach, given that you’re building a company for you, and you want to grow and stuff, but that’s going to come. You have an opportunity here. Does bringing in customer success person on feel like, “No. I’m not interested in it. I’ve already run that playbook. I really do want to try to give it a first crack at spending timing, getting on boarding up, and making it truly self-service.” Is that more interesting to you? Because that certainly could be your first crack at that, and then if it isn’t working out the way you want, you can always backfill it.
Matt: Yeah, I think it’s probably the more, to me, it feels like the more ambitious one. I don’t know that I would say it’s the right one though; I do have my doubts as to whether or not that’s really the right way to do it. I mean, especially when you’re dealing with a financial app, and it’s pretty complex. Having a human there to set you up, and to take you through that, that’s a pretty well-worn path, and we know it works. Maybe that is what I do is, I push as far as I can, and then see if I basically, hit a wall where, “No, there’s that 5% more, but then I can scope that down to exactly what I need.”
Rob: Right, that’s what I was thinking. Because in the early days of Drip, I really want everything to be self-service, and that’s just a lot of apps I had; pretty much all the apps I had before that were almost all self-service, and we built a lot of onboarding, and it worked well, and we had good growth. But I definitely found the people who are willing to pay us more money—the several hundred dollars a month clients—which obviously isn’t even that big. They really wanted to talk to somebody, and that was where I eventually got to a breaking point because I was doing demos, and talking with them.
As I said, I don’t enjoy it, not much like you. I’m good at it, but it wasn’t a thing that gave me life. We eventually did hire someone, and it was the right decision, but I had to give it a shot as the self-service first because we wanted to see if we could truly make that work. Again, it did work, it’s just the larger customers benefited a lot more from having that high touch.
Matt: I think that maybe the reality. I could see self-service, it does work for so many apps, and instances where the product’s a little bit more, category especially, I think that’s actually something I keep coming back to, and that might be just the reality is that this is a new product, metrics is the category. But the idea that you’re connecting all the state, and you’re doing all these forecastings, not having a human at all to explain what this is, how it works, and when to use it, it might not be realistic, and actually might create some glue and loyalty to have that involvement, which is what I’m providing right now. I think this is a good kind of re-scoping of where I want to be by the end of September.
Rob: Yeah, and it’s good to have goals. I know you’re driven and trying to think out a few months because you’re thinking where you want to be, and you don’t want to stand still. Some folks are super goal-oriented and motivated, and then for others, I think it de-motivates them. It sounds like you want to know where the puck is going, and where you’re headed, at your stage, I feel like dates might not be helpful. Unless it really is motivating to you. I should probably state that differently, for me one, when I’m that early in an app, or that early in the company’s development, there are too many variables for me to possibly throw a day out of when something should happen.
Matt: There’s kind of two ways to get to that date: you either change the definition of success or you move the dates, and you know you can timebox things. I’ll change the definition of self-service, not to the point of cheating, but I’ll change it to mean, “They can sell service, but that’s not what I want them to do, maybe there’s a way around that.” But yeah, I think I am pretty driven from the standpoint of reverse engineering, kind of where I want to be.
I think that you’re right. It’s like I’m trying to connect lightning from two sides here, I mean, that’s where I’m at. I think it creates a mental frame for me to just go, “Okay, it’s bottoms up, bottoms up. It’s the people I’m working with right now.” That’s why I knew last week was going to be sales and marketing heavy week. I scheduled a lot of meetings for that, and essentially, knew that I wasn’t going to get a lot of deep work done. But I kept the slate clean for this week and knowing that I needed to shift gears. Then that’s the other skill I want to develop is just getting myself in a mode, and being able to say no to things that are going to knock me off.
Rob: Yeah, I was going to bring that up, maybe as a last point a conversation because we’re running long on time, but I was coming back to cadence, which I believe you mentioned or at least—in your Slack, I was thinking cadence, and I was going to ask, “Do you do better with a one day on one day off cadence?” Or, “Would a one week on, one week off cadence work?” It sounds like that’s what you tried recently is kind of like the BD sales a week, and then a development week. Because I feel like most of us tend to bounce around, and handle whatever is the next thing that we think is most important.
But if you are able to say no, whether it’s just for that one work day, like I’m going to say no to everything that is not pushing the product forward in some form or fashion, and then the next day, “I’m going to push it—I didn’t say no to everything that’s not pushing the sales, like revenue forward in some form or fashion,” whether that’s one day or one week, I think that most of us are helped by that.
I’m surprised that you did it for a whole week, or I’m impressed, I should say, that you were able to do that for a whole week because that would be hard for me to do. Do you feel like that was successful, and that’s something you want to continue to do? Or was it like, “It was too long. I should probably only do three-day sprint,” so to speak?
Matt: Yeah, I think it will shorten naturally to three or four days a week to focus on something, and then you’ve got your bonus day to catch all the stuff where somebody just says, “Look, I can’t meet with you next week.” I think I’d like to keep trying that. That would be a good way to kind of follow up here and see, “This is the product development week for me then I’m going on vacation.” That’ll naturally lend itself to maybe just checking email, and following up on sales related things, and then we’ll have to see which mode I fall into when I get back, or maybe I shouldn’t fall into one, I should pick one.
Rob: YYeah, that’s right. You sent me a tweet from James Clear, and many people may know James Clear as an author, and blogger about kind of forming good habits, and motivation, and stuff. His tweet said, “Most people need consistency more than they need intensity,” and he says, “Intensity is running a marathon, writing a book in 30 days, or a silent meditation retreat. Consistency is not missing workout for two years, writing every week, or daily silence. Intensity makes a good story; consistency makes progress.” I really like that tweet, and I’m glad you sent over.
It reminds me of a quote that I’ve used over and over, I’ve written a blog post on it, there’s an episode of this podcast titled this, but it’s a quote from Steve Martin. He wrote it in his autobiography. The quote is, “It’s easy to be great, it’s hard to be consistent.” He’s a standup comedian, and he said, he would come to the shows, and he would watch a comedian just kill it one night, just blow the doors off, but that comedian couldn’t do it every night and that was the challenge. He said, “It is easy to be good once in awhile,” and that’s what James Clear is talk about with intensity, it’s easy to be great, but how do you show every day, how do not have the splashy tech-crunch launch or this big one time hit, where it’s not a sustainable thing.
We see a lot in the startup space, we see it in pop culture, where things come and go quickly in this place of glory, that’s not what we’re here to build. We’re here to build these longer-term, these sustainable, these 5-year, 10-year, 20-year companies, and whether we run them for 20 years or not, it doesn’t matter. But is it this something that can be around for the long term? I believe that the way that happens is—with what we’re talking about today—it’s this consistent needle moving progress, that you show up every day, or you show up every week for years, and that’s the thing that most people have the hardest time doing. I think it was helpful for me. I hope it was helpful for you to know you as a listener. Thanks so much, Matt, for agreeing to come on the show.
Matt: Thanks a lot, Rob.
Rob: Again, if you want to catch up with what Matt is doing, you can head to simsaas.co. If you have a question for the podcast, call our voice mail number at 888-880-19690, or email us at email@example.com. We’re in iTunes, and all the other places you would imagine, just search for startups. We’ll have a full transcript of this episode on our website startupsfortherestofus.com. Thank you for listening. We’ll see you next time.
In this episode of Startups For The Rest Of Us, Rob along with co-host Tracy Osborn answer a number of listener questions on topics including two side marketplaces, automated testing, building like-minded relationships and more.
Items mentioned in this episode:
Rob: Welcome to this week’s episode of Startups for the Rest of Us. I’m your host, Rob Walling. Each week on the show we cover topics relating to building and growing startups in order to provide yourself with a better life. These are not the typical Silicon Valley startups where fundraising can be a goal on itself, where people sometimes overwork themselves, 90-hour weeks, and where building slide decks are often valued more than building real business.
On this show, we’ll talk about building software companies and that can be Software as a Service, WordPress plugins, Shopify add-ons, Photoshop add-ons, even downloadable software, mobile apps, whatever. There are many, many ways just there to step your way to a business that can provide you with a better life and better existence.
A common thread over the past nine years in the show is that your product or your company is built around being a human being and having goals around on what you want to accomplish as a human rather than the business being me and be all of all your achievement.
There are three main things that we’ve espoused for the past 449 episodes of the show. It’s things like freedom. It’s the freedom to work on what you want, when you want, without a boss breathing down your neck, or the freedom to go to your kid’s baseball game on a Thursday afternoon without asking permission.
Its purpose is the ability to work on something that fascinates you and it drives you every day to make it better. The purpose of building something that tens of thousands of people get value out of, that makes you feel great and proud of what you built, and it’s about relationships; deep, meaningful relationships with your family, your significant other, your kids, maybe even have time for friends.
That’s Startups for the Rest of Us is all about. That’s what it’s always been about. It’s the lens through which we view startups and that’s why we say, it’s for the rest of us.
We have a few formats for the show. Sometimes, we talk through a topic in detail, we work through an outline of how to do a particular tactic, sometimes it’s purely for inspiration, sometimes it’s to help you grow your business over the next week or two, something you can implement.
Sometimes more rarely, we do interviews with folks who can offer advice or inspiration. In other times like this week, we answer your questions. What I like about answering questions live on the show is not only can I directly help a founder who has an issue, not only can I directly help a founder who has a question or challenge or something they’re trying to overcome, but you as a listener, can either learn from that thought process, learn from that answer, and hear how someone thinks through hard decisions. Being a founder is about making decisions when we don’t have enough information. Took me a long time to realize that.
Being a founder is 70% mental and so much of it is about doing things that are hard, that are scary, and that you don’t have enough information to make a 100% correct decision. All of that to learning scale and it’s something that I hope you’ll be able to learn from the show over the years.
I’m here today with my co-host, Tracy Osborn. She was the founder of WeddingLovely and now she’s my colleague, friend, and program manager here at TinySeed. Welcome to the show, Tracy.
Tracy: Thanks for having me.
Rob: Excited to have you on. Beyond being a program manager at TinySeed and as I’ve mentioned having run a startup, a two-sided marketplace for wedding services called WeddingLovely, Tracy is a Python developer, she’s a gifted designer, and an author. She’s written several books that help make tech friendly for designers and design friendly for developers. Is that right? Am I saying that right?
Tracy: Pretty much, yeah. Tech is a scary subject and it’s been a fun topic to write on; what can I do to help people jump into it.
Rob: Absolutely. All of that is available, more on Tracy is available at tracyosborn.com and you’ll be hearing more from Tracy in the coming months. We’re working on a lot of fun stuff together.
Tracy: Yeah. The stuff at TinySeed has been so much fun and I’m really happy to be a part of the team.
Rob: Yeah. Us as well. We love having you. Let’s talk through some listener questions today. I know we have some voicemails and we have some text-writing questions. Typically voicemails go right to the top but today, I think we’ll start with some emails.
Tracy: Funny listening to your previous podcast on this. I was like, “Ooh. We’re going to switch up the formats, jump into one of the […] questions.”
Tracy: Let’s start with this one from Chris Palmer. He got a co-founder that is an experienced software engineer, and his question as a designer/product person, he wonders if there’s too much testing. How much time of the software build should go to things like unit testing, snapshot testing, et cetera, for an early-stage production product. So, he says, “Rob, when you had Drip, what did your engineering team do?”
Rob: This is a good question and what I like about this is, if you’re not technical, if you’re not a developer, it’s easy to discount unit testing. He’s talking about snapshot testing and all the types of automated testing, integration testing. There’s so much you can do and I have seen Software as a Service companies have to rewrite their entire codebase or literally run into major problems scaling because they skipped this in the early days.
Unit testing in particular, I am such a proponent of having 80%, 90%, like really extensive unit test coverage. I think if you’re a non-technical founder working with a technical co-founder who is saying “Hey, it’s going to take longer because I have to write a unit test,” that part, I’m all on board with.
Where it starts to become a gray area for me is when we talk about snapshot testing, which is taking a screenshot and comparing it from one build to the next to make sure that things aren’t going wrong, where we talk about full end-to-end integration testing, actually hitting the UI, hitting a web interface, clicking buttons, and doing all that stuff.
I would love and would have loved to have had all that testing in all of my startups but it’s very, very, time consuming and that has tended to be where I’ve drawn the line, is anything passed unit and some minor integration testing and smoke testing of API endpoints, all that stuff, we would build because it’s code and developers can get in the flow, they can hammer it out, and you get this amazing test coverage.
I used to brag about when we’re going to be acquired and then when we were hiring for new developers, I would say, “We have 2.5 lines of test code for every line of production code.” Some developers realize that’s not actually that outrageous. That’s probably where around where you should be if you really have good test coverage. But it sounds crazy to a non-developer like, “Woah. Haven’t you wasted a bunch of time?” but you haven’t. So, for me, that’s where I draw the line in the startup, where I am trying to move quickly, trying to go for end-to-end UI tests that cascade down through everything, I think is overkill. This is where it can be personal opinion.
Now, if I work for a bank, if I work at a Fortune 500 company, I would probably go to that next level because downtime and failures are catastrophic. You work at Amazon, you work at NASA, there are certain places, medical devices, where you do have to take that testing to the 99.999% non-failure rate. You can’t fail.
When you’re building a startup, you’re trying to grow, you’re trying to move fast. You can fail. You don’t want to, but you can fail a couple percent of the time. 1%, 2% of the time, where one of a hundred deployments has a bug in it. One out of even, frankly, 20 deployments will probably have some type of minor bug in it that you’re not going to catch but it’s going to save you dozens, if not hundreds and hundreds of developer hours along the way. That’s my take.
As a developer yourself, do you have a take on it?
Tracy: Yeah. It’s funny because my background is on design and I picked up Python programming. When I was building my first few web apps, I never did any testing at all, because I was like, “Oh. Why should I do this? I can just poke through the website and figure things out.”
But a little bit of time spent on writing those tests in the beginning, will hopefully prevent any kind of horribly stressful terrible moment later on when things go down, when the bug is found and everything. You don’t want to have that happen in the middle of the night. So, a little bit of time is going to save you a ton of time later. It’s just not going to feel like that in the beginning.
Rob: That’s the way to think about it. At a certain point, when we hit scale, and I believe it was post acquisitions, we had thousands of paying customers and I think, if we have the free plan, it was tens of thousands of people using it. This is Drip, of course.
We did talk about implementing end-to-end, front end snapshot testing in that sense, but it was only going to be for one or two flows. It was going to be the sign-up flow and something else critical, like sending a broadcast email because we knew that those two flows people use all the time, and if one of those failed, then we have a real problem.
Tracy: That’s a good point, actually. If you look at what are the critical flows are, when it comes to payments, or registration, or whatnot because when you’re launching new features later on, you want to make sure when you add those features, you can run those tests and make sure you didn’t inadvertently break those flaws.
Rob: Exactly and that’s the thing. For Chris, the original question asker, the thing to think about is how well do you know your co-founder? Does your co-founder tend to be extremely conservative? Does he or she come from a Fortune 500 company, or a bank, or NASA, or Lockheed, or somewhere where they had to have ridiculous test coverage that can never fail? Or have they worked a lot on startup environments? And what’s their personality like? Did they take it fast and lose? Did they hack stuff together? Their PHP hacker used to do it on the weekend and they never do the official stuff. They’re really tight knit unit testing ideas, or are they somewhere in the middle?
I think that almost counts for a lot and to be honest, I trusted my co-founder, Derek, a lot in the early days. I said, “Look, right unit test. Of course, we need them, we’re absolutely doing it,” but I let him go from there. I didn’t come in and say, “Oh, we should have this tested and that not tested.” I trusted his judgement that he’s conservative enough, that he was stressed that things are going to break about the same amount that I was. He wasn’t overly stressed nor too lax […] to cool with it. So that wound up being a pretty good relationship there.
Tracy: Cool. Should we move on to the next question?
Tracy: All right. This question comes from Tom, the founder of Tom’s Planner. He started working on this in 2007 and though the current design of the product itself dates back to that year, though it had a significant update years years ago, but starting to feel outdated again. So, he’s looking at doing another redesign.
He says, “Now, I have four designs to choose from. Each has their own strengths and weaknesses. I really like one of them. I decided to be a good idea to pull my most active users about it as well. That’s where the problem started. The users prefer another design than I do. Even worse, they scored the design I like the lowest. So, now what?”
He says, “Going with the majority would make sense but there’s a couple things to consider.” He really likes the other design. The design that the other users scored best, looks most like the current design that we have now and I’m guessing that’s part of the reason why it’s doing so well. People don’t like change. The design that he likes most has a timeless quality to it, which he believes, which is important to hand but the users probably don’t take that into account and the users are quite divided over it. Even though there’s a winner, no design had a bad finished. “Am I inclined to, despite the results of the poll, choose the design I like best and think this most future proof, but since it is the design users like least, I am still in doubt. Any advice?”
Rob: This is a tough situation you’ve gotten yourself into, Tom. I feel bad for you because I feel like asking users their opinion is pretty much not something that I would recommend overall. Tracy, you run a wedding marketplace, for wedding services. You had consumers like brides and grooms who are buying from service providers. Did you ever ask or poll your users for specific opinions like this?
Tracy: I did not for the site itself but there was an aspect of WeddingLovely where people could have their own wedding websites. I let users have the choice of emailing me and asking me for a custom design and that was a terrible, terrible thing to do. I end up ripping that out because I got overwhelmed to feedback and people were choosing and asking for things that I thought were bad design and didn’t reflect the brand. I end up actually removing that feature entirely.
So, I’m very strongly in the camp that I would prefer not to talk to my users about designs because, as Tom mentions, it can make things really complicated and I also worry about what would happen if you launch a design and it’s not the ones that someone wants. What would happen with the person who voted for the design? What would they feel? It’s a very sticky situation.
Ro: Yeah. People can be really opinionated about things that they’re not experts in. That’s an issue. Design is not something that we all have a training in. I don’t hire the person down the street to correct my back or to do surgery on my knee when I had knee surgery. I hire people with expertise. I don’t go down the street and hire a 15-year-old kid to write code for my website, although, he probably could. I hire people who have experience, and expertise, and training, and knowledge in the space. Design is the same thing.
Everybody has opinions but do they have taste? It’s an interesting thing and I don’t want to make it out like being snooty like, “Oh, I have taste because I only drink refined wines and these very pretentious single source origin coffees,” which my brother does and I say, “We’re going to go to the pretentious coffee place or go to the cheap one?” Of course, the pretentious coffee taste better but it’s $15 a cup.
I think if it’s all designers and you really want to get opinions and feedback, then do that. I think it’s more trouble than it’s worth, and I think it will create problems every time because what’s funny, as Tom said, that his users picked the one that’s most similar to what they already have because people don’t really like change and they don’t like using new software.
If you know that in 2007, 12 years ago, that you designed this thing, that design probably isn’t going to last in another 10 years. You want this one to at least another 5 or 10 years. If I had been in Tom shoes, I would not have done this. We would ask for opinions about, “Hey, we have some features. What do you think about this or what feature doesn’t this software do?” Those are interesting things because those are actual things that they’re doing in day-to-day business and they are experts on their own work flow and on their own needs for a product. But asking what color the button should be, or how a page should look, or showing three designs for a page, aside from just pure use ability things, like “Wow. I’m totally lost. I can navigate this,” that makes sense, but there are opinion on whether there should be a drop shadow or not, or a font. That’s why I hire experts or become an expert yourself, I guess.
Tracy: There is another piece of this puzzle that’s missing, which is that in a redesign, […] the user experience, not just the interface. When you’re asking people, it doesn’t really say about how we ask for feedback on the design and presuming it’s screenshots and that’s leaving out how the interaction actually is.
The users might be choosing something that looks like the old design because they don’t want the placement of buttons and how things work underneath the change. The thing that I struggle with new design is I’m trying to figure out how things are going to work and who might be scared about changing the system.
When one is doing a redesign, I think it’s important to include how things work and try to improve those flows about how someone uses the website, how someone signs up, or ask for payment information, whatnot. You don’t get feedback on those things when you’re sharing screenshots. So, that could be another thing for Tom to do, is do another round of feedback but not by users but go cray away of testing out the interactions about how things are working and see if his new design does better on that aspect. Does that make sense?
Rob: Yeah, it does. He did do screenshots. He included a link way at the bottom that has a link to the screenshots. One of them doesn’t work but the other one says he has all four designs and frankly, they’re all pretty similar. I actually don’t think it matters which one he goes with.
Tom, my advice would be don’t do this again because having trying to do it by democracy. If you have a product, you should have a pretty strong opinion and a vision for your product, I think. If you want to do a fun contest or a competition, that’s fine. But if really, it’s something as fundamental as the design of your product, that’s where you have to be.
You’re the founder, you’re in charge. You can certainly ask some opinions with people that you trust. You can get two or three designers together at your company. You can get people who have expertise to weigh in. When I was designing or having the TinySeed website designed, I asked a couple people that I know that are really good designers, that have a really good eye for fonts, and this and that, and I trust their opinions. But I didn’t go post it somewhere and ask for the opinions of everyone on my email list because I just don’t think that’s that productive.
Tracy: It’s just going to be a lot of noise and a lot of confusion, probably a lot of stress. It’s such a qualitative product. You don’t have any numbers to bring it back on to and that could be something. Also, when you’re choosing in a redesign, if you can do A/B testing of some sort, maybe on smaller elements, you’ll be able to say, “Okay, this one definitely works better.” More people are signing up or doing something that you want them to do because you can tie that to numbers but with just asking someone’s opinion about what looks better is not going to give that much useful feedback.
Rob: I hope that was helpful, Tom.
Tracy: Sorry, Tom.
Rob: Good luck. Our next question is a voicemail about which side to focus on when building a two-sided marketplace.
Chris: Hey, Mike and Rob. This is Chris Bowles from Kentucky. One of the […] for TinySeed, first batch. My question is relating to chicken or the egg with SaaS B2C/B2B. Got a startup concept that I’ll actually be providing free trial on the B2C side with a very small revenue figure to help support the B2B side.
Without going into a bunch of detail, basically I’m in stealth mode right now. How do you know whenever you recruit the majority of your revenue through the B2B side or you provide the trials to the B2B side versus beginning free trials on the B2C side? How do you know who to market to first and to who to set up on the website prior to launch to be sure everybody […] on […] day? Thanks for all you do. I’ve learned a lot. Have a good one.
Rob: Okay. It’s an interesting one. I think you’ve gone a little into the wood with the free trial and that kind of stuff. I just think about this as a two-sided marketplace, and there’s a business and a consumer side. My translation of his question is which side do I need to bring to the site first? You’ve built a two-sided marketplace?
Tracy: Yeah. The chicken and egg problem is tough because you need to have enough on both sides of the equation for your website to be useful for both. With WeddingLovely, it was a marketplace for wedding businesses and that was the primary focus. There was a consumer side where there’s a planning application. My recommendation is to focus on the businesses.
My personal experience with WeddingLovely is I actually the site very early on which is a few businesses because I needed to have something online for these businesses to say, “Okay. This is launched.” I’ve seen other people using it and I even told those businesses like, “Hey, this is something that’s going to be a slow growth thing.”
In the beginning we might not be able to send them a bunch of consumers, but I was live and they’re listing to the site for free. By focusing on the businesses, they actually help my marketing a ton because I was able to work directly with the people that were on the website with WeddingLovely. They had their own network, social media, blogs, and whatnot. So, they helped build up that consumer side of the business while I focus most of my effort and intention on the business side.
It was a […]. Market places take a long time to build up both sides but I’m a fan of working, I mean, businesses are also easier to work with, by far. I think there’s going to be a lot more benefit through focusing on the business side. What do you think?
Rob: I would focus on the business side first, in that case. I would basically have a landing page somewhere, or a social media account, an Instagram account, or something that is posting amazing stuff and trying to forget this consumer side. Some type of traction so that I don’t have to start from zero. Once I have 10, 20, 30 businesses lined up, I at least have an email list of a hundred people, or I have a thousand Instagram followers, or something there.
Typically, what I say when people ask about how to setup a market place is focus on one side first and in almost all cases, it’s pretty obvious which side you need. If you had a bunch of consumers with WeddingLovely, and you’re like, “All right. I have 5000 people who wants services,” and you have zero services, you have zero businesses, there’s no business there. So, you have to bring the businesses first.
The challenge is, of course, you have to bring the businesses to a place where you don’t have any consumer audience. You could then step back and say, “Well, should I start a blog, or a podcast, or an Instagram following, or an email list, or something that gets the brides- and grooms-to-be?” then from there, say, “Well now, I have this email list of 20,000. Now, I go recruit businesses?” That could be one way to do it. That’s another way to think about it. But you’re starting on a cold stop on both ends, right?
Tracy: Yeah. Chris mentioned that he was in stealth mode. I think that’s something that should depend on what he’s working on, but I feel it needs to be something that you have to get out of stealth mode so you can start recruiting people on either side of the audience.
Rob: Yeah, I would agree. Everytime I hear stealth mode, there’s certain yellow flags, red flags are probably stronger, but stealth mode is one here, “I want to raise money from you. Sign an NDA. I’m building a startup that targets every small business in the United States. It’s any business and there’s 60 million of them, that’s my target audience.” There’s just certain things that’s like, “Yeah. You’re making a basic mistake,” in almost every case.
Typically, the people who make stealth mode work are these really experienced founders. Ev Williams can do stealth mode. He’s done Blogger, and Twitter, and Medium, and on and on. He can do what he wants and break the rules. Steve Jobs can do stealth mode. There’s a handful of people that can do it, pull it off, and it works. But honestly, if it’s your first one and trying to figure stuff how, don’t do that. Just get out there. You need to start generating interest on both sides of this. I agree. I would start at looking at getting businesses on board and having conversations.
Here’s the thing I would do. Whatever it is, if I can bring you 500 customers a year or 10 inquiries a month, or whatever that number is, is this of interest to you and is this worth $99 a month for you to subscribe? That’s your customer development. You have to do it in theoretical because you don’t have that other side of it yet. If they say yes, then awesome. Get on the waiting list, there’s no commitment now, let me get your info, and then you go to the other side and you either start running ads, or you start SEO, or you start social, or you start whatever it is that’s going to bring that consumer side, and you start funneling them somewhere.
You don’t need to write a bunch of code to do this. You can funnel them to a blog, funnel them to a landing page, you can funnel them to a hacked together WordPress site that has a couple of listings that you literally put together by hand. I mean, all this stuff can be done with just hustle. You don’t need to go pay $50,000 for developers to go build anything. You’re just trying to test it out. You’re trying to push it forward a piece at a time.
Tracy: This is a great place to things that don’t scale. For those businesses, what can you do by hand for each of those businesses in the beginning just to start getting the ball rolling.
Rob: Indeed. Thanks for the question Chris. Hope that was helpful.
Next question is another voicemail. It’s about connecting with other founders to build relationships and he’s referring back to a comment I made a few episodes ago.
Michael: Hey Rob and Mike. This is Mike Whitbeck, one of the co-founders of UberWriter. We worked in the mortgage space and we built some income calculation software. We’re on our 5th year of business and I’ve listened to hundreds of your episodes. One of the co-founders, David Stamm, and myself have used a lot of your advice of the podcast to help reguide and redirect our business in very successful ways. Our website is www.uber-writer.com.
On episode 444, I believe you mentioned that you and your wife, for about the feelings of isolation, have other entrepreneur couples over maybe once a month or have dinner with somebody just to talk to people that you relate with. Though it’s probably a little bit weird and just trying to figure this out is, I know I’ve run in the past where you introduce yourself to another couple, just basically go out to dinner, a movie, or a common event with them, and maybe you just don’t kind of hit it off. I guess the awkward question is, when you meet up with these people, is it generally an expectation that you’re going to meet again or you just let the friendship go or not go where it goes? How do you handle that? Enjoyed the podcast. Please keep it up. Have a great one guys.
Rob: This is an interesting question. I think there’s a couple of things. One for me, when I was younger, I felt like I had the need to be best friends with people or not friends at all. It’s just a very binary thing. I’m talking like junior high and then high school. That’s how I was raised. That’s how my family did stuff. It wasn’t until probably after college where I realized, “Oh, having other friends who you just hang out with and aren’t necessarily your best friend or it’s not this binary thing, but you can hang out with them now and again, once a month, once every other month, you see them. It’s nice, but that’s it,” is a good thing. I think it’s a good thing for all of us to have larger networks than just one or two people. Not a requirement, but it gives me accessibility to more people to go see Avengers: Endgame when I need to and I’m not just relying on one or two people. That’s the first thing.
The second thing is when we invite people over, we literally just say, “Hey, we’re having a couple of people over that we know. We’re all startup founders and we’d love to have you over.” That’s the expectation. In addition, we tend to invite two couples or three couples over. That helps it not be awkward if, for some reason, there is one person in the group can be whatever. Talk too much, not talk enough, be a train wreck, whatever, and that won’t ruin the thing because you have six or eight people there. Whereas, when it’s just a double date, you really are reliant on the personalities of the folks around you, and that, of course, can be a wildcard.
So, there’s strength and numbers there and there’s really no expectations beyond that. We say, “Hey, we do this a few times a year and we have people over blah, blah, blah,” and that winds up being the situation. It worked out well for us. So far, we haven’t had any of those situations where it’s actually been bad or awkward. We haven’t become best friends with everyone, but that’s okay. That wasn’t the expectation up front anyway, neither from us nor the other side. It’s just a natural conversation about random stuff.
What’s been interesting is some of the funniest conversations have not been about our companies, have not been about our businesses. It’s been topics surrounding fact. Just that startup founders tend to be creative, driven, motivated, smart people, who are perpetually learning, and just being in a room with those kinds of people and asking what shows they’re watching, what kombucha you’re drinking, what’s the best coffee place you go to, what conferences you like right now, what books are you interested in, what podcasts do you listen to.
This stuff is all tangentially related to work but we’re not sitting there analyzing each other’s businesses, giving us advice on pay-per-click ads and positioning. It’s much more this almost social conversation. What I find is that when I’m talking to, again, interesting, driven, smart people who are shipping things, it just tends to be better conversation no matter what we’re talking about.
Tracy: This question really resonates with me. I don’t know if you had the same issue when you moved to Minneapolis. I’ve moved to Toronto about three years ago and I left all my old friends behind. When I moved here, I wanted to jump in and make friends that I think also do the same thing I do so we can have conversations. It’s been a hard slog. It’s really hard to make friends as an adult. Tying it to a business is even harder. So, I really like your suggestions and I think I learned something from this. I’m going to try to do a little bit more social stuff.
One thing I wanted to mention was, one of the best parts about just meeting up with people, not having a lot of expectations, and just hanging out, especially if you’re a founder. You’ll probably going to see them at the networking events in your city or around the world, or wherever you go, and just making those small connections. They’re not going to be best friends, like you said, but then making these small connections can be really fun because you’re going to see them later on. You’re in continually reinforces connections overtime and I think it’s really great to have these people.
For me in Toronto, I have people I see. Probably it’s just simply at events and they’ve been over at my house one or two times. It’s been really fun to start making those relationships and for a few people it has. Eventually, it’s going to move into, “Okay. Cool. Let’s talk business. Maybe I can tell you a problem I’m having. Maybe get some advice.” Just starting out and meeting people for the first time, don’t worry about talking business. Just see if they’re a good fit for you and not that everyone’s going to be.
Rob: I completely second the notion of how hard it is to make friends as adults and I don’t know that anyone ever told me that when I was growing up, but it just seems like you made friends in school, then you made friends in college. Shortly after college, if you’re still around those friends it was easy, but moving to a new place or relocating is hard.
I’m actually thankful because Sherry is pretty deliberate about wanting to find a community in various aspects of our lives. That has caused her to essentially just start making lists of people that we meet anywhere. We go to a meet-up, I did a little talk here locally a few weeks ago or any of the mirative startup events. Anybody we find that’s interesting, she’s like, “Get their names, get their email, and we’ll put them on this list.” We have this Google Doc of people now that is literally just a grab bag of some people we know relatively well and others we don’t, but we’re interested in getting together with them. We introduce them to one another often, which is cool. It’s not like our goal is to get everybody to network, but that at least there’s some value to everybody.
Tracy: Yeah. Think about talking to your 15-year-old self, being like, “When you’re an adult, you’re going to have spreadsheet of potential friends.”
Rob: And you’re going to have to invite them over for dinner. That’s just how it goes.
Tracy: I just have one more thing. Another thing when I moved to Toronto is that I insisted on working from a coworking space. That was also to get more business friends by working together and being around these people. There’s a lot of people at this coworking space after the last year, so have I grown into friends, we’re talking of business ethics because we’re there working together. I used to work at home in an office and this has been really great for me socially. It’s been really great for me careerwise, just to be around people while I’m working and then you have that little back-and-forth chit-chat. Then it grows into who am I going to invite over for dinner and doing dinner party or whatnot.
Another option that I usually recommend to a lot of people who are working solely from home is if there is a place so they can also try to make friends through coworking spaces, you might be able to build those relationships.
Rob: Literally, once a month, once every two months, it’s not that big of a burden. Frankly, you can couch it as, “Do you want to come over? We will literally order take out.” You really don’t have to cook for them. There isn’t an excuse. I’m talking to the listeners more than you Tracy.
There’s literally no excuse not to do this because when we brought this up before, I’ve had people say, “Wow. That sounds like a lot of work. I don’t think I have time for that.” We have three kids who go to three different schools. We homeschool one of them. Talk about not having time, my wife and I both work full time and do that. And yet we do this. It’s because we prioritize it. It’s not because it’s easy. Sometimes, we’ll do take out or we did potluck last time, where we provided the main thing that I grilled and people brought a salad, and this and that. It’s very little work for us.
The other thing is everybody brought their kids and they all played in our basement. Nobody needed to get sitters because that’s another hassle and expense. Frankly, it is finding sitters who are reliable and all that. There are ways to do this if it’s something that you’re motivated to do and that you think is valuable.
Tracy: Just like setting up a whole dinner party. Even just being proactive about inviting people to lunch. Maybe you said it personal goal of that twice a week, you invite a person to go on a lunch with you. Maybe you’re already at work, you don’t need to get a sitter for that, it’s a very low stress situation. That’s something my husband does and he does it way better than me. Every week, he has a different person he goes to lunch with. That’s how he creates and also build those connections.
Rob: Yep. So, thanks for the question. I hope that was some helpful food for that.
Thanks for listening to this week’s episode. Hope that was helpful to hear. Tracy and I talking through listener questions. If you have a question for us, you can call it into our voicemail number. It’s 888-801-9690. You can always email us at firstname.lastname@example.org. We’ll talk to you soon. Thanks for listening.
In this episode of Startups For The Rest Of Us, Rob and Mike talk about the current status of Bluetick. They discuss the Google approval process, external/internal motivations, current roadblocks, and Mike’s future with Bluetick.
Items mentioned in this episode:
Rob: Mike, which program do Jedi use to open their PDF files?
Mike: I don’t know what.
Rob: Adobe Wan Kenobi.
Mike: Oh God.
Rob: In this episode of Startups for the Rest of Us, Mike and I talk about Bluetick, where he’s at, and maybe where he’s headed. This is Startups for the Rest of Us Episode 448.
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 build your first one or you’re just thinking about it. I’m Rob.
Mike: And I’m Mike.
Rob: And we’re here to share our experiences to help you avoid the same mistakes we’ve made. To where this week, sir?
Mike: I strained my back somehow about a week or so ago, so sleeping the past five or six days has been rather rough. It’s on the left side. When I try to sleep, it gets really, really tight throughout the course of the night and it wakes me up. It’s been rough getting any kind of measurably good sleep for pretty much the entire week.
Rob: That’s a bummer. How did you strained up?
Mike: I have no idea. I think I was just alive and that was it.
Rob: Just. I was just old and I moved.
Mike: That’s a good way to put it. The thing is, I just woke up and it was like that. It got progressively worse over the course of two or three days or something like that. It was bad for about four or five and then it slowly gotten better over the last two or three.
Rob: Strained back is no good and no sleep is no good. You’re going back to your pre-CPAP machine days aren’t you?
Mike: Yeah, pretty much.
Rob: We’ll get into some of that more in this episode. We’re going to talk about, as I said in the intro, what’s going on with Bluetick and you and such. Before that, we have some good comments on recent episodes. In Episode 444, you and I went off on Gmail desktop clients. Carl posted a comment saying, “I switched everyone over to Mailbird last month,” everyone at his company. “We switched away from Office 365, Dropbox, and GoDaddy’s email service, and switched to G Suite Solutions. I needed to find an alternative to Outlook and I found Mailbird. It works great, love the Google integrations. My only complaint, one of my coworker’s complaints is that capability of right-clicking to create new folders does not exist. Not a deal breaker, just a complaint.”
What was the one I was using? I don’t remember now. It was Mailplane, like an airplane. When I right click, I often do right-click, paste as text or paste and match style or whatever, because I’ll be copying something that’s all weirdly formatted and I want it to go in the format of the email. In Mailplane, that’s disabled. Not a deal breaker, but I have to flip over into Atom, your […] text editor, I paste it in there then I Shift Command-A Command-C and then go back and paste it in. It’s this extra step that when you’re in a Chrome browser, you can right click, paste the match style, and then it’ll just go in. How about you? Are you still using the desktop Windows client you were using?
Mike: Yeah, I use it on occasion. I flip-flop back and forth between them because it’s an IMAP client and it’s got all that stuff. It’s nice to be able to use one or the other when I need it. The one that I did find with it was that I use the labels feature. I will take things and put them into, I refer to more folders than anything else, but in Gmail it uses labels for that. The one thing I find is that, if I go to use the shortcuts to move it into a folder or apply a label to it, some of my labels, depending on the folder, overlap.
For example I’ll have a customers label but there’s a customers label underneath a couple of different products. When I started typing it out, it doesn’t show me which customers label it is because it basically drops everything before the slash. I have no idea which customers label it actually is because it just doesn’t show me. I still use it on occasion but once I get into those use cases, it becomes a barrier for me. It makes it more difficult. I don’t know why they don’t show the whole thing, but whatever.
Rob: It’s weird. When we bring these things up, it’s like, “That’s kind of a nitpick. Right click, paste and match style, is that really that big of a deal? Is it the labeling?” It can be. It can become that. For me, it’s not that big of a deal, but label stuff, that gets in the way of your workflow and it can get in the way of the perfect solution unless you get used to the new way they do it.
Mike: Like I said, I flip-flop back and forth between them a little bit. I did notice when I was using it that I could shut it down and I would just have Gmail closed, but I’ve noticed that recently I’ve been having Gmail open again. With that, I know that I’m actually just going to close that tab entirely right this second because I forget to do that. Email can be distracting and disruptive. That’s a problem that I’ve uncovered with my workflow, is that when that is open, I tend to get pulled back into my email quite a bit. When that happens, I’m not as productive.
Rob: For sure. Another comment on Episode 447. Paul Mendoza was commenting on the Google verification stuff that you’ve been struggling with for several weeks. He says, “I’ve been dealing with Google verification stuff for months, you can see my day-by-day interactions with Google here. We just got a response from the security vendors, but our app still isn’t approved but I’m sending them emails almost everyday.” He has a URL. You can come to 447 if you want to check that Google verification status. He feels your pain, apparently. It’s not just something that you have manufactured in order to create drama and good radio on the podcast as you’ve been known to do. You haven’t been on […].
Rob: We got another couple of comments, because 447 we started diving in, we typically do our chit chat at the top end of the episode. When we talked about the Google stuff, we wound up spending 18 minutes just talking about that because I was asking questions and going through it. We’ve got some compliments like, “Do more of that. You guys aren’t digging into Bluetick enough,” was the comments, “or your own projects enough.” Part of the impetus for today’s episode was comments we’ve received but also, I think it’s been something that’s been on our minds for a while.
We have always liked doing updates, sharing what we’re up to, and what we’re working on, but it can be hard when it’s not good news. It’s hard to show up week after week and try to have an update of what you did in the past week if you didn’t get anything done or if things are going backwards. I think we tend to do update episodes every few months and I feel like this one today is really just a conversation about where you are, where Bluetick is, how you’re thinking about things, and try to find out more about what’s going on and even to give advice.
We talked for a while before this episode started and you’re bringing up things that I was telling you how I would approach them. We haven’t necessarily always been a ‘big advice for each other’ podcast. It’s a lot more answering listener questions. I think that can be helpful today, too, for you to hear how I would think of approaching different problems or how I have approached them in the past because I’ve done some of this stuff as well.
Mike: Do you want to relabel this as Mike’s therapy session?
Rob: Yeah, it’s going to be 50 minutes and I’m going to bill you […].
Mike: That’s actually cheaper.
Rob: Cheaper than you thought it would be.
Mike: Cheaper than a regular therapy session with […].
Rob: Indeed. Bluetick today, you’ve been working on it for two or three years, and it’s still not supporting you full time.
Mike: I went back and I started looking at my funnel metrics and stuff where I started tracking some of that stuff. I’ve got data in here from November of 2017 and that’s when I started tracking the numbers that I have here. I think that was shortly before I flipped the switch and said, “I’m just going to start billing people. If you’re not ready, then you can either cancel or that’s the end of the free trial or whatever that we have for you.” Obviously, my memory is kind of fuzzy as to exactly what state those things were at at the time so I don’t remember whether it was November of that year or what have you.
Rob: Was that November 2017?
Mike: Yes, November 2017. The reality is it’s not nearly where I would think that it should be if things were going well, the product had product market fit, and I was actively growing it. It’s just not. It’s not enough to support me full time. I don’t necessarily need it to, but at the same time if it’s going for an extended period of time and it’s not making enough money to do that, then why continue?
Rob: Yeah. It’s a waste of time and effort, opportunity cost, could you be working on something else that would be dramatically more lucrative whether that something else is a different product, or whether that something else is consulting, or heaven forbid a salary job? Not that you’re going to go do that, but you have skills. You’re a developer. You can write code. That’s a very valuable skill. To be wasting, I don’t mean wasting time on a day-to-day basis, but having 18 months, you’ve been charging for it, and to be only ramen profitable and not full time income is a struggle. It’s not just that you don’t have full time income but it’s not headed in the right direction anymore. You basically peaked at some point last year in terms of MRR.
Mike: Yeah and it’s more floundering than anything else. It’s not on a tailspin and I’m not bleeding out customers every single week or anything like that. It’s not tanking quickly, but it’s certainly not growing quickly, either. It’s really just meandering; go up on some months and then go down on some months. I have some customers who’ve been around since the very beginning and there are customers who will stick around for three to six months and then that’s it. I don’t feel like I’ve delve into the numbers of how long people have stuck around for and what the amount of revenue that I’ve gotten from each customer is enough, I just haven’t. It’s because I’ve spent a lot of my time on other things.
I feel like I have a hard time prioritizing where I should spend some of that time. Objectively, I think it’s like, “You should spend all of that time on marketing activities, analyzing what your current customers are doing, and who you should be targeting as those customers. One thing I struggle with is the fact that Bluetick has a very good use case for cold email and I don’t want those customers. I have a hard time justifying adding a lot more customers on there that are using the tool for that.
Rob: Is it an ethical thing? You just don’t like cold email?
Mike: Yeah, mostly.
Rob: Or a moral thing? Wait, what ethical is this? External and moral is internal. You’re internal code is like, “Meh. Not a fan of it.” Is that the idea?
Mike: The problem is that it depends on the customer. There are some customers that I’ll talk to, I’ll do a demo for somebody and I hear what they’re doing and they’re doing cold email. I’m like, “It’s not just a great tool that you have, but it’s also a great service. You’re doing great things with it and you are trying to make the world a better place,” versus some of the people just doing the cold email. They’re really bad at it and they’re doing things that are shady or scammy. I’m like, “Yeah. I don’t want those as customers,” but at the same time the tool works exactly the same for both of them.
How do I filter one out versus the other without having a conversation with every single one of them and how do you do that in the marketing that you put out such that you are catering specifically to a type of person who has a certain mindset?
Rob: I hear you. There are ways around it. You have options. You could, on your homepage, just be like the best tool for warm email interactions and then you could put in the FAQ, “This is not for cold email.” You could put it in your terms of service, “This is not for cold email.” You can have flags if people go in it, you see patterns of people doing cold email type things that you flag and you say, “Hey, this isn’t for cold email.”
We had to do this with Drip. People can’t use Drip for cold email. We had to build things and communicate that along the way. It was a pain. It was a lot of work and some people got really pissed off. Some people came in, signed up, uploaded their cold list and started emailing. Our system would automatically block them or they’d get enough complaints that are email spam. Dude would block them. That’s what you have to do if you really don’t want to do it.
The struggle is, with Drip, it will get you blacklisted. So, it’s a big problem for the business itself. With Bluetick, it’s not because they’re using their own inbox. You’re not going to get Bluetick itself, your IP doesn’t get blasted. You have to decide, “Hey, if ethically or morally or whatever, I only want to service certain type customer,” then you can do that. Just make it clear upfront.
It sounds to me like is it an excuse? If you accepted all the cold email, would Bluetick be where you want it to be? Or if you just focus on the warm email use case and ignore the cold email, would Bluetick be where you want it to be?
Mike: I don’t want to say it’s an unfair question, I think the question is a little bit off because it’s more a matter of holding me back from doing the marketing which would acquire those types of customers. It’s not about accepting them as customers or trying to turn them away or whatever. It’s more about holding me back from doing the marketing. I think it’s a very valid question about is that an excuse? I have a whole load of things I’ve looked at and thought about that comes to mind is, […] every single one of them is like, “Is that just an excuse?”
If you looked back at the stuff I did with AutoShark and then with Bluetick, I’ll […] frankly a lot of excuses along the way with AutoShark. If you think about objectively the stuff I’m going through with Google right now, there’s a huge question mark of this $15,000–$75,000 for a security audit. I’m apparently at the end point with Google where all I need to do is get this security audit and get a letter of—I forget what it is—authentication or something, this audit letter that I have to send into Google that says, “Yes, Bluetick is all up to snuff and we don’t have to worry too much about security vulnerabilities for the product,” but at the same time, is that another excuse?
If the products were much further along or had more customers and was making a substantial amount of revenue, would $15,000–$75,000 matter? The answer is no, it wouldn’t. The problem is I can’t point at Google and say they’re killing my business when the reality is the business isn’t making enough money. Really, that’s just the driver that says, “Here’s a hard line that you can’t cross unless the business is making enough.” If the business was making enough, that wouldn’t matter. The actual amount of whatever that is going to come out to would make no difference or whatsoever. So, is that an excuse?
I was saying in a way it kind of is, but at the same time I could almost point at anything that I’ve come across and say, “Is this an excuse?” Anything that comes up on the business as to why something is not working, you could ask that question and I think it’s a valid question to ask. I don’t have a good answer for some of those things. I just don’t.
Rob: That’s the thing. The cold email versus warm email thing, you don’t want to market it because people are using it for cold email. There are solutions to that. If I were in your shoes, I would decide, am I willing to let people do ethical cold email and warm email? If the answer is yes, then that would be on the website. That would be in my onboarding. I would mention that in every demo. I would probably do demo only for now in your shoes because you don’t have such an influx of trials. I’m guessing that you can’t do some type of demo with everyone at a minimum of screencast, 15 minutes of screencast that seriously talks about, “Look, we only do ethical cold email.” Just make that part of the whole deal. If that’s your hard line, then take the hard line and then move forward. That’s one option.
Second option is to not take the hard line and just say, “Hey, this is legal and it’s not going to hurt my IPs so I’m okay with people doing that.” That’s the second option.
Third option, shut the product down. It’s to realize, “Boy, I really built a product that people are going to misuse,” and the nuclear option would be to shut it down. Now that’s tough. I don’t know if I can come up with an easy fourth option. I feel like the ethical cold and warm is a perfectly viable non-nuclear option, and again, to just communicate that in every onboarding sequence.
Some people will sneak through, unfortunately. The good news is, it won’t get you on a blacklist like it did with Drip where we get on the blacklist and it’s like this, “Oh, […],” moment where a bunch of us were running around trying to figure out how to ban this customer and this and that. You’ll just have to have a conversation with that customer and say, “Look, by our judgment or by my judgment, you’ve gone over the line. I need you to migrate away or I need you to improve your things.” You can get a conversation with them where they say, “How do I improve my cold email?” You say, “Here’s a good example of a super ethical one. You only hit them four times over the course of a month, not 17 like you’re doing,” and blah, blah, blah.
All of this is work. It all takes work and that’s a crappy part. It’s the same thing with the Google approval, I think, that it totally gets in your head it seems like and it becomes this road block where really, it should be a speed bump that you look at your options. I say should. You’re going to encounter these over and over. I feel like if you look at the mess of speed bumps rather than roadblocks, knowing that there’s almost without exception, there’s always a way around it.
There are a few exceptions that are not. You can get sued into oblivion. You can get seriously injured. There are these extreme things where you can’t work or where your business is completely decimated because the whole platform just blocks your IP. There are certain exceptions but I don’t see that. Aside from Google disapproving you here in the next week or two, everything else you’ve mentioned to me is a speed bump, but I feel like it impacts you more than that.
Mike: That’s absolutely true. As you were talking through that and shifting the marketing to saying much more of it is ethical cold email and warm email, I actually got excited. I was like, “That’s exactly it.” I think that there are other ways to force that as well. I was talking to Josh from Referral Rock. He said that one of the things that they had done early on was that they charged a setup fee and that works really well for them. I was thinking about doing that as well and trying to figure out how can that work in there. That fits in really well with the idea of pitching it more towards the ethical cold email and warm email for people and then forcing people to do a demo.
That’s part of what the setup fee would be and making sure that they’re doing things the right way, that they’re not just spamming a ton of people just because they have the technical capabilities to. Honestly, that would make me feel a whole heck of a lot better about it. I was actually trying to figure out, “How can I justify this setup fee and how can I do that stuff?” I think that it falls directly in line with that. It makes total sense as to how that could happen now whereas before, I struggled a little bit with how do I present it or pitch it or make sure that people are doing the right things and everything is going well for them. I’ll say it’s like software augmented by services to some extent.
Rob: Absolutely. I feel like that’s one issue but it’s not as if we can now, “Alright and that’s the whole session, Mike, you’re all good,” because there are some deeper issues going on. It seems to me like the two biggest issues that I see with Bluetick and what you’ve been up to, number one, I don’t understand how Bluetick is any different than any of the other tools. I don’t think you’re differentiated. You can convince me otherwise but I don’t feel like there’s anything Bluetick can do that three or four other tools can’t do. That’s a problem because you’re picking up crumbs at that point.
The second thing that feeds into that is you have struggled to ship things. Whether it’s health issues, the distraction from the Google approval, I know you’ve had sleep issues for a long time. You talked at the last podcast about how you had a five- or six-hour workday. Two hours of it was with calls, then your kids were going to get home, and you’ve spent an hour on the Google thing. Your workday was just poof. Gone. You’re not shipping new features. You’re not shipping marketing.
When you look at the people who are making progress in these early stages, they’re shipping something every week. You look at Derrick Reimer. Even though he shut Level down, he was shipping features, he was shipping emails, he was shipping blog post. You look at Peter Suhm, who is the founder of Branch, which is a TinySeed company, was just announced today, he’s doing the same thing. He releases a blog post almost every week and he ships new features to Branch almost every week. You’ve struggled with that going way back.
I think that’s where we talked a little bit offline before this. You have reasons but you were saying to yourself like, “Are they reasons or are they excuses?” The health issues, there’s testosterone levels a few years back, there’s CPAP, there’s all that stuff. It impacts your motivation and that means that you haven’t shipped enough stuff fast enough to differentiate Bluetick and everyone else that you’re competing against is moving, I would say faster than you. You never catch up. Again, my impression is they are better tools, they just have more features, and they do more. So, how can you possibly grow an app that isn’t differentiated in any way?
Mike: A lot of them have definitely caught up in terms of the features. Some of them even started out further along than I was at the early stages. My difference in feature was intended to be the fact that Bluetick does not miss emails, whereas I know that people who were using the Gmail API, those types of customers tend to miss emails here and there. I feel like a lot of those problems have tended to go away. I don’t know whether that’s because the Gmail API has just gotten better in terms of what data that they’ve been sending or the frequency, but I don’t hear about those problems nearly as much as I used to.
Maybe the tools have just gotten better and they’ve fixed those problems. I don’t really know the answer to that because I don’t use those tools on a regular basis. But the fact is you’re right. I’m not shipping things nearly as much as I could or should be. There are certain things where I’ve gone through and I’ve reengineered something or changed how something works, and I’ve got all these data that is going through the system. I’m terrified in some cases of breaking stuff.
I’ve been going back-and-forth recently with one of the vendors who supplies the component that I use for synchronizing with IMAP. They won’t give me access to the stuff where I know for a fact it breaks and I can’t test it. I can’t put an automated test in place and they won’t give me a way to do it. I’m just like, “I don’t know what I’m supposed to do here,” other than switching to some other component which again is non-trivial work. Is that an excuse?
Rob: It’s a problem but you’re going to encounter a problem almost everyday as an entrepreneur. If they become, they should be speed bumps. You could mock up an interface of some kind. Again, we had a bunch of APIs that we interfaced with Drip and we couldn’t hit the production or staging APIs so when our unit has ran, they would hit a mocked up interface. There’s a better word for it, but you know what I’m talking about.
You could feasibly break things but that’s what integration testing is for, and then you just have a checklist of like, “These are the five things that I’m always worried about breaking because I can’t test them well.” Those are in a Google Doc or a Trello board or whatever. Every time you do a big push or everytime you modify that code, you test those things. That’s how I would think about it. Again, it’s not perfect but it makes it into a speed bump. It makes it into a bump in the road rather than an actual road block.
Mike: The specific issue with that piece of it and the problem that I have with that, there are certain things that come up on occasion and I literally can’t do that because they’ve marked the class that I need to use as internal and sealed and there’s no interface for it. I literally cannot do it. The only way that I found to get around it is to create a constructor that uses the internal private constructor for it and basically fake the data, but I’m looking at obfuscated code at that point and I don’t know what the hell half of it does. I think all of this particular example is kind of immaterial, I agree it should be more of a speed bump than a road block. Going down the rest of that specific example is more of going down the rabbit hole more than anything else because it’s not the only thing.
Rob: The thing is, when these things come up, it’s not going to be perfect. I know that sounds silly to say, but you’re an engineer, you’re left brained, and you want every I to be dotted, every T to be crossed, every edge and corner case to be handled. Mike, your software is going to break sometimes. There is […] software that is doing seven, eight, nine figures a month and the stuff breaks. You can build a company with software that isn’t 100%. My guess is your software is going to be pretty dang good because you’re a developer and because you’ve been doing this most of your life, but at a certain point, you can’t let perfect get in the way of good and in the way of shipping.
Mike: And I do. I absolutely let that get in the way. I don’t know why it’s so hard for me to just let it go. There are some things where I can just say, “Oh, we’ll just do this. Yes, […], go ahead.” Then there are other things where I’m like, “No, it has to be right.” For whatever reason, I fixate on those things.
Rob: That’s the problem. If you can’t identify when you’re fixating, then tell yourself stop and approach this from a different mindset. What would XYZ person do? How should I think about this differently is probably a better question that when you find yourself fixating to stop yourself and have the introspection to say, “What is the hack to get the solution? What is the 95% solution to this? What are the three or four options I have?” We’ve talked about a few topics here and then each one, you see, I’m just breaking them down into what are your choices here?
You’re choices with this API or whatever or it’s the component that you don’t have internal access to and it’s sealed and whatever, Mike, here are your options. You can completely shut your entire company down. Honestly, let’s look at them. You could shut the company down because of that. You could build a solution that is 80/20 or 95/5, however you want to phrase it. That’s like the one I said earlier which has been attacked together. It’s not going to catch everything and you have a checklist, and that’s probably good enough for now. Or you can spend a lot of time fixating on it. You can fight with the guy over email, you can try to reverse engineer it.
Mike: I can replace the component.
Rob: That’s great, you could feasibly do that. You could rewrite the whole thing yourself.
Mike: No, I wouldn’t do that. I would find a different vendor where I can rip that out and replace it with something else, that’s what I would do. I would absolutely not going down that road.
Rob: But that is an option. What’s funny is you could replace it with a different one. You’re going to spend time reworking your code or you could just rewrite the whole component yourself. It’s ridiculous but it is an option. Those are your five or six options. When you look at them, some of them seem like the dumbest thing ever like shutting your business down or writing the component yourself; don’t do those. It’s obvious, those are dumb. But the other three, if we look at them, black and white mindset and try to think about them. Which of those gets you to full-time income? Which of those gets you to $10,000? Yeah, there’s a little bit of risk with the one I’m suggesting, but that turns it into a speed bump rather than a road block.
Mike: One of the challenges I run into with this is that I don’t really have a mastermind group anymore where I can bounce ideas off of people and they call me out on a weekly basis that says, “Hey, you’re not working on this,” or, “You said that you’re going to have this done. You’ve been working on this for three weeks. This should’ve been done a long time ago.” I don’t have that external forcing function anymore. I think that’s been a big challenge for me.
Rob: Yeah. You’ve talked about in the past. You’ve told me that you feel like you’re more extrinsically motivated, that having someone who’s keeping you accountable is the way you work best versus being intrinsically motivated. And that’s fine. There are successful entrepreneurs on both sides of that. This is not something that precludes you from being one. You lost your mastermind or it broke up how long ago?
Mike: A little over a year and then I started a new one but we’ve only met I think three times total.
Rob: In a year?
Mike: It was over the course of three months or so and then we haven’t had a call on five or six months, I think.
Rob: For all intents you’re not really part of a mastermind at this point. You ended a year ago. Now, didn’t your revenue peak around that time?
Mike: Yeah, it did.
Mike: I know.
Rob: A correlation?
Mike: Correlation, causation. That’s a valid point too. That’s an excuse.
Rob: Don’t say it. You’re going to say, “It’s hard to find a mastermind and it’s hard to be part of one.” I would say, “All right, Mike, you have choices. Shut your company down, number one. Number two, don’t be an entrepreneur anymore. It is a choice. Number three, email Ken of MastermindJam—mastermindjam.com—and try to hook with a mastermind. Four, keep doing what you’re doing. Don’t do a mastermind and expect your future results to be the same as they have been,” is probably what I would say.
Mike: Some of these things like the other thing that it could potentially be solved by us having a cofounder. I have talked to you about this before. I’m not opposed to having a cofounder or having somebody else who works in the business with me, but at the same time it’s a question of finding the right person and all that other stuff. But again, is that an excuse? Is that what I really want? The answer is I don’t know. Is that an excuse? Probably. Is it what I really want? I don’t know. I’ve gone out in that road before and I think things worked out fantastically with you, with Microconf, the podcast, and everything else, but my past experiences have not been all sunshine and rainbows.
Rob: That’s a tougher one because finding a cofounder is hard. You can’t rush that. That’s not an easy thing to do. I do think it could be a fit for you given that you would work better with someone pushing you on and you’re feeling accountable to that.
Mike: I totally agree with that. But most of the people that I know of, that I know well enough to say, “Yeah, I wouldn’t mind going into business with them at all,” most of them have their own things going on. It’s hard to find somebody who is in that same position because I’ve got Bluetick that is substantially far along at this point. One thing that I’ve run into when you have employees or contractors or whatever, is I feel like they’re not just motivated, but they’re way less critical of the boss’ performance or decisions and things like that because they’re like, “Oh, well. That person is the person in charge. I don’t want to challenge them as hard as I probably could or would if I truly believed in this other direction versus the one that they’ve chosen or decided to go in.”
Rob: Yeah, but that’s just a minor speed bump. I’ve worked with contractors and employees and I’ve had cofounders. It’s just something you get over. I think the deeper issue comes back to the two things that I said, number one, Bluetick is not differentiated. Number two, it’s because you’re not shipping enough. It sounds like you struggle with indecision quite a bit where you’ve ruminated on a question for a long time, for days or weeks, and sometimes just can’t break out of that to make the decision to move forward. So, you get stalled.
And then the motivation thing. You told me offline that you were bored, you weren’t motivated. At times you know what you should do, “I should go build this feature,” but you’re not motivated to do it. Is that right? Talk about that. Is it a health thing? I guess you don’t know. If you knew you would fix it, right? You don’t know if it’s lack of sleep. You don’t know if it’s low testosterone. You don’t know if you just don’t want to do the idea. Do you have any thoughts or even more background for people?
Mike: My doctor took me off of my testosterone and it wasn’t because it was too high, it was because one of my other blood tests came back, it’s too high. He was like, “This is way outside of the normal range so I’m going to take you off with testosterone for four weeks to see how that plays out.” I was about a week-and-a-half into it and I was like, “I have to take some of it right now.” The downsides or drawbacks of having it, having low testosterone is you get depressed, you have a hard time focusing, you can’t get things done, you can’t really think straight. That was happening to such a severe degree, I was like, “I have to take it today just to put myself at least a little bit back on track.”
I’m going to call him and try and see if we can cut this whole thing short because it is extremely detrimental to me right now but I don’t have any answers, I wish I did. There’s a lot of things where I’m just like, “This is boring to me.” Some of it has to do with the work that needs to get done. Again, is that an excuse? Is that just a reason that I’m using to justify not feeling bad about getting the work done? I get that, as an entrepreneur, not everything is always going to be fine. You’re not always going to enjoy everything.
There are some things that you like to do versus there are things that you need to do. If you can outsource those things that need to be done that you don’t like doing, great. I don’t feel like I’ve been in a position where I can outsource everything that I hate doing because there’s financial research and things like that.
Rob: You’ll never be able to do that. Even when HitTail and Drip were growing like crazy, I still came in and did a bunch of crap that I didn’t want to do. With TinySeed, I have more resources than I’ve ever had and there’s still crap that I’m dealing with that I don’t want to do. But (a) I tried to minimize it, and (b) I tried not to let it clog the top of my to do list. When it’s sitting in that Trello board I’m like, “Oh my gosh, I do not want to look at health care plans and setting up a 401(k) for us.” But it’s like, “I’m going to power through it, suck it up, and get it done. Then I’m going to come out the other side and reward myself by doing something super fun, make it some swag or something.” I don’t know. You can’t avoid that. You can’t avoid it entirely. You can minimize it.
We’re building businesses that we want to be a part of, that we want to run. We’re building it for our lifestyles. That’s great, but that doesn’t mean that 100% of the time, it’s like a trip to Disneyland. I know you know that. I’m being a little facetious, but that’s the thing I think you’ve struggled with a lot. There’s this indecision piece. You’ve expressed to me like, “I’m not motivated to do this thing.” Whatever it is, I know that’s what has to get done. I think you’ve got to figure that out because without that, you can’t move forward. You have to be motivated some days even through the struggles.
We have a mutual friend who runs a SaaS app, who has pretty major health issues. He struggles, he works four hours a day, and it’s tough for him to travel. There’s a lot of stuff that it’s just hard. It’s hard for him, but he runs a successful SaaS app, lives off, and has a few employees. He shows up everyday. In those four hours, I bet he’s pretty damn effective by the fact that his SaaS app still grows.
Mike: I haven’t found a system, I guess, that works for me in terms of preventing me from wasting time on the stuff that I don’t want to do or procrastinating to get those things done. I don’t want to stay here and say, “Oh, well. I just need to find the right system,” because I don’t think that’s the right way to go, either, or the answer to it. I do feel maybe I just need to experiment more and say, “Okay, try this for a week or try that for a week,” and be very deliberate about trying to get things done and shipping things, as you said, versus just showing up to work every day and a lot of motion without forward progress. I feel like I’m thrashing a lot. I don’t have an answer to that. Maybe the problem is that I’ve thought about what the answer to that is without actually doing anything to try and figure it out.
Rob: Yeah, not taking action. I think effectiveness is what you’re summarizing. Thrashing is the opposite of being effective. If this founder we’re talking about works four hours a day but gets a full day’s work done, he’s highly effective. Some people can work 10 hours. If they’re not effective, their business doesn’t move forward. We’ve talked about this in the past. The 80-hour-a-week startup people, I think, are probably not effective. That’s the reason they work 80 hours.
There’s a few exceptions but there’s a lot of younger folks. I used to work longer hours when I was younger too. It’s just not picking the right stuff to work on and then not focusing on that stuff, not wandering off to answer email, jump on Twitter, go to Reddit, really focusing. I think you can get a full day’s work done in 4–6 hours. Your full day’s work would have been 10 years ago, I believe, with the personal growth, experience, and stuff that a person can be more effective with less time.
There’s a couple things that I’ll throw out. One is that I feel like you should consider whether you want to keep doing this, to continue doing Bluetick, whether you want to continue being an entrepreneur. Here’s the thing. If you’re working in a contract job or if you were working a salary job, a lot of these issues go away because daily you would do a daily standup, or weekly, or whatever. You would have accountability. That external motivation would be there for you to ship stuff. That would make a lot of these go away. That’s a pretty nuclear option. In the interest of time, we probably shouldn’t go down that today. I do think it’s something for you to take a step back and just think about longer term.
Mike: Counterargument to that would be if I worked, did the right thing, and got Bluetick to a point where I was able to hire people to put on a team, that exact same result would come out of it.
Rob: Yeah, okay. That’s fine. That’s fine but you’ve got to get there. At the rate you’re going, you’re not going to get there.
Rob: I don’t disagree with you, Mike. This is Startups for the Rest of Us. The whole point is that we want to help people start businesses that give them personal freedom. The whole point of this podcast and everything we do is to feel free, to do what you want to do, and work on which you want to do. That would be my answer as well. It’s just, you have to figure out how to get there because you’re not making progress there now.
The second thing I would think about which is a less nuclear option, if we’re talking about options, it’s to go one step further than our mastermind and to find someone who would do a daily standup with you. Every morning, five minute phone call or five minute Slack. They keep you accountable. You subscribe to that. When you say, “These are the things I did yesterday. This is what I’m going to do today.” The next day, you come and you do the walk of shame if you didn’t get that done. You celebrate if you did and that extrinsic motivation is something that you think will help to do that.
What do you think about that is that, does it not matter? Because you’re so tired you can’t get anything done? Is the extrinsic motivation enough if someone was breathing down your neck? Would that be enough? Or do you think no? “I’m still too damn tired. I just have health issues and I shouldn’t do this.”
Mike: I would certainly try it. I would say, it’s pretty immature for me to say that it would or wouldn’t work. I suspect that it would. I seriously contemplated trying to find a way to get a one-on-one business coach or something like that, somebody who’s going to hold me accountable. You’re right. A five minute thing like that on a daily basis could be plenty. I don’t know. Without trying it, I can’t say for sure one way or the other. My inclination is to say, “Yes, that would work,” but it would also need to be somebody who is, I don’t want to say willing to yell at me because I don’t want to be inundated with thousands of emails saying, “Hey, I’ll yell at you.”
Rob: Sure because you don’t need yelling. You do need positive and negative encouragement and feedback.
Mike: I think that’s certainly worth exploring. I would say, it goes further than my thoughts about having a business coach who holds me accountable on a weekly basis because I think a daily basis would probably be better. That’s mainly because I feel like I could waste a lot of time during a whole week whereas from a day-to-day, I can’t. I don’t want to say the stakes are higher but the deadlines are sure. I’ve always found myself to be somebody who works extremely well with tight deadlines and time pressure.
Rob: Yeah, external motivation.
Mike: Yes. When I was doing consulting, the […] gets subcontracting through, they’ve held me in with a bunch of stuff. I stopped consulting from them probably a year-and-a-half or two years ago, but every single time I get an email from them it’s because something’s on fire. They want me to deal with it. I actually got to a point where from one customer to the next, every single one, everything was on fire and burning to the ground. They needed somebody to go in and fix it. I was their person because I was really good at it. I just got burned out with the travel. That was what the problem was. It wasn’t that I didn’t enjoy doing those things but I got burned out with the travel. The customers tended to be the same from one to the next. And the problem was repetitive. It got to a point where the problem was the same thing over and over. Then, I just got bored.
Rob: Yeah. Consulting is like a hamster wheel. You want to own something. You want an equity in something that has a longer lasting thing than just […] per hour.
Rob: Yeah, that desire.
Mike: Right. That was a big reason for me leaving and decided to do Bluetick instead because I wanted something that was going to need much more of that Rob’s flywheel as opposed to the hamster wheel.
Rob: Yeah. Obviously, we can’t solve stuff like these in a day. You and I talked about you taking some time to think about this, three weeks, four weeks where you think about both of what we’ve talked about today, some stuff we talked about offline, but really, do soul searching and figure out. I think there’s big questions here. It’s like, Mike, do you want to do this and do you want to do it bad enough that you’re willing to change? What you’re doing now isn’t working so you have to change it. Are you going to be willing and able to start looking at every problem as a speedbump rather than a roadblock?
Is this the right fit for you? Whether it’s this being entrepreneurship, Bluetick, it’s just those two. Does Bluetick have the potential? If you feel like you’re gaining your momentum and motivation to take a hard look and say, “How long will it take to get Bluetick to a point where it is differentiated?” My assessment is that, until you’re differentiated enough that you’re like, “Nope, we do this and no one else does,” or “We do this better than all these other tools.” Until you get to that point, you just don’t win many sales.
Mike: I totally agree with all that. I don’t even have to think too long about that one aspect of those. Do I still want to be an entrepreneur? For me, the answer is absolutely yes. The question for Bluetick is what does that look like moving forward? The reality is, the situation is I’ve got basically a seven month deadline at this point. I think you said there were some questions about how that shakes out with Google. I kind of know the answers to some extent. I still don’t have all the information, but I’ve gone past the last stage of Google’s verification with the exception of the security audit. That’s all that needs to be done. That’s the piece where I don’t know how much that’s going to cost. I don’t know what they have to go through or what other things I’m going to have to change. I’m still waiting to find out what that’s going to cost.
Then, I have to make a judgment called the end of it to say if it’s $15,000 and I’m going to make that $15,000 back in a reasonable time frame, not a big deal. Even if it was $75,000 or $100,000. If I were going to be able to make that back within three or four months, it’s not a big deal. If I’m in a revenue standpoint where it’s not going to happen in six months, eight months, ten months, then, no. I can’t justify even continuing with the product to that point. I don’t know what the price tag on it is right now. It’s a question of how far can I get in the next six to seven months to the point where I know how much revenue I’m going to be making three or four months down the road to be able to justify putting the cash out for that security audit.
Rob: You understand that while the security audit is one thing like we’ve talked about today, there are bigger issues. It’s shipping. Let’s say you pass the security audit and you pay for it. Bluetick is still not growing. Bluetick is still not differentiated right now. The reason again, going back, is you haven’t been motivated, or you’ve been bored with it, or there’s been health issues. There’s been all these things along the way. If that doesn’t change, it doesn’t matter what happens with the Google audit.
Rob: We talked about you taking some time to think about it and actually stepping back from the podcast here for about three or four weeks. Give you some clarity.
Rob: Some time alone. I know, give you a chance to maybe find clarity. These are hard decisions. This is retreat level kind of stuff where it’s a lot of thinking.
Mike: Yeah. The weird thing is these aren’t nothing we’ve really talked about. So far, things I haven’t thought about or considered over the past couple of years, it’ s just like I haven’t really taken the time to step back, objectively look at things, and take a hard look. I mean, if I do look at stuff and how things have gone, one constant that has been throughout the whole thing is me. Is it me? That’s a hard thing to say and the hard thing to admit to as well.
The question, can things change? Or will they change? Or do I want them to? I think that I want to. It’s just a question of how is that going to happen? How do I make sure that I don’t go through this process and come out of it and say, “Yeah, I’m motivated. I’m amped up. Let’s do this,” then put in time and effort for six months, then fall back into the same patterns again, I’ll say? That could happen. I don’t know but I need to step back.
Rob: That’s for sure. You know, Mike, I’ve always respected your technical chops, your intelligence, your writing, and you just have a lot of positive qualities. You’ve accomplished stuff in your life but you’ve definitely gotten in your own way. You’ve gotten in your own way more than I think you want to or should have. I think if you can start thinking about it, in terms of, how do I not do in the next six months what has happened in the past six months? We’ll see.
I’m going to be holding down the fort here for a few weeks. It’ll be good to hear from you. I’m sure people will be waiting with bated breath. We’ll have an episode, I don’t know, will it be 452 or 453? It’s the return of Mike. We get to hear from you, what you’ve been thinking about, and stuff.
Mike: Yeah, I don’t know. We’ll see what happens. I got to talk to my doctor and go back on a testosterone because it’s just, my God.
Rob: It’s kind of […].
Mike: It really is. You wouldn’t think that that does it. It was like, “Oh, that can’t possibly be that bad.”
Rob: I would totally think, any chemical in our body, when it gets that out a whack, it has these negative impacts that can be pretty brutal.
Rob: Well, thanks for delving into this today. I know this is not easy stuff to talk about. I appreciate your openness, honesty, and willing to delve into it. I’m sure the listeners do, too. This has over and over been voiced. This is like one of the favorite aspects of our show is when we do these things. We talk pretty open and raw about what’s going on.
Mike: Yup. I guess with that, why don’t you take us out then?
Rob: Yeah. If you have a question for us, call our voicemail number at 888-801-9690 or you can email it to us at email@example.com. Our theme music is an excerpt from We’re Outta Control by MoOt. It’s used under Creative Commons. Subscribe to us on iTunes by searching for Startups and visit startupsfortherestofus.com for full transcript of each episode. Thanks for listening and I’ll see you next time.
In this episode of Startups For The Rest Of Us, Rob and Mike answer a number of listener questions on topics including pricing and customer development. They also continue to discuss Mike’s verification journey with Google.
Items mentioned in this episode:
Rob: In this episode of Startups For The Rest Of Us, Mike and I talk about pricing, talk about doing customer development in a crowded space, and about how much testing is too much testing. This is Startups For The Rest Of Us episode 447.
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: And I’m Mike.
Rob: And we’re here to share our experiences to help you avoid the same mistakes that we’ve made. To where this week, man?
Mike: Remember how there was a couple weeks ago where I mentioned there was this ongoing Google app authentication approval process I was going through.
Rob: Yes. Seems like that’s been going on for quite some time.
Mike: Yeah. Like I said, they had announced it back I think in October or November. But they didn’t really give any details on it other than what was published on their website and they’re slowly adding to it and then earlier this year, they started ramping up requests for information, and all these additional things. I got an email the other day saying that they’re basically going to start yanking access. I’ve actually been going back and forth with a couple of people inside of Google who reached out.
I just want to say thanks to those listeners who do work in Google and been listening, but they forwarded it over a couple of my emails, and started pushing through some things. Hopefully, things are moving a little bit faster, but I did just get an email this morning saying, “Now, you have to go through this security review.” I’m trying to figure out or find out more information about exactly what that looks like and whether it’s absolutely required. It’s just been a red date nightmare is what it really comes down to.
Rob: Yeah. I have questions for you about this. It sounds like this could be an existential threat to Bluetick, is that right? Could it basically put you out of business overnight?
Mike: Yeah. It absolutely could.
Rob: And does that scare you?
Mike: Yeah, it does. The whole reason I chose IMAP was because I didn’t want to be beholden to the Gmail API and I didn’t want to have to deal with anything that they could come in and say, “Either change” or maybe they say, “Oh, we’re not going to offer this anymore.” I didn’t want to deal with latencies and things like that associated with it because I knew people were running the problems with that kind of stuff.
Fast forward a bit, and they decide change policy and suddenly, policy says you have to go through all these red tape in order to verify your app. Now, because of what I’m doing, I have to go through security review and it’s a third party security review. The cost for that is pushed on to me and they don’t even give you an actual price for it. It’s like, I have to pay for it and it’s anywhere from $15,000-$75,000 on an annual basis.
Rob: And you totally have that in the couch cushions, right?
Mike: Yeah. Get the money from the tooth fairy or something. I don’t know.
Rob: It’s an existential threat and you genuinely don’t know what’s going to happen. They can literally yank access in two days and just say, “You didn’t comply,” or whatever. Is that accurate?
Mike: I wouldn’t think that it’s two days. I suppose it could, but I could take an email like a couple of weeks ago saying that they were going to extend the timeline to I think, June 15. I don’t know whether the security assessment needs to be done by the 15th or there is something else in there that said, “If you’ve had it done before January 19th then you have to have it done by the December 15th or 19th,” or something like that. I don’t know whether there’s this six months’ time frame. If it’s been done in the past six months, you’re fine, but before that you have to have a new one done. I don’t really know. They’re not forthcoming with direct information when you ask them questions and it’s just slow responses.
Rob: Is this anywhere? Have you gone online to forums? Other people have to be experiencing this, right? Have you gone into forums and looked? Does anyone have clarity in this? Or who do we know that has an app like Superhuman, as an example—now, we don’t know the founders of that—but who has an app like that that also relies on Google or Gmail specifically, that you can connect with, and ask if they have any clarity on it because this does feel like something where it needs more than one person because it sounds like you are not getting answers. If we cobble together, three or four founders who’ve had experience with this, then maybe you can get some clarity.
Mike: Yeah, I don’t know. I can certainly go looking for those. I’ve been following there’s a—it’s not a blog—I guess it’s a set of blog posts from a couple of different people. Contacts.io was one that I was looking at. They have this blog article that they talked about where they’re basically shutting down the whole thing because they can’t meet the requirements. They’re like, “Yeah. We’re just done.”
Then there’s another one I’ve been following, I forgot the name of it, I’ve got it bookmarked, but they’ve been documenting the whole process of what they’ve asked, what they’ve gone through, what the responses where, what they said, and they got all the way to the point where they have to have a security assessment done, and they said out of respect for that company, they’re not posting how much it cost. But I was going to drop them an email today—and that’s a recent post that they put out there—I’m going to drop an email, and be like, “Hey, look. What does this actually involve? What does this look like because I’m not getting any answers I need either.” Since they’ve already gone through it, I’d love to hear more.
But things have been really rushed over the past two weeks because that’s when they started sending out those emails saying, “Hey, here are the days where we’re going to start notifying people who own these domains that you’re no longer going to be allowed to access the API.” Or, “Your app is no longer trusted or hasn’t been verified yet.” Over the course of the next four weeks or so, three to four weeks, they say that they’re going to yank everything if you don’t meet the requirements. But I just got an email this morning saying, “Hey, you’ve gone through this final verification.” I checked my database log, and it’s like, “Yeah, they actually logged in, they did add a mailbox.” Apparently, I’m past that point, but I still need to have this security assessment done.
I wrote a long email that I guess they’re forwarding around internally that basically, laid out all these things. It’s like, “I probably know more about security and compliance than most of the people you have working on this, and definitely more than the average developer, and not to sound arrogant about that but I actually do.” I pointed to different places where, “I’ve been the author of one of the centers for internet security benchmarks. These are independent publications where you can see my name is on them.” I offered them. “Isn’t there some sort of exemption that can be put in here? Isn’t there money set aside in Google for small companies? Isn’t there something there that says that if you’re below a certain threshold, it doesn’t apply to you? It’s not like I’m out here trying to scam the world or anything. I’m just trying to carve out an existence here for myself.” They’re like the government, I guess, that’s kind of how I see it. It’s like they’re large and inflexible, and I don’t know what to do. It’s like arguing with the IRS. You’re probably not going to get very far.
Rob: The hard part is that you know the scrutiny that they’re coming under now, with all the Facebook privacy security crap. So you understand why they might have a policy like this even though it doesn’t necessarily feel fair.
Mike: I do. I get it. I understand. But at the same time, when you look at the discrepancies between what the benefits to me are for having this security assessment done, like all that does is it benefits Google, it benefits their security baseline, benefits their security posture globally. What does it do for me? Zero. It does absolutely nothing. It doesn’t get me more customers. It doesn’t add to my marketing footprint. I don’t even get really listed anywhere where it’s going to get a large amount of traffic or anything like that. I get virtually nothing. I’m the one paying for it, and Google is reaping the rewards and benefits of it.
From that justification, “Why should I pay for this?” They’re making $15 million-$16 million per hour. They actually had to go back and forth with me to say, “Please create a free account for us so that we can log into your app.” It’s like, “Really? You can’t sign up for a free trial from Google. Nobody there’s got a credit card?” It just boggles my mind that they’re treating people this way.
Rob: The part about the credit card I get because, in a big company, very few people have credit cards, right? Because they don’t want people just willy-nilly—you can’t track all the expenses, and you wouldn’t know what’s going on. It’s not that they don’t have the money to have credit cards, it’s that tracking credit cards is a pain in the butt in an organization with thousands of people. That part makes a little more sense to me.
Mike: It makes a little more sense, but at the same time, it’s a free trial. There should have been a credit card someplace that they’ve got and said, “Look, there shouldn’t be anything paid going on this and if there is, contact whoever it is and if you need to do a chargeback, do a chargeback.” But that shouldn’t be a two-week back and forth between them and the developer. I literally waited for two weeks for them to get back to me. I was like, “What email address are you using to register?” Nothing. Two weeks, nothing. It’s not a hard question. I could have done it, and I did eventually hear back from them and got it all taken care off, but then even after I sent it to them, I said, “Hey, here it is.” It was still another week.
Rob: That’s the hard part, I think. To mean them not having a credit card, I would give them a pass on. I just know how it is at big companies, and on, and on. I don’t blame them at that point. The fact that it took them two weeks or three weeks or whatever you’re saying is, that’s the part that gets really hard when they have a deadline. You are trying to meet it, and they’re not getting back to you quick enough. It sounds like they’re not staffed up enough in this department, and some arbitrary person somewhere decided, “Oh, we have to be compliant with this by this day,” but didn’t actually make the decision to staff up or give the proper resources.
I think, to circle back on the audit, how it benefits Google and not you, I don’t disagree with. It’s the same thing with Apple and the app store—it is a monopoly in essence. They can do what they want, they can screw the developers if they want, that’s the hard part, that’s the bummer of building on someone else’s platform. Until it’s antitrust, and the government gets involved, you kind of can’t do anything. You’re in an odd position because I know that you didn’t intend to build on someone else’s platform and that you did the IMAP stuff on purpose.
You’ve said that multiple times. I remember talking in the early days, and that was the point is you were going to do something that isn’t reliant on someone else. For them to just come in and say, “You need to drop $15,000-$75,000.” They can do it, and it sucks, but I cannot imagine them bearing the cost for all the developers who use their API because I think that’s what you’re saying is, you want them to bear that burden of it. I don’t know of a large company, with such a large public API, that would do that. Are you thinking they would have their own internal team that will do it, and they would just have people on salary to do it type of thing?
Mike: I would think that they have something along those lines. Honestly, my initial thought was, “There are going to be companies that can bear the burden, and it’s not really that big a deal for them.” Fine. Those aren’t the ones that I’m publicly advocating for here. It’s the ones that are in a position like me where, very limited resources, I’m not funded, I’m not making the type of money that would make a third party audit like that particularly easy, I’m doing everything myself. If I had 5 employees or 10 employees bringing in $1 million every year, okay, that’s a very different story.
There should be something set aside or some sort of exception process in place for companies that are not meeting a certain threshold, very similar to when the government comes in and say, “Oh, if you are 50 employees or more, you have to provide healthcare for your employees.” But there’s that threshold there because the burden on super small companies is so incredibly high whereas Pfizer or Facebook or Apple, they don’t care, it’s a drop in the bucket to them. They even have an entire compliance division, I’m sure. But a six-person company? No. That’s not the case. When you get into those super small companies, basically, what they’ve done is, they’ve taken this blanket statement that says, “These rules and regulations apply to everyone.”
Personally, I understand why they’ve done that, I understand what their intent is, but the application of it and applying it to every single business—big or small—it’s skewed in a direction that benefits the big businesses by pushing the smaller companies out of business.
Rob: Yeah. The thing I struggle with is, I can see it from their perspective and that the smaller companies are most likely going to be the ones that have the security holes, I would think, right? Maybe not in your case because you know security and you did it for so many years, but think about how many two-year developers, junior developer, hacking something together in PHP getting the API key, they’re not thinking about the security at the level that you are or that Google would require. I actually think that the risk to them is higher on the low-end. I don’t think there could be exemptions. It’s almost like you want more of a scholarship. That would be it, right?
Mike: If you look at exactly what you just said, the risk for a large company versus a small company is actually very similar. The reason is because a large company will have a much larger footprint, so they have much more data available to them and a larger customer base; a smaller company would have very few customers. The likelihood of any one of those getting hacked or them getting hacked or something happening—some sort of security breach—even if it does happen, the footprint of that breach is going to be much smaller.
Think of like T.J. Maxx, however many hundreds of millions of credit cards got hacked is because they are huge. If let’s say that Stripe was hacked, that’s a very similar thing. If you look at something like Bluetick or Level, for example, which Derrick Reimer just decided that he was going to shut that down, let’s just say that he was, for whatever reason, storing credit cards on his server and that got hacked, how many people have put their credit cards into that? The answer’s going to be, it’s much smaller than T.J. Maxx.
Rob: Right. It’s a higher likelihood of it getting breached, but (a) fewer people are going to want to breach it because they know it’s small, and (b) even if it gets breached, it’s just isn’t as nearly as big of a deal.
Mike: Correct. It’s about impact at that point.
Rob: Yeah. Their policy is obviously, very hard on what you are doing. I think the question I feel like, as a founder is like, you’re fighting this now, if you somehow win this battle, this conversation, do you have concerns moving forward that this is going to continue to be an issue?
I bring that up because with apps that I’ve run in the past when Google or someone else broke when it was platform-built, they broke every year, 12-18 months, 6-18 months, whatever, they just kept breaking my stuff. It was an ongoing thing, and I think I want to post that question, (a) have you considered that, and (b) is that a reason to move on? I’m not saying you should, but have you given that thought, has that gone through your mind of like, “I shouldn’t be doing this? I should look for a different idea?”
Mike: It has crossed my mind, and I have given it thought. I think this situation is a little different in terms of the platform itself breaking because I’m relying on IMAP, not anything else. From that perspective, I don’t think that’s an ongoing issue. The policy changes could be because if they change policy once then, there’s no reason to think that they couldn’t decide that they’re going to change policy again.
Could that come up in the future? It absolutely could. Could come up next year or the year after? Yeah, it absolutely could. Am I worried about that side of it? Probably not because I think with Bluetick, it’s one of those things where I evaluate it and say, “Look, this needs to move forward at a certain amount of time, and if it doesn’t, then I should go on to something else.”
Rob: Yeah. That’s something I think we should probably dig into an episode or two. I know we don’t have it on the books today and no, we haven’t done a prep but I think it could be an interesting conversation, for you and I, to talk about where you are with Bluetick and just hear more how you’re thinking about it and where it stands in your mind especially given the light of what’s going on right now. I mean, this is a lot of hassle for—like you said—for an app that is not as successful as you want it to be.
Mike: Right. I even went in and took a screenshot of revenue and sent it to him like, “Look, this is how much this is making and you want me to do this? This is absurd.” I don’t know. We’ll see what they have to say. Hopefully, in a couple of weeks, I’ll have more information. But I mean, I may not, I don’t know. I’m spending so much of my time with Red Tape right now—and I have been for several months now. I’m not moving. It sucks. I don’t know what else I can do.
Rob: Is it taking up that much time? I can imagine replying to emails, you screenshot, you make the argument, then you sent the email, and then don’t you have the rest of your day to then build features, or market, I would say? Maybe you shouldn’t be building features right now, maybe it should be more marketing, but whatever, to do things that push the business forward.
Mike: It’s really distracting. Having that in my brain bouncing around, it’s really been distracting. It’s a little bit harder to focus.
Rob: You’re saying, you fire the email, and then you’re hung up on it for an hour or two, and you’re half struggling to work done. Is that the idea?
Mike: Some of it. In the past two days, there were two different emails that I sent. Each of them took me like an hour to put together. It just takes time to do that, which sucks, and I don’t know, maybe I could provide a lot less detail. I don’t know.
Rob: Yeah. It sounds like it’s tough because when I hear that I think, “Oh man, that is a waste of time.” But if you don’t put the thought into it and write a well-crafted email in this situation, it could be business-ending, so where’s the time best spent? But if you spent an hour to send an email, you still have the other six hours of your day, or seven hours of your day, depending on how much you work. Are you then distracted for that time or are you able to just let it go because that’s where you got to get, if you want to move this forward is to let it go and be like, “I’m going to move forward.” You do have a timeline. It’s like two weeks, three weeks until you know for sure, I’m assuming.
Mike: Sure. So, this morning, I spent some time doing support stuff this morning, and then I spent an hour on one of those emails, and then I’ve got this call for an hour, and then I’ve got another call after that for an hour, and that takes me to 1:00 in the afternoon. My kids get home at 2:45 PM, and I haven’t even eaten lunch yet, so I’ll hopefully start getting work done around 1:30 PM, and I’ll have an hour and a half to two hours before my kids get home.
It’s hard to get things done when that ends up in your schedule, so I don’t know, I don’t have a good answer at the moment, but it’s something I definitely need to think about offline, but we can discuss it next week or the week after or something.
Rob: Yeah. Let’s do that because I do think this is worthwhile digging into. I don’t want to derail this whole episode, but I think this is such an interesting topic because this is the real side of entrepreneurship, right? These are the hard things that we all go through that are scary, and you often don’t know what to do, and it’s stressful. I have to imagine that when work ends, your kids get home, you’re probably stressed all evening—I would guess—unless you can let it go.
There’s a lot of ways we can talk about this. Thanks for sharing that, man. I know that it is not easy stuff to talk about, but I think this real conversation is important.
Mike: Moving on.
Rob: Yeah. I have some updates, but I’m going to leave them until the next episode because they’re just not that time sensitive. I wasn’t thinking […] I was doing. Let’s dive into a listener question, we got a voicemail question about pricing.
“Hi, Rob and Mike. First of all, thank you for your podcast. You’ve definitely made many […] journey and things like […] enjoyable. My question is yet another question about pricing. Something that’s been playing on my mind for a while. While I’m not trying to promote, I thought some background really helps these questions, otherwise, it turns into a whole load of, it depends. I run a successful SaaS called […], that runs digilization backups. However, the vendor lock in and the fear of digitalization releasing daily backups and making my life difficult is real. I’ve been working on my next product Ultimately. For SaaS products, they integrate payment gateway with your payment gateway, so you can do emails. Another work for that integration is without any code. It’s a bit like if Drip and Churn Buster have a love child. I’ve been struggling to work out pricing though. I want it to be in line with the value a customer receives, so I thought of a percentage of monthly recurring revenue, have it settle on a hidden percentage game saying, $9 per 1,000 MRR. However, talking to customers, the percentage model seems to strike fear into people with unexpected cost. Do you have a better suggestion before I roll with that because it’s just become a distraction. Thanks again, Simon. You can learn more about […] at […].com. Thank you.”
You have thoughts on this, Mike?
Mike: Yeah. Definitely. I’ve heard from other people who have apps that are kind of in the space and they have kind of reiterate the same thing that you’ve just covered, which is people really hate having a percentage model of any kind because they want it to be predictable. I think it’s interesting to see them make that argument because if you look at what you’re doing for them, you’re basically saving their money and preventing churn, and you don’t get paid unless they receive more money.
The reality of the situation is, they’re going to make more money by using your service, but they’re concerned about the fact that it’s going to cost them more money even though they’re making more money by using your service. For whatever reason, they have it in their heads that the cost fluctuates per month, and they’re not sure if they can afford it and this is a huge hang up for them. I’ve heard it time and time again.
What I would do is I would actually go and look at some competitors and don’t try to reinvent the wheel. Look at what they’ve done for pricing models and how they are putting things together and how they’re presenting them to customers. Don’t lean toward this model where people are going to hate your pricing. Find out what other people have done, copy what they’ve done, and then show how your solution differs from theirs. Don’t differentiate on your pricing model because that’s going to actually make your job of presenting it to customers a lot more challenging because they’re not going to understand it.
They’re going to look at your competitors and say, ‘”Well, they have this pricing model and that one, and this thing that you’ve come up with is completely, not insane or ridiculous, but it’s just very, very different.” They’re going to have a hard time processing it, and they’re going to mentally, cross you off their list because they don’t understand your pricing models.
Rob: Yep. I have tried to innovate with pricing models before. I have seen founders do it, and it is very hard to do. It’s like saying, “I want to invent a new category.” It’s like, “That sounds like a great idea. Call your app an integration email blah platform,” or something. People are like, “So, what is that? How are you different from MailChimp? How are you different from Zapier?” Those are the questions you get. People want to categorize that in their mind. Pricing is similar.
I think your advice is dead-on. The way I would approach it too is to at least look around at what other players who have similar models, how they’re approaching it. There are the ones that produce churn, but then there are also ones that help abandoned carts, there’s a whole gamut of things that make people money directly using email. Personally, I would pull out my Moleskine notebook, and I would just go around and do a big survey, boom, boom, boom, write it all down, and look at how that pricing is structured, and start from there. What you may find is that everyone does it based on a percentage as well, and you’ve just hit a few customers who don’t like it, and that’s fine. Your sample size is really small, and that makes it hard so far.
As you said, Mike, I would start there. Then the more people you talk to, the more data points you’ll get, and at a certain point, you will know. If you’ve talked to 20 people, and 19 will have a problem with it, it’s a real problem. But if you talk to 20 people, and it was the first two or three who said it, then it’s a little more clear cut.
I hope that was helpful, Simon. Thanks for sending your voicemail in. As always, voicemails go to the top of the questions queue. Our next question is from Martin at quoshift.com.
He says, “Hey, Rob and Mike. My name is Martin. I’m from Australia. I’m looking to start a new SaaS business in a fairly mature space. There are about three competitors in the $10 million to $100 million range in annual revenue that I would eventually like to compete with. I’ve compiled a large list of current users of those solutions. I’m going to go ahead and reach out to schedule some interviews. My platform would be easier to use while providing an objectively better technical solution than other companies. Easier to use, objectively better. What are the top three questions you would be asking these users to see if they would be interested in switching to my product? By the same token, how can I get people to pretty sign up to my solution?”
What do you think?
Mike: I think I would start by asking them what is the single thing you hate the most about what they’re using now because that’s probably going to drive them to switch. It’s not going to be, “Oh, this could be a better solution. It’s going to be better, technically or the UI is going to be better.” You have to hone in on the things that they absolutely hate. Use that as a lever to try and move them from whatever else they’re using because they’re going to want to avoid that pain, more than to incrementally improve, what they have now. That’s where I would definitely focus. Beyond that, just the language, I’d say, in the email is a little bit concerning because you’re saying that it is objectively better, technically. Dude, your customers are not going to care. It’s more about their experience with it and what they are going to get out of it.
Rob: Yes. Switching costs, whether they’re high or not, in actuality, they are always high in someone’s mental–in their mind. You can’t make an app that is 30% better and expect people to switch. You need to make an app that is two times, three times better and have a real, compelling way to communicate that to the customers. Building a better mousetrap is a really hard way to get people to switch SaaS apps.
The switching cost on mousetrap is not high—I’ll put it that way. I like your idea, the number one question of like, “What do you hate the most? What are two or three things that you hate most about this app?” I think, to tie it in, you talked about Derrick Reimer earlier deciding not to do Level. He wrote the blog post on derrickreimer.com, about deciding to shut it down, and the process there. He felt like he didn’t do it as well as he should have. He referenced the book called, The Mom Test—the subtitle is—How to Talk to Customers & Learn If Your Business is a Good Idea When Everyone is Lying to You. One of the big questions in there is not just, “What’s your biggest pain?” But that then followed up with, “What have you done to try to get around this pain so far? What have you done to solve this pain so far?”
Because if they say, “My biggest pain is I can’t integrate with this other product. If you build that integration, it would be great.” What have you done to solve that pain? Well, if they haven’t tried to hire a developer, or write any code to do it, or tie into Zapier, or do anything to actually fix the pain, then the odds are good that that pain actually, isn’t that big of a deal. In their head, they’re thinking, “Yeah, this is a pain. This is something I dislike.” But if they haven’t taken the time, or the money, or made an effort to fix it, it starts to sound like, “Well, maybe this isn’t that big of a deal. I think that’d be the follow-up question that I would ask about each of those pain points and I would […] The Mom Test, of course, to even hope further because there’s a whole bunch of questions in that book.
You know one other thing I would consider asking is because from a customer development standpoint, you want to find out what to build, and the early things to build. I would be curious to ask, “How long have you been using this product? How hard would it be to switch? Have you considered switching in the past? If you have, why didn’t you switch to another?” You know what I mean? Go down that logic, that path, of trying to really get into it to figure out when it comes time have they actually thought through what switching to your product looked like because if they haven’t, they can get right up to the end. They actually build all these integrations, and then like, “Oh, I haven’t thought that I’d have to get a developer involved.” That’s a no go. Those are the types of questions. That’s the path I wouldn’t follow. Thanks for the question, Martin. I hope that’s helpful.
I think we have more time for one more question today. This one is also about customer development. It’s about setting up initial meetings when all you have is wireframes. It’s from Scott.
“Hi, guys. I have a question for you. I’m trying to validate my idea by talking through wireframes with people, but before that can happen, I’m sending cold emails to people that I’m assuming are the target decision makers. In my case, it’s HR Managers of companies with around 250 or so employees, which may or may not be right. I wondered if you could talk about your experiences with getting those initial meetings set up. I don’t have a website at the moment, just initial product wireframes, do you think that’s a mistake at these early stage?”
He gave us a sample email, which I think is well-written. Any thoughts on this?
Mike: I like he led off the email by saying, “We’re in the early stages of building an app,” because I think it conveys to the person on the other end that you’re, I’ll say, as an aspiring entrepreneur. I found that that’s actually, a really good opening way to position yourself because you’re essentially soliciting them for their expertise and their advice.
A couple of things I would keep in mind though, the people that you talk to very early on like this—depending on how long it takes you to get your app out the door—it could be that these people are just not going to ultimately, end up being your customers. Just bear that in mind. Don’t bend over backward for every single one of these people, thinking that you’re going to get all of them as a paying customer once you start shipping the app or you have something to ship.
There’s a bunch of different reasons for that. But the fact of the matter is people switch jobs or their priorities change. All kinds of things can happen between the time that you first talked to them, and then you have something that you can show to them. I don’t think it’s a mistake to just show them wireframes. I mean, you need something to show them especially if you want to get any sort of prepayment or commitment from them.
The reason I would lean more towards that prepayment is because it essentially overcomes a hurdle which is that they’re saying they would pay for something, versus they will pay for it. If they give you a credit card as a prepayment, then they are willing to pay for it versus, “Oh, this sounds like a good idea. I would pay for it.” But the reality is, they want to see it, and they want to be able to play around with it. There’s going to be a bunch of people who fall into that category where they would pay for it except, and then they’ve got all these different reasons, that until you ask them for their credit card, they’re not really going to tell you because they want to be helpful. Nobody wants to be the person who says, “Oh, this is a bad idea.” If they’re trying to give you advice, they’re going to say those types of nice things which is going to what you want to hear, not necessarily what you need to hear.
Rob: Yeah. The hard part here is, if you’re an HR Manager of a company with 250 employees, you’re not going to prepay for something like this. Prepayment is such an SMB thing. When you’re talking to a single founder or a founder of a five-person company, yeah, they’ll totally give you a hundred bucks or whatever, put it in a credit card or whatever, but that type of thing, it works very differently as you get to the mid-market where they have these massive budgets, and everything is tracked.
You could feasibly do prepayment. But it’s going to be like, “Would you pay us $5000 or $10,000?” Then you’re going to need contracts. You’re going to have to go through procurement. That’s what this process would be like at that point. You’re trying to fund this based on customer pre-sales with larger companies, then it is definitely, much different—we would think—than if you’re dealing with just smaller companies.
Mike: Well, I don’t think you necessarily need to get to the point where you’re funding at with their money. In my mind, it’s more a matter of are they willing to commit to paying for when it’s ready. It’s a different goal than if you’re trying to get money from them to fund the development of it. That’s two different things, depending which direction he was trying to go.
Rob: Yeah. That’s fair. You don’t have to fund it, fund it yourself, but getting someone who runs HR at a 250-person company to give you their credit card number and say, “Yes, I’ll give you a few hundred dollars.” I wouldn’t do that. I worked at larger companies, and I just know the politics and everything that goes on in there, and you’re just so busy trying to push things forward that unless the solution is there in front of me, there are so many people marketing and trying to sell to these HR managers or to any manager at a company. That it’s like, them giving you the time to even give you feedback, and then them going out on a limb and then giving you money with the thought that you might build something. I mean, if they don’t know you, did they know that you’re going to build good software? Did they trust that you’re going to deliver […] ever? It’s a whole different ball game.
You’re not going to have a reputation like you might if, let’s say, I went to our audience and was like, “Hey, I’m going to build something that is going to solve whatever your problems.” There would be reputation factors, right? People know me, and hopefully, like me, and trust that I’m going to build something good, but he’s not going to have that with these HR Managers because it’s just cold outreach.
Mike: I think, what I would lean towards doing in that case is saying, “If the products says this, this, and this, so what are the roadblocks to you purchasing it and pain for it?” That gives you a little bit of insight in to the internal politics of how that company operates. If you’re asking that company that specific question, you’re going to get, I would think, a reasonably decent cross-section of how companies at that level operate in terms of purchasing and requisition.
Like, “Some are going to need to go through the IT department and they have to hand it off to them and the IT department has to purchase it. Some of them are going to have a credit card, they’re going to be able to just buy it themselves, and tell the IT department afterwards. Some of them purchases above a certain dollar amount, they need to go through somebody.” You can ask them about, “If the pricing was this, what would you think? If the pricing was this other thing, what would you think? What are the roadblocks that lead to those different points?” That’s what you need to know is how are you going to sell to these people assuming you built what they want.
So, one line of question is, “What is it that you want and need and what would make it so that she would pull the trigger and buy it and say yes.?” The second part is, “What does it take to actually get it into here?”
Rob: Yep. I think those are good points. He asked two other questions or he asked two questions in the email, and I don’t know if we’d addressed them very well. His first one was, “I wondered if you could talk about your experience with getting those initial meeting set up.” Yeah, the experience is, you have to send a lot of emails to get very few meetings. The funnel is wide, and people are busy, and they aren’t going to want to talk to you.
Other thing that I’ve done is use my network/audience to try to get that. Whether you’re going on LinkedIn, whether you are emailing everybody you know to basically say, “Look, I’m an aspiring entrepreneur or I’m a founder, and I’m in the early stages, I need advice on an HR product. Could you make an intro?” That’s how you’re going to get people who will at least talk to you on the phone. My experience is that it’s frustrating, and takes longer than you want and you get a lot of, “No, I’m not going to talk to you.” Eventually, your persevere, you figure it out, you talk to enough people.
Then his second question is, “I don’t have a website at the moment, just the initial product wireframes. Do you think that’s a mistake at this early stage?” I could go either way on this. I think wireframes is fine, but I think non-technical people have a tough time feeling wireframes as real things, but I’m less worried about how the screens worked, and I’m more worried about what is the headline. What is the headline of the website? There’s kind of this old marketing thought, and I think it’s good, it’s something that I’ve done from time to time, where you build the marketing page first, you build the landing first page. You go from there to then building the product. By the time you get that headline in there and some bullets of what the copy is and what it does. I mean, that’s how we did with Drip.
I’m trying to think, my book was that way too where it was five sentences on a page and then I took that and said, “Now, I’m going to go manifest this into reality.” That’s what I like about you building a marketing site is whether you do it in Squarespace or WordPress SaaS theme, it doesn’t have to look amazing, but it’s really about you getting it on paper, getting the marketing thoughts and the copy even in front of yourself, and maybe if they asked, you can send them there, it’s just an email opt-in, it kind of depends, but I think I lean towards in doing that. I think it’s a helpful exercise, especially for those of us who tend to want to go to the code.
Mike: I was going to mention exactly that. I don’t think that having a website in and of itself is going to help you, but I think the process of putting together the website makes you seriously think about what it needs to say, and how you’re going to position it, and it helps you craft a better story when you’re talking to people about the solution on a call, and you’re demonstrating those wireframes. It just helps you position it better so that if they look at your email, “Well, let me just take a look at the website before I reply back to this.” That should tell them very quickly whether or not they want to even waste their time at all or whether you’re serious. If you don’t have any website at all, who knows?
I mean, I feel like, this is definitely more me than anything else, but if somebody sends me some email and says, “Hey, I’m thinking about this,” and they’ve got literally nothing on their website at all or they don’t mean to have a website, it’s really hard to take him seriously that they were even going down this road.
Rob: Yeah. I think that’s a good point. Hope those thoughts are helpful, Scott.
Rob: Well, thanks for the questions everyone. If you have a question for us, you can call it into our voicemail number 1-888-801-9690 or you can email it to us at firstname.lastname@example.org.
Our theme music is an excerpt from We’re Outta Control by MoOt. It’s used under Creative Commons. Subscribe to us on iTunes by searching for Startups and visit startupsfortherestofus.com for full transcript of each episode. Thanks for listening. We’ll see you next time.
In this episode of Startups For The Rest Of Us, Rob and Mike talk about how to build more successful integrations. They discuss how to approach the different areas of risk including work estimates, API integration, co-marketing opportunities and more.
Items mentioned in this episode:
Mike: In this episode of Startups For The Rest Of Us, Rob and I are going to be talking about how to build more successful integrations. This is Startups For The Rest Of Us episode 446.
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 our experiences to help you avoid the same mistakes we’ve made. How are you doing this week, Rob?
Rob: Doing pretty good, man. Just doing a lot of work on TinySeed. It’s been fun to start have more and more exposure to more and more startups. We’ve had a lot of exposure to a lot of different founders of startups over the years through all the stuff that we do with MicroConf and book, blog, podcast, etc. Then I felt like I leveled up when I started angel investing and got in depth views, ongoing longitudinal of a more companies and TinySeed feels like another leveling up for me. It’s just seeing a lot of different data, a lot of different applications, and seeing what’s working, and what’s not, tactics, strategies, approaches, even what is working with the founders who are successful and not, that’s been a fun thing to continue to begin to.
Mike: That’s cool.
Rob: How about you?
Mike: Well, on my end, I’m in the midst of rolling out some Bluetick updates. The main focus here is to provide, I don’t want to say platform, but more of a mechanism for me to do more in the future in terms of displaying emails inside of the applications. Right now, I can send emails out and you could see those emails, but you can’t see the replies to those emails in there or see the history there. Some of these updates are going to allow people to do that and also, give people the capability to inject Bluetick into existing conversations which is not something that it’s capable of right now.
I had actually answered somebody’s question through Twitter the other day. They were asking, “Can it do that?” I was like, “Not yet, but that’s on the roadmap but it’s coming soon. It’s coming in the future.” This will put me in a much better position to be able to do that. And then there’s also various things with the Google authentication stuff that’s in there. Frankly, I’m worried about how that’s going to turn out because it’s a completely opaque process. I have no idea what the end result is going to be so I’m still, I don’t want to say sweating it out, but what is going to be the end result of this.
Rob: Sorry. I don’t know what else to say. That sucks. Goodluck is probably…
Mike: I guess. I mean, there’s really nothing to say. It’s just waiting for them to go in. I don’t know what their checklist looks like, I don’t know what they do or anything. It’s a huge hole, I’ve no visibility here and it sucks. There’s nothing I can do either which is the worst part. It’s just they’re going to either approve it or reject it and they’re going to move on with whatever their timeline is which they’ve been fairly vague about until just very recently where they’re like, “Oh, yeah. You only have three days left.” I’m still waiting to hear from them so if anyone here works in Google and is involved in that process, please email me.
Rob: Yeah, email Mike. Due to some recent fixes that I mentioned last episode, fixes to our WordPress theme, comments are now appearing to end-users and there were a couple that I want to read through.
Episode 436: How to Respond to Customer Suggestions. Steve says, “Great podcast. I’ve made every mistake mentioned in here plus a few more. We have one additional solution while working with customer request. I had found that if a customer wants a specific feature and it makes sense to them in a product, though they want it now and you see it down the road, charge them to put it in now. We charge it as an expedited feature release, it has helped us grow Skills DB Pro…” which is his product, “…to an enterprise level offering while getting paid along the way. One more bootstrapping thought.”
I think that’s a good one. It’s not something that I tend to do with SaaS apps, but back when I had these one more time downloadable stuff, we definitely did it on a number of my products especially the ones that were smaller where a few thousand dollars and kind of expedited feature, this actually moved the needle on the product versus if you’re doing million or more, worst if you have a seven-figure SaaS app then try to charge a few grand to expedite a feature, it’s almost not worth the hassle is how I found it. But I think that was a cool suggestion that some folks might be able to take advantage of.
Mike: Awesome. Anything else?
Rob: Yeah, we have a comment on episode 437 where we talked about MicroConf Europe. I think this was back when we were still trying to figure out where it’s going to be or maybe we even said Croatia, but Rob said, not me, a different Rob says, “Come to Barcelona.” What do we say to that, Mike?
Mike: Do you live in Barcelona?
Rob: No. Well, that’s the first thing because everybody wants us to come to their city, but we have. We came to Barcelona twice.
Rob: We tend to go to cities two years in a row and then we move on to keep things varied. Episode 440, How to Build Case Studies That Don’t Suck. Sarah said, “Great episode as always. You mentioned a book called the Hero’s Journey. There seems to be a few around with that name, can you give any additional details of the right one?” I don’t know if I mentioned a book, but I did mention Joseph Campbell’s Hero’s Journey. I never read a book about it. I tend to go Google and there’s this amazing diagrams and in-depth articles. I mean, the first result on Google is amazing, and it’ll give you the whole overview. Then maybe Joseph Campbell wrote a book called the Hero’s Journey. You can totally go to Google for that but frankly, just getting the idea of what a hero’s journey is like is pretty easy to do from the googs.
Last comment for the day, episode 441 where we answered some listener questions, and then in our aftershow, we talked about the first MicroConf Dungeons and Dragons game. Patrick Mckenzie, his character died early on and he became the final enemy, he was the boss, he was voicing the boss. Christoph Engelhardt chimed in and he said, “My biggest question is what kind of enemy in Dungeons and Dragons game constantly mutters ‘charge more’. Okay, I’ll see myself out.” I thought that was worthy of mention. One of the few funny lines I’m sure that will happen in today’s episode; one of the very, very few, Mike.
Mike: I don’t think I’ll be in any of this.
Rob: That was it. That was all one and done. Today, we’re talking about successful integrations. You want to dig us in?
Mike: Sure. I kind of based this outline loosely on some of the challenges that I’ve encountered integrating with other apps, taking Bluetick and just whether it’s integrating with IMAP servers or going into Zapier or other third-party applications or even using certain libraries, like code libraries. Some of this is retrospective like, “If I were to go back and do it again, how would I approach it?” Because there’s certainly things that I look at now and I would’ve done very differently and then there’s other things where I don’t know how much I would have changed or how much it would have changed, what the end result of that was. I think that these are the things that I’ve learned along the way of doing it and that are generally applicable to most people if they’re going to look to integrations.
I’m sure you have a ton of experience here in terms of taking Drip and integrating it with, I think it was like 30 or 35 different other applications, and incorporating them with Drip throughout it’s, I’ll say, rise to fame.
Rob: Yeah, I mean there was that, there was HitTail. I did, I don’t know, it wasn’t half a dozen, but it was approaching that, DotNetInvoice did a few. I had multiple apps, many apps I would say, that we’ve done integrations. Some successful, some not, some technically successful but revenue-wise, they weren’t that great and then others that were pretty simple and easy-to-build that wound up having a big impact on revenue. Yeah, a lot of learning and some do’s and don’ts along the way.
Mike: Before we dive in, what I want to do is provide a definition of this so that we’re working from the same page here. I’ve loosely defined integration as, it’s a part of your business where there’s something that’s handled internally and is reliant upon a third-party. Essentially, it’s outside of your direct control and there’s varying degrees of visibility and influence that you have over whatever the processing is or procedure or how it works. Some of the examples of those are things like code libraries or third-party APIs. Baremetrics, for example, is heavily reliant upon Stripe’s APIs. If those Stripe APIs went away, the business goes away.
I think a lot of discussions we’ve had in years passed about integrating with Twitter is they decided on a whim to go a route and either change the process of who is authorized to interact with their APIs or who has them available or even what you can do with them. Obviously, all these large companies like Google, and Facebook, Twitter, they all have varying things that they want to do in the future and those may directly conflict with you as an entrepreneur. These are areas of risks. Those are the types of things that you want to keep in mind when you want to integrate with somebody or something outside of your company. That could be software integrations, it could be business processes, it could even be a joint venture that you’re doing with somebody.
But I think the focus today is going to be more on the technical side of things but also taking into account the inter-business relationships as well because you have to know that the person you’re working with or the business entity on the other side isn’t going to totally screw you and if they do or if they could, what ways might those be. It’s really just providing some visibility to those areas of risk.
Rob: Right. Building your app on someone else’s platform where if they turned off the knob, you would lose 50%-80% of your revenue overnight, that’s one thing, and that’s platform risk. You can de-risk it by going to multiple platforms, sometimes you don’t need to de-risk it. It does impact sales multiples, if you ever try to sell a SaaS app that is entirely reliant on a platform and you don’t have an official contract, it’s a risk, so it requires to look at it and factor it in.
We’re not going to dive into all of that today. This is more about building individual integrations. You’d think about Drip that has all these incoming stuff from Stripe and from Shopify and from Event Pride, any one of those going away would have been a bummer because people want it and used it but it would not have been business-ending. That’s really more of the integrations we’re talking about today. We’re talking about both the process, the dev side of building it, the business development side of, how can you leverage that to get more customers and leads and we could touch on like deployment support and that kind of stuff.
Mike: As you’ve said, the best case scenario is really, if something goes away maybe you’ve lost some time or money and that’s about it but the worst case is everything that you’ve built is effectively gone and that kind of leads towards building on somebody else’s platform and you just have to evaluate that as a risk. We’re going to start through this list.
The first one is what level of effort is going to take to build something. I’ll […] up this by saying that I think in most cases, your estimate to build an integration are going to be too low by a lot. That will change over time as you get more familiar with building integrations and you create more infrastructure in your own application in order to build those things but what I’ve found is that there’s a few different places where I thought things were going to be in a certain way and it turns out that they weren’t.
For example, documentation is an area where when you’re trying to build a third-party integration or integrating to something else, I found documentation tends to be lacking, even if the documentation is there and it seems to be extensive, what I’ve found is that a lot of times that documentation is inaccurate and it’s because companies don’t keep their documentation up to date. There are places where it will say one thing and is absolutely not true or it documents in a certain way and it says, “Hey, this is how it works.” When you go start implementing it, it turns out it doesn’t actually work that way. These things sound like they shouldn’t be that big of a deal but in some cases, they really are. If you designed everything in a certain way, those things really throw a wrench into your plans.
Rob: Yeah. There’s an interesting X factor or a variable that is outside of your control that gets thrown in when you’re dealing with someone else’s API. It could be bugginess or it could be docs that are out of date. There’s a bunch of different things. It’s different when you’re just building your own app. You know there are going to be things that you can’t control in terms of, “Oh, I run into this problem. I couldn’t solve it quick enough. There’s a bug I couldn’t find for two hours,” or whatever, but external APIs can be one of the most frustrating things to develop against.
Here’s the thing, we got to the point with Drip since we’ve built so many of them, we basically almost by looking at documentation and whether we knew the founders or not, whether it’s a big company or a small company, we could gauge like, “Oh, this is Fortune 500 integration and they’re using SOAP. This is going to take a week to build,” versus, “Oh, it’s a REST API written by some […] developers that we know. We can probably literally build what we need in four hours.” I mean there were integrations we would get done in half a day. It’s because we have a whole repeatable system and a bunch of code on our side to help do that copy/paste and polymorphism and that kind of stuff but we would ballpark engage, “Yeah, I think this one is going to be a lot worse.” It’s like all APIs are certainly not created equal.
Mike: Another thing I’ve run into is there’s time that you’re going to have to do some sort of black box testing to figure out how things really work especially when you’re going up against external resources or external APIs that are providing data for you. Interesting thing I ran into was there was a code library I was using that says, “Oh, if you pull this information back, you get a list of strings over here and you get a list of integers over there and they represent the same thing.” Early on, I was trying to work with those and pull the data back and one of them took five seconds and the other one took 60 but it’s supposed to be identical data. The numbers, the integers should have been a lot faster and they weren’t. I ended up using just the strings, that worked fine.
Recently, I’ve gone back, and I’ve been doing some more test performance on that section of things and came back and said, “Why is this taking so long? It shouldn’t take that long.” I found some access to some additional logging capabilities and I printed it out and it turns out they’re actually returning not just those numbers but also a set of dates. I was like, “Wait a second. Why is this requesting dates?” It’s not even actually requesting one of the information I asked for, it’s requesting this other thing, and then just interpreting it and throwing those integers in there. It actually doesn’t even work. Like, “Wow, that’s just painfully wrong.”
Rob: That’s amazing.
Mike: Yeah. It works but only because of some other thing that happens to be going on. It’s issuing the wrong command to the server but those are the types of things that you’re going to run into and you won’t, since you don’t have the visibility into those things, you can’t troubleshoot somebody else’s code or somebody else’s server. It makes it difficult to find those things and it just takes longer. You have to do timing performance, benchmarks, and see how much memory allocation needs to be done for different things. You may not be able to do everything all in one shot. Those are the types of things that—it just takes longer, makes the process of implementing especially the early integrations that you do, just makes it take that much longer.
Rob: Here’s something I’ll say on how to streamline this. If you’re only going to build a few, then just do what you’re going to do and go straightforward. There are reasons to do this: a, it makes your product more sticky because you can get data from more places and therefore users get more value out of it; b, it makes your customers lives easier; and c, it can be a co-promotion opportunity. Off the top of my head, those are the top three reasons to do it.
If you’re going to build a bunch of them, then you’re going to want to standardize on the code side and like I said, develop something where it’s easy to just pop them in, you don’t have to build custom UI for each one. I mean, again, look at the Drip UI and we just pop an item in the dropdown list to add the next trigger or action that’s triggering something in Drip or sending out an action, something that goes out of Drip.
The other thing to think about is or the way we were doing it was, if I recall, we have three levels. We had a V1, V2, V3 of any integration that we did almost without fail where we would build a very simple integration first, and that was our V1, and that would typically take less than a day to build. Sometimes, it only had one or two triggers, one or two actions, something like that. It was easy to build, we’ve got two, three API, we’d push it live, we’d promote it, we’d see who used it, we’d see the request.
The best-case scenario is that we’ve got a bunch of people saying, “Oh, this is cool except for it doesn’t do this for me.” It’s almost like customer development where we’re iterating on the feature, almost like it was its own product because Drip had—off the top of my head—I’m going to say 20 different triggers and Stripe has 20 or 30 different actions. Well, there is no reason to build essentially 50 endpoints, 20 in and 30 out. Again, don’t quote me on those exact numbers but you get the idea of what I’m saying. There’s a lot. It’s a lot of work, it’s a lot of code to do.
If you build two in, two out, pretty simple, you throw it live and then as people ask for stuff, you can add another one in almost minutes. I mean, you have to write unit test and stuff but it’s very trivial to add. If you get enough people asking about it, well, you take it to that next level where it’s a tighter integration, you can add OAuth later. At first you can paste an API key which is a little janky but then OAuth becomes the V2, and you just build tighter and invest more in that, the more people who use it. That was how we did it and it seemed to work out pretty well in general.
Having the ability to watch the actual user behavior on your integrations before investing weeks of time is hugely valuable because it can save you a lot of time. There were integrations that we built, that V1, and 20 people used it out of thousands of customers, and we never did OAuth and we never added that extra week or two of development on it because there was no business case to do.
Mike: What I like about the strategy you just outlined—doing the V1 and then V2 and then V3—is that it allows you to come back and start very simple. Then as you start to see the technical problems with it, but also the features and functionality they’re missing, that customers are asking for, it allows you to fill them in afterwards. You don’t have to worry about as much about going back and rewriting some of those things that you’ve already built in order to satisfy what the customers need because you didn’t build very much to begin with. You did it really more or less to help pull that information out of the customers and find out what it is that they wanted and then take that forward.
That’s actually a mistake that I’ve probably made early on with integrating with Zapier is that I put too many things in there, but it was partly because customers were asking me to do a lot. I don’t what to answer how I would change that, but I think that I would probably spend a little bit more time on going back and verifying with Zapier directly like how this should have been done.
Rob: Yeah, it’s easy to over build. You get in there and you think they need to be able to do everything that they can do through the Bluetick UI or everything that the API offers, they need to be able to do that in Zapier. I would say that’s not true for a V1. You may miss something, but take your best guess, 80/20 it. What are the 2 out of 10 things that you think or you know people are using or your gut feel of what you think they’ll use which is sometimes you just don’t have the data and then pop it in. When they’re like, “Oh, I also want to do XYZ.” Well then you put that in your queue, and you build it out as soon as you can.
Integrations are—they’re a curious thing because I remember with HitTail, we skipped this with Drip too, but it was like, “Do you integrate with Shopify?” It’s like, “What do you mean by that? What does an integration mean in your head? Does that mean that we’re taking data in from them and we’re triggering things? Does that mean you want us to pull data and display it as a report? Does that mean you want us to push things into your Shopify store?”
Same as Stripe, “Do you integrate with Stripe?” It’s like, “Yeah, we do but what do you need it to do?” It was often digging in questions and then they would have a use case typically. It’s like, “Well, I want once someone purchase, I want to be able to mark them as a customer and drip.” It’s like, “Well, yeah, of course. We do that.” Or, “Once an invoice is created on the second Tuesday of every month, I want this and that to happen.” It’s like, “Oh, we don’t handle that use case, but we can build that.”
Saying integrating with Basecamp or Highrise or with Slack, that can mean a whole slew of things. Integrating with Slack can literally be, “Oh, I’ll just dump a message in there when someone says something.” It’s an integration but it might not be what everyone has in mind. You often want to dig in if people are asking for these things and find out really what is your exact use case and then just build those one at a time but build it in a framework such that it’s easy to add other functions.
Mike: Yeah. The question that I’ve kind of usually responded to for those types of request is, “What is it that you’re trying to do?” Because usually, that’ll entice people enough to give you the information that you need to either extrapolate it or what you need to build or what sorts of things they’re trying to do and whether it’s even remotely possible. If it is, then you can dig in a little bit more with the technical stuff but usually, at a high-level, it gives you enough information to say, “Yes, this conversation is even worth pursuing or it isn’t.”
Mike: Next step we’re going to dig into is the actual API integration itself whether you’re calling an external API or they’re trying to call back to yours from an external application. What I found is that, because there’s so many different ways to design an API, it’s probably not going to be likely that your API is going to be able to be used directly by the other application. This applies whether it’s having to respond to webhooks or accepting them or tracking them or just make external function calls.
If you have an external application that’s calling into yours, they already have a standard way of doing it. You may need to change how your product works. If you’ve already built an API, it may not be the easiest thing in the world to change your API especially if you have other customers interacting with it or your application depends on it. Bluetick for example is a single-page application and it’s got an API specifically for the app itself, it’s also got a public API and then I have additional endpoints that I’ve created.
This is one of the, I’ll say, hacks that I’ve learned is that creating your own dedicated endpoints for other apps could be in your best interest to do. It sucks to have to maintain them in addition to the other code that you have, but it may be the best way to go about providing a mechanism for them to talk to your app without having to rewrite all the different things in your app. Even if you would have just two of them that need to call into your application, they may be doing things differently between each other and then your application may be doing something else as well which makes it hard. You can’t standardize on one thing that’s different for three different people. A dedicated endpoint for each of them is a good way around that. I won’t say the best way, but it is a way that is workable.
Rob: Another thing to think about is rate limiting. I think I’ve talked a little bit about how segment, well, there are few people, segment was the most notorious for it a couple of years ago, but they would accidentally DDoS us. Someone would activate something, and it would just hammer your API and we had rate limiting in place. We had a Ruby Gem that basically sent back, I believe it’s a 304 response, 403, there’s some response where you encode. It’s like, you’ve been rate limited, you can send this much per hour, and wait this long before you can send your next batch and they just weren’t honoring that. There were several that weren’t honoring so you have to code the work around those. I know that Zapier has rate limits and we coded early on to help with those.
It’s one of those things that in the early days doesn’t matter and as you scale, it matters a lot because it’ll either take your API down, it could take your app down, your database down, it can take web servers down, or it can mean, if you’re not queuing things and you’re hitting and you’re getting rate limited, you could lose customer data. If you are queuing them, it could back your queues up because you have all this retrial logic. If a failure happens, it’ll just fill your queues up and say you have to expect rate limits and it’s a bunch of code, it solve problem logically but it can require a lot of code on your end to properly implement rate limiting.
Mike: Another thing that’s similar to that which is parallel request. You may end up with request that are coming in on your API that are close enough to each other where if that resource doesn’t exist, for example, then it needs to be created. If you don’t have your transactions set up properly in your code, then you can end up with duplicate resources created inside your app and then suddenly, things start to fall over because it’s basically what amounts to a raise condition, which you never would’ve run into in normal interactions with your app because users aren’t clicking on things with milliseconds between each request. If that happens to your app, if it’s coming to an external API, that can easily happen. You do have to be careful and cautious about those types of things which some frameworks are good about transactions and some are not so much.
Another thing to think about when you’re looking to integrate with an external API is what customers are using that and what visibility do you have for the other side of things. If you’re receiving commands or queries from another system, can you log into that system and see what has been initiated, can you see what has been satisfied, can you see the errors that we’re running to? Because a lot of those things, you may not necessarily have the information on your own servers like there could be requests that’s going out. You may see the request come in, but you don’t necessarily know if it was responded to properly or it’s sending back the wrong data.
If your code is incorrect or it’s not responding properly, how would you know that? The only way to know that is to go to the other side and look from there. Being able to monitor things both internally and externally is important. You don’t always get that external viewpoint that you need, and you may not be able to track them down to particular customers either. If you see an incoming request not just, why did it come in, and where did it come from, who is the vendor, but what customer of yours is that request associated with. If you can’t see those things, it makes it difficult to troubleshoot, it makes it difficult for you to offer support for your own customers.
Rob: Another think to think about is when you are building the integration, who can you contact for support. Is the documentation—we’ve already covered a little bit—is it good, is it buggy, is it correct or not? Do you have email access, phone access to a developer on there? Because you’re going to run into problems, and do you have access to a developer? Do you just email their general support that they have specific integration support?
We love integrating with the three-person startup where two of the founders were developers. I mean, those went so smoothly, they could fix things so quickly, and they knew how everything worked. You’d email them and be like, “Hey, there’s a problem here. This is the result we’re getting.” And they’re like, “Fixed.” It was so good. The larger the teams get and if you’re sending an email again, to Salesforce, to their support, to try to get integration, it’s an absolute nightmare. You hear back a week later, and they don’t understand your question at all, and they don’t escalate you, blah, blah, blah. Those are kind of the two extremes that I’d point out but it’s something to think about when building this.
Mike: The last one, typically comes around when there are webhooks of like, “How do you go about testing them?” This also applies to just you sending information over but how do you go about making sure that the stuff you’re developing has a test area on the other side? Are you working with production data? I would hope not but there are cases where you are going to have to do that which means that you have to create an account on their side and use that to do all of your testing and effectively it’s in production but on your side it’s not. That makes it hard because you have to keep things straight locally like, “Oh, is this information here that we’re working with in production or not on their side?” You may have internal flags or toggles or fields that you use to keep track of that stuff, but it can get complicated especially if you’re trying to document that. It’s got to be documented in places where it’s easily accessible by you to understand what’s going on both side and which environment it’s going on.
Rob: And then, as you get it built, there’s going to be an approval in publication process and again, with smaller startups there’s typically not much of a process. You send an email, you say, “Hey, this is live. We’re going to push this live in our UI next Tuesday.” They’re like, “Cool.” With Zapier or Salesforce or someone who’s doing a lot of integrations or having a lot of people integrate with them, they are going to have a process, they’re going to have a checklist of requirements. You’re going to want to look at approval timelines because I know some apps take weeks and/or months to get approval publication timeline after it’s approved.
Is there a beta period? This is something that Zapier I think does well. It feels like a pain when you’re doing it, or it feels like hoops to jump through but they’re doing it because they want to keep the quality of the service side. If they don’t have the beta period and all that where you have to get 10 users using it because they want to force you to work out the bugs basically. I think they do a good job of that. Then how will you get support during beta? How will you provide support to your folks during beta? It’s all things to think about to get it live. Oftentimes, writing the code is the least time intensive piece of this whole process.
Mike: Yeah. I think the piece of this process that does take the most time is just making sure that there is that trust factor there on both sides that, “Hey, this is going to work and is generally going to be good for everyone who’s using it but if it’s not working or it’s buggy or there’s problems of any kind where there’s transaction delays or things are just overly slow or they’re using too much memory or there’s scaling issues on either side, all of those things can essentially erode the credibility of the integration.
At that point, one side of the other is going to want to back things off a little bit and introduces this additional delay. Delay factored just from becoming comfortable with it is important, but you also need to have ways to resolve that. This begs the question of, “How are discrepancies or disputes handled” Those disputes or discrepancies can be like, “We expected this data, we got this data instead.” Or it could be something along the lines of, “This isn’t working right. Why is it taking so long?” Or it maybe it could be a designer or an architectural issue, “Oh, you said that you want to send us data XY and Z but it’s also including this other thing. Why is it doing that? I don’t think that it should.” You have to have someone resolve that.
Sometimes, you’re talking directly to developers. Sometimes, you’re talking to an anonymous email box where you have no idea who’s answering it or what their ability to make change is or even knowledge of the entire system is. Each of those is going to be a different approach but they’re things that you have to be aware of especially when you’re working with larger companies or smaller ones.
Rob: Then something we’ve alluded to several times during the episode is I mentioned there my top three reasons for building integrations and one of them is the comarketing opportunity, the business development so to speak, which is to be able to both promote who you’re integrating with and for them to promote you in one way or another. There are a lot of ways to do this such as joint webinar is a pretty good way. You think about it, if you’re integrating with another startup, you both want the exposure to each other’s audience. If you’re integrating with Stripe or Facebook or Google or whoever, you’re not going to get that, but it’s nice to think about high-touch opportunity to show how the integrating works and the benefit it provides—so joint webinar is one.
Certainly, I found a lot of success with the joint email. We email our list, you email yours. Copromote blog posts also on both announcement blogs for each company. There are the functionality updates whether they handle that via email or in-app or whatever. You can offer in-app announcement on both. Even providing customized landing page that says, “Welcome, Pipedrive users. Welcome, Stripe users.” That they can link to from the other place that you can get is in their app directory, their integrations directory. There’s typically one in the app and out on their public market website. That’s another place you want to be.
From there, we found that building custom landing page for some of them, but not all, worked really well and increased conversions quite a bit. There were a couple of integrations where the clickthrough from the in-app or from their integrations directory on the marketing site to our landing page and then sign-up for a trial was something like 30%. It was outrageously high. We asked for credit card upfront. Typically, the number is very small, and it was 20%-30% and it was shocking. We did so much to tune that page and split test it but the ones where we were getting 3% or 4%, you obviously don’t care as much about those.
But those comarketing opportunities can be fascinating because if you get a big email sent out to 30,000 of their marketing list or customer list or whatever, you can get a nice bump there. But then if you get in their app directory or you get in these other longer, living links basically, you not only get the SEO juice from that, but you then get that flywheel of traffic. I’s not huge, again, maybe it’s 100 visitors a month, so it’s not a huge amount but if you’re getting 10%, 20%, 30% of those to sign-up for a trial, that’s 10, 20, 30 trials every month that shows up. Then you multiply that by 10, 20, 30 integrations and you start to see how you can potentially build a flywheel out of this.
Again, you can’t just take this advice and apply it to your app without thinking, “Does this make sense? Is it going to provide the value? Do I have the leverage for these folks to do all of this?” That is the integration marketing playbook that can help grow your business not only as a one-time thing but as a sustainable approach. With that, I think we’re wrapped up for the day.
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In this episode of Startups For The Rest Of Us, Rob and Mike talk about some of the pitfalls of absolute thinking. Things are rarely black and white, they are more nuanced and on a spectrum. The guys explore the advantages to this approach.
Items mentioned in this episode:
Rob: In this episode of Startups for the Rest of Us, Mike and I talk about why absolute thinking is always bad. This is Startups for the Rest of Us Episode 445.
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: And I’m Mike.
Rob: We’re here to share our experiences to help you avoid the same mistakes we’ve made. Did you catch the joke? The sarcasm in the title there?
Mike: Just a little. Is it always though? Is it always bad?
Rob: Always bad. We’re going to dive into always and never, absolute, thinking in this episode. But before we do that, what’s the word this week, sir?
Mike: I’m still going through hell that is the Google authentication approval process. I feel like it’s on of those ongoing sagas, kind of like Game of Thrones right now, where like the last episode’s coming up and you’re just like, “Ugh, just let it end.” It’s going to take a little while. They sent me an email. I asked them for more information. They said, “We signed up.” This is me going on a rant here. But they signed up for Bluetick apparently and then they ran into the credit card screen, and then they email me saying, “We need you to make our account so that we can log into your application and bypass the payment information.” I’m just thinking to myself, I’m like, “You’re Google. I imagine that somewhere, there’s a credit card that you could put it in for the 14-day trial.” I would just imagined it that would be the case some place.
Of course, I email them. It was a week later, still nothing from them. I was just like, “I need an email address. What email address did you signed up with?” I didn’t hear a word from them and then they’re like, “You have five days to comply.” I’m like, “Come on!”
Rob: Oh, boy.
Mike: This coming Monday is when they’re like, “You have five days to comply. These are the steps that we’re going through. We’re going to start notifying people, your users that are connected.” I’m like, “Come on!” It’s just ridiculous. I don’t know how that all is going to turnout over the next couple of weeks. It’s just frustrating and irritating.
Of course, at the bottom of it, it’s one of those worst case scenarios where they’re going to detail about, “You’re not going to be able to add any new users using Google Gmail accounts.” I’m like, “Come on!” Basically, they’re taking aim and saying, “Well, if you don’t do this, we’re going to tank your business” Like, “Thanks.”
Rob: It’s a little bit like dealing with the state government or the federal government.
Mike: Only with them, you can just pay a fine or penalty or late fee or something like that. They’re threatening to shut things off. I’m just like, “This just sucks!”
Rob: Would you say, never build on top of Google, Mike? […] for the next episode, never trust Google. It’s not never but know what you’re getting into. Is that it?
Mike: I think what it would boil down to is that if a company removes, don’t be evil from their company motto. It is probably not wise to rely on them not being evil.
Rob: Right. You might say, “I will never build on Google again.” Or, “Know the pros and cons of basically building a business that relies on them.” That’s tough. It’s a similar thing that I’ve dealt with with setting up payroll in multiple states where you like Gusto, I guess, Zenefits, and there’s a few others that like it appears that it makes it just magical like, “Get payroll running. It’s no problem.” Then you have to sign up for at least two janky online web accounts that were built in 1997 with state governments to get the revenue, Office of the Revenue of the state, and then, it’s like the unemployment stuff so that it can pay into this. Then, you have to give Gusto access. That never works the first four times.
It’s not threatening to tank a business but it is something that adds a bunch of back and forth, that’s frustrating, that you can’t actually get it done, that you really can’t outsource to someone. That was the thing that I always struggled with. You almost need a chief operating officer or an office manager who’s really going to dig in and do it but it’s kind of something you just have to deal with. It’s just a headache that wastes time and it’s not the fun part—one of the many not fun parts—of running a business.
Mike: Yeah. The other thing is how opaque the whole process is. It’s Google. They’re kind of like Facebook or Apple. You have no way to talk to a real person. I guess with Apple, it’s a little different, you could go to the Apple store. Even then, if you need to talk to somebody, an engineer or something like that, I’ve only heard of one situation where somebody was able to get an Apple engineer who was in the design engineering office in Apple. It was because something literally caught on fire, with some charging cable or something like that. It was like the second or third time that it happened. They’re like, “I want to talk to that person.” That’s the only one that I have ever heard of. Just getting somebody to talk to, to say, “How is this supposed to actually work? What’s the next step? How do I talk to somebody about getting either a waiver or something like that or an extension?” Nothing, there’s no information, and they’re not forthcoming with it. Anyway, I will leave it at that. How about you?
Rob: Yeah. We can stop. Google Rants for the Rest of Us. I wanted to give a shoutout and a thank you to Rich Staats. He runs secretstache.com which is a WordPress agency. It’s spelled s-t-a-c-h-e like a mustache, secretstache.com. It’s a WordPress agency. You and I have met him at different Big Snow Tiny Conf. He comes to MicroConf as well. We were having some issues, to put it mildly, some minor issues with the Startups for the Rest of Us website because it’s on a, do we think a nine-year-old WordPress theme? Eight-year-old? Nine-year-old? It’s pretty ancient. It’s like 70 in human years.
Rob: It’s not like an eight-year-old WordPress theme. I think it’s nine years.
Rob: Anyways, he dove in. He helped us out, really appreciated it. Now, our comments appear. When people are making comments, we can see them in the admin, but they wouldn’t appear on the actual episode. As such, we have few comments that I haven’t read through over the past couple of months.
Episode 432, you and I talked about How to Indirectly Overcome Sales Objections and Matt made a comment. He said, “Great episode! I love the idea of using KB articles to overcome sales objections. I’m trying to figure out what knowledgebase I should use. It looks like they can get pretty pricey. Mike, I like the look of your KB at support.bluetick.io. Is that something you built yourself or are you somehow using a service for that?
Mike: I’m using Teamwork Desk for that. It’s just a redirect with my DNS. It just redirects support.bluetick.io over to that. It’s all completely hosted there. They’ve got stuff where it integrates into their desk products as well. If I’m answering a question or somebody has a problem and there’s a KB article on it, I can link directly to that KB article from within Teamwork Desk. Works quite well. You can have multiple mailboxes setup, it’s charged per user. I found it to work pretty well so far. That’s what I use.
I think there’s a lot of other ones that do something similar where they will have a KB article hosted for you or a set of KB articles. But that was one that I found that was simple and easy to get into. It just kind of worked and met my needs for the time being.
Rob: It makes a lot of sense. When you’re small, you have a support system—email support—where you’re already using it. I would say Teamwork Desk or Help Scout would be my two top recommendations for that. Both of them have built in KBS. It’s probably a little bit of extra money per month. I don’t even know, but that’s a totally viable option if you want it hosted.
What we did at Drip, and it worked out fine. I don’t know at this point that I would do it again. I was trying to be budget conscious and I don’t want to pay a bunch of money at that time. We had a WordPress install, it was on WP Engine, and we used the KnowHow theme and customized it a little bit to look like we have Drip colors. It worked great for us. It was essentially free because I already was paying for this WP Engine account. That’s another option. Of course then, you have all the maintenance and all that stuff that goes along with WordPress. It just feels like it gets worse and worse overtime. Those are some two relatively inexpensive options depending on how you want to go.
Mike: Yeah. I went with Teamwork Desk mainly because it also offered—I forgot what they call them—but it’s basically a part time account as well for free. If you have somebody who needs to log into the ticketing system and they only need to see tickets once in a while or you only need them to have answer once in a while then, the part time agents basically takeover. They can answer, I think, up to 10 for free. Then, your regular users, I think, I’m still only paying $8 or $10 a month or something like that. It’s really cheap for what I’m using.
I didn’t need very much either. It’s not like I needed higher end stuff where I need to have advance workflows. I didn’t really care about sending out satisfactions surveys to people because it’s not like I was getting a larger number of tickets. I’m still not. It’s not like I need to move off it. It’s a great place to start though.
Rob: Indeed. We have another comment. It was episode 433 where we answered several listener questions. In that episode, we talked about VidHug which is a B2C service that, if I recall, was doing around 500 or 600 a month MRR. You could send out a link. It was kind of B2C. Let’s say it was your grandma’s birthday and you could send all the links out to all the relatives. They could record something on their iPhone and it was stitched together a happy birthday video. That was the concept.
Tyler made a comment. He said, “Hey, Rob and Mike. Don’t if they’d be interested, but VidHug sounds like a great idea for small businesses looking for testimonials. They can invite their customers to leave testimonials then the company can use those videos for Facebook ads as social proof. That could be a B2B opportunity with recurring revenue. Was wondering if you could pass that along because I would pay for that now. Just a thought I had while listening. Keep up the great work! Thanks, guys!”
I thought that was kind of clever. Probably a better use because I think the VidHug founder had asked about switching to B2B and going after HR and having them do welcome videos and stuff. I almost like this better because it’s an easier sales process than going after HR departments.
Mike: Yeah. The only downside, I would say, that I see there is if you’re going after testimonials, how many testimonials do people go after in a particular year? You’re not going to constantly be doing that. It almost feels like there’s a—I don’t want to say it’s a one time fee, but it’s like a fee for a three-month period or something like that. You’re using it and it’s used during that time period and then after that, you’re probably not going to use it again for another six months or year or something like that. The pricing might be an issue. How you price it might be an issue. But if you don’t care that it’s recurring then it doesn’t matter. If you’re just going after customers to get them as customers and try to establish revenue, then it doesn’t matter.
Rob: Yup. I would agree with that. You could do a three-month or you can do an annual and just make it annual-only pricing or something.
Last comment for the day before we dive in. Episode 434, SaaS KPIs You Should Focus on From Day 1. Oh, this is a comment relating to when you sent out, I believe it was this scholarship applications, and you forgot the email. You forgot to put the email in the form and you had something like 70 of them or something that you had to go through. Anna says, “Lol! I totally noticed that you didn’t have an email field in the MicroConf application. I just figured that we were living in a post-email world and you’d DM everyone on Twitter. That did make me feel like I was way too old though and that MicroConf was going to be too hip for me, so I’m glad to hear that it was an accident!” We’re not in a post-email world. […] of getting there, so I thought that was funny.
Mike: It’s funny because I was still able to track down pretty much everybody on there. I don’t think there was anyone I couldn’t trackdown or wasn’t able to eventually get an email address for. Yeah, I’m shocked. I had enough information to be able to track people down, but it was still time consuming. It’s not a post-email world, but I guess given enough time, you could make it a post-email world but you’d have to have enough information too.
Rob: Right. Cool. Let’s dive in. Today as I said, the title’s a bit of a joke, Why Absolute Thinking is Always Bad. The alternate title is Why Absolute Thinking Can be Toxic to you, your business, and other people who are kind of listening to you. I think, if you’re wondering what absolute thinking is, it’s that very black and white view of things. Examples of that are, if you see someone say, “This always works. You should always do this.” Always is the key. “This never works. You should never do this.” Often times, it’s like, “I should do this.” Maybe that’s an absolute feeling but it’s kind of like an assumption or a burden you’re putting on yourself.
The reason I want to talk about this today, because we were talking about it before recording, and you were like, “What’s the point of pointing out that something as bad?” It’s because I believe that successful founders, and frankly, successful humans, that I like to have conversations with, stay away from absolute thinking and see the nuance in complex things instead of trying to break them down to black or white or zero to ones. I believe the entire startup community itself will be better off if there’s just less of this. If there are fewer of us that believe that there are these absolute, “You should always never do this.” We have examples later on, on this episode of actual examples that I’ve heard over the years, frankly.
I believe it’s a fallacy. It’s thinking that it isn’t true. It’s more than semantics. It’s not digging in. When someone says, “Always,” and they mean 95% of the time, that’s a very different thing. There are exceptions to most of these things. There are times when absolute thinking is useful with ethics and in genocide. There are things when, “Yes, this is always bad.” That’s why the title is a joke. I think we’re going to give some specific examples of marketing approaches and that kind of stuff that I think will lend a little more detail to what we’re thinking about here.
Mike: This almost goes back a little bit to what I kind of opened up MicroConf with this year which is the fact that the matter is, when we go to MicroConf, and we’re talking to all these other founders, that we’re essentially raising the bar for every single person there just because we’re learning from each other. I definitely think this is one of those things where we can learn a lot from it.
I do want to dig a little bit to the piece that you said on, if somebody says, “Always do this.” What they really mean is 95% of the time. How do you differentiate between what they meant to say versus what they actually said? A lot of time, I see a lot of these stuff come up on Twitter, for example, or in places where there’s not a lot of room to expound upon what the person actually meant. Then, there will be people who’ll jumpin in the comments and just rip them apart and say, “That’s not always true.” Or, “Well, actually this and that” How do you differentiate between that? Is it just you have to rely on your own personal knowledge of that? Because if you don’t know anything about it, how would you know it’s 95% versus 50%?
Rob: Yeah. That’s the problem. That’s why words matter. If you say ‘almost’ without exception, or ‘in almost all cases’, or ‘nine times out of ten’, that tends to be how we talk in the podcast. That tends to be how Jason Fried talks now. He didn’t used to be. He used to be more absolute but something I like about his Q & A this year at MicroConf is that he wasn’t nearly as black and white on things as I thinks he was 10 years ago. When I hear Jason Cohen talk, I don’t know that I’ve heard him say ‘always’ or ‘never’. It’s very much same way we think and talk about things where it’s like, “Yeah, in some cases, this and that but as a general rule,” blah blah blah. “As a rule of thumb, I will always…” We already talked about that. You will probably never write another app that relies on Google but you wouldn’t say never do that. You’re not going to tell everyone else they shouldn’t do that because there are pros and cons to it.
That’s where I think it is, the words that matter, language does matter. I think, that’s something we’ve seen over the past 20 years of a lot of language being adopted and people not saying, “Hey, you guys,” anymore when it’s a group of men and women because words matter. That’s what I’m saying here. I think saying ‘always’ and ‘never’ especially if you all caps it on Twitter to make a point, I think that’s detrimental to the folks who don’t know the difference like you’re saying. I also think it can veer the conversation off in a direction that just doesn’t matter. Let’s not debate if it’s the last 5% or the last 1% or whatever. It’s just being careful about how you say things and how you think about things. I think that’s the important part.
Mike: Yeah. I agree with you. The conversation can easily go off into the weeds just because somebody said always and what they really meant was 95% of the time. I think that in most cases, a simple correction but Twitter is also not known for making it easy to go back and edit those things, and provide a correction in a way that makes it visible to everyone who’s going to see it. It just extends the conversation. Rather than continue going off into the weeds, let’s circle us back a little and talk a little bit about the nuances of that.
Rob: What I would say is just be more careful with your first post. Be very thoughtful when you’re going to write and publish a blogpost or say that tweet or whatever. I, very intentionally, try to avoid absolute language and I have for years. Again, the folks who I admire, the folks who I see who are successful, in general, they always do that. No, they don’t always do that but in general, that’s the behavior I see as well.
Coming back to nuance, most of the topics that we’re going to talk about is in the startup space, in the bootstrap space, or in the whole startup ecosystem world of tens and thousands, hundred of thousands of companies, there’s nuance to these things. It tends to be much more a spectrum or a continuum of 1-100 maybe instead of this 0-1 binary thinking.
I remember getting in a conversation, I believe it was on Hacker News, I don’t even remember. But someone posted, “You should never outsource the development of your SaaS product. Never. Never.” I mean, that’s okay advice. It was like, “If you don’t build it, you have zero chance of it working.” That’s just patently not true. It’s not even a 5% exception. I would say that there’s a bunch of stuff that can add up from 1-100. If you’re going to be a solo SaaS founder, let’s say, if you have any of these skills, it will mean you have a higher chance of success. One of those is the development […] is the ability to build your own product. The other one is the ability to manage and hire people. Another one is the ability to market. Another one is the ability to think about the product and build good UX. On and on and on.
If I recall, in that Hacker News article, I made a list of 10 things. I said, “Just weight each of them as a 10 if you have them or 9.9 because you never get to 100.” If you have all 10 of those then you’re at 99 out of 100, you just have the huge chance of success. But most of us don’t, most of us none of us have, all 10 of the things that I threw out. That was a way of thinking about it where it’s like if I were to add it for myself, I have 70 out of 100. People I really respect have 80 out of 100 or whatever.
They have a better chance than others but that’s all it is, it’s a chance. You should always never do these things. It’s more like, “Let’s look at the factors and the list of pros and cons.” I realized, looking at pros and cons is complicated. It takes an advanced frontal lobe developed. That’s why kids often have a hard time doing this. It can be hard and it hurts your brain to think about it. I think that’s important because higher level thinking involves this nuance.
Mike: I wonder if that nuance also comes with time and experience too. The couple of things you had mentioned about these examples of somebody going on social media saying, “She should never outsource those core things.”
I remember there was a couple of articles from Joel Spolsky—I’m looking at them now. One of them is titled, Things You Should Never Do, Part 1. This is from April 6, 2000. He’s talking about basically rewriting an entire application from scratch. It kind of goes into the history of Netscape. The next one is from October 14th of 2001 which is, In Defense of Not-Invented-Here Syndrome. He says, “The best advice I can offer: If it’s a core business function — do it yourself, no matter what.” Both of those things are incredibly absolute. He’s essentially saying, “Never ever do these things.”
I think if you start reading beyond the statements and looking into the context of what he’s providing and all the things around it, you’ll see the rationale. You’ll see the reason why he’s saying that. I think that that context is important for the statement, not necessarily just the statement itself. You’ve got to stake that context into account along with the statement. Staking the statement alone is essentially taking it out of that context. It’s very easy to manipulate it and twist it to say something that he didn’t quite mean. He said it, he didn’t mean that though.
Rob: Yeah. That’s a good point. I bet if you ask Joel today, in 19 years later, I bet he would see a little more nuance in it, I would guess. I think that comes with experience. I think that comes with knowledge and wisdom, just doing more things, and maybe he wouldn’t. Mike, I bet you and I could go to our—you’re in my blogs or essays—right now and find some evidence of some absolute thinking. I bet it’s 10 years ago. I bet it was when I thought I knew everything. I hear my kids, or I hear kids in general, say these black and white things like, “I never get to do this.” Actually, you did that last week. It’s a way of them kind of being dramatic or trying to call attention or showing how really bad it is for them when it’s kind of not, when they’re exaggerating for effect. That kind of leads into this thing about frontal lobe development.
Sherry and I had this conversation where, if you watch a lot of kids movies, they’re very black and white, there’s a good person and a bad person. A protagonist and an antagonist. As you develop and you watch shows like Game of Thrones or Breaking Bad, there’s this really strong nuance. Obviously, I haven’t watched Game of Thrones or Breaking Bad with my 13-year-old, but I have watched shows that have more nuance like in the MCU, in Black Panther, the villain in the first movie, he wasn’t bad. Thanos is another one. He does want to kill half of the people but he has a pretty good reason for it and he believes it. He’s not just doing things to be evil, he actually believe he’s doing good when he does it. It takes development to learn that.
Sherry has talked about how the frontal lobe is your advanced thinking and it doesn’t fully develop until early 20s. I think women are few years ahead of men with that. But this is one of the reasons why you thought you knew everything when you were 16 and why I thought I knew everything when I was 18 or when I was in high school. As you get older, if you get experience and you get knowledge outside of your little box, you don’t live in your little box but you travel and you meet other people with your thoughts. You’re allowed to be shaped. A lot of these happens in college. When you’re 18, you know everything. When you’re 28, you’ll realize you know less. When you’re 38, you’ll realize you know even less and so on.
Mike: Eventually, you get to be our age and you know nothing.
Rob: You know nothing.
Mike: You know nothing Rob Walling.
Rob: Yes. You know how little you know. That’s part of it.
Mike: I don’t want to say, but the way that this comes across is age is just in terms of people being younger. As you become more mature, you get older. You just naturally develop this. I think it’s a datapoint for you look in the mirror and say, “Is this type of thinking actually helpful for me or for other people?” The answer in general, I think, is no. But you have to be aware of it first. You just can’t just magically, you hit a certain age then suddenly you are aware of this. It’s something that develops over time through repeated experience and exposure. I think that’s what we’re trying to do here is, just expose people to the idea that those absolutes without the contexts are probably detrimental not just to you but to other people as well.
Rob: To your audience, that’s really the point. That’s right. It’s detrimental to you and the folks who you’re speaking to who don’t know better.
Rob: It’s not that. That’s something you pointed out over there. I am glad you called that out. My intent is not to say, “Oh, as you get older, you get out of absolute thinking.” That was one example of frontal lobe development. But I’ve known folks who were in their late teens who I felt like they had the life experience. They were 18 and they were as not absolute as I was when I was 38. You know what I mean, they were way ahead.
It’s not just some absolute scale of, “As you get older, you get better with this.” I do think it’s probably quite a bit of your upbringing. I was brought up for a black and white. It took me years to break free of that. I think if you’re brought up with more nuance and with parents who really talk things through in a non-absolute way. I think you’re ahead of the game. I think when you have life experience, you’ve traveled outside your home country, and you’ve met a lot of people with different viewpoints, and evaluated those, I think you’re ahead of the game. Again, I’ve know kids, 17, 18, 20, or whatever, who are way ahead of me and other folks that we might encounter on a day-to-day basis.
I think, piggybacking on the experience thing—I’m totally guilty of this, I was guilty of this—when I had my first success back in 2005, 2007, I was like, “Boom! I know it.” The first time entrepreneur typically thinks they have it all figured out. I did too. A few years later, you tend to realize that you didn’t. In research circles, they call it the N-of-1. N is how many subjects you have in an experiment or in a research study. An N of 10,000, meaning you’ve talked to 10,000 people or you researched them or whatever, that gets to be a pretty good number. It’s statistically significant. Depending on how everything varies, an N of 500 can be totally valid. An N-of-1 is a little bit of a joke. It’s basically an anecdote.
I say this because Sherry was a researcher for a while. She did a residency at Yale. There were a lot of researchers there and that was one of their jokes. It was, “Your anecdote is not my data.” Or the singular form of data is not anecdote.
Mike: That’s almost like when I see arguments of people, “Well, that didn’t happened to me,” and they’re arguing against data that they disagree with because of what their experience was. It doesn’t invalidate their experience but they feel like it does. But the data itself indicates something completely different. I can think of any number of things where that stuff has come up. One example that comes up specifically is Patrick Campbell of MicroConf had recently said and provided some data that said, “Companies that are remote first, I believe, are less successful or make less money.”
Rob: Grow slower.
Mike: Oh, that’s what it was. They grow slower than companies that are not which kind of flies in the face of a lot of kind of what we see. It’s not necessarily directly confrontational to it, but a lot of us don’t necessarily have the context of other companies either. I think that’s one of those dangerous things where you have a certain point of view and you believe it is correct but the data doesn’t necessarily prove or support that. You think that you’re right but you don’t necessarily have any data to prove that you’re right or wrong but you have that core belief. Because you’re growing a remote company, you don’t want to hear that growing a remote company is going to be slower or is going to slow down your growth.
Rob: Yeah. That’s a good example of that. Examples of it I talked about earlier, we looked at some specific things that I think I’ve heard people say over the past, let’s say 15 years of doing this. Common example is, they try a marketing approach, it doesn’t work and then saying, “This never works for anyone ever.” Or, “This can’t work with SaaS.” Or, “This can’t work with B2C.” It’s generalizing a single experience. Even if you try something two to three times, it doesn’t work, it’s not accurate to say it never works.
Paid acquisition is one that a lot of people try and give up on where we see a similar niche or the same vertical making it work. I think content marketing is another one or SEO. You can go on and on with success stories and failures stories. […] to say, “It never or always works.” It’s not helpful to say that.
I think another one I used to hear is never buy an app. You should build all your apps from scratch because the code will be too crappy, there’ll be too much risk, and too many problems. All those things are true that there is problems, and risks, and the code is crappy and all that stuff. But the absolute of always/never isn’t. There are just pros and cons and you have to look at them.
The, “Never hire contractors. Only hire W2 employees.” I think venture capital tends to lean towards that. I’m talking about building up a whole team. Let’s say I’m going to have a team of 20. Some folks might want to be a solopreneur and have 10 contractors or 20 contractors, for that matter. That can work. We see folks doing product-type of services and have it work but it’s a different model. There’s context to it. It’s like a venture capitalist says, “Your employees have to be loyal and your people are what make this company. If you’re going to build it into a $100 million venture-funded business then this is the model we see working and we’re pattern matching, and so they say do that. Similar to venture capitalists tend to want you to have an office versus having a remote team in general. That’s the pattern that they see working. It’s not an always/never thing.
Mike: I think that what’s make it difficult when you don’t necessarily have a lot of familiarity with that topic or that particular subject because you don’t have enough of your own context, so you’re relying on the words of somebody else. Kind of back to what you said, and we’ve reiterated it a couple of times, the words themselves matter. If you’re going to go down the road of trying to give advice or talk about a particular topic in whatever realm you’re doing it, it’s beneficial to most people to provide data points, provide context about what percentages of the time this is accurate. It’s not to say that you’re always going to be accurate.
I think I’ve just answered an email a couple of days ago from somebody asking about Bluetick and how it would integrate in with exchange server. I said, “I don’t know your environment, but the majority of the time,” I forget what percentage I said. It was like 80% or 90%. I was like, “80% or 90% of the time when I’ve see this, this is what it looks like. There are other cases when it looks like this or that. […] of my suspicions based on what you have said but I can’t be 100% accurate.” I distinctly remember saying, “I can’t be 100% accurate because I don’t know.” There’s always those little details that you’re not going to know.
I think it’s important to make sure that you quantify some of those details, so people would know where the dark areas are, so that they’d know where there might be more information or context that they may need to have to completely understand what it is you’re trying to say in the general sense as opposed to making things absolute.
Rob: I like to think of it like this. First, learn the rules. Then, master the rules. Then, learn when and how you should break the rules. When I say rules, I actually mean rules of thumb. A rule makes it sound like it’s an absolute, but rules of thumb that are generally accepted whether it’s common knowledge or whether you ask an expert and they have their own mental model of it. We pointed out Saas KPIs—that was a pretty popular episode a while back—those are just rule of thumbs that we’ve seen in over hundreds and hundreds of businesses.
First, learn those and then learn when they shouldn’t work. If you stop just learning the rules and then deciding you have all these rules and they’re always in ‘nevers’, you’ve stopped before mastery. It’s the same thing of like becoming a black belt in martial arts. Blackbelt is once you’ve learned the basics, then you start mastering it. Then, you become a 2nd, 3rd, 4th level. Black belt, it’s not the end, it’s really the beginning of knowing all the “rules of thumb” or all the tactics and techniques. From there, you then build on that.
Same thing with writing. You’ll see prolific successful writers. Whether it’s a Hemingway or a Stephen King or anyone in the middle, at some point they learn some rules. Then they master them. Then they learn how to break them. They did stuff differently and that’s what makes them great.
Picasso is another one. There’s a Picasso museum. I don’t remember if it’s the one in Barcelona or there’s one in Antibes in France where it shows him in his early years. He just sits and paint for a decade. He paints all the stuff that everyone else is doing. He starts of not good then he gets better and better and better. Eventually, he’s a really good painter. But he’s just one of many. He’s learned the rules and he’s master the rules. Then he started breaking the rules and everyone is like, “What the hell is this guy doing with these crazy paintings?” He invented cubism. That was mastery. He didn’t sit there and say, “A painting should always have this form and that form. This type of shape and that type of shape. He started trying to break those rules and seeing what happened. That’s how I feel about this––the absolute. These rules are helpful for giving us guardrails when you’re early on but at a certain point, you then learn. There’s nuance and pros and cons to them.
Mike: I do wonder whether you get to that certain point and how are you judged afterwards. If you’re trying to break those “rules”, is it because you’re trying to experiment to figure out something new and something that is completely and fundamentally different from everything else? Or you’re just a nutcase? But the results of that is kind of how you’re judged afterwards. He’d done that and created cubism. Nobody liked it or thought everything of it. We would not have ever heard about it right now.
I’m not saying that that’s bad and you should experiment. I’m just pointing out that, I think that is a natural evolution of what that process looks like. It may not turn into anything but that doesn’t mean you should experiment with it.
Rob: Right. That’s the thing. I think the bottomline is it’s important to form an opinion. It’s important that we’ll be able to discuss our opinions, be opened to being convinced otherwise by smart people who have different experiences, seeing the nuance and things. That’s the bottomline. Again, I come back to someone like the folks who I respect and who I see who are a, successful, and also, have good relationships with fellow humans whether it’s a spouse, or children, they have good family life, they have friends. They’re just people I want to be more like. Jason Cohen, Hiten Shah, we have dozens and dozens of folks that we know that do this. They are the folks who I see embodying this thinking, who learned the rules, that mastered the rules, and then learned when and where to break them. It’s very, very rare you’ll hear any of them say that, “It’s this hard and fast always/never.”
I really like Jason Cohen’s recent post on smartbear.com, it’s called Kung-fu. It was all about his rules; his rules of thumb. He said, “Look, everyone’s different. Your mileage may vary. But these are things that I’ve learned.” There were things like, it wasn’t, “Don’t do freemium.” It was, “I don’t like freemium. I’m not going to use it and here’s why.” I think that is super important to kind of couch something like that. It really comes back to flexibility and nuance.
Even a growth mindset versus a fixed mindset. I’ve talked about that book Mindset by Carol Dweck. Growth mindset believes you can and should change overtime. Even your opinions and some of your beliefs can be malleable. That’s helpful and leads to success in a lot of things.
Mike: I think overarching point here is just to educate yourself. Not just about the things you’re working on but about how other businesses in general work. Because I think it gives you more of a mental model or a framework to work from and be able to be a little bit more objective about the things you’re looking at. It seems like it would be easier in some ways to be more ignorant and just say, “I know what I’m doing. I’m going to do things in this particular way because I know that it is going to work.”
I think being able to second guess yourself and being able to be a little bit more objective about the decisions that you make, or that other people are making, the advice you’re receiving from people, is extremely beneficial just because it gives you enough mental model to work from something where you’re not sure. You’ve got these dark spots and you’re aware of those dark spots. You know that there’s places where there’s some—I don’t want to call it risk—but some percentages that could go either way. At least knowing where those places are is important.
Rob: Yeah. When I’m thinking about a decision or something like this where I might have an absolute in my head, I often will couch it as like, “Well, I’m 51/49 on this.” Or I’ll say, “I’m 95/5 on this.” I rarely go higher than 95. There tends to be the exception or the doubt. It’s not just so clear cut.
Before you take us out, Mike, there’s a few absolutes that I want to throw out that as you listen to them, each of them has totally valid exceptions even though they feel like, “Wow, maybe it should be true.” I challenge the listener to think about the complete valid sections to each of these things.
Always write unit test when coding. Always grandfather on price increases. Never trust Google or Facebook. Never build on someone else’s platform and have your business totally reliant on it. Never go B2C. Never raise funding. There are more we could throw out.
In general, are those things true? Yeah, I would say so. Yeah, I think those are good rules of thumb. Are there totally valid times to break them? Indeed, sir. Absolute thinking, while it’s not always bad, we would conjecture that, I think all of us, you and I included, I think we can all get better at.
Mike: You would say that it’s not always bad but it’s not always good?
Rob: Not always good. Let’s raise the bar. Let’s raise the bar of the conversation. I think that’s the point.
Mike: With that, we’ll wrap things up. If you have a question for us, you can call it in to our voicemail number of 1-888-801-9690 or you can email it to us at firstname.lastname@example.org.
Our theme music is an excerpt from We’re Outta Control by MoOt. It’s used under Creative Commons. Subscribe to us on iTunes by searching for Startups and visit startupsfortherestofus.com for full transcripts of each episode. Thanks for listening. We’ll see you next time.
In this episode of Startups For The Rest Of Us, Rob and Mike answer a number of listener questions on topics including what are their biggest regrets, how to deal with the loneliness of building a startup, and task management.
Items mentioned in this episode:
Mike: In this episode of Startups for the Rest of Us, Rob and I are going to be talking about our biggest regrets, feelings of isolation, the impact of management task on deep work, and more listener questions. This is Startups for the Rest of Us Episode 444.
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 build your first product or you’re just thinking about it. I’m Mike.
Rob: And I’m definitely not sick today.
Mike: And we are here to share our experiences to help you avoid the same mistakes we’ve made. What’s the word this week, definitely not sick today?
Rob: As bad as this sounds and as much as I hope not to be a pain in our listener’s ears, I actually feel better today than I did yesterday and the day before. You know how sometimes the voice stuff lags what actually feeling bad?
Rob: That’s how it is now. I’m not 100% for sure but definitely able to record a podcast. I just don’t know if my voice is going to hold, so at a certain point I may just drop off and be like, “I don’t know, Mike. You answer the questions.”
Mike: I’m just going to mute you and I’ll replace you with a text-to-speech converter or something like that.
Rob: Yes, that would be great. But the show must go on, am I right, Mike?
Mike: I suppose it does.
Rob: The show must go on. For me this week, I’m excited MicroConf Europe tickets are on sale. It’s in lovely Dubrovnik, Croatia again at that amazing hotel, where we’re amassing an ocean view, second week October. microconfeurope.com has the full details. Although I just look at it and the speakers are last year’s speakers. We’ll have to get that corrected. We haven’t selected any speakers yet, but know that it’ll be a good show.
Mike: I’m definitely looking forward to going back there although I do remember thinking to myself that because the hotel was built into a cliff right against the ocean, my engineering days came back to me as like I wonder what would happen or what it would take for the whole thing to fall into the ocean.
Rob: I’m hoping that they’ve thought of that. Way to go, Mike, five people just decided not to come because of what you said. I think they’ve thought of that and as far as I know they don’t have earthquakes there. You would never build something like that in California or if you did, you’d really have a lot of supports and such seismic stuff.
Mike: For whatever reason, my brain just goes to those types of things, whether it’s a plane or a giant bridge or something like that. I just think I remember one time, my wife and I were driving back from Massachusetts to New York because that’s where my family is, and there’s this bridge that goes over the Hudson where we stopped on the bridge because traffic was just so bad. We were at a complete standstill and the bridge was popping up and down. Not a lot but it was like four, five, six inches, something like that but you could feel it. The entire car was just bouncing up and down a little bit. All I could think of is that video from grade school or from high school where they show you this bridge that basically just rips itself apart in California.
Rob: It’s in Washington.
Mike: Was it Washington?
Rob: Yeah, in Seattle or that area.
Mike: Oh yes. The Seattle Sound, I think. So that just came to mind. We were out of reason like these giant structures like that is all I can think of sometimes.
Rob: Yeah, I find this as software engineers. Oftentimes, you’re trying to think of everything that could go wrong and when you transfer that into life, sometimes it’s not such an adaptive quality. Sherry will suggest things, “Hey, let’s go visit Mike.” “Here’s six things that could go wrong with that. Again, that’s actually not helpful. How about instead of that, you go on and you select an Airbnb and look-up for the tickets?”
What else? You have a webinar last week, right?
Mike: Yeah, I had a webinar. It was a couple of days ago and I went a little bit longer than I thought I would. I thought it was coming around 40 minutes and it ended up coming around 50–55 just because I went into more depth on a couple of things than I had probably originally expected to. But it was pretty good.
I think there were 46 or 48 people who registered for it. I got their contact information and the list that I got also included their company names, their job titles, where they’re located, the size of the companies, a lot of interesting things there. So, definitely adding those people into my mailing list and working from there.
It was fun. I’ll definitely do it again. It’s just a question of whether or not they would have me and whether it’s applicable to the audience still.
Rob: That makes sense. Did you get any positive feedback or did you get much feedback?
Mike: Very little feedback. There is one person who submitted feedback out of the people who attended. I also got information about who attended and who didn’t. So, there’s emails that go out to them after where it sends them a link to the video. I’ve got a copy of the video as well. It’s typical webinar stuff.
Rob: We did a bunch of webinars in the early days of Drip. Some of them we found worked really well and others were complete bust and waste of time. You don’t know for another week, another month, depending on who sticks around and listens and who basically stops reading your emails or whatever other way you contact them. Curious to hear a fit, figure if it’s worth your time, and maybe 2–3 weeks I think you have a decent sense of that.
Mike: Definitely. The other thing that I’ve been looking at lately is that I’ve been testing out a new email client called Mailbird. You and I talked about this very briefly before the podcast and we decided to talk about it on the podcast. I find that most of the time I look at my email through Google Chrome and I have most of my different emails from different domains forwarded in there so that I have the one email client.
I was looking at Mailbird just because it has a unified mailbox where you can see and view all of your emails in one place regardless of what IMAP servers they’re coming from and what domains they’re coming from, et cetera, so I can see everything there. I’m not going to have to forward things over if I don’t want to but I could. I could continue doing that, but the one problem I’ve had with that is that the mail servers tend to rewrite the headers. If it’s forwarded in email, then the SPF records are no longer valid because it’s basically being rewritten. It no longer matches the original, which isn’t a big deal because I’m the one receiving them. But it still screws up the reporting staff that they get on a weekly basis about my sent emails. But you said you were assessing out something else as well. What’s that and why?
Rob: Mailbird I can’t use because I’m on a Mac. It’s Windows only. I was going to check it out, I was on the site. I straight-up Google best Mac Gmail client because I like Gmail, I like the paradigm of it, and it’s so slow in my Chrome browser now. I will go to type an email, you know that I know all the keyboard shortcuts, I’m like, “Label this as that, then type five words,” and it’s playing catch up with me. It’s getting worse and worse.
I know everyone’s thinking Superhuman, “Go use Superhuman.” Yes, I will check them out at some point, but I really wanted to consider going back to a desktop client, both for the speed and just the native feel. I found an app called Mailplane and it basically mimics the Gmail interface in a desktop wrapper in a sense. There’s also a calendar you can flip back and forth.
At first I really struggled with the fact that it wasn’t just a tab in a browser, but now I’m starting to like it. I have it on a completely separate monitor than my browser and when I click a link it opens in a browser on the other side instead of opening it in a new tab and throwing me out Gmail for not holding Command-Down and opening a new tab. I started liking the workflow. I like that all the keyboard shortcuts as the same, I label things constantly, I archive things constantly, I delete things, and I snooze or boomerang them. Those are the four most important things I do. Of course I compose and send, but those four things have to be super fast, they have to be keyboard shortcuts, and I do that both on mobile and on my desktop in essence.
The one place where it falls down is it doesn’t have the snooze keyboard shortcut, which is B, and I can’t install Boomerang on it which also has the B keyboard shortcut. I may bail on it, go back to the drawing board, and try out something like Airmail, or I know Spark’s good, or take a look at Superhuman. I struggle with wanting to do Superhuman. I think some of the hype drives me away from it and also $30 a month, obviously, I can’t afford that. I struggle to pay that or something. It’s so stupid because I’m in my inbox constantly and if it saves me any amount of time, it will pay for itself in a day.
Mike: I think it’s probably the price anchoring you have to Gmail, which has been free for 15 years now and you’re like, I don’t want to pay $30 a month for something like that.
Rob: Yeah and it’s also I know that I have to relearn or I’m expecting to relearn a bunch of keyboard shortcuts. While I can totally do that when I switched from Windows to Mac, that was a complete trucking of my productivity at the time. But I got over. It took me two, three, four weeks, and I was good.
I’m sure that if I switch to Superhuman, it will be all good. But I also want to look the product mature a little bit and see what direction it heads because every time I do this switch, I’m always wary of like, “Here they go. They got acquired and now they shut them down,” which has happened with three of the mobile email clients I’ve used, or they themselves start getting slow over time, or things go wrong with the business model and they start showing so much ads, whatever.
I know they’re charging $30 a month, so that should mean that, (a) they shouldn’t get shut down or acquired, and (b) they’re not going to do ads. All of the objections I’ve actually brought up are probably not going to happen but I often don’t trust these Silicon Valley startups in these early days because you just don’t know what’s going to happen and I don’t want my whole world to be invested in this single app that is quite disruptive to leave.
Mike: Two things here. One is I was looking at the Mailplane app website and there is something there that says flat-out that they had support Boomerang as a third-party extension, so there might be a way to basically add that into the app itself, maybe as a plugin or an extension or something like that. The other thing is that, it’s interesting that you and I are probably on the same page there where just because it’s a Silicon Valley startup and they’ve got funding, we actually put less emphasis on them being a viable product, versus the bootstrap companies where the largest company say, “Hey, I’m not going to trust you because where’s your funding? You might go out of business tomorrow,” versus I almost feel the Silicon Valley startups.
Actually, it’s the opposite. That’s just the way I view it. It seems like you feel the same way about this and I think it’s partially a function of whether or not they’re charging for their service or it’s a, “Let’s try and get as many users as we can, and try to figure out a business model to make money later.”
Rob: That’s it and since Superhuman are charging, it does remove some of those doubts, but still I’m pretty skeptical on one side. I’m like, “Yeah, you’re going to make me switch over and learn all the stuff, it’s going to make me faster, and then in six months, you’re going to do whatever. You’re going to pull a medium.” Again, anything I can think of is unlikely to happen because I was gonna say, “You’re going to pull a medium and start charging,” but they are already charging.
It just makes me skeptical that they don’t have my best interest at heart and what they have is hyper growth at heart, and they’re going to be willing to sacrifice whether it’s my user experience or whatever in order to further their business. I’m just not convinced. I’m not trying to pick on them. Just in general that’s how I view these startups. I think I will move there, eventually. That’s probably where I’ll wind up. But the fact that you just told me Boomerang is available at Mailplane, I don’t know if I have a reason to move anymore because I just click down extensions, I installed it, and it looks like it’s working. That does change the game for me. Thanks, Mike. I appreciate that.
Mike: There’s a bunch of other extensions there, too. I know you use them, so.
Rob: Yeah, but Boomerang was at the top when I went to extensions. It was literally the first on the list and I just downloaded it while you are talking, I configured it, and it’s looks like I’m all good now. It will be interesting. I like to question my assumptions and one of my assumptions is that I really want to stick with the interface. I’ve been using Gmail since 2006. Is that when it came out? I mean, I was really early on.
Mike: It came out before then because Bluetick I can see where my earliest emails were sent and received and I didn’t get into Gmail for at least a year or two. I think it came out in 2003 but my earliest emails were from 2005.
Rob: And I’m somewhere in there, 2005–2006. It’s not just I’m used to it, but the keyboard shortcuts and the actions all makes sense, and I’m very fast. It’s like using them or using an “old” editor that people move on from, but when you’re really good you can actually be in the command-line the whole time. I feel like that’s how I sync with Gmail.
Obviously, there’s an Outlook mail client or there’s a bunch of good desktop Mac clients for Gmail, but enough of the paradigms or trying to be different, and it’s not just keyboard trope. It’s just the whole interface. When you’re looking in different places for different things, I’m not sure I want to give my productivity gap much of a hit over the course of weeks or months and I’m not just sure it’s worth it to relearn a new tool.
Mike: That’s actually what attracts me to Mailbird was because all of the keyboard shortcuts were the same as Gmail. It’s just like, “Oh, I can just hit the V or…” I honestly don’t remember what the shortcuts are. I just do them at this point, but adding a label to something, or moving it, or throwing it to the trash, those things are just keyboard shortcuts that I just use. I think one of them is Control-Pound or Shift-Pound or something like that, and there’s one, it’s a V and add a label to it and move, and all that stuff. It’s just there and it’s very intuitive, very much alike. Not intuitive because shortcuts are not intuitive, but once you learn them, they just become second nature. For the most part, the ones that I use are there and it’s helpful.
The only thing I don’t like is that in Gmail I have have stars in emails and then I have one’s that are marked important and then ones that basically everything else below that. I have three different sections and it doesn’t have that. It only has two. So, it’s like, “Oh, well.” I mean, I’ll live. It’s not like I’m going to stop using it because of that. It was cheap, so.
Rob: Yeah and it’s just keyboard shortcuts. I’m sure Superhuman probably duplicated the Gmail ones, but there’s other things. A little known fact, actually, Mike. Before I started Drip, I was actually pretty heavily considering building a mobile email client that was all the things. It was fast and there’s some add-on. I remember you and I talked about it. I was like,“Yeah, this is on my list,” and you’re like, “Boy, that’s kind of a Silicon Valley play.” You’re like, “How are you going to make money at that?” and I was like, “Yeah, that’s what I’m struggling with because it’s not a normal SaaS model.”
I thought for a bit of why I should do basically a SaaS email client and again, make it fast and make it do all the things, build on top of Gmail in a way that they’re not innovating on, and I thought to myself no one would pay for that. They wouldn’t pay a price. I don’t want to charge $5 a month. What’s funny is, I think that was my bias because I don’t want to pay for an email client, but also, it was 2012 and I don’t think Gmail had the problems that it has today with the slowness and all that. It didn’t have that problem in 2012.
I think timing is also a factor. It’s not just that I have the idea, but you also need to be there at the right time and you need to execute on it. The Superhuman guys has done a great job, as we’ve heard years of customer development in essence to get to where they are today, and that was obviously a ton of work to get there. It’s not just, “Oh, you had the same idea and the Superhuman guys did it.” They did a really good job of it, executed to perfection.
Mike: That’s actually a very odd coincidence that you mentioned those specific things about the speed because I think it was about two years before that that they had acquired the business that your co-founder in TinySeed, Einar has. He was building and it was to make mobile search very fast. Then fast forward a couple of years and the search is no longer dog slow.
Rob: Yeah, it’s a trip. You wonder if Gmail, in the background, are they’re innovating and they’re going to basically release something that’s going to makes them superfast and that implement some of the things Superhuman does. That’s the other thing. Since it’s on top of G Suite or Gmail, they have platform risk right now. As an idea like Gmail or Google could feasibly shut them down. It would be a bad move or an anti-competitive move, but we’ve seen this happen with Twitter API restrictions and all that stuff. Facebook do that, wouldn’t put a pass Google and it could be a pretty big issue for Superhuman moving forward if they become a multi-million dollar business, deck a million dollar business. Who’s to say Gmail won’t either just implement the features and it’s still free or screw around with API access and that kind of stuff?
Mike: It’s funny you mentioned that because I’ve actually been going through a bunch of approval processes with Google. I don’t know if I talked about this before, but because I’m accessing customer information through OAuth, I had to go through this approval process and they say…
Rob: You did talk about it. A couple of episodes ago you mentioned it’s pretty cumbersome.
Mike: And I’m still going through that. I’ve sent them a bunch more information and I’m just waiting now to see if anything else that they need and I haven’t heard anything back for at least a week or two. That’s certainly something that could happen, but it’s more of a result of me just accessing things through IMAP. I don’t know how they actually access that data but if it’s through IMAP, then there’s got to be a reasonable way to get access to it because there’s no way I could see that Google could say, “Look, nobody can access through IMAP anymore. You have to use OAuth tokens and et cetera. I suppose I could end-of-life that access down the road but they’re going to have to wait while people, their email clients switch over and add that type of support.
Rob: And that concludes this episode of Gmail Clients for the Rest of Us. That was a longer tangent that I thought we would go on, but I think it’s still interesting stuff. We touched on a couple of relevant points of platform risk, about finding the right client, because if you’re in it so many hours of the day, it’s important stuff, and then switching cost and that kind of stuff.
Mike: With all that said, I think we’ll switch over and actually start doing some of these listener questions that we get them in before the end of this episode. The first one comes from Steven Moon. It came into Twitter and he said, “With so many years of experience behind you, both in the startup space, what would you say were some of your biggest regrets?”
Rob: This is a tough one. I gave it some thought in advance of the episode because it’s not something I think about that much. I tend to make pretty calculated decisions, I tend take longer to makes decisions than some people, and I try to make it with all the information I have at the time. If I make a decision with that and it turns out to have a negative outcome, I don’t consider it a regret because I did what I thought was best at the time. I don’t make many impulsive decisions. Those are the decisions that I would tend to regret, are things that I didn’t take the time to think it through or made an emotional decision instead of trying to look at the data and making the best decision.
With that said, I think that something that I regret early on—this is 2005, maybe 2010—is that I was too timid. I was scared of making people mad. I was too much of a developer to do marketing. That transition actually happened during that time period, but in the early days, even before 2005, I didn’t want to market because I considered it some bad thing. SEO, AdWords, taking out ads. I don’t know adjusting to all that and even doing sales. It wasn’t something that I really wanted to do and I wished that I’ve gotten there sooner. Eventually, I realized, “Oh, this is valuable. A fun product provides value, reaching to people, for who it’s going to have value for, is an important thing.”
I think another thing that I regret is I thought that I could do everything myself early on. Frankly, I did everything myself for a while and then I hit the ceiling on that. Then I hired contractors and VAs, which worked to a point. I guess I don’t have regrets that I did that, but then eventually knowing that I needed a deeper network of people, has changed my world and allows me to do things a lot faster and a lot easier than just trying to go it on my own. These are lessons I’ve learned along the way and I guess my regret is I didn’t learn earlier. I think those tend to be my regrets. I have another one but how about you? You want to weigh in on something?
Mike: I think some of mine are similar to yours. Essentially, they were learning experiences and the one that definitely comes to mind is not really thinking through things before just doing them. I wouldn’t say that I was unnecessarily impulsive in many ways, but I would definitely say that I didn’t pause to look at the big picture enough.
For example, when I was in college, I did not do very well. Even going back into high school, I did very well in high school because it was high school and it was easy to make. But unfortunately, the by-product of that was I didn’t know how to learn things. I either figured it out and just did whatever needed to be done or I just said, “I’ll be able to figure this out.”
What tend to happen is I leave things to the last minute because I want to do other stuff and I wouldn’t spend the time to focus on my studies or actually really trying to understand stuff. It’s either I could do the problems or I couldn’t. I feel like I didn’t have a good understanding of how I learned when I got to college and I really struggled when I got to college because of that, because I relied on me just showing up and being in class to understand stuff. When I didn’t, I had a hard time sitting down and actually doing homework or studying because that was just not how I had wired myself.
That took a really long time to break. It took four or five years to break that habit. I fortunately did when by the time I got to grad school but it took way longer than it really should have. It was because I didn’t think about the longer term consequences of what those actions could potentially be but I didn’t necessarily know what those consequences would be, either.
Rob: Right because you’re 17. I think he was asking in terms of startups. How does that relate to your business? Your professional career? Or does it?
Mike: It does. I have to intentionally set aside time to think about the bigger picture and if I don’t, I could easily find myself just going down the rabbit hole and not thinking about, “Is this the right thing I should be doing? Is this the most important stuff for me to be spending my time on?” I can easily burn a lot of time doing stuff that actually doesn’t move the needle or isn’t very important if I’m not very cautious and conscious of that.
It’s more of being aware that that’s a flaw of mine that I have to keep in mind and being very intentional about setting aside time to come up and look at the big picture. If you look back in my day with AutoShark, that was a huge problem because I just put my head down and kept going. What I really should have done was take a few steps back and look at the bigger picture and be a little bit more objective about stuff.
Rob: That makes sense and knowing that’s your previous position, you should ask yourself that now, what it would look like to take a step back? It’s a rhetorical question but that’s the thing about knowing our strengths and weaknesses is now that I’m older, I know a lot of my weaknesses. I don’t know that I know them all but I really tune in when I start the same things that I realize, or maybe not 100% true, or just an emotional thought, or me just trying to justify what I feel like I want to do, rather than what should be done, and those are weaknesses.
Or when I am a negative self-talker. I talked before if I don’t get enough sleep, I’m super negative and I’m almost look like someone who’s depressed. I’m unmotivated for that day. I’m unmotivated and I’ll just be like, “Nothing’s going to work. This whole thing isn’t even going to work. Why are we even doing this?” I literally have that in my head and I will always say like, “Dude, this is a temporary thing. You’re just in a weird state. Go take a nap.” I’ll come back and I feel better about it, but I didn’t realize that until five or ten years ago. I think that that’s an important thing, to know yourself.
Mike: The way that I deal with it now is I do a lot of journaling and I use that to track whether or not I’m making progress on stuff or getting things done that I need to get done because I will write those things down, but again, that’s just a personal productivity hack more than anything else of make sure that I’m staying aware of those things.
I would say that the other major regret I have, I’m not sure if I label it as a regret but being under the belief or assumption that I would be youthful forever. I definitely found that as I’ve gotten older, things do not heal nearly as quickly as they used to, I need more sleep that I used to, and just a lot of stuff with my personal health that I was like, “Oh, I’m invincible. I’m twenty-something years old and nothing will ever happen to me.” Fast forward 10 or 15 years and your body starts to give out on you in certain ways and you’re like, “Huh, that sucks,” and there’s nothing you can do about it.
Rob: That makes sense. The other regret I can think of is that I didn’t take good enough care of myself while growing Drip. There’s self-care. What’s funny is it’s what my life talks about all the time. That’s what ZenFounder is, about taking care of yourself. There’s a certain point where I was just bearing the burden of a lot of stuff. I wasn’t working on the things I liked but I knew they had to get done and it’s that recipe for burnout where I’m capable of doing them but they don’t bring me joy and I didn’t want to interrupt anybody else’s day because everybody else was either selling or onboarding or writing code and that’s what’s needed to push the business forward.
If I pulled anyone else into it, this is a fallacy. You tell yourself like, “I’m just going to grind it out. The business is going fast, everything’s working. Why would I screw that up, pull people off, and move slower than these other things?” Anytime I got budget, I hired a support person or a developer or someone else to move the business forward and really should have made some different decisions there.
I didn’t take good enough care of myself, I did start to enter burnout at a certain point, and that sucks. There were a few times in my professional career and the most recent one was during Drip. I think I want to avoid it for the rest if possible, because it takes toll on you and your relationships is the problem. You can recover but if you’ve damaged relationships, it takes a while to repair those.
Mike: Moving on to our second question. This one comes from Dick Polipnick and he says, “What do you think of buying a small company that already serves your target customers and building your SaaS idea on top of it?”
Rob: He’s saying buying a small company that is not a SaaS company, right? It’s either one-time download software or it’s an info product? What do you think he’s implying here?
Mike: I think it could be either one of those. It could also be a services business of some kind? I wouldn’t say it’s as big as an agency. I think the implication here is it’s a small company that’s probably one person or maybe it’s just a book or something like that. That seems odd. I don’t think that’s it, actually.
Rob: If it’s a small consulting agency, I wouldn’t buy an agency unless I wanted to do agency work. Going from agency to product, the work is hard. Ask anyone who’s trying to do it because you have so many things going on. It’s a well-worn story. It’s possible, but it’s a slog. I would not invest money into acquiring an agency. If it’s like an ebook or a one-time downloadable software and there was an audience there that you felt like could buy a SaaS or would be interested in something that’s pretty a direct path to it, I’m not opposed to the idea of it.
The concern I have is, if you spend this money—let’s say it’s $30,000, $50,000, $100,000, it’s a chunk of change—then what if you’re wrong? What if now you have this info product that you don’t really want to run or you have this one-time download software that you don’t really want to maintain and they don’t really want the SaaS? You can’t ask them now because you don’t have access to the audience.
I’m not saying don’t do it, but I’m saying how can you prove that I bought this or disprove that hypothesis without spending the money? Can you work with the current owner to survey the audience to find out if they do want the SaaS? Or maybe you do? Maybe if it’s a one-time software and you buy it, and the SaaS doesn’t work out, you’re okay with that. One-time software is not terrible. I mean, I had done it, it was for years, and it was a great revenue stream.
So, I’m not opposed to it but I do feel like you have to answer a lot of questions. Even if you answer, I would ask, “It’s like acquiring yourself into the stair step?” which is something that I did and very few people do, but I didn’t intend to build SaaS on top of the things I acquired. Those were really just income revenue streams. So, not opposed to it, but I do have some questions that I want answered before doing it.
Mike: I think the piece that’s probably the most important is how you validate that is the right move and that those people are going to want to purchase a SaaS? If there’s already people who are purchasing the SaaS products in that particular target market that is similar to what it is that you want to build, then great. Are you buying it because of the company and what it offers? Or you buying it because you want to plug it in and you see it as a new channel that you can tap into because they’re offering something that nobody else does in this particular market?
So, thanks for the question. The next one that we have is from Daniel Fellows and he says, “Question for you. How do you deal with the loneliness of building your startup?
Rob: I think that’s the reason I started my blog back in 2005 was the loneliness of trying to do something that I didn’t know if anyone else was doing it. I didn’t know if any other single founder software startups that were raising funding. There was nobody.
I starting blogging and trying to find other people. That turned into my book, then this podcast, MicroConf, so I deal with the loneliness by having this community. Whether I have been part of building it like we have been or whether I just became a part of it later, I rely on this community as much as anyone to keep me from feeling that loneliness. That is a reason.
We did the podcast for a number of reasons, but I think part of it is to be able to talk about this stuff, both with you and with the audience, and to get questions and comments and all that stuff is helpful.
Going to MicroConf basically three times a year in essence is a big one for me and I always get a bump from there, realizing that there’s a bunch of other people doing this with us. On their own but with us. And then of course, Mastermind groups. That’s been a huge thing. I have always been a proponent of it years and years. That gives you that touch point every other week or however often your do it, to know that there are people that are in your corner.
I didn’t do this when I was growing startups because I was so focused on grinding out day to day, but finding founders, entrepreneurs locally, Sherry’s been doing a good job of that here in Minneapolis of finding local entrepreneurs and having them over for dinner once a month. We’ll just get two couples over here and have a nice dinner. Sometimes the conversation involves work and other times it doesn’t, but having that shared ethos of being a founder makes conversation super interesting and cool. How about you?
Mike: I agree with everything you said. The one other thing that I would add is finding something that is outside of your business where you can use to socialize with other people that is not work- or business-related. I think that’s something that I definitely neglected that early on in my career where it’s just I worked all the time and beyond that I didn’t do much else.
I didn’t really have a life outside of the business and I think that’s probably, I wouldn’t say a huge regret but it’s definitely something that I probably should have done a little differently if I were really thinking about it or thinking about the future. I think I’m definitely on the right track there these days, but it’s something that I would probably emphasize a lot more if I were to go back and do things over again.
I feel like having time away from your business when you’re not thinking about it and you’re not talking to people who are also running their own businesses as helpful just as a way to recharge. If you’re spending all of your time thinking about it, it starts to creep into places where it really shouldn’t, like when you try to sleep at night and you toss and turn just because you’ve got business on your mind at all times.
There are always interesting problems but it’s helpful to have something else that is completely distracting and completely irrelevant to your business that you can do that will take your mind off of it. I find a lot of times that there are problems that I’m working on where the solutions just come to me very quickly if I’m not thinking about it.
Rob: It’s a good point. It’s something I didn’t do until the last 2–3 years actually. I believe I was doing some tabletop gaming before that, but before the exit in 2016, that I really ramped it up after that. That’s something that I’ve enjoyed having as a hobby. I really neglected my hobbies for a decade plus and I don’t regret that actually and wished that I have done more hobbies because I did take that time and I got stuff done.
The reason I was able to put out as much content as I did and we’re into all the multiple things as I was thinking about them a lot. Eventually, that can take a toll on you. I think having maybe one hobby that’s not super time-consuming can be helpful. But since I didn’t do it, that’s not something I can necessarily recommend. I know it’s best practice, but I think the other stuff we’ve talked about with masterminds and such is that’s what I did, so that’s what I feel better about telling people with a straight face. Not to just do what I say now as I do, but you can do it as I do and I think just to keep from being lonely.
Mike: For our last question of the day, we’re going to take one from Graham Blake and he says, “As a single founder whose business has succeeded, I find I have less time to do the things that made it succeed. I delegated a fair bit but the management of a bunch of small areas reduces the time I have to deep dive on stuff. How do you organize things? You can still do the most valuable work while keeping the machine running smoothly. My biggest difficulties are that most of my valuable work involves deep focus, which is generally writing a video production. I have to give feedback on work that is being done for me, but if I ignore this for too long, it creates bottlenecks.”
Rob: This is a hard one. It’s the maker’s schedule versus the manager’s schedule from Paul Graham’s writings where the manager is interruptive, you’re responding, you’re trying to keep people going, and the maker is where you need deep focus. Trying to be both of those is very hard. I don’t know that there’s a great answer to it other than to hire someone to manage all the little ins and outs so that you are no longer a manager. Trying to be both is hard.
There’s really two solutions here. Step away from the making, hire somebody to do that, or step away from the managing and hire someone to do that. I realize neither of those is easy nor straightforward, but we’re entrepreneurs and we do things that are not easy or straightforward. That’s what I would look to do longer term if I look out six months or a year, I would look to get completely out of one of those or the other and you need to ask yourself which one you want to do.
We’re bootstrappers. You can do what it is that you want to do. That’s why we design these businesses around us and then figure out a path to get there. It may not be hire one person to manage everyone right from the start. Maybe it’s someone with enough skill that they can manage part of your team, part of the contractors or whatever. But you need to remove yourself from the deep dive if you don’t want to be doing that or you need to allow yourself to deep dive if you want to.
Mike: I think it’s really hard to cross that line because there’s a chasm between what you’re looking for from people versus what you’re actually getting. Until you get to a certain scale, it’s hard to put people in there if you can’t afford to hire managers, for example. I think that getting to the point where you’ve gone one direction or the other is the difficult choice the most people have in front of them.
I’m sure you’ve run into this in the past where you’ve got something that you’ve outsourced to someone and then they come back with it, but you still need to spend time going through it and looking at it, making sure everything’s right. Really, the only short-term solution I see for that is time-blocking in some way, shape, or form so that you are not trying to do too much context switching between the creative time versus that management time.
If you try to slot it in on a daily basis, it’s just not going to work. I’ve found that if I allocate time for it once or twice a week or something like that, maybe Tuesdays and Fridays or something along those lines, you can get more done because you’re not context-switching between those things as much. Anything else that comes up, you have to be diligent about making sure that those questions don’t come into a channel where it’s going to be disruptive to you.
I was constantly telling people, “Hey, don’t send me a Slack message. Send me an email and I will review it when I get it. Otherwise, that Slack message is going to be disruptive for me. It’s going to screw up my schedule of being able to work on this stuff.” You just have to be diligent about making sure that the expectations are that you will review stuff on Friday and you’ll go over it with them on Tuesday, for example. That way, you can email them, say, “This is what my thinking is,” or, “Here’s a short video of what my thoughts are.”
Got something else I would rather recommend is trying to cut down on the synchronize time that you have to spend with people. If you can do a short recording of it and send it to them as feedback versus getting on a call with them so you both have to be available. I find that calls tend to be disruptive just because if it’s 20 minutes or half an hour before the call, you’re really hesitant to start on anything that has any level of involvement because you know you’ve got a call coming up and you don’t want to have to stop. It’s about being conscious of where you’re time is going to be wasted and these are going to waste half an hour of your time before and after the call.
Rob: Those are all good points and I really want to highlight the one of just changing the expectation of communication and saying, “By default, use email because it asynchronous. By default, let’s not schedule calls. Maybe use Voxer where we can leave a voicemail and go back-and-forth on that, then turn off alerts, and check it twice a day or something. But if stuff is urgent, then you can text me or Slack me and interrupt me. If it’s super urgent, you are blocked, and you need an answer within, let’s say 10 or 15 minutes, then use an interruptive medium. But if not, don’t. Just use Slack for everything.”
That’s always when I would onboard new people. Anytime, actually, with TinySeed, with Drip, with whatever, that’s my thing. It’s like, “Let’s not Slack by default. This is dumb. Let’s not text by default. I don’t need to be interrupted and you’re interrupting what I’m trying to do.” That could be a first step. We just don’t know if it seems using Slack for everything is just throwing them into a loop, or you can say, “Hey, everybody. I’m going D&D. Do not disturb for the next two hours. I will not get back to you. If the building is burning down and the site is completely down, then break my D&D. Otherwise, do not expect a response.”
Frankly, if you’re a software video production company, that should be the default. I think two or three hours every morning, two or three hours every afternoon, everyone should be doing that. Now, that doesn’t work if you’re a manager and you have blah-blah-blah. Yeah, I get it. But that should be the default and you should be able to break that rule if you have a specific role, or if you have a specific week, or you need a lot of collaboration or whatever.
I can’t believe my voice at a certain point that I thought was not going to make it through this episode, but I’m glad you were talking at points because it gave me a chance to recharge it. I’m feeling good. We answered a bunch of listener questions today.
If you have a question for us, you can call them into our voicemail number at 888-801-9690. Voicemails always go to the top of the stack unless I screw up and forget to move them there. You can also email it to us. You can just attach or send us a Dropbox link to an audio file, or you can do the old-fashioned and just send us some text to email@example.com. Our theme music is an excerpt from We’re Outta Control by MoOt. It’s used under Creative Commons. You can subscribe to us in iTunes, Stitcher, Overcast, Downcast, and all the other good ones. Just search for ‘startups.’ We tend to be in the top few. You can visit startupsfortherestofus.com to see a full transcript of each episode. Thanks for listening. We’ll see you next time.
In this episode of Startups For The Rest Of Us, Rob and Mike answer a number of listener questions on topics including which signals matter, staying on task without external motivation, and how they manage their time.
Items mentioned in this episode:
Rob: Hey, Mike. Do you know what the Exeˈcutor is in Star Wars?
Mike: Yes. It’s one of the Star Destroyers but I don’t remember which one. I figure whether it’s the Super Star Destroyer or is it just one of the other ones?
Rob: I believe it’s Darth Vader’s Star Destroyer.
Mike: Yeah? Okay.
Rob: Exeˈcutor. What’s funny is I used to call it the Eˈxecutor when I was I kid because it’s spelled like that but I learned it’s called the Exeˈcutor. Here’s my question for the day. How many bounty hunters are on the Exeˈcutor when the rebels are hiding in the asteroid field?
Mike: Bounty hunters? Geeze.
Rob: This is The Empire Strikes Back.
Mike: Yup. They’re all standing around and he says like, “No disintegrations.”
Rob: Exactly and Robot Chicken has done a great parody of this. If anyone has not seen that, go type it. ‘Robot Chicken Star Wars Bounty Hunters.’ How many?
Mike: Oh gosh. How many exactly? There’s between four and six. If I had to guess, I’d go on the higher end. There’s probably six or seven, actually. I’ll go with seven.
Rob: Final answer?
Rob: It is six. Very close, sir. I was at five, but Boba Fett, Dengar, Zuckuss, 4-LOM, Bossk, and IG-88.
In this episode of Startups for the Rest of Us, Mike and I discuss determining which signals matter, staying on task without extrinsic motivation, and more listener questions. This is Startups for the Rest of Us Episode 443.
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 build your first product or you’re just thinking about it. I’m Rob.
Mike: And I’m Mike.
Rob: And we’re here to share our experiences to help you avoid the same mistakes we’ve made. Where this week, sir?
What sucked even more is I created this 30-minute video and then I went to basically dump it unto YouTube, because of course you can’t submit it in any other way except by putting the video on YouTube, and I found out that there was no sound so I had to do it all over again. I had to re-record it. I was like, “This sucks,” and I tested the sound before like the first time, too. I tested it, it worked, then I did the video, and no sound. I was like, “Come on.”
Rob: That is no good. So, you basically just […] a bunch of times on something that really did not move you business forward.
Mike: Exactly. Of course, this whole thing does not really move my business forward, but I don’t know. I still have concerns about the whole thing because they say that depending on what you’re doing, you may need to go through a third party security review and I’m like, “Oh and that will cost anywhere from $15,000–$75,000,” and I’m like, “Uh, yeah. I don’t know about that.”
Rob: Interesting. They must have an exception, I’m guessing, for small companies? I mean, that seems like an odd thing to saddle you with.
Mike: Yeah, I don’t know.
Rob: It’s like it’s PCI has self-certification. There are often things like that where it’s a pain in the neck to do but there is some out. I guess it gets serious backlash. If there’s not, that’s not good because you’ve had this in place for a while and then they’ve changed policy?
Rob: Huh? Google changing something and hurting someone’s business? That’s news. Shocker.
Mike: The sad part about that is that I specifically built Bluetick using IMAPS so I wouldn’t rely on their API, so that if they decided to change things on me then I basically wouldn’t be affected. Guess how that is working out for me right now?
Rob: Yeah, sorry to hear that. It’s tough to rely on any third-party. I talked about when I had HitTail, how we were reliant on Google keywords, and then they did not provide it. Then we got into the Webmaster Tools and then they broke that. They break that every six months. It was really frustrating.
That was a big reason that when I wanted to start my next startup, I didn’t want to be reliant, and then you just wound up being reliant. You’re relying on somebody at some point. You’re relying on Amazon or Google for hosting and it’s hard to switch. Yes, there are options but it’s a tremendous amount of effort to switch.
Even just sending emails, as you and I know, getting in spam, inboxes, and on blacklists like that, you become reliant on them, and then you have to go build all this infrastructure to keep you from spamming people. This is another example. You do something, it makes sense, it makes it easier for your customers, and in this case it kind of get you into a bunch of extra work to just maintain this thing.
Mike: It is a double-edged sword, though, and it creates this hurdle that if anyone wants to come in after the fact and try to build that, it just makes it more difficult for them. Just by virtue of building your app and making it better over time, that does the same thing, certainly so. I don’t know. Still trying to work through it. I sent it off to them. I send the video to them and in less than an hour later, they got back to me and said, “Okay, now this other thing needs to be fixed.” I’m like, “All right.” I fixed that and burned another three or four hours fixing that because they’re like, “You can’t have non-production systems using the same client ID.” I’m like, “Dear God, it’s the same thing.” So, I’m like, “All right.” I don’t know. I have to switch everything over, modify my build server and everything else.
Rob: Anything else beside from technical and integration challenges going on with old Bluetick?
Mike: I’ve got my webinar that I’m doing which, by the time this episode comes out, it will have been yesterday. I’m doing that for hr.com and we’ll see how that goes. I got to get them the final PDFs to the slides so that they can post it in the website and then get the presentation on Monday. It ought to be good.
Rob: Sounds good. On my end, just opposite pushing forward with TinySeed and things are going well there. I’m having a great time and I’m very excited about the batch that’s coming together quickly. We have almost all of the startups you selected, made offers, sent paperwork and that kind of stuff.
There’s a bunch of stuff I think I’ve said on the podcast in the past, like legal is the bottleneck and had been now for a month of two. We’ve been selecting and making offers but without the final paperwork, which is […] third party who isn’t moving nearly as fast, isn’t moving with the same urgency that we are, put it that way, has been a little bit frustrating.
I’m looking forward to getting past this point because not only did we have to incorporate and set-up multiple, where now all I see is a limited partnership in all this stuff, which takes time. Then we have to have all these docs drawn up and we won’t next time. Batch number two will not have the same level of foundation-building and will have a lot more way. We’ll know more of what we’re getting into and have better systems to do it. But realistically, the systems are not what are holding us back at this point. It really is this reliance on a third party who is moving at a glacial pace compared to us. So, I look forward to being out from under that here pretty soon
Mike: It’s interesting that you say that because it reminds me of, don’t know the inside story on this but my guess is that, that’s probably the exact reason why Stripe came out with Atlas was to help founders get past all of that stuff, so that they just didn’t have to worry about the pace of getting all the legal stuff taken cared of. It just reminds me of that.
Rob: Totally. It’s friction and it’s something, specifically with Atlas, that every company that’s not a sole proprietorship has to do. They just want there to be more of those companies. They want to have that rising tide so they can remove that friction. I remember the first time with […] I was like, “Wow, they’re really going outside their core competency,” but now I get what their long-term vision is, is that they just want more businesses that are able to get online. Of course, that’s what Stripe Atlas allows you to do super easy.
I said it before. I wish there was Stripe Atlas for accelerators and for funds. There are some pre-made things for it. They’re ridiculously expensive to the point of being a non-starter. So, we get to do it from scratch. Good thing I’m used to doing that, huh? No one thinks from scratch.
In other news, we have a few more podcast reviews. I’ll just read one of them. From wking-io, he said, “I could listen all day. I do not own my own SaaS but I work for a small info product startup and this information is so valuable. I’m able to see this information in practice and know that I will have a head start whenever the moment strikes for my own app from all the info Rob and Mike shares.”
Thank you for that review. We love a five star rating or if you’d prefer spending more time writing review, either one is fine, in […], Apple podcast, wherever greater podcast are sold, we appreciate it. Mike, when is the last time that you got something useful from Twitter?
Mike: I connected last week when somebody had lunch with them and we connected over Twitter directly. So, we coordinated that […] as you could say.
Rob: That was a very long pause. The editor edited that out but to the listener, Mike was silent for about seven on eight seconds. Number two, did you have each other’s email or did you literally meet and connect? If Twitter had not existed, would you guys have been able to coordinate that?
Mike: We probably would have. It was somebody who joined the MicroConf Academy years ago and he’s been eyeing MicroConf. It’s Josh from […]. We did lunch maybe Tuesday. Monday or Tuesday. It was Monday this week. He was in town from Maryland and just wanted to say hi, so we got together and chatted for a while about our businesses and how things were going.
It was a good time but other than that, it’s been a while since I’ve ever gotten any real value from Twitter. You’re right. Evidently, there’s a huge pause because quite frankly, I don’t log into Twitter very often anymore because it’s a lot of noise. I guess that’s what Twitter is for is for noise.
Rob: Noise and arguments. I’m not a hater but I’m been trying to figure out how do I get myself off of it because I find it a bit more of a distraction than anything. With that said, I haven’t gotten anything valuable from Twitter in a for a very long time except for yesterday and today. I knew we were recording this episode. We didn’t have enough questions to fill out a full episode and with one tweet, got frankly enough for probably two episodes or more. So, I want to give a shout out to Twitter for bringing the thunder once every six months for me or whatever.
Anyway, enough of the Twitterating. Our first question was posed on Twitter. It wasn’t even directly to us. It was probably a few weeks ago when I emailed it to my Trello board and got it over here. Justin Jackson posted on Twitter and he said, “One challenge I’d had as a founder, tracking and trying to triangulate thousands of qualitative data points. Somehow, you have to decide which signals matter. But even then, plotting all those data points on a map and deciding on a direction is tough.” Then Alli Blum replied then and said, “Same. I think about this pretty much all day, everyday.”
I think we should discuss because I have thoughts on this. Basically, how do you do this? That’s the question here is how do you as a founder do that? Probably the best question is, you have a bunch of qualitative data, how do you decide on a direction when there are conflicting signals?
Mike: I don’t like this answer. I’ll tell you that before I give it.
Rob: It depends? No, just kidding.
Mike: No. Even worse than that. It’s like a lot of gut feel. You go with what feels important at the time because it’s hard to take some of that data and say, “This is justifiably more important than that,” really based on whatever rules you try to put in place. It’s hard to put rules down on paper that are immutable. There’s always things that are changing and there’s always stuff that’s going to factor in to those decisions.
For example, the video that I had to do for Google. It wasn’t really all that important and I pushed it off for a long time because it just wasn’t important. Then, there was a deadline where it’s like, “Okay, you got a week before we just outright reject your application.” It’s like, “Okay, I have to do this now.” It’s because the priority has bumped up, because there’s a hard line in the sand, and it has to get done by that time or there’s consequences.
I feel like a lot of my decision-making around priorities tends to be driven by negative consequences of not doing something, as opposed to there’s going to be positive outcome for X, Y, or Z. There’s so many things that are going on at any given time and you have to try and juggle them all at once. It’s hard to do that.
Rob: I actually think that’s a good answer. I think gut feel is the first thing that came to my mind. I think rules of thumb are something that, if you could possibly apply rules of thumb or expertise from other people who’ve gone down before it, then start there. If not, it’s a ton of gut feel.
Justin has identified the edges of where we can have a startup blueprint and where you’re drawing your own map, with a map ends in essence. I actually have a tattoo on my shoulder that is a map and there’s a hand drawing at the edges. It’s a metaphor for exactly this, of going off the beaten path. Originally, it was like, “Well, I’m not going to work 9–5, a salary job. I’m going to go be a contractor,” and people are like, “Woah. that’s risky,” and then, “I’m not going to do salaried work anymore. I’m going to build products.” “Wow. that’s really risky. You’re hard. Can you even do that?” Then while you’re building those products, there’s no map anymore or very little map.
Frankly 10–15 years ago there was almost no map. Things like this podcast, even lean startup, customer development, SaaStr, and MicroConf have enabled us to develop a mental model. There are books that come out on the topic as […]. It helps all of us have kind of a lose map or a lose blueprint, but there’s always an edge to that. This is the point where you have a bunch of data points to decide another action. There’s no map and this is where what separates the, I would say, a poor founder from a mediocre one, a mediocre from a good, a good from a great, is how well they’re able to make these decisions.
I would also say that this is, at least for me, gotten easier over time. I feel like I’ve gotten better at it because here’s what it is. It’s making decisions without sufficient data. You don’t have all the necessary data to actually make the decisions, so you have to fill the rest in in your head. I believe there’s almost never a right answer to these things. There’s always multiple right, multiple tough, wrong answers.
I also believe that most decisions are reversible; almost all decisions. There are very few that are not. To some, you may think are not reversible. They may come with a monetary cost. They may come with a relationship cost. They may come with agony, pain, time, whatever, but almost every decision is reversible. The ones that are truly not are the ones that I now agonize over and everything else. I tend to make a pretty quick gut feel decision, realizing that if we need to change course later, you can.
Mike: I’ve looked at all these different data points and see them as signals that point at a certain direction. But some of them are more important than others, and based on the situation or timeline or things that you’re dealing with, some of them are going to come out on top. If you have rules on paper, it’s very hard to create a set of rules that say exactly what to do or how to track those things and to determine what matters.
As you said, I think that that’s a really good point about the fact that there are these guidelines and rules of thumb that you can follow. But at the same time, they’re just signals. That’s all it means. There isn’t a right or wrong answer, unless you’re looking at it in retrospect. In retrospect, there is always a right answer, or a best answer, or an optimal answer. But because you probably are working with only about 30%–40% of the complete picture at any given time, I call it guessing a little bit. It’s more like educated model recognition of what’s going on.
That’s why MicroConf is just so important and these conferences and communities where other people have seen those types of things. They can recognize it essentially on your behalf, if you have not been there before and you are not able to directly recognize it. That’s why mentors help. that’s why accelerator programs work. Like Paul Graham, I would imagine who walk into just about any startup and give pretty solid feedback about why it will or won’t work, and probably be very reasonably accurate on it, just by virtue of having talked to 1500 to 2000 or 3000 startup founders, and helping them through all those different situations.
Rob: There’s a book called Decisive by Chip and Dan Heath. It’s about how to make decisions. I believe Ruben Gomez from […] turn me onto that. I listened to it a couple of years ago and something they say in that book is, just because the outcome turns out bad doesn’t mean it was the wrong decision. Those two things are not linked. You make the best decision you can, with the data you have, and with the information, the gut feeling or whatever else, the intuition, whatever you want to call it, and then you do the best you can. You reverse it if you need to or you correct-course as you move forward.
Mike: I think that’s actually a problem for a lot of people, myself included. A large extent is trying to figure out, “Can I just make a decision and move on?” or even just recognizing that you’re a reasonably smart person, you’re going to make the best decision with the information you have at the time, and it may turn out to have been a sub-optimal answer or solution to whatever it is that you’re trying to do.
Waiting is not necessarily going to help you very much. You’re basically just wasting time at that point when you could have been trying to move something forward in one direction or the other. Maybe it was the wrong direction but, as you said, those types of things tend to be reversible. It could take some pain but if you wait around for enough information, you have wasted so much time and then you still have to do it. So, moving is better than not moving.
Rob: Yeah. Opportunity cost of postponing, or agonizing, or waiting, procrastinating, whatever word you want to look for of a decision. It’s hard and that’s why most people don’t do this, don’t start companies because it’s too uncharted, it scary, it takes a while to get used to, and it’s uncomfortable. I think that that’s when you know that you probably want to doing things right, but you know that when you’re in a zone of personal growth, is when you’re doing things that are making you feel not comfortable. That’s when you’re going to get better. So, cool. Glad that Justin threw that out on Twitter.
Our next question is about how to stay on task with no extrinsic motivation, no external motivation. It’s from Mike Manfrin. He’s @manfrin on Twitter. He says, “How the hell do you stay on task when you have no extrinsic motivation? I’ve been letting myself spiral out second- and third-guessing design decisions and getting absolutely paralyzed with choice and scope, that I end up doing no work towards my startup.” Ken Wallace chimed in, “Think about having a mastermind because those folks can guide you,” and I actually think that’s a good thing we should throw out. I mean, that’s often with the bigger decisions. That’s where I rely on is someone in a mastermind. What other thoughts do you have here for Mr. Manfrin?
Mike: It’s interesting that this question comes out because I just talked about it. It’s very easy to run into that situation where you are not sure what to do, so you wait and you second-guess yourself. You don’t do the work because you’re second- and third-guessing your design decisions, thinking that if you look at the problem more or you try to gather more data is going to help you in some way shape or form, and it usually doesn’t. I think that’s a very different problem than not having motivation, whether it’s intrinsic or extrinsic. That’s a different problem than being in a situation where you second-guess yourself and you’re not sure what to do, so you try and gather more information. I think those are two completely different problems.
Rob: I agree. He says, “How do you stay on task when you have no external motivation?” I definitely had time especially when I start to burn out, or when I’m feeling depressed, or when I don’t get enough sleep, there are seasonal times when it’s dark outside and cold and stuff, where I am unmotivated to do things, and I really struggle just to stay on task. Those are the times where I strategically break out caffeine, I turn on bright lights, I turn on loud music. I use all the sensory options that I have to try to get myself into a zone. I try to get into a routine where when I hear this playlist start or when I hear this single song and listening looping start, that I force myself to get in and do things. Now, the nice part is it’s probably been a year or more since I felt that way, but I’ve gone through months and months of stretches of that. That’s how I do it.
He’s also then asking, he’s spiraling out second-guessing design decisions, getting paralyzed with choice and scope. This does tie into that first question or first proclamation that Justin made of how do you make these decisions and not get paralyzed with choice. That’s where we said this is hard, it’s gut feel, you can undo things later. I think a lot of us as developers don’t want to make the wrong choice because we feel like we’ll have to rewrite all this code. Refactoring’s a pain in the butt and if we make this decision decision in the database, then we’ll never live it down, never be able to correct it.
While it will be painful to correct, these things are reversible. That’s where I tell myself actively if I find myself being hung up and for the first thing is to identify that you’re doing this, and being like, “I’m not being productive right now because of this, because of this decision, or this item in my Trello board, or this email. Why am I not doing that? Am I stressed about it? I just don’t want to face it, am I scared that I’m going to make the wrong decision?”
There’s a bunch of things that I will try to identify and then I’ll say, “Okay, if I’m stressed about it, then why? And then why? And then why? Keep asking the whys to get to the true source of it, to figure out if I’m actually stressed, or if it’s a design decision then I will either think to myself like, “Well, I’m going to call up XYZ person, who I know has a great design and usability sense, and I’m going to ask for 15 minute of their time and say, ‘Can you help me with this?’ so that I have some sense of calm about the decision.” Or maybe I just make a gut feel, I go forward, and hope it’s the right decision.
These are tactics that I would use trying to get other people involved. I do think Ken Wallace’s suggestion of having a mastermind so that you can bring these things to people on a regular basis, is a good one. Can of course run MastermindJam, which matches people up in the startup space into a mastermind.
Mike: But I think that those are also with two different pieces. One was recognizing it and then two actually addressing the problem. I think the recognition of it is something that tends to take much longer than it probably should for most people. I found that myself. I mentally know that I’m not making progress on something, but I don’t necessarily allocate time to analyze my productivity at noon, for example. I don’t have 15 minutes of this to decide and say, “Am I making progress today? Am I doing what I expected to do? Am I procrastinating doing stuff or just not doing things because I don’t want to or I’m afraid to make mistakes?”
I think the identification pieces, the part that creeps up on us, and it last fast longer than it should if we aren’t on the lookout for it at all times. What I do, for example, I do a lot of journaling. I have an app that sends me an email and says like, “Hey, write into this little thing here and you can explain what your day is supposed to be like,” for example. I do that on a fairly regular basis. I’d say probably at least three or four, if not five days a week. Then I will notice the following day if I’m not making progress on something because I’ll be a little annoyed, usually my sleep will be suffering, and I’ll say, “Oh, I didn’t get a good night sleep last night because I was thinking about this,” and it makes me think about that stuff.
So, it’s kind of a forcing function. That’s something that people can think about. I won’t say journal your way out of it. I don’t look at it as full-fledged journaling. I might write a couple of sentences or maybe a paragraph or two. It’s usually the stuff that bothers me and that just brings it to my attention. Maybe if I start writing a lot, I know that I need to pay attention to it, maybe take a step back, but otherwise I could easily go a couple of weeks or a month or two without really noticing, and then all of a sudden it’s like, “Oh I’ve burned two months and I’ve got nothing done.”
Rob: That’s a good point. The faster you get basically knowing yourself at noticing that you’re having negative thought patterns, or negative behaviors, or behaviors that are causing you to procrastinate, or go in circles or whatever, the faster you’re able to do that and identify it, the faster you’re then able to actively attack it, get through it, and make progress. I think this is something that all of us struggle with in one form or another and I think this is something that you get better at over time if you focus on it.
This is so much of what my wife, Sherry, does on the ZenFounder podcast and in her writings and such, is looking at how these thought patterns come about, how to identify them, how to get through them. I’ve been saying for quite a while that I think 60%–70% of entrepreneurship is mental. I think more than half of entrepreneurship is purely just dealing with your own psychology, your own things, that self-sabotaging behavior, procrastination, whatever it is that you struggle with, if you can learn to overcome that, you will have such an easier time and make so much more progress so much faster.
I’m saying this from personal experience, that getting into you own psychology, whether that’s with a spouse, or a mastermind, or trained professional who is either a therapist or business coach or whatever, I think it’s invaluable. Thanks for the question. I hope that was helpful.
Our next question is from @GregDigneo on Twitter. He says, “My question revolves how you and Mike manage your time. Rob you’ve built and exited a company. You guys are both parents, you run a conference, you have the podcast, you write books. My loose question is, what is your day/week look like?” He’s asking in a couple of different ways. It’s like, how do you manage your time and what is a typical day/week look like? I think he’s probably looking for the days or the weeks where we’re more productive, not the ones where I stare at my computer for three hours, don’t get anything done, and then just wander off to go for a walk because I realize I’m not actually focused.
Mike: I tend to look at it on a weekly basis. My week’s, for the most part, are pretty similar. I work from home and the weeks that I tend to get screwed up is when the kids are home from school. Let’s see here. If I’m starting on Monday, Monday is usually my heavy work day, so I have it blocked off from my calendar. Even if somebody wants to schedule time with me using Calendly, they simply can’t. I have a hidden calendar that I can send them a link if I really needed to talk to somebody on a Monday, but typically I don’t hand that out to people and it’s usually on a case-by-case basis.
Tuesdays is not blocked off but I tend to get a fair amount of work done on Tuesdays as well Monday. I usually will work late, so seven or eight o’clock at night just because I tend not to have anything else going on. Tuesdays is a little bit lighter. In the evenings on Tuesday night, I have a D&D game that I play every week and then Seeker Wednesdays, I probably do less work. On Thursday, I do less work. Fridays, I try to get things done and set up for the following week. Saturdays, do a bunch of stuff around the house and take the kids to whatever they have, music lessons, or soccer, or what have you. Saturday night I have another online D&D game that I play and then Sunday is usually do whatever, usually cleaning up around the house and stuff like that. My week is pretty straightforward for the most part. How about you? Do you do it on a daily basis or a weekly basis?
Rob: I tend to think about things on a daily basis. Most of my days are different from one another. Sherry and I collaboratively home school one of our kids. He’s older, he’s almost 13, so it’s not like we’re sitting there teaching him stuff. He’s online taking courses, making progress on his own, and then we just have to monitor and poke in.
Some of my days I’m on and I know I can schedule fewer calls that day because I don’t want to be interrupted, and then other days I’m just completely focused on work. I look at it at a day-by-day basis. What I’ve noticed about myself is that I used to code. When I was writing code, I could sit and write it for 12 hours straight. I used to do that. That was actually my optimal way of functioning is to sit down, get momentum, break very briefly to eat or use the bathroom, and then get back. I would do 12-, 14-hour code days and get two or three days worth of progress done in that amount of time.
I don’t know if it has since I’ve gotten older or if it’s that I don’t code anymore because the coding was a very logical left brain. There’s some creative in it, but compared to what I’m doing now where I’m actually actively producing content, having to think things through, and these higher-level decisions, they’re a lot more taxing on my good glucose, so to speak. There’s only so much good brain functioning that you can have.
Writers who write books, Stephen King, these highly productive writers, they don’t write for 10 hours a day. They tend to get up, write in the morning between three and four hours tops, and then they spend the rest of the day doing other things because there’s only so much good focus you have.
Now, what I’ve found is that I’m highly productive in short bursts of, say, one to two hours. I try to have a forcing function that forces me to stop, because if I don’t, I will tend to just work two, three, four hours straight, and I feel my productivity just descend over the subsequent last one or two hours that I’m working. I have different forcing functions. Oftentimes, it is a child getting home from school or I take two of the kids to Jiu-jitsu. It’s only about an hour that we’re sitting there and I get so much done in that hour. And it’s the worst working conditions. It is terrible. I’m hunched, I have no plug, I have no chair. I’m literally hunched against the wall like I’m in junior high gym or something. I’m sitting almost like Indian style with my back to the wall, terrible posture, I have a laptop there, and I get more email done in that 45–60 minutes than I do two hours sitting at my house. I have no external monitors, I have nothing. It’s loud but there’s something about that space and the fact that I know my time is so compressed that I just hammer through to-dos and I hammer through emails.
That’s just one example but I have a bunch of times like that during the week that I’m finding there’s kids’ music lessons, there’s other things where I find that if I force myself to only have this much time, that I get the work done faster. That’s kind of a personal hack that I’ve been doing lately.
I think another thing is these are low-level how to get things done quicker on a higher level. I say ‘no’ to everything except for what’s on my goal list for the year. If you look at running a conference, you and I just do that. That’s on the to-do list. I feel like I’m pretty efficient about it, I feel like I focus on it when I need to, and then I make it a priority. The podcast is something that we’ve essentially automated almost all of it. You and I show up for two hours every other week and that’s two episodes. We walk away and the next two episodes go live. We don’t do anything else. We’ve automated, we paid for years. Since 10 episodes in, we paid for an editor who post the episode, who writes the show notes, who does all that stuff.
Writing the books. When I’m going to write a book I will make that a priority and I will work on it everyday. If I was writing or revising my book right now, I would probably do at least an hour of that once a day and then I would continue to do my other stuff. I wouldn’t say ‘yes’ to a bunch of things. I say no to some interviews. I say no to a lot of opportunities to jump on a call with someone to explore this or that. I say no to speaking at some conferences. Not all, but if I don’t think it’s a valid use of my time, I save the two travel days and the time to write the talk and all that. I push that towards things that I feel like are my highest priorities, that are in my goals, and things that hopefully will bring the most value to me, but also most valuable to this community that we’ve built and more value to more people.
That’s something else that I had to tone down is I don’t do as nearly as many as one-on-one things because I find that I can be more valuable by writing a book, or recording a podcast, or writing a conference talk that is going to be distributed to thousands or tens of thousands of people. I also don’t like things that are ephemeral, things that don’t stick around. To me, a blog post is better than a tweet because a tweet’s gone. A book is better than a blog post because a book sticks around for a long term. This is a lesson I that I’ve learned over the years is to focus on those things that help more people, that stick around longer, that have deeper meaning, and that bring more value to both yourself and people that will be consuming it.
That was a longer answer than I thought. It was more than I had thought to say on that topic but I think that was a good question. I think at a higher level it’s about priorities and saying no to everything else, number one, and then number two it’s about staying motivated over the long term, showing up every day, and getting […] done. Relentless execution is this phrase that I’ve used. It’s a personal moniker that I have adopted. Relentless execution.
That doesn’t mean you go crazy and work 20-hour days. I haven’t work more than 40 hours a week during the decade. There may have been these short stints like when I was revamping HitTail. I worked 60-hour weeks for about six weeks and then I pair back. To me, a 35- to 40-hour a week schedule is ideal, sometimes 30 depending on the season of the year, but I find that I get more done when I actually have shorter weeks and I’m forced to make quick decisions and get stuff done.
Mike: I do as well. You know at the back of your mind that you have as much time to work on something as you want, when you can just take as much time as you need, then it will take forever. I think it’s, what is it? Taylor’s Law that the amount of work will expand to fill the available time. I find the same thing. I will hold off on making decisions because I know that I have time to ruminate on it, or I will take longer to do something just because I have the time available. That’s actually what makes my Mondays a little bit tough is that, because I get myself a lot more time on that day, sometimes I’m not necessarily as productive. Then I find that sometimes on Tuesdays I will be more productive even though I have less time available to me to do work.
Rob: I can totally see that. To come back to Greg’s question, he says, “What is your day or week look like?” I feel like everyday for me tends to be different. I do like hitting things hard Monday morning by getting up and I ask myself the question, what has to get done today or what has to get done this week? What will move the business forward the most?
When it was Drip it was like, “Well, it’s getting everyone on the whole team on the same page and getting this decision made about what feature to build or this big deal we’re trying to close.” Now with TinySeed, it’s choosing the batch and it’s getting that forward. Those go right to the top of the list even if I get in my email box and it has 50 things, the things that are on the topic of what I have to get done that day, I skim through it. I take care of all that stuff first and everything else is on the side.
I would say that my days probably don’t look like you think they do. I start work a bit later than you probably think and I end it earlier that you think. I didn’t used to do that. Again, I think that’s where we’re coming back to is forcing yourself to get stuff done on a shorter time frame. It comes back to the cult of the Silicon Valley startup hours where they’re like, “I’m working 80-hour weeks or 90-hour weeks,” or whatever.
Your productivity plummets. There been a bunch of studies that have shown that it plummets after 40, 50, 60 hours a week. They’ve done it in construction, with construction workers when they go to 610s and 710s. When you were estimating those jobs, you have this major markdown factor. There’s books published by the electrical contractors who say, “These are guidelines and it will drop 30% over 50 hours and it drops 40% over 60 hours. It’s not just for those last 20 hours. It starts to fatigue and then your entire 70 hours that you’re working become 60% as effective.
It’s this crazy thing and that’s where the Silicon Valley startups who say or the founders who say, “Oh, I’m just working all these hours.” I’m always thinking, “What are you doing? What are you actually accomplishing during that time?” I find that I’ve been able to get quite a bit done in my career and my life. I don’t do that, really never have, even when I was coding. When I talk about coding, there’s 12- or 14-hour days. It was my early 20s, we had no kids, and what I would do as a contractor-consultant I would code that long day and I take the next day off.
It wasn’t that I was working long weeks. It was that I prefer to batch my work into a single stint, so to speak. I felt like it was more productive once I’ve got everything loaded up into my head—the mental model—I hated stopping and losing all of that, and had to regain that the next time that I sat down.
Mike: I would agree with that. I do wonder about some of the studies and stuff where they say, “Oh if you’re working more hours, then it’s not as good. You’re not nearly as productive.” I do find that there are times when you just get into a rhythm and you’re in the zone. If you break out of it, take breaks and shorter days or something like that, it’s kind of hard to load your brain up with all the stuff and all the little details that need to be there in order for you to get certain types of work done. I’m not necessarily saying that it’s broadly applicable, but there are times especially when it’s coding, taking a break is extremely disruptive. It’s so much easier to just down there and bang that stuff for four or six hours or eight hours, and if you’re still being productive then there’s not a great reason to stop except for those forcing functions.
Rob: Thanks for the question, Greg. I hope that one was helpful. If you want to connect with Mike or I on Twitter, I am @robwalling and he is @SingleFounder. I feel like that probably wraps this up for the week, Mike.
Mike: I think it does. If you have a question for us, you can call into our voicemail number at 1-888-801-9690 or you can email it to us at firstname.lastname@example.org. Our theme music is an excerpt from We’re Outta Control by MoOt, used under Creative Commons. Subscribe to us on iTunes by searching for ‘startups’ and visit startupsfortherestofus.com for a full transcript to each episode. Thanks for listening and we’ll see you next time.
In this episode of Startups For The Rest Of Us, Rob and Einar Vollset talk through the different kinds of corporate entities, how they differ, and how they can impact you in the future.
Items mentioned in this episode:
Rob: In this episode of Startups for the Rest of Us, Einar and I talk about US corporate structures, taxes, and why what you do now can impact you years down the line. This is Startups for the Rest of Us Episode 442.
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 build your first product or you’re just thinking about it. I’m Rob.
Einar: And I’m Einar.
Rob: And we’re here to share our experiences to help you avoid the same mistakes we’ve made. What’s the word this week, sir?
Einar: You know, it’s same old, same old. I’m mostly spending my time arguing with lawyers and accountants and things around Tiny Seed. That’s always exciting. It’s probably been since before MicroConf it’s been nonstop lawyering pretty much. That’s both expensive and frustrating at the same time.
Rob: Yeah. I was looking at some notes I had from a couple of years ago, I found this old notebook, and I had some personal goals that I didn’t announce in the podcast but personal goals for myself. One of the bullets was, “I don’t want to talk to any lawyers this year for any reason.” It was like 2017 or something.
Einar: It’s been unavoidable for me lately. Mostly with Tiny Seed stuff. Actually the main hurdle–which I guess we’ll get into this later–has been there are lawyers who specialize in whatever. You wouldn’t go to a securities lawyer if you need to be defended for a hit and run. But you talk to lawyers and their specialist and the expensive ones for securities and fund formation and they have their way of doing it, and it’s the way that venture capital is normally done. Essentially, you’re having to spend $1000 an hour arguing with somebody about how things should be done.
Rob: Right. Trying to educate them that we’re not traditional venture capital. It’s not going to all be Delaware or C Corps. We mentioned early on to the lawyers, we’ve been now through a couple of different firms but we told early on, it’s going to be more bootstrap startups, that’s our thing. We’re going to fund LLCs, we’re going to fund C Corps and they’re not all going to be in Delaware but then when rubber meets the road, all the docs made the assumption of Delaware C.
Einar: Delaware C Corp, a ban on issuing dividends which clearly doesn’t work with us, and all sorts of things. It’s been quite frustrating and a bit more expensive than I expected too.
Rob: Yeah. Because we’re just going against the tide of so many funds, right?
Einar: Oh yeah. The standard is like we only take Delaware C Corporations, at a corporate level disallow any kind of dividends because people want to reinvest and just do Delaware C Corps and that’s it and issue SAFEs ideally. The standard one, which again, assumes that there is a price around coming. That’s been interesting.
Rob: Yup. And that’s really the impetus for this episode is to give folks a little more background in case you don’t know who you are, you and I have co-founded Tiny Seed, we spoke about this about 20 episodes ago. It’s episode 420, an alternative form of startup funding where we talk to Tiny Seed and the mission and all that.
Rob: Folks can go back and listen to that if they want more background. But you and I are in the midst of getting this off the ground and we’re picking the first batch and closing in all that stuff. But really, legal has now become the bottleneck and it’s getting these terms in there and as we were knee deep in this having these conversations via email when I was London and then get back in doing calls and stuff, you brought up. You’re like, you know there’s a lot of misunderstanding or just lack of knowledge with startup founders about the different entity types. Granted, this episode we’re going to focus on US entities, and there’s a few reasons for that.
One is even if you’re not in the US, a lot of folks do start US entities, they’re going to take any funding or if they’re going to cater to the US market or there’s tax reasons, there’s a bunch of reasons. If you’re living in Europe right now, some of this still may apply to you. You very well may wind up setting up a US entity at some point. But even beyond that, what I’ve often seen is while laws don’t translate one to one, there is generally in England, and in most of Europe, there’s the equivalent of these things, an equivalent of a C Corp that has double tax. And there’s equivalent of the LLC even though it’s not called the same thing.
Einar: That’s right.
Rob: The standard disclaimer applies, you and I are not lawyers, this is not legal advice and all that. But damn it, I kind of feel like I’m becoming a lawyer.
Einar: We’re going to go and ask all around, this is a plan whose […] all the Tiny Seed stuff and sign up […].
Rob: That would be my worst nightmare. We’re having to get pretty knee deep into it and I think the fact that traditionally bootstrapped companies typically form as LLCs or S Corps. And VC backed companies almost always form as Delaware C Corps, right?
Einar: The standard thing in YCs, you come into YC and you have A another entity, a foreign entity, or no entity, they kick you to I think it’s another YC Company, Clerky? And they just spin you up with like a, “Here’s how to do a Delaware C Corporation, that’s what you need in order to get the investment from us.”
Einar: That’s very much to stay. With their investment structure, and YC is so dominant that pretty much whatever YC does on the accelerator early stage fund side, that’s what everyone else copies. It becomes a Delaware C Corp and a SAFE.
Rob: Right. What we’re going to talk through today is talk through the different corporate entities. We’re going to attempt and not make it the most boring episode ever of this podcast.
Einar: You should call it the most boring episode ever.
Rob: That should be the title, that’ll be something. And we’ll touch on points like liability versus taxes. Any tax is really the big thing with most of these, right? Because once you have an LLC, S Corp, C Crop, you do have a certain amount of liability shield. I’ve heard that if you’re a single member LLC in certain states, if you got sued, court will often consider you a sole proprietor, you don’t have a liability but we’re not going to get into that.
We’re going to talk a lot about taxes today because that’s the thing. Because if you pull dividends out, how are they taxed differently?
Einar: How you mean different? That’s the difference between a traditional YC Venture style company and like a bootstrapped “lifestyle” business. You’re going to basically go through several rounds of funding while you run at a loss. That’s the goal. It doesn’t really matter like tax optimization for dividends or the owners pulling out cash doesn’t really apply because there should be none. And in fact you might find that your investors are more than a little upset if you start actually running out of profit because that’s not the goal. The goal is become, burn all the money, dominate the market, and IPO.
Rob: Right. Raise every 18 months and if you’re not burning through that cash, you’re not spending it well, you’re wasting time and wasting their money. Because if they’re going to give you money and have you let it sit in your back account, it would be better served doing something else. That’s the mentality.
Einar: That’s true. Honestly, a lot of DCs will basically tell you they would prefer, like if you’re in a company that’s growing reasonably well. Tiny Seed or most bootstrap founders would consider a success so you get the $5 million, $6 million a year and you’re profitable but you don’t then need anymore a venture fund, that’s a loss for them. They would actually prefer you just to sell the company, pocket some money and try again and have a run at a bigger success.
Rob: Yup. That brings us into the meat of this episode. In the US structure, aside from just being a sole proprietor, there are really these three entities that are most common. I already mentioned them in this episode. Every Fortune 500 company I’m guessing is a C Corp. If you go public, you’re a C Corp. I don’t know that you can go public with other structures but that’s the big one and it’s as we’ve said, that’s what the venture capitalist typically Delaware C Corp. The nice part about that is there’s no past through income so that if you had a hundred different people on your cap table, you had a hundred different people or entities that owned a piece of your C Corp, at the end of the year, if you make a million dollars and keep it inside the company, nobody else gets taxed on it.
They’re like shielded from the taxes. It doesn’t count as income until you pull that money out of the company and actually distribute it to your shareholders.
Einar: Yeah, because that’s the challenge. That’s really the challenge with LLCs in that regard in general path through entities whether that’s partnerships, or a single member, or sole proprietor, or a C Corp doing it, S selection. You end up basically passing through whatever losses and gains to the people who own the company whether that’s investors or just the owners. You can be in a situation where there’s a gain but you’re not actually kicking out the gain so that there’s taxes to be paid but without any profits, any cash to pay for the investors. Which is partly why traditional venture funds don’t like to do it.
In some cases actually, the investors into the fund themselves, there’s a disregard of entities. They could be not for profits, they could be university endowments, they can be wealthy individuals who invest through like a self directed IRA. In most of those cases, they actually don’t pay taxes, so they don’t file tax returns. If you pass through a gain or a loss to them, all of a sudden they have to start filing tax returns not because of you, which is problematic in a lot of cases which is partly why it’s disallowed.
Rob: In my experience forming corporate entities, my consulting firm that then was this umbrella entity over all of my early small software products, and it still is frankly, I’ve changed the name of it now but it was called The Numa Group for years. I ran it for five years just as a sole proprietorship and then I made it an LLC. Certainly I wouldn’t have done a C Corp because I was just pulling up a bunch of cash off. That’s the thing we didn’t say.
The negatives of a C Corp, if you’re bootstrapped, the corporation itself will pay taxes at the end of the year and if you want to pull dividends out, you then pay another round of income tax. It’s called double taxation. If you’re pulling cash off a business, you do not want it in general to be C Corp. When I was forming The Numa Group as an entity and it was really more for liability reasons at the time just to shield me from anything. I could do an LLC or an S Corp and I was advised that an LLC, if you do a single member pass through LLC, that it has a less filing requirements, even less bookkeeping stringency complexity. I did that and that’s been fine. That was a good call for me.
When I went to spin Drip out, Drip started as just like hittail on all my other stuff, it was just under Numa Group LLC. Eventually, Drip got big enough for it has to be its own thing. When I spun that out, I could make it an LLC or an S Corp. Really, an S Corp as you said earlier, it’s just a C Corp with an S filing something or rather, like an option.
Einar: Yeah. It’s basically to do a federal taxes. You make what’s called a S Selection, and again, I am not a lawyer or a tax accountant, thank God, but you basically file an election with the IRS essentially you’ll be taxed in a very similar way to an LLC despite the fact that you’re a corporation. Doing so has benefits either from certain tax standpoints but it comes with certain issues related to it. For example, if you’re an S Corporation, typically becomes very hard to take investments, there’s a limit on the number of stockholders you can hold in the company, there is actually a limit on whether you’re allowed to have a non US persons as investors or owners. There’s a bunch of things that come into play there if you do the S Selection for sure.
Rob: Yeah. Because the advice we’ve been given is that Tiny Seed can fund C Corps and LLCs but we cannot fund the S Corps.
Einar: Definitely not, yeah.
Rob: Right. I didn’t know that. I believe it’s that another corporate entity cannot own a portion of an S Corp, is that correct?
Einar: I think that’s right.
Rob: Yeah. Again, not a lawyer but that was how it was explained to me but that was news because Drip was an S Corp and I didn’t realize when we formed it that that was a drawback. We hadn’t planned to take institutional funding. When we got acquired, I was looking around to try to do an angel round. That would’ve worked because it probably would have been a bunch of individuals but I just wasn’t aware of that at that time.
Einar: I think most people aren’t. You start up, people go to like Clerky or LegalZoom or ask their friendly neighborhood lawyer and it’s just like, “Oh yeah, yeah, yeah. Just do a single member LLC. Don’t think about it.” Or just do XYZ. in certain cases, people will optimize for their current tax situation but not necessarily for what’s going to happen if I want to sell the business or do a small angel round or that kind of thing.
Rob: That’s an interesting point because again, over the years when things were really simple for me, I just did an LLC and it filed its taxes as a sole proprietorship. Everything passed through to me, I didn’t take a salary. It was none of that. Now at a certain point, it started making enough money that my CPA said, “Look, keep it as an LLC but you file taxes as an S Corp and that allows you to now take a salary and you set a fair market salary, what does a CEO of a small software company make in the town you live in?” And since it was Fresno, it isn’t that high actually. “Everything above that, you just take out as an owner’s draw and then you don’t pay FICA,” is that social security?
Einar: Taxes and things or anything above that.
Rob: Yup. That’s a strategy that’s used by a lot of folks with both S Corps and LLCs filing as S Corps in essence. I think there are some number and I’ve heard varying, it depends on the CPA. My CPA said it’s when you’re making between about $60,000 and $70,000 from the entity. But I talked to someone the other day, they said their CPA told them $50,000 and someone else said $90,000. There’s some range in there.
Einar: My CPA is pretty mellow. She’s like I think $95,000. I live in the Bay Area too so she’s like $95,000 she’s fine with. I was like, “Why don’t we make it $50,000?” And she’s like, “Why don’t we not?”
Rob: Yeah. The salary?
Einar: Yeah, yeah, yeah. Because of the employment taxes in California held their own taxes on things on top of the Federal FICA taxes.
Rob: Right. It seems if you’re bootstrapping in business, the odds are pretty high. You’re going to do an S Corp or you’re going to do an LLC just because C Corp wouldn’t make sense. If you plan to raise venture funding, you’re probably going to go the C Corp route.
Einar: After you take funding from us. Maybe.
Rob: Yeah, exactly. Anyways, but it’s interesting because someone could go anywhere on the internet and research the taxes and stuff we just talked about but the interesting thing you and I are talking about before this episode started is the difference of if you decide to sell the company at some point, and the difference between if you never sold a company, you’ve never been thought about selling the asset within the corporate but not actually selling the corp itself versus a stock sale. Which is where you literally hand someone all the stock and they take the corporate entity with it.
Einar: Correct. Including the assets and liability crucially.
Rob: Right. That’s the thing that I’ve seen is, and you have more experience in this in the work you’ve been doing with Discretion Capital over the past couple of years. But my vague understanding has been that in smaller acquisitions, smaller meaning some $10 million, some $20 million whatever, they tend to be asset sales. Where you as the business owner, you keep the corporate entity and you keep all the liabilities in essence and the acquirer buys the assets, whereas if it’s some big, my guess is when Mark Zuckerberg bought Instagram, they probably bought all the stock.
Einar: Yeah. They bought the whole thing. Typically, a stock sale is essentially you’re taking the whole company, all assets, all liabilities, every single contract of this thing, including like if you buy a company and employee from three years ago sues you over something, sues the company, then you have to defend that claim. There’s a bunch of challenges around doing a stock sale. It includes the fact that if you purchase a company as a stock sale, that’s actually not as beneficial as doing it as an asset sale for the buyer.
With an asset sale, what you can do as a buyer, they come in and they say, “We want to buy just this specific piece. We might buy the technology, the goodwill, the existing contracts with customers, that sort of thing and we’ll explicitly exclude everything else.” Any liability that you sign, any contracts that they don’t want to assume, all that kind of thing will remain in the ship, was now essentially a shell entity. The other benefit which is often why buyers will push forward an asset sale, is that they get a tax break from doing an asset sale versus stock purchase so they often will pay more for exactly the same thing in an asset sale compared to a stock sale. And the specifics here gets into tax law and accounting. You definitely don’t want my advice on that.
Fundamentally, with an asset sale, what you’re able to do is to essentially reset the depreciation on those assets, and the value of those assets essentially becomes the purchase price. If you paid $5 million for an asset, my understanding is you essentially can reset the depreciation of those assets AKA those $5 million and then going forward, you can have that offset any income. If you’re doing a $5 million asset thing on something like this, it’s quite easily a million dollar tax break in the coming years which might translate to the buyers paying significantly more for an asset purchases.
Rob: The buyer gets that tax break, right?
Einar: Right. Essentially, you say like, “I bought this asset and it depreciates over time.” With the stock sale, you can’t do that. You’re just taking it over and essentially, you can’t reset the depreciation on the asset. Whereas with an asset sale, you’re allowed to do that which is so beneficial.
Rob: Right. Let me say that I bootstrapped a company, and for some reason I set it up as a C Corp because I think I’m going to raise funding at some point and I get acquired for $5 million but it’s an asset sale. Meaning they buy all the assets within the C Corp but I keep the C Corp. $5 million gets dumped into the C Corp, the C Corp pays income tax on that, then if I want to pull that money out to myself, I then pay my own personal income tax. You get double tax, it can be a huge amount of money, right?
Einar: It can be a really big difference. Because essentially, that corporate tax levels turn at least 21%. A lot of the time what happens is people essentially shot down the company because they sold essentially the core of it. They take the $5 million that goes in and then they’ll kick out whatever expenses they can but most people don’t have regular expenses that would wipe out $5 million. They then have to pay corporate taxes on it which is 21% and then they have whatever is left. At that point they can then pass it through to the owners. The benefit is that that can be long term capital gains, if you hold the company for long enough but it adds up quite quickly.
Rob: Whereas if you had that C Corp and it was a stock sale then, you would just sell stock and it’d be hopefully long term gains, assuming you own that stock for more than a year. But that’s the tricky part. Whereas if you had that S Corp and you would bootstrap it and it was an asset sale, then you’d save that 21% of extra tax. That’s the tricky thing. You don’t know what’s going to happen but you’re just doing your best to prepare for it.
Something you said to me, I’ve never heard of this but this almost sounds like a bizarre loophole is this qualifying small business stocks. Just to throw another wrench into this is if you have a C Corp and you’ve owned it for five years.
Einar: There’s a bunch qualifiers here. Although it’s like if you have the C Corp that was formed after this law came in. It’s a while ago now. Probably if you hold it for a fair amount of time, it’s probably after this date but essentially if after a certain date, if you formed it but on top of that you hold it for five years and it qualifies under these other criteria which I don’t have right in front of me but essentially they’re like sub $25 million or something like that and there’s a bunch of other qualifier stuff here. But if you do that and essentially your stock in the C Corp is counted as a qualifying small business stock, then you pay no federal taxes whatsoever including no long term capital gains.
Rob: That’s crazy. Is that if it’s a stock sale or an asset sale?
Einar: That would have to be a stock sale specifically on a C Corp.
Rob: Got it. Okay.
Einar: If you’ve done with an S Corporation election like a couple of years before, because that’s tax beneficial, then you don’t qualify.
Rob: There you go. It’s complicated stuff. I think what we’ve realized to turn it to Tiny Seed because we’ve been trying to figure out what can we fund, what should we fund. At this point, it looks like we’re able to fund C Corps and LLCs with some specific tax structures. I don’t think we can do individual single member LLCs due to some type of tax complexity or whatever.
Einar: Rob, it’s not even tax complexies. The fact that if we own a stake in that LLC it becomes a multi member LLC. It’s no longer a single member.
Rob: That’s right. You can’t do this thing. So it has to convert to a partnership. Now, it will mean that we have folks applying who might have a Colorado LLC so Tiny Seed will get a K1, which is an LLC equivalent of saying, “Hey, you own part of this and we file taxes and here’s a document showing how much your portion made or lost.” And then Tiny Seed will likely have to file a state income tax return in that state.
Einar: Income taxes and yeah, there’s actually even a question about whether our investors will then have to turn around and find their own income taxes in various plates. There’s a reason why the lawyers say, “You know just do the SAFE and the C Corp,” and why it’s more complicated doing this the other way. Certainly, most venture investing isn’t setup to do what we’re trying to do.
Rob: Right. And that’s been one of the challenges, that’s also one of the ways that we’re trying to change this, right? Is change this landscape to allow people to have an LLC and to take funding from essentially, it’s institutional. We are institutional money technically because we are investing our own money but in addition to other people who have put the money into our fund.
I think that sums up the feelings and the hots that we’ve been digging into all the stuff surrounding these corporate entities because frankly, I’ve been running a business for approaching 20 years now, different businesses. I felt like I had a handle on most of this and it turns out everytime I dig into this stuff I learn something new about it.
Einar: Yeah. That happens to me too. I had a conversation with somebody and this qualifying small business talk thing. He was looking at the sales business and I told him, and it turns out he qualified and he was quite surprised. Pleasantly so, I think. It’s an odd thing. You got to think about how easy is it to convert between the various things. If you’re already filed as an S Corp, it’s not actually straight forward, just to go back to a C Corp. There are some hangovers there.
Actually, different states treat these things differently. It’s not easy. It’s actually quite hard for us, I think that people come and they’re like, “What should we do? Should we do an LLC or an S Corp? Or a C Corp? What should we do?” In part, it’s up to them. They have to decide what they think is the most important. We can only sort of just lay it out for them to say, “Okay, here is the pros ann the cons.” It depends roughly what you’re looking to do.
Rob: Because if you wind up selling in an assets sale versus a stock sale versus never selling and just run and pulling dividends out being profitable, each of those has its own ideal structure.
Einar: I think that’s true. At a very high level, I think it’s fair to say that if you don’t think you’re going to take a bunch of investment, if you don’t think you’re going to IPO or sell for hundreds of millions of dollars, you can imagine this business becoming something that sells for sub $20 million say, then chances are that with the tax structure and the fact that you’ll probably get more money for an asset sale versus a stock sale, you’re probably better off with an LLC, I should think. But it’s hard to know. Who knows that any given company can turn around and becoming much bigger than you thought and then you have to deal with the headaches for the choices you made earlier.
Rob: Yep. Talk to a lawyer for sure. I did when I spun Drip out. It was essentially just an asset under that umbrella corp I had. While it was painful and took a few months, I basically spun it out into its own S Corp and all that worked out well. These things are doable. It’s just how complicated, how further the line you are, if it’s a taxable event.
Einar: That’s part of the main thing. There are certain things that are easy, like you can go from one to another and might be easy but going back might be hard or might be delayed or take time or have tax implications. There’s a reason tax accountants get paid so much money.
Rob: Indeed. Hopefully we haven’t bored you to death today for those of you who are still with us.
Einar: I’m feeling kind of sleepy.
Rob: You got to go drink some coffee. If you have a question for us, not about this topic because I hope to never speak about it again, you can call our voicemail number at 888-801-9690 or email us at email@example.com. Our theme music is an excerpt from We’re Outta Control by MoOt, used under Creative Commons. Subscribe to us on iTunes by searching for ‘startups’ and visit startupsfortherestofus.com for a full transcript to each episode. Thanks for listening and we’ll see you next time.