[00:00] Mike: In this episode of Startups For The Rest Of Us, Rob and I are going to be talking about how to run a paid advertising campaign. This is Startups For The Rest Of Us, episode 225.
[00:15] Mike: Welcome to Startups For The Rest Of Us, the podcast that helps developers, designers, and entrepreneurs be awesome at launching software products. Whether you’re launching your first product, or you’re just thinking about it. I’m Mike.
[00:23] Rob: And I’m Rob.
[00:24] Mike: And we’re here to share our experiences to help you avoid the same mistakes we’ve made. What’s going on this week, Rob?
[00:27] Rob: We had a nice tip from Josh Ayernov, and it’s about using Todoist, and email. This ties into a discussion you and I have had a few times, where I mentioned that I would love to be able to, basically, reorder my Gmail email, and make it a “to do” list. And he says, “Hey guys. Love the show. I’ve been using Todoist lately, and they have a Chrome extension, which lets you add a task from email, and append the email to the task as a url that goes back to that email. So if I have an email I need to respond to – that I need to postpone – I can just make a task, and click on it. So it essentially integrates the two. I figure if anyone is using Todoist, this would be a good tip, and if you’re interested in, kind of, being able to reorder your Gmail inbox, it could also be helpful.”
[01:08] Mike: That sounds really cool. It sounds very similar to what you’re, kind of, doing manually right now, with Trello, where you, kind of, send things over –
[01:13] Rob: Exactly. Forward it over, and then come back and search. Yup. Which is a little bit cumbersome – it works for me – but I can see, if I was not using Trello, I would consider using something like this. We had discussed the new EU VAT laws a couple of weeks ago, and Ryan Delk from GumRoad dropped me a link to an email. We’ll link it up in the show notes. It’s actually a blog post, and it says, “How we’re handling VAT at GumRoad.” The nice part is if you are using Gumroad, they basically handle it all for you, so you don’t have to worry about it. If you want to hear more about that, you can check it out in the show notes.
[01:41] Mike: Very cool. So this past week I went to a local photography studio, and had some new photos done. I took the time to update my social profiles – clean shaven, a little bit lighter, and no glasses.
[01:52] Rob: Yeah.
[01:53] Mike: It was like $130 for the sitting fee, and then $5 for each photo that I wanted. There were 10 that looked good, so I just grabbed 10, in different poses and outfits, and stuff like that.
[02:03] Rob: Yeah, every couple of years it’s nice to get a couple of head shots done. I’ve actually done it – the last couple of head shots I’ve gotten, one was when we did a big family photo shoot. We hired a photographer to come out to our property and do different location shootings here, indoors and outdoors. And I said, “Hey, can you just do a head shot while you’re here?” Then the other time was when I recorded that video course on how to hire a VA for your startup, which is startupvacourse.com. So, it’s nice to have a couple of different ones you can rotate.
[02:29] Mike: I figured I’d have something professionally done, that I can actually use in more of a professional manner.
[02:34] Rob: Right. So what are we talking about this week?
[02:36] Mike: Well, today we’re going to be talking about how to run a paid advertising campaign. But I don’t think we’ve ever actually done an episode on walking through what it is you should be doing, how do you compare different platforms, what sorts of things you should look at when you’re going through that, what things you should document. Things to pay attention to. Things to avoid. And I thought that what we should do is we should walk through a lot of those things so that people understand, kind of, the process that we go through, and learn from that, and maybe offer some insights back onto the comments of the podcast. Share the things that we’ve gone through, and what things we pay attention to because we thing they’re important.
[03:11] Rob: I think our intent is to make this, A, a little bit entertaining – so that you actually want to listen to it. And B, keep it high level enough that it’s something that is like “evergreen” content, so that you could come back to it in the future if you wanted. But it also gives you, like the mindset – if you’re going to start embarking on driving paid traffic – it gives you the mindset of how to, kind of, conceptualize all of this.
[03:31] Mike: So I think the first step in running a paid advertising campaign, is to know what your target cost of acquisition is. If you don’t know what your cost of acquisition is, you kind of need to guess what it is that you’re going to aim for, and use that as a guideline. Because when you start advertising on these different platforms, the cost of acquisition is going to vary dramatically between the different platforms. So, know what your target is, before you even start running the advertisements.
[03:57] Rob: I’m going to give you a couple of rules of thumb about how I would calculate – or ballpark – what I would use for my cost to acquire a customer. The first I’d start with is to figure out what is the average lifetime value of a customer. I’ll throw out three scenarios. One is that you have a one-time purchase product. Let’s say you have an ebook, or you have a WordPress plugin, or some downloadable software you charge “X” dollars one time for it. Now, some people may buy that, and then buy other things from you, but if you don’t have a bunch of data – that are easily at your fingertips – I would just ballpark it, and say, “My lifetime value is going to tend to be just the dollar amount someone would pay me for that.” Right? So if I sell four different pieces of software, for $40 each, I would say the lifetime value is going to be $40. Because I’m going to just say – unless I know for a fact “X” amount of people go and buy multiple items – I’m going to say, “My one-time purchase is $40.” And I’m going to start with that. If you have an e-commerce web site, I would just look at my average order value. Again, if you have the data, and you can go and say,
[04:55] “Well, this many people re-order, on average.” And if you can calculate it, that’s fine. But if I was going to ballpark it, what is your average order value. And if you’re a subscription service – so let’s say your SAAS, or your membership web site – I would tend to ball park – membership web sites tend to between four and six month, lifetime. So you can – to be on the low side – you might want to say, “Hey. It’s four times my monthly fee.” And SAAS tends to be between five and ten, until you’ve really hit product market fit. So again, if you want to be on the low side, and be more conservative, you can say five, and ten is not unrealistic for a reasonable service. So once you have that number – and if you’re selling a $19 ebook, then your lifetime value is $19. And if you have a SAAS app that’s $30/month, then maybe it’s $300 for that lifetime value. In general, you want to turn a profit, right? You don’t want to break even unless you have a back-end. And so, if I was going to be trying to scale up a SAAS app eventually, I would probably say, “To acquire a customer, I don’t want to spend any more than one-third of my lifetime value. And if I was going to try to acquire someone for a one-time purchase, you know, maybe you could creep up to 50% or 60%. But you don’t want to 80% or 90%, because then your profit margin is really, really low – unless you are trying to build that list and sell more things down the line. That’s a quick summary. There’s obviously a very large topic, to figure out what your target cost per acquisition should be. But that’s how I think about it conceptually.
[06:17] Mike: Yeah. I mean, you want your cost of acquisition to be as low as possible, but still at a point where you’re going to be able to make money. I think the other point to drive home here is, just because you have a target cost of acquisition doesn’t mean that over time you’re not going to be able to reduce that by optimizing some of your different ads. Because when you first start out, you don’t know what you’re doing. And that’s part of why you’re testing some of these different platforms and strategies. And when you do that, over time you will naturally get better at it. Or, at least, hopefully you will get better at it. Sometimes the platform makes changes, and they basically screw you over. Or there’s a lot of competition that comes in, and there’s really not a lot that you can do about it at that point. Your long-term goal is to get better at it, and thus drive your own cost down.
[06:58] Rob: Yup. The rule of thumb I use is, if I run ads and send them to a landing page, and do what I’m trying to do, and I can get within 3X of my target cost for acquisition, then I continue, right? Then I try split-testing, and optimizing ads, and doing other things. So that means if I can pay $50 to acquire a customer, and the first time I run an un-optimized campaign, it’s $150 or less, then I’m within target. But if I run it, and it’s $500 to acquire – meaning it’s 10X, it’s obviously possible that you could optimize into that, but that’s where I tend to just back out and say, “Boy, this channel is not going to work for me.”
[07:36] And I think this actually begs the question of like, “Well, what type of lifetime value do you need, in order to be able to support paid acquisition?” And it depends – B2C, B2B, and all of that stuff – but, in general, what I’ve seen is I don’t know anyone who’s making paid acquisition work, profitably, that doesn’t have a lifetime value of around $100. And so, if you are selling a $20 or $30 ebook, that’s hard. If it’s out of an ecosystem, you know? If it’s not a loss leader. If you’re actually trying to turn a profit on it, it’s pretty tough with a $20 or $30 lifetime value. There are exceptions. Patrick McKenzie with “Bingo Card Creator” has done it. He’s also very, very good, and he’s spent a lot of time – he’s one of the best people at AdWords that I know. If you are in a niche where the clicks are at all expensive, then you are going to be paying, easily, $100 or more to get someone to come and try your app, or turn into a customer. And so that’s where low lifetime value stuff doesn’t tend to be ideal for paid advertising. And you need to look at things more like SEO, content marketing by rally or word-of-mouth – kind of, the other marketing approaches.
[08:41] Mike: So once you know what your target customer acquisition cost is, you have to start identifying the platforms you’re going to use. And there’s a lot of different platforms out there, and it also depends on the specifics of whether you’re going after desktop users or mobile users. But, you know, there’s also like the standard ones that, kind of, cross into both mobile and desktop – like Twitter, Facebook, AdWords, Buy-Sell Ads, and a number of other ones. I mean, Rob, I’m sure there’s a list that you have taken a look at, and have leveraged as well.
[09:11] Rob: Yeah. Boy, I had a list that was like a mile long, when I was really hammering on this stuff with Hittail. And I ran on all types of crappy B2C networks. It’s like, there’s one called Chitika. To be honest, I don’t even remember the names of the other ones, because the ROI was so bad. I mean, I would pay $50 in ads, and you’d get all these 10 cent clicks, and no one would stay on your site more than three seconds. Like none of them. And so, instantly, that was just a non-starter, because I knew that if I spent $500 no one was going to stay on the site. There are a limited number of ad channels that you can think about if you are in the B2B space. You mentioned several of them. I would add LinkedIn. I would add AdWords, even though it’s very expensive – it can be expensive. The Bing ad network is reasonable. YouTube is actually something I’m doing right now, and I’m experimenting with. And then the other channel is re-targeting, which kind of spreads across all of these channels. But re-targeting is, while different from what we’re talking about – we’re talking about driving brand new traffic right now – but re-targeting is something I would want to have in place before I ran these paid ads. Because re-targeting gives you the chance to then advertise to them again, and your conversion rate on those is going to be a lot better.
[10:22] Mike: Yeah, that’s a good point. But the one thing you do have to be careful about with re-targeting is sometimes they have policies around, you have to have a product that people can reasonably buy. And sometimes if you’re sending people directly to a landing page, so you can’t buy from there, sometimes they get a little antsy about even allowing you to use their re-targeting capabilities on landing pages.
[10:43] So the next step is to run a series of tests on each platform for a specified amount of time. I’m partial to basically setting aside $100 and running the test for a week. And that’s a very small test. I understand that it’s probably not going to be representative, but at least it, kind of, dips your toes into the water. It gets you, at least a little bit comfortable, with how that platform operates – what things you need to make those things work. You know, there are certain platforms, like Twitter and Facebook, you can put images into those advertisements. But when you’re doing that, the requirements for those images are different sizes. And they will appear differently to the users, based on whether or not it’s showing up on the desktop or on a mobile device. You have to play around with those things a little bit. And when you’re first setting these things up, it can take way more time than you ever thought imaginable to like just tweak your images, and stuff like that, to get them to show up inside the advertising platform. So it can be, kind of, nightmarish process – in terms of the amount of time that it takes – but you do still have to go through that process to figure out, what is it you need to do? And then be able to take those things, and write them down, and say, “These are the requirements for this particular network.” And then hand them off to a graphic designer. Once you get through this, if you decide to double-down on a platform, you can then take those requirements, hand them off to somebody, and say, “Hey, I need you to build me images that go with this, this and this. And these are the different sizes.” It allows you to repeat the process in a way that is a lot more effective in terms of your time, as opposed to the first time where you’re just trying to figure things out. You’re trying to get familiar with it, get comfortable enough to be a little bit dangerous. And then from there you need to start optimizing. But from there you don’t want to go through the process of trying to optimize before you even get started.
[12:27] Rob: I second your surprise at how long it takes to set these things up. Every time I do paid acquisition I think, “I’m just going to go in, by a few ads, set up a budget, and be out.” And it’s always hours later, because I wind up finding images, and crafting headlines, and running all the split tests, and doing all of that type of stuff. So give more time to this than you think you’re going to need. There’s not a shortcut, like any other marketing approach.
[12:53] Mike: Yeah, like three or four times as much time as you think you need.
[12:56] Rob: Yup. Exactly. The other thing I would do – probably before I ran a test, if you haven’t done much paid acquisition – is to pick a single channel, pick one of these. And I would educate myself. I would dive deep into it. I would probably buy a course, either on Mixergy Premium, or Udemy, or from AppSumo. I have taken courses on all of those. There are some really nice experts who give you some good insight on how to work the system. Or you can even find an expert on it. So like Amy Porterfield, is an example, is a Facebook ads expert. So I bought a course from her on how to improve my Facebook ads. Or if you find a good blog, or a good podcast, on the topic, typically they are monetizing that by selling a paid course on whatever topic you want – Twitter ads, of AdWords. That’s what I would do, and that’s what I have done. So when I started really doubling down on Facebook ads with Hittail, I bought like four or five Kindle books. I listened to several podcasts, and I bought some paid video courses. And I went through all of the material quickly.
[13:55] I didn’t spend weeks doing it. I mean, I did this all in, like, one day. I skimmed through the books. I tried to find out the things that people were saying in common, and the differences. And you can find yourself almost becoming an expert by proxy, if you just immerse yourself quickly, and give yourself like an instant PhD in that technology, just by hearing a bunch of stuff. Then you go and use all of the best practices that you’ve developed, and then you hammer on a test. Now, you said do a small test, $100 in a week. I tend to want to move faster than that, and I will throw more money at it. I might budget $100 a day, and sit there and watch it. Because I want to know quickly if this is going to work or not. And if I get four or five days into it, and I’ve spent a decent amount of money, I can start to tell where the trend line is going. When I’ve made paid acquisition work in the past, it typically is an investment of a couple thousand dollars before I’m starting to become confident in my ability to execute on it. And sometimes it’s more than that. But that’s, in my head, kind of a mental marker that I use of like, “Yeah, I might get a few grand into this before I really know if it’s going to work.”
[14:58] Mike: Got it. Yeah, see, I run them, kind of, in parallel at the same time, on multiple channels. Maybe at some point I would get a little bit more confident and, say, dump $100 today into like three, four, or five different channels at the same time. But I also found that trying to flip back and forth between the different ones, and keep track of which ones were performing, and which ones weren’t. You could easily rack up a pretty hefty advertising bill, in just inside of a week, if you’re paying $100 a day on five different channels.
[15:25] Rob: That’s the thing. I only test one channel at a time, because I need to be an expert on it. Like, I can’t become an expert on five channels, and then try to run them parallel, or else I’m running around like a chicken with no head. When I do a channel, I immerse, I focus on that channel for maybe a solid week. And I don’t really do anything else, except for – I mean, I do my other projects and stuff – but I don’t try to scatter myself. Then if that channel doesn’t work, I can move on to the next one. If it does work, then you can start trying to figure out that repeatable process of, “How am I going to run this long term?” Because I’m not going to spend 20 hours a week on this every week, even though this week, getting it set up and monitoring every – I mean, I would literally monitor it every couple of hours. Like, log in, look at it, see what it’s going to do, stop ads, start new ones. You know, I was really into it. Again, I’m not saying this is the only way to do it. This is how I do it. I like to dive into things anyways, and be pretty intense about them, and find out very quickly if it’s going work or not, rather than taking a more hands-off approach that I think you’re talking about.
[16:20] Mike: Yeah. I think it’s interesting that you have a different approach to it than I did. Where what I did was, as I said, I would run several of them in parallel, and then after that week I’d basically look at that channel I thought was performing the best, and essentially double-down on that one, and optimize it. So I ran through an ad, and I compared Twitter against Facebook ads, and found out that Twitter was performing about four times better than Facebook was. And then I went in, and I optimized the Twitter campaign, and I essentially doubled conversion rate on the Twitter campaign. So at the end of the day I basically made eight times better than what I was getting on Facebook. Clearly, there’s different ways of doing it. I think it depends on how much time you have to play with, and how much your budget it, and how quickly you want to move forward with the paid advertising.
[17:04] Rob: Yeah. That’s a good point. There was a point where I ran through, I think, about twelve ad networks, in the span of maybe three or four weeks. Which means I obviously did do some of them in parallel. And what I did was, the bigger ones that had more information about them, and that I just had more confidence that they would work. Those were the ones that I dove into, and I only did those one at a time. Right? So that was like AdWords and Facebook. Whereas the ones – like the B2C ones I was talking about, 7-click and Chitika, and these kind of weird things, and Bing ads – I would set them up and let them run in parallel. Because it’s not like there’s a way to become a master at those. You just, kind of, had to throw it out and see what was going to happen. So I did do more parallel stuff with the things I didn’t think were going to work as well.
[17:48] Mike: Yeah. That totally makes sense. So the next step in this process is to document everything that you’re doing, so that you’re able to refer back to it later. I use a combination of things like screenshots, and spreadsheets, and Google Docs – pretty much anything that I need to be able to come back and recreate it, or ask questions in the future. I do that for a couple of reasons. Partly, is just so I can acquire information, and set it to the side so it acts as a true snapshot, and partly because I don’t necessarily trust the platforms to not change underneath me. So if I need to find something later on, I can do it. And some of them actually make it very difficult to go in and tweak some of your settings. I remember back when Facebook was still making a ton of changes to their advertising network. There were things that would just break every other day. So, I kind of learned quickly to just take screen shots, and make it so that you could go back and do it again. That’s not to say that you need to document everything heavily. Just make sure that you’re taking screen shots, so that if you take a screenshot of like the demographic information that you’re going to be targeting for one advertising network, it’s a lot easier to just go refer to the screenshot, than it is to go there, log in, and the try to compare it to another network that you’re trying to advertise on.
[18:59] Rob: Yeah, I haven’t done a good job at this step of documenting things. I typically leave it in the system where it’s in. You know, if it’s in the Facebook ads system, I’ll refer back to it, and go and try to look for trends. And I’ll graph stuff, and I do review the data, and see who’s clicking, and optimize and stuff. But I don’t think that I have a single, external doc that documents anything, that is shared with anyone. Because I’ve pretty much done most of the ads stuff myself. Now, with that said, if I was going to be outsourcing this, or even having someone in my team do it, we would need some kind of a way to communicate and document the tests we were running, so that we could share our findings, right? There’s this concept of a “growth spring”, and it’s similar to the “coding sprints” with SCRUM. It’s like a one to two week, or it can be a 30 to 90 day, thing of trying to grow your company by using a single tactic. And so if you do a growth spring with Facebook Ads – however long that takes – you really want to document the experiments you’re running, and what you’re learning from them, so that you can share them with others. To date, like I said, I have not been very good at this, and I’ve kept it all in my head. So if I was going to pass it on to someone else, I would have a bit of documentation to do beforehand.
[20:09] Mike: Well, I think that also, kind of, goes back to the difference between how you have done it, and how I’ve done it. Whereas you do that really hard, deep dive into one advertising network, where I’ll step back and do things a lot slower, and compare the networks against each other. In that case, I kind of need those screenshots in order to make it easier for me to be able to compare between the two. Versus, if you’re kind of going deep in one particular network, it’s not as important, because you’re tweaking within that network, and you typically have all the information right there at your fingertips, and you can just look at it. It depends on how much you think you need to document some of that stuff, too.
[20:46] The other thing I like to do is compare the results from one platform against each other. And I think that the best way to do this is to make sure that your advertising is as similar between the different platforms as possible. But do keep in mind that there are going to be differences between advertising on LinkedIn versus on Facebook and on Twitter – partially because of intent, but partially because of the audience as well. So you might say one thing to the people in LinkedIn, and something different to the people on Twitter. And another thing I like to do – as I said before, comparing against like Twitter and Facebook – double-down on what’s working, or try to optimize it. I found that on Twitter I was able to do four times as well as Facebook right out of the gate. And I found that using the Twitter cards, for example, I could essentially double my conversion rate, by essentially eliminating steps by forcing people to click on the advertisement, and then go over to a landing page, and then enter their information. With the Twitter cards it’s literally one click. They can just click a button that says, “Learn more, and send my information over to Mike Taber for what he’s working on.” And I’ve found that by getting rid of those extra steps, it doubles my conversion rate on that.
[21:55] Rob: Yeah. The thing to keep in mind when you’re doing paid acquisition is that it’s a lot harder than you think it is. You don’t just set up and ad, and instantly have positive ROI. It takes work. It takes optimization. It takes comparison. I mean, we’re recording a whole episode here, and we’re barely touching the surface of the amount of, not only up-front optimization, but the ongoing work it takes to run an ongoing campaign. You know, because it adds burnout and that kind of stuff. So keep that in mind – as you’re embarking on this – that this is… The nice part about paid advertising is it’s very quick, right? It’s like instant ramp-up, instant ramp-down like a faucet you can turn on and off. And it scales really well, if you can make it work, because any of these channels that we’re talking about are pretty highly scalable. But the downside is that it often will not work for you. A lot of channels just won’t convert, and you will spend some money that you won’t get back, and you won’t have a positive ROI on that.
[22:49] Mike: So let’s talk about some general thoughts on paid advertising. One thing that you just mentioned was “ad burnout”. Why don’t you expand a little bit on that, on exactly what ad burnout is first.
[22:58] Rob: Sure. The idea is that ads have a certain lifetime, and over that lifetime you’ll see this gradual decay of click-through rates, and of results, because people basically get blindness to your ads. So if you use the same image for months at a time, over time that click-through rate will just naturally fall. So you can’t just – as a rule – post an ad, and expect it to work forever. There are some exceptions to this. AdWords is one where you don’t tend to need to renew your ads, because it’s intent-based, right? It’s search-based. So the people who are seeing it tend to be new people all the time, and that’s a good thing. If you’re on Facebook, and you’re targeting a demographic, then someone who’s interested in “email marketing” will see that same ad over and over, and over time – even if they’ve clicked it once – they’ll become blind. Your audience is so big, and you need to change it up. So that’s the idea. “Ad blindness”, “ad rot”, “ad burnout”, it’s all the same idea. It’s that the performance of your ads will decay over time.
[23:56] Mike: Going back to what I talked about, in terms of documenting things, one thing that I’ve seen is that the ad networks that I’ve worked with don’t tend to track what your conversion rate is over time. Because of ad burnout, you kind of have to do it yourself. Because all they do is they give you this raw number, and it’s within this snapshot of time, or it’s like the total amount of time that you’ve been running the ad, and it will just be a number. So, if you’re not paying attention to what that number is, yesterday, and the day before, and the week before that, then it can slowly drop over time, and you don’t notice. So that’s something else that you, kind of, have to keep in mind. As I said before, in terms of being able to drive people to a landing page, it’s very helpful. And if there’s any way to bypass that process, or shorten the entire time that it takes in order to acquire somebody’s email address, then that’s definitely an avenue that you should explore and look at. I mean, like I said, on Twitter I was able to double my conversion rate just by using the lead cards, as opposed to sending somebody to a landing page, and then they have to enter their information.
[24:59] Rob: Right, and Google AdWords has that same capability, where you can capture an email right there in the ad. I’ve never actually tried that, so I don’t know its effectiveness. But I imagine that if someone is interested, it’s a decent way to go.
[25:10] Mike: Another option you have is that if you have an email list already. So if you have an existing product – where you have customers, and you’ve got information about them, like their email address – then you can take those email addresses and upload them to some of these ad networks. What they use is something called “related audiences”. Essentially, what you do is – you’re going to be able to target people who are like that list of email addresses that you uploaded. I know that Facebook does this, Twitter does this. I don’t know if Google Ads does this or not, but –
[25:40] Rob: I don’t think it does.
[25:41] Mike:– what it does is it allows you to target other people, for advertising, who are like your current audience. And that’s extremely helpful.
[25:48] Rob: Yeah. So it’s similar to re-targeting, right? Where re-targeting, you are essentially targeting based on the action that somebody has taken – which is visiting your web site. In this case, you’re targeting a specific group because they are demographically similar to your audience – to people who have actually signed up for it. And “demographically similar” I’ll put in quotes, because that’s Facebook’s judgment call, right? They have these algorithms – so they have this social graph, where they can link people together and see similar folks. So it’s, kind of, a black box for you, but you get the recommendations based on that. I’ve used the “related audience” stuff on Facebook. I have not had luck with it, but I have heard that it is doing very well for some folks.
[26:32] Mike: It hasn’t worked nearly as well for me, but I do know some people who are making it work extremely well. Something else you can pay attention to is, any sort of related information you can get from the different advertising networks. So if you can get age, or location, or demographic, or platform information you can zero in on those particular things, and some of those are going to convert better for you. I haven’t figured out exactly why that is. So, for example, I’m running a Twitter advertising campaign right now, and the people who are using Android devices are converting more than twice as well as people who are using IOS devices, which is kind of bizarre.
[27:10] Rob: I’ve used this quite a bit, especially on Facebook. I found out that there was a certain age bracket that converted better. Absolutely. There are like 14 states in the U.S. that convert way, way better – like two or three times better than all of the other states. I didn’t notice anything with platforms, in particular, like you said. But you can get these out of the Facebook Ad platform, once someone clicks on stuff, once you run some ads, and then you can go back and see who clicked on it most, and narrow your demographics. Now this means you can’t scale this ad up, as well, because you are starting to exclude people. So you won’t get as much traffic, even once you ratchet your budget all the way up. But those will be your highest ROI clicks, and so early on that’s what you want to shoot for. Then later on, if you are exceeding your ROI, you can always dial those back a little bit. You can widen that age range, or you can go to those states that maybe don’t convert as well, when you’re really trying to scale it up and drive the maximum amount of traffic.
[28:02] Mike: So, another I’ve found is, do not trust the metrics that they’re giving you. You have to take anything that they’re telling you with a grain of salt. Especially when it comes to Facebook and Twitter, because they use what’s referred to as an “engagement”, which is not necessarily a conversion for you. The other issue that I’ve found is that their idea a lead, and yours, can be wildly different, depending on whether they’re counting it just based on a click, or all the way through your acquisition funnel to get an email address. Also whether or not they’re charging you for that lead, or not. There are some ads that can be shares, for example, and depending on whether or not it was showed to somebody – and then they clicked through it, and you were charged for it. Or if they shared it, and one of their friends clicked through and signed up for it – you might be charged for the first one and not the second one – and that skews your numbers. So be really, really careful about how you’re looking at a lot of those numbers. And make sure you fully understand exactly what you’re interested in. Whether it’s email addresses, or impressions, or actual sales all the way through the sales funnel. It really depends on why it is that you’re running these ads, as to the specifics of what you’re looking at.
[29:15] Rob: Yeah, I agree with this one. I’ve seen some folks touting the Facebook news feed ads, over the right-hand side ads – because you get more clicks, or the clicks are cheaper, I guess is what it is. And the click-through rate is higher. But if you actually look at what a click means for a news feed ad, it means someone clicking any link on that ad – and there’s like five or six links. So if you’re trying to drive them off site to your web site, half of those links – or more – don’t go to your web site. They go to like your Facebook page, or some other random place – completely not useful for you, and not going to contribute to your conversions. But they count that as a click, and you get charged for it. Then, on the right-hand side ads, any link there is actually going to lead off-site to your web site. So every click there is a real click to your web site. So like you said Mike, these things can be misleading, and I hope they’re not being intentionally misleading, but it has felt like that to me, at times, where the numbers don’t really add up because of the way they’re defining certain thinks, like clicks.
[30:14] Mike: It’s complicated because your perspective, as somebody who’s buying these ads, is going to be different than their perspective, as somebody who is creating the mechanism for you to run the advertisements. If any of the advertising platforms reach out to you, and offer any sort of a free one-on-one, to help you improve your advertising, definitely take them up on the offer. It gives you the ability to ask them in-depth questions about exactly how things work, and you can start questioning the numbers that you’re coming back with – or that they’re coming back with – and ask them, “Hey, what does this mean?” or, “I saw this, and these numbers don’t add up. Why do they not add up?” And you can start getting an in-depth description, or explanation – directly from them – about why some of those things don’t add up. Sometimes it’s very helpful, and sometimes you look at it – and they’ll look at it – and they’ll say, “Yeah, we know. We’ve heard that a number of times. This is how you can, sort of, get around it” So sometimes they do have work-arounds for you, but it’s always worth it to take the time to follow up on those things, and be able to get in front of them the questions directly, so you can get answers directly from the vendor.
[31:20] Rob: Yeah. I would agree with that. They seem like they might be a waste of time, but I agree. If there’s quirks in the system, these are the folks who know it, and these are the folks who can alert you to it. I did let Google, at one point – they wanted to like optimize one of my campaigns. So they copied it, and asked if they could create an optimized version based on their “best practices”. And this was three or four years ago, probably. It was an AdWords campaign, and I ran theirs along with mine, and theirs was awful. It was horrendous. It was spending a ton of money. The budget was high. It wasn’t getting many clicks. It wasn’t getting conversions. I eventually stopped it. And I don’t know what the story was, because I genuinely expected them to have the knowledge to be able to do this better, but the campaigns I had running were far superior to it. So, I think in terms of that – which is super-specific advice – I think, take it with a grain of salt. And if they do run or optimize a campaign for you, you just need to watch and compare, like anything else. But just in terms of meeting with them – like you said – and getting advice on the platform and all that, I think that’s a worthwhile hour you can spend on the phone with them.
[32:18] Rob: If you have a question for us, call our voice-mail number at 888-801-9690. Or email us at firstname.lastname@example.org . Our theme music is an excerpt from “We’re Out of Control” by Moot, used under creative commons. Subscribe to us in iTunes, by searching for “startups”, and visit www.startupsfortherestofus.com for a full transcript of each episode. Thanks for listening. We’ll see you next time.
[00:00] Rob: In this episode Startups for the Rest of Us, Mike and I asked the question. Should a non-technical founder learn to code? This is Startups for the Rest of Us, episode 224.
[00:17] Welcome to Startups for the Rest of Us, the podcast that that helps developers, designers, and entrepreneurs be awesome at launching software products whether you’ve built your first product or just thinking about it. I’m Rob.
[00:26] Mike: And I’m Mike.
[00:27] Rob: And we’re here to share our experiences to help you avoid the same mistakes we’ve made. So what’s for this week, sir?
[00:32] Mike: Well, we got an email from Aaron Weiner from Software Promotions. And he had a comment and sort of a clarification question about episode 223 where we had given some advice about when bootstrapper should start worrying about insurance and security and things like that. And he got a question what it was we were really trying to say when we talked about security because one of the things that I had said was that these companies have billions of dollars at their disposal. And they have large security teams. And if you’re being actively targeted, there’s absolutely nothing that you can do about it. His disagreement on that was that it sounded like I was saying that entrepreneurs shouldn’t spend any time on security.
[01:12] To clarify for everyone, the issue isn’t so much that you shouldn’t spend any time on security. But what I was saying was if you were being actively targeted. And so the difference between actively targeted and what I call more of a drive by is that if a hacker has a vendetta against you, there is absolutely nothing you can ever do that is going to stop him. So they can essentially go through your testimonials page, find out who your customers are, and then target them. Do DDOS attacks. Take down their servers and say, “Hey, if you don’t stop doing business with this person, I’m going to keep coming after you.”
[01:42] And it could very seriously and negatively affect your business. And they don’t even have to get your customer list. If they get your customer list and they have half of it or most of it, then you’re in serious trouble because then you’ll have very big PR problem to deal with. And they have the list of all your customers. They can go after them as well.
[01:58] But on the flip side of it, if it’s a matter where you have the ability to lock down your server and you’re not, those are the things that are more like targets of opportunities. So people who – I refer to them as script kiddies. They’re just writing the scripts against every IP address on the internet trying to see what it is that’s out there so that they can dig in and start pulling information out of those servers. And if you have a server out there that isn’t properly locked down or secured or there are cross-site scripting vulnerabilities in your code on your SaaS app, those are the types of things that they’re going to exploit. And it’s not because they don’t like you. It’s because they can. And so you do have to do the basics and the bare minimums just to make sure that those things are taken care of. But if they’re actively going after you, then you’ve got a really serious problem at your hands.
[02:41] Rob: It’s a judgment call. It’s like how much life insurance should you get? Well, you should get enough.
[02:46] Mike: All of it.
[02:47] Rob: You should get enough. Yeah. I mean there is a point of diminishing returns at a certain point. And I think that’s kind of how you have to handle it. You know how we answer a lot of questions with, “It depends.” This is a really it depends like it’s very heavily that your call, your risk tolerance, and how much you stand to lose. Thanks for the question, Aaron. I’m glad you wrote in to clarify that.
[03:07] So I want to announce the launch of my new podcast. It is called Zen Founder, and it’s myself and my wife. She’s a clinical psychologist. It’s at zenfounder.com. We have links there to get into iTunes and subscribe to email and such. We have four episodes live right now. One is called “Three Strategies for Staying Sane While Starting Up.” And then we have one all about retreats where we outlined how we’d structure our retreats because she’s kind of the one that got me started with annual retreats. We have one about procrastination. And then we actually interviewed Greg Baugues who did this talk at BOS about depression and developers.
[03:44] So kind of a gist of the whole podcast is like staying sane while starting up and it’s how to balance startup family and life. And so we plan to put out an episode every Wednesday morning. So if you like this show and you like the mental aspects of getting all this going, I think Zen Founder will be a good fit for you.
[04:04] Mike: Very cool. I’m looking forward to it. Something else related to MicroConf is that we’re in the process of looking for sponsors for MicroConf. So, if you’re interested in sponsoring MicroConf or if you know of somebody who is, feel free to drop us an email. You can send it to email@example.com. We also have a pool of tickets set aside specifically for sponsors. Our expectation is that when people sponsor the event, they will be coming. And we do make tickets available for those sponsors. It’s not a huge pool of tickets, but there are some available for them. And so if you’re interested and weren’t able to get a ticket, you could also sponsor the conference and you’ll be able to get a ticket in that way.
[04:39] So when you’re sponsoring MicroConf, MicroConf sponsorship started about $1500 and they go about to about $6000 for the kind of top-tiered sponsorship. And depending on what level of sponsorship you sponsor the conference at, you get more tickets. So for example, the community sponsorship at $1500, you get one ticket with the master plan, the $6000 sponsorship that comes with four tickets. But one of the things that sponsoring MicroConf does for you is that it gives you additional publicity for the conference. We do call out our sponsors at the conference. We include information from the sponsors on the USB drives. We include information about the sponsors to the attendees. There are links back from the website over to the sponsors’ websites. And essentially, we will work with you to try and figure out what other ways we can be creative to help the sponsors get additional publicity and meet their goals from the sponsorship. So again that’s firstname.lastname@example.org if anyone’s interested.
[05:34] Rob: So we’ve received a lot of feedback about the possibility of diving into more technical topics. And overall, it looks like there are a lot more downvotes than upvotes on doing that. But what’s interesting is the few upvotes have kind of said, “Yes, I’d like to hear more about technical topics.” But then they’ll say something that’s not really a technical topic. So it’s maybe the bare minimum you need to know about hosting a SaaS app or topics that are – I mean they’re semi-technical, but it’s not like digging into the nitty-gritty like a developer podcast would do.
So maybe we may want to look at doing one show where we kind of walk through because we’ve had several suggestions on some specifics of how to do that and to kind of make it non-technical founder friendly or at least just give it like a founder’s point of view, right? You don’t need to be at such detail to know everything about it, but as an example like I know that we use Honeybadger which is from Benjamin Curtis. And we use that with Drip and HitTail, and it shows us all of our errors.
[06:29] Now, I couldn’t show you every point of integration that we use or how Honeybadger gets our info, but I don’t think that’s what people need to know, right? I think people might just need to know, “Hey, if you’re going to be launching something, you have to have a way to capture your errors in a way that you can dig into them and then talk about at a perspective of here are a few services that do it rather than the nitty-gritty nuts and bolts to have to do it all.”
[06:50] So in today’s show, we’re going to be talking about whether a non-technical founder should learn to code. And this is actually spurred on by a question that I received via email from a friend of mine. And unfortunately, I didn’t get his permission in advance to use his name. So let’s just call him John for the sake of this. But he says, “I’ve got solid marketing chops, but there’s a part of me that wants to get in on the SaaS action. If I was going to get into software and wanted to bootstrap it, would it be worth learning to code myself? And if the answer is yes, where would I start?” So we seemed to have three questions going on here. The first is talking about starting a SaaS app at all. The second is, is it worth learning to code if I’m going to do that? And the third is where you would start if you were going to move forward with that.
[07:32] So let’s start off with the first topic here. John had asked, “I’ve got solid marketing chops, but there’s a part of me that wants to get in on the SaaS action.” And I have some thoughts on just that statement which isn’t even really part of his question. It’s kind of setting the stage. But it comes back to what we said a couple of episodes ago in episode 222 where we talked about the stair-step approach to launching products. I’m concerned with the idea of being a non-technical founder and jumping directly into launching SaaS. And I’m actually concerned about a technical founder doing it as well but for different reasons.
[08:05] So a technical founder is probably going to know how to build the SaaS, but they’re not going to know how to market it because marketing a SaaS app is more complicated than say marketing a WordPress plugin because it’s a multi-channel. It’s more expensive. It’s recurring. There’s a lot of complexity there. A non-technical founder may know how to market a SaaS app because they’re able to handle the multiple channels. They have that tool belt. But purely getting one built is maybe ten times more complicated. And be supporting it ongoing in terms of the hosting and the error stuff, all the stuff we’ve kind of talked about it already and scaling it for a non-technical founder is going to be a real challenge. So I think if you’re non-technical, you haven’t learned to code, or you’re considering, I wouldn’t try to jump to that third step just yet. And if you don’t know what I’m talking about, go back and listen to episode 222. It’s just two episodes weeks ago and we talked through kind of the progression that I think is best both for technical and non-technical aspiring software founders.
[09:01] Mike: I also think there’s a big difference between a SaaS app that’s simple versus one that is a lot more complicated. And I mean you’re kind of a prime example of this where you’ve got HitTail and Drip where HitTail is very – I don’t want to call it a simple app. But the concept behind it is the valuable proposition is very simple to explain. And the application itself has a lot less code than something like Drip does. There’s a very big difference between trying to sell something like HitTail versus trying to sell something like Drip where Drip has a lot more complexity to it not just in the application, but in all the marketing that goes behind it. And that makes it a lot more difficult to sell. And it’s not to say it’s not worth it or that it ultimately won’t be able to overcome those hurdles because obviously you’re making it work. But at the same time if you’re jumping right to that level 3 as you call it from episode 222 that makes it much more difficult to do that versus doing a much more simplistic SaaS app like HitTail. And I’ve actually heard a lot of people who are going after this very, very tiny niches where the only thing that the app does is keeps track of what people are doing. And I’ve done this and a half dozen other clones of that type of technology where all it does is send you an email every day. You reply to it, and it aggregates those things and then sends out an email as a team. And something like that is much more simplistic than something like Drip.
[11:33] Mike: The other thing just doing what you just recommended is that essentially what that does is it allows you to figure out what it is that people really want before you’re going through that process of building all of that stuff. I’m technical and my inclination would be to sit there and write the code and show it to somebody and say, “Is this what you want or do I need to tweak it a little bit,” versus someone who’s non-technical who has to do that first and kind of describe it and then take that and then translate into software. And you’re going to have to do it through an intermediary. And I think that that forces you to not only figure it out a little bit better, but also learn how to communicate it because you’re going to have to not only communicate it back to the person who’s explaining it to you, but then you’ll have to turn around and communicate it to the developer because they’re the ones who are building it. You’re going to become very good at that communication process.
[12:24] Rob: Right. And if you look at say building a WordPress plugin, I mean you could get a plugin built in a few weeks, maybe a month, that solves a pretty reasonable problem for a lot of people. There’s no chance you’re going to do that with a SaaS app. There’s a lot of low-hanging fruit that has been taken out of the SaaS market. Certainly, there are still small apps that you could launch and make a few bucks here and there. It’s not as easy as it was. I think that there’s more long-term sustainability moving into that more complex range of SaaS. I think the other thing we haven’t even brought up is human automation. Can you use human automation to do it temporarily? Meaning you’re a non-technical founder. Don’t go try to build any software. That’s the mistake that all the technical founders do. Don’t build anything. Find a pain point. Figure out how to solve it without writing a line of code. So you hire some VAs. You do it yourself manually. Instead of having a fancy SaaS interface, it’s all done with Excel spreadsheets over email. And can you do that via human automation for five paying clients? Figure out all the ins and outs of it. And then you know exactly what the software needs to do, and you can build it one piece at a time. And that makes it so much easier coming back to the translation process that you were talking about where you’re going to have to talk to a customer. Try to figure out what they need. Try to turn it into a requirement. Then try to communicate that to a developer when you’re not a developer. That’s a tough process to do. The odds of you getting that right the first time are almost nil. Whereas using human automation if you have some folks that are cranking up these reports and you’re getting feedback. You’re iterating on those reports very quickly because it’s just a different way to prepare the same report. That’s the kind of thing you can iterate on fast. And then you have so much more intimate knowledge that you can use to basically this is exactly what we’re trying to do. We’re trying to take this process and turn it into code.
[14:15] So then this brings us to the second part of Johns’ question. He says, “If I was going to get into software and I wanted to bootstrap it, would it be worth learning to code myself?”
[14:25] Mike: I think that generally speaking, trying to learn to code if you’re the non-technical person and you’ve got solid marketing chops is not necessarily the way that I would go about it. There is a little bit of a caveat to that. And I think that if you’re bootstrapping it, and again, this is the difference between bootstrapping and self-funding where self-funding you are funding the development of the products from previous things that you’ve done or from your own salary versus bootstrapping whereas you’re building it from scratch yourself. I think that if you’re going to do that and you’re going to bootstrap it, then you need to at least learn a little bit about coding. That’s not to say you need to learn a lot. You don’t need to necessarily build the entire application. But you’ll also need to be able to learn enough about how to code to be able to ask the right questions and to be able to see if somebody who’s working for you knows what they’re doing. And again, it’s a lot easier in most cases to read well-written code than it is to build it from scratch.
[15:21] And as a non-technical person coming in and you know the basics of code, if you can read their code and understand it and it makes sense, then that’s probably a really good sign especially if they’re putting in on all the comments. They’re following the processes and stuff that you’re putting in place. That will help you do that. So you do want to learn at least a little bit about code. Do you need to become an expert in it? Absolutely not. And again especially if you have those marketing chops that you’ve kind of said that you already have.
[15:50] Rob: Yeah. When I think about timelines for doing this from a standing stop how long would it take you to learn how to write software and be able to build a production X, where X — let’s say it’s a WordPress plugin or X is a SaaS app. And I think if you’ve never coded in your life that to learn enough PHP and server setup and the development environment, I mean there are so many concepts, HTML, even just all markup and CSS and that kind of stuff. I think that if you basically invested full time from a standing stop that maybe you could have a WordPress plugin out in three months.
[17:47] I think there are three types of people in terms of coding. There are people who hate it. There are people who do it, but they put up with it. I mean they don’t love it. And then there’s just the people who is their brain. It works exactly how their brain works. I’m in the latter group like I love writing codes. I actually get an endorphin rush from building a class and having the polymorphism work. And then the first times it appears on the screen, it rocks my world. You need to figure out which type of person you are because if you hate it, then you shouldn’t learn to code at all. If you can up with it, you should learn to code enough to be able to hire someone as you said. And if you love it, then it’s debatable, right? If you love it, should you put in the year to kind of get decent at it and the two to three years to become really, really good at it? Well, I don’t know. That’s a question you need to ask yourself in terms of where you want to go with your life.
[18:33] Mike: You know your comments about running into very simple things that take you six hours to figure out what the problem was. It brings me back to some of those where I did run into those problems. And running into those circumstances, they can be a huge, huge time sink and they are not productive at all. They actually make you start to hate what you’re doing.
[18:55] Rob: Yeah, a quick anecdote. I was teaching my son who’s eight now. But when he was seven, I wanted to start to teach him how to code. And so I was thinking he’s going to need to build games like mobile games like drag and drop and blah blah blah. And I had him start with codecademy.com. And it was basically some simple like HTML and CSS stuff that I was thinking this is going to be so boring and there were some Python as well. And the first time he did like print Hello World or What’s your Name. And then he replies with Hello, Your Name, it puts your name in there. I just thought he’d be really bored with it. But it totally fired off the endorphin. I could see it and he got really excited. And I found this kid is done for like he’s going to be a programmer because he loved just the whole mechanism. He was fascinated with the mechanism of how it worked. Whereas I showed that – when I was younger, I remember showing it to my mom as I was learning to code. And she just had really no interest in it like it just didn’t click with her mind. I think that’s to kind of illustrate what it’s like for people who don’t necessarily have an interest in code and those who it really works for.
[21:19] Mike: I think there’s also lots more resources for PHP for people. But it seems like when you’re looking around and you’re trying to find just how do I write PHP, there are tons of examples all over the place. And anywhere you turn like if you have a particular question about PHP, there’s usually more than one way to do it. But there seems like there’s like one straightforward way to do it versus something like Ruby and Python where because they touch on a bunch of different technologies, the answer tends to depend a little bit on what it is that you’re trying to do. There’s a little bit more complexity to Ruby and Python just because of the fact that there are additional I’ll say abstract frameworks that you kind of have to keep in mind. There’s conventions that you have to keep in mind. And if you’re not the type of person who is going to look at that and look at it in a more abstract fashion, then PHP is going to be a lot more straightforward versus something like Ruby or Python. And it’s not to say anything about power or efficiency or anything like that. It’s if you’re coming at it from a strictly non-technical point of view. PHP is going to be more straightforward to understand because you don’t need to know anything about some abstract framework that’s going to be make assumptions about how stuff works.
[22:26] Rob: I think another advantage is that it powers WordPress, Drupla, Joomla, Magento. These are great plugin and theme ecosystems. And so if you do learn PHP, then you’ll know enough to be able to participate in those and be able to kind of hack some code there.
[22:43] Mike: Another advantage is that PHP developers can be found all over the world. And they tend to be a lot cheaper than Ruby or Python developers especially when you start trying to find experienced ones. And part of that is just the factor of PHP being around for so much longer.
[25:10] This is the path that I’ve been meaning personally to go down since I basically started having all of our apps done in Rails because both HitTail and Drip now are completely in Ruby on Rails. And I know just enough Ruby to be able to kind of maybe read some of it, right, and I couldn’t code it at all. And this is the path that I have set out for myself when I have time. And that’s I think which you might find as an non-technical founder is that if you do this upfront, it will help you be able to hire and manage people. If you try to learn it well enough to actually build or produce SaaS app, it’s going to take a really long time, a year or more. And if you push this off and you try do it while you’re building the SaaS app while someone else is building, you may run out of time to do it, which is the situation I found myself in.
[25:52] Mike: Yeah. I think there’s a couple of differences I want to point out between something like codecademy and One Month versus Go Tealeaf. And that’s that codecademy and One Month are both more self-paced instruction. So you’re essentially going through them. It’s generally free, but you have to essentially teach yourself versus Go Tealeaf. It’s paid, but there’s an instruction there to help you. So depending on the type of person you are, you might want to lean towards one versus the other. But if you’re under a time crunch or you don’t necessarily do well with setting your own deadlines, for example, which may be a problem in and of itself later on when you’re trying to launch the SaaS app. But if you’re going to much better with an external company setting that deadline for you and setting that course schedule, something like Tealeaf is going to be a much better preparation for you because they have a set course schedule and an outline. And it only lasts for so long and you have to show up and you have to do the work. So it’s not like the other ones where you can push it off and push it off and push it off. Then eventually you still haven’t learned anything.
[26:56] Rob: You know, Mike, there are a lot more topics surrounding this to discuss. Kind of the next step is OK so I’ve done all that. Now what like how do I hire a developer? There’s thoughts of like OK. I’ve hired a developer. How do I spec this thing out? Do I try to do the waterfall approach? Do I try to do more of an iterative approach? I think there’s couple of different topics there. And if you’re listening to this and you’re interested in hearing about either one of those or both, hit us up on Twitter. I’m @robwalling and Mike is @singlefounder. Let us know what you’re interested in hearing about along these lines.
[27:26] Mike: If you have a question for us, you can call it into our voicemail number, 1-888-801-9690 or email it to 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 of each episode. Thanks for listening, and we’ll see you next time.
[00:00] Mike: This is Startups for the Rest of Us, episode 223.
[00:08] Mike: Welcome to Startups for the Rest of Us, the podcast that helps developers, designers and entrepreneurs be awesome at launching software products. Whether you’ve built your first product or you’re just thinking about it. I’m Mike.
[00:16] Rob: And I’m Rob.
[00:17] Mike: And we’re here to share our experiences to help you avoid the same mistakes we’ve made. What’s going on this week Rob?
[00:21] Rob: You know, a lot is going on. Things are moving quickly. Growth is kicking in for me again, and it feels good to be past that first part of the year. I have a couple more books I want to talk about. The first book is called “Innovators” and it is written by Walter Isaacson, and he’s the guy that wrote the Steve Jobs biography, the definitive guide, and he has written several other biographies, a very, very good writer. I love his journalistic approach. I recommend Innovators if you want to hear the history of computers, dating all the way back to the 1700’s, and then he walks through how each group influenced the next group so it’s fascinating. You know, again, it’s not going to help you launch your startup or anything but it’s a really cool story. I actually had to fast forward the Steve Jobs era and the Microsoft era, because I’ve read so many books about those specific time frames that it wasn’t interesting. I’d heard it all before, but I did like the way he tied that together with the whole computer age of basically the 1940’s to the present. So if you haven’t checked it out I would recommend that book.
[01:22] Mike: We got an email in from Phillip Dirkson and he says, “Hi Rob and Mike. As you mentioned in the last episode on the “Stair Step Approach” launching multiple WordPress plugins over the years has allowed me to finally quit my nine-to-five gig and go with this full time. It’s been a long and gradual process. Podcast listener since episode number one, four-and-a-half years in the academy, four micro confs and two and a half years since my first paid plugin launch. But I finally got there. I can’t thank you enough for the guidance during this journey over the years.”
[01:46] Rob: Yeah, awesome. Phil has been to every micro conf we’ve had in Vegas, and he’s actually here in Fresno and, so he and I hang out now and again. So it’s really cool to see him go on this entrepreneurial journey and eventually hit that point where he’s been striving for, right? It’s what we’re all looking for, the ability to quit our jobs. So a hearty congratulations to Phil.
[02:07] Mike: So I went to “Big Snow Tiny Conf” last week. It’s put on by Brian Casel and Brad Touesnard. Brad is out of Canada, and Brian is out of Connecticut. So what they do is they put on this conference. It’s a twelve-person conference, but they basically just rent out this house, a bunch of people show up and they are all entrepreneurs and looking to build businesses. And we went out on the slopes for several hours each day, and then talked business into the wee hours of the morning. So it was a lot of fun. It was really interesting, and there were a lot of great stories there and I’m going to be keeping in touch with a bunch of guys.
[02:40] Rob: That sounds cool. It’s really nice to have those small venues where everybody can really bond and it’s not a big room of people. So the other book I wanted to talk about today, it’s called “Essentialism” and the subtitle is “The Disciplined Pursuit of Less”. And in essence the author goes into talking about how to make choices and where to spend your precious time and energy instead of giving others the implicit permission to choose for you. I highly, highly recommend this book if you have not read it. Even if you are already into saying no a lot and being aggressive about your own time, and about not letting other people make choices for you and put things on your calendar. A lot was reinforced for me, and I think I may go back and listen to it a second time. I took some notes, about half of it, sixty to seventy percent of it, I’m already doing. But there were some edge cases that this author goes into and I think it’s a very powerful look at how you can be in control of all aspects of your life; your personal, your professional, your family. Yeah, I was really impacted by this book and I think you should check it out.
[03:45] Mike: Very cool. So what we’re going to be doing today is we’re going to be going through a bunch of listener questions that have come in. Last month when we put out a call for new podcast episodes we also caught an influx of questions as well. So what we’re going to do is we’re going to go through some of those. And the first one comes in from Greg Millett and he says, “Hi. I need some advice. I worked on a product with a partner. He’s the main expert with the product idea, and is also the sales person with contacts. I’m the developer. Our plan was I would build the product and he would sell it. Now as you might expect this was a huge mistake and a sad story follows. I worked three hundred hours on the product. Initially my partner was proving valuable. He even secured an initial customer. Then he got too busy and I’ve basically not heard from him since. This leaves me with a working product I can’t push forward. He has the contacts, he knows the audience. Without him I can’t find customers or be as convincing. So my question is this: Do you think I can learn enough about the audience to be effective at marketing it? The only thing I’ve tried unsuccessfully so far is messaging potentially interested people on LinkedIn. How would you approach gaining a foothold with an audience that you don’t know well? I’d hate to let the product go since I’ve put so much work into it. Thanks.”
[04:44] Rob: So, to begin, I think if you’re listening to this it’s obviously very painful to hear, because I can imagine being in this situation, and it sucks to have invested three hundred hours of time and then not be able to yield the benefit of that. If you’re going to go into a partnership like this, my biggest piece of advice is to have that partner be working the same amount of hours that you are on the product. Because this stuff happens, where you frontload it, and then the other person backs out. But if they’ve also sunk three hundred hours into it then they have the same sunk cost and they will be less likely to do it. So that’s kind of my advice, not for Greg’s specific question, but if you’re going to go into this the other person should be selling as much as you are. And there shouldn’t have been one initial customer. There should have been ten or twenty that are lined up. Now I know that takes a lot of work, but that would’ve insured — it would’ve been really quickly noticeable after maybe a month or two, if his partner wasn’t doing it, and then Greg could’ve stopped. But the fact that his partner bailed on him wasn’t noticed until everything was done and the software was there. To step forward and answer Greg’s actual question, the question is, “Do you think I can learn enough about the audience to be effective at marketing to it?” And the answer is yes. The question is do you want to, and do you have the motivation to do that. I mean, I think that’s the bottom line. If it interests you enough that you want to spend the next three to five years learning this market, learning who they are and how to market to them, then absolutely. I think you can definitely learn enough about a market. The question is do you have the motivation to stick with it?
[06:13] Mike: I think there are two things that strikes me that specifically came out of what he said, and the exact line is, “without him I cannot find customers or be as convincing.” I think it might be a fallacy to think that you can’t find the customers, but I think you can definitely learn to be convincing. As Rob said, it boils down to whether or not you want to. In terms of “cannot find customers”, the only thing that you’ve tried so far is messaging people on LinkedIn. There are probably a number of different other ways that you can try and find customers. There’s tons of different ways you that can try to do that. But. you know. we’ve talked about a bunch of them on the podcast. I mean there’s SEO, outbound emails, cold calls, all kinds of different things. But as Rob said “it just boils down to whether or not you want to.” One thing I would also keep in mind is that it may be possible to sell this product, but you might not be the right person for it. So it may very well be a good product and a viable product but are you the right person to do it? And I can’t answer that, that’s something that you’re going to have to answer yourself.
[07:14] Rob: Also, he could potentially look for another partner in this space. Because it does seem like finding a developer is always the hard part right? When a marketing guy wants to find the developer, or the sales person wants to find the developer, going the other way I imagine you could have some luck if you come and say look, “I built this whole product. Here’s the situation. Do you want to come on as a partner?” I think that’s another option to consider.
[07:35] Mike: Yeah, I mean a lot of it boils down to whether or not it’s actually solving a real problem, because otherwise you’re back to the position – where a lot of developers find themselves in – where they built a product and then they go to find a market for it, and it almost seems like this product was built and initially there was some collaboration and then suddenly that collaboration went away and you end up in a position not by design or anything but you don’t have the customers lined up that you were going to go after. So Greg, I hope that answers your question and good luck. Keep us posted on how things go.
[08:07] Our next questions comes in from Anders and he says, “Hi Mike. I saw a tweet from Patio11 and I thought it would be a good question for you too so here goes. What is success? How do you define it and how do you know when you are successful?” Anders I think is a really good question. I think that when you are trying to define success for yourself it’s a matter of what your long term life goals are. So, for some people they go out and they try to build a business, and they go out and get funding and hopefully are shooting for that hundred million dollar exit. And there are some people that that is what is important for them, and that is going to signify success. I think in the circles that Rob and I travel in, and a lot of the people who listen to this podcast, having a hundred million dollars is not necessarily the definition of success, although it is a marker of success. I think that in many cases, especially for me, success to me means that I have the ability to make decisions about how I spend my time in a way that makes me happy. If you’ve ever been in a position where you had a full time job, and you were essentially going through the motions because you hated it so much you just showed up because it gave you a paycheck, and that was the sole reason why you showed up, is because you’ve got a wife and kids and family and you’ve got to support them. So you go to work every day and you get that paycheck, and you do what it takes to get it. But if you’re lucky enough to be in a position where you don’t have to go through that and you actually enjoy what you do – to me that’s success.
[09:33] Rob: I like that. For me I have these three parts that I’ve distilled it down to. And actually I took part of this from the “Internet Business Mastery Guide”, it was an episode I heard years ago. It really struck me and I wrote it down in a notebook. But in essence for me being successful for me requires three things to be in place. The first is freedom, the second is purpose, and the third is relationships. So freedom is basically being in control of my head space and being able to work on what I want, and when I want – so that I don’t have a salary gig. I don’t have a client telling me what to do. Now that’s typically the first thing that you need. So if you are working a salary gig and you don’t have the freedom and you want it, that’s all you need to focus on now, because purpose and relationships can come later but right now you need to get to freedom as quickly as possible. What I found is that once I did achieve that freedom, and I had products that were providing enough revenue that I didn’t need to work, then freedom wasn’t enough because I got bored. And that’s when you need to start thinking about purpose and relationships and so purpose can be many different things right. Purpose can be, “I just want to have as much time as possible to spend time to spend with my kids, or to homeschool my kids. or to travel full time or anything.” What is your purpose? I think that’s a deep, deep question. Like Mike said, you kind of have to ask yourself.
[10:53] I have kind of an overall purpose that’s to help other entrepreneurs, and to bring people together, and to use startups and entrepreneurship to provide a good life for as many people as possible. I have a very well-worded version of that in my notebook – that’s my purpose – but that is the gist of it. It’s to provide abundance for my family, and those around me, and those who interact with me. But every year I find that my purpose shifts a little bit, and it happens during that retreat that I take in January and so I do think that you might have slight changes in course there. And then relationships. I just don’t think a person can be happy if they don’t have relationships. It doesn’t mean you need to have a family or to be married but I think you need close friends. I think you need people that you can talk to and have a conversation with, and who know who you are. And if I had freedom and I had purpose and I was traveling the world and I had no friends and no relationships, I would be sad, and I think you would be too. So those are the three components that I believe that you need to be successful. And it’s always a balancing act because you never get there. You never arrive. You can get there and have all three of those in balance for a while, but then eventually it gets out of balance and you find that even though you think you have freedom, you’re actually working on stuff you don’t want to work on. So you have to reevaluate that, and you have to get back to it, but those are the criteria that I look at when I’m deciding if I’m successful today.
[12:10] Mike: And another question comes in from Adam Clinkett, which is very, very much related to this. So Anders’ question was “How do you define success?” and Adam asks “How do you measure success?” How do you know if you’re really succeeding? There’s a subtle difference between those, because defining success is what you ultimately want to achieve, but measuring it is sometimes a lot more difficult, because you don’t necessarily know where on that continuum of success you fall. Are you really close to meeting your goals? Or are you much further away? And sometimes there’s not a numeric value for that. Are you happy or are you sad? And it’s like, “Well, I’m a happiness level of eight out of ten.” And sometimes those are just really hard to measure. To answer Adam’s question, “How do you measure success?” I think it depends on what it is that you’re trying to achieve. Do you feel like you’re succeeding? Because you can be the poorest person in the world, but if you’re happy with what you’re doing then chances are you’re leading a successful life, and the success should be measured internally not by external factors. It’s not about how much money you make. It’s not about how many people view you as a success. It’s how do you view yourself? Do you feel like you’re succeeding? Are you happy with what you’re doing and how your life is progressing?
[13:21] Rob: Yeah, I measure success typically by looking back at the previous year. But I measure it by how much I’m enjoying what I’m doing. There are times when you’re not going to enjoy it, right? There are times when you have to work late nights, and times when you have to work too many hours in a week. There are times when you can’t be around your family or you have to do stuff that you don’t enjoy. But when I look over a longer swath of time – so maybe a ninety day period or a six month period or a one year period – that whole time should not be filled with those memories, right? It shouldn’t be filled with, “Boy that really sucked.” You know “That year really sucked.” Like I probably made a wrong turn at some point if that’s where I am. If a thirty day period really sucked, or I’m going into it and I’m saying “This is going to be hard for the next sixty days, then when I come out of that of course it’s going to feel bad. But over the longer term I measure success with that freedom, purpose, relationship stuff. But you have to do a rolling average, rather than look at it every day, because some days are going to be better than others. There’s like micro and macro, to be honest, because if I’m working on a single business – let’s say I’m trying to grow Drip – then my success metric tends to be month over recurring revenue growth. And I think that’s pretty easy to measure. And then you step back and it’s like, “What is your life success metric?” And that’s the criteria that Mike and I talked about earlier. So I think it depends on what scope you’re looking at when you do ask about success.
[14:41] Mike: So thanks for the question Adam. Our next one comes from Calin Jordan. And Calin asks “When should a bootstrapper get insurance?” And second question is, “How much time and resources should you put into security?” Good questions. When should a bootstrapper get insurance? I think the answer to that is when you have enough to lose that the likelihood of a bad event happening is getting more and more likely to the point that it makes sense to get that insurance. I know that talks probably around the issue a little bit, but let me throw together a couple of examples. If you’re making, let’s say, a thousand dollars a month from an app, the chances are good that going out and getting a ton of insurance for that is probably not wise. But if it’s your full time employment and you’re making, say, ten thousand dollars a month from it, it probably makes sense to go out and get some kind of insurance, especially if you’re touching other people’s machines or you could negatively impact their business or lose their data. Those are the cases when you might want to start looking at it, but there are businesses out there that operate with no insurance for years and years at a time, and they don’t get insurance until after they’re five or ten years into it. There are some businesses who never get insurance. The purpose of insurance is if something happens then they will cover it or at least cover some of the damages. And this comes down to risk. Are you comfortable taking that risk? How likely is it that something bad is going to happen? [16:06] Onto your second question, “How much time and resources should you put into security?” This ties back a little bit to the insurance. I think you definitely want to do the bare minimums in terms of making sure that people’s data is secure. So that doesn’t necessarily mean you go in and encrypt all of the user data. There are certainly cases where that makes sense, if you’re dealing with any sort of personal or private health insurance information, or anything like that. Or credit card numbers which you probably shouldn’t be storing anyway, those are the things that I would probably keep in mind but the reality is that you want to put time and effort into security when it makes sense, and it won’t make sense until after you have something to protect. If you’re spending a lot of time building a product, and building all this security mechanisms into a product when for the product itself it doesn’t matter, and people aren’t paying you for it yet, then you’re focusing on the wrong thing. You’re doing optimizations for something that it may not matter in three or four months because you may have very well ended up shutting it down because people are not buying the product.
[17:03] Rob: This is a tough one, it’s kind of like “I’ll know it when I see it.” You spend the minimal amount of time possible to feel confident that you don’t have any gaping holes or don’t have any holes as much as possible that you’ve locked stuff down. There are best practices, and you can of course dive in and try and do credit card or bank level security on everything and, like you said, it’s premature optimization. So you kind of don’t want to do that unless you do have social security numbers or really, really important critical information. But then there are just the best practices of web development; of salting and hashing passwords, and of having all your ports closed, and not allowing or using multiple passwords and having strong passwords for everything. That’s the kind of stuff where that’s the accepted best practice and that’s as far as I would go today.
[17:52] Mike: Yeah, there’s companies out there that have billions of dollars at their disposal and they still get hacked. You look at companies like Adobe and Home Depot. These companies have billions of dollars at their disposal and large security teams, and they still lose data and they still get hacked. The reality is that if someone is actively targeting you there is absolutely nothing you’re going to be able to do to stop them. They will get your data if they want it.
[18:16] Our next one comes in from Kevin Taylor and he says, “Hi Rob and Mike. I’m a long time listener and fan of your podcast and a lifetime member of the Micropreneur Academy. Keep up the good work. I’d be interested to know how you’re planning to deal with the EU VAT rules?”
[18:28] Rob: Yes there were some EU VAT rules that were passed. The interesting thing is if you’re in the U.S. nothing changed for us. This only impacts people who are in the EU. And if you’re in the EU then you need to research this because it’s not trivial, right? It makes things vastly more complicated. Obviously we don’t give advice, either way, on if you should be paying this or not. But if you haven’t, and you continue to not, then really nothing changed with this law. It only impacts EU based businesses.
[18:55] Mike: Yeah, the thing I would point out is that, because we’re based in the US and this is a tax law it does make it pretty difficult for us to answer or give specific advice. What I’m going to do is I’m going to post a link in the show notes to www.EnterpriseNation.com. They have a “Five Steps to VATMOSS” infographic that you can take a look at, which kind of walks you through whether or not you need to register, the dates that you have to register by, and additional information about it. It’s pretty high level, but it’s at least a starting point. And again we’re not CPA’s, we’re not attorneys, we can’t give specific advice along those lines, but we can kind of point you in the right direction in terms of helping you find the information you need. So Kevin I hope that helps out.
[19:36] Our next question comes in from Chris Willow and he says, “Hey guys. I have a software product in the SEO niche with two options: self-hosted or hosted. This is cheap for bigger SEO shops who get a lot of value from the app, so I’d like to charge them more for self-hosting. Say I add pricing tiers based on the number of clients they have, which is common for SAAS apps? The problem is there is no real reason for limiting a self-hosted app besides getting more money, so it could be hard to explain why we’re doing this. What’s your take on pricing plans for self-hosted apps, and does it even make sense to add limitations? Thanks, Chris.” I think in my mind it does. If you take a look at just about any server based application software, there are limits on the different tiers of that product that you get based on the amount of money that you pay for. Let’s take a long-standing example of like a mail server. I remember buying a mail server software a long time ago, and if you wanted five users it would cost X dollars. If you wanted ten users it would cost X plus whatever. [20:32] So there are definitely reasons and justifications for charging people more for a product that is going to offer them more value. The trick is finding out what those tiers are. And I think what you can use is if you have your SAAS app, and you are giving them an option of some kind say for the number of web sites they are able to manage their SEO for, you can limit it based on the number of sites, or you can limit it based on the number of accounts, or the types of reports. There are lots of different ways that you can segment that customer base to figure out what is important to them, and then charge the people more who are going to fit a criteria that would fall into that bucket. So let’s say that it integrates into something like SQL Server. Well, there are different editions of SQL Server that will have advanced reporting options, and if you hook into those chances are really good that they have an advanced version of SQL Server. So you can use that as a justification that says, “Hey, if you want to hook into this it’s going to cost extra.” Because you can reasonably assume that if they were paying that much extra for that version of SQL Server then they have the money to pay more for your application.
[21:39] Rob: Yeah, I agree with Mike. Chris mentioned in his email that there is no real reason for limiting a self-hosted app besides getting more money, so it could be hard to explain why we’re doing this. I would see how it goes, personally. I think the limitation is that they are a bigger company. This has been done since the beginning of software sales, right? This is how every enterprise software sale is done. So you’ve got to see how it feels, but this is the way to maximize revenue on that. I would almost take it a step back and ask, “Why do you have self-hosted and a hosted version?” How critical is that self-hosted version? I would move toward SAAS personally, just because of the maintenance, and then this question doesn’t even need to be asked. Or if the self-hosted one provides the vast majority of revenue, then why have the SAAS version? Why not just double down on self-hosted? If you have a fifty-fifty split I’d be surprised, but I would tend to lean towards hosting infrastructure itself, so that support is so much easier. You don’t have to deal with everyone’s crazy server configurations, helping them install on their own servers, and all that stuff.
[22:33] Mike: Our next question comes in from Chad, and he says, “Hi Rob and Mike. My app, “Pint Track”, is a loyalty program tracker specifically for bars. I’m in private beta with one bar and about a thousand users right now and gearing up for a public launch next quarter. Your podcast has already given me tons of ideas for both marketing and development. Here’s my question, I’ve recently finished reading Slicing Pie by Mike Moyer. It describes a system of dynamic equity split that founders can use to compensate employees and co-founders based on work invested, rather than using static equity grants. Have you guys seen this book, and if so what do you think of the plan or of the dynamic equity splits in general? Have you ever done anything like this before and if so how did it go?”
[23:09] Rob: This is a really good question actually. I had seen the “Slicing Pie” book, I hadn’t read it. Mike and I have researched and looked at an infographic and an explanation of kind of how this split works. I’ll say a couple of things. One, this is non-standard, so it’s going to be hard to find pre-done documents that can define this. I know that, as an example, Y Combinator has released what they have called their “SAFE” documents, S A F E, it’s an acronym for something and they’ve basically released those documents. So if you’re going to do standard equity splits, where you have vesting and that kind of stuff, then you can use their documents. But if you’re going to do something funky like this then you’re really going to need to hire a lawyer. There’s no chance I can imagine you writing this up and having this working because it’s complicated. That’s the other thing is the complexity of it. If you ever wanted to raise funding, even an Angel Round, I think you might run into issues because this is non-standard. When you tend to step outside of the lines on these things you are running a bit of an experiment right? If there haven’t been hundreds or thousands of companies that have done this – much like have done the standard four year vesting with the one year cliff of stock options – you’re kind of being a “canary in the coal mine”. And so I think it’s an interesting theory. I question if I want to be the “canary in the coal mine” on something like this, because it is pretty serious. The big objection I see on the home page of Slicing Pie dot com is you and a friend go fifty-fifty on a new business, you do all the work, he still wants fifty percent for doing nothing. Now what? Well the way you tend to get around that is you tend to have stuff that vests, and if that person is not working on it then their employment ends and they don’t get the stock. And they have to work a year to get twenty-five percent, and then every month after that they get a certain percentage. So, you know, it’s interesting. I like the thought of it as a thought experiment. It does seem perhaps a little complicated. But if you showed me ten companies who had done it and it had worked for them. I’d also be curious if employees like this — because if you have folks who have worked for startups in the past then they are going to know this whole stock equity thing, that the way that everyone else does it, and I think you’re going to have to explain this to every new employee you hire because no one is going to understand it.
[25:15] Mike: I agree with Rob. I think this is an interesting way of dividing the company, and it’s an interesting way of thinking creatively about it, but I think my issue is not necessarily with what this process is, or how it looks, but how do you define when somebody is no longer working for the company, especially if it is something that people are doing on the side. Because let’s say somebody hasn’t done something for two or three months. Does that mean they are no longer working for the product or the company? How do you define that? Are there specific rules about that? Is there a minimum number of hours that they have to work? And if that’s well defined great. If it’s not, then that’s when these types of things can start to kick in. The example that’s used on their website, if you do all the work and you’ve split the company fifty-fifty with somebody, do you have to give them fifty percent of whatever the benefits are? The problem, I think with that is, when do you define that they are no longer working for the company, and no longer entitled to benefits. Part of that goes with vesting, but even with vesting you can say, “OK, well you’re going to vest after one year of being involved.” But what happens if six months in they stop being involved, and then six months later they say, “OK. now I’m fully vested.” How do you define whether or not they are still working is really the fundamental question, and I think as long as you can answer that then things like this will come into play and you can get creative about vesting options and everything else. But until that question is answered, all of this stuff is kind of immaterial.
[26:43] Our last question comes in from Tom and he says, “Hi Rob and Mike. My little software company is growing and we’re hiring our first QA Engineer. In a past episode you both spoke about the testing tools you use for your products. I wanted to know what tools you’re currently using? Thanks, and I love the podcast.”
[26:57] Rob: So I’m not sure that we’ve ever spoken about our testing tools. Did we talk about unit testing frameworks? Because I had to ask my developers, because I don’t know anymore. But we use MiniTest, using Shoulda matchers – which is a gem – and Mocha for stubbing and expectations – which is also a gem. So that’s our unit testing framework, but we don’t actually use any type of QA or automated testing tools.
[27:22] Mike: Yeah, I haven’t used anything other than unit tests to be honest. I know there are different frameworks for testing UI’s, and hooking into it so that you don’t have to code directly against the code – so you don’t have to have your code arranged in a certain way, but it’s a little bit more fragile, because if you change the UI then you have to go in and rework those tasks versus hooking directly into like MVC frameworks so that you separated out all the different components that make up the application. But all I’ve ever done, really, is just rely on unit tests, and make sure that the inputs and the outputs of various things are working properly. And then do something more of a system test, where you’re not just testing a single function, you’re testing a string of functions that are supposed to work in a certain way. And then you set up your unit test to basically make sure that that system – or that set of components – is working properly together. But that’s all we’ve ever done. I haven’t really gone into the UI testing, or anything like that. Do you guys do any UI testing – aside from the backend code itself – or do you find that the UI tends to change subtly too many times to be able to add those things in.
[28:32] Rob: Yeah, we don’t. We don’t have any automated UI stuff, because the UI changes so quickly. I mean, Drip is still in such an evolution, and we’re adding stuff constantly. I think if your product was mature, and you weren’t constantly adding new things, you could think about doing some UI click-throughs. But we have thousands of unit tests. We have very extensive test coverage for our apps that we’ve built from scratch, and that takes a lot of the burden off of it. Obviously you can have UI issues and we do manually test those, basically we do not have an automated test suite that hits the UI.
[29:02] Mike: So Tom, sorry we couldn’t be a little bit more help in that. Maybe you’ll be able to find some people at Microconf who can fill you in on what sort of things they do.
[29:09] Rob: Today’s episode was filled with listener questions. And if you have a question and would like us to answer it on air you can 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 Out of Control by Moot used under Creative Commons. Subscribe to us in iTunes by searching for startups and visit www.StartupsfortheRestofUs.com for a full transcript of each episode. Thanks for listening. We’ll see you next time.
- How Star Wars Conquered the Universe
- In-N-Out Burger book
- Rob’s old duck boat website
[00:00] Rob: In this episode of Start-Ups for the Rest of Us, Mike and I discuss the “stair- step” approach to launching products. This is Start-Ups for the Rest of Us, episode 222.
[00:15] Welcome to Start-Ups for the rest of us, the podcast that helps developers, designers and entrepreneurs be awesome at launching software products; whether you’ve built your first product or you’re just thinking about it. I’m Rob.
[00:24] Mike: And I’m Mike.
[00:25] Rob: And we’re here to share our experiences to help you avoid the same mistakes we’ve made. What’s the word this week, Mike?
[00:30] Mike: Well, last week I had talked a little bit about some of the Twitter and Facebook advertising campaigns that I was doing. Somebody pointed out to me that one of them was using this massive image that had not been re-sized properly so it was like 700k on a page.
[00:44] Rob: Nice.
[00:45] Mike: And I re-sized it. It only needed to be 65k.
[00:48] Rob: Oh, man. Was it impacting page load time? I mean, obviously it would have some impact but it could be negligible. If it’s like three tenths of a second people are not that likely to notice.
[00:59] Mike: The total page size was only about 2.5 megs so you add 700k to that and it’s like 3.2 which is about a third of the size but it depends a lot more on latency at that point than anything else. And I don’t think that it was a big deal but with a file that size, depending on how long it takes to download that one and how your browser is probably only going to download that and maybe one other thing at a time.
[01:24] Rob: Yeah, obviously if someone was hitting it on mobile or something it would be a bigger deal but you’re probably not targeting mobile users, right?
[01:30] Mike: No, for the most part I think I excluded them. Although the Twitter ads, I don’t know if those were excluded. I haven’t really fully reviewed the results and stuff yet because it just ended but I need to go back in and take a look at those things to see if it impacted it at all. I’ve got data so I can go back and adjust things in any way. I’m probably never going to know for sure whether it had that much of an impact but it was a stupid mistake.
[01:51] Rob: If that’s the worst thing that happens to you this week I’d consider yourself lucky.
[01:55] Mike: Right. The other thing I noticed was that on the Twitter ads – because I’m experimenting over there, I haven’t really run Twitter ads before, but when a Twitter ad is finished, if you give it a dollar amount, when it’s done it’s listed as being exhausted.
[02:10] Rob: Nice. I like that. It’s just so tired that it has to stop.
[02:14] Mike: Yeah.
[02:15] Rob: That’s cool. So, continuing with my stretch of reading a lot of books, I have a couple other books I wanted to mention today. The first one, it’s called “How Star Wars Conquered the Universe” and it’s a pretty thick book. I think it was twenty something hours on audio which is more than I tend to attack but it’s by a reporter from Mashable, and he basically wanted to write the definitive history of Star Wars and how Lucas came up with the concept and how he was influenced and then launch of all six films and the re-releases and all the controversies around it. He really goes in depth. I was super impressed with the quality of the research. I’m a Star Wars fan, I have been since I was a kid. I’ve seen the movies a lot of times and I know a lot of trivia but this guy dove in way deeper than anything I had ever read so if you’re at all interested in that, or even if you’re not a Star Wars fan, it’s fascinating to hear how every movie pushed Lucas to the breaking point, whether it was the financial breaking point or the sanity breaking point. It reminds me of launching a start-up. It pushed him to the edge so many times where he struggled even to complete the movie. I highly recommend this book.
[03:30] The other book is called “In and Out” and this is one, if you have considered reading it I would recommend against it. I really love hearing start-up tales and “In and Out” is a hamburger chain on the west coast of the United States and they’ve stayed private. They’re privately owned, they’re not franchised and they still basically have the same menu that they did when they launched in the ’50’s. It’s a really cool story about a business that’s staying small even though there are a couple hundred restaurants around the west coast of the US. The book itself was not very well researched, not very well written and overall I would just say if it’s on your wishlist I would probably take it off. I was pretty disappointed with it. It felt very surfacey. It was like, “this happened next, and then this happened” and the other thing I didn’t like was that it was really pro “In and Out”. It kept saying, “and then, due to the founders’ will and determination they launched another ten stores.” But they had to have done something negative over those fifty years and it really skipped over that. It wasn’t a harrowing tale. It was more of an encyclopedia or a long Wikipedia entry about it.
[04:41] Today’s episode was inspired by a question from Chris Cottham and he says, “I really liked how Rob illustrated his path through small, one time sale products to recurring revenue SaaS apps in his MicroConf Europe talk this year.” So Chris obviously attended MicroConf Europe. He says, “I think it would make a great topic for a podcast. So, what I wanted to do today is talk through the “stair-step” approach to launching really any type of products but we’re going to focus more on software products today. Mike and I have tossed out concepts from this “stair step” approach for years on the podcast but it wasn’t until DCBKK and MicroConf Europe that I decided to sit down and formulate it and make it concrete. I spent five or ten minutes with a slide and demonstrated how I view the “stair-step” approach, how it works and all of that. It seemed to really resonate with people because it’s a framework for getting started and moving from beginner to intermediate to advanced. So, that’s what we’re going to be talking about today.
[05:43] The “stair-step” approach really has three steps that I talked about at the conferences. I’ve added a fourth step that we’ll talk about here that I’m still formulating and figuring out what it means and if it’s even a good step to go to. What I want you to imagine is a set of stairs and obviously step one is on the bottom and step two is above that and step three is above that and each step gets a little more challenging but you step up to that step once you have more experience. Step one is what I think is the approach that I would recommend if you’re just starting out today and you don’t have any products with any revenue because the problem that we see is, folks are coming in and they’re seeing what successful people are doing. They look at Heaton Shaw, Jason Cohen, Patrick McKenzie, whoever, and they say, “well, they’re doing SaaS apps so I’m going to do a SaaS app.” I don’t always think that’s the right choice because SaaS apps– it’s a very long, slow, SaaS ramp odf death to the revenue, it is very complicated to build them and it’s hard to market them, et cetera, et cetera. Instead, I want you to imagine step one as one time sales. Instead, I want you to imagine step one consisting of products with one time sales. Imagine a WordPress plugin or maybe a mobile app or a Magento add-on or a Photoshop add-on or even an E-book. These are just one time sales and the price point is not huge and in addition, think about it as a single traffic channel.
[07:09] Examples of a single traffic channel might be, it gets all it’s traffic from SEO or 90% of it’s traffic from SEO, or it gets all of it’s traffic from WordPress.org from the plugin repo. Or, I know folks selling things as more physical goods but their entire sales channel is Amazon or their entire funnel consists of YouTube. That’s step one. The benefits here are that you are starting small with something simple to get some revenue in the door and learn this whole process.
[07:39] Mike: I think one of the overlooked aspects of this is that it can be a lot easier to sell something that’s a one time sale or something that people just buy into up front and they don’t have this recurring payment that they have to keep paying to keep using it afterwards and people mentally think of that differently than they do the one time sales. It’s easier to convince people to do this and it helps give you that fundamental understanding of how sales work and how you can convince people to buy using different marketing messages. The marketing messages for example for a book are radically different for the customers than you would for a recurring revenue model for just about anything; whether it’s a book or a physical product or any of those types of things, or even a downloadable application or even a mobile app, those things have a fundamentally different message inside of the marketing material and how you go about on-boarding people and marketing to them. There’s a difference between the different types of channels that you’re going to be able to use for those one time products versus something that’s more of a SaaS model.
[08:46] Rob: Right, and that’s the idea here is to get some experience writing marketing copy, supporting a product, just pushing a product out to market like launching and doing something in public. A lot of folks have never done that and it’s really terrifying the first time you do that. I shudder to think of the absolute beginner who has never launched anything in public trying to build a SaaS app and launch that with all of the complexities involved in that; in terms of marketing support, the code, sales, everything that’s involved. This is such a simpler way to do it and cut your teeth in, maybe it’s the minor leagues or maybe it’s college ball instead of jumping right to the pros. We all need to go through that development. You can’t just jump up to the hardest task right away. We see a lot of folks having success with this approach. A lot of Micropreneur Academy members are doing this. There’s WordPress plugins, Magento add-ons, one off e-books; and you may not make ten grand a month and you’ll very likely not going to make ten grand a month from this thing. You’re not going to quit your job in step one but that’s not the point. The point is to get experience and gain confidence in your skills and learn one tool. I always like to think of it as I have a tool belt of marketing approaches. When I first started out the tool belt was empty and I had no tools on that. The first thing I learned, I’m pretty sure it was SEO, so then I had SEO in my tool belt and the next thing was AdWords, that was the second product I had.
[10:10] Then I had SEO and AdWords and I started acquiring and building products that I knew I could market with SEO and AdWords. So, if you learn the ins and out of SEO or AdWords or Amazon or WordPress.org or YouTube or any other single traffic channel, and then you build a fairly simple product that sells for twenty to fifty dollars a pop, you’re going to learn a ton from doing that. And with that confidence and a little bit of revenue that’s where you start moving up into step two. Step two is basically to repeat step one until you own your time. It’s until you make enough money that you can buy out either your salary gig or any consulting work you’re doing. An example of this is, a colleague of mine, a friend of ours has three WordPress plugins now and he has basically bought out his time. He didn’t do it with just one. It wasn’t this big splash and it didn’t happen right away but he learned how to build and launch a WordPress plugin, how to market it, how to do the support and all of that stuff and then got one to market and basically has repeated that twice. At this point he actually quit his job this month. This path from step one to step two is a lot easier than trying to jump straight up to the most complex task.
[11:25] Mike: The nice thing behind doing that is that once you’ve done something once, it makes it a little bit easier to do it the second time, especially if you’re repeating almost the same process because you can use the things that you learned from the first iteration through that process on the second time and the third time and the fourth time. Eventually what you’re doing is you’re growing this revenue base that you’re going to be able to use to essentially replace what your current revenue stream is.
[11:49] Rob: Right. And this interesting thing with this “stair step” approach is that I kept seeing it with people at the academy, people at MicroConf and I kept seeing them start small and then build up and eventually get to the next level and be able to buy out their time. I noticed it was a pattern which is why I started thinking about something to try to classify it or have a higher level theory about it. Then I looked back at my own experience and realized that a lot of what I did fits the “stair step” retroactively and I had no idea about that. If you look back at products I owned I had DotNetInvoice which is one time sale downloadable software, I had “Apprentice Lineman Jobs” which is essentially a job board. It’s a subscription but it’s very short lived. People only look for one or two months but it’s a small price point and it had a single source of traffic, SEO, CMS Themer which was a theming service which was a one time sale, it was a higher price point but it had one source of traffic which was actually banner ads and then I had a couple E-books that I had purchased on random topics like beginner bonsai and there was one about building a duck hunting boat and all of these things had a single source of traffic and none of them made more than, some of then topped out at between three and four grand a month but each one of them taught me one more thing. It was either SEO or AdWords or banner ads or PPC advertising or copyrighting and how much it takes to support a software product versus an info product. So, it’s interesting that I essentially followed this path, kind of stumbled into it.
[13:25] Mike: What Rob has done for example is, he had DotNetInvoice and Apprentice Lineman Jobs and CMS Themer, which are all completely unrelated areas but if you map things out in advance you can make those things into the same business or address different problems inside of the same market vertical such that you are building upon your previous audience. Essentially you have this lower end product that is a one time sale and then you look up stream a little bit and say, “okay, well, what is the next step? What is the product that somebody who has purchased this and actually implemented it would use after this?” Essentially what you’re doing is creating this closed feedback loop where customers that you’re bringing in hopefully purchased the first product and then you may very well be able to get them to buy into the second. So, depending where they come into the process, you may have additional higher end products that you can sell them. Your initial product might be an info product or a book of some kind. Then you might sell some specialized consulting services around that. Then you might have a SaaS app or something along those lines. You’re basically just moving up the sales funnel maybe with higher price points. You don’t have to do that in advance. There are certainly places where that’s not only not warranted but you just simply can’t do that. But that’s an approach that you can think about.
[14:42] Rob: That’s a mistake that I made early on was as you said, I did it in disparate niches so I did not have the advantage of building either an audience or more likely a customer base that I could then sell more things to. That’s the one thing with the “stair step” approach. I wouldn’t say it’s required that you do it that way, that you keep it all in the same market, but it’s definitely going to be easier for you if you can. It’s always easier to sell a new product to your existing customers or an existing product to new customers. But it’s never good to sell a new product to new customers unless you absolutely have to. I think that will give you a leg up if you take that focus. On the other hand, it was either me or the podcast received an email from someone saying, “I want to start the “stair step” approach but I’m thinking if I want it to all be in the same niche then I need to think five years out because what I launch today has to relate to everything I build in step two and the recurring revenue app I’m going to launch in step three.” I think you could put a little too much importance on that initial product at that point. If you’re holding off because you’re just not sure you want to be in this niche for five years then I think you’re over thinking it.
[15:57] Mike: Yeah, I would agree. I think if you’re starting out you don’t necessarily want to try to plan that far out in advance because you may very well launch this one time purchase and it may not go anywhere. It may just be that the market doesn’t want what you have to offer or that there’s not enough money there or that you can’t reach those people. There’s all these problems that I can see with that and if you aren’t sure of all of those things and you’re trying to plan around this vast sea of unknowns you can very well talk yourself out of doing anything at all before you map everything out. At that point you’re basically just wasting a heck of a lot of time planning for things that are just never going to occur.
[16:37] Rob: So then step three is basically getting recurring sales and in our world this typically means SaaS. It doesn’t always have to be that way but I think that’s the direction you move. One of the benefits of SaaS, we’ve talked about it before, is the fact that you don’t have to get a large sale upfront. You can get a smaller sale every month from that group of customers. And there are pros and cons to this that we discussed ten or fifteen episodes ago but the bottom line is, if you want to build a sustainable revenue stream then having one time sales is not the way to do it. So step three is going after recurring sales and examples of this, they’re all around us, an app like Baremetrics or Bidsketch or Drip, Planscope or there’s even recurring info products like Brecht Palumbo who is a Microprenuer Academy member and host of “Bootstrapped with Kids” podcast. He has distressedpro.com which there’s some software to it but there’s also a lot of training. We have microprenuer.com and the Microprenuer Academy which is essentially training. There’s no software involved with that. So, you can go both ways it doesn’t just have to be software. Even productized services I think could fit into this level if you get folks to sign up to a subscription for them.
[17:53] Mike: Yeah, most of this conversation today is limited much more toward the software side of things and getting started but you’re absolutely right that there’s a lot of other ways to have different up sells for people that can buy into, whether that’s with their wallets or with their mentality. If you look at what we’ve done with the Microprenuer Academy, in some ways you can look at it as a complete sales funnel where we’ve got our blogs and I guess I’ll say our online profiles but we’ve also got the podcast which is free to everybody and then if you want to buy into the Microprenuer Academy and those types of approaches and that community, there’s a fifty dollar a month price point with that and then up stream from that is MicroConf and there’s a lot of different ways that that whole life cycle of products could be viewed. The “stair step” approach kind of falls in line with that.
[18:45] Rob: Yeah, I agree. If you just think about our ecosystem as a funnel. I don’t think either of us intentionally did this but there’s all these things that kind of feed into each other. My book is one thing. Certain people hear about my book from the podcast and from MicroConf but other people hear about my book from something else and then they later listen to the podcast or become an academy member or buy a MicroConf ticket. All four of those things really feed into each other. Brennan Dunn is another guy who has done this really well. He has multiple e-books and podcast, a blog and his software product. And he runs training, in person training. So that all fits in and he will actually say that he stair stepped it in the wrong order. He launched the SaaS first and it was so hard to get traction that he went back and started writing e-books and stuff to make money and then realized that the experience he gained there and the audience that he built fed back into it. The “stair step” approach is not about building an audience. I don’t think you need to be a personal brand or build an audience to do this. But I do think that building a customer base and then learning these skills, how to launch, how to market, how to copyright, all of that stuff is the key to it. So, don’t feel like you have to be a big personal brand in order to make that work or even have this big ecosystem of products. I don’t necessarily think that if you got to step two and you had the WordPress plugins and you decided, “I’m going to launch a SaaS app” and you sold those WordPress plugins enough to give you a runway to then go build the SaaS and grow it, I don’t think that’s a terrible decision. I’d take it on a case by case basis but I think that’s an option. You don’t necessarily have to keep everything as you’re moving up the stair steps.
[20:23] Mike: I agree with that point. That’s one option and there are certainly viable reasons for saying,”okay, I’ve already got this one product but I want to do something completely different.” I think both of them are valid approaches. Going back to what Brennan had done where he had kind of done things out of order, we did things out of order with the Microprenuer Academy as well because we launched the academy first and that has a subscription model to it and then we did the podcast which is kind of down stream from that. And then we did the conference which is up stream from that. So we did things in the wrong order as well but it’s not something that we planned out front. We just kind of fell into it and decided, “what is it that we want to do next and what are people looking for?” Sometimes you just need to get into the market to figure out where things need to go or where they should go. And where they should do in some cases may very well be in a completely different market because you don’t want to deal with it anymore.
[21:15] Rob: Exactly. And then step four is something I’m still mulling over. I did not mention this in the MicroConf Europe or DCBKK talk. I mention it offhand. I think step four might be having multiple recurring apps, multiple SaaS apps or something but to be honest, few companies or people that I’ve seen are able to maintain this because basically one eventually takes the lead and makes so much money that the others seem inconsequential. So, if you look at what 37signals did as an example, they just kept launching apps, kept launching apps and then Basecamp, I’m assuming, 10x’ed or 100x’ed everything else and at that point it’s just hard to devote any time to something that’s making you ten grand a month when something is making you a million dollars a month as an example. I don’t know their numbers but you get the idea. There are a few companies, like Wildbit does this, they have multiple SaaS apps. Certainly you and I have multiple projects going on. I have multiple SaaS apps plus the academy and conference and stuff. So it’s not impossible to do but I have definitely found it hard as some of my apps grow and they tend to X other apps in my portfolio. I have a really hard time going back to those apps that are making the small amounts. I think at that point that’s when you want to sell one off or shut it down even if it’s not worth selling. So I’m not sure that step four is aspirational. I don’t know that getting to multiple recurring is really necessary. I do like that it diversifies you. When I had issues, HitTail’s revenue took a hit when Google did the not provided stuff and it was nice that I had other revenue streams but I’m not sure that trying to manage multiple SaaS apps or multiple recurring revenue streams should be a goal for everyone.
[22:54] Mike: Yeah, if you look at what Basecamp has been doing, even over the past four or five years, they used to have, I think it was called “sortfoloio”, they got rid of that, right now they’re in the middle of the process of getting rid of things like Highrise and changing their company name from 37signals to Basecamp and getting rid of all of the other things that they’ve build and they’ve sold and launched and been successful with them but they haven’t been nearly as successful. They spell out in fairly large detail on their blog and in a lot of their communications that “we’re getting rid of all of these other things because they serve as distractions.” I was at the Business of Software, I even met somebody who was heading up one of the business units that they’re spinning off and saying, “okay, we’re going to take this entire product that is making money that could fully support at least a couple of people and just get rid of it because it is taking time away from our core business and that’s where we make our money.” Even in the stuff that I’ve done and Rob, obviously in the stuff that you’ve done, there’s things where you get to a certain point or you just don’t want to work on them anymore because it’s not worth the time or you lose motivation for it, and at that point it becomes a mental drain because it’s always in the back of your mind and you’re thinking to yourself, “oh, I should devote some time to that” or you’re coming up with ideas for it. But if you don’t even own it anymore it’s a lot easier to not think about it.
[24:10] Rob: That’s right and that’s something you always have to weigh is whether to sell it and walk away or to keep it running in the background because there is a mental weight to it like you said. If you’re listening to this “stair step” approach I think you could feasibly be skeptical and say, “well, if I ultimately want a SaaS app, why would I start with a small product?” Maybe you really don’t want to launch a small WordPress plugin, you just want to do SaaS because that’s what the cool kids are doing or something. I think that the optimal way and the way to maximize your chance of ultimately being successful at it is to do something like this “stair step” approach but I think there are other avenues. I think if you were to intern within a bootstrap SaaS app and have someone mentor you and teach you the ropes, that you could feasibly learn it without doing it yourself and then go launch your own SaaS app. So I do think there are other ways around it, they’re just a lot less common. They’re going to be harder to find because how many of those opportunities are there compared to how many people are there who are able to go launch the WordPress plugin and go up the stair step?
[25:11] Mike: Yeah, I almost look at the different steps as learning experiences where somehow you have to figure out the knowledge within that particular arena. The “stair step” approach is obviously one method for doing it. Doing some sort of mentorship would be another method, and then going straight to step three and beating your head against the wall a lot to figure out all the different things that you should have learned in step one and step two, that’s another mechanism for doing it but there’s the risk of going straight to that step and beating your head against the wall so many times that you get frustrated and you just give up. So, I think there’s definitely some inherent risks there but there are also some very clear, exceptional cases out there where people have successfully gone straight to step three. I would say that in some cases, not all of them, but some cases, those are used as examples of “this is exactly how you build a software product and this is exactly how you build a company from the ground up.” I’ll point specifically to 37Signals for that because I think a lot of people have held them up on an alter and said, “this is exactly how you do it. We scratched our own itch. This is the way to do it.” And then you’ve got all these other people who are going out and scratching their own itch for a product that not everybody is going to pay for. So, there are definitely ways to do it and there are I’ll say red flags for other ways that it can be done but aren’t necessarily going to be successful. Success is not something that you can just say is going to happen. There’s a lot of red flags but there’s also ways around some of those red flags.
[26:41] Rob: I think 37Signals would have been successful whenever they had done it. They’re very smart and they’re great businessmen and they build things people want and all that. But I don’t know that they would have grown to how large they are as quickly as they did without their timing. They really hit SaaS at the early stage right as the concept was taking off and they got in first and they really got a first movers advantage which I think is great because they took a risk and it paid off for them. But I think that in the decade since Basecamp was launched, I think it launched around 2005-ish, a lot of things have changed so five maybe six years ago, still going directly into SaaS, I could see that potentially working. I don’t think it was nearly as competitive as it is today. So many people want to launch SaaS. It really is something that the funded companies are talking about, B to B is talking about it, B to C is talking about it, it really is something a lot of people are aspiring to and as a result a lot of people are doing it and a lot of the niches that didn’t have SaaS apps a few years ago have them now. So that’s where it’s just become so much more difficult to do it that I think jumping straight into the deep end of the pool is going to fail more often than not. That’s not to say it can’t succeed sometimes, and as you’ve said there are examples of people who have done it and even examples of people who have done it more recently. But what I tend to find is if you dig into their stories a little more, someone might say, Josh Pigford, with Baremetrics, he launched a SaaS app and it was successful but if you look back at his story he basically had two other smaller apps, he did stuff before that. It’s that ten years to overnight success type thing. You could say the same about me, right? Some would say, “oh, he has a successful SaaS app with Drip” but I have this whole long history of launching things, launching smaller things and then moving up this ladder. So it’s not that it can’t be done I just think it’s done a lot less often, especially these days.
[28:32] Mike: Right, and as you moved up that ladder you’ve built things that are more and more complicated. A duck boat E-book is a relatively uncomplicated thing but you get to something like Drip and that’s very complicated. There’s a lot of moving parts that are constantly moving and shifting whereas selling somebody an e-book on how to build a duck boat is relatively straight forward in comparison.
[28:54] Rob: That’s right.
[28:55] Mike: But if you take that example of how to build a duck boat as an e-book, you can translate that to one section of a marketing campaign that you might run for Drip. All those things that come up in step one and step two basically become these modules of knowledge that you drop into place when you get into things that are a lot more complicated and become a lot more successful because of the modular learning process that you went through before.
[29:22] Rob: That’s exactly right. Each one is, like you said, a module that fits together. I think that’s a good analogy.
[29:28] Mike: If you have a question for us you can call it into our voice mail number at 1-888-801-9690 or email it to us at email@example.com. Our theme music is an excerpt from “We’re Out of Control” by MoOt used under Creative Commons. Subscribe to us at iTunes by searching Startups and visit Startupsfortherestofus.com for a full transcript of each episode. Thanks for listening and we’ll see you next time.
[00:00] Mike: In this episode of “Startups for the Rest of Us”, Rob and I are going to be talking about updates for Drip, HitTail, AuditShark and more. This is Startups for the Rest of Us, Episode 221.
[00:16] Welcome to Startups for the Rest of Us, the podcast that helps developers, entrepreneurs and designers be awesome at launching software products, whether you’ve already launched your product or you’re just thinking about it. I’m Mike.
[00:24] Rob: And I’m Rob.
[00:25] Mike: We’re here to share our experiences to help you avoid the same mistakes we’ve made. What’s going on this week, Rob?
[00:29] Rob: You know, Mike, there’s nothing like that feeling of having an email queued up to send to a few thousand people at a very specific time that you’ve publicly committed to, only to have your email provider disable your account overnight, almost mistakenly. Then email them to re-enable it but you missed the window.
[00:45] Mike: Yeah
[00:48] Rob: This is the story of our MicroConf early bird launch today. I had emailed, you know, our list was a few thousand people now. I’d queued up an email, but I’d let everybody know yesterday that we’d be notifying them, and were using MailChimp to do that, because we haven’t moved everything over to Drip yet. Sure enough, when I emailed folks yesterday, I said, “If you’ve already bought your ticket, just click here to unsubscribe. Otherwise, you’ll be notified tomorrow.” We had a lot of people unsubscribe because they had already heard about it. So the MailChimp filter just clicked and in the middle of the night, disabled our account. So the big launch at noon Eastern time today winds up being, when I got it out – actually, I had to export and import into Drip. So, in essence, Drip did save the day on this one. But it happened maybe a half hour later than it should have.
[01:34] Mike: You’re probably going to catch hell from people because everything wasn’t in Drip. But we talked about that. It just wasn’t really worth the time or effort because everything’s already set up in MailChimp. It’s not like Drip costs us anything extra to use, so it wasn’t really that big a deal.
[01:47] Rob: Yes, so I think I’ll be moving it. It’s about time to move this. This is my last MailChimp account that I have. I used to have four of them. At this point, I only have this one. It’s the MicroConf/Micropreneur academy account. But it seems like it’s probably time to get everything out of there and over into Drip. But seems like everybody got the email out of Drip and it sold out. I think it sold out within 10 minutes of the email going out.
[02:09] Mike: Oh, was it?
[02:10] Rob: I think it was about 10 minutes from the time it landed in inboxes until it said “Sold Out” on EventBright, even though at that point I think there were still like eight tickets left. You had to go through and divvy those out to folks.
[02:22] Mike: Yeah, the same thing, kind of, happened last year, and that was about 20 minutes before it started locking those tickets.
[02:28] Rob: Right. This year we did more of a layered launch through, right? We went to previous attendees that kind of got a second grab at it. It was Micropreneur academy members, then it was previous attendees/last year’s attendees and then it was the early bird list. So we had fewer tickets left for the early bird list this year than we did last year. How about you? What’s going on?
[02:47] Mike: Well, you know how I’ve explained that I’ve had a couple of hard drive issues? I believe that a couple hard drives in my office are all possessed. I’ve now lost three drives in three consecutive weeks. I don’t know what’s going on.
[02:58] Rob: This is someone trying to tell you something and it’s, “Stop screwing around with hard drives, and just go to the Cloud. Don’t have a local backup. That’s crazy. Three drives.”
[03:06] Mike: I don’t have a local backup. Yes, because that’s a good idea.
[03:09] Rob: Exactly.
[03:10] Mike: I’m getting tired of it but at the same time, it’s like I wonder if this stems back to me reading the “Back Blaze Hard Drive Report” where it basically spells out and says that Seagate drives have the worst longevity among all the different manufacturers. In all of my drives, with the exception of the SSDs are Seagate drives. So I don’t know whether they took that as a hint that they need to roll over and die, but it seems to be happening.
[03:36] Rob: Yes, well you’ve heard that term “mean time between failure.” MTBF? I think it’s supposed to be an average, but maybe it’s like an exact countdown.
[03:46] Mike: Yes, it could be a countdown. Yes.
[03:48] Rob: So I’ve been reading quite a few books lately. I’ve had a little extra time in the car and such, so I’ve been listening to audiobooks. One book that I want to recommend to folks, if they haven’t already listened to it or read it, it’s called “On Writing” and it’s written by Stephen King. Whether you like his writing or not is irrelevant, the brilliant part about this book is that it’s someone who is, in essence, a genius at something, right?. He is a phenomenal writer in terms of being prolific, and getting up and shipping every day. He’s written 35 books. He’s one of the best selling authors of all time, if not purely because of the volume that he’s put out. So again, whether you like his writing or not is beside the point. But it’s listening to — the first half of the book is a memoir, and it’s interesting to hear how that influences his story. The really interesting part is the second half, and you hear his process for staying creative and for delivering, for crafting story – which of course, I use to help write MicroConf talks, and podcast episodes and blog posts. It helps kind of shift and make you think about how to create content. Then, I like his rituals and the ways that he’s kind of set things up in terms of just being able to get up every day and deliver, which most people can’t. So it’s nice because it’s a pretty quick read and it’s not super dense. So I’d recommend it if you haven’t checked it out.
[05:07] The other book I wanted to bring to people’s attention is called “Smart Cuts”. This one is good. It’s basically a list of things of kind of, how to pack your process and get things done quicker. I wanted it to be more specific, and I wanted it to be a little more new information, but it was good, better than some other business books I’ve been listening to. So they have advice like, “Here’s how to hack the ladder. Don’t go through the entire process everyone else has to do. Train with masters. Basically find a mentor. Get rapid feedback. So it’s like, iterate quickly.” These aren’t just – what’s funny is all these things come out of our world, the startup space. With growth hacking, getting mentors and iterating quickly but they’re trying to apply it more to life in general. Like, if you want to become whatever, a politician, or you want to rise through the ranks of your business, or anything like that. There’s other advice like, “Ride waves of things,” so find a wave that’s getting big, like mobile or wearables. Find people who super connect, who know a lot of other folks. Maintain momentum, that kind of stuff. So it was good advice and I took a few notes. Nothing that really rocked my world but, you know, I think it’s always a good reminder to kind of hear this kind of thing. The writing was done well. I have to kind of revisit those thoughts and think like, “Am I not doing any of these?” I’ve heard this so much, but have I really embraced the simplicity and the 10X thinking they talk about in the book?
[06:26] Mike: Yes, I think some of those things just come down to – not that they’re not good ideas – but just actually following through and implementing them. I mean, there’s so much tactical advice that you can read about and just go online and search really quickly, and probably find 50 different ways to save time or to do things more efficiently. But at the end of the day, you actually have to implement something to do it. If you don’t do it, then you’re not going to get any sort of benefit out of it. At that point, you’re just reading more for entertainment or “entre-porn” than anything else.
[06:54] I guess since we’re diving right into our updates on the different products and stuff that we’re working on. This year, what I’ve started doing is I’ve started translating some of my over reaching year-end goals into quarterly and monthly milestones, so that they’re all a little bit more front and center. We talked about this a little bit briefly, back in December, I think. Where you have these over-arching goals at the end of the year. Let’s say, for example, one of them is to add a thousand people to your mailing list. Well, if you don’t have that front and center in front of you every month or every couple of weeks, then it’s very easy for it to get pushed to the side. Then you forget about it for long periods of time and then not come back to it. Suddenly, it’s September, October, November and you’re like, “Oh, shoot, I’ve got – one of my goals was to add a thousand people to my mailing list.” What I’ve actually started doing is, I’ve taken a look at some of my – I’ll call them more numerical goals? Starting to divide them up so that I have these concrete milestones that I’m attempting to hit along the way as opposed to, “I want to do “X” by the end of the year.” It’s, “I want to do “X divided by four” within the first three months of the year,” and then continue doing that so I’m not rushing at the end of the year to try to get everything done.
[08:01] Rob: Yeah, I think that’s a really good way to do it. I think it keeps those of us who are kind of task or goal-oriented, it keeps you having more shorter term goals so you can live up to them. One challenge is if your goals are not linear, it makes it a challenge, right? Because if you say, “I want to add four thousand people to my mailing list this year,” that may not happen linearly. So, I mean, may not be a thousand per quarter. As you get toward the end of the year and your list gets bigger and you have success, you’ll start building it faster. But I still think having that goal of a thousand for that first quarter is at least something to shoot for. If you only hit 500, you know that you’re probably a little bit behind schedule and you need to maybe kick up the effort unless you see that the curve is already pointing upward for that second quarter.
[08:41] Mike: Yes, that is something that came to mind when I was putting them together. But the other side of the coin that I thought about was the fact that if you have the strategy for –- let’s say that you’re trying to get 250 people signed up in the first three months, and you’re not able to do that, you come short by a significant margin. Then what you can do is look at that and say, “Well, what I’m doing so far is not working. I need to switch strategies.” And something else may work exponentially better. So it gives you that feedback loop and those milestones to essentially take that step back to say – evaluating what it is what you’re doing right now, and is it working or not? And if it’s not working then you need to switch tactics.
[09:20] Rob: Yes, and that’s why I like the monthly breakdown, because it helps you know really quickly if you’re off course. I’ve gone, so far, with app growth. I did this with HitTail and Drip. I set a goal – like for Drip, I said I wanted it to be 2.5x – what it was in December – by the end of this year. And I know exactly — assuming all my numbers through all the peak conversion and all the numbers stay where they are — I know exactly how many trials I need every month. If I’m at or above that, it’s very likely that I will meet or exceed that goal by the end of the year. I can even back that up to unique visitors to the website as long as they’re reasonably targeted. So I know an exact number, or a pretty close to exact number, of how many need to come through, and then how many convert to trial, and then how many convert to paid, and how long they stick around, all that stuff. So I’m a big fan of having those numbers around, even if you’re not a number person and you’re not super into the analytics side of things, having a general concept of whether you’re on track – even if you’re off by 20-30%, at least you have an idea of where you are, and you have an idea that you’re off.
[10:28] Mike: You know, a question for you – I’ve started asking this of people that I’ve been talking to recently just because, you know, I’m still kind of working out what my monthly goals are for the rest of the year. When you’re putting together things like that and you’re doing goal planning and you say, “Okay, I’ve got this goal out in the future that I want to hit.” Do you work from today’s date out towards that goal? Or do you basically start at that goal and then work backwards to today to figure out the different milestones that you need to hit? I’ve heard people do it both ways. I’m curious to know how you do it.
[10:57] Rob: I do it from today and work out. The reason I do that is, to me, it’s more realistic. I know what’s going on today and I can look at numbers and then just multiply, and see where I think it will be at the end. And to be honest, that 2.5x – as a goal for Drip, as an example – is a little higher than my current growth rate. So I need to increase my growth rate, not just stay linear. But if I stay linear, it’s still a nice number by the end of the year. I find if I shoot out towards the end of the year, I might name a number that’s just really big. “I’m going to be at $100 thousand, monthly recurring revenue by the end of the year.” Then it’s like, “Whoa! you could do that.” I know some people who do it. Then when you work backwards, it’s like Holy Toledo. You really need a lot of trials. I guess that could be a really good motivator, right? You could be aspirational for that.
[11:49] Mike: I guess what I was thinking more was, you take that 2.5x and then you start backtracking from – let’s say you made out this goal of 2.5x in 12 months. You say, “Okay, that’s what my goal is.” Then you say, “Well, what is that going to look like in month 11? I’ve got four weeks to do it, where can I go from here?” You backtrack. Then you start planning October, then September and backtrack from there as opposed to just pulling a number out of the hat and saying, “That’s where I want to be.” Because that is not necessarily realistic. That’s more what I was wondering.
[12:20] Rob: Yes, that makes sense. No, so that’s the thing. I didn’t start and say, “I want to be 2.5x by the end of the year,” and then work backwards. What I said is, “Where am I now and how fast is Drip growing currently? How many trials do I think I can start driving as of January,” right? Because I was making this goal in December. I put that number in a spreadsheet and calculated it out. When I dragged everything down, by December it was at like 2x. So I said, “Okay, that’s if I continue to grow as it is now, given the traffic sources that I have. I think I can add more to that, and I’m going to shoot for 2.5x.” But by the time I get to that goal, it’s already mapped out, right? It’s in that spreadsheet of how many trials I need per month in order to get there. So I arrived at the goal by calculating forwards.
[13:05] Mike: Yes, and that’s what I was wondering, was whether you were calculating forwards or backwards. Obviously, you calculate forwards.
[13:10] Rob: Yes, and to be honest, it’s a bit more of a conservative approach, right? I mean, if you were really going after heavy growth, you probably would go out and say, “How can I 5x this thing?” You know? Or, “How can I beat 100k per month by the end of the year?” and then working backwards? That’s an interesting way to do it too, right? Then to say, “What would it take? How would I have to change the company? How many people would I need to hire? What huge marketing approaches would I need to basically triple, quadruple, the number of trials that I have by the time I get to March or April in order to hit that goal?” That’s an interesting thought experiment. I actually think it’s worth doing even if you’re not going to make that a goal. It’s definitely an interesting thought experiment. It’s kind of like asking yourself that question. “What, right now, is keeping me from 10x’ing my business? What would my business look like if I had 10 times the revenue?”
[13:58] That’s a really interesting question to think about because it will your whole mind set. It’ll shift, kind of, the marketing approaches you consider. It’ll make you realize, “Wow, I may have to hire a lot of people,” or, “I may be able to do it without hiring.” It’s just that whole thought experiment of spending a few hours of thinking like that. I think it’s a helpful thing. That’s kind of thinking backwards from the goal, like you’re saying. I think that’s helpful too. It’s just not how I tend to do my individual goals, because I want to make my end-of-year goals really achievable. But again, some might call that too conservative as well.
[14:27] Mike: I asked the question just because, typically, I’ve always done kind of the same thing that you have. Lately, I’ve started reading and doing some research on this and kind of realizing that’s not the only way to do the goal setting and goal planning. If I’m working backwards, as you said, it’s a little bit more aspirational. But what I find is that it allows you to take a look at some of the different approaches that you probably would have considered in the past, and just rule them out. Because you can look at it and say, “I’m in August or September, and I need to get here in two months. I know that this particular approach is not going to work at that point, so I’m not even going to consider that in my list of strategies. I need to do something radically different.” Maybe it doesn’t work at all, but you still need to be able to consider other options. It helps rule things out, I guess, is really what it comes down to.
[15:15] Rob: Yes, that makes sense. So I have a productivity strategy that I’ve been kind of honing over the past several months. I’ve started pushing all of my calls to one day during the week. I don’t tend to do that many calls in general but I found that it’s that maker’s schedule versus manager’s schedule thing. If you haven’t read that Paul Graham post, go to paulgraham.com and he has an article called “Maker’s Schedule vs. Manager Schedule.” It’s about being interrupted and how it’s hard to be creative when you’re getting interrupted. So I don’t have a ton of calls during the week, but I’ve started pushing all of them to Wednesdays.
[15:47] And so like, today as an example, this is my sixth call that I’ve done today. Several of them were sales calls and there were some other things mixed in there, but I’ve found that it’s really helpful to get into a flow of talking on the phone. Because I don’t like talking on the phone in particular. But I find that on these Wednesdays, I kind of gear up for it. I drink a little coffee in the morning and then the further I get in, the more I’m like, “Hey, I actually am kind of digging this whole call thing.” I get into the groove of it. But any other time during the week – like if the calls interrupt my day – I’m totally never getting into the flow of it. So if you’re able to control your schedule a bit, and are able to keep your calls to a single day, it might be something for you to try, especially if you don’t particularly enjoy being interrupted or talking on the phone.
[16:29] Mike: Yeah, I find that grouping similar tasks like that together is a lot easier. It’s almost like, you know, when doing sales calls and things like that. If you just put it all into one block of time, it makes it easier to – I’ll say, be flexible during that time and not have to worry about, “Oh, I have to go back over here and tweak this marketing copy.” Then you’re kind of mentally context-switching between doing a phone call and then have to go back to marketing copy. Then you switch over to something else, some sort of management responsibility. It can be kind of a pain in the neck to do that and not to mention, it’s just not terribly productive. So just aggregating those similar tasks, I find that’s helpful. I don’t think I’ve ever dedicated a full day to like, meetings and calls, stuff like that. Mainly because they just kind of come up sometimes.
[17:13] Rob: I think the lesson is just that batching in general tends to get you into the flow and keep you more productive.
[17:20] Mike: So one of the things that I’ve done recently, also, is I mentioned a few weeks ago that I shut down my Moon River Consulting business. But one of the things that it’s doing is it’s making me take a really hard look at some of the different products that I’ve been, I’ll say, more or less neglecting. One of them which is the Alteristraining.com website which I had previously had under Moon River Consulting. I still own it, because I still have the domain name and everything. I basically just took everything from Moon River Consulting and kind of shoved it over under Moon River software so I could cancel a bunch of subscription services.
[17:52] I mean, I’ve already saved several thousand dollars a year just by not having that business any more. But I still have some of these products and stuff that I just don’t touch any more. Some of them are making money, some of them are not making hardly any money, but they serve as more of a distraction than anything else. So I’m trying to figure out what to do with some of them. You know, I’m looking at either selling them off or either just completely shutting them down. I haven’t really come to any solid conclusions about any of them yet.
[18:16] Rob: I think doing this pruning, especially for folks like us who start a lot of efforts, start a lot of products or own a lot of products, just doing some pruning now and again is a good way to do it, especially if something is continuing to make money and you really back burnered it, I feel those things don’t continue forever. So if you can kind of step away from it and hand it off to someone who’s willing to grow it while it’s still somewhat profitable, it’s a better time to do it than once the thing gets completely hosed and isn’t worth selling.
[18:45] Mike: Yes. I look at it from a financial perspective and I say, “Yes, this has absolutely made me money.” But at the same time, it’s like, do I hang on to it for a month, three months, eight months, whatever? It’s just kind of hard to take a look at those and, as you said, prune them off and just get rid of them. Especially when they’re making money but, you know, there’s this mental overhead that you have that is associated with it. I’ve already noticed that there’s a dramatic level of difference between what my focus is today versus what it was even four weeks ago when I still had both companies. Now I’m much more focused than back then and I don’t think that it’s just due to the fact that four weeks have passed. I think it has a lot to do with the fact that I’m not switching back and forth between two different companies and thinking about two entirely different businesses.
[19:32] Rob: Yes, I can see that. I think any time you can get stuff off your plate, doubling down on what’s working for you. So for me, with Drip, definitely starting to find some fly wheels. There’s been nothing – there’s been no single massive marketing approach that I’ve found. It’s like all my past experience, you just get a bunch of different things that work. But at this point, I have more trials in the Drip queue than we’ve ever had. So it feels good. Things are working. I had a bunch of stuff kind of ready in December, and didn’t launch that until the first week of January. Every time I do that and launch a bunch of different efforts, it just seems like the stuff kind of compounds and turns into even more that you hadn’t planned for.
[20:12] So, you know, in addition to the email mini-course that we run through Drip and basic re-targeting through Perfect Audience, I’m churning out blog content – well, I say, “I am.” I have an agency who’s doing content marketing. There’s some really good writers that are managed by an editor, and I have them creating the blog content for Drip. That’s starting to pick up some steam. Then all the integration marketing I did last year, with the integrations through Kickoff Labs, and Unbounce and Gumrow. Those things kind of just build over time and send a little more link juice your way. They send a few more customers your way.
[20:45] Then I actually did – I really wanted to get webinars going. I’ve been meaning to do that for a year. But I did the first webinar last week. After we integrated with Kickoff Labs, they suggested that we do kind of a joint webinar. That went really well. It was fun, and it was a nice entryway into it. So I think I’m going to start doing those. I want to do them just with Drip and Drip’s audience to continue to educate about this whole marketing automation stuff. Then a bunch of other stuff. Been on podcasts, interviews, done a couple guest posts. Then I’m quoted in some articles here and there about email marketing and marketing automation. Along with SEO and word of mouth, it just sort of all combines.
[21:21] The bummer is that I look in Google Analytics and it’s just so hard to tell what’s really working. It used to be so much easier when you could actually see your keywords and figure out what people were searching on. If branded search terms increased then you knew it was something like, “Oh, it’s ‘podcast’ or it’s ‘word of mouth’,” it’s something that people are hearing about and then typing “Drip” or “Get Drip” into Google. But now I’m not being able to see the keywords, you don’t know if people are actually searching for generic things, like “email marketing software” and you just rank high enough for that, and that’s what driving traffic. Or, if it’s actual you banging the drum that’s really driving it. So it’s a bit of a bummer that it’s a lot hazier than it used to be in order to be able to track your efforts to specific rises. But I do know that, basically, everything I’m doing right now seems to be compounding into sending more traffic and more trials through the funnel than it has been in the past. So it’s starting to feel good. I’m just getting to the point where I’m feeling like, “Ah.” This is where I wanted to be six months or a year ago, you know? We’re finally there.
[22:24] Mike: You know, it’s funny that you bring up the difficulties involved in finding information from Google Analytics about where your traffic is coming from, and what sorts of things are going on in there. Because we got an email from Will Gant, who said the fact that there’s this new spamming strategy with Google Analytics where people are essentially showing up in your Google Analytics. It’s basically just spam links. The idea is to, essentially, target people who are using Google Analytics and, you know, if you’re using Google Analytics then chances are good that you’re probably, at least, paying attention to who’s coming to your website, where they’re coming from and, you know, what the sources of traffic are. They basically – somehow they inject the data in there in such that it shows up in your Google Analytics account. Then you click on them and you go back to their site. So it’s kind of weird that not only is Google Analytics becoming less relevant over time, but you’re also starting to see spam inside of your Analytics itself.
[23:23] Rob: Whoa, that is – I have not heard about that. That’s crazy. I can’t imagine that would pay off. That seems so bizarre. That’s such a bizarre marketing approach.
[23:31] Mike: I’m sure that there’s a lot of other subtleties to it that I don’t entirely understand. But it’s interesting that people are doing that. It’s just because people are wanting to get these clicks. And maybe they’re selling something from their website, or are trying to get traffic back to their site. Whatever it takes at that point. It doesn’t take much to set up a bot that’s just going to go around to ten thousand or a hundred thousand websites and inject those. Then suddenly, you’ve got traffic coming back to the site. And if it’s an advertising-driven site, now you’ve got eyeballs on it. So they’re getting paid for it. So at some point, it could be worth it for them.
[24:06] Rob: You have to have such a volume on you, though. Even just ten thousand sites, that’s just not enough. That’s pretty crazy. I haven’t – it’s been a long time before I’ve gotten something actionable out of Google Analytics. It’s not the tool that it used to be. It’s getting harder to use, it’s more complicated. They’re changing terminology and without giving you keywords, it just makes it even worse. I actually, when I went to do keyword research, I literally logged into HitTail instead of Google Analytics because I wanted to see how people finding me. HitTail pulls from Google webmaster tools, which actually gives you the keywords people are using to find you. So it was helpful. I did go into webmaster tools as well, but it’s a harder marketing landscape than it used to be, for sure.
[24:43] Mike: So speaking of inbound links and paid traffic, I’ve been testing paid ads on Twitter and Facebook lately. It’s interesting because my ads between the two of them are very, very similar. But I’m getting five times the conversions on Twitter than I am on Facebook.
[24:58] Rob: Wow, is that for the same money?
[25:00] Mike: The same money. So basically, I have two identical landing pages set up. This is the thing I don’t like, is that, you know, with the conversion pixels for Twitter and Facebook, they tend to trigger regardless of how somebody comes through. No matter how you try and match up the numbers between what they tell you they sent traffic – like how many people they sent for traffic, versus what your numbers say on your site, they are always different. So I don’t necessarily trust if I go into my Facebook Dashboard and look at all my ad campaigns and see, “Oh, we sent 200 people.” And it’s like, “I’m looking at my site and my analytics are telling me they did not send 200 people. I certainly did not get the 80 conversions, or whatever it is, that they’re telling me that I got.” For whatever reason, sometimes people are just counted twice or they’re not counted at all. It depends on which one it is. But the bottom line is, I set up two completely different landing pages and I injected the tracking code differently, for Twitter on one page and Facebook on the other. Then I mapped everything and Twitter is just converting at five times what Facebook is.
[26:03] Rob: And the clicks are the same price?
[26:05] Mike: Well, the clicks turn out to be substantially more expensive on Facebook.
[26:09] Rob: Okay, so you’re probably getting more people through from Facebook, but it’s converting at a lower rate, but it’s super clicks?
[26:16] Mike: It is. I’m trying to think. It’s between $7 and $8 per click on Facebook. On Twitter, I think it’s like $1.50 or $2, or something like that. It’s pretty low.
[26:27] Rob: $7 to $8 a click, huh? Yes, that’s high. You should be able to get, using Facebook right-hand side ads, you should be able to get clicks between – it depends on your niche – but between 50 and 80 cents.
[26:39] Mike: There’s a difference between the clicks themselves. The cost per conversion is about $7 or $8.
[26:43] Rob: Oh, there we go. Okay, cost per conversion not click.
[26:46] Mike: Yes. The clicks themselves are about 50 cents or something along those lines. That is the price of them, but they’re converting it like 10%. It’s ridiculously low.
[26:58] Rob: That’s to email, they opt into something?
[27:00] Mike: Yes, yes.
[27:01] Rob: Okay. Yeah, that’s lower than I would like. I’d like to see it up around 20-25%.
[27:07] Mike: That’s what Twitter is converting at. And like I said, it’s an identical landing page and the advertising, the images and stuff are almost identical.
[27:15] Rob: So it’s the targeting. Yes, it sounds like you want to mess with your Facebook targeting, figuring out which niche. That’s interesting. I want to take a peek at your Twitter ad. I have it on my list to run some Twitter ads. I ran one, maybe four or five months ago and wasn’t pleased with it. Then I just bailed on it, which is not how you’re going to learn to optimize it, right? You’ve got to spend time in there doing it. But I’d like to see what you did, because I’ll probably try something similar.
[27:38] Mike: Right, yes. It was funny because very early on, before, I think I had only gotten a couple of conversions and I’d already gotten a complaint, on Twitter. Like, somebody tweeted to me and said something along the lines of, “You shouldn’t be using Twitter to be advertising.” I was like, “Are you serious? Really?”
[27:51] Rob: Wow. So speaking of that, I’m actually – in terms of a HitTail update, HitTail’s kind of been running in the background and, over time, I originally had hired Derek to help me, to basically be the product manager. Then I pulled him off of that to help with Drip, and he’s full time under for a long time. So over time, I’ve neglected to run more ads and to kind of keep the marketing fly wheels going with HitTail. So I need to hire someone, definitely part-time, to help out with a couple of very specific marketing approaches, mostly advertising. Maybe I’ll announce on the podcast.
[28:26] I need to get like a – kind of a landing page or an application form like a Google form set up to find out exactly which questions I want to ask. But in essence, I don’t really want – I don’t particularly want to hire an agency. I was considering that for a while, but the cost and the – I have some very specific ways that I want it done. I don’t think most agencies are going to work with me on that. So I really already have the process down and I know what works. So I just kind of want to hire somebody who’s hungry to do it and learn it. Just make it so that HitTail’s a bit more self-sustaining than it is now. Because without me doing some type of ongoing stuff with sending some traffic, it still has several fly wheel choices, but they’re smaller than if I were dropping the money to do pay per click. With pay per click, it definitely – the ROI is there. So it’s kind of a no-brainer to do it.
[29:14] Mike: Hey, by the way, did you – have you gotten any results from the emails that you sent out for people to essentially restart their trials from back in December?
[29:21] Rob: Yes. We did get a handful of folks who wanted to extend their trial. So it was definitely worth sending the email. It took me five minutes, maybe, to do it. I’m trying to think, it was maybe 10% of people responded and said yes? So it wasn’t a huge number but even getting one is worth it, right? If they continue through and become a paying customer.
[29:40] Mike: Yeah, you know, that one email is probably worth, you calculate the lifetime value –
[29:44] Rob: Several thousand bucks.
[29:44] Mike: Sure.
[29:45] Rob: For sure.
[29:46] Mike: So five minutes of work for several thousand dollars. Don’t you wish you could do that five minutes of work every five minutes?
[29:50] Rob: Every day?
[29:53] Mike: It’s funny that works so well for you, because with AuditShark, because of November and December essentially being holidays, I’ve essentially had to start over with most of my sales prospects from November/December. Just because the sales cycles are so long that people, you know, get involved with stuff and then they get distracted. They’re like, “Oh, we need to come back to this after the New Year, because all these things are in flux right now. And we need to make sure that we don’t introduce any new variables into our network because we don’t want things to change during the holidays.” It’s like a very sensitive time, nobody wants anything to break and they don’t want to try anything new. So they put everything off and then it’s just like, “Okay, now we have to restart the conversations over again.” You know, there’s still that – some level of familiarity, but it just kind of sucks.
[30:37] Rob: Yes, long sales cycles are a bummer and December is a bummer. It always is, man, unless you can run a special or unless they have budget that they’re trying to get rid of. Everything just kind of comes to a grinding halt.
[30:48] Mike: Yes. The only other thing is I’ve actually been looking at restructuring AuditShark a little bit. I’m still putting feelers out there for this. One of the things that I’ve kind of come to realize lately is that what I’ve traditionally tried to do with AuditShark is sell it as kind of a standalone software package. And I think that fits extremely well for certain types of businesses where they have a dedicated auditing department, or people who that’s their sole job. But I think there’s a lot of businesses out there that they want a system or piece of software like that but they don’t necessarily know how to use it. They’re not going to use it full time or even really, part time. They might use it once in a while. So it doesn’t have quite the same impact or the same draw for those kinds of people.
[31:32] So I’m looking at kind of exploring the possibility of offering it, instead of like a classical model where it’s like, “Sell the software and then you’re hands-off at that point.” A much more involved model where it’s, I come in – or we come in – we do like a software audit and analyze their network, give them reports, talk to them a little bit more and then, at that point, we basically walk away. So it becomes much more of a services engagement, I’ll say, which is – I don’t think it’s like the classic model of what we think is a successful SAAS or recurring revenue model, but at the same time, it really is a recurring revenue model. Especially if you’re going to them every six months or every year where you go in there, you do the audit and you give them the reports and say, “This is where you’re at. This is where I think you should be. These are the things that I think you should do.” Then you leave. Then you come back in three months, or six months or maybe you put together a plan to help them get to where they need to be. Then you come back and do that again.
[32:26] Rob: Sounds like it could be recurring or not, right? Depending on their preference. But it seems like the price point could be so much higher that you’d need so many fewer of those, right? If you’re going to do the enterprise sales anyways, it’s like you want to get that price point as high as possible. I would wonder, you know, you said you’d basically find the issues and then walk away, but it seems like they’re going to want remediation help, right? That seems like the biggest paying point of this whole deal. It’s not just finding the things but actually fixing them.
[32:52] Mike: Yes, and that’s actually something I’ve talked to Manage Services Providers about. Because Manage Services Providers can use it to identify issues but they want to use it as like a punch list, where they go into a customer and they say, “We found these 250 issues. We can fix these things for you, but it’s going to cost you this much money, because we’re going to need to go touch all these things. Here’s the billable hours that the MSP is basically generating from my tool.” So that’s one mechanism for them to use it, and then, of course, there’s the other one where I’m working directly with kind of the end customer. It kind of depends on who you’re talking to. So – but I don’t have remediation built into the product yet, so –
[33:28] Rob: Right, I wasn’t thinking build it in. I was thinking, add that as an add-on consulting service from AuditShark itself, that it finds issues and then – I mean, that requires manual work from you guys, obviously.
[33:38] Mike: That’s okay, because that might very well lead towards the idea of building that into the product. Because if I’m going to charge them for, say, two or three weeks worth of remediation services, then it would be in my best interest to say, “Okay, well, here’s a flat fee and we can fix all of these things for you. And instead of charging you for three weeks of manual effort, we’ll do it through the tool, and fix everything through there.” So in a way, it’s almost like backtracking from solving the problem for them and then building the software after the need is there. I mean, the software’s there. I’ve kind of gone about it backwards in some respects. I very well could have offered this exact same service without having AuditShark at all.
[34:16] Rob: That’s right, yeah.
[34:17] Mike: I could go in and do everything manually, but obviously, the tool makes it a lot easier to gather all that data from, you know, numerous machines. That’s what people do now, though, is they do it manually, but they don’t do all the machines in the environment. They’ll just do a small handful of them and they’ll say, “This is our sample.” That’s a big problem because then you get this sample bias where you’ve got three, four or five machines but it’s not those machines that are going to hurt you if your network is compromised. It’s the ones that slip through the cracks that you didn’t audit, because those are the low hanging fruit that a script is going to come out and take over. A script is going to take over. It’s not these ones you’ve already audited, it’s the ones that you haven’t.
[34:54] Rob: Right. If you can make this work, this makes sense. Because if you’re going to do this enterprise sales anyways, you’re going to have long sales cycles, you want that price point to be as high as you can make it in order to make this worth your while. Just selling software they’re never going to have at a higher price point is an actual consulting engagement. So I think, you know, whether you call a concierge, or you just call it add-on consulting services, whatever it is. I think it’s worth a shot. You know, it’s worth exploring. It’s like you said, you’re putting feelers out for it and I don’t see any reason not to do that.
[35:24] Mike: There’s consulting on one end, which is completely customized, and then the middle, you’ve got the SAAS offering where the customer’s kind of doing the work and then the low end, obviously, is like everything’s being done manual. There’s no automation whatsoever. But there’s this tier, I think, in between SAAS and completely custom consulting work where that type of services arrangement can – it’s essentially augmented consulting services. So it’s not quite a SAAS offering where you’re just giving them the software. It’s they’re doing the work themselves. And it’s not completely done for them like consulting services. It’s kind of this hybrid approach.
[35:58] So I think we have one last thing. Back in December, we had asked a lot of people for information and ideas on podcasts episodes that they could – if they could send it to us, we’d greatly appreciate it. But one of the things that we found is there’s a lot of episode ideas that are heavily tech-related. What we want to know is, we want to know if people want to hear some more technical discussions. What I mean by that is, there’s people who have asked us to provide discussions on things like engineering a SAAS for availability, doing backups, security testing, testing your code, optimizing your applications for database, your CPU, and memory to reduce hosting costs, server hardening techniques and other, I’ll say, much more technically oriented stuff. So if you’re interested in hearing about those things, I’d appreciate it if you could write into us, firstname.lastname@example.org. Let us know what your thoughts are, or send us tweets, emails, actually, probably just the email@example.com, or the tweets. Those are probably a little bit easier for us to manage. Just let us know what your thoughts are on that and whether we should kind of shift gears a little bit and delve into those topics, or just kind of reply to those people directly on what our thoughts are.
[37:05] Rob: If you have a question for us, you can 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 Out of Control by Moot, used under Creative Commons. Subscribe to us in iTunes by searching for startups and visit startupsfortherestofus.com for a full transcript of each episode. Thanks for listening, we’ll see you next time.
- Congrats to Micropreneur Academy member Adrian Rosebrock from PyImageSearch on funding his KickStarter in under 30 minutes.
- Startup documentary Your Own Way Out (direct link to some of Rob’s interview)
- Rob’s movie recommendations: Somm and Jiro Dreams of Sushi
[00:00] Rob: In this episode of Start-ups for the Rest of Us, Mike and I will discuss our biggest failures of 2014, the pros and cons of having domain expertise and how to document your company road map. This is Start-ups for the Rest of Us, episode 220.
[00:22] Rob: Welcome to start-ups For the Rest of Us, the podcast that helps developers, designers and entrepreneurs be awesome at launching software for products, whether you’ve built your first product, or you’re just thinking about. I’m Rob–
[00:30]Mike: And I’m Mike.
[00:31] Rob: And we’re here to share our experiences to help you avoid the same mistakes we’ve made. What’s the word this week, Mike?
[00:35] Mike: You remember how I told you that my RAID partition had gone to heck, and I had to go to backups for some of my data? Well, my other drive failed this week.
[00:47] Rob: Wow. The other drive in the RAID configuration?
[00:50] Mike: Yes.
[00:51] Rob: Wow, what are the odds of that? That’s a bummer.
[00:53] Mike: The worst part is it wasn’t even being used. It was an old copy of all the data. It was like, “Oh, God, you’ve got to be kidding me”.
[01:00] Rob: I have a question for you, why are you using a RAID array? I got rid of all my hardware and I either use Dropbox or Crashplan for backups. What is this for, that you couldn’t do in the Cloud?
[01:10] Mike: It’s all of my local data. It’s just on my desktop. On my desktop I have a C drive and an S drive and my S drive is for all of my storage, and it’s like one-and-a-half terabytes. Whenever I throw stuff over there I just throw it on the RAID array, because if that thing dies I don’t want to have to download everything from the Cloud. It’s already being backed up I just don’t want to have to download it.
[01:33] Rob: That’s a bummer. It kills so much time too.
[01:37] Mike: The worst part is that it’s not completely dead. It goes up and comes down. It’s fine for a little while, and then it drops off the face of the earth for a little while and then it’s back up. I’ve got some brand new drives sitting right next to my desk that I haven’t installed yet so I’m hoping that I can get everything off and I won’t have to go to the backups in the Cloud and if I do I’ll probably just have to pay the two hundred dollars to have them ship me a brand new drive and be done with it.
[02:00] Rob: Yeah, I hear that. So, we want to congratulate Micropreneur Academy member Adrian Rosebrock from PyImage Search. We’ve mentioned him here before. He’s had several successful milestones. He launched a Kickstarter campaign today and he funded it in twenty-five minutes. It’s for his computer vision academy he’s starting. He’s had success with several e-books and other teachings on it. So congratulations to you, Adrian.
[02:24] Mike: What else is going on?
[02:26] Rob: There’s a pretty cool documentary that interviewed a bunch of start-up founders and entrepreneurs. It was filmed at DCBKK a few months ago in Bangkok. The URL is yourownwayout.com. I was one of the folks interviewed for it and what’s nice is that they released teaser trailers for each person. They interviewed Dan and Ian from Tropical MBA, Derek Sivers was there, I was there, several others, and they released these three to four minute previews with us answering questions; pretty good stuff. I hadn’t heard any of the other guys answers so it was neat. I went up to several of them and listened to their answers and it’s super professional. It’s a documentary film. It’s not like someone with an HD camera. These guys knew how to do the lighting and the miking and all of the cuts and everything. If you’re interested in seeing– at this point it’s previews and snippets and you give your email and they give you access to all of them– you should head over to yourownwayout.com, and you can go to slash Rob dash Walling if you want to see mine or you can enter your email and get access to all of them. I’m interested to see the whole film at this point after seeing all of these teasers. Did you check it out?
[03:34] Mike: Yeah, I did, I watched it. It was pretty cool.
[03:36] Rob: How about you, anything else going on this week?
[03:37] Mike: I’m fighting with GIT at the moment. Maybe it’s just me but it feels like GIT is extremely powerful but it’s very difficult to use.
[03:54] Rob: Yeah, well difficult to learn I would say. The folks I know who use it are really good with it but the learning curve is steep, because I think the paradigm is so dramatically different. I know the paradigm is so dramatically different than any other version control software.
[03:57] Mike: Yeah, I don’t even know if it’s really the paradigm that’s that much different. It’s just that – I’m using Windows – so GIT on Windows doesn’t play as nice as on UNIX or OSX or Linux
[04:12] Rob: If you talk to my developers, and you were talking to them in support, and you said you were using Windows they would say, “Okay, so my first instruction would be to drive to the Apple store and buy a Mac and get rid of that other computer”.
[04:24] Ok. So, I watched a couple of really interesting documentaries over the past couple of months that really focus on excellence and being super exceptional at a very focused thing. It’s a little bit about genius and it’s a little bit about the pursuit of becoming excellent – to the point of being obsessive about something – but I really enjoyed these documentaries. Both of them are free in the US on Netflix. You can probably find them other ways if you’re outside the US. The first one is called “Somm”. It’s short for sommelier. A sommelier is an expert in wine and there’s a small group of people who are going after the master sommelier certification and in 40 years only 170 people have achieved it because it’s this brutal, brutal test. I’m only about halfway through but already it’s fascinating to see how exceptional these people are at the task of choosing wines and the flavor palates and the culture and everything that they’ve learned about areas of the world where it’s produced.
[05:25] The second movie is called “Jiro Dreams of Sushi” and again it’s about a guy who has a tiny little sushi shop in Japan and instead of getting bigger he just raises prices and he only has eight seats and you come sit at the bar and he serves you whatever he’s making. He’s a genius sushi chef. He’s done it for fifty or sixty years, he’s never opened another restaurant and it’s two hundred bucks or so per meal per person. But you just come in– and it’s booked out six months, so you come in, sit down, he serves you the meal and he lets you know when you’re done. It’s amazing to see how far you can take something and how amazing he is as a sushi chef. So if you’re looking for a couple of cool documentaries that relate to the pursuit of something great and becoming exceptional at something, I’d recommend “Somm” and “Jiro Dreams of Sushi”.
[06:21] So, Mike and I are going to be answering a bunch of listener questions today. The first one is actually a comment about using Facebook ads to fill webinar seats and it’s from Joe Daniel and he says, “Hey guys, just listened to your podcast episode 204, great show. I heard the discussion on the webinar audience at the outset. I just wanted to throw my two cents in on the Facebook ads. I run webinars and I was able to get a lot of relatively cheap registrations via Facebook ads with my football coaching business because there’s little competition but it wasn’t really a well targeted audience. With my current business – which is teaching webinars – the opt-ins are expensive but more targeted. In highly competitive fields I’ve found it better to advertise to get opt ins with a freebie download than promote your webinars primarily to your list”. Like you said, you don’t want to burn out your list. I keep my opt ins tagged so I know who was on the list last time and who wasn’t and also who attended. I thought that was a nice little tidbit, and of course any email marketing or marketing automation software worth it’s salt should be able to help you with that. He says, “I’ve done over one hundred webinars in my football coaching business, and have started training others to use webinars in my podcast”.
[07:34] Mike: As long as you keep track of which tags you’re using, you can make those things pretty targeted and filter out who should be getting which offers. I know that there’s different platforms out there that allow you to do a lot of advanced things. Infusionsoft comes to mind–
[07:49] Rob: What about Drip?
[07:50] Mike: Yes, well–
[07:50] Rob: Drip will do it too.
[07:52] Mike: Yes, Drip will do it too but Infusionsoft is known for the capability behind having complex automation behind a lot of stuff. There’s a huge start-up cost. I think it’s two thousand dollars or something like that.
[08:07] Rob: And then three hundred bucks a month.
[08:08] Mike: So, it is expensive, but I’ve been told by people who use it that once you get into it and start using it, as long as you have a substantial customer base, you can get pretty complicated with the things that you’re doing.
[08:19] Rob: Drip, we’ve essential tried to build– we can do anything Infusionsoft can do, we’re at a lower entry level price point, but there’s a visual builder that they use. We may build that at some point. Well, we probably won’t build the builder, because the builder actually sucks, I’ve heard. But we want to build in some type of view that’s visual like them. And Joe’s podcast if you’re interested is called the “Webinational Webinar Podcast”. Thanks for writing in, Joe.
[08:47] The first question of the day comes from Micropreneur Academy member and multiple MicroConf attendee, Anders Peterson and he says, “Hi guys, listening to your latest podcast I thought you were going to talk about your failures of 2014, but you wound up not talking about them. So I’m curious, what are your biggest failures from 2014?”
[09:07] Mike: I would say that one of my biggest failures was failure to plan. It’s funny because I thought at the beginning of the year that I had things pretty well planned out, but once I got to the end of the year I realized that my planning was actually pretty atrocious. So I’m trying to do a better job of that this year. Something else, there are people who work for me this previous year that I just gave them way too many chances, and I should have just let them go earlier than I did. People feel bad about firing contractors, and people who are working for you, but at the same time if you’re a bootstrap business you have to pay attention too– it’s not just the money, it’s the time investment that you’re undertaking by giving people second and third chances. That’s something I really need to do better about is just pull the plug earlier and be done with it. That’s an ongoing struggle that I have. The third one, I think there are certain marketing efforts that clearly weren’t working for me for AuditShark that I continued doing because I wanted them to work. So I kept at it but the reality is that there are certain things that I really should have just pulled the plug on much sooner than I did. I’d say that those are three failures of mine that come to mind for this past year. What about you, Rob?
[10:19] Rob: I had many failures in 2014, and most of them stemmed from the same cause. I made an error managing my cash – my cash flow – and around tax time last year, March or April, I got a very large tax bill that was partially the fault of my CPA, our estimated taxes were off, but it just sucked a lot of stuff out of my bank account. And a couple of other big expenses came through right at the same time so suddenly I found myself having three full time developers that I had just hired and brought on full time, and my cash in the bank just plummeted. So a bunch of stuff came out of that. That was the root cause, but that made last year my worst year as an entrepreneur; my least enjoyable and my most anxiety-provoking, and the year that I worried the most about money and keeping going every month. It’s interesting when you think about it, because it wasn’t like the company was going to go out of business. The company has plenty of revenue, but it was the thing of failing. Did I make such a bad choice that I’m going to have to lay someone off? Or that I’m going to have to sell an app in order to pay this bill or whatever.
[11:30] And that feeling alone, I let it hang around way too long. I had it for the latter seven or eight months of the year, and I’m just now coming out of that and every month I kept looking like, “Well, next month will be better, next month will be better” and some months were better, but then I found myself back in the same boat. What I realized was the mistake was not managing my cash well, but I then let it go on too long without fixing it. I also let it push me to the point where I was forcing myself to work on problems that I didn’t want to work on, because I felt like I needed to drive revenue and I needed to drive revenue in the short term. So instead of being my normal relaxed self, where I work thirty hours a week and do what I want to and work on what I want, I fell out of that, because I felt like I couldn’t do that if the company was not highly profitable like it was in 2013 where it was throwing off a lot more cash. There’s a lot there, but it’s a mistake I’ve never made before and I will probably never make again. Now that I’m coming through that – because my apps have all grown since then – so I’m finally out of the cash issue. It’s a lesson that I’ve learned that I will take with me for the rest of my career for sure.
[12:47] Our next question is about the pros and cons of having domain expertise and it’s from Nils Rooijmans from watercoolertopics.com. He says, “Hi guys, great show, true learning here. I think the topic of looking at the pros and cons of having problem domain expertise might interest your audience and yourselves. I’d love to hear from you”.
[13:06] Mike: The typical advice that you’ll hear from people about building a start-up is that you want to find something that you’re knowledgeable about, because you may very well have insights into the problems in that particular area where you can exploit those and you essentially have a competitive advantage. That’s great advice, I generally tend to agree with it, but there’s a caveat there and that caveat is that it can make you blind to certain things. You can definitely have a little bit too much domain expertise and you can set expectations about what your users and prospective customers might be looking for or expecting, and it makes it more difficult for you because you don’t know what the terms are that they’re using for example that you should be targeting in SEO. So, you may know all of these technical terms for the problem and the problem space and the solutions for it, but your customers may not. And if you’re not specifically looking for those things that the customers are actually using, you can completely overlook that stuff and back yourself into a corner where you’re using these advanced terms that they’re just not familiar with because you’re not paying attention to what it is that they’re saying. There are definitely pros and cons of having that domain expertise, but I think if you do have that domain expertise you have to have a little bit more of an open mind about what is that the customers might actually be doing or looking for.
[14:26] Rob: Yeah, I think that’s going to be your biggest con, the blindness to how other people talk about it and being like, “Well, I can just build this whole product myself because I know what everyone needs” but not realizing that everyone does it a little differently. I can imagine you doing that with maybe project management software or CRM software and saying, “I’m a domain expert, because I’m a sales person.” So you build the CRM but it turns out that your process is not the same as anybody else’s so you can’t get anybody to use it. I think that could be one con. I have to admit, I haven’t really thought a lot about the cons of domain expertise. I don’t think they come anywhere close to the pros of it. I think the positives of having that domain expertise far outweigh the cons that we’re looking at. We actually included domain expertise as one of our eleven attributes of the ideal founder. It was in episode 133, “The Founder Test” It was eleven founder attributes that will determine the success of your product. We basically only talked about the positives of it, about your knowledge of the niche or a problem to be solved. So, while I do think there are some cons, I think they’re pretty small compared to the pluses that you’ll get out of having domain expertise. Thanks for the question, Nils.
[15:32] Our next question is from Emil Hajric from Help Juice and he says, “Hey guys, a few podcasts ago you mentioned how XYZ is on your road map, or how you plan to do Y in X month. We’re starting to grow and it’s getting a little harder keeping all of this in my head. Are there some tools out there that you use to help with this? Perhaps some methods as well. I would love to hear your take on it”. So, the way that I’ve done it is I either– if you really want a calendar– because we typically have features laid out, but we do it in more of an agile way. So there’s not hard deadlines it’s just you do a burn down chart and you build the next thing that’s in your cue. So, I don’t keep dates, which allows us to keep all of the features in our project management software, which is Fogbugz. But if I do have higher level things that I want to think about that I haven’t specked out to features, I will either keep them in a single Trello list or have them in a Google doc and have product road map with a bunch of bullet points, maybe I’ll categorize them or put them in some kind of order. If I wanted to attach dates to them, which I don’t know that I would recommend if you’re a start-up because trying to hit arbitrary dates will make you sacrifice on code quality or feature quality or whatever, but if you did, I would probably just use a Google doc to be honest. I’m sure there are other, more exotic approaches, but I’m such a fan of keeping things simple that I would use one of those approaches, the Trello or the Google doc.
[16:56] Mike: You almost have a two-tier system where something’s on your road map but you don’t necessarily know exactly where it’s going to fall, so something like that ends up in Fogbugz or in a Google doc, where you keep track of it but you don’t necessarily look at it as a short term goal. Then you have these other things that you’re working on immediately or going to be within the next couple of weeks and those are on your short term road map, and they’re basically scheduled. But I think that unless you have it scheduled, it can easily get pushed off because there’s other things that may come up that are a little bit more important. So, a customer comes in and they say, “Hey, I would buy if you had this.” but then you have another customer who comes in and they’re paying you a thousand dollars a month and they really need something else. Well, that something else is probably going to take priority because they’re already paying you so you want to keep them happy and you want to keep that thousand dollars a month of revenue coming in. The fact that as a high value customer they are paying you a lot more money, it’s very likely that that feature could be used by other high value customers. So it would be easy to push off some of those other things into the future. Like I said, if you’re not actively working on them right now, they can very easily get pushed off almost indefinitely, until you get to a point where a lot of people are asking for it. Then it moves on to your short term road map. So, in my mind there’s a difference between the stuff that you’re working on right now, or in the very near future which you essentially do have a schedule for, and everything else, which you may get to it, you may never get to it but you tend to just track it. And I know there are people out there who advocate and say, “Well, if it’s something that’s really important to your customers it will keep coming up so you don’t need to keep track of it.” But the reality is that the cost associated with just writing it down and putting it in a Bug report or in a Google doc, it’s virtually zero. So if you keep track of all those requests that are coming in, there’s nothing wrong with that.
[18:51] Rob: Yeah, I think it’s an important distinction you pointed out where a road map should be high level and more long term. So, if you have a bunch of little tasks you’re working on, then those can all be enumerated down to a very detailed level, and they could have specs and all that stuff. But you might have that for only your top 20 or 40 things that are being built, whereas a road map for me, in Drip, might say, “We’re going to implement lead scoring, and in the next three months we’re going to implement some minor CRM features.” But it’s like, I don’t have a spec for that yet until we get to the point where we start outline it. So I think keeping track of a road map is actually simpler than you think. I don’t think it’s an enumeration of every tiny little element of lead scoring or CRM. That’s it. That’s all I would put on that bullet line because a road map by definition is supposed to be a higher level view of this process. Thanks for your question, Emil. I hope that helps.
[19:47] Our next question is from Evan Carmi and it’s about how to learn sales and marketing as a developer. He says, “Hey guys, I appreciate your podcast. I’m a software engineer who just took the leap to try to start some small projects. I feel very confident about my technical skills, but I’m realizing more and more about my lack of knowledge in sales and marketing. I’m curious what resources you’d recommend for this – ideally things that are somewhat fast paced and cheap. I’ve seen a lot of great academies for two thousand dollars, but I think I’d rather spend that two thousand dollars on my project or on food so I can spend a bit longer trying to figure it out myself. I’m looking forward to hearing from you.
[20:20] Mike: Well, I think the first one I would say is the Micropreneur Academy is a quarter of that two thousand dollars. It’s only about five hundred dollars for a years subscription, so that’s one thing that I would look at. But I think that there’s also a very big difference between what you’re going to get from an academy or course that’s two thousand or twenty five hundred or five thousand dollars versus something that you’re going to get from the Micropreneur Academy. The Micropreneur Academy’s material is self-paced, so there’s not a lot of hand holding, you basically work on stuff on your own versus these academies that have a lot of hand holding, they’re a lot of high-touch. That’s partly also why they have such a high cost associated with them. So, I think depending on the level of help that you feel like you need, that should guide what you’re decision is in that particular regard, because if you need that hand holding then you’re probably going to want to lean towards the ones that are a lot more expensive. If you don’t, if you’re looking for self paced materials, you could even go down the route of– there’s a blog put out by Josh Kaufman for the personal MBA. Go to his website and he’s got a list of a hundred different business books on there that are essentially his top recommendations over the years. You can go through those books and just voraciously read through all of the different things that he’s recommending. There’s a lot of free or low cost material out there. Getting involved in something like a Micropreneur Academy, where you’ve got a network of other people where you can ask questions to, that could also be extremely beneficial. So, it really depends a lot on what situation you’re in, what you know and what you don’t have a lot of confidence in.
[21:53] Rob: So, thanks for your question, Evan. I hope that helps. Our next question comes from Adrian Pooter and it’s about finding out why customers are cancelling. He says, “Hi Rob and Mike, I find it very challenging getting responses from my customers about why they’re cancelling. I’m using the mandatory reason when a customer cancels, but some reasons need more information and deeper conversation which I’m not managing to get. I’d appreciate some ideas for getting customers and potential customers to engage in a conversation with me.”
[22:22] Mike: I think one of the things that I might lean towards, and I don’t know how exactly you’re doing the mandatory reason for when customers cancel, but if you go over to the less accounting blog– and we’ll link this up in the show notes, Allan Branch wrote a post on how to reduce customer churn when people are deleting their accounts. And what he did was essentially provided people with a bunch of different reasons as to why they might be cancelling their account — essentially given them different options. So if they were lost and didn’t really have any idea what to do with their account, then he would extend their trial or the support team would reach out to people. If it cost to much they might give them a discount of some kind, so there’s all these different reasons that he came up with, and based on the reason that the person chose to cancel their account, he would basically take a different action within the software. So, that’s the first thing I would do. It sounds to me like you might already be doing that, but one of the things that you can ask them to do is put in their phone number or something along those lines. If they’re giving you specific reasons which you really need to get that additional information. Something else you can do during the on boarding process is while people are being on boarded you can start asking for some of that information in case they cancel later. If you recognize that during the on-boarding process, someone is not activating their account, they’re not doing the things that they really need to be doing in order for them to actually provide value then you can insert those additional touch points. Maybe just send them an email saying, “hey, we saw that you might be having some trouble. Reply to this email or send us your phone number, and we’d be happy to do this for you or walk you through something”. That way you’re essentially trying to pull additional information out of them while they’re still going through the trial and before they get to a point where they’ve cancelled.
[24:08] And even if they have activated, you may way to have a screen pop-up while they log in that says, “Hey, you haven’t filled out this information in your profile yet.” and basically ask them for their phone number. I don’t know how draconian you want to be about it, but you could make it to where they absolutely can’t do anything unless they put in their phone number. There’s a lot of different ways to slice that but those are my thoughts off the top of my head about different ways you can get additional information out of people.
[24:35] Rob: I actually used a phone number approach that you mentioned, in HitTail, and we’re going to implement it for Drip, and the reason it’s good to have a phone number is mostly if people have billing issues, like a delinquent card and they’re not responding to emails. Often times people don’t want their emails to stop sending if you’re an email service provider, so having that is actually a good thing. I’ve never made it so they can’t get around it, but having someone’s email on file is good. Then if they did cancel and you wanted to reach them, obviously that’s something you could do. That’s not something I’ve ever tried. I also used to do the required field when people cancelled, and I found that that is not very effective. What I do instead is, when someone cancels we throw an event and Drip captures that event and it says, “This customer cancelled”. Then Drip is able to move them into a cancelled customer followup campaign. That campaign only has one email in it, because I don’t want to send someone an email every week asking for stuff. But that email subject line is, “A quick question” and it gets just under a 70% open rate at this point. So a lot of people open it. The email is short. It says, “I was hoping you could spare 15 seconds of your time and let me know why you decided to cancel your Drip account. Feel free to just hit reply and fire away. Thanks in advance”. Then it says “Rob, Founder of Drip”. Then it says “PS, I’d really appreciate a reply even if it’s just a few words”. And I get a lot of replies to this email. I’ve found it to much, much more effective than having that required field. Now, I don’t know if that’s going to solve Adrian’s issues, because he says it requires you to dig in a little more. [26:02] But what I have is once they’ve replied, you can then reply to them and they almost always reply to me if I have additional questions. So it could be more of a way to get a conversation going rather than them feeling like they tried to hit cancel and you stopped them and said, “No, we require a reason” and they just type in “too expensive” and hit submit. They’re almost disgruntled by that. but if you let the cancellation be easy and then once they’re free of your app you ping them right away or maybe fifteen minutes later you can send the email. I find that that’s worked better for me. The other thing you can do is you can actually go back and hand email your last twenty, thirty, forty cancellations, right from your company email address, in Gmail or whatever and just say, “Hey, I’m just trying to figure out why you cancelled. I’m curious.” And even if you only get five replies out of sending thirty or forty emails, it becomes a conversation so it’s a lot easier to get information out of your cancelled customers. Thanks for the question, Adrian. I hope that was helpful.
[27:01] The next question is from Brian, and it’s about hiring contract developers, rates and quality. He says, “Hi guys, I started listening a few months ago and I’m digging the practical advice. I met Mike at Businesses of Software. My question is, I hear you guys talk about developers you’re hiring, RAILS or otherwise, and I’m wondering if you’re hiring these folks via oDesk like you’ve hired VA’s in the past, specifically in the case of the full time people Rob has on his team. Where are these developers located and what rates are you paying for what level of experience? I was recently burned by a US-based firm who was charging a hundred fifty dollars an hour who totally dropped the ball on deliverables. Most of the top firms in the Bay area want one hundred sixty to two hundred dollars an hour for developers. I’d like to hire some solid individuals but while I’m a developer, I don’t know RAILS so I can’t manage the code and process very well. It sounds to me like Rob is not dealing with the RAILS code much, which to me suggests that these devs are senior enough to build the product semi-independently. What are your thoughts on this, Mike?
[27:56] Mike: The rates of one hundred fifty to two hundred sixty dollars an hour, I can see those coming from a firm. The reason is, the firms tend to have a lot of overhead. There are sales reps in front of those developers, so you’re never working directly with the developer. You’re basically working through a middle man who also needs to get paid somehow. And that’s how those companies make their money in terms of their consulting rates. They have to bill a high amount in order to be able to fund the business, and keep it running. So when you’re going in that direction you have to have a lot of money to burn. Obviously most of us are not in that situation. First of all, I wouldn’t work with firms or companies. You really have to go after individuals, because they have a lot less overhead, they don’t have nearly the start-up time, you don’t have to worry too much about paperwork in terms of how long it’s going to take them to get started. You can generally get up and running a lot faster with an independent contractor than you can with a firm. It’s also going to be cheaper. The problem of course is, how do you find good ones? That’s the million dollar question. How do you find a good developer at a reasonable cost?
[29:02] I’ve never hired RAILS developers. Most of the people that I’ve hired independently tend to come off of oDesk but it’s a lot of picking and choosing and trial and error when you’re trying to find people on oDesk. I got pretty lucky with one of the first people that I hired and after that it was a lot of trial and error. I went through quite a few people and there’s still times where I think that I’ve chosen very wisely and it turns out that three or four weeks later that just totally wasn’t the case. I think people get disenchanted by that particular approach. They go out and have a bad experience, and three or four more bad experiences and it never seems to work out for them. I don’t have any other good suggestions about how to go through that process other than keep trying and refine what your process is and make sure that you’re looking specifically for people who are following the procedures and processes that you’re putting in place, because that’s probably a little bit more important than technical competence. You want to make sure that they’re following the processes and procedures that you’re putting in place. I would probably be a little less concerned about whether or not they can code well. I don’t want to say that you don’t care how well they code, but you want to make sure there’s a baseline level of knowledge and beyond that make sure you can hand stuff off to them. If you’re looking somebody who can take something from ground zero all the way to product then at that point you’re looking for a very senior person and it’s going to be very difficult to find somebody like that in the US at a price point that’s not going to break the bank.
[30:31] Rob: I’ve had similar experiences to Mike. oDesk has worked so-so for me hiring developers. I’ve had some around for a few months. They’ve been okay. I’ve never had a ton of great success. I’m not saying it can’t work, but the developers I’ve found were interested in making a quick buck and doing some work but never someone I would bring on to build a whole product, because they just wouldn’t take ownership. In addition, as soon as you get into hot technologies like RAILS and I’d imagine Python, they get really expensive. I was hiring developers in Mexico and Central America and they were more expensive than I could find here locally if I were to hire someone for a salary. Locally for me is Fresno California, so it’s not a major hub like San Francisco or LA, but it is a place in California and to have someone local who can come into an office is obviously worth a lot more to me than having someone remote. I have three full time developers working for me and the first one was through my network. He’s a good friend of mine. He was going to do some consulting so I hired him instead. But the other two I found through a local company that I’m actually one of the co-founders of.
[31:35] It’s called Geekwise Academy and it’s a really cool, educational program here that’s basically six week crash courses on different technologies. There’s basic HTML, CSS, there’s RAILS, there’s .NET, there’s PHP, there’s WordPress, all this stuff and it’s like vocational education. It’s super cheap, a couple hundred bucks and people are in it for six weeks and by the time they come out– they’re just learning stuff. If they don’t have any background in tech then they’re not even a junior developer at that point. But a lot of these folks are self-taught, and they’ve been teaching themselves on the side while they’re working another gig. So you get people coming in after six or twelve months of them teaching themselves through one month of RAILS, or Tealeaf Academy, or even just free RAILS casts and stuff. Then they come in and take these Geekwise courses and it puts them into a junior developer right away. I hired two guys out of that. So if you can find something like that that’s local to you– and it really has to almost come out of the start-up ecosystem. Because if it’s something like ITT Tech or DeVry Institute or something, they don’t really know what start-ups need. That’s what Geekwise Academy is.
[32:46] If you can’t find one local to you, drop me an email, or search for Geekwise Academy on Google and check them out because job placement is part of it. We have an extremely high placement rate. We’ve educated more than one thousand people in the last year, and the placement rate on those people to come out and actually get jobs or freelance gigs is very, very high because it’s such tactical, vocational experience that we’re giving them. So those two developers that I’ve hired are obviously not senior devs, but I do have a senior dev who is managing that process and if I didn’t have that I would be doing it as best I could. The last piece is I would always go to the network first and then I’d go to a place like Geekwise. That’s what I’m using now. You can also hit a place like Authentic Jobs or We Work Remotely and find someone there who could potentially work full time for a lot less. Or even contract for a lot less than this one hundred sixty to two hundred dollar an hour mark. If you’re not in San Francisco, don’t hire out of San Francisco because it’s outrageous. You’re going to pay way more, because the start-ups there pump up the market. Hire out of town. Hire out of a place like Fresno, or out of the Midwest, or find a developer in a town that’s less expensive because they’re able to charge a lower rate and still make a living. It’s arbitrage. You don’t want to live in Fresno and live in the middle of nowhere and hire someone in San Francisco. That’s the worst thing you could do. You should either take advantage of your local cheapness, your local inexpensive, low cost of living. Or, if you live in San Francisco I would hire out of the area and you can probably get people at half or less of that price if you do in fact look in the cheaper metro areas or even outside of those major metro areas. So, thanks for the question, Brian. I hope that was helpful.
[34:34] Mike: Well, I think that about wraps us up. If you have a question for us you can call it in to our voicemail number at 1-888-801-9690 or email it to us at email@example.com. Our theme music is an exert from “We’re out of Control” by Moot used under Creative Commons. Subscribe to us in iTunes by searching for start-ups and visit startupsfortherestofus.com for a full transcript of each episode. Thanks for listening and we’ll see you next time.
[00:00] Mike: In this episode of “Start-ups For The Rest of Us,” Rob and I are going to be talking about the ten advantages of “start small, stay small.” This is “Start-ups for the Rest of Us,” episode 219.
[00:16] Welcome to “Start-ups For The Rest of Us”, the podcast that helps developers, designers and entrepreneurs be awesome at launching software products. Whether you’ve built you’re first product, or you’re just thinking about it. I’m Mike.
[00:24] Rob: And I’m Rob.
[00:25] Mike: And we’re here to share our experiences to help you avoid the same mistakes we’ve made. What’s going on this week, Rob?
[00:28] Rob: Well, I wrapped up my two-day retreat and I came to a whole slew of conclusions. I had a lot of questions this year that I was mulling through. One of the big ones that came to me was that writing a book in 2015 is contingent on a few things, so I would like to write another book, or update my previous book, but there’s several events that need to happen, and I need to get some things off my plate first, and the more I looked into it, the more I realized I have too much going on in 2015, as it stands now, if I want to write a book.
[01:00] So there’s a couple of things I specifically outlined that I need to get done and, you know, like I said, off my plate, but that could take six months. It could take 12 months to do that. So I want to kind of revise my 2015 goals that I mentioned a couple of weeks ago, but overall the retreat was great. It kind of sets my mind off on the right foot for starting the new year, and I came back and already have made some changes to my work schedule.
[01:26] I’m doing a little more working from home than I usually do because I realized that I missed that, after working from home for a decade, and getting an office. I’ve kind of worked in the office all of the time, and now I’ve realized I’m getting a little stagnant in there, after doing it for a year-and-a-half.
[01:38] So just realizing some things that you don’t realize if you’re going into work every day. That’s why I do this, and so I have seven or eight pages of notes, and from there, I transcribed them into kind of this key list of bulleted take-aways, and I’m working to implement those, as I get back to work.
[01:54] Mike: You’re right, and I mean, that retreat is a good idea. I’d like to do another retreat in the very near future. I know I did one, but I feel like I need another one now, just because I feel like I started to recognize that I’ve actually been pretty burned out the past several months, but things have started to occur to me lately, and I really feel like I need to take another step back and just take a look at things, and one of the things that I’ve been looking at that’s been helping me out a little bit more has been taking a hard look at what my goals are for this coming year, and mapping them out, month by month.
[02:23] So instead of just having these broad goals where like this is what I’d ultimately want to achieve, actually laying the framework for all of those, like month by month, and basically chaining everything together as opposed to “shooting from the hip” every other week, where like I don’t necessarily have this – I have a longer term plan in place, but I’m not as deliberate about it, and I think that that’s what has come to mind a little bit more lately. It’s just being much more deliberate about what my path, moving forward, is as opposed to just, you know, this is my conceptual goal and I will get there whenever I get there.
[02:53] Rob: Yes, I really like the idea of mapping it out, month by month, if at all possible. The best kind of retreat mappings that I had were broken to the month. Sometimes, I do it by quarter, and that’s not as helpful, but sometimes I just find that I am not able to put it down, month to month, and so I think that’s really good.
[03:11] In addition, I also think that the ideal retreat schedule is to do it twice a year. After about six months, it’s typically when I feel like I should do another one, but I don’t always do it. Once a year is not quite enough.
[03:23] Mike: Yes, I mean, some of the other things that I’ve been looking at when I’m kind of mapping these things out, month by month, is that it actually helps me kind of focus and point at the things that I shouldn’t be doing. I basically killed Moon River Consulting, and officially closed that done, and everything, but you know I definitely think that I can do more, and by more, I mean doing less, depending on how you look at it.
[03:43] Because, you know, certain things I don’t need to be doing, or I shouldn’t be doing, and I shouldn’t be spending or wasting any of my time on it, and I think that identifying those along the way is going to be helpful for dictating what it is that I choose to do, versus what I don’t.
[03:55] Rob: Right, and you know that comes back to I originally started doing personal retreats because my wife Sherry did them, and she would always ask the question, and it’s this St. Ignatius meditation which ways, “What gave me life in the past,” time-frame, you know, one week, month or year in this case, and what sucked life from me over that same time-frame? And that’s the question she always started with.
[04:19] I didn’t use to, but nowadays, that is what I start with. So my first two pages of notes in my little notebook are, “What gave me life this year? What stole from me?” and that was both personal stuff, and so it was spending time with kids and doing things, and then professionally what really ignited my passions and what am I tired of doing? And what was really a drag on me, what do I need to, as you said, stop doing in 2015?
[04:41] Mike: I think the first couple of questions on my personal retreat were exactly the same, and so you know what is adding to my personal life and detracting from it? And the same thing for the professional life.
[04:50] For me, at least, that kind of dictated the rest of the mental conversation that I was having with myself during my personal retreat.
[04:55] Rob: Yes, that’s why I do it. I mean, Sherry and I actually outlined and recorded a whole podcast episode on personal retreats and the structure that we use and stuff, and that will be coming out when we get on the stick and get the new podcast launched.
[05:10] Mike: Very cool. Well, we finally have the dates for MicroConf confirmed. So that will be April 13th and 14th. That’s a Monday and Tuesday. That will be at the Tropicana Casino and Hotel in Las Vegas. So looking forward to that. Finally got all the paperwork straightened out, and that’s a huge stress relief to not have to worry about where it’s going to be, or you know whether or not we’re going to be able to have it there, or –
[05:31] Rob: I was concerned that we weren’t going to have a venue and we were going to be hosting it at your house or something.
[05:34] Mike: So what else is going on with you?
[05:36] Rob: Well, so per your suggestion, last week on the podcast, I went ahead and emailed everyone who had cancelled their trials during the last couple weeks of December, and like the very early part of January, because of the holidays. I don’t have any results on that yet. I just emailed them yesterday afternoon, and so it’s been less than 24 hours, but it was kind of fun to do.
[05:55] What was neat was, I could go into Drip and pretty easily just get those people out. You know, because I have “events” and “trial started,” and I have tags that they’ve cancelled, and so it was just kind of a drag and drop, drag and drop, and then draft the email and send it.
[06:09] It was fun. I hope it, you know, gets at least a few people who – it seems like people had written in and just said, “Oh, I just ran out of time during the holidays,” and my hope is to at least get a few of those folks back in and trying the app out.
[06:21] What’s going on with you?
[06:22] Mike: I’m recovering from a hard drive failure, actually.
[06:25] Rob: That’s brutal. Do you have backups?
[06:26] Mike: I do have backups, but what happened was, I had all the data in a RAID mirror, so if a drive went bad, it wouldn’t be a big deal. I could just order a new one, and it’d be there in a couple of days, but the problem is that the drive that failed, it was in a mirror configuration, and for some reason, whatever reason, that had stopped working like 18 months ago, so only the drive that was – that actually had the latest data on it, died.
[06:53] So then when it came back online, because I plugged the other one in, and said, “Well, OK, I’ve got most of my data here,” you know, kind of what’s going on, and that’s when I realized that things were wrong on it, and so Dropbox started synching and deleting all my files because it had old – just basically a snapshot from 18 months ago, and then the same thing with Sugarsync and like it took me like a full day to kind of recover from that, and then I’ve still got backups that are downloading from the cloud. So it’s been kind of a nightmare.
[07:19] Rob: That sucks, uh, yes, even with all the new-fangled backup software. I mean, we’re in better shape now with Dropbox and CrashPlan, or whoever you use, than we used to be, but it still sucks when you lose a hard drive.
[07:32] Mike: Right, there’s no way to overcome the time that it takes to download hundreds of gigs over the internet, and I’ve got a fast internet connection, but it doesn’t seem to matter because it is limited much more by their data centers and how quickly they can serve up the data.
[07:46] Rob: Yes, I know that there are a couple of backup services where, if you do have a bunch, you can pay them and they’ll like overnight you a USB hard drive, but it all depends on if that’s worth it to you, you know?
[07:56] Mike: Yes, that’s an option for me, but I have a lot of the data because of that data hasn’t changed on there, and then plus there was so much stuff on there, that I had it all in Dropbox or Sugarsync. So I touched base with Dropbox and just said, “Hey, I need you to revert this back to his snapshot in time,” and they said, “OK, no problem,” and they did it, and everything’s fine.
[08:13] So all of those things synched up, just – you know, perfectly OK, and all my data and everything is there. Is it really worth having – paying $200 to have them ship me the entire drive? Or do I just download things kind of as I need them? It’s like, “OK, I recognize there’s a few directories here and there that are not on this old drive. I’ll just download them.”
[08:32] Sure, it will take me an extra couple of days, but it’s not critical that I have that data, and even if I lose it, it’s not that big of a deal anyway.
[08:38] Rob: Yes, I would be in the same boat as you.
[08:40] Mike: So, just before we get into this, we have a quick listener question from Maurice Knopp , and he says, “Do we …” and I’m paraphrasing this, but he says, “Do we resist the urge to code, or sometimes do we do it for fun?”
[08:52] So he had a somewhat lengthy email, but I wanted to kind of answer that for him. I don’t know about you, but I tend to dig in, but there are certain times where I dig in just to learn something new or where, if I’m waiting for someone to do something, and I know that it’s not going to take very long for me to do, but it’s kind of time-sensitive, I’ll just do it myself.
[09:10] I do enjoy going in there, but there’s also times where I will go in there and I’ll see stuff that I don’t like, and then I have to resist the urge to start going and fixing a bunch of stuff. It’s like I came in here for one very specific reason, do the stuff that I came in here to do, and then get out. It’s not worth my going in there and “correcting a bunch of things” that are really more personal preference than anything else.
[09:30] So I have done those types of things, but I try not to get too heavily involved in the code these days.
[09:37] Rob: Right, and his original question was basically like he started as a developer and now he’s a manager, and he was asking if – he said he gets so much joy out of coding, do we still do it when we have the chance, or – you know, have we really like outsourced all of it?
[09:50] I mean, I’m kind of in your boat, although now my main apps are all in Rails, and I don’t – I’m not good enough in Rails to touch any type of production code. As of six months ago, I was still hacking away, making some fixes here and there. I still do a little bit of PHP. There’s a couple of things that have needed fixing in the past few months on some other sites, but I’ve realized that I can contribute more to my team and my company by doing other things, right?
[10:15] I have these – the marketing skills, the managing skills, and I spend so much time getting obstacles out of my team’s way that, if I’m trying to sit down and code, I need “head’s down” time. I need four-hour blocks, six-hour blocks. I mean, that’s when I work best, and I don’t tend to have a lot of those any more. I’m on that – you know, it’s that manager’s schedule, versus a-maker’s schedule, and unfortunately I’m a little more of a manager’s schedule these days.
[10:37] So, yes, I do – in response to Maurice, I love to code, and any time I get to do it, it totally triggers the endorphins in my brain like it always has, but I’ve realized that in order to do it right, I need more than I can give, and keep the business running. And so I, in general – you know, for all intents, I’ve stepped away. I mean, if I code more than an hour or two, every month or two, and I mean it’s kind of down to that level, although I’ve really enjoyed working – my son’s learning Ruby, and so I’ve enjoyed doing that with him, and that’s where I’m getting a little bit of my technical fix, but it’s certainly not writing production code.
[11:14] Mike: So thanks for that question Maurice.
[11:16] Today’s episode, it comes to us from Bruno Martin, and he also wrote a rather lengthy email to us. I’ll kind of paraphrase and pull out a little bit of it, and he says, “Across your episodes, I get some arguments favoring this start-up style,” and to that he means, you know, the advantages of kind of building a very small company, and “start small, and stay small,” and he says that “but sometimes there are some implicates. It can sound idiotic, but for example, you mentioned that you have a more comfortable lifestyle and that it was really appealing.
[11:42] I’m not sure I understand fully why this is the case. Maybe newcomers like me would like a short-overview of the advantages of this choice. I’d really love to hear your voices on it.”
[11:50] So, today, what we’re going to do is, we’re going to talk about the advantages of “start small, stay small” versus doing something along the lines of like Y Combinator, where you’re getting VC funding or going out and getting Angel investment, really building and bootstrapping your own business, and owning that entire life cycle of that business from beginning to end.
[12:09] And the first one, I think, is that you own your own time. You get to choose what you do and don’t work on. Typically, when you’re going out, and you’re trying to get funding, you’re essentially in one of two modes: either you are building the products, or you’re trying to find people to, you know, help fund the company.
[12:25] And, personally, that’s something that’s appealing to me. And maybe for some people it is, it’s appealing to go out and trying to get people to give you money to help further your product, but the reality is – I mean, for me personally, I’d much rather find customers to pay for the product, because that can fund the development and move it forward as opposed to trying to go out and find investors that believe in you and your skill set in order to move it forward.
[12:48] And a lot of times, what I’ve also seen is that – you know, some of the funded companies will tend to go after like a B2C market where there’s a huge play, but you’re not actually getting anybody to pay for it. So the value of what you’re providing is a little bit unclear. I mean, is it – you know, is something like Facebook really valuable?
[13:05] I mean, yes, you can look on the numbers. And, yes, after it’s gone IPO, sure, it’s valuable. For the longest time, Facebook was not making any money whatsoever, and it’s very hard to look at something like that, objectively, and say – you know, “Is this really worth something?’
[13:19] You kind of have to be in the right situation for it to eventually become worth something.
[13:23] Rob: Owning your own time is one of the biggest benefits of this approach versus taking funding. And, you know, we’ve talked about taking funding, initially in the past. Just a couple of episodes ago, we talked about when you should consider doing it. So I am not anti-funding. I’m just anti-everyone thinking that it’s the only way to start a software company, or the only way to start a start-up, right? So I just kind of want to make that clear, up front.
[13:45] We’re going to name a bunch of reasons, here, why self-funding is better than taking funding, but I don’t think that it’s like a clear dichotomy. I just think it’s what you value the most, and owning your own time is probably the one that I value the most. It’s being able to own your thoughts and own your head space.
[14:02] During your workday, being able to pick and choose what you work on, is a huge, huge win, and it’s something that I think, having been independent now for so many years, without consulting clients, because even when you’re consulting, you don’t own your time during the day.
[14:15] I know that you can prioritize, and you can pick which clients you want to work with, but when you’re working on something that someone else owns, there’s still this feeling of dollars for hours, and truly having like a product business where you own your own time, and can guide – you know, what you want to do, you can work on what you want, it’s a real benefit.
[14:31] Mike: And that leads us directly into the second one which is that you can set your own hours. You do get to work when you want, not when you don’t, and it is very flexible, within reason. I’m mean, obviously, you’ve got deadlines that you’re going to have to meet, internally, to be able to build products – you know, and do marketing plans, and get the products that you’re building out there in front of people, but you don’t necessarily need to work 16- or 18-hour days to make sure that investors are happy with your progress, or that you’re landing enough customers.
[14:57] I mean, there’s a lot of ways to build a business where you’re building it kind of in parallel with whatever you currently have going on, so that at some point in the future, you can make a transition between being an employee, a consultant or a freelancer, into doing a products-based business, or a services-based business where you’ve got, you know, some sort of recurring revenue that’s coming in from your customers, where you’re performing those services on a regular basis.
[15:21] I mean, people look at software as a service as like the Holy Grail of products, but at the same time, they don’t necessarily realize that the crux of that argument is recurring revenue, and if you have a bunch of customers that you are continually performing services for, that is also a recurring revenue model and, sure, you may still have to do work for it, but that’s what you’re looking for. It’s really that recurring revenue, so that you don’t always have to hunt around and charge people extra in order to make up for the time that you are finding customers.
[15:49] Rob: Having the flexibility to set your own hours, especially if you have a family, or you have some unique needs where working 9-to-5 at a fixed location, under someone else’s roof, is constricting. This is a really big deal.
[16:03] I think, early on, when I was still kind of working the 9-to-5, and I had to be at a certain place at a certain time, every day, I thought that being able to – you know, work at night, or work shorter days if I wanted to, work four or six hours a day, exactly when I’m most productive, I thought that it would be really cool, and I kind of romanticized it. And when I got out, I found that it was every bit as cool as I thought it was.
[16:28] Now, after doing it for – again, for you know, seven or eight years now, although since I was consulting even before that, I mean, it’s been a decade that I’ve kind of worked from home. So I’ve always been able to set my own hours, but I take it a little bit for granted, but this is absolutely like a game-changer, the first time that you literally wake up and you realize that you can do whatever you want, at whatever time you want.
[16:49] And this is where it then calls upon your own discipline to – you know, to actually get stuff done, and to work and to move forward, but I find that when the motivation is to work on your own products, and your own projects and things you choose to do, it becomes really easy, that you don’t need someone there kind of “cracking the whip,” so to speak, because you’re just fired up to get started every Monday morning. I actually remember looking forward to Monday mornings, and not looking forward to the weekends because I wasn’t going to be able to move forward on the cool projects I’m working on.
[17:20] Mike: Yes, I was going to mention that it can be dangerous, kind of, when you first get into that, where you are coming in and you wake up in the morning, and you can do whatever you want. You can also just stay in bed until noon, if you really want to, but at the same time, you know, you’ve got to move the business forward, and if you’re moving it forward for yourself, then that’s obviously a lot more helpful. But it can be dangerous, especially early on, when you’re first making that transition.
[17:42] Rob: Yes, and I mean, the contrast this with a funded start-up, you don’t really own your own time. You don’t set your own work hours, because your own work hours are basically as many as you can possibly work, and that’s 12 hours a day, 7 days a week, then so be it.
[17:55] And while launching, you know, a self-funded software company or start-up takes a lot of work, you can move at your own pace, as long as you don’t get too impatient with it. There are very few people that I know who own their own software company who aren’t like racing for some big green field event, that work a lot of hours. Most of us work less than full-time, and I’ve worked less than full-time for several years, and I consider that a luxury of not taking funding.
[18:21] Mike: So the third advantage is that you’re somewhat location independent, and you do get location independence from somewhat doing consulting, or freelancing. I mean, there’s certain ways of doing freelancing and consulting work where you’re not able to be location independent. But, for the most part, if you’re running a software company, you can run it from just about anywhere. I mean, if you’re running – and not even just a software company. If you’re running a technology company, you can run it from just about anywhere, especially if you’re using contractors to kind of fill in the blanks and supply you with things that you don’t necessarily have locally.
[18:52] I mean, you could run it out of Boston – the Boston area where I am, or you could run it from the middle of Nebraska. It doesn’t really matter. As long as you have an internet connection, you can generally get the work done that you need to get done. I think that – you know, you said that you were kind of getting work done while you were traveling between Thailand and Prague.
[19:09] Rob: Yes, that’s the beauty of it. I don’t want to over-romanticize this one, but it has allowed me to essentially take a full month off, both of the last two years. And then, in addition to that, I take another several weeks off, let’s say, typically in like four-day weekends, or in the form of a – you know, I went to Scotland for a week last year.
[19:27] So that allows me to take time off, but also to do – to get enough work done while I am on the road that I don’t come back to that mountain of emails that we always dread. And so there’s that kind of location independence, you know, being able to just be on the move, and there’s also the location independence of being able to live wherever you want. So, if you want to move to Portland, Oregon, and live there for a year, or you want to move to France, or you just want to move to a town out in the middle of nowhere. You know, you can do that. And as someone who is self-funded, it’s interesting because you can choose to live somewhere where the quality of life is high, the pace of life – you know, maybe you might like a slower pace of life, where you can get “more house for your money,” and that kind of thing.
[20:05] You don’t have to live in city center. I love urban centers. I love San Francisco and Boston, and big cities, but living there would be very expensive. And so I can choose to live outside of those towns and then go in on weekends. You know, take a four- or five-day weekend and go into San Francisco, just a couple of hours from me, or I – you know, we go to the coast all of the time because we really enjoy that. So there’s like a lot of different dimensions to this location independence, of where you actually physically live and have an address, and then being able to kind of go on the road and still get enough done that you could kind of be a perpetual traveler, you know, in the sense of the “digital nomad” term, you know, that the Tropical MBA podcast talks about.
[20:44] Mike: The fourth advantage is that your income is decoupled from the hours worked. If you do the right work, that work can pay off for a very long time. There’s also the other side of that which is, if you do the wrong work, then it’s never going to pay off, and you’ve just essentially wasted all that time working on something that just doesn’t pan out. But, at the same time, there’s always situations where you’re going to have to try things and experiment with certain techniques, or marketing channels, or advertising, that just is not going to work out. It’s either going to be a time sink, or a money sink, or possibly both, and – you know, it’s going to be a lot of experimentation. Your income is not directly tied to the hours worked. There’s going to be times where you put in a couple of hours’ work and that’s going to pay dividends for years. And then there’s going to be other times where you, you know, sink 20, 30, 80 hours into something, and it never pans out.
[21:30] So there is that balance that you have to strike, and hopefully you can do more of the things that pay off, and less of the things that don’t. The point of the matter is that you’re income is not directly tied to the hours, the actual number of hours that you’re working.
[21:42] Rob: Yes, and I think this is the case, both with self-funded or a funded start-up, but this is maybe more of a dichotomy between a product business and consulting. It’s actually been a bummer. There have been a few points where like my cash has gone low, and I’ve wanted the dollars-for-hours thing back, temporarily, because I’m willing to work a bunch of hours in order to make a good hourly rate, but now that I have products, you can’t just kick that into high gear.
[22:08] Everything takes longer, and I like to think that I use that illustration of a flywheel, where it’s like getting these marketing approaches going takes a ton of effort up front, but once you invest that time, they can pay dividends for a long, long time, and that is, of course, the beauty of having a product. It’s that you don’t have to work an hour for every dollar that it generates for you.
[22:26] Mike: The fifth advantage is that you get to choose who you work with, and I think that, as a company founder, and I think in general, you tend to get to choose who you work with because you can decide who you hire and who you don’t, but I think if you have investors, you’re essentially “married” to them in some way, and I think that this goes along with having co-founders, as well. It becomes much more difficult to break those ties. If you’re working with a contractor, and they’re not working out, for whatever reason, it’s a lot easier to walk away from them than it is to somebody who handed you a check for $250,000.
[22:56] Now, there’s certain customers that you’re probably going to have that give you a fairly hefty check, that are going to be difficult to walk away from, as well, but they don’t own your company, and there are ways to work through things with them to the point that they are no longer an issue, or they are no longer a customer of yours, but when somebody owns a piece of your company, it’s a lot more difficult to do that.
[23:15] Rob: Yes, getting to choose who you work with is a big deal, right? If you’re a salaried gig, the odds that you’ve been able to choose your coworkers, or choose the people that you manage every single one of them, is very, very low, unless you’ve built a team from scratch. It’s a big difference, and it’s such a difference to be able to work with people that you enjoy working with. And, certainly, if you’ve taken funding, and it depends on how much and to what level, but oftentimes you will have investors and you don’t have much of a choice, you know, who you work with, unless you had a lot of investor interest, and if they’re forcing you to grow, which if you’ve taken a million or two million bucks, then they will be, and then you have to hire quick, and you need to get to ten or twenty people within a year, and you can have much less choice. You will have some choice, but you’re going to have to be much less picky about who you hire in order to hit the growth numbers that your investors are going to want to have. So there are definitely pluses and minuses to that approach.
[24:10] Mike: The sixth advantage is that staying small means a lot less overhead, and that’s both financial and management overhead. If you have a small team, then the number of active connections you need to keep open with people is much lower, but if you have a larger team, or if you’re getting funding for a start-up, and you’re growing quickly, the investors want to see large growth in the companies that they invest in. So, if you have a team of 20, 30, 50 or 80 people, that becomes a lot more difficult. So you end up with a lot more management overhead in the company and the company is going to have to essentially absorb that cost. Now, if you own the entire company, you want that overhead to be as low as possible. So that’s why staying as small as possible, while supporting as many customers as possible, is advantageous because it’s advantageous from both a financial and a management perspective.
[24:58] But, it also keeps your stress levels down by not having to worry about the people that you’re reporting to above you, and then also having to worry about the people who are reporting to you. With funded start-up, I would say, I would liken it to middle management where you’ve got to report to the investors and then you’ve got all of the people underneath you who are reporting to you. That’s not for me. I’m not a big middle management type of person.
[25:18] Rob: I’ve talked about this quite a bit because, since the title of my book was Start Small Stay Small, I’ve had people ask me what that means, and the “stay small” part means stay small in terms of employee headcount, not in terms of revenue. So I’ve always wanted to grow my businesses as large as I can, in terms of revenue and net profit, but I’ve never wanted to manage 10, 20 or more people.
[25:39] And that’s really what this one comes down to. It’s that, if you raise funding, you will have to hire a lot of people. You will have management overhead. You will step away from the code, from the marketing, from the day-to-day nuts and bolts, and you’ll become a financial and a people manager. And if that’s what you want to do, then go do that, but if not, then the idea of trying to raise funding and climb that scale, it’s not in line with your goals.
[26:05] Mike: Yes, and there was a time where I used to want to do that. I used to want to build a large company and have dozens of people working for me, and I’ve kind of reversed my position on that, and that kind of leads into number seven, which is, you’re close to the customers. If you’re a small company, you’re really only a phone call or an email away from the customers. And that’s not to say that you can’t do that as a larger company, but when you are a much smaller company, of only one to five people, it’s a lot easier to be involved with the customers on a very regular basis because – you know, there’s not very many people doing the work.
[26:35] So you have to be doing the work. So you have to be interacting with those customers regularly. And I’ve found that I actually enjoy that aspect of it. I feel like if I were to grow a large company that I would lose that. It would be very difficult to grow a large company and still kind of maintain myself on the front lines, and interacting with people.
[26:52] Rob: I really like that that I know the names of a lot of my Drip, my HitTail customers. A lot of folks that come to Microconf are listeners. You know, that’s exciting to me, and I feel like you can pretty – it’s pretty easy to get removed from that, that if when you do have 10 or 12 employees, and you’re basically managing those folks, that they are then the front lines, and you can peek in now and again, but you’re not going to be connected to the customers the way that you used to be. So I think, and that may be a plus for you, or it may be a minus, but for me, I enjoy it, and I enjoy seeing, you know, the same name using multiple products that I’ve built, and I enjoy just kind of starting to build longer-term relationships with these folks.
[27:35] Mike: The eighth advantage is that you can be very agile. If an opportunity arises that, as a small business, you want to be able to take advantage of it, you typically can. You know, obviously, there’s – you know, time and money constraints that you have to deal with, like any other company, any larger company, but with a larger company there tends to be a lot more red tape. There’s a lot more people to talk to, to get things moving, and especially if you are in a larger company and you’re kind of higher up in the ranks. You can point at something and say, “This has got to get done,” but that doesn’t mean that it’s going to get done any time soon, and there’s usually a lot of other priorities that are vying for people’s attention and time.
[28:09] So it can be very difficult to get the ball rolling in a larger company whereas, if you’re – you know, a small team of one to five people, you can usually accomplish things in a fraction of the time that it would take a larger company to be able to do those things. Now, that said, you do have to have less resources to be able to perform those things, but when it comes to being able to turn on a dime, you’re going to rule over those larger companies.
[28:31] Rob: Yes, this is one of the fun parts of being small, it’s just that you can move so quickly and assuming that you’ve built a profitable business, you can take some time and kind of do some pet projects. You know, even within the scope of that same business. You can go off and build a feature that maybe no one has requested that you think would be cool, and you could spend a month of your time, or a month of a developer’s time working on it, and it’s just a – you know, an opportunity, or a whim that kind of strikes you, and you can go build something that’s cool, and this comes back to kind of choosing what you work on, right?
[29:01] You can’t do this all the time. If you did it all the time, your business would eventually start to go down, but being this agile, and being able to respond to things so quickly, as much as it is a competitive advantage, it’s just plain fun, as well.
[29:15] Mike: Another advantage of a small company that I like is that you have a larger scope of responsibility. I remember working at Wegmans and, at the time, the company was about 25,000 employees, but you know the IT department was only probably 200 or 300 people, or something like that, and it really felt like I didn’t have very much responsibility. There were – obviously, there were things that I had to pay attention to and work on, where – you know, like I had to carry around a pager because that’s what people did back in those days, and if a server went down, I had to deal with it, but at the same time, I didn’t feel like I had very much responsibility outside of my job, and it was more or less people coming to me and saying, “Here, this needs to be worked on,” versus, you know, me being able to kind of independently figure out what it is that I was going to be working on, or wanted to work on, and the responsibility, like the scope of my responsibility was kind of set by people outside of my control.
[30:04] It wasn’t as if I had the ability to go out and take responsibility for something. It was more or less that I sat in my chair and when somebody decided that there was something that I could handle, then they would hand it to me. Part of that, I think, is the direct result of – you know, where I was in my career at the time, but at the same time, you know, I just didn’t feel like I had any control over what I did have responsibility of.
[30:25] Rob: I think that leads pretty nicely into our tenth and final advantage of starting small and staying small, and it’s that you have such a large impact on your business, that there’s not that layer of employees between you and the end result, that while you are responsible for more things, directly, like everything will always fall back on you, if it’s just you, or if it’s you and a couple of employees, but you and all of your employees can have a major, major impact on your customers, on your revenue, on new features. You can make a huge difference, both in your business and in your employees, and in your customers’ lives when you do stay small.
[31:05] Mike: So, Bruno, hopefully that helps answer your question about what are some of the advantages of starting small and staying small. If any of the listeners have any questions, or thoughts about any advantages that they think we missed, feel free to come into the website at startupsfortherestofus.com and leave some comments on this episode.
[31:22] Rob: And if you have a question for us, you can 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 Out Of 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.
[00:00] Rob: In this episode of “Startups For The Rest Of Us” Mike and I discuss a five-step process to answering emails, managing your “to do” list, and staying productive. This is “Startups For The Rest Of Us” episode 218.
[00:18] Rob: Welcome to “Startups For The Rest Of Us”, the podcast that helps developers, designers and entrepreneurs be awesome at launching software products. Whether you’ve built your first product, or you’re just thinking about it. I’m Rob.
[00:28] Mike: And I’m Mike.
[00:28] Rob: And we’re here to share our experiences to help you avoid the same mistakes we’ve made. What’s the word this week, sir?
[00:33] Mike: Guess what I got for Christmas?
[00:34] Rob: What? Did you get another iPad?
[00:36] Mike: No. I got sick.
[00:37] Rob: Yeah, and you guys were laid out pretty bad for several days, it sounded like.
[00:41] Mike: Yup.
[00:42] Rob: Well, for me, I leave tomorrow for a 48 hour retreat in Shell Beach. I have a long list of questions to consider. Once I come back from that I will have a much better idea of being able to solidify the goals. You know, when we did our goals episode I hadn’t yet done this retreat. So I do expect to revise that, and I think if it is dramatically revised I may mention it on the next show. I am definitely looking forward to that, trying to get some clarity for 2015.
[01:08] Mike: Very cool. Anything else?
[01:10] Rob: Yeah, my “trial-to-paid” conversion rate – with DRIP specifically, I mean it’s doing good with all apps, but with DRIP specifically – it dropped by over 20% in the last two weeks of December. And I had a nice big bucket of trials that were checking DRIP out, and then conversions just fell off a cliff. So, it’s such a bummer.
[01:27] Mike: Well, you can probably go back to them and shoot to them an email to them and say, “Hey, I know December was a rough month, in terms of being able to carve out time.” You know, you can extend their trials by another 21 days, or 14 days, or something like that after the 1st of the year, and see what happens.
[01:42] Rob: That’s a really good idea actually.
[01:43] Mike: Maybe try to bring them back. Even on Twitter it’s commented like, December of a terrible time of the year for bootstrappers in general, just because conversion rates just fall of a cliff, and everbody’s leads basically start to plummet, just because people get busy. I’ve actually avoided doing stuff – or signing up for stuff – just because I know that I’m not going to get to it. So I’ve kind of gone off into a hole and started working on stuff, because I know that there’s really not much point in me doing any of that stuff online, and I think that if you go back to them – at least if you have the email addresses, if they did start, you might be able to bring them back.
[02:14] Rob: Yeah, that’s a really good idea. I definitely have email addresses. They’re all in DRIP, and they’re marked as “folk whose trial has expired”. So it’s just a couple of clicks to send them an email. I’ll think about doing that probably next week. I like that idea. Just give them a link to re-enable their trial. Yeah, I’m kind of taking this week to take care of some year-end bookkeeping stuff. And also, I noticed that my Amazon S3 charges are creeping up, because of all of the database backups that we’re storing there. So I’m clearing out a lot of files and putting in a automated process to start clearing those out, because 6-7 months ago, when we really started getting stuff into S3 it’s just really, kind of, all sat there. So we don’t have a script, and we don’t have any type of policy that removes things. The S3 stuff crept over $300/month and I realized that we need to get in there. So, figuring out how to do that. I have a DBA who’s helping with that. So, kind of just doing that year-end stuff I otherwise wouldn’t really focus on during the day-to-day running of the business.
[03:13] Mike: Aside from being sick, the only other official news I have is that I’ve officially closed down Moon River Consulting as a business. And I believe that will be effective as of the 31st. So this episode will be out next Tuesday. So by the time this episode goes live I believe that the businesses will be completely closed, and the only thing I’ll have to take care of is taxes for this coming year. Then after that I can, kind of, wash my hands of the whole business.
[03:35] Rob: Nice. That’s a big milestone, man. It’s got to feel good.
[03:38] Mike: It does. It’s nice to know that going forward I’m not going to have two different sets of books, two different sets of checking accounts, two different lines of business that I have to worry about. I mean, I’ve still got some of that to begin with, but at least I don’t have to also think about, “Okay, well what checking account is this money going to go into?”. I feel like running the two businesses side-by-side has actually been a lot less helpful than I thought it would have been.
[04:01] Rob: Mmmhmm. And it’s not just the time and the decision process – that’s of course a big one – but then it’s the money of maintaining the corporations every year, of filing two separate tax returns. It seems like a pretty big win for you.
[04:13] Mike: Yeah. All of the associated overhead just of running a business is doubled because I have the two. So, It’ll be nice to kind of cut that in half.
[04:21] Rob: So the impetus for this week’s episode is that I’ve been asked about and explained my system for how I answer emails, how I manage “to do” lists, and how I stay productive at least five or six times in the past month. It’s kind of uncanny. I don’t typically get asked about this stuff, but I think since we recorded that productivity episode, folks have either emailed or Tweeted or asked in person. So I realize it’s probably time to document it in more detail, so that I can just refer folks to this episode. And I think you and I have some overlap in our processes too, and in essence, today we’re going to be walking through a five-step process to answering emails, managing a “to do” list, and staying productive.
[04:58] Mike: Cool. So let’s get started.
[05:00] Rob: So the first step of the process is to only check email once or twice a day. It’s to basically turn off all new email notifications, and then it’s to close the Gmail tab in your browser, and turn it off on your phone – so you’re not getting buzzed every five or ten minutes as emails arrive, and then only check it at a certain time. Now I check email twice a day. It may work for you to do it once. You may need to do it three times. But the idea is to not have it open, not constantly being pulled out of your flow. In addition, the times of day, I’ve heard widely debated. You know, people say, “Don’t check it first thing in the morning. Check it right before lunch and right before you go home”. Like 11 am and maybe 4 or 5 pm. I do, kind of, the opposite. I do right when I get in, because it helps set my to do list for the day. Then I tend to do it right after lunch in the early afternoon, because I find that I am not super productive in the early afternoon, and it’s a nice easy task that I can take care of. I do “time box” this when I check email, especially in the morning, because the morning is my most productive time. So I will tend to only spend about 30 minutes in the inbox, get a bunch of stuff into the to do list, and then I move into the to do list. Then in the afternoon I may not “time box” it. If it’s going to take me a couple hours to get through it, I want that to be afternoon time, where I’m going to be less productive as it is.
[06:14] Mike: I’m probably not nearly as disciplined about this as I would like. I almost always check my email early in the morning – sometimes it’s not until 10 or 11. If I get up really early, what I tend to do is I’ll check my email and clear it out, and then either close the Gmail tab, or I use a plugin called Inbox Pause. I find that helpful because it allows me to have my Gmail tab open, and it tells me flat-out at the top, “Hey, your inbox is paused.” So, if I happen to flip over there because I’m looking for that little kick that says, “Hey! You’ve got new mail.” I’ll see that right there and say, “Oh yeah. I shouldn’t be checking my email.” or “I’m not supposed to be in here because I’m not going to get anything anyway.” And sure, I can click that button, but the fact that I have to manually click that button to start getting to my email is a mental trigger, or reminder, that says, “Hey! You should be doing other things, and actually getting real work done.” So I find that helpful. I agree with you that getting things done in the afternoon is helpful. The other thing that I find helpful is clearing out email near the end of the night, because it helps me alleviate the mental strain of having the fact that there are some emails that were sitting there throughout the day, or at the end of the night, and I’m not thinking about them – which is kind of nice.
[07:26] So, if I can clear out my email and get it as close to Inbox Zero as I possibly can, I find that helpful to do near the end of the day, and in the evening. It would probably be better to just not check my email and maybe remove it from my phone, but I like having my email on my phone if I need it.
[07:41] Rob: Yeah. You bring up a good point, because these five steps that I’m using are during your workday. So if you have a regular schedule that you work – 9-5 or whatever – that’s where these steps come in. Outside of that, if I’m waiting in line somewhere, I will check email on my phone, because I consider that, kind of, found time. It is time that I wouldn’t be doing something productive anyways, and so if I can go in and check emails, and get a few replied to, get a few forwarded, and get a few deleted – that to me is actually a good way to do it. I think as long as you’re not compulsively checking your email all the time, and thinking about it, and you have that addiction thing – I don’t really see anything wrong with having email on your phone and checking it. I try my best not to check email or Facebook or Twitter when I’m with my family. I think that’s the big thing. When I’m working I want to be working hard, and when I’m playing and hanging out with my kids and my wife I don’t want to be thinking about work. Right? I don’t want to check email and have it suddenly stress me out, or remind me of something that I then can’t do anything about, so that I’m mentally shifted away from being present.
[08:45] So that’s where that balance — you, kind of, have to know yourself. But again, if I’m waiting in line and my family is not around, I’m not considering checking email and getting things done then a bad thing at all. I think it’s actually a way to be reasonably productive, instead of just standing around.
[08:58] So that was step one – was to check email twice a day. And I guess we would put the caveat in, except for if you’re standing in line somewhere and you’re on your phone. Step two, is to live by the Three Ds. The Three Ds are : to Do it, to Delegate it, or to Delete it. I’m going to start with Deleting it. So I’m not a big believer in saving things for later. In general, I don’t save many things for later. So if I’m not going to read an article now, probably 80-90% of the time I delete it. So I do get emails from Quora, emails from Growthhackers.com, emails from Bootstrappers.io, emails from Foundercafe. And they’re, kind of, showing me threads and conversations, and I’m either going to pop in quickly, comment, maybe skim something – but in general I don’t plan to read things later. That’s not the way that I work, because I find that that adds a big queue of this mental weight in the background, and something that I’m always thinking about.
[09:55] However, if you know yourself, and you do use a read later app – like maybe Instapaper or some other feature in your browser – and you do actually find time in the evening or over the weekend, and you like to have a queue of things that you’ve set up, then that’s maybe where you maybe wouldn’t delete those, right? You would put them in that queue and read them later. If I’m going to do it, I use Trello, and I wind up putting it into a side Trello board of the things that I do want to read later. I do that with FounderCafe threads as an example. If there’s something that I think I can reply to, and it’s going to take longer than a couple minutes, then I’ll actually just put a Trello item in there. But otherwise, I delete a lot of email. I get more than 100 emails a day, and I wind up deleting a lot of them. Even in the old days I probably would have kept some of these around thinking, “Boy, someday I’ going to need that information.” But I’ve found that you can typically find stuff via search, and in general, I’ve found that my productivity has dramatically increased by the fact that I’ve learned to skim, and I’ve learned to skim/read a lot fewer things than I used to. And that has allowed me to maintain a lot of productivity even though I have a lot of incoming stimuli and a lot of incoming emails. So, again, this first of the Three Ds is to Delete it. And I find that I delete very healthfully, and I delete heavily, and when in doubt I delete emails – rather than the Do or the Delegate.
[11:16] Mike: I was just going to mention an anecdote about Instapaper that I read at one point, which I’m sure I could find it, if I looked hard enough. But it essentially said that in Instapaper, if you had not read something, and it’s been more than 2 or 3 weeks or something like that – or maybe even a week – the chances of you ever going in and reading that are slim to none. And I think that the developers had written the article which basically just showed that once somebody gets to a backlog that’s more than a couple of days long, it’s almost like having a hundred RSS feeds coming in. It’s just like you can consume so much information and then have no time left to do anything else. So I do the same kind of thing that you do, but I also use UnrollMe. So anything that comes in from Quora and a ton of these other sources, I just have UnrollMe aggregate all of those. I get a single email with all of them. And I just go in and I very quickly review it. Most of the time it’s things from L.L. Bean or Amazon for various things – you know, most of them are promotional advertisements. And I don’t necessarily want to completely unsubscribe from everything, because I do want certain notifications. But having it as a single email that rolls up 20-30 other emails every single day, it alleviates the sheer volume of email that comes into my inbox. Because I can just quickly glance through quickly within that one email and kind of skip most of it. I don’t have to worry about it.
[12:35] Rob: Yeah, that’s a nice way to do it. I will make a note here that Gmail has the three inboxes with the promotional tab and that kind of stuff – social tab. I don’t do any of that, because it makes me feel like I have three inboxes to check. And I found that if it’s not 100% accurate, then I always have a doubt, “Am I missing an important email, a support email, or something I need to reply to?” And so I found myself checking all three tabs, both on the phone and in Gmail. So, me, myself, I’ve disabled all of that, and I like to have a single inbox view, and kind of do my own filtering.
[13:05] Mike: I do the same thing. I disabled that just because I didn’t like having the three different things. And I think the way you put it is probably the best. I hadn’t really thought of it in that way. You’re right, it’s like having three different inboxes. But in a way I do that now, because I have all these filters set up – I probably have like 50 different filters set up – that will take emails that come in to my inbox that match certain criteria, and just automatically apply labels to them. And some of them are marked as read, and some of them are not. So what will happen is it will end up in my list of labels on the left side in Gmail, and then it will be bolded, and it will show me the number that were sitting there because it was not marked as read yet. So I might need to go in and tweak my filters a little bit for some of them, but for the most part that works out pretty well. And in a way it kind of lend itself to that idea, where I have multiple inboxes. But I know that anything going into those that’s automatically labeled is not critical. So I can just let it go. And the nice part is that it doesn’t show up on my phone if I do that, because my phone only just goes straight to my inbox, which is kind of nice.
[14:05] Rob: Yeah. So an example of how I read through some startup news – or marketing news – this morning. I get a couple of different newsletters – like I said, Growthhachers.com, and the Mad Mark newsletter, and Bootstrappers.io. And if I have a busy morning, or I have a lot of stuff to do, I will just delete those outright as I go through my inbox. I won’t even open them. If I find that I think I might have some time during the day where I’m going to want to look at them, then I might Boomerang them back. We’ll talk about boomeranging in a little bit. But I’ll Boomerang them back in the afternoon, and I will typically timebox about 10 minutes to look through all of them. I skim through the titles and look at what’s interesting, and I open them all at once – so I’ll open six or seven tabs of anything I find interesting. Then I delete all of those emails – as you said, if you do UnrollMe they’re all in one email that you can delete, which is even better. Then I’ll go through each tab, I’ll skim through it, and I’ll figure out, “Am I going to get anything out of this?” or — a lot of these posts I find are so short anyways, that the title basically gets you to click, and then there’s nothing actually of value in them. So, I’ll go through them, I’ll figure out, “Do I want to Tweet this? Do I want to pull it into a podcast outline later?” – in which case I’ll go into the Google Doc and I’ll make a note of it for the next week.
[15:09] “Do I want to make a note in a marketing plan?” Like if there’s a new marketing approach, or it’s kind of a walk-through of like, “Here’s a new tweak to Facebook ads.” or something. Then I will actually pull a link to that and I’ll put it in the HitTail or the DRIP marketing plan. Or if it’s something else that I then want to look into in the future, I will then go put it in Trello, and I’ll say, “Research YouTube re-targeting.” and I’ll prioritize that. So what I’m trying to do is take really actionable items, very quickly, from these things that you could otherwise spend an hour reading through. So I’m trying to distill it quickly down to what action items am I going to take away from this, and not reading through a bunch of “entreporn” that you’re just looking to read some success story of someone that isn’t helpful, and isn’t going to move my business forward anymore.
[15:54] So that was the first of the Three D’s. The Three D’s again are : Do it, Delegate it, or Delete it – and we just talked through deleting it. The second one I’m going to talk about is Doing it. So any email if it takes between three and five minutes – anywhere less than five minutes – I try to handle it immediately. This is where I will Timebox things, and do the most important ones first. But I like to not handle emails more than once if possible. So if it’s just going to take a couple of minutes, and it’s worth doing – and that’s a big caveat there. I found that early on in my career I replied to everyone, all the time, any partnership opportunities. You know, you’re just trying to claw your way forward, and you’re doing any interview people ask about, or doing joint ventures and that kind of stuff. I find that now a lot fewer things move my needle, both on my personal brand side and the software side. So I’m pretty choosy about even what emails I’m able to fully reply to. I try to reply to everyone who emails and maybe say, “Hey, just not interested right now. No thank you.” is sometimes my reply. If I can do that very quickly I tend to lean towards replying no to most things, unless there’s a really compelling reason to reply “yes”. I don’t tend to spend a lot of time thinking about whether I should go forward with a partnership, because unless it’s a “Hell Yeah!” – like Derrick Sivers says, “Unless it’s hell yeah!” – I’m just going to have to say “No”. Because I have so many other opportunities going on, and the opportunity cost of even spending five minutes and thinking about it is just too much time these days. So you have to weigh where you are in your process – early in your career versus maybe later in your career.
[17:24] Mike: I think I have a bit of a harder time doing this, just because there are some things that will take me only a couple of minutes to do, and a lot of times I’ll just batch them up instead. So I don’t take care of them right away, but I’ll say, “Okay, well these three or four things, I’ll come back to them later in the day when I feel like I’m going to block off that time. Some of those things will just sit in my email box for a little bit longer than they probably should, and I do handle them more than once. I don’t know whether there’s a great way to do that. So, for example, I have an email sitting in my inbox right now for renewing part of my Microsoft Partner Network benefits. And I know that I’m going to get another one next month. So it’s like, “Do I even bother with this right now?” And a lot of times those things tend to fall much lower on the priority list, just because I know that I’m going to get another notification, and if I don’t get to it now it’s not a big deal.
[18:12] Rob: Right. Yeah, for that one particular I would either just delete it outright – if I know I’m going to get one – or I would forward it into Trello. That sounds like it’s going to take at least five minutes – or maybe more, by the time you find your login, and update your info, and do some clicks. Then you know there’s something you’ll have to read in “Terms of Service”. So I would probably put it into Trello, unless I clicked through and it was literally one or two clicks and I could be done.
[18:35] Mike: And maybe this is because it leans more towards the higher end of the five minutes – more towards the “I’m not absolutely sure how long this is going to take.” It might take five minutes. It might take me 30. And forwarding it to Trello, though, doesn’t necessarily either because I know that I’m going to get another email about it.
[18:52] Rob: So I probably would have done it by then – my stuff doesn’t stay in my Trello board very long, I mean I get it done pretty quickly. But if it was still in Trello when I got the next email I would delete that right away, because it’s already captured. It’s already in the to do list, and I’m already working out of the to do list. The Three D’s we’re talking about, I do very quickly, and I try to get out of my inbox as quickly as possible. I don’t work in my inbox. Then I will shut it down, and I move to Trello, and I start hammering all of the stuff that’s in there. So for this one, yeah, you can either do it – if you think it’s going to be less than five – I’d do it. If I have a feeling, like you said, it could be 15 or 20 minutes, I’d forward it over to Trello, archive the email – I’d label everything and archive it, it’s all with keyboard shortcuts of course – and then I would move onto the next email.
[19:34] Mike: Sure. That makes sense.
[19:35] Rob: And then the last of the Three D’s is to Delegate it. So if I can’t do it quickly, if I can’t delete it, I delegate it to one of two places. I have a virtual assistant, or I have my own to do list. So, for my to do list, as I mentioned, I used to use pen and paper, and that worked okay but it just got too complicated, so I’ve moved to Trello. There’s a bunch of other to do lists – I know you don’t have to use Trello – but the reason it works for me is because I love being able to just hit the “F” key in Gmail, type in “TRE” and it pre-populates with my Trello email address for my “to do” board. It’s all done very quickly via keyboard shortcuts. The email is gone, and it’s now at the top of my Trello board for when I do actually start doing things, I can prioritize quickly, and get on with my day and actually start being productive.
[20:21] Mike: That you try to get in and out of your mailbox as fast as possible. That’s not something that I probably tend to do, but it probably is something that I should start doing. Because sitting in your mailbox is not necessarily productive. It doesn’t really move your business forward. Unless you’re doing a lot of email exchanges with people, where you really need to do those email follow-ups. But for the most part I think that most of our businesses do not necessarily live and die through our email. It’s all of the other things that we’re doing.
[20:45] Rob: Yeah, that’s right. And obviously email can be a major time suck, you know? I find that since I can’t re-prioritize and reorder emails in Gmail that you’re constantly scanning through all of the emails in your inbox, and figuring out, “What’s the next priority? What’s the next priority?” So it’s this decision progress, it’s a scanning process – that’s what I’m trying to remove. I’m trying to do that once, through this triage – the Three D’s. Trying to get it into Trello, get it deleted, get it delegated – forwarded to a VA if they can handle it – and then try to get to Inbox Zero – I don’t always, but I get pretty darn close, and then move into that Trello thing to actually, in the morning, start to crank to real to do’s that are moving the business forward, then coming back to email later. But again, I think a big rule that I’m trying to do is get out of the inbox as quickly as possible, and not handle emails more than once if possible. Obviously, if I’ve sent something into Trello, and I have to then go back into Gmail to pull up a link or something, typically it’s in the body of the Trello thing itself – because when you forward the email it goes into the Trello card. But if not, if I do have to get back into Gmail, then I will and I go search and find the email and I’ll pick up the link. So I do maybe waste 20-30 seconds there. But it’s not as if I’m forwarding 30, 40 emails a day into Trello. By the time I’ve done my Three D’s and I’ve triaged my inbox, I’ll get my inbox almost to zero – if not to zero – and I will maybe have added three to five items to the top of my Trello list.
[22:09] You know, a helpful scheduling tip from Nate Grahek, who was on the show, he uses “Assistant.2” for helping to schedule appointments. And so I’m still using the old-school way of emailing and asking, “When are you available between 9 am and 3 pm, Monday through Thursday?” Mike, I know you use a service. What is the url?
[22:28] Mike: I use Doodle.com. So what that does is you sign up for it and it gives you a special url. Then what you do is you send that url to somebody and it links into your Gmail calendar. I have it hooked up to my Gmail calendar and my wife’s, so that any time where I’m busy, or where my wife has essentially scheduled something for us. Like if she’s got a class that she’s teaching and I have to watch the kids during the day, then obviously it’s going to be a bad time for me to try and have a meeting for that time. So what will happen is that that time will show up as busy on the calendar link I sent to somebody else. So it, kind of, aggregates the two calendars together, and when I give it to somebody I say, “Hey, choose something between these hours, Monday through Friday.” And that way it will just show up, and it just says, “Mike Taber is busy” and it gives you that time chunk. And then the person can choose several other times that they want to have a meeting with me, and then they just say, “Create a meeting request.” and it will send it over to me. Then I can just – whichever one works the best for me – say “accept”, and then it puts it on my calendar, and sends them an email, and then we’re good to go. So it’s helpful for me because it allows me to send something – because I’m busy. I think Assistant2 is a little bit different, because it helps, kind of, from the reverse angle where you know that the other person is busy.
[23:44] Rob: Exactly. It sounds like either one of those could be a good fit. I think I’ll probably consider starting one of those up. I just haven’t optimized the scheduling part of my whole process. I’m still handling my own scheduling. A couple of notes on to do lists before we wrap up this second step of living by the Three D’s. Because these are some questions – as I’ve explained this to people over the past month – they have these questions, so I want to answer them. The first is I have essentially two to do lists. I have an “A Priority” and a “B Priority”. I also have a doing and a done list. These are called “boards” in Trello, but it’s just a list of things. The reason I like – doing I never use – I like the done list because I can look back for months and see things that I have done. I can also use it – like when we sit down to make notes on what we’ve done during the past week for the podcast – I typically go to my done list of Trello and say, “What have I been working on?”. It also gives me a feeling of accomplishment, just to see that I’ve been getting things done. And at the end of a year I can look back and see how far I’ve come, and it actually gives me things to review, and say, “What did I enjoy this year?” and “What did I not enjoy doing?”. So aside from the doing and done, my “A” list is everything I’m working on, and my “B” list is basically super-low priority. It’s things like, “Watch this video someone recommended that I deemed I should watch.”, “Read this exceptional blog post.” Take care of something that is not high priority. And I only move to my “B” list when I’m fried, frankly. It’s when I don’t have the energy to actually work, and I want to learn something new, or I just want to indulge in some content. And even then, if it’s a video I use MySpeed, which is a 1.5 to 2x player – so I never 1X these videos. I mean, these are not movies. These are actually like marketing videos, or maybe a video interview with someone that I can’t get via audio, or some type of presentation where I want to see the slides, or something. Those are my main “A” and “B” lists, and the structure that I use.
[25:37] Mike: I use a combination of a couple of different things. So, like in Trello, I have an “A’, “B” and “C” tasks set of boards. And then anything I need to be doing that’s, kind of, time sensitive or critical, goes under my “A” list. Then “B” list is for things that can take a little bit more time. And then my “C” list is for things I would like to do, but I will probably not get to in the near future. And the reality is that if I put something on the “C” list I kind of know mentally that, “Hey, I’ve written this down, so that if I ever need to search for it in the future I can find it.” But at the same time, I just know that I will probably never get to those things. And it’s pretty rare for something to go from my “C” list to my “B” list. Things swap back and forth between “B” and “A” occasionally. Things do go back and forth between “B” and “C”, but almost never will something go directly from “C” to “A”. I work from my “A” list. That’s just how I do it.
[26:27] The other thing that I do, to keep track of the things that I’ve done, is that I signed up for Idonethis.com, which basically just send you an email each day which says, “Hey, what did you get done today?” All you do is reply to it. I just give it a bulleted list of all the things I got done that day, and that’s it. What it does is keep track of all of that in a calendar, and I can go back and see all of the different things I have accomplished on any given day. I find that that’s fairly helpful for helping to keep me on track. Obviously, if something goes wrong during a day, and I blow my whole day doing stuff that I didn’t want to do, or hadn’t meant to do, I just throw it into that reply to Idonethis.com and it shows up there and says that I spent the entire day doing that. But it’s also obvious that I only got that one thing done.
[27:11] Rob: Another note on to do list structure. I live by one to do list. I have all my work, my personal, my HitTail, my DRIP, my MicroConf, my podcast. All of those to do items are on a single list. Because when I used to have lists for each one, I would spend several minutes – every time I finished a task – trying to figure out which list I should start working on next. I’d skim through all the lists, and look at them, and re-prioritize them, and five or ten minutes were gone every time I finished something. In my opinion, you want to remove that decision point. You want to make it once during triage, and then you want to roll with your momentum. So I don’t like interrupting my flow with useless decisions, and to optimize productivity that’s something that I do. And I’m able to keep that “to do” list pretty short, because I don’t stuff my “A” list with a bunch of crap. I triage it pretty healthfully, and I either put stuff on my “B” or I delete it or delegate it. I’m pretty guarded about what actually gets on that “A” list, and that’s the step I think a lot of people fail at. They just want to throw everything in there and then prioritize it later. But when you have two or three hundred items on that list it’s just not possible. So even with all the stuff I’m managing, and all of the projects I’m working on, I’m able to make it work with a single to do list that manages both personal and work stuff.
[28:22] I do have multiple queues and “wish lists” elsewhere. So I have an Audible.com wish list, where I keep all the audiobooks that I want to purchase and listen to in the future. So when someone tells me about a book, or I hear about a book on a podcast, hear an author interviewed – even if I’m in the car I can use Siri and say, “Send email to Trello.” It will say, “What’s the subject line?” and I will just put in the title of the book, and then say, “Send.” with no body. That goes into the top of my Trello board. The next time I go into Trello I can very quickly go into Audible, search for it, Boom! – add it in there. I just did that today with Sally Hogshead’s new book, “How the World Views You.” I heard an interview with her last week, and now it’s in a wish list somewhere, and I know that when I’m thinking about that, next time I’m in Audible and I have some credits and I want to get a new book, it’s right there where I want it to be. Same thing with Amazon. Same thing with Netflix. Then I do have some side Trello boards, that are things like projects I want to do with my kids that I heard about or maybe some IOS apps that are teaching how to program, or some science, or something that I want to work on with my kids. I do have those here and there, but these are not to do lists. These are more like lists keeping track of interesting things that I want to revisit later, and so that kind of stuff does not live on my main to do lists, because I don’t want it cluttering up what is my next task to get done for my work or my personal life.
[29:37] Mike: Yeah. So to go back a little bit to your single to do list. When you have stuff on there, do you have like, “Hittail marketing”, for example. Or do you have things, like, “Get a blog post entry for Hittail done that says this…” and then you have like three or four other things that are related to Hittail. Is that on your main list, or do you just have the one line item that says, “Hittail Marketing”, and then off to the side you keep a separate list for all the different things that that would entail?
[30:03] Rob: No, anything on my list is super-specific and super-actionable. Because if I have “Hittail Marketing”, what does that even mean? If I feel like, “Wow! I need to do some Hittail marketing.” I might have a Trello to-do that says, “Check Hittail marketing plan, and pull two or three items into Trello to do” list. Like that would be a “to do”. Then I would go in and think about “What’s next?”, and “What do I want to do?” – I have a contact calendar now, actually, or a marketing calendar. But I would go to the game plan, I would then pull them in, and I would add the three items, and I would prioritize those. Today I have a couple of personal issues. I have to book my son in a camp and I have to send a new contract to somebody and I have to do a final read-through of a WordPress plugin page and add some content to it. So, that’s how specific things are. It’s that when I get there it is an action item. If it is a brainstorming item, then I will put it as such. Like, “Brainstorm new ideas and create them into actionable “to do’s” to loop back to the list.”
[30:59] Mike: Yeah. That’s, kind of, what I was getting at, because it wasn’t clear how you were putting those things into your single to do list. You said that there are different queues or wish lists that you have that are basically just lists of stuff. And I have some of those for AuditShark, and a couple of other things I’m working on, where it’s just, “These are the lists of things that need to get done for it.” And what I’ll do is I’ll put it on my Trello board that says, “Do this.” or “Spend time on this.” And what I do is I say, “Okay. Well, if I’m going to work on that, then I need to go over to this other place where I’ve got a list of 30 or 40 different things.” And I’ll spend two hours executing on some of those things. So I don’t keep that entire list of 30 or 40 things on my main “A” list, because it would just get overwhelming at that point. So I almost have a two-level hierarchy at that point. But not everything in there has that two-level hierarchy. Some of it is just one.
[31:47] Rob: That’s a good point. I have the same thing. I have these marketing game plans for all the different products, and so that may have hundreds of bullets in it. But you can’t have that in your to do list, because you’re not doing all of them soon. So I guess I hadn’t thought about it in those terms, but I don’t want anything on my to do list that I’m not going to get done here in the next week or so. If it’s something that needs to get done months or years down the line then it should be somewhere else. It should be in a goals list. It should be handwritten in my notebook as a goal for 2015. Or it should be – like you said – in a second-tier list of all the things that have to happen for that product that I can revisit periodically.
[32:25] Mike: Yeah, I think the difference between the way we do it is that you have those secondary lists, and so do I. But what I do with them is I work on them and then I leave them in that secondary list, and just mark them off over there. Versus what you do, is you go over to that secondary list, probably delete them or archive them or whatever, and physically move them from there into your “A” list on the Trello board, to say “This is what I’m working on now.”
[32:46] Rob: Yup. That makes sense. So the third step, after Live by the Three D’s is to Aspire for Inbox Zero, but realize that it’s not always feasible.
[32:55] Mike: How many emails are you up to right now?
[32:58] Rob: Right now, since it’s mostly a vacation week, I have 27 emails in my inbox. Today we’re recording. I’m not actually working today, so I didn’t go through this process. If I had, I would probably be down to under five emails in the inbox, and everything else would have been delegated, deleted, or in Trello at this point.
[33:17] Mike: Yeah. I’ve got 21 right now. Then there’s a bunch of them that I can definitely get rid of, but I haven’t sat down to spend the time to go through. I didn’t get a chance to really work today, because I had to take my kids to the dentist, and I had to go to the bank, and I had to file paperwork to close Moon River Consulting, and all of this other stuff. It’s just like I really just have not gotten to my email. I mean, there is a ton of stuff I could have deleted already, but there is a lot of stuff in here that I haven’t gone through that process to actually take care of all the stuff that isn’t going to take me very long.
[33:46] Rob: Right. I think that’s a good point. I don’t view email as this stressful, real-time thing – as I think some people do. They want to instantly reply to every email, and they want to get back to people within a couple of hours. That’s not how I do it. I don’t think that my schedule should be set by a person sending me an email. I don’t think that – they shouldn’t be able to get something on my to do list unless I want it to be there.
[34:07] Mike: That’s a really good point. It was a hard lesson for me to learn early on. I wanted to be super-responsive, and felt like if I was super-responsive to other people, not only would that be reciprocated, but it would also help my business move forward quickly. The fact is that it’s just so blatantly false that it’s hard to comprehend when you’re first getting started. Because those things just do not matter. There’s been emails that have sat there for two, three or four weeks before. At some point they fall off the radar and they become immaterial. They don’t matter at all at that point. If it’s waiting for three days, it can wait for a fourth. It’s not that big of a deal.
[34:42] Rob: Yup. The fourth step of five is to use Boomerang and your calendar liberally. So what I used to do – this is years ago – I used to use a “tickler file”. I don’t know if you’ve ever heard that term, but you would basically have a file that was 12 months of the year, and then you would have another multi-file in each one of those, for each of the four weeks. And if you needed to remember to do something on December 14th, then you would go to your December file and you would go to the second week, and you would place a piece of paper in there that said like, “Revisit this.” But this has become so much simpler with either Boomerang or your Google Calendar – or whatever calendar you use. So Boomerang is a Gmail plugin, and it allows you to not only send email later – which is a cool side benefit – but it allow you to take an email that you do not want to respond to today, can’t respond to today – because you don’t have the information, but you know that you’re going to have the information in a week or two. And you can just – I hit the “B” key, and say, “Next Monday, 10 am”, I hit enter and it’s out of my inbox, and it’s back in my inbox next Monday. So examples of things that I’ve done with this recently are : we’re constantly getting requests to be notified when MicroConf dates are set. We’re still trying to get a contract back from the hotel. I don’t have the dates yet, by I’m assuming that I’ll have them by next Monday. So I have like six emails now that have come in that I’ll reply to and say, “Hey sorry. Not yet. I’ll let you know.”
[36:04] And them I’m boomeranging them back to me next Monday. Now, obviously at a certain point that doesn’t scale. It gets to be too many. It never has. I’ve never had 50 emails Boomeranging back to me in the same morning. These things tend to space themselves out. Another one is, I sell quite a bit of stuff on Amazon. I just like to sell used stuff that I have. I don’t keep it around. And I’ll often be at my apartment near the beach, and I don’t have the stuff to pack it up. I don’t even have the thing that I need to ship, but that email comes in. And I know that I want to be notified of it when I get back to the house, so that I can ship the stuff. So what do I do? Well, I Boomerang that for the day – the morning of – the time when I’m getting back to the house. So those are two, kind of, simple examples. But it’s ways to keep clutter out of your inbox, and for it to come in just in time. You can also – if you don’t want to use Boomerang – just use a calendar event, right. Go in at 9 am that morning and remind yourself, “Hey, this blog post is going live.” I have like a recurring event in the calendar that reminds me “A blog post is going live on the DRIP blog. It’s been scheduled and that morning you need to schedule the Tweet, and do this and do that.” There’s some steps that have to get taken. So, that’s why step four is to use Boomerang and your calendar liberally to keep your inbox clear.
[37:10] Mike: I use Boomerang for basically the same types of things, because I’m getting the same types of emails from people asking when Microconf dates are, so they can plan around them. One of the things that Boomerang does not do is that it does not send you emails unprompted. So one of the things that I like to do – like for our Mastermind group call – we maintain a Google Document that basically outlines all of our previous conversations, and what our to do lists are for the current week, and what we’re supposed to be working on so we can discuss it next week. I actually went into Zappier and set up an email based on a schedule that sends me an email with a link to that document every Monday morning. It actually goes to me and to the other people who are in my Mastermind group. It’s very helpful, because it comes in every Monday, but we only meet every other Monday. So what happens is if I forget to go look at it, and we meet on a Tuesday night, and then the following Monday I get that email. And even though we’re not meeting that week, it’s a reminder “Hey, go check this document and make sure that you’ve at least started working on this stuff.” Because if I were to get it every other week, and I only have a day to work on the stuff because I forgot the previous week, that would obviously be fairly detrimental to my progress on a weekly basis – because I might get sidetracked. But I find that having that email come in every week helps me. But you can use Zappier to send you email notifications on a schedule to do different things. If you have a marketing calendar than that’s fine – you can have those things automatically added. But if you need emails, or anything like that, sent to you on a regular basis for that kind of stuff, I find that that’s very helpful.
[38:41] Rob: I like that. That’s a good hack. Step five is to do the work. It’s to close emails, to turn off notifications, and it’s to move into your to do lists. So, for me, it’s to move into Trello. I prioritize today – pretty much only today. I figure out what has to get done, so I don’t go through my entire to do list every day, but I skim through the top 10 or 15 things, maybe 20. I’ll move the stuff to the top, and then I start looping music and enjoy productivity. And I don’t come back into my email inbox for several hours.
[39:10] Mike: I don’t necessarily prioritize just today. I also try and prioritize things throughout the week, because there’s obviously long-term projects and stuff that you’re working on, that you know that you’re not going to be able to finish all the work on any given day, and it’s going to take several days. So, I will prioritize things a couple of days into the future. So for certain longer-term things I’ll say, “Okay. I’m going to work on it for two or three hours today, and then I’ll work on it for a couple of hours the next day, and the day after that.” But I use that primarily for those things that I know I’m not going to be able to finish in a single day, or a single sitting.
[39:38] Rob: That’s interesting. See, I would break those things up into smaller tasks. So if you had something that’s like a 12 hour task, I would actually break it up into its components, and figure out what 2-3 hour blocks it could be crunched down into.
[39:52] Mike: Yeah, this is writing for my book. Depending on how I feel, or what comes to mind when I’m sitting down to do it, I may feel like writing about a certain topic, and I may not. So that’s where I just start breaking out, and say, block off blocks of time to do this. I don’t necessarily block out specifically what I’m going to be doing during that time. It’s just, you know, “Spend these three hours working on that.”
[40:14] Rob: Yeah. I can see doing that.
[40:15] Mike: But I just, kind of, pull from the outline at that point. It’s like, I get to the beginning of that three-hour block and I say, “Okay. Go to the outline for it, and then look from there.”
[40:24] Rob: Yup. That makes sense. That’s probably how I’d do it as well. So to recap, our five steps to answering emails, managing a “to do” lists, and staying productive are, Step 1 : Check your email once or twice a day, Step 2 : To live by the “Three Ds : Delete, Delegate, or “Do It”., Step 3 : Aspire for “Inbox Zero”, but realize it’s not always feasible, Step 4 is to use Boomerang and your calendar liberally, and Step 5 is to do the work.
[40:47] Mike: If you have a question for us, you can call it into our voice mail number at 1-888-801-9690, or email it to us at : email@example.com. Our theme music is an excerpt from “We’re Out Of Control” by MoOt, used under Creative Commons. Subscribe to us on iTunes by searching for “Startups” and visit www.startupsfortherestofus.com for a full transcript of each episode. Thanks for listening, and we’ll see you next time.
[00:00] Mike: In this episode of Startups For the Rest of Us, Rob and I are going to be talking about why you shouldn’t worry about competitors. This is Startups For the Rest of Us episode 217.
[00:14] Mike: Welcome to Startups For the Rest of Us. The podcast helps developers, designers, and entrepreneurs be awesome at launching software products. Whether you built your first product or just thinking about it. I’m Mike.
[00:22] Rob: And I’m Rob.
[00:24] Mike: And we’re here to share our experiences to help you avoid the same mistakes we’ve made. What’s the word this week, Rob?
[00:27] Rob: Well, I just wrapped up an AMA, ask me anything, on Bootstrappers.io. We’ll link it up in the show notes. But it was a lot more work than I thought it’d be but it was also pretty fun. I got questions from folks like Andrew Warner, Brian Castle. There was a lot of good stuff that came out of it and actually there were so many questions and I answered all of them, but there were a lot of the answers that I really want to flesh out, either into full-length blog posts or a full podcast episode because there’s just so much to say about certain topics.
[00:56] Mike: Very cool. So, what brought that on?
[00:58] Rob: I was emailed by the guy that writes Bootstrappers.io. He asked if I wanted to do it and I said as long as in the Bio you could include a mention of Drip. I’d never done one so I didn’t know how much work it would be or what the real impact of it would be. Turns out it was pretty cool. It was neat to see how many names of people that I recognized. Emailed us, asked questions through the podcast, that I met at MicroConf, run other podcasts. It was fun to just be involved and be doing something in public. I think I had actually mentioned in Founder Cafe, kind of my status update, I need to start doing more things in public again. Because aside from the podcast, I haven’t published a book in a long time. I haven’t been blogging nearly as much as I used to. I’ve really been heads-down, focusing on growing Drip.
[01:42] And while that’s what needs to be done right now to grow it, I want to do more things like this and just get back to the way it was. I mean, three or four years ago, I was publishing stuff every which way online all the time. I was just all over the place and I’ve since been focusing more on businesses. But I do really enjoy doing things out in public and it makes me happy to do that. I’m happier when I do it. So, I think part of 2015, that’s something I want to get back to.
[02:09] Mike: I don’t want to call it getting back to your roots, but getting back to the things that you started out doing and kind of the reasons why you started bootstrapping and kind of sharing this stories and experiences and stuff online. It’s just because it’s fun and it’s helpful for other people but most of all you just enjoy doing that.
[02:25] Rob: That’s right. Yeah, since it’s the week of Christmas, I have basically backed off on almost all of my advertising, even some of my re-targeting and there’s not a lot of action going on right now in the B to B space. So, I actually stopped publishing new blog posts on the Drip blog this week as well. I’m stockpiling some pretty good content, some ad ideas and even some videos that I’m going to be pushing live in early January. About email marketing and how to do it and all that stuff. So, just trying to get that all in line because aside from just having the content, there’s always the technical issues of how you’re going to upload it, how you’re going to present it, how you’re going to market it. And I’m trying to iron all that out and get things going, so. At this point it just feels like easing into the end of the year. Kind of how it goes every year. And then second week of January, really ramping things up.
[03:12] Mike: So, the only other thing I’ve kind of been paying attention to lately is the fact that we still don’t have a signed contract from MicroConf yet because everybody’s on vacation so we basically still have the dates as tentative, which kind of sucks.
[03:23] Rob: We’ve had the toughest time this year just getting a venue nailed down and getting a contract signed. It’s been crazy. I think this has been the worst year we’ve had.
[03:29] Mike: Yeah. I think even the first year was quicker. What was it, like the first year we went from zero to conference in what ten or twelve weeks or something like that?
[03:36] Rob: Yeah.
[03:37] Mike: Well, today’s episode is kind of inspired by Robin Warren and he wrote into us and he said, “Hi, guys. I’m responding to the request for episode ideas from the newly branded Founder’s Cafe. Every time I see some information on a competitor or even something that looks like a competitor to the app I’m developing it’s like being punched in the stomach. I know logically it’s a good thing and that it helps validate the market and now I need to work out how to compete with them. Maybe in time I’ll internalize that and my intuitive response won’t be to get deflated. To help with that it’d be cool to have an episode on competition and what to do when you discover competition or see them getting more press, or influence, or attention. Hopefully some sense talking from you guys can help bring the intuitive side of my brain into a bit closer to dealing with these events without wanting to give up.” I brought this up partly because it’s also a section I’m putting into my book which made doing the outline for this really easy this week.
[04:24] Rob: Yeah, and speaking of your book. If folks want to hear more about that they can head to Singlefounderhandbook.com.
[04:31] Mike: One of the things that have kind of come back to me and some of the customer development that I’ve been doing for the book is that people have been saying that they’re having a hard time dealing with competitors. And part of it was some of the things that Robin talked about. But a lot of the stuff has to do with things like bootstrappers tend to want to build stuff that nobody’s ever built before. Or they don’t want to be seen as if they’re copying from others, or, and I think that a lot of people have this issue, is that they don’t want to put their stuff out there because they’re afraid of other people copying their ideas. So, I wanted to talk a little bit about competition and why you shouldn’t necessarily worry too much about other people competing with you and you also shouldn’t worry too much about having to compete with other people. And I think that kind of laying some of these things out will help put people’s minds at ease.
[05:14] Rob: Yeah, I think there’s kind of a spectrum here, right? If you’re trying to build something on the side that’s really small and the market is tiny and maybe you only want to get a thousand or two thousand bucks a month and you’re kind of doing that first step of the stairstep process, then having a competitor that is way ahead of you and is executing well, it can be a real issue. So, I don’t think that competition is always a good thing especially in a smaller market like that. But assuming that’s not your initial goal or that’s not the goal that you’re trying to attack right now, then let’s talk about why bootstrappers seen to have a hard time with competitors.
[05:50] Mike: So, I think the first one is that they want to do things that nobody has ever done before. I think the downside to this is when you are trying to do something that nobody’s ever done before, you haven’t really proven out the business idea, yet. There’s no justification there that says, “Hey, there’s people who are willing to pay for this.” And I think that’s one of the downsides of trying to go into a market where there aren’t any competitors, and as I said, there’s this propensity for developers to say, “I want to green field project,” when in some cases that can actually be harder because there’s no justification there that anybody’s willing to pay for it, so you have to do that work yourself.
[06:24] Rob: Yeah, and I think there’s two sides of this. An example of doing something that no one has ever done before could be something like, coming up with some new B to C social network idea or it could be trying to build really, really good low priced software for accounting for the timber industry, right? If no one has ever done that before. And those, if there really is no other competition, it could be a real sign that either, A, the idea’s too risky, or that the market is not large enough. Now, examples of doing something no one has ever done before, that I think are better ideas or that actually have some viability, is if you said, “Okay, no one has ever done e-signatures on WordPress, so I’m going to combine those two.” Or, “no one has ever done an Eventbrite crossover with WordPress, so I’m going to build a WordPress plugin that essentially allows me to emulate Eventbrite.”
[07:13] There you’re just combining stuff, taking an idea that’s already worked and you’re moving it into a new eco-system. Into WordPress, a place where you know you can get leads and that there are channels of folks coming and looking for it. So, I think that’s a good differentiator. We’re not saying that you should never do stuff that no one has done before, but if someone has done something before and it hasn’t been delivered to a particular eco-system or you can put a spin on it but still keep it kind of B to B and true to it’s original form to where you can tap into a nice marketing channel, then it can actually be something that can work for you.
[07:45] Mike: You know, it can be more work because you have to justify the application’s existence or you may need to educate on why it is that they need it. And it’s not to say that’s impossible, it’s just that it can be a little bit more difficult. Whereas, if there are competitors there, it helps to kind of provide you that assurance that people are willing to pay for it.
[08:04] Rob: Yeah, I agree. And if you push into a brand new space and you can’t just come in and say, “All right, we make email marketing software and here’s how we’re different from the two or three incumbents that you know about.” If you can do that, you’re actually in a pretty good position. But if you come out and instead of being able to use a short phrase like email marketing software, or marketing automation software, or accounting software instead of being able to do one of those things and you have to say, “Well, we build software that helps you do this and that,” and every time someone asks you you find that you have to explain what it does rather than being able to just name a two or three word description that everybody knows, that’s where you’re really running uphill.
[08:42] Because people want to be able to link your product to something that they already know about and they want to be able to position it with something they already know about. And if they can’t do that then it is a real uphill battle, especially for a bootstrapper because it’s very expensive to educate people and to try to get them to understand what you’re building and why they should need it if they don’t already have that knowledge.
[09:03] Mike: So, the second problem is that developers don’t want to be seen as if they’re copying others. And this kind of goes back to the first one where people want to have green field ideas but they don’t want to be seen as if they’re completely ripping off and idea that somebody else had. And I don’t know whether that has to do with self-esteem because they want to say, “Oh, look how smart I am. I came up with this brand new idea that nobody else had ever done before,” and I’ll use time tracking software as an example. There’s only so many ways that you can track your time online using applications. But if you look around on the market, there’s like thirty different time tracking applications and that’s probably an understatement. They’re just everywhere. But in some way, shape, or form, they are all a clone of one another. So, the reality is that it doesn’t necessarily matter whether or not you’re doing that. It’s like are you doing it well and are you serving a market?
[09:50] But I think that’s a psychological barrier that people have is that they don’t want to be seen as if they’re cloning some other application out there. Which in my mind is actually very funny because if you look at something like Linux. It’s very widely used. It’s a clone of Unix. If you look at Apple’s OS X, it had it’s roots back in PSD. It’s not the same thing, obviously but that’s where it’s roots are. And those things naturally evolve over time. They’re not going to stay the same throughout their lifespan, so even if you’re using somebody else’s product or application or design as kind of a starting point, it’s not going to stay there. But I do think that this is one of the things that people have a hard time justifying to themselves and to others.
[10:29] Rob: Yeah. And, I think the bottom line is, especially at the scale that we’re all operating at, which is very, very small compared to the rest of the world, people just don’t really care unless you rip off marketing verbiage, or homepage headlines, or a feature by feature, or you really are stealing tactics, that’s when people start to care. But even then it’s typically only the competitor. If you’re stealing someone’s headline, they care, but no one else notices. Don’t rip off other people’s marketing, don’t rip off their feature by feature, but be less concerned in general about being seen as copying others, because frankly it doesn’t really matter that much. It’s so much about how well you’re going to execute and how you can out-market other people than it is about building a product that might be similar or close in positioning to another one.
[11:15] Mike: So, I think the third reason bootstrappers have a hard time with competitors is that they don’t want other people to steal their ideas from them. So, similar to them not wanting to take other people’s ideas, they don’t want other people taking their own ideas. And this is really just the reverse of what we just talked about. But the reality is as soon as you take your product and create a webpage for it and people can go sign up for it or download it, that can easily happen and people can go out there and take it to their heart’s content and do what they want with it. They can copy to UI. I mean there’s loads of GPL software out there that is almost a one hundred percent ripoff of various applications. As I said, it’s kind of humorous that you look at those things and that’s deemed okay, but as soon as an entrepreneur goes out and tries to make money off of something like that then it’s a big no-no. The reality is that once your product is out there, you are inevitably going to have other people copying from you and that’s not necessarily a bad thing because just because they’re copying your design doesn’t mean they’re copying all the underlining things that make your product special. And that’s really what you should be concentrating on is making your product special.
[12:15] Rob: Yeah, we’ve talked about this a lot in the past on this show, just about how you shouldn’t be afraid of talking about your ideas to people. Now, something I would not do is go publish on the open internet my entire marketing plan or something that I consider to be a real unique competitive advantage that I have. But to tell someone that I’m going to be building an email marketing app or I’m going to be building a time tracking app and even to give out some ideas of it, what’s it’s going to be or how it’s going to be different, there’s just so few people who can even execute on that well enough to be a competitor and those people tend to have their own good ideas or they have their own good things going on. They’re not going to sit around. The people that are going to sit around and take your idea and try to duplicate it tend to be the ones who want some sort of shortcut and aren’t going to follow through and don’t know UX well enough and who don’t know how to market well enough, they just aren’t really going to be that much of a competitor to you.
[13:07] Mike: So, I wanted to dig in a little bit and talk specifically about seven different reasons that having competitors doesn’t matter. And the first one is that established competitors help to justify the market. And as I said before, when you start looking at a market and you start building a product, when you find established competition and they are making ends meat by actually having a business that they’re making money from, then what that is is that’s a signal that you can use to say, “Hey, there are customers that this particular product is serving that are willing to pay for this particular product.” Now, that doesn’t necessarily translate to you being able to reach them or you being able to fully serve all the needs that they have, and it’s one of many that you have to take into account and it’s helpful to know upfront that people are willing to pay for that kind of solution as more of a data point than anything else.
[13:54] Rob: Yeah, the interesting thing is, especially if you have extremely large competitors who are doing tens of millions or hundreds of millions of dollars, they are almost always leaving behind some group of people. They’re not serving them very well. Because that’s how you grow large is by covering this horizontal space, and so if you take a mega time tracking app or a huge accounting system or an enormous email marketing system, I think we all have ideas of what each of those are, you’re always going to find people on forums, or Twitter, or just in your circle who are saying, “You know, they are not serving,” insert demographics here, “they are not serving startups very well.”
[14:33] You can use them for those purposes but there are all these verticals that you can dig into that you can serve better as a small micropreneur, solo entrepreneur, on getting started, and you’re right, the established competitor helps justify that market on a large scale. What will happen is, you can find a little niche under there that could be a couple grand a month or maybe it’s five or ten grand a month and you can sneak in under their radar and they won’t even notice it but it’s still a nice little business for you.
[14:59] Mike: So, number one deals more with established competitors but number two is specifically aimed at when you’re building a product and it’s kind of a new product and you find somebody else who’s also building the same product. It helps but it doesn’t absolutely justify that there is a market. So, if you’re building a time tracker that hooks into a very specific piece of software, maybe it hooks into OS X and it allows you to trigger it from a Macro, or something like that, if you look out there and you find somebody else doing that exact same thing but they are not far enough along that they’ve actually launched, I put this in the same bucket where as a data point but it doesn’t necessarily define the entire market.
[15:37] It doesn’t say that you’re going to be able to meet their needs and everything else. I think this is a little bit different than what you also just explained where you’ve got a large competitor where they’re leaving behind a big piece of the market where there would be space for somebody smaller to come in and take ten to fifteen thousand dollars a month. It’s a little bit different than that.
[15:54] Rob: Yeah. When I look at competition as a really small startup or solo entrepreneur I’m not scared of the large competition because as I said you can sneak in under their radar and take a much smaller piece of the market that’s still substantial for someone of our size. I am more concerned about new competitors, always, because they’re the ones that are agile. They’re the ones that are out there and hungry and doing it on the side like you are and they’re the ones that are going to be talking to probably overlapping customers or prospects that you are and you guys are going to be competing for business more than you and that giant behemoth email marketing company or whatever, time tracking, whatever it is you’re building.
[16:32] So, they definitely cause me more concern but I agree with you that, you know, it used to be that when I would see new competition enter a market, you always give them the benefit of the doubt. If they raised funding, you think, “Wow, they’re legitimate.” If they haven’t raised funding, you think, “Wow, they’re scrappy.” Almost always that’s an incorrect assumption. And that people out there launching things are just bound to fail. More often than not, the colleagues that I know who are in these markets and new competitors come in, we’ll look at them together and we’ll talk through them and almost every time that competitor winds up fizzling out within three to six months because they don’t know the UX, they don’t know how to market well enough, they don’t learn what their customers really need, and they often rely on a single feature. It’s funny, you said time tracking that integrates with Macros or whatever, that’s a great single feature to start off with and that’s a great headline to kind of get out there.
[17:21] Almost guarantee you that feature will be implemented by either larger competitors or other small competitors quickly and so you then have to figure out what’s next. If you don’t continue to evolve then you are going to lost market share and you’re going to lose it. And that’s what I see a lot of these fly by night competitors coming up doing. So, new competition as you said, it helps justify the market, it doesn’t absolutely guarantee there’s a market and while I have more concern about them than larger competitors, overall I found that they don’t tend to stick around in general.
[17:48] Mike: So, the third reason that having competitors doesn’t matter is that once having your product launched anyone can sign up for it an copy everything you have done anyway. Working in secret, we’ve talked about this before, in general is really just not helpful because the software isn’t what gets you customers, it’s the marketing engine behind it and it’s a lot more difficult to copy that than it is the product which is more or less public. There are ways to spy on your competition and see what ad words they’re going after or what keywords they’re targeting on their website for SEO and everything else, but the reality is their marketing engine or their marketing plan is probably a lot deeper than you have visibility to and the same thing with yours. Your marketing plan is not public knowledge for everybody to see. So, just because they can copy your product doesn’t mean that they can copy all of the associated things that go with it that are helping you to get in front of customers and help turn them into paying customers.
[18:40] Rob: Yeah. Some other things that are essentially competitive advantages that you build up as a snowball over time and are kind of moats that are hard to cross are things like a lot of link authority and so therefore, a good SEO juice and a high proportion or a high number of organic visitors every month coming to landing pages where you’re capturing email addresses. If you build up that engine, which has nothing to do with the product and can go unseen if people are not actually looking at what you’re doing, that is a flywheel in a half right there. And so, if you have a competitor who comes in late, even if they can take your whole product, they can’t catch up to that kind of thing.
[19:17] Another thing is knowledge of paid acquisition because you can honestly burn through thousands of dollars on a bunch of channels figuring out one channel that works and the demographics and the keywords that work for that. When you have that knowledge and your competitor doesn’t, that’s an advantage. Another one is your network. You can do joint ventures, you can get people to come and vouch for you, you can get people to do courses with you and webinars and all kinds of stuff. So, if you get out ahead of someone and you can use your network that’s another thing that’s really hard to compete with. But the product itself, in general, is relatively easy to replicate. There’s obviously are exceptions.
[19:55] Actually another thing is knowledge of your customers, and that’s one thing that I don’t want to leave out here, is that a lot of people launch products and then are selling to customers and they don’t understand who they are or why they’re buying and all that stuff. Once you have an in-depth knowledge of who your customers are and how to reach them and why they’re buying, which is all encompassed in that single term, marketing, you have a competitive advantage that a newbie coming on board, even with a half million dollars in funding, trying to launch a direct competitor to you, they will likely lose because you’re just so far ahead of them in terms of that knowledge.
[20:29] Mike: The fourth reason for why having competitors doesn’t matter is that in many cases it’s hard to imagine a scenario where there’s just one winner and everybody else loses. And if you look at major players out there. You’ve got Apple and Microsoft, you’ve got Oracle and SQL Server and kind of our space, you have much smaller companies but there are still several of them out there. You have companies like LaunchRock and Kickofflabs and Unbounce that are all kind of competing in basically the same space. And then another set. You’ve got FirstOfficer.io and HookFeed and Baremetrics and they’re all competing in the same space. And they’re all have viable products and they’re all making ends meet. So, the point is that it’s not a zero sum game where for you to win everyone else has to lose.
[21:07] There’s almost always room for more players. And I say almost with that little caveat, there are definitely places where there are not enough room, the much smaller areas where it’s really just not worth the time or effort to have multiple competitors in that space. If you’re looking to build any sort of serious business you have to examine the possibility of what happens if a competitor comes in here? And is there enough room for multiple people to play. That should be part of your consideration process.
[21:32] Rob: Yeah, that’s the important part again, right? If the market is tiny. If it’s a two-thousand dollar market then there probably aren’t room for competitors. But in any of the spaces that we’re talking about today, there tends to be room for another small competitor. And what typically happens is apps come out that is very similar to a competitor but they have one twist, they have one feature differentiation. Or maybe it’s a pricing structure, a business model differentiation. And customers who aren’t happy with that first incumbent, come and take a look at yours, and you’re going to find that some like your product and others don’t, but you’re going to find out why they like it and then you’re going to move more in that direction. The product is not stagnant and neither will your customer base be.
[22:11] You’re going to build more features for that group and you may find that you start a competitor, you know, a new landing page competitor to compete with LaunchRock, Kickofflabs, Unbounce, LeadPages and you try to differentiate in one way and all of a sudden it’s like e-commerce, providers are really using this and they like that one feature and so then you just go and you focus and you niche down on e-commerce. We’ve seen Nathan Barry do this on ConvertKit. He launched ConvertKit and the landing pages and kind of email marketing built in and he’s niched down because he’s found out that he had a lot of authors who were interested and so now if you go to his homepage the headline is email marketing for authors. And so he’s niched down. That wasn’t the original goal. Same thing happened with Drip.
[22:47] I launched it with the certain unique selling proposition and that has changed over time and I’ve entered the marketing automation space purely from customer requests. So, this stuff tends to shake itself out over time. If you get in there and you get some customers and you follow the lead and try to figure out what’s the most valuable thing for the largest group of customers that you have and you can move in that direction then you’re right there’s room for more players because you’re going to spread out anyway. You’re not all going to stay clustered in the middle of the market.
[23:14] Mike: And part of what you said in the beginning kind of leads on to number five which is that customers sometimes change products. There are times where you’re going to be able to accommodate the changes that they’re asking for but there’s times when those customers are not going to be willing to wait and those customers very well may look at the competition and decide that they’re going to switch. Just because somebody signs up for your competitor doesn’t mean that they’re not going to have a bad experience or some problem that that competitor can’t solve. That can be an opportunity for you to succeed in the long run.
[23:41] Just because somebody signs up for your product doesn’t mean that they’re not going to switch in the future. And this goes back to having enough room in that market for more than one player. The sixth reason is that different competitors can serve different market segments better. And this is generally according to their marketing. It tends to have very little to do with the product itself. It has to do with how they’re positioned in the market. So, for example, if you think about something like Constant Contact or MailChimp, you start thinking about the types of customers that are going to use those. And I think for MailChimp you kind of gravitate much more to thinking of them for bootstrap startups and much smaller companies. The reality is that they can scale up very very high and they can handle massive email lists. The same thing with Constant Contact. But Constant Contact has a, I’ll say a reputation, for working with brick and mortar businesses than anything else.
[24:29] It’s not to say that that’s true of exactly what they do but that’s a reputation that they’ve kind of established in a lot of the direct response marketing that they’ve done and working with people at a local level to handle all these different events that they’re doing where they’ll send somebody in and they’ll do an in person presentation. Invite a bunch of people in and show them how it works and what they can get out of it. It’s much more about how they’re addressing the market and how they’re presenting themselves to the market in terms of what they’re capable of delivering. And it’s about the perception of the customers. So, if you can position yourself differently then you also have an opportunity to compete against them by positioning yourself one way versus how the other company positions themselves.
[25:13] Rob: Yeah, and the way I think I want to enter this is if you are a single founder and you don’t have a lot of budget and you’re doing this on the side, I’ve always said, you want to enter a vertical first to try to serve that vertical as best you can. And then later, if you get enough momentum, spread out into the horizontal. If you ever get there. I mean if the vertical’s big enough you can stay there. I think if you have more horsepower, you have a little bit of funding or you have a couple developers who you’re working with, you have a larger team, then you can consider going into a space and being a little more horizontal, getting a lot of people using it, and then figuring out which is the most valuable. And then almost, kind of like I said, going the reverse direction of catering maybe just to authors like Nathan Barry’s doing or switching, specializing, going from just this broad email marketing into marketing automation which, I guess, not directly vertical, it is a subset of email marketing. So, you can attack it from two directions depending on the resources you have when you start.
[26:10] Mike: And the last reason that having competitors doesn’t necessarily matter is that your customers are the ones that should be driving your product road map, not your competitors. The fact of the matter is, your customers are going to be different than your competitors which means that you’re talking to them and your competitor is not. So, naturally what’s going to happen is that naturally over time your road map is going to naturally diverge from their road map because your listening to your customers. Presumably, they’re listening to their customers and if they’re following you it’s going to be very difficult for them to attract those types of people because if they’re not talking to their own customers and they’re just copying what your website says that your product does, it’s going to be an uphill road for them and they’re probably not going to last very long. But if they’re talking to their own customers and listening to what their customers have to say to them then chances are you guys are going to go in different directions. And if you do end up going in the same directions, then at least you were listening to your customers and those are the people who are driving your revenue anyway.
[27:02] Rob: Yeah, it’s pretty rare that I see two companies whose road maps are just lockstep for months or years at a time because when you are listening to customer feature requests and prospect, you know, lead feature request who are very serious about signing up and you’ve kind of validated that and they’re basically saying, “Yeah, can you do this one more thing and then I’ll sign up?” As you qualify them at that point, you’re just going to get different requests. You’re going to get feature requests. You’re going to decide to go in a slightly different direction than your competitors and I think that’s a good thing because it helps differentiate multiple products that are in the same space and while you are still competitors it will kind of broaden your differences over time.
[27:40] The only time I’ve seen competitors that are almost lockstep in terms of features, is when one competitor is basically watching the other competitor and whenever the second competitor releases something, the first one then goes and builds it. And that’s what I was talking earlier about the people who are doing it wrong in the long term are doing that. Because if none of your customers are asking for this and you’re basically just trying to be a clone of another service that’s successful, that’s not the way to find long term success, right? Over time, you’re eventually going to lose because that’s boring, you have no differentiation and you have kind of no unique selling proposition, you’re trying to duplicate someone else’s selling proposition, and again, just long term, that’s not the best play.
[28:22] So, we outlined this whole episode based on a single question from Robin Warren. Thanks for the question Robin. And if you have your own question for us and would like to see us answer it on air or turn it into an entire episode, you can call out 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 and it’s used under Creative Commons. Subscribe to us on iTunes by searching for startups and visit startupsfortherestofus.com for a full transcript of each episode. Thanks for listening. We’ll see you next time.
[00:00] Rob: In this episode of “Startups for the Rest of Us,” Mike and I talk to a single founder who launched a seven-figure SaaS app with special guest Nate Grahek. This is “Startups for the Rest of Us,” episode 216.
[00:18] Rob: Welcome to “Startups for the Rest of Us,” the podcast that helps developers, designers and entrepreneurs be awesome at launching software products, whether you’re built your first product, or you’re just thinking about it. I’m Rob.
[00:28] Mike: And I’m Mike.
[00:29] Rob: And we’re here to share our experiences to help you avoid the same mistakes we’ve made. So, what’s the word this week, Mike?
[00:33] Mike: Well, I’ve been to the gym 15 times in the last 18 days.
[00:37] Rob: Congratulations.
[00:38] Mike: I actually don’t feel all that bad. It’s just like there’re certain muscle groups that I didn’t know that I had.
[00:43] Rob: Did it get easier after the first few days?
[00:45] Mike: Well, the first week was the worst, and then since then things have gotten significantly better. It’s not nearly as bad as it was the first week. I mean the first week was really rough, and even my wife said it was like the – I was only three days in, and she was just like, “I don’t think he’s going to make it.” [Chuckles]
[00:59] Rob: So, MicroConf Vegas 2015 – it looks like we finally, finally have dates. So, it looks to be April 13th and 14th in Las Vegas; and then, of course, we always have the evening reception on the 12th. So, that’s really a Sunday night, Monday, Tuesday. We have signed a contract and sent it in. We haven’t received the countersigned contract yet, but my guess is by the time this episode goes live, that we will. So, if you’re interested in hanging out with about 200 self-funded startup founders, single founders, head over to MicroCom.com, enter your email address there, and we will be selling tickets in the next few weeks. Myself and Heaton Shah are confirmed as speakers, and we have basically a full list of all the speakers we’re going to be inviting. We just have not emailed everyone yet.
[01:45] Mike: On episode 214, where we discussed Inbox Zero a little bit, Jack Jones left a comment on the blog, and he said, “For Inbox Zero, I highly recommend FollowUp Then. I tried Boomerang and others, but FollowUp Then works completely via email – no separate app or plugin to use. This means you can use it from wherever you deal with your email. It has lots of cool features, like scheduling tasks, automatically, following up with other people and automatic cancellation when someone replies. Between FollowUp Then and emailing tasks to Trello, I’ve maintained daily Inbox Zero across three businesses and my personal life coming up on a year now.”
[02:15] Thanks for that, Jack. And Tyler also said, “The two tools that’ve helped me maintain Inbox Zero for quite a while are Boomerang and TeuxDeux.” And it’s T-e-u-x-d-e-u-x. “Boomerang’s perfect for getting emails out of your inbox when you want to deal with them later, while the simplicity and automatic task rollovers of TeauxDeux have made it my top to-do and calendar app.”
[02:32] Rob: Very nice. Good tips. We also got a comment from Ben on episode 215, which was our predictions episode in which I predicted that five-terabyte cloud storage would be under a hundred dollars next year. And Ben said, “The five-terabyte cloud storage for under a hundred dollars has already happened. Microsoft announced back in October that OneDrive will be unlimited cloud storage, rolling out in the coming months. Both Office 365 plans of around 70 bucks a year or a hundred dollars a year will also include unlimited storage. And while not unlimited, my OneDrive plan was bumped up to 10 terabytes for a hundred dollars back in November.”
[03:09] So, I appreciate you pointing that out. So, either I’m a genius with my prediction and I was ahead of my time, or I’m just misinformed about present-day cloud storage offerings.
[03:18] I tried out Cascade content based on your mention and basically had them write a knowledge-base article based on a screen cast, and this is for the Drip knowledge base, where I recorded screen casts because they’re faster for me to do. But I’ve had requests from customers that they want to see a written version of those, and so far, so good. They’ve done one video and turned it around in two or three days, and so I think I’m going to send them – I probably have five or six others that I’d like to get done. But what’s nice is this allows me, moving forward, to not have to worry about writing it out myself or hiring someone. I just have someone that I can send a video to as soon as I post it, and then within a few days, get it back – kind of like getting a transcript done or something.
[03:58] Mike: Awesome.
[04:00] Rob: So, today Mike and I have the distinct pleasure of having special guest Nate Grahek on the show, and Nate is a single founder who launched seven-figure SaaS app. He’s also a lifetime Academy member. So, welcome to the show, Nate.
[04:12] Nate: Thank you so much for having me, guys. I’m kind of a little star-struck, to be honest. It’s fun to listen to you guys each week, and to actually be on the show, it’s definitely an honor. Thanks for having me.
[04:22] Rob: Very cool. Well, do you want to start by telling folks briefly who you are, what you do?
[04:28] Nate: Oh, sure. In 2012, I started a company called StickyAlbums.com. It’s a service for portrait photographers to create custom, mobile apps for each of their clients. So, a wedding photographer, an infant photographer, high school seniors – they deliver a subset, like a very simple image gallery, as a mobile app; and it becomes a marketing tool for the photographer. That’s the big problem we solve. We help photographers get more customers.
[04:56] Rob: Very cool. And is your background in development? Are you a designer?
[04:59] Nate: My background was in training and development and corporate training, and very quickly I had to learn how to do web development because all training with the economy around that time was moving to the web. We couldn’t afford to fly people in for corporate stuff anymore. And so I learned HTML. I learned Flash. At the same time, iPads were blowing up, and my boss says, “Nate, we[‘ve] got to put all training in iPads.” So, in the course of figuring out how to put other content on iPads and iPhones and other mobile devices with HTML, I was also doing portrait photography on the side and kind of had that classic, light-bulb moment – like scratched my own itch. “How can I make my portrait clients better at referring me new business?”
[05:43] Rob: Very cool.
[05:44] Nate: And I asked one of my high school senior clients – because I was giving them paper business cards to pass out to their friends, and she’s like, “Yeah, we don’t like carrying paper. What if I give you your own custom app with your face on the icon, and you can just share that with your friends?” They were like, “Oh, yeah. I don’t go anywhere without my phone.” So, that was the crux of the idea right there.
[06:02] Rob: Got it. And so you were a photographer?
[06:00] Nate: Yes. I’ve learned a lot about what it means to be a professional photographer now. I’m very much humbled, as the range is huge.
[06:11] Rob: Sure.
[06:12] Nate: The market’s huge, but the range is also pretty big, and I was definitely considering myself a rookie on that scale. The domain experience really, really was valuable.
[06:21] Rob: So, you started StickyAlbums.com in – was that 2011 or 2012?
[06:27] Nate: 2012. I launched the site and the domain, like, late ’11 and then had my first sale right in January of 2012.
[06:35] Rob: Got it. And so today, towards the end of 2014, where does your business stand in terms of revenue – whatever you’re willing to share – and team size, if any? I’m not sure if you have full-time employees or –
[06:47] Nate: Yeah.
[06:48] Rob: – contractors.
[06:49] Nate: [I’ve] got a lot of competition, so I’m trying to decide what I should share with them. They just flooded the market after I approved this idea –
[06:55] Rob: Oh, jeez.
[06:56] Nate: – and the competition’s been healthy, but it’s all good. So, within the first two years, we grew to 5,000 photographers. Everybody can do the math. It’s roughly a million dollars in annual revenue. That was a blur. To grow that quickly was pretty intense. And now the last year – so, our third year of business, we’ve kind of plateaued a little bit because of the annual, recurring thing, where we have people that are no longer photographers that were. And we’re still replacing them with new photographers at a pretty good clip.
[07:25] And then since this year, I really sat on the decision of growing the team for a while, because I’m really a huge fan of you guys’ podcast and the idea of staying small and flexible and manageable. But I knew that I wanted to grow something for photographers that was going to be around in the next five years. In order to do that I wasn’t going to be able to do it myself anymore, and so this year I invested a lot of energy in growing the team. We now have four full-time employees, including me. We’re hiring our fifth in January. We’re hiring a full-time designer I’m pretty stoked about, and then we have four other part-time employees that are contractors. So, that growth was exciting. It’s daunting to switch gears into being a manager now. A lot of my time goes to managing, but it’s really rewarding to create a remote culture where people can come to work when and how they want to. I get the unique personalities from everybody adding to a much greater sum. It’s pretty cool.
[08:22] Rob: Yeah, that’s a lot of fun. I know that feeling, too – you know, having gone from kind of doing everything on my own to then expanding. It’s good to have a team.
[08:29] Nate: Yeah, it is. It’s daunting. I’ve got two, small kids. I knew the risk involved in growing. Being a manager always takes more time than you think it does. There’s a human element you never plan for. Despite all that added complexity, it’s incredibly rewarding. Like, I got to give people holiday bonuses this year, and that’s felt really good.
[08:47] Mike: So, one of the things that you mentioned early on was that you were talking to somebody. You wanted to give them a business card, and they just said, “Oh, we don’t really like paper.”
[08:55] Nate: Yeah.
[08:56] Mike: And you kind of went down the road of saying, “Well, I could put your face on an app.” What sort of validation did you do for this idea, or did you just kind of dive right in?
[09:03] Nate: Well, it was first, like, the ‘scratch my own itch’ model where I just made these. Technically, I know I’ve got a lot of developers on the call. It’s an HTML 5 web app, so we’ve built it using some open-source and some proprietary tools. We prompt the user to save the web app to their home screen, and we populate it with a home screen icon, but it is just a website that saves offline. And so there’s huge advantages to it being that way, where it’s shared with just a link instead of it being an actual, native app. There had been other vendors in this space that have tried that model and failed because it’s too complex to try to submit that many apps to the app store. The photographer has to have their own developer license and on and on and on. There’s just a lot of complexity there that we short-cutted by making it HTML, and it’s something I figured out. I taught it myself, and I was just making these sites for my own personal photography clients. I gave them to the client, and they loved them, and it brought me new business – and so much new business that I stopped sharing them in my own business, because I knew I wanted to grow StickyAlbums – not my photography business. So, I had to stop using my [chuckles] own product because it was working too well.
[10:12] Mike: Got it. So, this is really not even an app itself. To the user, it looks like an app, but really it’s a shortcut to a website on their phone – right?
[10:20] Nate: Exactly. I can do a link, or I’ll give you guys a URL. I can post my show notes, and people can see an example of what one looks like.
[10:27] Rob: Very cool. And your pricing – it’s 19 bucks a month, 29 bucks a month; and then you have a lifetime, it looks like, that’s $699?
[10:34] Nate: That’s actually going away. The pricing page is kind of tricky. We could spend time there, if we want to, but it’s kind of –
[10:40] Rob: Oh. It’s 19 a month if it’s billed annually, 29 a month if it’s billed monthly.
[10:42] Nate: Right.
[10:43] Rob: Got it. I missed that.
[10:45] Nate: 90, 95 percent of our customers are on the annual membership, and we just find that works a lot better. People commit. Because it’s a marketing tool, we’ve learned that people who do the monthly are just experimenting, and they don’t take it seriously enough. And if they don’t see the results right away in that first month, then they don’t renew; whereas, when they bite off for the whole year, we have that whole year to engage with them and to teach them how to use the product. And they get to see results, and then they’re a customer for the long haul.
[11:14] Rob: And do you find that the sales effort up front is a lot harder? Because you’re essentially trying to get a couple hundred dollars all at once up front, rather than –
[11:23] Nate: I don’t think it necessarily make it harder. I’ve learned that using a discount code, a lot of people do sign up with a discount. And it’s that deadline. It’s a limited-time offer, and we do a lot of partner deals. So, one way or another, people need a reason to buy today. That’s the thing we’ve found, and beyond that, it doesn’t matter if it’s annual or monthly.
[11:45] Rob: Right. And when you said “it’s going away,” did you mean the lifetime membership?
[11:49] Nate: Yeah, yeah, yeah. We’re removing that.
[11:50] Rob: Got it.
[11:51] Nate: That was early on. It helped us grow big and reward some of our most loyal customers, but we’re going to take that away and bring in a two-year plan.
[11:58] Rob: Nice. So, you’ll have monthly, annual and two-year. So, you mentioned earlier that you grew to 5,000 paying users in your first year. Obviously, that’s 5,000 photographers who found you, who decided to buy. A lot of folks listening to this podcast are probably wondering how did you achieve such enviable growth. Was there one tactic? Was it a combination of tactics? What was it that gave you that hockey stick?
[12:22] Nate: It was 5,000 by two years. At the first year, I was at about 3, and then the second year we made it to 5. It’s not just one. I think the one that enabled the crazy speed was word of mouth. It was that I did a couple things really well. I treated my customers well, and then it’s that word-of-mouth referral. We had a tracking form when people first came in that says, “Where’d you hear about us?” and I would celebrate. Once a week or once a month, somebody would write, “Everywhere.” [Chuckles] Like, “Oh, my gosh. That’s so cool.” They were hearing about it from their friends, from other places, from other blogs. So, it was definitely a combined approach. But I think, more than anything, people buy when something’s been referred by somebody else that they trust.
[13:09] Rob: Right. It’s a lot easier sales process if someone’s already been referred, rather than seeing a cold ad and then having to get familiar.
[13:16] Nate: I have a theory. We do a lot of education now, too, and teaching other photographers how to do marketing themselves. And I tell them that paid advertising – I think the only time it works is when you already have a foundation of word-of-mouth referrals happening. Somebody’s like, “Oh, yeah. I heard about this cool photographer, blah, blah, blah. And Julie said she was great.” And then later on that week, you see an ad in a local newspaper. [They’re] like, “Oh, yeah. That’s right! I remember. I wanted to call Julie.” But if you just saw that ad for Julie, and nobody had told you who she was, that ad’s not going to really do anything.
[13:50] Rob: Right.
[13:51] Nate: And we found that to be true in our business, too, where our paid advertising is only icing on the cake when we have that good word-of-mouth buzz happening first.
[14:00] Rob: So, obviously, once you had a thousand or 2,000 people using it, then word of mouth is going to help. But how did you get those first few hundred users?
[14:09] Nate: I got really lucky with a – this was even when it was first Concierge. We didn’t even go to the actual builder code that was written, that is the base of the business today. I went to market without that. I went to market where I was selling this as if, when photographers were uploading their pictures, like a machine was doing it; but it was actually just me. [Chuckles] I was taking people’s pictures and building these one-off albums one at a time. I had a friend help me build some automation so I could be faster for myself on my local computer. I used to take, like, ten, 15 minutes to build each one. And now, with the app he made for me – he made this small version of an app that took it down to five minutes per album, and that let me go to market. And I did a paid blog post review, and that got us our first 15 to 20 customers.
[15:00] But then there was a site called Photo Dough; and they had, like, a Groupon for our industry. Their meteoric rise also. And so doing a deal there was perfect, because everybody knows Groupon. I didn’t have to pay to be there. They just got a cut. The timing was right. For that first three days, we did $10,000 in revenue. And, ironically, I had at the same time been shopping for developers. I’d met with three different developers, and they’d all estimated the MVP was going to be about ten grand.
[15:32] And so my wife was pretty excited. It was a fun, exciting day to refresh the web page and just watch the sales go up. And she was like, “Oh wow! When do we get some of that?” I was like, “Actually, now that we have 200 customers, I have to get this thing automated ASAP.” And, luckily, the team was able to build it in 30 days; because that month I think I built 400 websites by hand until the automated builder was done. And since then, we’ve made close to a million, I think, apps.
[16:02] Rob: Wow. Yeah, that’s really impressive. So, you definitely pulled the MVP approach – kind of the lean startup approach of just getting out there and selling something, seeing if it caught fire. And with you, it obviously did, and then you had to use human automation to get you through it.
[16:16] Nate: Yeah, it was terrifying. I risked $300 of my own money –
[16:19] Rob: Yeah.
[16:20] Nate: – and then after that, it was building with the customer money. And I was definitely nervous. I said to myself, “If this fails, I will just give people their money back and apologize profusely.” But I wasn’t ready with a mortgage and – we had just had our second kid. He was a month old. I wasn’t ready to risk $10,000 of my own money yet. I wouldn’t recommend anybody do something like that at that stage of their life. The lean startup stuff was – I wasn’t even familiar with what I was doing, that it was called “lean startup” until I found podcasts like you guys. I was like, “Oh, there’s a name for what my wife forced me to do.” [Laughs] She was like, “There’s no way you’re spending that kind of money! Figure it out – how you’re going to do it without it.” And that’s what I did.
[16:58] Rob: Very cool.
[17:00] Mike: So, it sounds like there wasn’t very much time between the time you had the idea and you realized that this really had legs. I’m curious to know what your mentality was going into it, thinking that you were going to do all of this stuff by hand versus automating it first, because I think that’s a common situation – where people run into something, and they have this idea, and they say, “Oh, we’ll, I’ll build some code,” because, naturally, most of the people listening to this are developers. And that’s what they do.
[17:25] Nate: Yeah, right.
[17:26] Mike: So, their first instinct is to write code to solve the problem. You clearly went in a different direction, and that’s one of the things that lean startup advocates – is testing the idea to make sure that it has legs before you do a lot of investment. And I’m curious to know what your mentality around that was. Or, was it just, “My wife said so”? [Chuckles]
[17:44] Nate: Yeah, right [chuckles]. The first idea was sitting around the fire – it was October of 2011 – with my neighbor, who was a developer. I knew education – right? So, I was going to sell a product. I was like, “There’s this huge market to sell informational products to photographers. I’m going to sell videos,” because that’s what I did in my day job, “teaching people how to make these HTML apps.” Thank goodness for one of my good friends now. He was like, “Dude, there’s such a small subset of people that will actually take the time. Photographers don’t want to deal with HTML. You’ve just got to build a builder for them, and it’s not that hard.” I was like, “Wow. Really?”
[18:18] So, that’s the idea. And then four months it took to flush it out. I put my energy into the marketing site so that I could validate the idea with sales. That was where I put all of my energy and then was just going to continue being the – like, the builder was just the concierge, like human labor – a model first to test it. But I quickly learned there was a lot of things that I thought I would have to build from scratch. I built on WordPress, and then I bought a membership plugin. So, I thought I was going to have to hire developers to build all of the membership stuff, too; but that was already just, like, a hundred-dollar S- – I think I used an S2 member plugin for a hundred bucks. And it let me go to market with PayPal integration right away. Within two months, I was able to put up a sales page. I knew sales was the first thing I had to show before I was going to invest more money.
[19:12] Rob: That’s really cool that that was your intuition, because obviously, with most people – developers, designers, or otherwise – the typical inclination is to build something first, to go into your basement and build it. But you obviously wanted to get sales first. Where did that come from? Why was that your number one before you built anything?
[19:31] Nate: I had the idea – right? It had worked for me already in my business. And other photographers, I had shared the – quote/unquote – “product.” They saw the finished albums that I was making. That was it. That was the MVP there. I can sell making these for photographers. So, flushing that out – that was actually the first thing. I was just getting creative in my own photography business – like, “Oh, what could I make for my customers in photography? Oh, this is cool. Oh, wait. This might be a huge market for other photographers – not just my own business.”
[20:52] Rob: And you had kind of a Cinderella story early on. I mean it’s kind of a rare idea that gets this much traction this quickly. I’m curious. You had to have run into some hurdles, some roadblocks within that first year. Does one come to mind that really made you pause and think like, “Maybe this won’t work”? If you don’t have one that made you think that, maybe there was a darkest-hour time.
[21:17] Nate: Yeah. I think probably the biggest challenges were personal, to be honest, like the fact that I had two children. My wife was like, “Are you serious? Now is when you want to launch a business? We have a two-year-old and a[n] infant.” So, deciding when to quit the day job was very daunting. There was so much going on, because I was still working the day job those first four, five months and coming home till two in the morning, working on building these for people. So, that was very, very taxing – to work a 40-hour day job and then come home and put another 40 hours a week into launching it. That was not sustainable. I burned bridges with friends and family in those first months so that I could make the leap and quit the day job.
[22:03] And then once I was able to quit the day job, then the challenges after that were staying focused on sales. I’ll share my revenue chart. I would have a record month, and then the next month would be like half the size. And then I’d have a record month in sales, and the next month it’d be half the size. And it repeated this pattern because I was doing support also. And as soon as I was able to hire a good support rep, that’s when we had consistent growth, because I could stay focused on sales and marketing and partnerships, and she could stay focused on engaging the customer. As soon as I would pull away – and it was good. Again, I’m glad I did that. It was good for me to stay super close to the customer and know their issues and really understand what problems I was solving and which ones I wasn’t. It was instantaneous. That’s the point I wanted to make – is as soon as I took my hand off of sales, I could see it impacted in the numbers right away. As soon as I stopped selling and marketing and building relationships with other people, sales would drop off. And that’s a constant today. As soon as I try to slow down and focus on something else, sales slow down, too.
[23:07] Mike: So, it sounds to me like you’re constantly pushing down on that pedal to make sales and marketing work for you. But aside from the word of mouth, what’s your most successful marketing channel that you’ve kind of stumbled on or identified so far?
[23:21] Nate: Yeah, absolutely. As I transitioned into this, like the marketing piece, it’s also been tempered with learning over time that there’s always more features to build. I love building new features, and the majority of features we’ve put in have come from customer requests. That’s never-ending. I could fast-forward five years, and there’s always going to be more to build. And my goal has been to make sure that we have the ability to build features, like, we still have a business to build features for. And I’ve luckily focused on sales to make sure that we just keep the lights on, I think, is what’s important. There’s a lot of other competition in our space that’s come into the space and price really cheap. They come in, and they fizzle.
[24:04] This is one story I like to share, this very humbling call. This was an early challenge. When you first launch a product, there’s this terror. I would wake up every morning, like, “Somebody else has my idea. Somebody’s going to rip this off and steal it.” And that was a pretty constant challenge. And then after six months, we had one. It would really stress me out at first, and it took me a while to really get over the early, like, “Stop being worried, so focused on the competition. Just focus on your own business and our own customer base.” And I finally got better at that.
[24:36] There was this one vendor that I stumbled across. I think he was in month two or three. And it ruined my day. I was so sad. They had so many more features. They had the HTML site. They had the app side – the native side. Their marketing video was really well done, better than what I thought ours was. And the moral of the story is fast-forward three years. I actually got an email from this company saying, “Hey, Nate, we love your marketing and follow what you’re doing. We’re actually looking to sell and wondering if you’re interested.” And I had the whole conversation really wanted to understand what worked, what didn’t; if there was an opportunity for me to buy them. They had ten customers the last three years. While they had built this amazingly robust, feature-rich solution, they hadn’t put any energy around marketing it and educating people about how to use it in their business. They wanted to recoup some of their money that they had invested in, like, contracted development. I felt terrible. I really empathized with these guys, but it’s one of these classic cases where they focused too much on building one more feature with their own dollars instead of building it with the company.
[25:44] And that comes from my commitment to my customers. I want to be around here in five years so that we still have a service to provide. And I do that by making sure we’re growing a healthy company.
[25:55] Rob: Right. And their story is the more common path – right? That’s the more common story we hear of people launching a startup – is that they err on the side of too much product rather than too much sales.
[26:06] Nate: Yeah. But it’s so counterintuitive. I was like, “Oh, we’re done.” It was one of those things where I found it on a Google search, or somebody said, “Hey, Nate, have you seen this company?” And I was like, “Oh, wow. That was fun. We’re done.” I really thought [crosstalk].
[26:21] Rob: They were going to put you out of business. Yeah, that’s actually really common in terms of competition coming up. You always think they know more than they do, and especially if you’ve been in a market for any length of time and you’re good at it, you typically are way, way ahead of them in terms of revenue, customer count and in terms of your intimate knowledge of the market.
[26:39] Nate: Right. There was an analogy I made early on that I had to relearn my mindset of what the Internet is before launching my own online business. A lot of the things I consumed online were trending things. Every once in a while, something trending comes up, and I go, “Oh, yeah.” And it feels like we all know about the trending things that are happening. We all know about Uber. And instead, what I’ve learned is the Internet is like a big room – a really, really, really big room. And you can yell about something for years, and the majority of the Internet still won’t hear you. And that is what took me some time to realize – that it’s all about getting other people to talk about you and getting your message out, because people don’t need to hear about you just once. They need to hear about you over and over again. And just because you’re yelling in your corner doesn’t mean anybody’s hearing you yet.
[27:26] Rob: Right. Wise words. So, Nate, back in May of 2012, I did my first Mixergy sometime around there. And you emailed me afterwards, and you said that you saw that I had the Micropreneur Academy, and you asked me a few questions about it. And we had a short email exchange that I hadn’t remembered when you and I reconnected later. And then in June of 2013 – so, that’s about a year later – I did a Growth Hacker TV interview, and you sent me this email, and you said:
[27:55] “Hi, Rob. I just watched your interview on Growth Hacker TV. Great stuff. It’s been just over a year since I emailed you and then joined the Micropreneur Academy. While I feel I was so busy executing that I was only able to implement about 10 percent of the full course content, the little that I did implement was invaluable. The majority of my customers are on annual plans, and with the first few months of renewals being decent, May was my first $100,000 month.’ So, you said, you know, thanks. And you felt a lot of gratitude [to] both myself and Mike for the podcast and then others who are so willing to share what we’ve learned.
[28:27] Nate: Yeah.
[28:28] Rob: That was cool. I love hearing that kind of story, because you kind of came out of nowhere. I was just like, “Whoa! Who is this guy having so much success?” And I’m curious if you recall any specific times where you may have used either advice from the podcast, or from the Academy, or stuff that Mike and I’ve shared that helped you out as you were growing.
[28:47] Nate: I think I heard you talk about the point of just execution early on – how important executing is. And when I started in the Academy, I think I downloaded all of the MP3 courses right away and just listened to them on fast mode whenever I was commuting. And the one that sticks out for me – I think you did a class on joint ventures, or marketing partnerships; and I think that’s one that’s just been probably – when you asked earlier my most successful marketing tactic. It’s just been relationships – building relationships with other people. Like Marketing 101. It’s finding a reason for other people to talk about you and what your service is.
[29:27] And so some of that was easier. It was a brand new product. And think about a blogger, somebody whose job is to educate and share good ideas to their audience. They love having something brand new and shiny to show off and talk about. So, getting my foot in the door was relatively easy earlier, but now it’s had to transition to building the partnership based on the audience that we now have. We can kind of swap back and forth, and then also focusing just on really good content, just really educating people. And I also learned the value of education, obviously, through Micropreneur Academy. It was just invaluable.
[30:05] Rob: Very cool.
[30:06] Nate: There’s a couple podcast episodes that I find myself forwarding to other early-stage entrepreneurs a lot. The first two are the product test and the founder test. It really helped. The founder test especially helped me look at my own blind spots, or my own opportunities for growth and not feel so bad about it. And through growing the team, it helped me identify key personalities I had to hire for. And one of the best lessons I’ve learned – I also was really fortunate to find a mentor in Clay Collins, who’s the founder of LeadPages. He’s here in the Twin Cities. He told me the best lesson in hiring is you want to hire early in your business people who are good at doing a thing instead of a jack of all trades. That way, you don’t have to stop and teach them how to blog, or how to podcast, or how to do webinars. If they’re already doing those things somewhere else, they can come in day one and start generating revenue for you.
[31:06] Like, my first hire was customer support. I almost hired somebody that was just good at knew photography, but didn’t know how to do tech support. And, luckily, [at] the last minute, the last person to apply – she had done customer support somewhere else. That would’ve probably broken my business had I made that wrong decision. Luckily, I chose the right person who could come in day one, and she started handling most of the support tickets, like right away.
[31:30] Rob: Very nice.
[31:31] Nate: And I’ve learned that lesson on both sides ever since. And then, finally, the episode 141, “Five Elements of Effective Thinking,” where you guys did that book review. I love – I quote that on, like, a weekly basis, I feel like: just really focusing on doubt. And I really get worried about people who are certain about things. Having the guts to question and to be skeptical – it’s so true that in politics and other areas we devalue that. We feel like somebody’s wishy-washy. But when I’m hiring, and when I’m building partnerships, it’s like a huge red flag if somebody is absolutely certain about a thing. It’s like wait a second. If you’re certain, that means you probably just haven’t been doing that for long enough. [Chuckles]
[32:14] Rob: Right – to see the nuance of it.
[32:15] Nate: Exactly.
[32:18] Rob: It’s too black-and-white. Very cool. Well, thanks for sharing that. So, those were episodes 133, 134 and 141 you mentioned. I think all of them are in our little “Greatest Hits” area of our website, and we’ll link them up as well.
[32:30] Well, thanks, Nate. We really appreciate your time, coming on the show and sharing your story. I think it’s been inspirational for folks listening. If someone wants to keep up with you on the Internet, where would they do that?
[32:43] Nate: I like wrapping all of my podcasts up as a reward for people to listen to the very end. I love the feedback of, “What part of this interview was the most valuable to you. Send me an email: email@example.com.
[32:57] Rob: Awesome. Thanks again for taking the time to come on the show, Nate.
[32:59] Nate: You bet. Thanks for having me, guys. It was a pleasure.
[33:02] Mike: Thanks, Nate.
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