[00:00] Mike: In this episode of Startups for the Rest of Us, Rob and I are going to be talking about our predictions for 2015. This is Startups for the Rest of Us: Episode 215.
[00:15] 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.
[00:22] I’m Mike.
[00:23] Rob: I’m Rob.
[00:24] Mike: And we’re here to share our experiences to help you avoid the same mistakes we’ve made.
[00:27] Rob: So we’re not predicting anything about our businesses. These predictions are like the global kind of broader world of technology and entrepreneurship.
[00:34] So for me this week after about sixty days of my Facebook retargeting ads not showing up because I was in Thailand when they changed the image size you needed, and I couldn’t get new images made in time, after about sixty-something days I finally got those working again this week – or late last week – so they’re really showing up now. It feels good to have that done because I hate it when retargeting’s not running. And while I was at it, since I had a bunch of banners made I’ve started a trickle of Facebook ads again, and I started some YouTube ads, and I figure if I’m going to do some paid acquisition and I’m in the mindset of it in optimization I may as well dive in with both feet.
[01:09] Mike: That would explain all of the ads for Drip that I’m seeing.
[01:11] Rob: Are you seeing a lot?
[01:12] Mike: No. [laughs]
[01:13] Rob: Oh.
[01:14] Mike: I see them here and there. I don’t see a lot though.
[01:17] Rob: You know, retargeting is CPM so it’s per impression whereas if it is an actual Facebook ad, then I do pay-per-click if it’s not retargeted. If you’re seeing them though since you have a Drip account you should not be retargeted. So if you’re seeing them it probably would actually cost me seventy, eighty cents if you clicked it.
[01:35] Mike: So I think I talked a couple of weeks ago about my problems with my bank. I’m actually in the process of switching over to Silicon Valley Bank at this point. So hopefully all my accounting issues are going to go away shortly, and I won’t be overcharged for wire transfers anymore. They make it so difficult to change, and then with all the new laws and stuff you have to prove who you are and actually have you fill out forms and then mail the forms to them if you’re doing an online bank now. It doesn’t matter that it’s all done electronically, they still need some of this paper stuff.
[02:08] Rob: Right. Ah, the Patriot Act.
[02:10] Mike: But aside from that I’ve just been working on mostly AuditShark demos. I spent some time looking at some of the different landing page services because things are a little bit slow now because it’s December so people are kind of busy with holidays and trying to get ready for the new year. So I’m not having as many conversations with people, but I’m starting to look at kind of what my marketing efforts are going to be looking like next year. So I tried LeadPages a while back and it didn’t really work out, so I took another look and started looking at KickoffLabs and Unbounce and LaunchRock, and I think I’m going to go with KickoffLabs for a while and see how that works out.
[02:43] Rob: Very cool. So Kyle Albert tweeted us about a year ago, and I found it in an old outline for a podcast episode as I was searching for something else, and I noticed we never responded to him. So I wanted to respond in this episode. But first a quick service announcement: if you are not connected to @robwalling on Twitter and @SingleFounder on Twitter, you are missing out because it’s like a party up in there every day. So Kyle Albert, as I said, is @kylealbert95, tweeted us a while ago and said, “Have you guys seen this? Would be interested in hearing your take on startups for the rest of us.” The article is called “The Value of Content” and it’s written by Andy Beaumont. And in essence, he started a website called TC;DR, it’s “Tab Closed; Didn’t Read,” and he stated that his preference when he goes to websites is that they don’t popup a big lightbox, right? they don’t ask him for email, they don’t popup an ad, they don’t block the content. The whole post talks about how that’s a negative user experience, and he himself just closes a website instantly if they do that out of principle. And there was a whole discussion of it, and actually Ramit Sethi weighed in on Twitter, and he said, “100% of the people who are cheering this site have never run a website & seen the analytics behind lightboxes” so he obviously comes out on the side of lightboxes.
[03:59] Obviously emotion can run wild on this because you can get on both sides of this argument and kind of make this a religious debate. My take is that it is a personal preference like anything else in selling. You can be a used car salesman or you can be someone who doesn’t sell at all. And these are the kind of opposite ends of the spectrum or you can be somewhere in the middle, and everyone has their comfort zone. And so if your comfort zone is that whenever you see a lightbox it infuriates you then that’s fine. Express your- that’s your right, right? You’re expressing your freedom of being able to close that browser tab, and that’s okay.
[04:33] What’s interesting- but I wouldn’t take that as something- as a reason to never have a lightbox on your site. Personally, I have not used lightboxes because I don’t enjoy them. I don’t think they’re the optimal user experience. However, they are the optimal way to collect emails. You will get more emails. Now then there’s debate about if the people who put emails in are as valuable as the ones who actually seek out the form, and that’s a whole other discussion. But that’s my opinion on it: is that the numbers play out that lightboxes, or something that blocks the screen, is better in terms of ads, in terms of collecting emails, but keep in mind that, you know I have this rule that I will never write copy- I will never write sales copy that I wouldn’t say to someone at a dinner party or at a MicroConf attendee party, because that’s just my personal kind of compass of how far I will go for something. And for me popping up a lightbox is a little irritating, but that doesn’t mean that I judge people or websites that do it. I personally don’t TC;DR them.
[05:28] Mike: I think that what Ramit said about the “100% of the people who cheering this site have never run a website & seen the analytics behind it” I think that there’s a great deal of truth to that because I mean if you even look at in the startup community, people who are building businesses- there are all these people who are sitting on the sidelines who have never done that kind of thing before, and they’re sitting there Monday morning, armchair quarterback saying, “This is what you should be doing, and this is what I think you should do, and this is how I think it should work,” but at the same time they’ve never gone through the effort of trying to do any of that stuff. What I tend to find is that the people who I’ll say are out there and in the trenches and actually doing this stuff have a lot less negative things to say about the things that other people are working on than the people who have never even made the attempt. I’m kind of overgeneralizing here because I don’t want to say “everybody” because there’s certainly people who take this way, way too far like the second you get onto a website, boom: lightbox. That is annoying.
[06:27] There’s definitely a way to go too far. And there’s also that wide swath of comfortability where some people will say, “I will never do lightboxes,” and there’s other people who say, “I’m perfectly comfortable putting a lightbox up there because I want people to see the stuff that I’m creating because it is valuable, and if you have any of these types of challenges I can help you, but I need to be able to get in front of you in order to be able to do that.” So it’s definitely a comfortability thing, but I think that there’s a huge range of places where you can fall on that.
[06:56] Rob: I think you bring up a really good point. You know I have that phrase “it’s easy to criticize from the stands.” And you bring up the folks who criticize a business for- you’ll get emails that say, “Oh, you’re too expensive. You should never charge that much,” or let’s say you only have annual plans. You’re definitely going to get people who call and complain about that. Or maybe you have an ad headline or image- people just always have feedback about how you shouldn’t do that. You’re taking it too far. If you ask for a credit card up front people complain. But it’s easy to criticize from the stands. It’s like the people who are complaining about those things and probably this TC;DR thing have very, very likely never actually seen what it takes to build a business.
[07:33] Mike: And I think that in cases like this you get into situations where if you are not getting the number of leads that you need, then this very well may be the direction that you go in, and if that’s what gets you to the point where you are getting the number of leads that you need, then maybe that’s what it takes to build a business. And it’s hard for me to sit here and criticize somebody for doing that. Would I do it? Probably not. But would I criticize them for their business practices around that? If that’s what’s helping them stay in business, and I’m kind of making an assumption here that they are providing value, they’re not screwing little old ladies out of their Social Security checks. So Kyle, hopefully that gives you an idea of what Rob’s take and my take on that is.
[08:12] So I think today what we’re going to be doing is we’re going to be talking about our predictions for 2015. Why don’t we start off by going back to 2014 and talk about what those predictions were and see how well we did on those.
[08:22] Rob: So my first prediction for 2014 was that Twitter would become more profitable and piss off its users in the process, but that it would be a solid opportunity for paid placement and promotion for entrepreneurs. And that didn’t happen. Twitter is still not profitable. I don’t think it’s pissed off its users with the ads it’s done. It’s actually done a pretty good job. I haven’t heard much of an uproar. I do think it’s a solid opportunity for paid placement. I’ve heard a few folks making it work. I don’t think- it’s not Facebook was three years ago where a lot of folks were in there really making money, but I still am keeping my eye on it to figure out if Twitter is going to be a good paid acquisition platform.
[09:00] Mike: My prediction was that Apple releasing a new product is a gimme. And I would say that they probably didn’t necessarily release new product, did they? They didn’t come out with the watch. They announced it, but they didn’t actually release it.
[09:12] Rob: No, and my second prediction was that Apple would release an iWatch. And I actually meant- and I really did mean “announce”- rather than release, but it’s neither here nor there. My third prediction was that concierge services and concierge onboarding would become a requirement for SaaS apps in crowded markets. I don’t know how we measure that one. I know that a lot of people are doing concierge. I was on a call today with a SaaS entrepreneur who’s adding it, and the other person on the call already has it. I hear a lot- there’s several people in the building that my company is in that have added it in the last year so I don’t know if I would go as far as to say it’s a requirement if you’re in a crowded market, but I think it’s a really good differentiator, and I think people are using it to great effect unlike they were two or three years ago when very few of us were doing it.
[09:55] Mike: My next prediction was that more high profile acquisitions will start to be turned down – kind of reminiscent of what Snapchat did. And there was one called Cyanogen. They turned down a $1 billion dollar acquisition offer from Google. The thing is I don’t know whether there were other ones that I didn’t really pay attention to. I think the Snapchat one was kind of in everybody’s faces because it was one of the first ones where it was very public that they got turned down. I would probably give this half credit because there was one, but I don’t know if there was a lot more or anything like that.
[10:27] I think this next one that I had is a little bit difficult to measure as well, but investors are going to start to pour more money into startups. Do you have an idea?
[10:35] Rob: I mean, I’m looking at annual venture capital investment amount and deal volume and both of them- this is according to a report from Mattermark.com, and they showed 2013 there was 6,208 VC deals and in 2014 there was 6,700 so that’s up 500, and in addition the actual amount of money invested in venture deals looks like it goes up about twenty-three percent between 2013 and 2014. I’d give you a point.
[11:03] My fourth prediction was that Kickstarter would have a major multi-million dollar fail. And what I meant by that was that a product would come out and get funded and then not deliver and that it would be kind of a big catastrophe for them. And I would say that did not happen in 2014. There were some smaller dollar amount failures, but I think they increased kind of the restrictions on the Kickstarter program, and if people are failing they really are trying to get the money back at this point.
[11:32] Mike: My fourth prediction was that I don’t see a clear winner in either the game console market or tablets. I thought that it was going to go back and forth a lot, and I think that if you were to look at Xbox One and PS4, I don’t see a clear winner in that scenario. I don’t know if there’s a huge difference between them.
[11:48] Rob: My fifth prediction was that Apple would continue to lose market share as history repeats itself thirty years later. And specifically, I was talking about mobile devices, iPad, iPhone, that kind of stuff. Now, the iPad has been losing market share, but it’s funny – when I actually look at this diagram – they’ve been losing it really since late 2012 so the fact that I made this prediction a year after that really isn’t much of a prediction. I wasn’t fully aware of this, but it’s noticeable. Apple’s iPad market share of global tablet shipments has pretty much been consistently going down every quarter. There’s just so many other tablets, right? Android has done a good job of getting out there and Samsung and just all the other tablet makers have legitimate tablets on the market now as well as the Kindle Fire.
[12:32] I know a lot of folks are doing that instead of the iPad. Friends that I talk to have said that iPad is just too expensive for them. Well, I personally enjoy my iPad. I know that folks have a lot of alternatives these days, and in essence the same thing has happened with the iPhone. There are just so many solid phone alternatives. There has been a pretty steady decline in that as well.
[12:54] Mike: My next one was that Google Glass will become publicly available in 2014 or early 2015, and if you go out to Google’s website you can actually buy a pair of Google Glass right now, but it’s still considered a beta product. But I don’t think it’s something that they’re intent on releasing to the general public in mass quantities like people were predicting before. I still don’t see that anywhere in the near future.
[13:19] Rob: My last prediction for 2014 was that integration marketing would pick up steam as more companies offer APIs and become more connected, and integration marketing is actually an idea that I took from Ruben Gomez of Bidsketch back in the day, and it’s where you do integrations with other SaaS apps and other companies, and then you promote the integration, and you get them to promote you to their audience. And I know that I’ve been using this quite a bit, and we did more than a dozen integrations this year on Drip. I wouldn’t necessarily say that integration marketing has picked up steam.
[13:54] I do see that everyone, every SaaS app I know that comes out has an API within a few months of release, and that’s really cool. So the ubiquity of APIs and the ability to do these integrations is a good thing. I don’t know that I would necessarily say that a lot of people have jumped on this bandwagon and that it’s picked up steam, but it is definitely working for those who are using it.
[14:14] Mike: Yeah, I’ve noticed that there are full blown companies that are kind of coming up and creating services completely around other people’s APIs just like hooking from one API to another, so that’s kind of cool to see.
[14:26] So my last two predictions, one of them was more of our listeners are going to start flying solo. And we do get emails from people from time to time telling us what it is that they’re working on and asking us to add their website information over to where we highlight some of the successes that our listeners are having. And then the other one was that targeted marketing individuals will start to become a reality, and I haven’t really seen this. I guess what I was thinking was that you would start to see more individualized ads for people. I mean being able to go down and use big data to figure out who somebody is and be able to put targeted ads right in front of that specific person, and I haven’t really seen that. And I wonder if that’s more because of data anonymity or privacy concerns or anything like that.
[15:10] Rob: Yeah, I would definitely say it’s about privacy concerns, because privacy’s been a big issue with all the big players – Facebook, Twitter, and Google, even Apple coming out and basically saying, “We sell devices and we don’t want your data” trying to talk about how you could use Apple products instead of Android products because of Google collecting all the data about it. Who knows? But I do think that’s why that hasn’t come around. Not because the technology’s not there but because the privacy concerns would be big.
[15:35] Mike: So now that we’ve kind of covered what 2014 looked like, let’s talk about 2015. What our predictions are for 2015. Do you want to go first?
[15:43] Rob: Sure. My first prediction for 2015 is that Twitter will become profitable and piss off its users in the process, but it’ll be a solid opportunity for paid placement promotions.
[15:53] Mike: I think hindsight is 20/20.
[15:54] Rob: Does that sound familiar? [laughs]
[15:55] Mike: It does sound familiar. I’m not sure where I’ve heard this before.
[15:58] Rob: This is the exact same prediction I had for 2014, and I’m sticking by it. I think it’s going to happen in 2015. They’re not profitable now. I think they’ll do it in 2015.
[16:06] Mike: My first one is that net neutrality is going to take a much bigger stage this year. I think part of the reason I say this is because right now we’re starting to see Netflix, for example, is paying service providers for higher bandwith to serve their content out to people faster. I saw a study that showed their content delivery speed has increased by fifty percent since the beginning of the year, and if you look back at what Netflix has done, they’ve made deals with a lot of the major providers that will essentially help serve their content faster. And I don’t think that that bodes well for the startup world in general. I think there’s a lot of concerns around that. I mean, it works great for Netflix, and I’m sure that the ISPs are very happy that they’re getting more money in their pockets to help pay for upgrades, but I don’t necessarily think that they’re actually going to be doing a lot of the upgrades that they maybe promised to have.
[16:55] So it concerns me a little bit that there’s also people in congress who are talking about net neutrality, and when you listen to them talk they clearly have absolutely no idea what net neutrality meant in any historical form. That’s worrisome. That’s scary, because these people are supposedly the ones who are making the laws. I mean really it’s probably the lobbyists who are putting money in their pockets, but at the same time, it’s just a scary thing to look at. So I think that it’s going to become a much bigger deal this year.
[17:20] Rob: My next prediction is that video ads – and mostly I’m thinking about YouTube ads, but I’m sure there are some other platforms that’ll have the volume – that they will be a big opportunity for cheap clicks in 2015. I think this is a green field area, and not a lot of people are doing it. It’s kind of hard to come up with a video, and there’s just not a lot of competition for it in the advertiser space right now. So I’m hearing the rumblings, and I’m starting to dip my toe in these waters as well because right now it is cheaper clicks.
[17:51] And if Google would kind of get its act together a little bit with retargeting – because the YouTube retargeting is really poor. I just want to be able to put a pixel on my website, and then if someone visits, be able to have an ad shown to them on YouTube next time they visit, but it doesn’t work like that. You’d only retarget your YouTube video if someone has visited your YouTube channel or watched your YouTube video in the past or something, and since I don’t have any presence on YouTube that is completely useless to me. But if they actually did some real retargeting like Facebook and the web allows us to do, this could potentially be a pretty big win for Google.
[18:27] Mike: My second prediction is that the number of startups in the wearables category is going to skyrocket. And I say wearables not just in terms of the hardware that’s coming out but also the number of software startups that are going to start to come out and try and offer services around integrating data back and forth between the different wearables, offering dashboarding technology and social sharing of people’s accomplishments and things like that. I think if you look at some of the apps that are out there right now like MyFitnessPal and Lose It! and things like that there is some of that stuff that is out there now, but it doesn’t necessarily integrate with as much hardware as I see coming out. And I just see a huge opportunity for people to get in there and start connecting all of the different devices. Because if you look at some of those different providers right now they work with a handful of devices, and there are a lot of devices that are coming out.
[19:16] Rob: Yeah, and wearables are blowing up. I mean I think this is already starting. We have fitness bands, a lot of people are wearing. We also have the watch, watches that are coming out. We have glasses like Google Glass with headset displays. There’s even this jewelry coming out that can do- like rings and bracelets that can do minor notifications. There’s shoe attachments that I’ve heard of that are way more accurate at being a pedometer. There’s a lot of stuff that this category is set to blow up over the next several years.
[19:42] My next prediction is that virtual reality will actually be a hit with the early adopter set in 2015. I don’t think that all of us are going to own a virtual reality headset in 2015, and the promise of virtual reality has been floating around for twenty plus years. It’s like artificial intelligence, right? It’s the promise that never seems to come to fruition. But I think in 2015 the early adopter set is going to make it work and that probably as 2016 rolls around that more and more of us will have these. They’re basically inexpensive consumer level VR headsets. Samsung just released a $200 headset. It only works with, I think it’s the Note 4 phone, but that’s kind of their first foray into it. I would consider it like a post-beta product but not quite ready for production, and they kind of want to dip their toe in the water. And I think 2015 is going to be when a lot of the legitimate VR headsets start coming out and we really start seeing what they can be used for and whether VR headsets are going to only be for gaming? Will we use them in video conferencing? You know, it’d be interesting to have a 3D view of everyone instead it’s not just these flat images. Would that be more engaging? We don’t know yet because everyone doesn’t have them. So I think there’s a lot of potential for it in the coming year.
[20:55] Mike: Well, that’ll be interesting to see with the Facebook Rift.
[20:57] Rob: Yeah, indeed. Yeah. Oculus, right? Yeah, and I was actually going to say that with my Kickstarter prediction I said that they would have a major multi-million dollar failure. They didn’t have that with the Rift because it raised the money and was delivering the product, but Facebook’s acquisition of them raised a pretty big stink, right? The question of like why did all these people back the Kickstarter if they were just going to take a billion dollars from Facebook? So that was I guess a controversy around them.
[21:22] Mike: Well, my next prediction is that Google is going to screw all bootstrap startups, and there’s absolutely nothing we can do about it. And I don’t have any details about this, I just have this feeling that there’s going to be something that they do, and it’s going to go probably much further than they’ve gone in the past, and basically they’re just going to screw anyone who’s doing internet marketing if you don’t do things the way that you want them to do them. I just don’t trust them anymore.
[21:44] Rob: What could this possibly be? They’ve already taken away all of our organic keywords, the ad rates continue to increase as competition goes up. What else could they do, Mike?
[21:53] Mike: I think that they could probably move much more towards basically forcing you to almost pay for rankings. Just the amount of data that they have and the strides that they’ve have made towards pushing people to pay for paid advertising, it just makes me wonder about when is the day going to come where they’re going to say, “Well, you know what? We’re just going to kind of flip the switch, and half the page is going to be ads for whatever it was that you searched for, and if you want to go to an organic search, you’re going to have to go to this other place over here.
[22:24] Otherwise it’s all going to be all paid advertisements for specifically what it is that you’re looking for.” I think they would be able to make a pretty solid argument that, “Well, if you search for this then clearly you want this particular type of product or this particular type of information, and there’s people who are willing to pay to put it in front of you.” So I can see them going in that direction.
[22:43] Rob: My next prediction is that we will see our first sub $100 a year consumer-level five terrabyte cloud storage service. Dropbox “ten Xed” the amount of storage they give you just a couple months ago. It was 100 gigs for a long time and they just increased that to a terrabyte, but I think we’re going to see five terrabytes within 2015, and that’ll be cool.
[23:07] Mike: Well, my next prediction is that Google Glass isn’t going to go anywhere fast.
[23:11] Rob: To think that Google Glass is not going anywhere fast is like- that’s it. I think the last nail in Google Glass’s coffin was a few months ago. It’s done already. I mean, is anybody- they haven’t done anything with it. They haven’t done any new releases, they’re not promoting it.
[23:24] Mike: I think the issue is that they’re trying to find good use cases for it. And I think there are definitely some really good use cases for it, but the problem is that they’re not mainstream uses. There’s no giant market there that I can think of that “Google Glass solves this whole slew of problems and it would be generally useful for just about everybody,” and I just don’t see that.
[23:44] Rob: And do you predict the same for the heads up display contact lenses that they are looking at? I’ve heard Google is researching this as well as some other companies. If they replace the dorky looking glasses with actual contacts so it’s much less visible, do you think that that could have legs?
[24:00] Mike: No, not really. I don’t see it happening. You still have no good way to interact with it, and that’s the problem. You don’t have a good input device. And unless it can start reading your brain waves to figure out what you’re thinking of to be able to modify– like move things around on the interface while you’re looking at it or something like that — that’d be totally different. But still that would take a pretty significant learning curve. There’s a huge amount of engineering that would need to go into that, and I don’t see that happening anywhere in the near future. So unless they come out with like a radically new input mechanism for directing or controlling these devices, I don’t think that it makes a difference.
[24:37] Rob: What if voice control got better?
[24:39] Mike: The thing is you can use voice control for your phone right now, and I don’t particularly use it. I use it when I’m driving. I don’t see most people out there talking to their phones if they’re trying to get things done. They’ll tap into it. They’ll type. They’ll use the keyboard. The software works reasonably well, but I don’t think people feel comfortable talking to their devices and asking it for information. I think they’d rather just type it in.
[25:02] Rob: My fifth and final prediction for 2015 is that we will start to see 3D printers in the houses of our early adopter friends. So I don’t think we’ll see mass adoption by the end of 2015, but I do think that our kids are definitely going to grow up seeing 3D printers potentially in our houses in the next couple years and definitely with our early adopter geeky tech friends such as myself. We’ll have a 3D printer in 2015.
[25:29] Mike: My last prediction is that cloud platforms and services are going to be generally viewed as a commodity by the end of the year, and there’s not going to be a lot of differentiation between them other than brand identity. So you’ll have the Rackspace cloud and the Microsoft cloud and the Amazon cloud, and if you take a look at the services themselves those different platforms offer you’re not going to see a whole lot of difference between them, and people are going to start associating themselves with a particular brand as opposed to going with one of them because of the specific services that they offer. So storage, queues, storing video – that sort of stuff – people are just going to use whatever cloud they happen to like the vendor of.
[26:10] Rob: Is that not the case right now? Because like when I went to look for hosting I could have gone with Rackspace or Amazon, and I picked Amazon for brand identity and because some other people were using it, frankly. But is there that much differentiation now that you think is going to change in the next twelve months?
[26:27] Mike: By “services” I don’t necessarily mean like hosting. Like Amazon Web Services, they have all these different services you can use, and hosting is just one of them. The same thing with Azure. When Azure started out it was they had hosted servers that you could use, but then they started adding in Linux and all these other distributions that you could use in addition to the Microsoft operating systems. And then they started adding in a lot of the things that Amazon had already been offering in terms of block storage and things like that. And Rackspace has kind of been doing the same thing kind of the whole time with their open stack technology. And I think that over time what we’re seeing is that the services themselves that they’re offering, at this point, they’re just competing on price. And it almost doesn’t matter which service you go through or which vendor you buy from; you’re going to get almost identical services from each of them.
[27:18] Rob: So we’re interested in hearing your thoughts on our predictions for 2015. You can tweet us at @robwalling and @SingleFounder. And if you have a question for us, call our voicemail number at 1-888-801-9690 or email us at firstname.lastname@example.org. Our theme music is an excerpt from “We’re Outta Control” by Moot used under Creative Commons. Subscribe to us on iTunes by searching for “startups,” and visit startupsfortherestofus.com for a full transcript 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 our goals for 2015. This is “Startups for the Rest of Us” Episode 214.
[00:15] 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.
[00:24] 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. So what’s the word this week Mike?
[00:30] Mike: I’ve been running a little bit of an experiment lately. I’m not really a huge fan of time tracking software of pretty much any kind, but I’ve started using Toggle, it’s T-O-G-G-L. But I started to realize that I felt like I was spending a lot of time on things that didn’t necessarily matter, and I was starting to wonder where all my time was being spent. Not just with my time, but with my productivity in general. And what I found was just the very act of tracking of some of that time, and mentally calculating, okay, what category does this go in, it’s been a good experiment so far. I’ve only been running it for about a week.
[01:04] Rob: I’m a big fan of time-tracking. And ever since back in my days of consulting, you know, it becomes a habit at that point, because you have to report invoices and such. But even after that, when I was doing my own stuff, I would track my time to figure out which apps I was spending the most time on. And then at the end of the month, I used to do a dollar per hour, per app. So I would see which particular app that I owned was making me not very much money per hour and others which were making more. So I agree with you, there’s a discipline to it, there’s a little bit of an annoyance, because it feels like bean counting, but I find that the data you get out of it is more than worth it.
[01:38] And also, the fact that it makes you think about what you’re doing all the time, because you have to basically categorize that somewhere. Frankly, it’s a discipline I’ve fallen out of and it’s probably something I should look at again. I actually asked my guys, the developers I work with, to track their time, even though we’re all salaried employees. I asked them to track it and I said, I don’t need to see it, but I think it’s a good discipline for you to have.
[02:00] Mike: And I found that there’s certain things where business overhead for example, I don’t get anything out of that, dealing with financial stuff or learning about new things for the business. I don’t necessarily get anything out of it, but there’s no specific ROI for them. But I do find that I’m spending time on some of that stuff, and it’s just like, ugh, is there any way I could start cutting this out so that I can work on things that are worth more. So that’s what I found to be the most useful. And then obviously, because of AuditShark and the Academy and my consulting business, all those different things, there’s time spent there and I’m just trying to figure out how to reallocate most of it, which is pretty cool. How about you, what have you been up to?
[02:39] Rob: So I launched my startup audio documentary, it’s called “Launch.” And so far it’s received a warm reception. I’ve been pretty happy with the feedback I’ve been getting on it. You mentioned you’ve listened to part of it.
[02:51] Mike: Yeah, I’ve listened to a little bit over an hour so far.
[02:54] Rob: Got it. So you’re right at the point where we start questioning what we’re building and why and who we’re building it for.
[03:00] Mike: Yes, yup.
[03:02] Rob: So there’s some good ups and downs. I re-listened to it, just because I haven’t listened to it in a month or so. And since it went live, I kind of want it to be fresh. It’s called “Launch. A Startup Documentary.” And it’s basically a two-hour audio documentary of building and launching Drip with myself and my lead developer Derek. You can find that at startupstoriespodcast.com or you can download it at iTunes if you just search for Launch Documentary. It should come up in the top one or two. How about you, what else is going on?
[03:29] Mike: It’s getting towards the end of the year, and one of the things that I was thinking about a couple of weeks ago was kind of what I wanted to do for next year. It reminded me of a conversation that I had with Heaton where he had asked me why do I do all the different things I do, because I have a couple of different businesses and several different products. And he was asking me kind of a matter of factly, why is it that you do all these different things. I was like, you know, I like to do a lot of different things. If I work on the same thing for too long, I get bored. New Year’s is coming up, are there any New Year’s resolutions that I have. Why do I have to wait until New Year’s to start doing some of this stuff? So about probably three or four days ago, I started figuring out what I wanted to do for some month-long experiments for life and business and things like that. And the first one that I’m doing is going to the gym every single day with one day off a week for a month to see if I’m actually going to follow through with something like that.
[04:22] Rob: Nice, well, that’s a good way to build a habit if you want to.
[04:24] Mike: I was three days into it and on the third day, it was probably about 7:00, 8:00 at night, and I’m like, oh, I really don’t want to go to the gym, but I still went. It was 9:00 at night and I got to the gym and I worked out for an hour and I went home. It was definitely difficult to get in there.
[04:40] Rob: I’m curious, if Heaton was asking why do you do all the things you do, was he asking you for like what is your single motivating factor that gets you to do everything, or was he saying why do you do so many things instead of focusing on one?
[04:53] Mike: I think it was more out of just idle curiosity, you know, why do you do all these different things?
[04:56] Rob: Got it.
[04:57] Mike: It’s not often that you get asked why is it that you do what you do.
[05:00] Rob: I know. And it’s hard to find a satisfactory answer to, to be honest for me. I think that’s probably something I want to find a better answer to, is like why do you do so many things? And I have reasons I can rattle off, but I think deep down at the core, I want to really know that because doing multiple things means you don’t do them nearly as well as if you were just focused on one. And yet I’m doing the same thing right? I mean, I also run Microconf and have Micropreneur.com and the podcasts and startups and a book and all this stuff, so that’s something I actually, I’m taking a retreat here in about a month and I think that’s going to be one question for me, is whether or not I want to continue doing all these things, why I do them and if I should continue to.
[05:39] Mike: Yeah, that’s a question I have to answer for myself as well.
[05:42] Rob: So hey, have you been listening to the “How to start a startup” podcast from Y Combinator?
[05:47] Mike: I have not.
[05:48] Rob: Okay, so I mentioned it in the last episode. And it’s a Stanford course that they’re basically releasing as a podcast. And I started listening to it, and I’m maybe four or five lectures in. So far the first lecture was decent and then the other ones, it is so geared, it’s Y.C., so it makes sense. But it’s so geared towards billion dollar businesses that I’m struggling to pull things out of it that apply to bootstrappers. At this point, I’m not sure I’d recommend it to you if you’re bootstrapping, because all it’s serving to do for me right now is to distract me. In terms of, their talking about these really sexy big businesses and raising all this money and changing the world, and it gets you all excited, you know. It’s like when you watch “The Social Network” or you read the Steve Jobs biography or “Hatching Twitter,” I get super excited and I think why am I doing stuff so small? Why aren’t I thinking big? But in reality, there’s a reason that I’m doing stuff so small, and there’s a reason why I’m not thinking that big, and it’s because I value my lifestyle, and I value having time with my family and being in control of my time and all these things. And so, I think if you’re susceptible to that, to kind of the influence of listening to these things and getting pulled off your core mission.
[06:55] If you’re core mission is to really have time, income and mobility, then I would say you may not want to listen to this. Even though it’s good stuff and it’s interesting interviews. And then the last thing I want to point out today is if you haven’t stopped by startupsbytherestofus.com/greatesthits, you should check it out. We put together a page of our greatest hits. I think we’ve chosen maybe 20 or 30 and are based on download popularity, as well as our favorites. We need to update a little bit, it only goes through episode, I think 179, so we have 20 or 30 we have to cull through and choose a few out. But if you’ve only been listening for the last 50 or 100 episodes, there’s a lot of episodes before that I think you’ll definitely want to check out.
[07:37] Rob: Today, we are looking back at our goals that we talked about a year ago. So we’re reviewing our 2014 goals and then we’re going to set our goals for 2015. And I was thinking this year we can do a little scoring thing. You could say, I got on that goal, I got a zero, I got a one, if you achieved it, or I got a half point, if you kind of achieved it.
[07:57] Mike: Can we not. So my first goal was to go full-time on AuditShark. And I guess I would say that I achieved that. I did that back in, what was it, July, yeah, about five months ago. I’ll say 0.75.
[08:12] Rob: Nice.
[08:12] Mike: We’ll go with 75% if that makes you feel better about it. I would say that, mainly because it’s not a full-time income.
[08:19] Rob: And has it changed your life, full-time at AuditShark? Because a lot of people’s goals are to go full-time on their product.
[08:25] Mike: I would say my life is considerably different in a good way. But I would say it’s not necessarily because I went full-time at AuditShark, it’s because I quit consulting.
[08:33] Rob: So my first goal from 2014 was to 5x Drip’s revenue from December of 2014. And I did not achieve that. I was looking at about 3.1x of the December revenue. So I’m going to give myself a half a point. The biggest reason we weren’t able to do that was because Drip was not ready to scale in December of last year like I thought it was. And if fact, if you listen to that launch documentary, you’ll hear that we basically launched people like it, but then it took us another five months of development to really find that product market fit to where it could start scaling up. And that wasn’t really until June or July.
[09:13] Mike: Well, my next one was finish my security book. And I’d have to give myself a zero on this one.
[09:19] Rob: Did you start your security book?
[09:21] Mike: You know, I started putting one together and I probably only wrote a couple of chapters, and I just remember thinking to myself, how can I possibly put together something like this that isn’t going to be completely and utterly boring.
[09:35] Rob: To you or to the reader?
[09:37] Mike: I would say both. So yeah, I kind of bailed on that, but I did start on something called, “The Single Founder Handbook.” Singlefounderhandbook.com is going to be where I’m going to be launching that. It’s going to be more about how to build and structure a business in such a way that it’s something that you’re interested in doing long term. And I say that because I’ve talked to a bunch of people who, they’re goal was to build a business and then they built a business, and then they realized kind of after the fact that they didn’t actually build themselves a business, they built themselves a job, and they don’t like their job. So now they’ve got this “asset” that they don’t actually like coming into work and doing any work on it, but it pays the bills. And they’d like to go do something else, but they really can’t because they’re stuck in that, so it’s not like a job where you can take a couple of weeks off here and there and then go do something else.
[10:25] It’s like if you’re not working on your own business, then it’s probably tanking. And a lot of people that I’ve talked to are kind of in that position. So I’m really looking at putting together something that addresses those types of things and talks about how to structure the business so that it allows you to do the things that you want to do rather than forcing you into a situation where you have to do certain things or things go haywire.
[10:47] Rob: Cool. So my second goal for 2014 was to get HitTail back on track in the next 60 days. So that was within 60 days of last December. And if you recall, Google’s Not provided was wreaking havoc on HitTail and it was bleeding customers, because it wasn’t able to provide nearly as much value. And I did get it back on track although it took me probably 90 days, but it was a big scramble to basically get another source of data. Were now reporting from Google Webmaster Tools instead of relying on the Google query string right? Because they don’t provide keywords anymore. And that essentially got HitTail back on track. So I feel good about that one. We also rewrote HitTail in Rails this year, meaning that even if it had another problem, I could have a developer fix it instead of me.
[11:31] Mike: My third goal was to get back to blogging and writing. The goal I set for myself was 26 blog posts or email newsletters for the year. And I ran into a situation where things were kind of just going haywire within MailChimp and I kind of got frustrated with the whole thing. And I felt like it got in the way of me actually writing and posting things. I mean, I still kept writing to some extent. I’d probably give myself maybe half a point for this, but I definitely didn’t come close to the 26 blog posts that I wanted to. That said, about probably a week or two ago, I finally got everything from my blog moved out of MailChimp and into Drip. So now that all of that stuff is straightened out, hopefully it’ll make it easier for me to kind of overcome those mental hurdles associated with that. And I have started writing again.
[12:16] Rob: Yeah, this is a tough one because I admire the goal when you said it last December, but I remember thinking this is a tough one to adhere to given all the other stuff you’re trying to do as well. Writing is just a time consuming thing, and unless it’s a major driver of revenue or it’s a major focus for you, it’s hard to get a blog post out every week or two.
[12:37] Mike: This is part of the reason why I’m giving myself half a point on this is because part of this was just about writing more. And I’ve kind of channeled those writing efforts into writing in the Single Founder Handbook, not into the blog. So I’m still writing, it’s just not all going into the blog. The goal was to write for the blog and for the email newsletter, but not a lot of that’s going in there. I mean, I probably will cross promote or cross post some of that, so I can reuse some of the content a little bit, but that kind of factors into it as well.
[13:04] Rob: So my third goal for 2014 was to throw two MicroConfs with you of course, in a sustainable manner. And the sustainable manner part just meant throw two MicroConfs without spending a bazillion hours on it. And I think we definitely did that in April because we hired a coordinator named Xander who took a ton of stuff off our plates. I think we mostly did that in October because we were working with Dan Taylor on it. There were still enough stuff in the October Prague Conference that fell through that I felt like it’s not super sustainable. You and I are obviously talking about ways to improve on that. But overall, I think this one’s mostly a full point.
[13:42] Mike: So my next one was to take an extended vacation. And I would give myself a half a point on this. I did not take an extended vacation of two-plus weeks which was kind of the goal. But I have taken a week-long vacation there. And I did get some extra time in for some personal time away for my retreat back in August too.
[13:59] Rob: Very nice. My fourth goal was to re-launch micropreneur.com. And this was really more about launching the forms and getting a venue where people could continue to share and interact because if the forms in micropreneur.com were, as we said, their WordPress, and they were getting old and there was a bunch of issues with them. And we just did that here in the last month. We moved over to a new platform called Founder Café. And so far things have been going really well. Lots of discussions, and I’ve been in there every day or two interacting. So I would give this one a full point.
[14:30] Mike: My fifth goal was to make a conscious effort to improve my health. I have a very specific goal in here which was to lose 2.5% of BMI by MicroConf which was about 10 pounds. And if I remember correctly, I did do that. I would say that that’s going really well. Of course, with my month of change starting a couple of days ago with this, that would go through December, and I would expect to be able to drop some more weight and improve my health even further. But I’ve noticed that kind of since the June-July timeframe, when I stopped consulting and stopped being on the road, and stopped eating out all the time, my health has been dramatically changed for the better. And not just my physical health, but my mental health as well.
[15:08] Rob: So my fifth goal from last year was only an honorable mention. I did this very much on purpose, because before I set my goals for last year, I had to retreat and I looked at what I thought I could realistically do in 2014. And the previous four goals I mentioned is what I had down. The fifth goal I put as an honorable mention because I genuinely didn’t think I could get to it and I would have time even to start it, but that I could see it coming up in 2015 and that if I had time in 2014, it was something I would do. And that goal was to write a second edition of “Start Small, Stay Small.” And frankly, as time goes on, second edition is like a loose term, because so much has changed that it would kind of be a complete re-write. It would almost be like writing a brand new book. So I didn’t get that one done, obviously get zero points for that. But not feeling too bad about it, because I didn’t think that I would. Yeah, it’s interesting, when you write such a tactical book like that, the stuff just doesn’t stick around forever.
[16:02] What I did notice, because I went back through, and I have not picked up a copy of my book in years. And I picked it up the other day and I noticed about probably 60-70% of the info is mindset and it’s thought-process and that kind of stuff. And that stuff, I probably wouldn’t have to re-write. So it really would be where I go into the keyword planner and the super numeric stuff, would certainly have to change. So let’s dive into our 2015 goals. Looks like we each have five.
[16:30] Mike: Well, I think the first goal that I have is to run a series of life experiments. The first month of change is going to be going to the gym almost every day. But there’s some other things that I want to try as well. So for example, one of the things that I always kind of wanted to do was to become an early riser. And I know that’s going to be something that is going to take a while to do, because I am not a morning person by any stretch of the imagination. So I’m going to try and get up early every day for a month and see how that goes. Part of that is also getting enough sleep at night, and then there’s, I’d like to try maybe going vegetarian for a month. I haven’t fully worked out the entire year yet. But I just want to try a bunch of different things.
[17:07] Rob: So to summarize, it sounds like you want to try 12 different one-month experiments.
[17:11] Mike: Yeah.
[17:12] Rob: There is, if you haven’t read Steve Pavlina’s article about becoming an early riser, it’s the one, because you and I are both not morning people, and that’s the one early riser article that has actually ever worked for me. So I loved his approach. It’s a weird approach, makes you feel silly, but do it and at least for me, it worked really well. Before I get to my first goal of 2015, I have a caveat here. Typically, before we’ve done these goal episodes, I’m very certain about my goals because I’ve gone on a retreat and I’ve spent 48 hour solid thinking about it somewhere. I have not done that this year. I feel generally good about these goals, but I have not put them to the real fire test of saying, do I actually think these are all completely realistic and have I committed to these.
[17:57] But giving about 30 minutes to think about it, this is what I put together, and this is basically going to be my starting point when I start my retreat and really think though each of these. So I think it’s probably a reasonably accurate picture of what I’ll do in 2015. With that, my first goal in 2015 is to 2.5x Drip’s revenue. It’s something that I think is ambitious, but I certainly think it’s within the realm of possibility.
[18:21] Mike: One of my goals is to spend some dedicated time each month kind of looking at where I’ve spend my time and figure out how to create more systems that I can put in place that will allow me to spend less time doing those things on a continuing basis. And this kind of talks back to a little bit of what we talked about earlier, about time-tracking is I need to know where I’m spending my time in order to be able to systemize things so that I get myself out of doing those things on a regular basis. So obviously, time-tracking is going to factor into that pretty heavily, but I also need to make sure that I’m dedicating some time at the end of each month to kind of look back and say where did I spend my time, where did things go wrong, and where is it that I can become more efficient in the future by automating certain things.
[19:03] Rob: My second goal for 2015 is to get back to the point where I can choose what I want to work on and when I want to work on it. I feel like over the last year, I feel like focusing so much on Drip and growth and all this stuff, that there are times that I have to do a lot of things that I am not particularly choosing to do, but have to get done for the businesses-sake and for growth’s sake. And while I want to continue to focus on Drip, and Drip is absolutely my number one priority and I’m all-in on it, I do want to find a place where I have perhaps one more person hired and I can have them take over some of the sales, some of the marketing and the stuff that I’m kind of over.
[19:44] The stuff that I’ve done enough, that I’m not learning new stuff, that’s easy to systematize, that I’m still doing, and that I can move on to the things that are teaching me, that I’m learning from, and frankly are the things that I want to work on. So that’s a big goal for me this year, is to get back to that point, because I’ve been there. I was there for the previous two years of just doing really fun stuff most of the time and having a lot of choice on what I worked on, and I definitely lost some of that in 2014.
[20:08] Mike: My third goal is to build a better system for maintaining the inbox to zero. And what I, I think I’m like a lot of people where I use my inbox as a glorified to do list. And at one point, there were emails in there that were more than a year old. And at that point, of course, it’s just, you’re not going to do anything with that at that point. I’ve still got emails that are less than a month old in my mailbox, and those are the things that I need to figure out a mechanism for getting them out of there and on to a task list that they’re not in my mailbox. What I did realize, I got to inbox zero a couple of times, and what I realized that knowing that I had no emails in my inbox, I didn’t have to think about it. I never had to sit there and say, oh, I need to check my email because there’s all this stuff that is in there that’s on my list of things to do and I need to kind of refresh my memory about what’s on that list. But I realized that when I didn’t have anything in my inbox, I could just completely ignore it, and it was just a huge weight off my shoulders, and it was a nice stress reliever.
[21:10] Rob: When you find a system for maintaining inbox zero, you need to tell it to me, because I want to do it too. All right, so my third goal for 2015 is to host two more MicroConfs in an even more sustainable manner. I don’t know, maybe we should toss this one out. Rather than a goal, it’s like part of my plan. It’s like part of what I see taking up a lot of my time in the next year, and I kind of have to slot that out.
[21:36] Mike: Well my fourth goal is to do a better job of systemizing my different revenue streams. And I jump around a lot between the different things that I have going on. And I feel like a lot of the jumping around, back and forth, between the different products and revenue streams is that it’s too haphazard. I feel like I’m constantly jumping from fire to fire as opposed to like having cold calculations about, I’m going to do this this week and then next week I’m going to do that, and having a solid plan in place for doing things versus just jumping from fire to fire. And I think that that’s definitely something I can do a lot better with that I’m just not handling very well right now.
[22:14] Rob: My fourth goal is to launch another podcast. I think that 2015 is the year that that will happen. So keep your ears peeled. I’ll obviously be talking about that process as it goes. And no, it will not be a competitor to “Startups for the Rest of Us.” It’s not going to be Startups for the Rest of the Rest of Us in case you were wondering. It’ll be in the startup space, and I wanted to look at like mindset stuff, psychology. It could be with a certain significant other of mine who has done a lot of talks about this topic. Hint, hint, if you’ve come to MicroConf and you’ve seen my wife speak. Frankly, she is the one who started pushing it forward and she was going to do it on her own. And I said, boy, I’d really like to be part of that because I feel like I have to say on it.
[22:55] Mike: Very cool. The fifth goal that I have for this coming year, is to keep up my writing habit. And I think with the progress of the Single Founder Handbook and all the issues that have been straightened out with my email newsletter, I think that will happen. Again, it kind of goes back to making sure that I set aside dedicated time to do different things and I’m still trying to figure out how to put things on my weekly task list that in such a way that I know that I can get to them, as opposed to building a task list for the week and then I get to the end of the week and a lot of stuff is not done and get it pushed to the next week. And then you end up with this flow of tasks that have been overflowing for two, three or four weeks. And obviously at that point, you’re just overloaded and things are just not getting done the way that they need to.
[23:37] Rob: So when you say keep up your writing habit, what specifically do you hope to produce?
[23:43] Mike: I want to put out a new blog post at least twice a month. So that kind of goes back to, or at least the equivalent, not necessarily a full blog post that’s published or anything. I know, for example, that Nathan Berry was doing a thousand words a day, which as long as you sit down and dedicate the time to starting writing, then you’re fine. But I think that dedicating time every single day for me is probably not an option right now, just because I don’t have systems in place for how I’m going to be working on things, what I’m going to working on it any given day. Part of that writing habit is going to kind of go back to how I manage that process. I think that the equivalent of a couple of blog posts on a monthly basis would be fine. If I dedicated some time to put it into my Single Founder Handbook, then I would count that towards that habit.
[24:31] Rob: Got it. Well, my fifth and final goal, and this one pains me so much to say, I’m really having a tough time coming out in public with this, but in 2015, I think I might write another book. That may be the second edition of “Start Small, Stay Small.” It may be something else. I have some other ideas in my head. Writing books is such a time-consuming and painful process, but the time has come where I need to do that. I’ve hit kind of the next stage of my career since I wrote the last book, and I have so much to say, that I feel like I need to put on paper. So I don’t even make this an honorable mention and it’s going to hurt if I get to the end of next year and I haven’t done it, but especially given everything else that I’ve listed of growing Drip and launching a podcast and returning to the point where I can choose what I want to work on, fitting this one is going to be a challenge.
[25:21] 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 us at email@example.com. And I do want to say thanks because I know a lot of people probably turned off by now. But I do want to say thanks to everybody who has emailed in a bunch of podcast topic ideas for us, those have been really helpful. So we’ll be adding those to our queues and working through them. But just to continue on, 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 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 talk about how to plan a conference. This is Startups for the Rest of Us, episode 213.
[00:13] Welcome to Startups for the Rest of Us, the podcast that helps developers and entrepreneurs get awesome at launching software products, whether you’re developing your first product or you’re just thinking about it. I’m Mike.
[00:21] Rob: I’m Rob.
[00:22] Mike: We’re here to share our experiences to help you avoid the same mistakes we’ve made. What’s the word this week, Rob?
[00:26] Rob: The word is, startupstoriespodcast.com or go into iTunes and search for the word “launch”, you may need to put “launch documentary”. Two words.But this is that two hour audio documentary that covers nine months of building Drip and then we recorded an epilogue about a year later. So it’s a span of about twenty-one months of recorded audio and it’s broken down into just over two hours. It goes live today; this podcast comes out.
[00:54] Mike: Very cool.
[00:55] Rob: I’m excited about it. I spent a lot of time editing it on the plane versus on my last trip. I feel good about it. I feel like it tells the story pretty well and it’s produced. I put music in…
[01:04] Mike: That’s neat, that will be interesting to listen to.
[01:06] Rob: How about you? What’s going on?
[01:07] Mike: We have an open call for new podcast episode ideas that I put out on Twitter yesterday. So that kind of goes for any of our listeners, if you have questions that you want us to answer or show ideas, shoot us an email. We’d love to take a look at what your thoughts are and what you guys are interested in hearing from us about. After 213 episodes, it does get a little difficult to come up with new episodes every week. So we would really appreciate any ideas and thoughts you guys have and ultimately as part of this podcast is for you guys anyway. Make sure you send in your ideas and we’ll take a look and see what we can bring out of it.
[01:39] Rob: Yes, for the first time in a long time, our question coffer is very low. We just have a handful of questions, so we would like to hear your thoughts. So what are we talking about today?
[01:50] Mike: Today we’re going to be talking about how to plan a conference. I think that part of this has come up primarily because we’ve had a lot of questions about what the dates are for the next MicroConf, and to be honest, we just don’t know yet. I thought it would be interesting to discuss what goes into planning MicroConf. I know there’s a bunch of people who come to MicroConf who also listen to the podcast. I thought it would be interesting to discuss kind of the dirty details of what goes down behind the scenes to plan the conference.
[02:14] Rob: Right, and we’ve received specific questions about that. Certain people either are thinking about throwing an event or wanting to know more about what goes on and they’ve asked us. We kind of have a quick conversation with them but I think that’s the idea here is to kind of document it.
[02:26] Mike: We’re not going to be talking about selling tickets. We’re really just going to be talking about the event logistics. The short of it for selling tickets, we simply use Eventbrite, it’s very easy to use. It makes selling tickets a lot easier, but obviously there’s a whole other side to selling tickets for an event that has to deal with marketing, leveraging an audience, getting people to the event, getting them to buy into it, especially the first time around. I think that’s enough of a conversation that we’re going to leave that out this time and focus solely on all the logistics and things you need to think about when you’re planning a large-scale event.
[03:01] Rob: One of the first things you need to think about is location and dates. What’s funny is, location actually needs to come first because from a location, then you go out on a hotel search. The first thing you need to think about is how long will a conference be, and potentially how many people you’re going to have. You may not know that up front, but you kind of have to name a number. Because if you are going to have a 300 or 400 person conference, there are certain cities and airports that have a really hard time supporting that. They just don’t have the open hotel rooms. So the size of your conference can impact where in the world you can have it.
[03:35] Mike: It’s also worth looking around quite a bit because the cost of the conference itself is just one factor. You also have to take into account the cost for the attendees to fly into that location, because there’s certain cities where it’s monumentally more expensive to go to that city at different times of the year than it is to go to other cities. We chose to have MicroConf in Vegas for a lot of different reasons, but one of the big ones is the cost. It’s not just the cost to us, it’s the cost to the attendees. There’s the cost of the conference itself, the cost of the hotels, the cost of the flights, that adds up. You have to be a little bit conscious of what the total cost of coming to the conference is. It’s not just the $200 or $500 or $1000 that you’re charging, it’s also the cost of the hotel, flight and everything else.
[04:23] Rob: Like you said, we’re really in tune with that. We pay a lot of attention to it and that’s one thing we prioritize highly when we are looking at new hotels. I don’t think either of us loves Vegas that much, but it is so cheap to get to. It’s pretty easy to get to from in the US. The hotels have really good deals. We’ve looked at holding it in eight or ten cities in the US and almost all of them are more expensive or harder to get to and the total cost is more for attendees, which is why we just haven’t done it. I’d love to do it in Boston or San Francisco but the hotels are going to be $300 a night and we would almost have to double ticket prices. We haven’t wanted to do that because we’re trying to get bootstrappers there and we don’t necessarily have a bazillion dollars to throw around.
[05:04] Mike: Once you’ve got the city and hotels narrowed down, you have to start considering which hotel you’re going to go with. Part of that has to do with what dates they have available. Just because you want to have the conference on certain dates of the year doesn’t mean that the hotel is actually going to be available on those dates. If you book far enough in advance, you can probably get those dates, but it also has a lot to do with the number of people that you’re expecting to have there.
[05:29] One thing you definitely have to be careful about is not under booking it. So if you decide that you’re going to try and get 100 people there and you only get 70 or 60 there, you can really be in a lot of trouble in terms of the financial side of it if you’re not able to get that number of people there. They typically have some sort of a food and beverage minimum that you have to come up with in order for them to make certain concessions about the rooms and the catering.
[05:53] Rob: Yes, and they also – you’re on the hook for covering the room cost, a minimum number of rooms in addition to the food and beverage minimum. The first year we had MicroConf, if you recall, Mike, we were on the hook for $10,000-$15,000, might have even been more than that. We had not sold enough tickets to even come close to covering that. I remember kind of having a panic moment that we were going to be paying for a bunch of rooms that weren’t rented out and some other stuff. So throwing a conference, especially if you’re going to get above 100 people and start to get into the 120s to 170s, if you don’t sell enough tickets, it can become a real financial issue. It can cost quite a bit of money. It can be a risky endeavor if you aren’t sure how many tickets you’re going to sell.
[06:34] Mike: So when you start looking at those dates, you have to decide what days of the week you want, as well. Especially when we were looking at hosting the conference in Vegas versus in Europe, we found in Europe it was substantially less expensive to have it on the weekend, whereas in Vegas it was substantially more to have it on the weekend. For several years of MicroConf in Vegas, and I don’t think we’re going to be changing this; we hosted it basically Sunday through Wednesday. Basically, a Sunday night evening event and then Monday and Tuesday. That was primarily driven by cost and then our first year over in Prague, we hosted it on a Saturday and Sunday. I don’t think that, although it was more cost effective, I don’t think it worked out in terms of the type of audience that we attracted. You definitely have to give some consideration to the type of people you’re going to attract by hosting it on certain days of the week.
[07:21] Rob: With MicroConf, we found that people who are self employed and are very serious about launching a business are willing to either take those two days off from their salaried gig if they still have one, or from their product business because they have a flexibility to do it. So we found it has resulted in kind of a higher quality or more serious group of attendees if we actually do it during the week. I don’t know if that would be the case with all conferences, but it’s definitely something to think about.
[07:46] Mike: The next thing you want to take a look at when considering the hotel is what sorts of concessions are they making on the total price and on the services that they’re offering. Are they flexible? For example, one thing we found in Vegas is most of the hotels have some sort of a resort fee. That’s something you have to be conscious of. In some places, they’ll let you waive it. They’ll say, “Okay, if you’re not going to go to the gym and spa area, we’ll waive this for them. But if they use the gym at all, we have to recharge this resort fee.” Then there’s certain hotels where it’s absolutely non-negotiable. They will not waive that fee.
[08:18] I think the one we’re actually looking at now, they have it tied to the WiFi access, the roaming WiFi throughout the hotel. So that’s a consideration for us. We don’t want to ask them to waive it because we want everybody to have that WiFi. But again, they didn’t actually let us have it as an option.
[08:34] Rob: Yes, which is a real bummer. We found that some hotels that are not owned by big corporations, those are the ones that tend to work with us because every year it’s a negotiation. You don’t want to pay rack rate when you go to start talking about this stuff, it’s all negotiable. The ones that are owned by these big corporations are really rigid and they won’t negotiate very much. They won’t give many concessions, meaning suite upgrades for your staff based on number of rooms that are booked, or discounts on audiovisual or food and that kind of stuff. That’s all been pretty negotiable with the hotels we’ve used thus far.
[09:08] Mike: The last thing you need to keep in mind with the hotel itself is, what is the final cost to the attendees of those hotel rooms? As Rob was saying before, if we hosted a conference in Boston, the rooms are going to be $300 a night. What we typically shoot for, for MicroConf in Vegas, is anywhere between $80 and about $120. $120 I think is a little on the high side. Of course, over the course of three or four days, that’s $400 or so. Very same thing, in Boston or San Francisco, $300 a night, you’re immediately going from $400 for the whole thing to $1200. That gets a little bit out of the price range of the type of audience we want to attract for MicroConf. You do have to be mindful of what the total cost is going to be for people, because some people are going to stay a little bit longer.
[09:53] Rob: So when you’re looking at hotels, one thing you have to think about is, what event space do they have? Because we found hotels that say they have event space, what they actually have is meeting space. There’s a difference, right? An event space is something with a high ceiling where you can get a stage in with a podium and a big projector. A meeting space tends to be eight to twelve-foot T-bar ceiling and, yes, you can have a podium and maybe some small screens but it’s very different. So depending on the type of event you want to have – if you’re going to have more than I’d say, seventy-five people, you really want some type of event space. That high ceiling gives your event a different feel.
[10:28] The first MicroConf in Prague, we had it in a smaller room, and it was more meeting space. We hadn’t seen the space before the event. For me, it was definitely not as classy. It just didn’t feel as big of an event as this year’s, where we did have high ceilings, or like we’ve had in Vegas. Think about ceiling height. You definitely want an elevated stage. That’s been another one that’s made a difference. Then you want a podium on that and you want at least one very large projector screen, sometimes two, and those are pretty expensive. The hotels rent the projectors to you at an exorbitant amount. We’re like, “If you pay for two days of it, you could buy the projector?” But that’s just the way it goes. If people can’t see, then it’s a problem, so you might just have to pay for two of those depending on the shape of the room.
[11:12] Mike: That’s a really good point you brought up about the cost of some of the different equipment that you’re renting. It’s like, we could buy a projector for that cost, but at the same time we’d be on the hook for bringing it, setting it up and everything else. In addition to that, what happens if in the middle of the conference, the thing breaks? Or the bulb blows? Then we have to go out and buy another one and we have to scramble, versus if we’re using the – whatever local event company they have, they’re supplying the equipment – they typically have spares right there on hand. So you don’t have to worry about it as much. Basically it just becomes a stress factor that you don’t have to worry about. In many cases, it really is just worth it to pay the money and say, “Okay, you guys deal with it.” You don’t want to be the one who’s on the hook for dealing with all those little technical glitches.
[11:59] Rob: Yes, that’s right. I don’t think most people realize how expensive everything is if you’re going to do this through a hotel. There are other ways to do it; I’ve seen people throw conferences at universities and you can get the space for free or for a low cost, especially if you give tickets to some students there. But then you have to provide everything. You need to figure out the sound, all the meals, there’s a lot that goes into that. That’s why we do it as hotels, as well so that people can all stay in the same place. It makes it convenient, but they’ll charge you for things like projectors or coffees. Don’t they charge us $68 for a gallon of coffee? Something like that, it’s outrageous. The lunches, it’s like a buffet lunch for $50-something per person. They’re giving us the event space for free, so that’s kind of how it winds up. Be prepared, if you’re going to do this, that the budget – there’s a reason conference tickets tend to be expensive. To do it right, it is not a cheap endeavor.
[12:53] Mike: You also have to make sure that you have at least a reasonably good sound system or sound engineers on site. The last thing you want to be doing is trying to deal with the hotel sound system when it’s not something you’re familiar with, if you didn’t set it up. You really need to have some sort of an onsite event staff that’s going to be handling that aspect of it for you, because you want the event to sound nice. You want the speakers to be able to come through loud and clear.
[13:17] At MicroConf, we actually have a sound engineer who’s there all the time, where if something goes wrong, he can fix it right on the spot. There’s been a couple of times where they’ve had sound issues – where either a microphone dies on us because the batteries are dead, or we have to swap one out because it’s not working right. There’s all these different problems that can come up. They’re all little things, but they can really seriously impact that quality level or the perceived quality level of the conference. Having those people there is extremely helpful.
[13:45] Rob: WiFi is the other thing – we spend, I think between $4000 and $5000 on each conference. That’s for two days of WiFi in the venue. It’s always been worth it. We only had one year we had some scattered issues and that was a real bummer, but every other year that cost, while it feels like a lot to pay, has always been worth it when you get 150, 170 attendees and they’re all able to connect to the internet.
[14:11] Mike: Well, even that year that we had problems, they brought in another WiFi access point for us. That was something they just did on the spot. It’s hard enough to deal with a conference, let alone technical glitches. So having them – it’s almost a no brainer if you start putting on a conference of any given size.
[14:26] Rob: I think the last part about the event space itself is to realize that you really don’t want a lot of extra space in that room. You kind of want there to be an energy of that room. I’ve been at conferences where the space is like two sizes too big, right? So you have a bunch of extra space, and the energy kind of just dissipates, either straight up or out the sides. You want people to be packed in just enough so that it feels like there’s a lot of people and like there’s a lot of energy in the space.
[14:53] Mike: So let’s talk about the evening events a little bit. For MicroConf, we run an evening event every night of the conference itself. Then we have, essentially, an evening reception the night before the conference starts. I think it’s important to have something every night; I don’t think you necessarily need to be the one who organizes it, but you do want to make plans for something. You don’t want to just say, “Okay, goodbye!” Especially at the end of the conference you want to have something for them, whether that is, you’re helping people organize into groups so they’re going out to dinner and you provide them with a list of places they can go. Or, you host something for them.
[15:25] I think that it’s just important to make sure that you are providing direction for people, so they know kind of what the expectations are. I think that if you’re just leaving people to the wolves, so to speak, and letting them decide on their own, it almost feels like you’re not taking care of them. You’re not paying attention to what their needs are as part of the conference. You do want the attendees to talk to each other; you do want them to interact. So providing a venue for them to interact at an evening event is extremely helpful in terms of them just getting more out of the conference, but also getting them talking to one another.
[15:55] Rob: Right, realizing that the hallway track is always worth at least as much as the speaking track itself – the first year at MicroConf, we didn’t have an evening event planned for the third, final night. We just figured people would kind of self-organize and as it turns out, that was the year Heaten Shaw spent like $900 in liquor at the hotel gift store and we all just lined up and carried it up to Andrew Warner’s suite. That became kind of the tradition of – we at MicroConf get together every night in some organized fashion, at some prearranged meeting place where everyone to gather is a big deal. Every night, because any time you skip a night, people want to be together. That’s why they’re there, why they’re taking time out of their week and why they’ve paid for the hotel.
[16:35] Being pretty deliberate about getting people together every night of a conference is a big one, including the welcome reception the night before the conference. I think that’s really important, because getting the social energy kick started before the conference itself starts is a big deal. When you get up on stage that first day, if you’re running this conference, you’ll feel the difference. When people are not connected, it’s harder to run the conference. But if people have reconnected and you feel like it’s a cohesive group, it makes a big difference.
[17:03] Mike: One of the things that we’ve discovered with our evening events is that, ours have gotten large enough that we actually want them to be outdoors. The reason for that is that sound travels. If you have it inside and you have enough people in a room, what happens is that the sound will reflect off the ceiling and comes back. It just makes it exponentially louder and by having it outside, that sound travels up and it doesn’t come back, which is really nice. I think we discovered that more by accident than anything else. By far, every single event that was outside has been far better. I know that you really can’t do this outside of Vegas, because Vegas is basically a desert, but it makes it so much easier to be able to do that event outside.
[17:42] Along with the noise factor is having low or no music at all. In Prague, this past year, we’d had one of the evening events at a bar in downtown Prague. It was so incredibly loud that people just didn’t enjoy it. There were people who left early because they wanted to go back to the hotel and hang out at the bar there. They couldn’t hear themselves talk. That’s definitely something to be mindful of. People are there to talk to one another and if you don’t provide them with an environment where they can talk to one another, they are going to leave.
[18:09] Rob: Last couple of things to keep in mind with evening events is to buy at least the first drink for everyone. The other thing is, to serve some kind of appetizers or dessert. Even if it’s a small quantity, everyone’s not going to eat it, but just to have something to munch on lying around helps.
[18:24] Mike: Along with the appetizers, something you also have to be mindful of is that different people have different dietary needs. So there are some people who are vegetarians, vegan, gluten free or have allergies to different types of foods. You have to be sensitive to those types of things and handle them more or less as exceptions. Basically, ask people, “Are there any dietary considerations that you have?” and we follow up with them to make sure that we’re able to meet those. We work with the hotel on those things. So for lunches, for the evening event appetizers and things like that, you want to make sure you’re taking those things into consideration because it may not be important to you, but it is important to your attendees. If you show them that you do care about those types of things, they’re going to be much more willing to come back and to tell other people, “Hey, I went to this event, these guys took care of me.” We’ve actually gotten emails back very recently about the MicroConf we just held in Europe – people who have emailed us and said, “Hey, I really appreciated the fact that you guys took care of me because of this.” It was just nice to see that it was noticed.
[19:23] Rob: So let’s talk about speakers. This can be a big part of your effort is actually recruiting good, solid speakers. I was talking to Dan and Ian at Tropical NBA when I was at DCBKK and one thing Dan had mentioned, which hadn’t necessarily occurred to me before, was just how hard it is to find people who are both practitioners and who can communicate, and communicate well onstage. It really is hard to find good speakers. There are only so many of them. So our way to find those folks is to seek warm introductions. We ask people if they know someone who is a speaker or who has spoken in the past, because once you’re throwing an event that has a lot of people attending it, you can’t necessarily have beginner speakers. That’s when you start doing stuff like attendee talks or having shorter talks with the beginner folks to see who fleshes out and who is able to take the main stage later.
[20:15] Mike: Yes, I definitely think addressing the quality of the speakers and establishing kind of a minimum bar is definitely something that you want to do at a large scale event. The last thing you want to do is put speakers up there who don’t resonate at all or clearly have issues speaking in front of a large group of people, because it just doesn’t come across well. Then you get this very, very wide range of speakers and people come away from the event thinking to themselves, “Oh, well I really liked this speaker and this speaker, but these other four or five, or whatever, I didn’t resonate with them. I didn’t find what they were talking about interesting. They just weren’t good speakers.” I think you want to raise the bar as far as you possibly can, but you want to do what you can to vet them. So that includes watching videos of all the talks that they’ve done, especially if they’re not a speaker that you’ve heard before or been able to see some of their videos.
[21:03] You want to take a look at their slides and see what it is they’re talking about, if it’s something you think is going to resonate with the audience. I’ve been to conferences and spoken at conferences where they want your slide deck up front so they can essentially help you tweak it. There’s other ones where they’re essentially just let you go and you can talk about whatever you want, and they’re not going to review it. I think the best thing to do is something in the middle. You kind of give people a lot of leeway if you’ve seen other talks that they’re done and you have a good sense they’ll do a good job just based on their previous work.
[21:34] Rob: Yes, there are two things a talk needs. It needs delivery and it needs a really good talk, like actual content of the talk. Most of the talks that fail have poor content or it’s not organized well. It’s almost never that the delivery is bad. So you can watch former talks and get ideas of how people speak but if they’re writing a new talk, it’s always hit and miss. As an organizer, keep that in mind. Even if you were to line up nine fantastic speakers and everybody delivers really well, all nine of those talks are not going to be great. Someone is going to tank, at least one, every year. If you have more beginners who haven’t written a lot of talks, you’re going to have more of that happen. It’s just something to keep in mind. You’re never going to bat a thousand with this, you just have to do the best you can and get the best talks up there. Overall the conference will average out.
[22:26] Another thing to keep in mind is to maintain some kind of variety, right? You don’t want all the speakers talking about the same thing. You don’t want all of them telling stories; you don’t want all of them doing tactical; you don’t want all of them doing inspirational. It just gets boring. For MicroConf we found that this means a good mix of founders, who are typically telling their story but pulling tactics out of it. That’s the best format for a talk I’ve seen from a founder. Then we have tactical specialists, and these are people like Sarah Hatter with her tactical specialty of support, Dave Collins who really knows SEO and Joanna Weeb who really knows copyrighting really well. That’s been the mix for us. It’s been a good blend of tactical specialists and founders. If you’re running your own conference you’ll have to think about that as well.
[23:11] Mike: Another consideration is the scheduling of the speakers. You really want to have one of your best speakers go first and another go last. By having one of your best speakers first and last, then the conference starts and ends on a high note. That’s really how you want people to walk away from a conference. You want them to feel like, “Hey, this was an awesome conference.” Because they’re going to remember most things about that first speaker and last speaker.
[23:37] Another thing that we found in the scheduling – the very first year we put on MicroConf, we detailed exactly when everything was going to happen. We told people, “This speaker will be speaking from 9 to 10, this one from 10 to 11,” etc. What we found was, 15 minutes into the conference, we were like half an hour off. So at this point we don’t publish that schedule anymore. We publish the order but not a detailed schedule, because if you get off of that schedule it can be very difficult to get back on to it.
[24:06] Rob: Right, we’ve also found that putting some pretty proven speakers at the end of the first day and the start of the second day – so essentially bookending both days with really strong speakers helps, because when people are heading off to dinner for that first day, they want something interesting to talk about. You don’t want them to say, “Boy, that speaker really tanked.” You want there to be positive association and then you want someone strong the start of the second day because a lot of people want to sleep in and don’t want to come. Frankly, you want to encourage everybody to come and you want to kickoff the day with a lot of energy.
[24:37] One other thing I’ll mention about speakers is, if possible, talk to them in advance and ask them to attend your evening events. Ask them to attend the conference. It’s a big deal, and it’s a big compliment we’ve heard about MicroConf, that people can come up and talk to the speakers, that they don’t fly in and fly out to do this one hour stretch. They’re actually approachable, able to answer questions, able to give feedback and they’re around for the duration of the conference. It’s a pretty big deal.
[25:01] Mike: Another thing on the speakers is that – I think one of the best things you can do for the speakers is have a speakers’ dinner where essentially you’re kind of thanking them for the event. But you’re also setting them up so that they know what to expect at the conference, especially if they’ve never been to the conference. We host our speakers’ dinner on Sunday night before the conference even starts. That helps the speakers who are coming, because then you can set expectations for them, you can let them know what they’re likely to see, what the audience is going to be like. You can let them ask questions, and of course you’re going to want to pick up the tab for them coming to the conference.
[25:33] Rob: Right, and this has actually been a big perk for some of the speakers. We’re not able to pay our speakers, and a lot of them are important and very busy. But being able to hang out with both the MicroConf attendees but also the other power players, to reconnect with folks they may not have seen at the speakers’ dinner is a big perk. We’ve had compliments about doing it.
[25:56] Mike: So let’s talk about sponsorships for a little bit. One of the things we do to help pay for MicroConf is have sponsors at the conference. I think you really need to be very sensitive about hosting a conference where you’re having sponsors. I’ve been to some conferences where you go there and sponsors basically buy their way in to talk onstage for an hour or two at length about their product, what they can do for you and it basically becomes this giant sales pitch. We really wanted to make sure that we didn’t do that for MicroConf.
[26:25] So there’s this delicate balance we’ve kind of struck where we have the sponsors there, we definitely highlight them and talk to people about them, but we don’t shove it in their faces. We do giveaways for the different sponsors so they have the opportunity to put things forward. We’ll do giveaways in between speakers and they’re obviously welcome to come to the conference. In fact, we actually encourage that. One of the things that we do for the sponsors is that, as part of the different sponsorships, they are invited to come to the event and their tickets are included in those sponsorship packages. It’s essentially a way to say, “This is the cost of the event, but for this much more you can become a sponsor.” One of the things that we do with the sponsors is make sure that we try to get those sponsors to the event. They’re going to get a lot more out of it as a sponsor if they attend.
[27:09] Basically, we’ve priced the sponsorship levels above and beyond what it costs to come at the event. You can’t be a sponsor without getting those tickets. We simply avoid giving people the option to sponsor if they’re not also going to get the ticket. There are some sponsors who say, “Look, we just want to support the event but we can’t come so we’re going to do a giveaway. We’ll give away our ticket.” That’s fine; that’s totally cool, but at the same time we want those sponsors to come so that they do get a lot out of it, they are able to interact with people. That’s part of the value proposition that you have to provide to them. You have to have a solid value proposition that says what they’re going to get and how does your audience overlap with theirs.
[27:50] I think the last comment I have on that is making sure that you have a rate card for the sponsors so that it’s very clear cut what they’re getting and what the different packages are so that it’s not more of a negotiation. Because some sponsors will try to negotiate with you and I think it’s a bad idea to negotiate on a sponsorship side, especially in terms of price. If you lay it out in a rate card, people look at that as more of a menu and it becomes much less negotiable.
[28:15] Rob: Something’s always going to go wrong. We’ve had something go wrong every conference, including speakers canceling during the conference or the day before. We’ve had some issues with sound, music too loud at some of the venues that we aren’t able to control… all kinds of stuff is going to go wrong. You just kind of have to give into that and understand that when it goes wrong, you just do your best to fix it. We’ve actually had some of our best innovations come from a speaker canceling, because we then did some website tear-downs. That has become like a pivotal part of MicroConf and something that people look forward to.
[28:53] Mike: Yes, I think it was three or four years before I was actually speaking on the day that I was scheduled to. It’s been a running joke.
[28:59] Rob: You were always scheduled for the second day and then we always had something go wrong with a speaker on the first day. We had a flight delayed, someone who got sick and then something else. We moved you to the first day, so the night before MicroConf you were always scrambling with your slides.
[29:13] The other thing to think about is that all of this always requires compromises. We’ve named a bunch of criteria for the city, the hotel, the venue, the audio and the cost. You’re going to have to compromise on something. Pretty much every year we feel like, “Yeah, all right, we nailed the city and hotel but boy, that one venue we just couldn’t afford to get one better.” Or, the venue is really nice but the evening events at the hotel weren’t as good because they didn’t have an outdoor event. You’re never going to find the perfect package; you just have to be willing to figure out where it is you’re willing to compromise and where you’re not.
[29:48] Mike: I think one thing that’s really helped us is knowing in advance exactly how many people we’re going to be having at the event. Part of that isn’t so much the number of people but knowing exactly what our budget is to work with. If you’re always working with a moving target for the different places you’re having events or meetings or workshops, anything like that – that moving target becomes a very big challenge. But if you know exactly how many people you’re going to be having before you even get there, and you’re able to give them that number well in advance, it makes things so much easier and you know in advance if you can pay for something. You don’t have to think twice about it. You just say, “Is this good for the conference? And can we afford it?” Not having to deal with that moving number is extremely valuable.
[30:34] Rob: When you’re done running this event, you’re going to be exhausted. You need to do a couple things. One is take a couple days off and decompress and think about the conference. The other is find someone to talk about it with. Hopefully if you have a co host you’re putting it on with, you can sit down for an hour or two and basically do a debriefing or post-mortem. Figure out what you did right, what you did wrong, what you’re going to change for next year, how things went in general – I find that time to be invaluable. You have so much in your head and it’s so intense when you’re running this event that taking those hours and getting it all out on the table is very helpful for trying to return back to normal life, frankly, and normal work. I find that I pretty much won’t get any work done for two or three days after MicroConf because I’m so burned out. Because it’s kind of like the volume turns up to 11 for a few days and it’s really hard to just come back into a normal life after that.
[31:30] Mike: Yes, so you and I usually record a podcast – essentially right after the conference is over. We just kind of sit down and talk about what went on, what went right, what went wrong and I think that having two of us there helps in a lot of ways. But being able to talk about the different things that we saw and being able to get different perspectives on them. Different people are going to have different perspectives even if they see the exact same thing. If there’s more than one person running the conference with you, then it makes it easier to get those different perspectives from somebody who was deeply involved in the entire process. So I would probably recommend that you actually have somebody who was working with you on it in a major capacity. I think you and I both kind of go on vacation afterwards as well. I think last year I went out and camped out in the desert of Utah after MicroConf.
[32:14] Rob: Yes, I typically just come back home and take a couple days to decompress and maybe check email a few times. But I don’t do much work on purpose after that.
[32:24] That concludes our show for today. If you have a question for us, 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, see you next time.
[00:00] Rob: In this episode of “Startups For The Rest of Us” Mike and I will be talking about what feature to build next. This is “Startups For The Rest of Us” episode 212.
[00:15] 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 you’re 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, we got a really cool “thank you” email from a Mayo De Leon. He says, “Hi guys. I wanted to thank you for the great audio content. I tune your podcast in while on the treadmill. I’ve lost 16 pounds in four weeks just listening to the podcast and getting tons of incredible information. Thanks. And he’s the founder of Proposalware. I listen to a lot of podcasts, but I don’t think I’ve lost 16 pounds in four weeks.
[00:50] Rob: Yeah, I know. Very nice. We also got several new iTunes reviews. We’re up to 376 worldwide, most of them five-star. The first review is from Eric Stark from Sweden. He says, “With under 200 episodes under their belt, I’m impressed by the consistent high quality. Always some good nuggets of wisdom each week. We have one from R. Wilmer of the UK. He says, “Perfect timing for me, since this is something I need. So good I listen to it twice”. Then we have Chris Kodem from the Czech Republic saying, “There’s no other podcast I know of that so consistently delivers such great value week after week. Where plenty of other podcasts end up turning into a collection of tips and tricks, Mike and Rob manage to combine their own ongoing experiences as entrepreneurs, with detailed tactical advice, into a tight package that respects my time by keeping the fluff and banter to a manageable level. I highly recommend it.” So many thanks to everyone who has given us an iTunes review. If you have not, I really encourage you to give us five stars. You don’t need to write a review. And even if you are on something Sketcher or Downcast, if you review us in there it actually helps us as well. So we really appreciate it.
[01:54] Mike: Well, I spent a ton of time this past week working on the Micropreneur Academy Forums, and basically migrating everything to a new platform. Because the Micropreneur Academy was built on WordPress back in … When did we start it? 2009 or something like that? We went with Simplepress forums for the long time. Over the years its gotten kind of old, and it just doesn’t handle things very well. And then WP Engine shut off some of the full text search capabilities, which completely hosed the ability to search inside of the forums. So about a year ago we started looking around and saying “Okay. Well we really need to do something with the Micropreneur Academy itself, migrate to a new platform of some kind, or just do a major update of some kind. What we ended up doing was we ended up going out, finding a new platform. We looked at, I think, three different platforms that were on our short list, and only one of them really met a lot of our needs. So we spent probably the past eight or ten months working to try and get all of the content in such a way that can be moved over onto the new platform.
[02:50]We tested it out for MicroConf Europe and for MicroConf Vegas. This past week we, kind of, pulled the trigger and disabled all the forums on the Micropreneur Academy, moved all the content over, and then I’ve just basically been working through support issues for the past five or six days, trying to make sure everything is working and that everybody can get in. I think it’s gone reasonably well. I think there’s a lot of good comments in there, and the discussion have actually really moved forward.
[03:17] Rob: Yeah. That’s been a thing I’ve noticed. Obviously there are going to be hiccups when you gave a migration like this, with thousands of forum posts being moved to a new platform. But the fact that the number of conversations that are going on instantly increased from the time we moved over I think really says something about the platform and how much of a difference it makes in being able to allowing for conversation, allowing for good discussion. So, I’m happy with it. Micropreneur.com is still active. People can log into it. We have all of the content there, but the forum discussions themselves have now been moved into Founder Cafe, and I’m happy to call that the new home of the Micropreneur discussions.
[03:55] Mike: Yeah. So it’ll be interesting to get some of the bugs worked out. And once we can that done then we can start adding in a lot of the other things we’ve looked at, like adding a wiki, and integrating that in so that everybody can use it and collaborate on what sorts of tools are out there that they’re using, or reviews and analysis of the things that are working and not working for them. I think that will really help – just in general – the community, because it’s obviously stuff that people are going are going to suffer through on their own, but if people have already gone through that process of evaluating different pieces of software, or different services, it helps to be able to share that information. Before you could do it in the forums, but I don’t think that it was nearly as well organized as something like a wiki would be, and that’s going to be completely integrated into the New Founder Cafe.
[04:37] Rob : Right. So if you’re interested, if you have checked out the academy in the past, but left because maybe the discussions weren’t up to your liking, you might want to check it out. Micropreneur.com, if you enter your email there, we’ll let you know the next time we take a class.
[04:51]So, Gabe from “Just Add Content” sent us an email, and he wanted to give us a heads-up about the start-up class from “Y Combinator”. It’s at startupclass.samaltman.com. It’s actually a course at Stanford, and there are videos of the lectures that are only up for a certain amount of time, from what I can tell. There are notes and there’s all types of stuff. Now I actually found it in the Downcast Podcast Repo today, so I’m sure it’s in iTunes as well, if you search for “start-up class” and then look for a very simple logo that’s just, kind of, text on a black background. You can pick and choose which lectures you might want to listen to. It’s discussions from people like Paul Graham and Sam Altman, and a bunch of other influential and knowledgeable start-up folks. So I have not started listening to it yet, but I am very much looking forward to digging into this, because this is essentially something that they’re doing for their own founders, so it’s definitely going to have some good insights and tips I think will be useful to you if you are interested in this show.
[05:48] Mike : Very cool.
[05:49] Rob : Today we’re going to be talking about deciding what feature to build next, and the criteria that we use to figure out how to decide whether to build a feature if it’s requested, and then how to somehow prioritize those features. I think I should start by saying that this really is, as usual, a discussion about B2B apps. So, if you’re going to business-to-consumer you kind of need some good luck. You kind of need an amazing sense of product if you’re going to pull it off, and you don’t necessarily go based on user requests, because consumers don’t necessarily know what they want before you show it to them. I think this is really evident if you hear every person who is building a B2B app, what do they say when you talk about what features to build next? They say, “Talk to your customers.” Right? That’s the next thing you should do to guide the direction of your product. And you can’t just listen directly to what they say. You have to filter that, and you have to decide the direction you want it to take. But with B2C folks that’s where you hear the quotes like Steve Jobs saying, “It’s really hard to design products by focus group.” A lot of times people don’t know what they want until you show it to them. And I find it hilarious when people take that so out of context, and they day, “Yeah.
[06:58]That’s how you build a start-up. People don’t know what they want, and you just have to make the decision as the founder.” And it’s like, number one, you’re not Steve Jobs. You just don’t have the product sense that he does. You don’t have the experience. You don’t have the leverage and the resources and all of that stuff. Number two, unless you are doing a B2C company, whether that’s hardware or software or any of that other stuff, that advice is not helpful. I don’t know of very many, if any, B2B companies that are using that as their product direction. There’s actually this other quote that everybody attributes to Henry Ford. The quote is, “If I had asked people what they wanted they would have said, ‘Faster horses.'” Again, implying that your customers don’t know what they want, and that you should make the decision for them. My take is that that is not correct. Yes, if you want to build a billion dollar business, then maybe you need to innovate to the point that you are ahead of the curve and people don’t know what they want.
[07:54]So you should not be listening to this podcast. You should be going and building a slide deck and trying to pitch investors to raise your series-A of five million dollars, and then go try and build some B2C company. And that’s fine, but that’s really a different path. If you want to build a business that other businesses need – where you save them money, make them money, save them time – and you want to build a sustainable product in a repeatable process, then that’s what we’re talking about today is how to take incoming feature requests. Whether it’s early stage, or whether your product is far more mature and you’re still getting feature requests, that’s really what we’re going to be talking about today. It’s how to decide what features to build and then, hopefully, how to prioritize them.
[08:30] Mike : This is really about maximizing your chances of success.
[08:33] Rob : The first thing I want to tap into is trying to figure out the priority of when to build a feature. So the four questions that I think about when we’re talking about whether to build a feature, and this is in order of priority. Number one is a prospect asking for it. It’s someone who is not currently paying you, asking for you to build this feature. Priority number two is a customer asking for it. Priority number three is someone on your team – such as a developer, support, or salesperson asking for it. And priority number four is, “Do you think it will shift your product into a new market?” So, in other words, are you asking for it, but it is a little riskier. So let’s look at each of those individually now. The first one is, “Is a prospect asking for it?” So the reason that a prospect’s feature request tends to be the most important is because a prospect hasn’t paid you money yet, and their time frame is very limited. So if someone comes and says, “Hey, does your product do X?” and you tell them, “No it doesn’t, but we can build it.” you typically have a very limited time frame to get that done before they will move on to another product and decide on something else. So that’s why I’ve prioritized it high here, even above customers. And there is debate of whether you should listen to your customers to support them, or your prospects first. But in this order, I’ve put the prospect’s feature requests as number one.
[09:53] Mike: I think a lot of this is dependent on the price point and what stage you are in the company. Because the start-up that I worked at, what the sales reps would do is they would talk to people, and because the deal price points were extremely high, they would talk to people and essentially talk them into buying the software saying, “We will build this feature for you.” And they were basically promising features that had not yet been developed, or were kind of in the pipeline. And it was interesting to see them work that side of the sales angle, because they’re basically making promises that they can’t necessarily keep themselves, or depending on the back-end developers and engineers to do it for them. It was just interesting that they used that as a strategy for selling the products. It was like, “Oh, we don’t do that now, but we can. Give us a little bit to work that out for you.” But they were also dealing with time frames that were several months. So the price point there, because a higher price point product has a much longer sales cycle in it, it gives you that flexibility to do that, especially on more difficult problems that you are trying to solve, or more difficult features that you are trying to implement. If it’s a really hard problem to solve, it’s a lot harder to turn that around in a much shorter time frame, and as Rob said before, if the price point is low and your attention span from the customer is not very long, it’s going to be difficult to turn around some of those things.
[11:14] Rob: Right, and it may not be worth it, frankly. If you only have a $10 a month product, unless you really, really early on – let’s say first 20 or 30 customers – it’s typically not worth dealing in super fine detail with someone who’s requesting features. You know? You can take it and say, “Yeah, we’ll put it in our queue.” but then even to take the time to get back to them and say, “Hey, we implemented this. Are you ready to sign up?…blah…blah…blah.” on a $10 a month product, it just doesn’t justify. Like the LTV typically will not. You need just a higher lifetime value in order to be able to justify it. I think the other thing is, in my experience of doing this with my software products is, it’s worked out really well – with the higher end stuff, where it’s actually is worth working one-on-one with someone – is that when a prospect who hasn’t paid you any money starts asking you for things, try to define the finite list. The question that I use is I’ll say, “Is this the last thing that is keeping you from paying us money?” Because nothing is worse than building a feature and then having somebody come back and then saying, “Oh yeah, and then I need this other feature.” So now you’re on this constant thing trying to keep up with someone’s feature ideas in order for them to actually become a customer.
[12:23]Prospects like that – I don’t think they do it intentionally – but prospects like that are not necessarily going to be good for you. You really want to find people who are one step away from signing up, and they just need you to build one feature or maybe two, and you want to work on those people first, especially in the early days when you’re trying to get to revenue. Then you can come back and work on people who maybe take a little longer. I have someone in the queue right now who’s been thinking about it now for maybe six months, and we’ve been emailing here and there. And I know him, so it’s cool. He’s not a hard customer to deal with, but he has just been in constant thought about whether or not to move over, and it’s little by little he’s gained confidence in Drip. And the fact that I’ve kept him in my boomerang, kept him in Pipedrive and stuff, and touched base with him every month or two has eventually meant that he has come over. But it wasn’t one single feature that it took. It’s, kind of, a series that we’ve built.
[13:15] Rob: So the second priority that I have mentioned is whether a customer is asking for a feature. So the first was a prospect. The second is someone who is actively paying you money. Now the interesting things is if you have one-time software sales, then this actually becomes a lot less relevant, or it becomes a lower priority for you. Because if someone has paid you a large chunk up front, and maybe they’re paying you a small annual maintenance fee, they’re just not as valuable to you as a new prospect who could potentially land you a very large sale. With SaaS it doesn’t matter, because that money of an existing customer … In fact, with SaaS it’s actually a much more even trade, because a prospect and a customer, who are potentially paying you the same amount of money, are potentially worth the same to you – although a customer who is already paying you money could potentially be worth more. So, that’s where I was saying this priority could be shifted to where customer requests could be higher priority, but what I’ve typically found is, since switching cost are not zero with SaaS apps, that customers are not likely, if they have trust in you, they are not very likely to jump ship very easily. So as long as you are listening to customer requests and building them in a reasonable amount of time, you don’t need that tight turn-around like you do with prospects. Because a customer is not likely to say, “Well, I need this in the next week, or else I’m going to cancel.”
[14:33] Mike: Yeah. I think you bring up an interesting point there where, in some cases, it’s a difference between what type of product you have for this particular prioritization. With a SaaS customer, they’re coming back to you every month, but if it’s a customer where you sold them a perpetual license for either downloadable software, then you’ve gotten all of your money up front, and the return for you is your 20% maintenance cost at the end of the year. It depends on where your money is coming from at that point. It does make a difference when you’re trying to prioritize multiple feature requests.
[15:05] Rob: Right, and another thing to think about when a customer is asking for a feature is, “Is that customer a power user, or are they just a normal, everyday user? How much are they paying you every month?” and, “Are they maybe one of your more painful customers? Someone who may cause you trouble most of the time, and that you really wish would, kind of, go away?” There’s varying levels of the quality of customers, of how much you want to work with them, and how much they’re paying you. All that factors into where you want to prioritize features that they request.
[15:35]Then the third priority is, “Is someone on your team asking for it?” So, a developer, a person in support, or a person in sales. Typically, this will be influenced by their interaction with a customer. To be honest, I’m not quite sure why customers wouldn’t request something and people on your team would request it, but this happens to me. My support guy will email and say, “Hey, have you thought about building this?” Then I’ll say, “Why?” And he’ll say, “Well, I see customers are having trouble with this.” But maybe they didn’t know what to request, or didn’t know how to request it or something. So these should definitely be in the priority, but since it’s not something that you’re maybe going to email several customers when you’re done, and notify them, and potentially get new customers out of directly, it’s something that I prioritize as third out of fourth.
[16:17] Mike: I think these fall into a couple of different buckets. One is if customers aren’t asking for it, that’s a slightly different scenario. But when your support team comes back and says, “Hey, I think we should build this.” it could very well be that they have this cross-sectional view of all the different customers who are coming in with requests, and they can see something where one customer thinks, “Oh, I just didn’t understand the interface.” or, “This is confusing to me.” But your support rep sees that there were 50 different people who had a very similar problem in going through the sign-up process, or using a particular page, or something like that. So they get to see that, and the customer on their own isn’t going to ask for you to implement a new feature. But the support reps are going to look at that and say, “Hey, we’ve gotten a lot of calls about this particular thing, because people don’t understand how to use it, or it’s not clear. We should make some changes here to make the product better.” And that will ultimately cut down on your support costs. It’s not something anyone has asked for, but at the same time they do need that little bit of extra help.
[17:13]The other place where I can see people internally asking for stuff is to make their lives easier. So, for example, things like administrative interfaces, or the ability to log in as any given customer so that you can see exactly what it is that they’re seeing. Stuff like that is stuff that no customer is ever going to ask for, because you wouldn’t give it to them anyway. But your support team and your developers need that kind of stuff, and need to be able to do those kinds of things because it helps them do their jobs, and it helps them serve the customers. It’s interesting that you can look at this and say, “Oh, well anything that comes internally should be a third on the list of priorities – should be under customer requests.” But I think that that is not always the case. There’s definitely some flexibility here in terms of these prioritizations. It depends on exactly what it is.
[17:59] Rob: I agree, and that’s where this priority stuff really does come down to there always a big judgment call, and a gut instinct based on what the actual feature is. What I’ve typically found is that something might come internally. So, under this list it would be priority three, but then I’ve just been hearing rumblings over it from customers and from prospects, and there’s an underpinning of the request already being there. So I do think there’s a lot of judgment that has to go into this as well. [18:24]And the fourth priority is, “Do you think it will shift your product into a new market?” So this is essentially you coming up with feature ideas. And the reason that I couched it like, “Do you think it will shift you into a new market?’ and not just saying, “Does it come from you the founder?” is because spit-balling features and just coming up with new features is almost never a good idea. The only time that you should be considering generating your own features, and not just building stuff that prospects and customers are asking for, are if you think that it can push you into a new market and either widen your reach or actually get you into a new vertical. And so to give you an example of that, seven, eight months ago Drip was, essentially, a very small email marketing app. It could capture emails, and it could do auto-responders, and it could do some split testing. And then we were getting a lot of customer requests to do marketing automation. To be able to move people in and out of lists, to be able to tag them, do behavioral email and that kind of stuff. Now, I thought that those features would push us into a new market. So while those features did not come directly from me, that was a really big impetus to raise the priority of those, and to build them out. That’s what’s resulted in the spark of growth in Drip that wouldn’t have happened otherwise.
[19:39] Mike: I think for something like that you have to consider the ramifications of that – of shifting into a new market – because it has the potential to take you out of the one you’re currently in. So I think that there’s definitely some additional considerations you need to take into account when you’re deciding on something that could shift you into a new market, because you don’t want to necessarily be seen as no longer doing a particular thing. Your current customers aren’t going to necessarily care, because you’re solving their problem and they know that you’re solving their problem. But at the same time you have to be conscious of what adding some of those new features is going to say to prospects who have never heard of you before, or don’t know the history behind where you app has come from.
[20:18] Rob: So with those in mind, I have four questions that you should ask yourself when you’re thinking about building a new feature. Hopefully it will help deciding whether you should do it, and then how to prioritize it as well. So the first question is, “How many of your existing customers do you think will use it?”
[20:35]It’s always an estimate, and my estimates typically come in the form of like 5%, 20%, 50% or more, because it’s not relevant to get down to 7.5% or any type of detail like that. And this will come up in discussions pretty regularly, when we’re trying to decide to build a feature. Then, if only 5% of people will use it, the next question – the second of these questions – is, “Will a good chunk of your customers who use it be power-users?”. Because power-users are more loyal. They’ll end up paying you more money over their lifetime. So even if only a small chunk of people use it, are they going to be your power-users?
[21:13] Mike: Another question to ask yourself is, “Does the feature request fit in with your vision of the product?” This is something of a balance you need to strike. If you’re too narrow-minded and you’re not open to listening to customers and having them show you the way that they do things, then it can cut you off from implementing things that would attract a lot more customers. And I think that this is probably a problem that a lot of people struggle with, because you have this vision or this idea of what the product should look like in your head, and you say to yourself, “I know how to implement this. I know how it should be done.” Then you talk to customers, and suddenly maps that you’ve, kind of, laid out in your head get blown apart, and you have to go in a different direction. And it’s not to say that it’s going to be in a completely different direction – and sometimes that does happen – but there’s these minor alterations in course that you almost have to take in order to serve your customers better. Sometimes that can be difficult to make that transition from saying, “I know exactly what I’m going to do, and I know how to solve this particular problem.” to transitioning over to saying, “Okay, maybe I don’t understand this as well as my customers do. Let me have them show me what should be done.”
[22:17] Rob: And then the fourth question is, “Will this feature be over-extending your team’s capabilities?” What I mean by that is, we get a lot of feature requests that ask for things that are far outside of our core competency, and they don’t relate at all to marketing automation or email marketing. They are peripherally related. So it’s things like landing pages or shopping carts and payment processing and that kind of stuff. And we’ve seen some of our competitors that go out and build these things based on customer requests. So they are a conglomeration of really five or six different apps, because they added landing pages and shopping cart and all of that stuff in. But what they did is they over-extended their team’s capabilities. They basically built lower grade software. The software is not Best of Breed. So it’s not a collection of Best of Breed tools. It’s actually a big collection of so-so software tools. [23:11]So what’s happened is if you go to a Best of Breed landing page provider, and a Best of Breed shopping cart and payment provider, and Best of Breed marketing automation, and you combine those together using integrations, you can actually get a much better tool out of it. So, what these competitors have done is over-extended their teams. They’re not able to properly support the software. They’re not able to properly build enough features in it to keep up with everyone. That’s where they’re finding themselves. As the product matures, they still have a large customer base, but they’re finding themselves being, kind of, beaten on the lower end from new competitors who can come out and just build one piece of it. So, keep it in mind, if you try to extend out too far to areas which are not related to your core product – especially if you’re a really small team – that’s something to look out for.
[24:00] Mike: I feel like this supplies a lot more to established products that are trying to do new things with their products. If you were to take Mail Chimp, for example, and have them start doing landing page design so where they’re not only sending out emails, but they’re also designing the landing pages that the emails that are being sent are driving people to. It seems like that might be a natural extension of what it is that they do, but at the same time they may just not do it very well. It does shift the core focus of the developers and of the management team to a slightly different vertical, because now you’re saying, “Okay. Well, we’ve got this group of people who are sending out emails. Then we’ve got this other group of people who maybe just want landing pages, but we’re really focused on trying to get some collaboration between those two, and overlap as much as possible between the two so we can leverage one market to get into another. And that doesn’t always work out. Sometimes it’s better to just simply spin off a new product under, kind of, a new team. I do feel like, in some ways, this is a problem that applies to larger companies than much smaller companies.
[25:01] Rob: But I’ve seen it happen with the smaller guys too, because it’s pretty easy – especially early on – to get a lot of questions and requests and not know which ones to build or not. And a lot of them are going to come out of left field, especially if you have competitors who are large and already cover four or five different product spaces, like email marketing and landing pages and shopping cart. I mean, those really should be three “Best of Breed” products that are linked together. But if you have competitors that have already built all of that, then the first thing you’re going to get as soon as you start building is, “Oh! Can you do a shopping cart too?” And that alone is six to twelve months of development to build it well, and then you need an ongoing team just to keep adding new features to try to keep up with a Shopify, or a Magenta, or another cart that’s going to be really well-built. I’ve seen it happen in the smaller space. We certainly get these requests – that’s why I’m bringing it up – and we’re obviously not a big, massive company. And if we decided to go into those spaces, I personally think it would be a mistake.
We could have built a landing page provider by now. We could have built it in a month or two, but it wouldn’t be anywhere near as good as a Leadpages or an Unbounce, and the same goes with shopping carts.
[26:10]So I think the last thing to think about when you’re trying to prioritize and think about whether or not to build features is, if you do decide to build a feature, every time you should be asking yourself, “How can you hide it well enough in the user interface, so your app doesn’t become a hideous collection of check boxes and settings?” This is more basic UX stuff, but you use a lot apps – I think we all do – especially it tends to happen more in open-source, unfortunately, because I don’t know that there is someone maintaining the UX and managing that. But you see them, they’re just a bunch of settings, and you really can’t find you way around very well. That comes from just implementing everything and not really asking yourself these hard questions, of how many people will use it. And then thinking about the fact that things that most people will not use should not very visible in the UI. They should actually be hard to find. So whether you do that through having lighter text, having them being hidden until someone clicks something, having an advanced view that only shows all of the check boxes if you’re an advanced user. I mean, we have entire features that are completely hidden for all of our users until we uncheck a box in our admin area, and that’s purely to keep the product really useable for that 80 to 90% group that wants to do some basic stuff, and maybe exercise their muscles with email marketing. But the really advanced stuff, we hide it quite a bit in the UI. And I feel like that’s helped keep the core product from basically just bloating out.
[27:37] Mike: And that’s really just about establishing what the 80% of the market needs for your particular product, and as long as you can figure that out you’re addressing most of their needs. The rest of it’s a matter of figuring out, “What is not used by people very often, but some people still need it?” You know, those “power users” that need those advanced options. And I’ve used a lot of products where they have the special advanced menus for doing things, or they’ll have an interface where there’s all the basic options there, and then you can click on this link that expands this other area that will show you all of the advances options. But most people don’t need that, so they just use the basic menu.
[28:12] Rob: Yeah, and I’ve been quite surprised at the low level of usage of several of the features that we’ve built. Some pretty key features that several people requested are used by a handful of users. Now the users who use them love them, and they don’t want us to remove them from the product for sure. It’s the 80/20 rule, but it’s not even that – it’s like the 95/5 rule. It’s like just a couple percent of our people use them, but they really, really use them everyday. So that’s your challenge, right? You can’t build fifty different products for the 2 to 3% of people who use all the different features, because it would become bloatware. So you really have to spend time thinking about not only should you build the features, but then if you decide to build them, how can you keep that UI as simple and as elegant as possible, especially for new users getting started, because that’s where you don’t want to overwhelm people, during the on-boarding process.
[29:06] Mike: If you have a question for us you can call it into our voicemail number at : 1-888-801-9690, or you can email it to us at email@example.com. Our theme music is an excerpt from “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 for Start Ups for the Rest of Us, Rob and I are going to talk about when to look for investment money for your startup. This is Start Ups for The Rest of Us, Episode 211.
[00:14]Welcome to Starts Ups for The Rest of Us, the podcast that helps developers, designers, entrepreneurs be awesome at launching software products, whether you built your first product or you’re just thinking about it. I’m Mike.
[00:22] Rob: And I’m Rob.
[00:23] Mike: And we’re here to share our experiences to help you avoid the same mistakes we’ve made. What’s the good word this week, Rob?
[00:27] Rob: I am putting the real finishing touches on an audio documentary about the 9-month process of kind of getting Drip off the ground. So I mentioned this in a previous episode, but then I left because I had, you know, 11-hour flights between each of them. I spent a lot of time editing, and I took 9 hours of audio down to about 2, and I added music. Then we added – we just added an epilogue this week, kind of a summary discussion recorded a year after the final recording for that. The audio documentary itself will go live on my blog. How about you? What’s going on?
[01:01] Mike: Audit Shark Version 2.2 is officially released. And I got a few comments on Twitter. Somebody said, “If you’re not embarrassed by it, you know, then obviously you launched too late.” And my reply was, “I’ve been extremely embarrassed till now. My level of embarrassment at this point has dropped from 8 to about a 6.” I’m really excited about it. It’s, you know, there’s a lot of new enhancements. Not even really new features, just, like, stability enhancements, and adding an installer, like a lot of the cleanup stuff that just never got done earlier. And then there was some, you know, some things that people have been asking for that just haven’t been there, like reporting, and the scheduler. People were kind of pointing to is objections before, and they’re just like, “You can’t do this. You can’t do that.” But I’ve got most of those major things addressed. So at this point that becomes a much easier conversation to have because I could say, “Oh, well, it’s right here. And maybe it’s not exactly what you want, but, you know, it is there.”
[01:52] Rob: Yeah, it’s tough trying to sell your product when you’re having a conversation about it and everything they ask, you’re like, “Yeah, we’re going to build that soon. Yeah, we’re going to build that next.” It’s not mature enough to support the customers you’re talking to.
[02:05] Mike: Yeah, and that’s kind of what was happening in several cases. It’s a nice feeling to be at that point now.
[02:10] Rob: Yeah, and what we’ve noticed with Drip is that we hit that point, maybe, it was somewhere in the last six months, where I stopped saying, “Yes, we’re about to build that,” and I started saying, “Oh yeah, you can do that,” and then it was like, “Oh, you can do that in two different ways depending on your preference.” And now what we’ve noticed is that – Derek was just telling me this the other day, that we get these big groups of feature requests that are kind of all very similar. And so, people come in to the app and start using it, and then everybody realizes, wow, you know, this is working. But you need reporting. Like your reports aren’t there. And so we probably within a week, we got 4-5 people requesting the same thing, and so then the next week we built reports. And then after that, it was something else. But it’s crazy how the same people kind of progress through the app and as we launch the new feature, then they all realize that this next thing is not there yet, and we have to build it. So I definitely feel like Drip has matured to a place where it has fit with a certain market, but there’s always kind of that next thing.
[03:11] Mike: Well, I think it’s good that, you know, you get that group of people that are all asking for the same thing. And then when you implement it, they ask for, they all ask for like the next thing, which is kind of identical. I mean, maybe they ask in different ways, but it means that you’ve got that, you know, that product market fit, where you’re attracting the right people of a specific type, and they all have a similar problem. So when they come in, they use it, they all need that similar feature set, which makes those future conversations with people from that particular market much, much easier to have.
[03:40] Rob: And the other part that’s nice is you start to learn who your good customers are, your helpful customers are, who request the good features and request them well, meaning they give you an idea of what they need and they ask for it respectively, and they’re willing to wait for you to build it right. They don’t need everything today, you know. And they’re not threatening to quit, or they’re not kind of being jerks about it. Like the vast minority do that. Right, every once in a while, you get a customer like that. And it is nice because when you have this group of customers who’s requesting it, it makes it a little easier to figure out what you should build next. Right, because you have a pipeline and you have basically a weighting of how important each feature is, and it does, but it makes it easier to figure what to build next, rather than when you have no customers, as we know, it’s a big challenge to figure out what feature to focus on.
[04:31] Mike: So what else is going on for you?
[04:32] Rob: Well, I listened to the book “Zero to One” by Peter Thiel. I’ve now listened to it twice and the reason I did that is because it just contains a lot of pretty deep and insightful conversations and essays. And Peter Thiel, if you don’t know, he’s one of the PayPal mafia. He’s one of the founders of PayPal and then he went on to start – so that was a business that sold for $1.5 billion to eBay. Then he went on to found another business that is also worth more than a billion dollars. But Peter Thiel is so amazingly smart that I find that I just re-listen to these chapters that he wrote and he makes comments about, you know, where the world is headed, where he thinks technology is going, how to start a company that revolutionizes stuff. And I find that even though he’s not speaking to me because I am not starting a billion dollar company. I’m not starting a groundbreaking, you know, paradigm shifting, just completely world rocking company, and I never will. I have no plans to do that.
[05:30]Even though I’m not, I still find that a lot of the stuff he says has some application to me and my business and the way that I like to think about things. The book Zero to One is about building these massive ideas and trying to revolutionize. You know, it’s like trying to fix a massive technology problem of say, not having water, not having enough food, or something like PayPal, where they’re trying to replace a currency. It didn’t actually succeed, but that was their goal. It’s having a big view and being able to live up to it. Even though that’s the focus, I still think there’s some good nuggets.
[06:04] Mike: Very cool. I think last thing for me is LinkedIn has been irritating the living hell out of me because every time I get a new connection, it asks me to go through this ridiculous process of confirming all the possible ways that I might have an email account, like Gmail and Outlook.com and Yahoo, and asking if it’s okay to like for me to log into those things so that it can reach in and suck out as much data as it possibly can. I made the mistake of letting them do it with my Gmail account. They’re like, “Oh, we don’t do anything,” and it’s just like, ugh, it’s awful.
[06:32] Rob: Well it’s weird because it’s not doing that to me, so I wonder why it’s – why it would be doing that to you.
[06:38] Mike: I don’t know. I have a paid subscription, so I don’t know if that’s it.
[06:42] Rob: Ah, yeah, I do not.
[06:43] Mike: But yeah, maybe I should cancel it. Maybe it’ll stop.
[06:46] Rob: Exactly.
[06:48] Mike: So real quick before we get started, we got a email from Niles from MicroConf Europe, and he said, “Hey Rob and Mike, thanks again for all the information and inspiration at MicroConf. It was amazing and I really enjoyed and learned from the crowd. Also, you might enjoy knowing this: the money I spent on the conference is already back in my pocket with an ROI of greater than 100% because one of my customers heard about me attending MicroConf and is paying me for a workshop to summarize everything I learned. Thanks again, and keep up the great work.”
[07:13] Rob: That’s awesome. I love to hear stuff like that.
[07:16] Mike: Well thanks, Niles. Glad to hear that that’s working out for you.
[07:19]Today we’re going to be talking about kind of a topic that came up at an ask me anything session that Rob and I tried out at MicroConf Europe. One of the questions that was asked of us was essentially along the lines of, “Have you ever thought of going after angel or VC funding, and would you ever do it?” And I thought it was an interesting question, not just because Rob and I kind of have very similar views on it, but also because I think people do have kind of a mistaken impression that, you know, Rob and I are completely against angel or VC funding in any way, shape, or form, because there are definitely cases where it makes a lot of sense to do, but, you know, obviously that’s not really our platform. It’s not what we do. It’s not our background or anything. But I wanted to do was talk a little bit about the times where we think it would be warranted to go after funding and what sorts of things that we would look for.
[08:03] Rob: Yeah, you know, and the first couple paragraphs of my book, and I said, I don’t want you to think that I’m anti-funding, I’m just anti-everyone thinking that the only way to start a successful software company is to raise a bunch of funding and to get big. And that’s really the approach we’ve tried to take, right, is that you don’t have to go that route, that it’s one possible path. And it doesn’t even need to be the path up front. Like, some people have the connections to do it from day one, to raise a big chunk of funding, and other people bootstrap until they have traction, product market fit, and they start growing, and then they raise some funding. There’s a lot of different ways to go about it. And I guess to give one disclaimer: Mike and I have never raised funding, so there’s a lot of ins and outs to it that we’re not going to dive into. There’s actually a good book by Brad Feld called “Venture Deals: Be Smarter Than Your Lawyer and Venture Capitalist.” And if you really want to know the ins and outs of venture funding, then that’s the book you’re going to want to read about nuts and bolts. What we’re going to talk about today are kind of the considerations, the things you need to think through if you’re considering not raising, raising at a later stage, or, you know, maybe raising just an angel round or a VC round.
[09:11] Mike: So I’d like to start off with, what we’re going to do is we’re going to talk about some of the situations where we think that going after funding of some kind is warranted. And when we talk about going after funding, there’s a couple of different primary levels of funding. You’ve got angels, that are kind of at the lower end, and then you’ve got VCs at the higher end. And I’ll say that the estimates range. It’s hard to give it an exact number of what exactly constitutes of somebody doing an angel investment versus what dollar amount is qualified for VCs. You know, the ranges are anywhere between like half a million dollars up to, some people say 2 million, some people say 5 million for angels, you know, and some people will say, well VCs will go down to 2 million or down to a million. It kind of depends on who it is that you’re talking to. You know, you essentially do a progression from angels at the lower end to VCs at the higher end. And then you can also have people like family members or friends do lower end investments as well. There’s different rules for those kinds of things, so we’re not really going to talk about any of the specific rules because, you know, we don’t necessarily know what those are.
[10:09] Rob: And specifically we don’t know what those are for every country in the world. And since our listenership is worldwide it would just be too hard to even try to address them even if we could comment on the ones here in the states. I think of like friends and family as kind of being the lowest round because typically if someone has no funding and they want to raise something from friends and family, it’s typically a very small amount. It might be 50 grand or 100 grand. And then angels, I consider like a professional angel someone who is investing their own money. It’s not institutional funds, but it is someone who has had a large exit or who has just a lot of cash in the bank, and they are then divvying out their angel funds, their own funds, in typically in amounts of between 10 and 50 thousand dollars per investment. And you get a group of angels all to invest at once. And these investors tend to be what you might call smart money, right. You try to seek them out in an area of expertise where you’re entering so they can actually give you advice, whereas friends and family, if you’re going to do that, frankly, it’s not something I’ve ever done, nor would I recommend doing it, but you’re not going to get much good advice from your family. And then venture capitalists of course are folks who are investing institutional money. They’ve raised money from a bunch of limited partners, they’re called, and they’re trying to put a lot of money to work at one time. And so, you know, like you said, some VCs will come down into the million dollar, you know, two million dollar range. They typically have so much money in their fund, that that isn’t even worth doing for them. And that they want to do a series A, in the let’s say, 2 to 5 million dollar range, and a series B in the 10 to 20, and then, you know. When I’m saying A and B, these are the rounds, right. Series A is your first round of funding. Series B would be your second round after angel.
[11:51] Mike: So let’s talk about some of the different situations where we think it’s warranted for people to go after funding. And I think the first one that came to mind for me was essentially a land grab of some kind is necessary. So, you know, companies like PayPal or AirBnB come to mind just because if you’re their first, then it makes it a lot of easier to stifle all sorts of competition, you know, in that particular space. It’d be very difficult to compete with the likes of PayPal or Amazon or AirBnB at this point, just because they’ve dumped so much money and investment into that that they essentially crowd out all other contenders and are able to shove them out of the market, or just outright acquire them. And it’s not to say that being acquired by them is necessarily a bad thing, but you’re not going to have this massive, out-of-the-park success that you might’ve been shooting for initially. The reason you would go after funding in the case of a land grab is because you want to grab as much of the market as you possibly can before anybody else gets there.
[12:48] Rob: Right, and these land grab businesses are the ones that are super, super risky, and maybe 1 in 1,000 works, or 1 in several thousand works, so it’s not super repeatable. It’s not reliable. There’s not a high rate of success. But if you do succeed, then obviously you can be worth 100 million dollars or several hundred million. So not particularly the approach that I espouse, and it feels to me, I’ve always thought this was much more of a lottery ticket. And frankly, if you go and try to do a land grab business and you’re going to raise funding, you need some type of team that is really good. No one’s going to fund just some Joe Schmo nobody’s ever heard of to go and do a land grab business anymore. Like, the late 90s maybe, but these days you need to have either some kind of tractions, or some kind of team or both if you’re going to go after this kind of market, and then you’re going to have to commit to moving to wherever the venture capitalist is, and that’s maybe one of maybe 5 cities in the world, where you’re going to find somebody to give you this much money. And you’re going to have to work incredible hours. You’re going to have to grow a big team. You know, you’re not going to do it with 10 employees. This is the kind of business that goes to 100 employees in a year or two, if it succeeds, and then it goes to several hundred after that. So this is the one I agree this is where you need to raise it if you’re going to do it. But if you’re going to do that, then this is not the podcast that you’re looking for.
[14:09] Mike: The next time we think it’s warranted to go after funding is that you have problem solution fit and product market fit. I think the best thing to do here is to kind of step back a little bit and describe what both of these things are for all the listeners. So why don’t you talk a little bit about problem solution fit?
[14:24] Rob: As concepts, they are very powerful. And there’s something that I use in everyday conversation as I’m talking to other founders, as well as in my own business to try to gauge where I am.
[14:35] Mike: Because in my mind, the problem solution fit is like you’ve found something that people are experiencing as a problem that needs to be solved and they’re willing to pay for it, which is slightly different than the product market fit, which is you found an audience that is willing to pay for it. Because there’s a difference between finding a couple of people who want the solution, versus a lot of people, I think.
[14:56] Rob: Right. Right. And finding a lot of people, that group of people, and being able to reach them inexpensively enough that you can actually make a profit at, is part of profit market fit.
[15:05] Mike: Yes. Yeah. Because the first part is really about the customer discovery phase. And the next piece, which is the product market fit, which is more about like validation and somewhat scaling, I think, but, you know, making sure that you got the price points and everything else.
[15:18] Rob: Right, and I think the key part with that, that you just pointed out, is problem solution fit comes before product market fit, but first you have to solve a problem, and then you have to turn it into a product, and then you have to find the market for that.
[15:31] Mike: Next, I think, if you’re going after funding, you need to know all the important metrics that people who are going to invest are going to be interested in. And you need to know them cold for your business. So you’re going to need to know like your cost of acquisition. And you’re going to need to know the lifetime value of your customers. You need to know what your turn rate is. You’re going to need to know what your profit margins are. And you can use those calculations to figure out whether or not you’re going to be able to expand the business. I mean, has it become a machine where you can put a dollar into it and you get two dollars out, because that’s what the investors are looking for. They’re looking for a way to accelerate the value of their money, and your business is the mechanism for doing that. And they want to know if they throw money into it, are they going to get more money out on the other side. And I think that that’s probably the best position to be in. I don’t necessarily know that you need to be in that position always in order to get funding. But I think that if you are in that position, you can solidly demonstrate those metrics and those numbers to them, then you’re in much better negotiating position to be able to get the most value for, you know, the equity that you’re essentially giving them in exchange for the money.
[16:32] Rob: Yeah, that’s the key part of what you said there is that you don’t always need that. You don’t always need the traction, but that’s where you’re going to be able to give away the least amount of your company for the funding that you’re raising. You know, I don’t know of any venture capitalist that’s going to write a multi-million dollar check to someone who doesn’t have product market fit. I think it’s going to be a very rare instance. It’s going to be a repeat founder who’s already had a success. It’s going to be someone with an exquisite pedigree and a great team, or it’s going to be someone who has a real in, in a market or a patent or something like that. But if you’re just coming on the scene and you’re trying to solve a problem for a group of people, you’re going to need traction if you want to be taken seriously. If you don’t want to do 50 pitch meetings in order to find your one investor. You know, if you actually want to use your time well, you’re going to need to know these numbers cold and you’re going to need, basically, to be ready to scale.
[17:20]So you know, when I was getting started, like around ’99, 2000, I thought the only way to launch software products and startups was to raise funding, and I went down that road for years. And I’ve talked about that in the past. And around 2007 is when I really kind of switched and realized that I could do it with smaller products. And at that point, I really became kind of anti-funding, and I just thought it was all a big game. And then some time in 2008-2009, I was at Businesses Software and I was talking to Dharmesh Shah, who previously before HubSpot, I’m pretty sure he had bootstrapped his first company. And so, he was talking about raising funding. Or he’d either just raised it or was talking about it, and I asked him, “Why did you do that?” And it felt like kind of a betrayal of his bootstrapper ethic. And he said, “You know, we hit a point where we saw that you can put 1 dollar in and you can get 4 or 5 out, and it was a repeatable, scalable process, and so at that point, you want to put in as much money as you can in order to get 4 or 5 times that much, much larger amount on the other end.” And for the first time, it really clicked with me, that there, especially within our B2B space, once you’ve solved the problem and you’re able to scale, there is a really good time to raise funding. It doesn’t mean you have to, and doesn’t mean you always should, but if you are going to, that is the optimal time, once you’ve hit that place where you know how to scale a business up and all you need are the funds to put it in basically just grow faster than your competition because especially with SaaS businesses, if you can climb that long, slow SaaS ramp of death, and you can build up that large customer base by having a big influx of cash, it will just throw off cash for years and years after that. And whether you raise investment or not, whoever owns part of that company is going to be doing well.
[19:04] Mike: And I think that’s a very different story from a lot of the people who are kind of coming out of college, or going through Y Combinator, where, you know, people are investing in the people and an idea, but they have absolutely no product. They don’t even have a product yet, let alone product market fit or product solution fit.
[19:20] Rob: That’s a really good point. Like, we are talking about – we’re not talking about B to C stuff, like I don’t even think that’s on our radar, right. I’m not talking about the guy who’s going to start the next Uber or the gal who wants to start the next Twitter. That’s just a totally different ballgame. We’re really talking about repeatable businesses that solve problems for other businesses, and therefore are much easier to build and more predictable.
[19:41] Mike: Right. So I think if you’re trying to find that engine that’s turning that dollar into more than a dollar, then, you know, going after funding is probably not wise at that point.
[19:49] Rob: One other thing I wanted to add here is that typically if you take angel investing, you are implying that you are going to take a Series A, round of Series A from venture capitalists, then a Series B, and enough funding needed to get to a hundred million dollar or more valuation. That’s typically implied. It’s not always. But if you plan on raising angel funding, and you do not want to grow to that size company, that is something that you would need to be very specific about with your investors up front. And some investors will want no part of that. They only want to go after the big homeruns. And others are okay to invest in companies that may get to a 7 figure or a low 8 figure valuation. And, in fact, it’s becoming more common, to be honest. I heard the term fund strapping, and I really liked it. It was from Collin at Customer.I0, and they essentially raised, I think it was around, $250,000 of angel funding with the intention of making it to profitability and not raising a Series A, B, and C. And they did it. They succeeded. Raise some money in order to get your company to the point of profitability. And so that’s not everyone’s path, but I do think that’s a viable path. And I’ve talked to a couple entrepreneurs in the past six months, actually several people who are trying to do that, and they don’t want to go down the old rabbit hole of trying to grow into a bazillion dollar company. But they just want to, they’ve found that growth engine, they’ve hit the point of product market fit, and they just need some almost growth capital to get to that next level. So keep that in mind if you are at that point because I think it’s becoming a more viable option.
[21:21] Mike: So now that we’ve talked about the times that we think it’s warranted to go after funding, what are some of the things that we would look for when we were going after funding?
[21:29] Rob: There’s kind of two terms for investors, right. There’s smart money and dumb money. And typically, smart money is from an investor who is going to bring a lot of value to you, and a lot of advice and some guidance, and maybe some connections and some introductions. And then, the pejorative term is dumb money, and that’s typically when you go to the local doctor or dentist and they have some money in the bank, and they give it to you, and they’re not actually going to help your business at all. It’s just money that you’re going to use to grow. So my hope would be, you typically want to take smart money because that’s the one where their specific experience or network of connections are going to be able to be leveraged by you and hopefully, you know, there could potentially be introductions to acquires down the line. There’s just a lot more that they can bring to the table to help your business grow faster, rather than just writing that check.
[22:13] Mike: I think there’s also some rather obvious things you should be looking for as well, such as honesty and integrity, you know, kind of a history of not screwing over people that they’ve invested in. Those are things that, you know, I think in some cases may be difficult to find. But, you know, you should be able to find a list of the different companies that somebody has invested in and be able to ask the people who they’ve invested in, you know, what was it like to work with this person? How did they help you out? Are there any places where you ran into problems or disagreements and how were those handled? Because I think you want to know that you can work with the other person. Are they going to just railroad you into decisions that are not good for you or for the business? Because at the end of the day, yes, these investors tend to invest in multiple businesses with the attempt to get money out of at least one of them that’s going to make up for all their investments, but at the same time, you don’t want to get the short end of the stick here. I mean, yes, you’re taking money from them, but at the same time, you don’t want to be in a position where they’re trying to pull money back because they need it for something else that they see is going to be much more profitable for them in the long run.
[23:15] Rob: Yes, some advice that I was given once, was not to take money from a first time angel investor, to look at someone who has some kind of track record, because first time angel investors are going to be really gun shy, and if they only have one company, they’re going to be kind of be all up in your business, right? I mean, you really do – you want advice and you want help. You don’t want someone’s who’s emailing you once a week, asking you about the status, or really trying to offer advice, or going to your website and giving you feedback on the headline or anything. Not unless you ask for it, and you consider them an expert in that area. Typically, if someone is doing a lot of angel investing, then they know the boundaries and they know what’s good for the founder and the company, and they’ll give you the leeway to kind of go out and do it on your own, realizing that you’ll come to them when you need the advice and the help.
[23:56] Mike: The next thing I think you’d look for is somebody who’s got a shared vision for the product, the company itself, and your working arrangements, because if you’re listening to this podcast, chances are really good you’re probably bootstrapping your business. And you’re going to have a certain way that you operate the company, that you work with the employees who are working with you, so maybe you have a distributed team, maybe you guys talk once a week, or once a month, or something like that. Maybe you take long, afternoon breaks, and you work in the evenings or something like that. But, at the end of the day, you want to be able to continue working in whatever way has made you successful. You don’t want to have to conform to, I’ll say, arbitrary rules about how the business should operate just because they think that, you know, you should be doing things differently. But there’s a difference between having them make suggestions to you versus mandating that.
[24:44] Rob: The folks who I’ve seen raise funding well, especially that initial angel round, they basically were very deliberate about who they invited in, and they tried to stack their team with someone who knew a lot about, you know, maybe online marketing. And someone who knew a lot about growing a sales team, and someone who knew a lot about acquisitions and selling, and someone who knew a lot about some other piece. So they actually kind of built this team, a dream team of investors, who not only gave them money, and therefore have some type of, essentially an investment in your company, but they have an expertise that they can lend. And it wasn’t a bunch of overlap. It was complementary skills. And all of these skills are something you’re going to need at one point or another if you do actually make it to profitability and hope to, you know, one day get acquired. So, Mike, you know, the original question at MicroConf Europe was about funding and it was also for us specifically, and the question was, would you ever consider raising angel or VC funding, and I’m curious what your thoughts are on that?
[25:45] Mike: I’m not opposed to it. But I think, for me, I would have to get to that point where I do have, you know, the problem solution fit and the product market fit, and making sure that, you know, as I said, I’ve got all those numbers in place and dialed in, so that I know how much it’s going to cost me to acquire a customer. And not to say that I’m at the very beginning of a growth curve or something like that because I think it’s foolish to get to the very beginning of a growth curve where you know that you’re putting money into it, you’re going to get a lot of money out of it, and maybe trying to get that. You’re not sure whether, how long that growth curve is going to last for that particular channel that you’re trying to leverage. I don’t know what the hard numbers are for me for saying, “Hey, I’m going to go get money.” I’d have to be in that situation to kind of put the parameters around it. I’m not opposed to it. I don’t agree with the stance of going out and raising money to build a company because I think that you can get a lot more leverage out of it if you have something that you’ve built and are pushing forward and you’re being successful already, versus going out and saying, “Hey, I have an idea for this, or I have some small product that I’ve built. You know, can you give me money for it.” I think those are two entirely different scenarios. But I’m not opposed to it. I just haven’t been at the point where I think that it’s warranted it yet.
[27:00] Rob: I’ve definitely entertained the idea. I think ever since 2009, when I talked to Dharmesh about it, I realized that there’s a smart point at which it is perhaps a good choice to raise some funding. I don’t like saying never, but I don’t ever think that I would raise a venture round because I just don’t want to turn my life upside down. It’s not worth giving up the lifestyle that I’ve built over the past 15 years in order to try and go for some big homerun and go for 100 million dollar exit. Because what I have already is probably what I would do if I had a 100 million dollar exit. I mean, don’t get me wrong, my life would change, but it wouldn’t be so dramatic. You know, I wouldn’t go out and buy a yacht or anything. I’m already pretty happy with the choices that I’ve made, and kind of the life that I live. With that said, in recent years especially, you know, as I’ve built apps with larger and larger markets, and especially with Drip now that I feel that it’s hit product market fit or it’s very near that, and it’s starting to scale up,
[28:04]the question became for me, not should I raise funding, but under what circumstances and terms would I raise funding? And as I started talking to some folks I trust, who have gone down this road, they said, “Why wouldn’t you do it right now?” And I said, “Because it would really impact my lifestyle.” And they said, “Well what if you could raise from people who don’t care about that?” And that, you don’t need to move. And they don’t care that you take a month of vacation. You know, there is no board, right, so you don’t lose control of your company. And you don’t give away more than 15% of your company and it allows you to grow faster, and da da da. And suddenly, it was like how interesting that it’s not an either/or question, it’s under what circumstances would you or would you not raise funding, and that’s the question that I’ve mulled over. You know, that’s kind of – it’s been on my mind for, you know, definitely the last several years. Would that be an option? So I don’t know if I ever will. I think that funding allows you to get somewhere faster. So if you want to get to that 7 figure or low 8 figure revenue mark, funding is definitely going to get you there faster,
[29:04]but it’s all a matter of how patient are you, and do you think you could get to that even without the funding. Or are the competitors in your space too far ahead and perhaps better funded, and that’s, I’m asking these theoretically, but I mean, these are the things I’m thinking through with Drip, right, because I’m in market automation now. And there are some big players, and there’s some well funded players, and there are people who are definitely ahead of us. And so I’m trying to figure out, you know, am I able to build a really solid small business without funding and will I succeed in the long term? Or do I need a little bit of help getting to a point where I’m just a bigger player in this space? So I don’t have any decisions, but, for sure, I’m not anti-funding. So it’s an interesting question.
[29:44] Mike: I mean, even at MicroConf Europe, you gave a really great answer to the question, and I was just like, “What he said.” Because I didn’t have anything to add. I mean, it was just- it was dead on.
[29:53] Rob: Right. I would say though for most people that I know, like most founders that we deal with and talk with, I don’t think it’s the right decision. I just don’t think it’s helpful. I think building a bootstrap software company and self-funding it, and all the learning that goes along with that, even if takes a while to do so, I think that’s the right choice. It really is an epic time that we live in, that we are able to do that, because even 20 years ago, it was barely possible to do that. And these days, we know a lot of people who are doing very well just building self-funded little software companies. I think that’s really amazing.
[30:29]If you have a question for us, call our voicemail number at 888-801-9690, or email us at firstname.lastname@example.org. Our theme music is an excerpt from Out of Control by Moot, used under Creative Commons. Subscribe to use 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 discuss MicroConf Europe 2014 and Dan and Ian’s DCBKK. This is Startups for the Rest of Us, episode 210.
[00:16]Welcome to Startups for the Rest of Us, the podcast that helps developers, designers and entrepreneurs be awesome at launching software products, whether you‚’ve built your first product or you’re just thinking about it. I‚’m Rob.
[00:25]Mike: And I’m Mike.
[00:26]Rob: And we’re here to share our experiences to help you avoid the same mistakes we’ve made. So weird this week, Mike, I haven’t seen you in a while.
[00:31]Mike: Welcome back, you know. I feel like there should be fireworks and balloons and kazoos and stuff like that to welcome me back on the show.
[00:37]Rob: What it’s been four or five episodes at least since I’ve been on, and you and I hung out last week at MicroConf Europe but what else has gone on that folks might want to hear about?
[00:45]Mike: There were some interests shown on Twitter about this, but I mentioned that I had let go a couple of developers. It was Friday at the airport, it was like 9 o’ clock at night, I was at the end of my rope and I’d just had it. I was just like, all right. That’s it. Both of these guys are done. And I let go two developers. Somebody had commented a while back and it just kind of rings in my brain that said, nobody ever got fired too soon from a job. Nobody says, oh, you fired them too soon. It’s always, hey, why didn’t you do that sooner?
[01:15]Rob: That’s tough, man.
[01:16]Mike: One of them had been having ongoing issues just keeping his hours up, and I just kind of finally drew a line in the sand. And then the other one had only been brought on about six weeks before but he was brought on to finish off version 2.2 and basically I gave him a three-week time frame. Three weeks stretched into six, and after six I just said, okay. That’s it, we’re done.
[01:38]Rob: So what are you going to do? Are you going to hire more or are you going to step back into engineering?
[01:41]Mike: Well, a little bit of both. I’m probably not going to hire because my other developer was actually out on his honeymoon. I’m really happy with his progress on all the stuff that’s been going on with AuditShark. Had he been there, I wouldn’t have been in such a rush to get rid of these guys, but I was just like, well I’m going to be at MicroConf for another week. These guys are not going to make any meaningful progress over the next week or so, so I may as well just draw the line in the sand and be done with it.
[02:04]This other guy was on his honeymoon for two or three weeks and I couldn’t hand things off to him. So things just kind of sat there for a little bit. He just got back today so hopefully I’ll be able to send things his way and then I’ll be free to do other things. I’m working on some stuff now just because I didn’t know when he was getting back. But once I’ve got a couple other things done, I’ll be handing stuff over to him and hopefully he’ll be tabled to take it from there.
[02:27]Rob: Nice. I’ve spent the last five weeks on the road. I took the family, my two kids and the wife went to Thailand for almost a month. Then I spoke at the end of that at Dan and Ian Tropical NBA, their DCBKK event which was awesome. Then I flew to Prague, wife and family flew home to California. All told, in Thailand I was only involved in one high-speed motorcycle chase with the police, ending with them searching me for drugs, which they found none. And we only had one trip to the hospital for stitches in the four year old’s finger. But other than that just your standard run of the mill vacation.
[03:05]Mike: The high-speed chase that you’ve alluded to, you downplay that very well.
[03:10]Rob: Being on the road makes you appreciate high-speed internet and having access to a washer and dryer. Especially when there’s four of us and we have three changes of clothes each, so we all fit in a single backpack. But that was really the only things that I missed.
[03:24]The real kicker was this high-speed internet and not being able to predict how fast it would be at the next place. You have no idea how much you rely on this, like we rely on it for our TV, for our movies, for my podcasts. I had a tough time keeping up with the podcast because sometimes I’d go to download and it would take hours to download all the episodes. It’s good to be back in a place where that’s more reliable and definitely if I was going to stay somewhere longer, like once I got to Prague I was in an Airbnb for several days, and the internet there was fast. So it’s not a matter of being in the US or not, it’s a matter of being in hotels or not. The high-speed internet is critical.
[04:00]So the good news for me is Drip had its best single month of growth ever while I was gone, which is encouraging me to take more vacations internationally. Obviously the seeds of that growth were sown in the months prior to the travel, not actually while I was away. I can see the trial funnel and how it all plays out, so I know it was basically the 30 to 60 days prior to leaving. But it does make a nice punch line. People in Prague were asking how Drip was doing and I was able to say, it’s actually been doing really well while I’m on the road. It’s nice to be able to say that, it makes vacation a lot more enjoyable for me because if things are tanking and they’re going sideways and I’m on vacation, I stress about it the whole time. I keep thinking about how can I turn this around and what do I need to do? But if they’re doing well, I can be freed up mentally like, ah. I just want to do more of the same.
[04:46]When I get back I’m really amped up to work and continue to drive trials which is essentially what I did when my family left and went back to California. I had four days in Thailand at the end and I basically went to co-working space in Bangkok, just worked long hours, probably 12 to 14 hour days and it was really worth it. I got a ton done; I was super fired up because I had been off for so long. You get reinvigorated when you step away from work that long. You get new ideas; you just kind of want to get back to it after a certain point. That’s how I felt.
[05:20]Mike: I felt the same way just coming back from MicroConf because I had put in all this time on AuditShark before I left and then for several days I didn’t get any work done at all on it. Of course I come back and suddenly I’m ready to get a lot of work done and I’ve been very, very productive over the last several days. I think part of that is also being able to catch up on my sleep.
[05:39]Rob: Yeah, it’s always tough. And you’re hanging out till 1 or 2 in the morning with everybody.
[05:45]Rob: Yeah. What’s up with you on AuditShark?
[05:47]Mike: I’m looking at different ways I can scale up the sales side of AuditShark and decrease the length of the sales cycle. Those are two things that I’m kind of fighting with right now. One is the length of the sales cycle and the other one is just generating enough leads that I can talk to on a regular basis. I feel like Pipedrive is filling up with a bunch of different leads that are in there but keeping track of them and keeping on top of everything and also trying to fill the funnel with people as other ones are falling out – I guess I’ll say the broader picture is that if I’m putting 100 people a day into the sales funnel to try and follow up on – whether I’m actually contacting them or not is kind of a different story. But if I’m hitting them on day one, and I go to a second batch of people on day two, day three, day four, etc.
[06:34]By the end of the week I’ve got 500 people kind of in queue. Some of them are just going to not be a fit, so they fall out very quickly. But there are other ones where you’ve tried to reach them and they stay in your funnel because you haven’t gotten a no yet. So they stay there and you have to come back to them later on. That’s actually pretty challenging to make sure that you’re staying on top of all of them. I don’t feel like I have a great system for that. Somebody suggested just using a spreadsheet.
[07:00]Rob: Sometimes that‚’s the best solution. The 100 a day sounds like a pretty high volume though, that would be tough to manage in software. That’s a lot of leads or suspects or whatever you want to call them coming through.
[07:11]Mike: Suspects‚ I like that word.
[07:12]Rob: Yeah, I read that in a sales book.
[07:14]Mike: Victims, maybe.
[07:15]Rob: Similarly, I’m also wrapping stuff up. I’m basically formulating two game plans for Drip for the next seventy days. That basically takes me through mid-January. Because the next two months, there’s more holiday time, things are starting to wind down. I know I can still drive trials and grow a little bit but it’s not going to be at the levels that it has been. So I know these next two months are going to need a nice roadmap and it’s going to be doing some stuff internally, I think. I’m working on a product roadmap and marketing calendar. The product roadmap is basically what features are we going to build? What are the next steps, after coming back from MicroConf Europe?
[07:52]I have some ideas after talking to a bunch of people about what they’re looking for. I’ve got a good sense of where I want to take Drip next. Then in terms of a marketing calendar, I just want to know what’s going on every week. I’m really going to be buckling down on marketing because things are ready to – things have already started to scale up with Drip and I’m ready to hit it even harder.
[08:13]Mike: Cool. This week we’re going to be talking about what happened at MicroConf Europe. We kicked off the conference with Rachel Andrew, why don’t you talk about that a little bit.
[08:20]Rob: Yeah, we’re just going to touch on a couple of the talks that we got the biggest takeaways from. Really we only have time to go through a couple of the speakers and Rachel Andrew, she really set the tone for the conference. That was the goal, right? Typically your kick off speaker, you’re hoping that they’re doing something that’s interesting enough that people are going to be really engaged. That kind of sets the tone.
[08:40]If you’re interested in more details about the speaker talks, as usual we have a recap site, it’s called MicroConfEuropeRecap.com, and we’ll look it up in the show notes. Christoph Engelhardt was so kind as to take very detailed notes and he‚’s aggregated slides and all types of stuff. We don’t have videos of the talks, but that’s the next best thing.
[08:59]One thing I like about Rachel Andrew is she runs CMS, it’s called Perch, and she runs it with her husband. They don’t have any employees. It’s downloadable self-hosted web based CMS. So it’s really the traditional Micro ISV, micropreneur approach with no employees and it’s even downloadable software. So she has some really good experience, she’s an experienced speaker and she has a lot of takeaways that she lent to the crowd. One of my favorites is her quote, “The missing features at launch don‚’t matter to anyone but you.”
[09:33]While I don’t fully agree with that, because when I’ve launched specifically Drip, we had missing features, and it mattered to everybody. But I think that depending on your product and depending on your competition, what features they have, this can go one way or the other. But I do like the sentiment of this because it reminds you that you are always going to be bothered by the stuff your product lacks. But that you need to ship it before you get to that comfort zone or else you’ll never ship it.
[10:02]Mike: I think that when she was referring to that, she really meant that the things you feel are important, your customers don’t necessarily value as much. As long as you’re meeting the core requirements of whatever it is that they need, that’s the important piece. That’s why they’re buying it. It’s not as though you need to go out of your way to include everything in, the kitchen sink. The set-up core requirements that your customers have, that’s what they‚’re paying for. All the other things you think are necessary, they think are nice to haves but are not critical for them to buy it. I think that was a very fresh approach to that sort of thing. In some ways it’s kind of a minimum viable product sort of thing, but it was a nice breath of fresh air to hear it put that way.
[10:42]Rob: Another thing she said was that the happy majority of your customers will be silent. This is something that I have definitely noticed with products that I own, but I hadn’t thought about it in those terms before. She basically said that a lot of features that you’ll hear requested over and over are really just being requested by three or four people who are kind of your loud minority. A lot of your happy customers, you’ll never hear from them. This is definitely helpful for folks who are just launching a product to give them some perspective on what to expect as you’re starting to deal with customers.
[11:20]Mike: The phrase I’ve always heard is “the squeaky wheels”. The people who complain a lot, there are going to be a few of them, and they’re going to complain a lot about certain things but unless you hear a lot of people complaining about the same things, you have to pay them a little less attention. You can certainly go down the road of implementing things that, one, people don’t use or don’t need or, two, are actually going to hurt your product rather than help it and make people a little confused about what your product does.
[11:46]Rob: Yeah, and you use the word complain. I don’t know that I would use the word complain as much as give feedback. Sometimes, the more irritating customers, they are complaining and they’re kind of a pain in the ass but a lot of the customers who are in the un-silent minority are the people who I think genuinely want the product to be better. I think the majority of those folks, while they may email you feature requests three times a week, I wouldn’t consider that a bad thing. I know it’s hard to deal with the onslaught of oncoming feature requests – of all people right now, I know this. I think I’ve received literally multiple feature requests per day for Drip. So it’s trying to get back to everybody and handle it well is a challenge but I think I’m pretty thankful in general for even the people who send us one or two per week. If they’re cool with realizing that we’re not going to build all of them, I think that’s where you’d end at the sticking point, right? Because if someone requests something and they’re nice about it and you can‚’t build it, sometimes that has to get done. Certain people are willing to accept that, certain people will get really indignant about it and they’ll say things like, well, you would get so many more customers if you had this. That’s pretty few and far between though.
[12:54]Mike: One of the things that she had mentioned in her talk was that the things you’re customers tell you that they’d love should be in your headlines. I thought that was not just an interesting take on it but a fascinating way to resonate with your audience. Because your audience is clearly going to think about your product differently than you are. In some ways it reminded me of other techniques I’ve heard from people going to Amazon.com reviews and pulling snippets of what people are saying about other products or about similar products and using that to help do SEO or to identify keywords that people are using to describe that type of product. It was just a very interesting way of taking your customers’ words and using them to your advantage on your website and in your SEO to help resonate with the rest of the user base that has already obviously bought into whatever you’re selling.
[13:40]Rob: Right. I love this one. I’m such a proponent of learning the way that your customers and potential customers are talking and thinking about your product, entering the conversation that’s already going on in they’re head. Most of the time when I sit down to write marketing or sales copy I will try to go and actually read emails or testimonials or somehow read something from my customers to start getting me in the mindset of how I should be talking about it. I think this is a really good tip.
[14:08]Another thing Rachel said was that you can learn a lot from the misuse of your features. So basically, you’ll launch a feature and you think everyone’s going to use it a certain way and then she gave an example of how some of her customers misused it. But what that really means is that they have another need, I’ve definitely seen this. At first, you think, ah, people are screwing things up! Right, they’re not using this correctly. But if you look at it from this other perspective it can actually lead to making your product better.
[14:34]Mike: I think a nice reminder that she threw out there for everyone was that your product is never done. Even if you’ve implemented a ton of things that were in line with your vision, there are always new requests that are going to come up, there’s always new ways to use your product. If your customers are coming up with new ways of using your product in their environment for new processes or new procedures as part of their daily workflows, you have to look at those and say, okay. Can I rework the product? Or can I reposition it in terms of the marketing to make it appeal to those types of people in a slightly different ways? The work’s never done. There’s never going to come a time where you can just sit back and say, oh, the work on this is completely done.
[15:14]Rob: Another popular speaker, who actually went last, was Lars Lofgren. He‚s in charge of Growth for KISSmetrics. He does a lot of work with their content marketing team; he runs a lot of split tests for them. He did an excellent session of teardowns at MicroConf Europe. His talk was titled “Unlocking the Four Gateways of Growth”. I really enjoyed this talk. My guess is it will be one of the top-rated talks.
[15:39]He had a great overview of depending on the phase that your product is in, what metrics to look at, how to build a better product, how to ask if it can grow, how to build a simple business model – he kind of went through the four phases, really good stuff. One of the first things he talked about was when choosing metrics – he said you have to have metrics that you’re measuring to figure out where you are and where you need to go, what you need to improve. He said when choosing metrics, always ask what is the biggest constraint right now.
[16:06]I feel like this is a really succinct way of basically saying, when you are early on in your product you just need data. Right? You either need one-on-one customer interviews when doing customer development, or if you want to split test market and copy you need traffic. You need some data to say which one’s going to perform better. Then when you get further on, maybe you’re starting to scale up, you don’t necessarily need as much data any more now. You need a lot of people coming and you need to optimize your funnel. I guess in a way, you do need data, but you just need that data further and further down the line of your funnel as it gets better. I really like this whole concept of thinking about what is the biggest constraint right now for your product growing? Figuring out how to measure that and then focusing on that for kind of a three month sprint.
[16:51]Mike: I think one of the things that does for you is that if you’re trying to fix all these different things all at once, it can be hard to fix any of them effectively. If you focus on the one biggest problem you have, and say you’re having problems getting people to click through and actually sign up for a trial. That’s your biggest problem at this point. Then by focusing on that and alleviating that headache as much as you possibly can, then you’ve essentially freed up people to move through the rest of the funnel.
[17:19]Then you get to see what’s going on. You don’t necessarily know whether or not there are other problems that are right after that or are six, seven, eight steps down the road. By focusing on that one biggest problem, you’re always focused on getting those people through the sales cycle. It trickles down.
[17:36]Rob: I also like that this makes you think about, depending on your stage, you need to look at different metrics. Because we’ve gotten questions in the past where someone says, well, I only get 100 unique visitors per month to my website, how can I run split tests? The answer is, you can’t. Because that’s not your biggest constraint right now, right? You need to choose a metric that is actually helpful. It’s more than likely that you need to actually go talk individually to customers and decide on what you need to build.
[18:01]But maybe your biggest constraint, if you only have 100 uniques per month is traffic. Then you can start trying to increase uniques and improve that. I’d recommend definitely checking Lars’ slides out up there on Christoph’s hub.
[18:15]Another thing I liked that Lars talked about is he had this section called Can You Grow? The takeaway I took from that is he said, pick one growth channel, one marketing channel, and focus on it for a three month sprint. Put everything you have into it and try to make it work. This is something that I have done many, many times. I’ve never systematized it like he was talking about, basically making it a sprint and making it official and documenting stuff.
[18:40]Mike: One thing I like that Lars talked about was whether or not you had a stable business model. I think that’s one of the things kind of neglected by most people because they’re so focused on trying to figure out, what should I charge? Not saying that what you should charge doesn’t factor into it, but they’re focused on all the details of trying to get people to pay for it and not necessarily focused on the big picture.
[19:02]He talked about a couple of different pricing models. One of them was for SaaS, and he basically said that for SaaS, you want a lifetime value of the customer to be essentially at least three times your cost of acquisition. You want to be able to recover that acquisition cost within twelve months. If you’re able to do that, you can establish a solid growth engine for that product and if your churn is above 2% then that’s something else you need to work on is to help drive that churn down below 2%. Obviously you get that by talking to customers, but I think that figuring out what your cost of acquisition is and measuring it against your lifetime value is really important. The one difficult thing is trying to figure out what your lifetime value is when you don’t have enough data to figure that out.
[19:46]I was talking to Jana, who runs HappyBootsTrapper.com, but she has a product called FirstOfficer.io and we were talking about how do you measure lifetime value of customers. Especially when you have people who are paying you on a monthly basis, versus others who are paying you on a yearly basis, and of course the question comes up – those people who are paying you on an annual basis, they only have one real opportunity to cancel. They’re given that opportunity to renew every year but that’s when they think about whether they want to renew this. Versus the people who are getting a bill every single month, where they look at it and say, well, do I want to keep paying this or do I want to cancel?
[20:19]There’s obviously difference between your lifetime value for the people who are paying you on an annual basis versus those paying you on a monthly basis. You can’t just arbitrarily aggregate them together, that’s not sound mathematics. We had a pretty extensive conversation about that. It’s just interesting how different people look at that particular problem.
[20:39]Rob: Right. I think it’s like trying to find the standard. The standard I’ve seen is that if someone does not have the option to cancel that month, then they should not be included in the churn calculation. You can break up into annual and monthly churn, or you can say on the month that they’re able to cancel, did they churn?
[20:53]To be honest, man, it’s really hard to get below a churn of 2%. It’s pretty rare that happens, but that’s what the really big companies when they really start to scale up, that’s what they have to hit. So I like that Lars brought that up and brought some real numbers. These are numbers that I have either found myself or have researched and always keep in my notebook; they’re my rules of thumb for things. It was nice to see them up there on the screen for everybody to see and kind of benchmark their own apps from that.
[21:25]So as I said, we had nine speakers at MicroConf Europe, we can’t talk about all their stuff. But I’d recommend you check out MicroConfEuropeRecap.com if you want to see some of the other talks about hiring a designer as a founder, how to build an app that you can sell, optimizing SaaS apps. There’s a lot of really good info there.
[21:24]I really wanted to talk, just for a few minutes, about Dan and Ian’s DCBKK event. DC is their membership website, their membership community called Dynamite Circle. BKK is the airport code for Bangkok, so it’s an annual conference that they host for digital nomads. I really consider the Tropical NBA as kind of a sister podcast of ours. To be honest, they have a lot of overlap, their audience and the folks who attended may have the most overlap with MicroConf attendees in terms of their interests and the conference in terms of its audience, size, and format. It was really cool to get an inside look at how another conference for similar audience and a similar size was run.
[22:25]The fun part was that a lot of the attendees listen to our podcast and it was really fun to touch base with them since we typically wouldn’t cross paths with them. They’re digital nomads, they’re traveling in Southeast Asia and other parts of the world. It was fun when I first got up to speak and they did a show of hands of who listens to our show. It kind of felt like it was a hometown crowd.
[22:44]Mike: Really? What was the rough percentage?
[22:46]Rob: I think it was maybe 40%, 50%? It was a good chunk. That’s my memory. Someone can correct me in the comments if I’m wrong. I just remember thinking, wow, a lot of people have heard of what I’ve been up to or heard of the podcast. It was nice and I kicked off the conference and it was fun to do that.
[23:04]One thing I did in my talk was, I’ve talked about this stair step approach a bunch of times on the podcast but I’ve never really fleshed that out. I really fleshed it out and dove into what I think the specifics are on how to stair step your way up to recurring revenue. Meaning, starting with a smaller product that’s typically a one-time sale and has a single marketing channel and then stepping up to multiple of those until you can buy out your own time. You own all of your time, then stepping up to recurring revenue. That really resonated with the DCBKK crowd, it was cool. I overheard several conversations later referencing it and saying, yeah, my app is a step one business right now, I’m hoping to get to step two. That’s a really good feeling for a speaker to hear a concept that you’ve outlined be used by attendees so quickly.
[23:50]Mike: That’s awesome.
[23:52]Rob: I also talked about it again at MicroConf Europe about a week later, so that’s again in our recap if you want to hear more details about it.
[24:00]I think the last point I’ll touch on, the event was very well run and I was impressed with it. A lot of conferences I go to, now that we’ve run a conference, when I attend conferences I’m pretty picky about it. I can tell when people are screwing up. If you go to a venue after the conference and the music’s too loud, I’m thinking to myself, real key mistake, man! We‚’re not here to club, we’re here to hang out and talk. We learned that the first year when the music was too loud at one of our venues. I was impressed, you could tell Dan and Ian had run it before.
[24:31]As usual, the hallway track is one of my favorite parts. Breakfasts and dinners were probably my highlights. Actually, in the Tropical NBA episode 268, it’s titled ‚”Getting More Out of Conferences, breakfast is a big deal”. They talk a little bit about this. But one thing I did this year at both of these conferences, DCBKK and MicroConf Europe, was I was really intentional about seeking out certain people I wanted to connect with. I made sure that we had some one-on-one time. Typically I will see people, like Derek Sivers was at DCBBK, or Nathan Barry was at MicroConf Europe, and I would see them in passing and I might catch up with them at a group event. But I’ve realized that the time is not – it’s tough to have an in depth conversation at a group event like that because you just wind up, especially as the organizer and speaker, you get mobbed.
[25:20]There are a lot of people who want to talk to you, and that’s okay. But I realize that you kind of have to have one-on-one time to do it. So I think that if you are attending conferences, that perhaps my number one recommendation, aside from being prepared to ask interesting questions and not just make small talk, my other recommendation is to look out for people who you really want to connect with. Make sure that you are able to find some one-on-one time with them, hopefully over a meal where you can really catch up and deepen those relationships. Because in my opinion, that’s really what attending these events is about.
[25:53]Mike: Yeah, that comes down to scoping out who else is going to be there. Then schedule in that time, either before you get there or while you’re there. If you haven’t had a chance to connect with them before the event, definitely make sure that you get on their radar and say, hey, I’d really like to sit down and talk to you for a while. This is what I want to talk about. Maybe you don’t have a set agenda that you tell them about, but just get on their radar so they know you’re trying to make time for them so hopefully they’ll reciprocate and make time for you as well.
[26:20]Rob: So thanks for Dan and Ian for inviting me to speak and congratulations to them for running a top notch event. So Mike, we’ve run six conferences now, four in Vegas and two in Europe. You feel like we’re getting a little better at it?
[26:32]Mike: A little bit. You know, it’s interesting going back and forth between Europe and Vegas. There’s certain things that I think we took for granted the first couple years at MicroConf and Vegas because we went over to Europe, the crowd over there is different. Then we changed some things over there that I don’t think we initially realized in the beginning helped to make us successful here in the US. The biggest one for example that I saw in the US, we chose to do it on Monday and Tuesday primarily for cost reasons and we never changed that. We never experimented with it, and first thing we did when we went to Europe is had it on a weekend. It’s interesting that actually might have torpedoed things for us if we had done that in the US.
[27:16]Rob: Yeah, the quality of the attendee overall tends to be less on average because it’s more people who don’t have to take off work and they’re able to come. You’ll wind up with a lot more beginners, I guess is what I’m trying to say. A lot more people who are just thinking about doing things, but if you do it during the week, you tend to have more people really serious about it. If they not only have to pay for a ticket and pay to fly, but they have to take time off work, then they’re probably pretty committed to this idea.
[27:44]Mike: Yeah, so that was one of the things I noticed up front. It’s interesting to see different perspectives from around the world about what sorts of things people have to deal with and obviously there’s this core set of problems everyone has. But it’s interesting to see that people in different countries deal with them in different ways, there’s certain laws that affect some people and don’t with other people. It’s a very mixed bag with the periphery problems that people have to deal with.
[28:12]Mike: If you have a question for us, you can call into our voicemail number at 1(888)801-9690 or you can email it to us at 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 StartupsForTheRestOfUs.com for a full transcript of each episode. Thanks for listening, and we’ll see you next time.
- A summary of the key points from this episode was generously donated by Sweet Fish Media: 5 Steps to Hosting the Perfect Webinar
[00:00] Mike: In this episode of Startups For the Rest of Us, I’m going to be talking to Brennan Dunn about how to run successful webinars. This is Startups For the Rest of Us Episode 209.
[00:13] 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 –
[00:21] Brennan: – and I’m Brennan –
[00:21] Mike: – and we’re here to share our experiences to help you avoid the same mistakes we’ve made. How you doing this week Brennan?
[00:25] Brennan: I’m good. I’m good. I’ve broke ground finally on my new course, so things are good.
[00:31] Mike: Excellent. If you’re not familiar with who Brennan is, I want to give you a quick introduction. He is the founder of Planscope, he’s written several books and courses on consulting, which you can find at doubleyourfreelancing.com, and he is also a former speaker at Microconf and will also be speaking at the upcoming Microconf Europe in Prague. Thanks, and welcome to the show Brennan.
[00:49] Brennan: Thanks Mike.
[00:50] Mike: So today we’re going to be talking a little bit about how to run successful webinars. Brennan, you’ve run quite a few webinars. I think one of the first things we should start out with is – when you’re first starting to look to put together a webinar and considering doing it, what are some of the first things you should think about? Are their target audiences you should have in mind? What’s the first thing they should start doing?
[01:10] Brennan: First, I think you need to realize what the goal of the webinar is, both for you and the audience. For you, it’s probably to promote or sell a product, in your case. With Auditshark, you’ll probably be wanting to teach somebody something about security, so that ultimately they can understand why it’s important to have a secure infrastructure, which will then ultimately lead them to Auditshark, right? I think you need to figure out both what the role of the webinar is, and on top of that, what the takeaways are for the attendees.
[01:40] The target audience, I think – It’s probably not that hard to determine if you already have a product in mind that the webinar’s for. If you have a info product, or a software product, or whatever it might be. Hopefully you already know who the ideal user is, right? That’s probably the easier part if you have a product in mind. But, a really good webinar is meant to – It’s kind of like an interactive blog post in that you’re teaching something and it’s interactive. People can ask you to clarify something, or have live Q&A, and do a lot of really fun things that you really can’t do traditionally through a newsletter or through blogging or through whatever else.
[02:17] Mike: Yeah. When I was putting together my first webinar for Auditshark, one of the things that jumped into my mind was – Obviously there’s a reason I’m doing the webinars because I want to help bring awareness for Auditshark and help drive sales, and things like that. But, the key thing that came to my mind first was, “What’s in it for the person who’s coming to the webinar, and why should they even care? Why should they spend the 45 minutes to an hour even bothering to come to the webinar, and what can I offer them that is going to” – especially to entice them to come and attend? It’s sort of “Marketing 101”, but “What’s in it for me?” is really the underlying question.
[02:48] Brennan: It should be. I think you really do need to be respectful of the person’s time and really understand that even if you are trying to sell something, I think the webinar itself should be valuable in its own right, even if you’re not selling anything. I think you really need to think: even if nobody buys, will they still walk away from this event thinking, “You know what? It was worthwhile for me to attend”. And that’s why I’m a big fan of a training webinar, or something like that, versus – Because some of the more seedier parts of the internet might have webinars that are more like pitching people on timeshares. I’m very big on having a very dense, educational webinar that coincides and aligns with whatever product I’m trying to up-sell.
[03:27] Mike: It’s almost the difference between doing an educational webinar, versus an education on how to use my product webinar.
[03:34] Brennan: No one cares about your product; they care about what it can do for them. I’m very big on the idea of: let the webinar demonstrate the “why”, and let the product come in as the natural “how”. Why is security important? Why does it matter? What are the implications of an insecure infrastructure, case studies, right? Then the “how” is obviously – the “how” is: if this is all resonating with you, and this makes sense, and you don’t want to have exploits or whatever else happen on your systems, then look at Auditshark. That’s the goal, right?
[04:04] Mike: Yes. There’s a couple other things on the educational side of things that help, because even if somebody comes to the webinar and they look at the product and they say, “Well that’s not really for me”, if you didn’t give them anything of value, they will probably never come to a future webinar. So, even if they’re not at a point right now or not ready to buy just yet, they may be down the road. I think if you turn it into too much of a sales pitch right away, they’re going to get turned off. They’re not going to come back to a future one. You’ve lost them as a future customer.
[04:31] Brennan: I think this is true of webinars, newsletters, really any form of marketing.
[04:37] Mike: So we talked a little bit about the fact that the target audience should come away and have learned something. But, one of the things you have to also ask is: why should you use a webinar? When are appropriate times to use webinars?
[04:49] Brennan: I think there are a lot of different ways a webinar can be used successfully. One of the ways that I think it underused is a way to learn about your audience and what they need. Let’s say before I wrote my course on pricing for freelancers, I could have hosted a webinar to my list; to my audience, talking about what I might even put in the course, right? Just a feeler to find out if this is something that resonates with people. Do people care about this product that I’m thinking about putting together? A webinar is a great way to do real-time validation, because you can talk to people about what it is you’re thinking about putting together and get feedback during the Q&A or even in real-time. I think it’s a really good way to scope out a product before you do the legwork needed to actually build the product.
[05:31] The second thing, which I think is the more used case, is using it to promote an existing product. If you have a software product out there, a webinar is a fantastic way of promoting it. I think the two real distinctions between a webinar and traditional forms of marketing like a newsletter or a blog post are: it’s interactive, meaning people can say, “Hey Brennan, can you clarify what you said about x, y, and z, and can you tell me more about that?”, and on top of that – another big thing – is that you can’t skip forward. The attendee cannot skip ahead. Let’s say you launch your product and you put together a really good sales page. A lot of people are just going to skip to the bottom and the pricing, and go there before they actually know what the products about, what the benefits are, and so on.
[06:14] The way that webinars are structured, because they’re live, is you can’t skip ahead, which I think when done right can really make them valuable. I’ve had webinars where 40% of the people who attended bought for me, because if they make it to the end, it’s very self-segmenting. Is this for them, or isn’t it? They know what it is and why they need it at that point.
[06:34] Mike: I really like the credibility aspect, because when you go to a sales page, it feels like you have to work a heck of a lot harder on the back-end to make sure that you’re putting the right information upfront to not only get the people who are going to read everything, but also to get the people who are just going to skim the content to figure out if it’s for them. But with the webinar, as you said, you get a lot more engagement and they’re hearing a live person on the other end of it, versus a website where it’s a little less personal. A webinar is very personal because you’re actually sitting there listening to the person who’s talking to you.
[07:06] Brennan: Right, you hear a human’s voice. A lot of them will have some sort of real-time chat where you can talk to other people who are attending. When I do a webinar I break the ice with asking everyone where they’re from. It’s really personal compared, like you said, to a static sales page.
[07:21] Mike: What are some of the disadvantages of hosting a webinar? What are some of the things that would actually turn you away from using a webinar?
[07:27] Brennan: First, you need to show up to make it happen. With a really great sales website, the idea is you can let it run on its own and if it’s effective it generates and drives sales to you. With a webinar, it still requires you to attend, like it’s a live event every time you do it. So, it requires time. On top of that, it’s one thing for me to blog weekly, and send it out to my audience, but they can read it and consume it on their own time. Whereas, typically with a webinar, you’re making people schedule, and asking, “Am I free on Tuesday at 2 pm EST?”, and especially if you have a lot of people from all over the planet, it’s logistically harder sometimes, and people really need to think, “Can I attend? Can I actually blank out my schedule for an hour on this day at this time?”. So that, I think, is one impediment – mainly for the audience, not as much for you.
[08:13] Mike: I think it is a little bit of an impediment for you because you have to think of where people are going to be attending from and what segment of your audience you’re basically going to ignore. We have this problem with the Micropreneur Academy where we’ll hosts an academy conference call. We’ll post a number and people can call in from all over the world, and we typically aim for an evening of Wednesday or Thursday. So it’s evening for the US, we have people calling in from India and it’s 2am or 3am there. It’s like, “Wow! You’re a trooper”, but when you have a worldwide community like that, it’s very hard to do those types of schedules without shunning some part of the world.
[08:52] Brennan: I’ve seen people who offer maybe two or three different versions of the same event. They might have one be at 7am EST and another one might be 2pm EST, and then you can choose which one is best for you. That’s one way to work around that.
[09:09] Mike: Let’s talk about some of the technical logistics. How do you go about hosting a webinar? What sorts of tools or technology should you be using? What should you at least give some consideration to?
[09:19] Brennan: There’s a lot of different options out there. My favorite – and it’s also the most economic – is using Hangouts on Air. A Hangout on Air is basically a Google Hangout, but it doesn’t have any limit to the number of attendees who can attend, and it auto-records everything that you do. What I do now is, I put together a very simple static page that has two iframe embeds basically. It has an iframe embed for a Google Hangout, and it also has an iframe embed for a service I use called Chatroll, which is a real-time chat widget.
[09:48] So I just put these two up and that is the entire – at least the hosting – that the viewing part of the webinar. There’s also GoToWebinar which is also an option, but I think that’s $100/month. It’s desktop software, but I just like how mine requires to just go to a webpage and as long as you can watch YouTube videos you can watch my webinar.
[10:05] Those are really the two main options. I think there’s Livestream also, I’ve never really used that. I would recommend for most people Hangouts on Air is by-far the easiest and most economic way to get started.
[10:17] Mike: I signed up for a GoToWebinar and I did my first webinar through there. My 30-day trial recently ended with them and they sent me this email saying, “Hey, your trial just ended. We’ll give you $10 off if you sign up now”, and it ended up being $39/month instead of $49/month, but that’s for their lower-end plan for only up to 100 attendees. The downside I saw with those was that the conversion rates were actually really low because they don’t give you any customization for the registration page. You can select which fields you want to get. Basically, just the user experience for signing up and registering for the webinar – it’s completely in their hands.
[10:55] Brennan: The registration flow is horrible; you can’t control it. Like you said, I don’t even think you can control the emails they send out. I think they send out a reminder email the day before, and then maybe one an hour before.
[11:06] Mike: You have some flexibility there you can set-up a bunch of different reminders. You can pre set-up polls and stuff like that for inside the webinar, and you can also customize the emails that get sent out afterwards. Once they get all of the registrations in, you can download them into Excel. From there you can do a MailChimp import. You can do your own things if you really want to. That initial registration page – it does not convert well.
[11:29] Brennan: The webinars I’ve been doing – the registration page gets about an 85% average conversion rate. In the show notes, I’d be happy to link to one of those as an example. I like having control over the entire registration confirmation flow, along with the emails that go out beforehand. I like being the one to send it. So I actually use my marketing software to do registration for me. I use Infusionsoft, but this can be done in Drip or MailChimp, AWeber, or whatever. But really, all you really need to do is create a list for that webinar, design a custom page, advertising the webinar, and then have an opt-in form, which is literally name and email.
[12:09] They get on that list, and you have an auto-responder that is scheduled to go out. I’ll send out a few emails before the actual event, and then I’ll be the one promoting, “Hey, the event is about to start”. Then after the event, I send out the replay mail, and any additional emails that relate to the pitch that I had. I think you can do a lot with a free MailChimp account with Hangouts on Air, and Chatroll does cost about $50/month minimum. Those three things plus some knowledge about how to glue it all together can basically give you what you need.
[12:40] Mike: Even if you’re paying $50/month for Chatroll, that’s only marginally more expensive than something like GoToWebinar – there you’re limited to just 100 people. Plus, people have to download their stuff, and I found this out the hard way. Their recordings don’t always work. I recorded my first webinar, and somebody emailed me, “Hey, I missed the webinar. Can you send me a recording of it?”. I said “sure” and thought this would be a good time to check and see how well the recording is.
[13:05] The recording was awful. It skipped all over the place, the transitions were terrible, and it just did not work. I had no choice to say, “Look, this recording didn’t come out well”, but I was kind of able to turn it around and say, “Hey, this didn’t work out well with the recording but if you would like a personalized demo or personalized webinar I can certainly do that”.
[13:23] Brennan: That’s what I love about Hangouts is that they come out as YouTube videos automatically – no matter what. You don’t need to worry about recording. It does it for you.
[13:30] Mike: So – Hangouts on Air from Google, a combination of Chatroll and a custom landing page for the people who you’re driving it to, and then in terms of getting people registered for it – very simple integration with like AWeber or Infusionsoft or MailChimp, or what have you.
[13:46] Brennan: Exactly. That’s it.
[13:47] Mike: That’s basically all you need to handle of all the technical side of stuff. Let’s dig a little bit into driving people to that landing page for the webinar. How do you drive people specifically to that page and get them to sign up?
[13:59] Brennan: If you’re promoting to your own lists it’s a lot easier. They’re used to hearing from you already – they know who you are. What I’ve done in the past is I will typically send out two or three emails spaced out where I talk about what they’re going to get out of it. I don’t actually say, “Join my webinar, here’s the link, cheers, Brennan”, I don’t do it like that. I’ll talk about an example of something that happened to me back before I learned how to price – this is what my life was like these are the kind of clients I was working with. Then I segwayed from that into: I’m going to be talking about all of this, what I learned over the years in building up my consultancy; if you’d like to join, there’s limited availability, but click this link – I’d also include the date and time.
[14:41] I did this one launch on doubling your freelancing rate last May, and I got quite a big turnout from my own list. I think it was really effective too because – It’s a way if you’re constantly talking to your list, it’s like a one-to-many. It’s you up at the top, and your broadcasting hundreds to thousands of emails to all of these people. There’s no two-way relationship.
[15:00] Mike: You’re not getting that interaction.
[15:02] Brennan: Yeah. But, it’s one thing if you can invite your list to a live event. They can talk to each other in the Chatroll, and they can also ask you questions and you can answer them live. You can say, “Yes Bob, great question, let me address this”. It’s just a great way to get to know who your audience is and help them get to know you better on a more personal level. That’s what I would do with my own email list. I would think: well, is this a launch or is this a meet and greet event, or am I really doing a formal promotion for a product of mine. It’s always going to be better for that. I get a very good conversion rate for my own list. I get upwards of 90% typically when promoting my own list. But if you’re going to look into paid acquisition or the typical social stuff, you’re definitely going to get lower returns, right? You’re going to get lower conversions. But, people like John Lee Dumas have done extremely well with paid ads when it comes to promoting webinars. I don’t know, Mike, if you’ve ever seen any of John’s ads in your Facebook feed –
[16:00] Mike: Yep.
[16:00] Brennan: – but he makes a killing. If you look at his income reports, he does most of his sales through webinars. I think it’s useful because traditionally, when most of us think of doing a paid advertising campaign, it’s usually: let’s drive people to the marketing site and let’s get them to hopefully buy. But when people are on Facebook and just browsing the web, usually not in a “pull out my credit card and buy something” mood. They’re just casually looking around. If you can find lower ways to convert people from a paid campaign through a webinar opt-in or an email course opt-in or something, I generally think that’s a lot more effective than just driving people to a product webpage.
[16:42] Mike: Part of the way you need to think about it is putting them at the first step of what your sales funnel looks like. Ultimately you want them to buy something way down the road, but there’s a series of other steps you want them to go through first, or at least start them on that path. Even if you get one touch with them, which is an advertisement of some kind, they’re probably not going to buy right away.
[17:03] But, you need to get them on that path somehow, and using a webinar says, “Hey, just give me your email address and I’ll send you a link to this webinar and you’ll get a bunch of free educational stuff that’s going to help you out. If it doesn’t help them out, they’re probably not coming back. But if they do find a value in it, then they’ve started on that path and they may start looking at you more. Eventually, they’ll say that they’re finding value in this, and paying money to get the product they’re offering is ultimately going to benefit them far more than just listening to free webinars.
[17:35] Brennan: I think it’s harder for you to promote to somebody who doesn’t already know who you are to ask them to blank out their calendar and attend a webinar. I’ve seen them offer something immediately too, like a worksheet or PDF report – something they get immediately upon opting in. That way – it’s not like when you see a Facebook ad, you click it, you opt-in and wait a week before you get anything – you get something immediately. But, you’re also hoping they can attend the real event, which is the webinar.
[18:05] Mike: Yeah. You’re kind of satisfying that need for instant gratification that we’re all used to on the Internet.
[18:09] Brennan: Right. A lot of people will say, “Fill out this worksheet before you attend”, because a lot of it will be in line with what they’re going to be presenting on. Say I was doing a webinar on pricing. I might give people a worksheet, “Now fill out these questions about your experience pricing, what fears you have around pricing”, just so they can get that emotional buy-in into what the webinar will be covering. So if you give them something of value immediately, that thing of value needs to coincide nicely with the webinar itself.
[18:37] Mike: What I’ve seen, I think LeadPages did this, when I registered for one of their webinars I went into it and looked at what they sent over, and it was actually a worksheet that went along with the webinar. Their webinar was going to walk through a bunch of things, and it was almost like a mad-libs thing. That is what the worksheet was. You had to fill it in, and it didn’t make much sense unless you actually attended the webinar to be able to connect some of those dots. So, it was kind of interesting, but at the same time I looked at it and said, “This is going do make me do some work”.
[19:08] Brennan: You could just offer a free report or a free eBook download or something too. That isn’t as intensive. Like you said, you have to rack your brain and think through stuff.
[19:19] Mike: You can tap your own email list, you can leverage some paid advertising or use social networks like Twitter, LinkedIn, Facebook, and various ads and stuff within those. Are there any other ways you can think of that people can use to drive people to a webinar?
[19:32] Brennan: I’ve had a lot of luck over the past few months with something called a joint-venture webinar. And what that is, is I will approach somebody in the complimentary audience, someone who has done the groundwork of getting an audience of consultants, and I will say to them, “I have a product that I think could be really valuable to your audience, but on top of that, I want to train your audience for free on a gist for my product”. There will be a soft up-sell at the end for the people who get a lot of my training and want to take it to that next step. But it’s not a overrated right, it’s not a hard sell. On top of that, I want to offer you, the audience owner – let’s do a rev-share of any sales that come as a result of that.
[20:10] So, I think there’s huge benefits for this. First off, if you go to an audience that has maybe tens of thousands of people, if they promote your event to their list, not only do you have a lot of potential sales that can come from that, but you’re also going to grab a whole lot of email addresses. You’re going to get a lot of new opt-ins, which is awesome. It’s hard, because unless you have a track record of your product and yourself being capable of delivering a large amount of value – if you have something untested. If you have a new product and nobody knows who you are, and you go to somebody with a list of 100,000 people and say, “Will you promote this?”, you’re probably not going to get very far.
[20:46] But, I would look out for people that are either in your immediate network that you know through conferences, or whatever else, and try to come up with something where you can say, “I want to provide value to your audience and make your look better to your audience by giving them something”, and then basically having a self-segmenting offer to them which is: if you want to take this product to the next level, I have a product that will help you do that. But if all your webinar is doing is trying to sell the product and nobody gets any value from it, no one will come back. And on top of that whoever promoted you is not going to be very happy with you.
[21:20] Mike: So this is more about credibility with these people you’re trying to tap into for a joint venture. You might be able to go to them – If you pre-record something that might help. But I think you’re right. You almost need to be making that pitch to someone who is at your level or even a little bit above. You probably don’t want to go down. If you have a list of 1,000 people you don’t want to approach someone who has 10,000 or 20,000 because the return for them is probably not nearly as big as it would be for you. So, baby steps up, but you’re not going to be able to make those huge leaps that you might have read are possible on TechCrunch.
[21:53] Brennan: Yeah, they’re going to want to see proof. If you’ve done this to your own list, and you can point them to recording, that’s much better than having nothing else before that. You should definitely do this first with your own audience and start there and maybe eventually doing a joint-venture.
[22:07] Mike: One of the things you touched on earlier was when you’re driving people to the lists and being able to give away different things so that whether it’s a white paper, various ways to entice people to sign up. What is typical for the registration rates? I think you said some of them for your own lists you’ve seen upwards of 85-90% for opt-in rates. What would be the typical range of other options? So if it’s paid advertising, what sorts of things can people look at to say “I’m doing well” or “These are areas where I obviously need to improve” because maybe somebody’s getting 20% and they’re thinking that’s great, but realistically they should probably be getting 40-50%.
[22:46] Brennan: I think you should definitely be getting upwards of about 50%. Everyone I know who has registration opt-in pages for webinars seem to be getting above that. The thing you don’t want to be doing is to have too much stuff that it’s keeping someone from opting in. It’s the typical squeeze-page set up where you don’t have much. You have a headline, a very basic sentence or two on why they should attend, the date and time it’s at, a type in your email, “click join”, then maybe under that, a bit about who you are and maybe four or five bullet points on what they’ll get from it.
[23:21] I think the more you add, the less likely someone is to opt in. At this point, you want to have as many people as possible opting in, because after they opt in is when you want to try to get them to actually attend. I think a lot of us will look at, “Oh yay, I got 1,000 people” to opt in or register, but then 100 people show up. Show up rates are very, very minimal. There are some things we should talk about how you can get more people to attend.
[23:48] But, one of the things I love about the joint-venture approach is that even if you get 1000 registrations but only 200 people show up, you still have 1000 new people on your list. This same thing applies for paid acquisition, doing social marketing, any sort of thing like that. You should definitely be aiming for above 50%. I think a really good squeeze-paged with not much you can do except put your email address in and click a button. You should be getting closer to 90%.
[24:14] Mike: I think those are great numbers for people to have at their fingertips. Now what about follow-up referrals and things like that? I’ve seen some landing pages where after you put in your email address and said yes you will claim your spot and confirm to attend this event. I’ve also seen pages where they’ll ask you to help promote it by sending out a tweet, or emailing friends. Do you see that those types of things work well? Or no?
[24:39] Brennan: I have actually. What I will typically do is on the confirmation page is I’ll have a to have a “Share on Facebook, Tweet this” link and say “thank you”, and I also have a widget that will let them add it to their calendar. Basically the confirmation page is: stick it on your calendar and why don’t you tell somebody about it. But in the email that I send out. So, immediately upon opting in I send a welcome email. And this welcome email it’s very simple. It’s basically, “Hey! I’m really excited. I can’t wait to see you at the live event. Can you do something for me?”. I have a form that will help me learn a bit more about who you are and what you need to get out of this event.
[25:14] If you’re going to give me an hour of your time, I want to make sure I cover what you need to hear. So click this link fill out this form, it will take you about a minute. And just tell me a bit about what you need to hear from me on whatever date the webinar is. That’s just a link to a Woofu form, or it can be a Google form. But it’s literally, “What made you want to opt in?” “What drew you to this?” and also “What are you hoping to get out of this event?” And what I found is when people filled that out, and I found about half of the people who have ever registered for my webinars end up filling out that form, I get a lot of raw data.
[25:46] But on top of that they’re much more likely to actually attend. Because now they’re vested. They’re engaged with the event before it’s even happening. If they’ve taken the time to say, “I’m hoping you cover x, y, z”, the likelihood they’ll attend is much higher. But on top of that after I link to that form, at the end of that form I say can you do one more thing for me “I want to do my best to make sure I address whatever it is you just put in that form. But can you try to get one or two new people from your network to attend that you think would get a lot of value out of this?”. I’ll usually have about three tweets that they can copy and paste.
[26:22] And I’ve gotten a lot of people. Like whenever I do these events I’ll have a lot of people on Twitter sharing the url which gets even more people into it. So, that’s typically what I’ll do for that first welcoming email that I send out immediately on opt in.
[26:37] Mike: So, this sounds like taking the corporate face or feel of the company that’s behind the webinar and putting a person’s face on it to say, “Although you’re getting a webinar with such-and-such company, you’re actually talking to me Brennan Dunn”.
[26:51] Brennan: That’s right.
[26:52] Mike: It’s just got that personal feel to it, so you’re creating this one-on-one relationship with somebody. Not necessarily, “I have a webinar with BidSketch or whatever the company is”.
[27:01] Brennan: Nobody wants to go to a webinar to talk to BidSketch the company. They want to talk to a person, so I think it’s important that whoever’s going to be presenting for the company is the one that needs to be behind these emails.
[27:13] Mike: Some of those emails obviously are aimed at increasing the likelihood that people are going to attend. What are some of the other ways? I think an email sequence and timing that email sequence leading up to the event is also a good way.
[27:26] Brennan: You need to get people excited. You really want to make sure to get people to attend. Mine would change depending on how far out the event is. I’ve done events where I’ve opened that registration a few weeks in advance, but typically those don’t perform as well. I’ve found that just sending an email starting to promote the event less than a week before it happens those tends to be the most effective in terms of turn-out and how valuable that event was.
[27:51] I’ll typically send a welcome email, and usually another email on a weekend – the Sunday before. Usually I’ll run events Tuesday or Wednesday. I’ll send this on a Sunday, and I’ll basically say “Are you ready?” in the subject. Inside, I’ll reiterate why I’m excited to have them to attend, but then I’ll copy and paste a few of the responses I got from people and almost use it like testimonials. Like, “I’ve struggled with pricing myself at $20/hour for years, I don’t know how to get out of that. I can’t wait to figure that out. – Laura” or something like that. I’ll do this for maybe four or five of the responses that I got.
[28:29] It’s really just a way to really not only have another way to promote that hey if you haven’t filled out the form. Fill it out so I know. But also as a way to showcase that first off there are other real people attending and secondly people are like dying for this info and I plan on sharing how to fix these different problems that I’ve just listed out. So it’s just a way to kind of again remind people “Hey! You got an event coming up”and on top that really just build that excited for them to attend. I usually send it the Sunday before the event and then again if my event’s on say Tuesday, and let’s say it’s at 7am my time, I’ll send out a reminder saying, “By the way, the event is coming out later today” and I’ll also give people the live-link for the first time. I’ll tell them to set an alarm on their phone, make sure it is on their calendar, they won’t want to miss it, and that even though there will be a replay, you can’t ask questions to a video. If you attend live, you’ll have an avenue to ask questions about what I’m presenting. So it’s really important that they show up live.
[29:29] Mike: Now these are all things you can schedule well in advance because people sign up for it. This is specifically for the mailing list that you’ve set up for this particular webinar. Do you go back to your primary email list and continue trying to get people signed up for the webinar? How do you manage the back-and-forth between those two lists? I don’t think you want to beat your existing subscribers over the head with your webinars, because if you’re doing that, it’s almost like you’re abusing the privilege of having their email address.
[30:00] Brennan: I agree. I will typically only send two or three emails max about a webinar. It’s easy for me to do this with Infusionsoft – I can filter out people who have already registered from getting those follow-up emails. So if you’ve already opted into the webinar, you’re not going to get that reminder email to the general list about the webinar. I do that.
[30:19] Mike: So when you are giving the webinar. Let’s talk about the different things people can do to keep people engaged when you’re giving the webinar, and the types of logistical things you need to deal with during the webinar. So I think the first one is Should you record it? In some ways this is a no-brainer. You’re using the Hangouts which automatically records it so you don’t necessarily have to worry about that, but the question is: now that you have the recording, should you do anything with it? Should you repurpose that recording? Should you send it to people afterwards? I think there’s some pros and cons there that you might want to talk a little bit about.
[30:52] Brennan: I’ve done experimenting on record, not record – obviously you always record it, but do you share the recording or don’t you? What I found works best. The beautiful thing about Hangouts on Air is that live page you send people to to watch the webinar. If they were to refresh that page or go to that page after the event, it will automatically start playing the recording. That’s just how Hangouts works.
[31:21]So what I’ll typically do after the event, and this is part of that auto-responder for the pre-event and post-event, about two hours after the event I’ll send out a replay email where I’ll say, “Hey you guys are awesome, thank you so much. For those of you who couldn’t make it, here’s the video. But there is time-sensitive stuff that I mention in the video, so I will need to take it down on this date at this time”, which is typically the end of your sales window.
[31:37] This way people who are geographically all over the planet can watch it on their own time. Usually it’s a day or two window period I’ll set up. But the benefit of this it’s not an open-ended, yeah you can watch it from a year from now if you want. There is still some urgency behind it. You want people to watch the video especially if you have a timed promotion. No one will act on that promotion probably until they’ve seen the webinar probably. So, you want as many people as possible to watch the webinar. So I’ll usually do a replay, but take it down after a certain amount of time.
[32:07] Mike: Yeah, I think that’s really really great advice. When you’re running the webinar, why don’t you talk about some of the objections some people have, and how you address those directly within the webinar.
[32:17] Brennan: We’ve been talking a lot about the webinar but we haven’t talked about what’s in the webinar – format-wise and everything. The formula that I use for putting these together – I’ll start with ice breakers where I ask people where they’re from, what they do, and livechat is great for this because they’ll just type it out and I’ll respond to people in real time.
[32:38] Then I’ll jump into the training. Within the training there are two schools of thought. The first is you can either gloss over your entire product. Let’s say you have a course. You could sum up the entire course in the event, but still make it so even if somebody doesn’t buy the course they can still learn something, or alternatively you can drive into one specific part of the product. So with my product, Planscope, I could talk solely about client communication and how important it is to keep your clients addressed on what you’re working on, progress, budget usage, and everything. The selling point could be that Planscope does this.
[33:13] It also does a lot more. I would have focused on one core feature. That would allow me to do future webinars that allow me to hop around the future benefits that the product provides. You’ll typically do this training, and I usually spend about 30 minutes doing that. You need to have a bridge. Let’s go back to Auditshark. Let’s say you presented on the importance of security and how vital it is to have a secure system. The bridge that ties the training in with the product is something like this.
[33:45] On one hand, you could do what I did with Auditshark. I manually went in to all of my machines to make sure all of these settings were set. It took a lot of time. I was manually addressing and diagnosing and running diagnostics all the time on my machines. It took a lot of time. Or you could do what I’m doing now, which is, why I built Auditshark which is, you pay for Auditshark and we’ll do the majority of this for you. Do you want to go the shortcut or the long road?
[34:13] The training should set people up so they are equipped to take the long road. You can teach them about how to do what Auditshark does automatically. You could train them on how to do it manually. Basically, the pitch is really: if this is stuff that matters to your business, and your time is valuable enough where you don’t want to do all of this manually, here’s the product for you. I’ve built the product that automates much of this.
[34:36] Mike: That’s exactly what I did with my webinar. I basically talked about how to implement a security plan, which was geared more toward: these are the things that you should be doing. Then walk them through that process on how to do that stuff, where to start, where to finish, and what are the different gotcha’s and what sources of authority you should be looking at. Then walk into the process of how to verify those things inside of your environment.
[35:00] Then it was like – by the way, if you want to not have to go to every one of these machines individually and check all of this stuff, this product will do it automatically for you. It will pull back on everything and you can report on it and you can slice the data however you like.
[35:14] Brennan: If somebody doesn’t value their time all that much, they can take what you train them on and do it themselves manually, right? But, The goal with Auditshark in this case is to remove that need. Remove that time spent. It’s like when I sell Double Your Freelancing Rate, the way I sell it is: this is stuff I literally spent years of trial and errors on writing proposals and qualifying new clients. How do I do all of this kind of stuff?
[35:38] I packaged that into a start-to-finish framework that is this product. it’s really like, yes. You can take what I just covered and practice and tweak things and everything else, or I have a product that will help you get to that finish line and goal, which is the reason your hear, which is a lot faster than how you would get there otherwise.
[35:57] Mike: That’s a great tactic in general because you’re talking about what they’re doing, what are the different ways they’re going to accomplish whatever the ultimate solution would be, and walk them through the pains they’re having. It’s actually reinforcing the problems that they have to go through to do this. Maybe they know some of the different things they’ve learned over the years to get from point A to point B a little bit faster, but the tool is really what drives the value. That tool automates a lot of it. You’re trying to walk them through to this point where they recognize where they are today, and they realize what the potential solution is for all of their problems with the service or product that you’re offering. At that point, it becomes a much easier sell to say: Hey if you give us your credit card, we can solve most of these problems for you very quickly. You don’t have to worry about them ever again.
[36:48] Brennan: After you do the training with that kind of pitch, I definitely think there needs to be some sort of urgency factor – whether that’s a discount, or some added benefit, or something like that. I’ve found that having a day or two to get it at that discount or with that extra benefit is typically ideal. I’ve found that 40% of people who end up buying do so within an hour or so afterward. The other 60% actually come with the emails I send after the live webinar.
[37:22] I already mentioned the first email which is the replay, which also includes a worksheet I put together that is actually in the course that I give away for free. It’s a worksheet that coincides with a lot of what I covered in the live event. So I give that away also for free along with the replay in that first email. The next day I’ll send out another email where I overcome objections. Somebody attended or they watched the replay, and they’re thinking, “Well this is all great, but is it really for me? Am I at the point of my life where I really need something like this?”.
[37:52] So I really just help people self qualify. I tell them “If this is where you are then yes you should do this.” But if this describes you then maybe you should do this first. So it’s just a way to really help qualify people into does this really make sense for them to adopt product which is being pitch and it’s also a great way to really further described on paper this time in writing with a bit about include sales copy on the value and benefits of the product.
[38:18] And that will typically be the second email I send. Then I’ll send a final email, which is usually a few hours before the sales wrap up. I say, “if you haven’t watched the replay yet, do it, because I need to take it off because in that replay I give out this coupon or this offer code that is going to go away. It won’t work anymore so I’m going to be taking down the video. So please watch it soon.” I’ll also include a link to the slide-deck that I used. I’ll also include a closing testimonial that really is meant to drive people to it.
[38:50] Mike: So, we’ve got the follow-up email sequence, the link to the replay, any additional documents or materials, a link to the slide-deck. There’s a very specific sequence that you go through that essentially winds down the webinar. You have the intro emails leading up to the webinar, the webinar itself, and then it winds down to whatever the end of that sale or promotion is for that webinar. Is that right? –
[39:12] Brennan: That’s right.
[39:13] Mike: I think that’s a very regimented sales process you’ve probably tested quite a bit. Correct?
[39:17] Brennan: Yeah. Like I said, I’ve done this 13 times to other peoples’ lists and about four or five times to my own list, and I’ve definitely iterated on all of this. The way I have just outlined, for what I’ve been doing it, is most ideal. I’ve seen people who don’t do replays, people like Ramit Sethi do not offer replays, so you either see it live or you don’t see it. I think that there’s a lot of pros to that, but you could also be missing out on some.
[39:42] There are a lot other interesting things you can do. Another thing Ramit does. Is he will do things like he will ask questions live. Usually not questions, more like things he wants people to agree with. Like, “Have you ever feared X?” “Have you ever feared that a hacker could get into your server?” or something. And then, “If you have, let me know in the chat”. Then he’ll get a flood of, “yes yes yes” and it’s kind of like a psychological mass-confirmation thing. So I’ve seen that work.
[40:07] There are so many different techniques and strategies. I think ultimately, you need to have a way to excite people to attend. You need to have an event that is informative, educational, and more importantly ties really nicely in with the product you’re trying to sell. Finally, you just need to close the deal afterward.
[40:26] Mike: I think that’s all really great, sound advice. One thing that might be in the back of people’s minds at this point is that they may have a fear of running webinars. What are some of the fears that people might come across in trying to set up their own webinars. One that comes to mind I’ve seen other people mention before, is “What if I host this webinar, and nobody shows up”, especially if you have a live chat there where people can see how many people are in the webinar. I think with your implementation of Chatroll then, if everyone can see what everyone else is chatting, then that might be a very valid concern. What are your thoughts about that?
[41:00] Brennan: I would use some discretion in that. If only ten people register, I would probably not put Chatroll up, just because that means probably one or two people would attend. I think that would be a little of awkward. I think there’s room to tell people to tweet questions instead of having a chat box. That’s another thing I have seen people do, especially when they don’t have a chat element.
[41:23] Chat elements are good, but if you don’t have one, no one really knows. You could have one person watching live, or 1000 people. To the attendees can’t discern how many are attending, right? You can’t really fail. One person attending is not failure. It’s not the goal you were hoping to hit, but it still gives you practice and helps you build confidence so you can do it better next time.
[41:44] Even if nobody attends, you can just try it again. Figure out why people didn’t attend, you can reach out to people. Email everyone. One thing I like doing if you have a small list – I used to do seminars for my agency where we would basically do this, but offline at our office using seminars and networking. One of the things that worked really well when you have a smaller audience is to email everyone individually who registers and say basically that first email I mentioned – do that, but don’t do it as an auto-responder.
[42:12] Do it as a, “Hey Mike. Googled you and found your website. Awesome! It looks like you’re doing this really cool! Can’t wait to have you here. Can I ask you a few questions? I’m still wrapping up on the material I’ll be presenting on, but I want to ask you specifically, Mike Taber, some questions. I want to know what you’re looking to get out of this so that I can really tailor this event just to you.
[42:31] If you have a smaller list and you’re thinking the reception won’t be as big as you want it to be maybe- I’ve had 900 people attend live, so I couldn’t do that with them – but if you’re talking about a list of maybe a few 100 people, it might be better for you to be a little more personable and to actually turn off some of the auto-responders and write people manually.
[42:51] Mike: And the other thing you can do which I actually did was I went through the list of people who signed up for my webinar and I picked out different people to see what companies they were in – essentially using their registration email address from. Even people who registered with Gmail accounts I was able to backtrack through Reportive and identify people through LinkedIn and there were people who signed up from 25,000 employee companies, like Senior IT Auditor at a public company. It’s like, that’s a really good lead. I want to touch base with that person. Those are the types of things you can also do.
[43:22] Brennan: Right. I think it’s very valuable, both for learning – You’ll get to learn who your audiences. It’s just a lot more than just knowing you have 500 people on a list. It’s so much better when you know actually who is on that list.
[43:36] Mike: That leads me to the very last question. After people have signed up for the webinar, whether they attended or not, what do you do with those email addresses afterwards? Do you essentially add them to your main list? Or what?
[43:47] Brennan: That’s what I do. I’ve seen it work really nicely by having a P.S. segway in your last email saying, “By the way next week I’m going to be writing to you on (whatever your theme is)” and I want to maybe say “if you’re not interested in getting my weekly emails on consulting, just click the unsubscribe link at the bottom of this email”, and then by default opt-in anyone who doesn’t do that.
[44:07] Mike: Very cool. Well thank you for coming on the show Brennan. It was very educational and I think a lot of people are going to get a lot out of this. Where can people find you if they want to hear more from you?
[44:15] Brennan: Awesome. So thanks Mike first off for having me. I finally have a new centralized website. It’s doubleyourfreelancing.com. It has three plus years of weekly blog posts on consulting, along with all of my courses and everything else. It also has if you want to send me an email. The about page there’s a link to email me.
[44:33] Mike: Excellent, we’ll link that in with the show notes. If you have a question for us you can call it into our voicemail number at 1-888-801-9690. Or you can email it to us at 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 on iTunes by searching for “start ups” and visit startupsfortherestofus.com for a full transcript of each episode. Thanks for listening.
- CasJam.com – Brian Casel’s website
- Bootstrapped Web podcast
- Productize – a course on productizing your services
- Restaurant Engine
[00:00] Mike: This is “Startups for the Rest of Us,” episode 208.
[00:10] 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.
[00:17] Brian: And I’m Brian.
[00:18] Mike: And we’re here to share our experiences to help you avoid the same mistakes we’ve made.
[00:21] Well, Rob is still away on vacation, so I have the pleasure of having Brian Casel on. If you’re not familiar with who Brian is, he the founder of Restaurant Engine. He writes and teaches at casjam.com, and he’s the co-host of the “Bootstrapped Web” podcast.
How are you doing today, Brian?
[00:36] Brian: Doing great, Mike. Glad to be here. Thanks for having me on.
[00:39] Mike: The topic that you wanted to talk about was productized services, and this is a topic that Patrick McKenzie has brought up a couple of time at previous MicroConfs about how people can essentially move from more of a consulting model into a software model, where they’re selling software instead of selling just services. But, you know, there’s this gap there where you don’t necessarily have enough money to be able to just work full-time on the product, but you’re making so much money from the consulting, you can’t necessarily just drop everything and move over to product; because then you’ve got this mismatch between what your cash flow looks like and what your future revenue looks like. So, a productized service essentially kind of bridges the gap a little bit where you have this product that you’re selling, but it’s still a service on the back end.
[01:21] I wanted to have you on and discuss that quite a bit more, because I think it’s a very interesting way that people can essentially take their products that they’re working on, that is still essentially a more of a beta format, and not necessarily ready for the open market. Or, they haven’t quite figured out exactly how to address the marketing and use that as a mechanism for bringing in revenue while they’re still developing those products.
[01:43] Brian: Yeah, exactly. I mean that’s a perfect example of it. What’s really exciting to me about productized services is that there’re a number of different directions that you can take and kind of plug them into your business, whether you’re just starting out, or you’re in that transition, like you said, between consulting and moving into a products business; or, you know, what I’ve even seen as well is you already have a product – you know, some kind of software product, plugging in a productized service component to that – another trend that I’m seeing. I’ve been researching this quite a bit, writing about it, seeing it in my own business as well. So, really excited about talking about productized services.
[02:16] Mike: There’s two, different perspectives that I can see here. One of them is from your customer’s perspective, and then the other one is from the founder’s perspective, the person who’s actually putting together the service. So, why don’t you talk about those two, different things and kind of what some of the research you’ve done has come up with and what some of the different things you’ve done in these scenarios is.
[02:33] Brian: Yeah, exactly. And, you know, if you’re a freelancer and you’re used to billing by the hour, or working project to project, productized services work a little bit differently. So, from your customer’s perspective, a productized service offers a specialized, done-for-you solution with a compelling value proposition. And it’s packaged at a set price and scope, so there’s really no negotiation, or writing a long proposal, or going into these discovery meetings that often happen in consulting work. “This is the scope. This is the price. It offers this type of value. Buy now.” And then, you know, from the founder’s perspective, a productized service is one that runs systematically, and it continues to produce and grow with or without your direct involvement. And I highlight “with or without,” because there are so many different types of productized services. And we can kind of get into them in a minute, but whether you want to remain solo and do like a productized consulting, or actually grow it – grow your team and focus on systems, you could actually design your productized service to run without you.
[03:35] Mike: I think one of the most interesting pieces of this is – you know, from the customer’s perspective, they’re essentially paying you to do a particular job; but you are in some ways decoupling the hours worked from the service itself. So, you’re no longer billing by the hour; you’re billing for the project itself. And in many ways, you already have a good idea of what the billable hours would have looked like anyway, but you want to essentially decouple those things so your price is not tied directly to the number of hours that you’re working.
[04:04] Brian: Yeah, exactly. It kind of goes to that idea of value-based pricing – right? So, you come up with some compelling value proposition, a very specific service that really benefits one type of customer; and you price it accordingly, and you define the scope of that service accordingly.
[04:21] Mike: The other side’s interesting, too, because from the founder’s perspective, you can start plugging other people in and, as you said, you can essentially scale it. So, if you just want to be the person doing the work, then you can do it; but you can also substitute other people in. And there’s lots of people who are doing that successfully.
[04:35] So, let’s talk a little bit about some of the different scenarios where productizing a service might come into the picture? The two that you had talked about before the show were launching a new product and then if you’ve already launched a product. So, let’s talk about those a little bit.
[04:47] Brian: You know, productizing, again, it comes into play in so many different types of scenarios. But if you’re launching a new product, you’re transitioning from consulting into products, or transitioning from a full-time job into a product business. You may not have the time or the money to invest into building something really big like a SaaS app, like a complex mobile app or something. So, you need to launch to paying customers quickly, and a productized service is a great way to do that. You know, you can pretty much begin productizing a service that you’ve already been doing as a consultant, or something that you’ve done at your job; package it into, again, a value-added, productized service.
[05:26] If you have a product and maybe you’re struggling to gain that initial traction, or you just want to find ways to add value to what you’re doing – and this really comes from my own experience with Restaurant Engine. It originally launched almost three years ago as a SaaS, and technically it still operates as a SaaS, you know, from the monthly and annual billing standpoint. But over the last three years, it really has evolved into much more of a productized service as we began adding manual, done-for-you services at every level. So, we do web design for restaurants. My team manually on-boards every new client, and we manually set up their entire website, input all their content for them. We’ll even make ongoing monthly updates to their website for them. All this is done manually, but I’ve completely removed myself from the process, built loads of systems and processes. And I’ve delegated all these tasks so that I can remove myself. I can focus on the bigger picture, kind of focus on marketing and then even take a vacation once in a while.
[06:26] Mike: I think one of the best parts about that is you can take things that you’ve already been doing for your existing customers and essentially just repackage them.
[06:34] Brian: You know, what we’re just beginning to do now with Restaurant Engine is we’re beginning to add an option add-on service, which is we’ll actually manage their email newsletter for them. We’ll create the email newsletter and send it out on their behalf. And this is an optional, done-for-you service that we’re adding on top of it, and we’ve been offering that to our existing customers.
[06:53] Mike: So, essentially, all you’re doing is going back to your existing customer base and offering them either services that you’ve already been doing on kind of a prepackaged basis, or you’re coming up with new services that you’re offering to them on that packaged basis. And that way, you can substitute anyone in on the back end that you need to, based on whatever that service provides for them, or special customizations, or something like that that go a little bit beyond what the standard package offers. That gives you the flexibility to do that stuff.
[07:18] Brian: Yeah, exactly. I mean we’ve designed a service with certain limitations built in, but then there’s also some flexibility there. We have a platform and framework in place, and we’ve built in a lot of customization tools that make it fast and easy for us to set up a customer’s website. We also have the ability to customize to a certain extent, like we can add custom CSS to a site and make certain tweaks; but there are limits to that, and those limits are put there for a reason – because, again, this is a productized, focused service. This is not consulting, where we can literally just do anything and everything the client dreams of.
[07:54] Mike: So, I think that’s probably an important piece that we want to dig into a little bit – is what sort of edge cases do you need to identify as places where customers might try to take advantage of what the service is? And how do you essentially protect yourself from those types of things so that not a lot of back and forth? How do you go about identifying those types of things in your service offering, and how do you protect yourself?
[08:16] Brian: You know, you can just look at so many others who are doing this productized consulting, or productized service, to two that I’ll highlight here: Nick Desabato and Jarrod Drysdale. Nick Desabato launched Draft Revise, which is like a monthly A/B testing optimization service that will help you increase conversions on a monthly basis. And he very clearly spells out on the landing page for his service, Draft Revise, exactly what’s included; exactly what the client can expect; and the type of results that his other clients have seen. So, it’s really just laid out and setting those expectations right from the start. I mean before a customer even decides to purchase, or decides to get in contact with him, they’ve basically read through his landing page and seen all the terms.
[09:04] And then the same is true for Jarrod’s site, LandingPageinaDay. You know, again, the landing page does just a really great job of setting those expectations; and, of course, his service is what it sounds like. He’ll design and build a landing page for you in one day. Even in the title of the service, that basically defines the scope – right? Like, he’ll start in the morning, work on it throughout the day. He’ll write the copy for you, and by the end of the day, it will be launched. And I think it says somewhere on its site if you needed additional revisions, additional tweaks and things that go beyond that day, he’s available – clearly at an additional cost.
[09:40] Mike: I think those are very interesting examples, because they kind of highlight two, different sides of the spectrum. With Draft Revise, you’re essentially getting this monthly, ongoing service versus the Landing Page in a Day, which you’re essentially hiring somebody for one day of work. But in both cases, I think it’s very clear what you’re getting at the other end of it, so the value is very, very clearly defined.
[10:02] Brian: Draft Revise has been designed to offering recurring revenue, and that is a fantastic way of building a business, of course. You know, with productized services, you can go in so many different routes. You can go with, like, you know, a one-time purchase type of deal, or the recurring revenue route; and you can even do a combination of those. I think Nick, on his Draft Revise service, actually offers both. He now offers Revise Express, which is kind of like the one-time audit where he’ll give you a clearly defined list of recommendations, or tweaks, that he would recommend for you to increase conversions on your website; and then clients have the ability to upgrade to the monthly Draft Revise service. And I’ve seen that again and again in a lot of these productized consulting – what’s basically known as “the ladder,” where you offer a one-time service and then the option to upgrade to a recurring service.
[10:52] Mike: We’ve talked a little bit about exactly what a productized service is and the different places where you might use it, some examples of other people are using it and how they’re using it. What’s the first step to productizing a service?
[11:06] Brian: You know, it’s really all about focus. So, you want to focus on one service, and you want to focus on customer. That usually starts with the service. Ideally, you want to pick something that customers have paid you for, have paid you to do, if you’re coming from consulting. So, you could even look at the types of projects that you’re doing, or that you’ve been doing, and break those down into individual services. So, you know, for example, I come from a background as a freelance web designer, and I might – my background – you know, I – one component is setting up a WordPress site.
[11:38] Another component is designing mockups. The list goes on, but you can kind of pick one of those things to really focus on. And you also want to look for a service that somebody has actually paid you for, and that’s really important because that indicates that there is a real pain or problem to be solved. The other aspect of picking one service is you want to look for something that can really produce specific results that can then produce compelling case studies. So, you look at something like Nick Desabato’s Draft Revise, and his case studies show actual increase in conversions with hard numbers. You want to look for those things. And then you also want to focus on choosing one customer to sell your service to. Of course, you’ll have a couple variations of the types of clients that you’ll work with. You want to be as focused as possible, because that makes everything so much easier. You know exactly who your customer is, and you know how to tailor the service to meet their exact needs and help them be extremely successful.
[12:36] And as you go about narrowing down one customer to focus on, there’re a few things that you can look for. Number one, you should be looking for businesses with money to spend. From what I’ve found, all the productized services that I researched they all tend to be B-to-B services, working with businesses who have a monthly operating budget to spend. Niched verticals can be easier to reach. I’ve seen that in my business Restaurant Engine, so we’ve basically only worked with restaurants and food trucks, and that’s a very tightly niched vertical. That’s one avenue to explore. Or, whatever industry you’re in, maybe find ways to get more specific. And then you also want to consider the right audience for you. So, what type of people are do you like to associate yourself with? If you’re doing a lot of content marketing, or you plan to do content marketing, who could you actually content ? You don’t necessarily have to end up writing all the content yourself, but in the early days you probably will. So, you want to keep that in mind. Another thing that I like to think about is what kind of conferences can you see yourself attending. You know, would you go to a conference with this type of audience? So, keep these things in mind as you’re narrowing down on that one customer to focus on.
[13:46] Mike: I think one of the things that you said there that’s really important for people to understand is that you are looking to productize a service that you’ve already performed for people and that you’ve charged them for. And the reason that’s so important is you know that there’s already a business there. It’s not like you’re creating something out of thin air and you’re trying to sell it to people, and you don’t necessarily know if people are going to buy it. If you’ve already performed it for people and you know that they’re willing to pay you on an hourly basis, or a weekly basis for it, it makes it so much easier to essentially define the limits of what that service is going to entail, but also to understand and fully appreciate all of the different things that are going to go into it. So, if you’ve never worked with a customer before, and you go to try to sell them on a particular service, they may very well have questions for you that you have no idea how to answer, so you aren’t able to clearly talk about those different points inside of your service offering.
[14:39] But if you’ve done that before, you know the different edge cases that are going to come up. You know the different pain points that people are going to hit and how you’re going to deal with them, because you’ve done it before. And I think that being able to clearly and solidly answer all of those questions for people, even before they’ve asked those questions, is very key to being able to sell some of these productized services.
[14:58] Brian: Yeah, exactly. What I also like to look for are the types of questions that come up from whether they’re new prospects or existing clients. A lot of times, you’ll hear a lot of the same questions come up again and again, and those are really big indicators of a particular point in the service, or a type of service that’s kind of the deal breaker. Like, if that’s not included, then the project is not going to happen. For example, looking back when I was a freelance web designer, it got to the point around 2011, 2012 where almost every, single prospect that I spoke to asked about mobile websites. Will the site be mobile optimized? And that just became a deal breaker. So, if I were to productize that service, that would be something that I would think heavily about.
[15:42] Mike: So, let’s talk about scaling services like this. How would you go about scaling this? I think one of the big things that comes to mind is being able to clearly document not only the resources that you need to go into the project, but also what that output is going to look like.
[15:58] Brian: Yeah. I hear this question a lot: “Can a productized service actually scale?” We are talking heavily about manual processes, doing things manually, done-for-you services. So, how can that actually scale up? And looking back when I started Restaurant Engine, my dream was to build something that literally runs on its own. Over time, we’ve added more and more manual services, but at the same time, I’ve been able to remove myself. So, my answer to that question is, yes, you can scale up a productized service; and the key is to focus on systems and systemizing every process. What I’ve broken down here is a three-step process to systemizing so that you can get to that point where you can actually begin to hire and delegate those tasks and remove yourself from the business. And what this really is all about is working on your business and not in your business. So, if you’re used to kind of pushing pixels in PhotoShop or coding, you want to remove yourself and focus on higher-level systems and process.
[16:57] Here are the three steps to systemization. It starts with standardizing. So, you want to focus on one particular service, like I said before. And, really, you want to focus down on one method or way of doing things. Or, choose not to do everything. As a consultant, we often do everything, but in a productized service we want to standardize and focus in on one service. There are always multiple ways of achieving the same result. Right? But we want to focus in on one method and commit to one way of doing things, and that just makes things more standardized and predictable.
[17:31] Mike: I think that’s a very important point to make just because – you’re right – when you’re doing a consultant engagement, you get in there, and your job is to just get things done; because you don’t necessarily fall under the same constraints that everybody else does who works in an organization. But I think that when you’re doing a standardized service like this, it’s very important to not get involved in some of these quagmires; because there are some tasks that you can perform that are just going to be an absolute nightmare. There’s no way that you’re ever going to be able to come up with a one-size-fits-all thing for everybody – for example, reporting. Reporting is a big thing. Some people like to have lots of reports in all these different formats, and I think that if you standardize and just say, “Okay, all reports are going to be in Excel, and this is what you get, and if you want customization beyond that, we can talk about it; but what come with this particular offering is just” – you know, “These are the Excel reports, and these are the fields that you can expect to see,” I think that’s a much more appropriate way to handle something like that, because reporting could become just one of those huge quagmires.
[18:32] Brian: Yeah, that’s exactly right. Just coming up with that one, standard way of doing things – it really comes back to setting those expectations up front; and that begins with your website, your landing page, and then the way that you speak about the service. It has that predefined scope. That’s what it is.
[18:49] Mike: So, what’s the second step to systemizing?
[18:51] Brian: Once you’ve standardized and made things more predictable, the next step is to look for ways to streamline the processes and make them more efficient. So, that might mean, again, adding new limitations. For instance, I mentioned we’re adding email marketing to Restaurant Engine, where we’ll be managing email campaigns for our clients. One limitation that we’re adding to that is they have to be on MailChimp. Our clients – we want them to be using MailChimp, number one, because it’s cheap for a restaurant owner to get started on; and, number two, it makes it easy for us to set one process that my team can then follow. They don’t have to learn how to use AWeber and Constant Contact and iContact. We’re sticking only with MailChimp. So, we’re setting a limitation there.
[19:32] Another idea here is to use one, common framework, or template. I mentioned Jarrod Drysdale, his Landing Page in a Day. He’s a great example of someone who actually started with software and converted it into a productized service. A few months back, he created a design framework called Cascade.io, which is kind of a product in itself. But now he’s using that product to streamline his Landing Page in a Day service. So, essentially, he’s using his design framework to speed up his process of designing a landing page for clients.
[20:07] Mike: And I think that’s a great example of taking software that you are using and working on to be able to complement your productized service, especially to help that product make money in a way that may not necessarily be obvious. I think most people when they do that, their goal is to write a piece of software and then be able to sell it to everybody they possibly can. That’s the way that they’re going to scale it. But at the same time, when you first release your software, it’s not necessarily finished. It’s not in a format that is going to be easy for the mainstream masses to be able to use. So, if you convert that and say, “Okay. Well, I’m going to create this product. Maybe it’s not quite there, but I can live with the limitations, and I know what those limitations are, because I wrote the software,” then you can essentially use it in a services fashion to help complement your skills and the ability to get things done that, without that software, you wouldn’t be able to do anyway.
[20:58] Brian: Yeah, exactly. And having that software built in the first place, you can use that to your advantage when you’re performing that service. It just drastically speeds up the process and makes it more efficient. You know, I found that in my service as well. With Restaurant Engine in the very beginning, we built in all these fancy customization tools. We wanted it to be a do-it-yourself service. Any restaurant owner can come in and create their own website. But what ended up happening is today it’s a productized service. We’re using those same features, but we’re using them internally, and now we’re able to set up a new website in just a matter of one or two days.
[21:33] Mike: In some ways, this reminds me of the idea which was essentially concierge on-boarding, which is the idea that you are having people come and sign up for your product; but at the same time, you’re essentially hand-holding them. You’re doing things for them that you would like for them to do themselves so that you don’t have to do it, but at the same time, it’s more important to get them onto the software and using it than it is to make it easy for them to do it themselves. I mean that’s not necessarily your goal. Your goal is to make them a long-term customer, and if you have to do those things up front to help get them over the hurdle, then you will.
[22:06] Brian: That’s a great point. I know that there are a lot of people interested in doing SaaS products and SaaS owners out there today. So, in the beginning, it was a concierge service – right? We were kind of adding the done-for-you setup complementary – you know, just to get you onto the service. And that worked pretty well, but then we actually started charging for it, and today we actually require every customer to pay for the initial setup service. What we’ve found is that when we do that, yes, the rate of signups obviously goes down. You know, we’re asking for an up-front fee, and to your credit card and everything; but we’ve found that those customers who do that and go through our setup service they stay. The cancellation rate goes to near zero at that point. So, we’ve found that’s a good balance for us.
[22:51] Mike: Dharmesh Shah of HubSpot had talked about this at the Business of Software conference a few years ago, because their service has – there’s a couple of different tiers. I think their lowest tier is $200 a month, and then the next tier up is $800 a month, and then above that I think it’s $2,000 or $3,000 a month. At the lowest tier, even, you have to pay for what they call a training session. That’s $500. And the second tier is a $2,000 fee that you have to pay just to get set up. Some ways a consulting services engagement where they’re teaching you how to use their software. People get this idea, “Oh, well, I’ve already paid $2,000 to get set up on this. I really should be using it.” Because if they make that mental leap [and] say, “Okay. I’m going to plunk down $2,000 for my first month and then $800 a month after it,” you need to just move forward and do it.
[23:37] Brian: Yes, exactly. And we have seen that, and we see customers who have paid the setup fee are much more engaged. They’re invested in the process. They’re willing to go through the on-boarding steps, like providing their content, or doing whatever they need to to get going and start being successful on the service much faster.
[23:57] So, the third step as we get into systemizing our service is all about documentation. It’s really all about your documentation. Now, it is incredibly important to focus on standardizing and streamlining first, but then as you begin to prepare to potentially hire and delegate these tasks, you want to have your documentation in place. And what this really means is as the founder, you know, you’re still doing everything yourself in the early days; but you want to be spending and investing a lot of your time early on in writing out detailed, step-by-step procedures. And that can often mean spending up to three times longer on a particular task. So, what I see a lot of people running into who have trouble with delegating tasks to a team [is] they’d say, “I’d love to delegate this task to someone. But you know what? If I just do it myself, I can get it done so much quicker.” And you kind of have to break out of that way of thinking and work on your business and invest that time up front. Yes, you’re doing it yourself, but spend even more time writing out that detailed procedure so that, ultimately, you can delegate this and never have to touch that task again. Yes, it can be tedious, and it will take a lot of time; but you should just start simple. Start with just a really quick-and-dirty bullet list, step-by-step framework of what you’re working on, and then you can just continuously improve that over time.
[25:17] Mike: I think that’s a general-purpose skill that every entrepreneur needs to have – is to be able to document the processes and procedures and how the business is run, just purely from a logistics standpoint, to be able to step back from certain parts of the business, or to be able to hand them off. I’ve actually been in a position where there’re certain parts of the business where I’m handing off to other people and saying, “I need you to standard and streamline and document this entire process so that I don’t have to.”
[25:42] Brian: And that’s where it has come in my business as well. I mean literally just before we got on this call today, I wrote out a quick email to one of my teammates and said, “Can you turn this email into a procedure?” We actually have, like, a procedure for creating procedures. [Chuckles] You know, we have a standard template in Google Docs, and then they just kind of duplicate that. It has all the formatting and everything, and then he’ll just convert that into a procedure.
[26:05] And another thing that I see done quite often is doing a video screencast of a task and then handing that off to your virtual assistant or someone on your team. What I like to use video for is to document my process once, show that to my teammate and then ask them to convert that into a written procedure.
[26:21] Mike: What I’ve done is for documentation, I have a standard operating document in Google Docs. And whenever I bring on a new person to my team, I just share the entire folder with them so they have this whole folder structure of documents that they have access to. But inside of those, I will have one, main Google doc; and then it links off to all these other ones that are in the different sub-folders. For example, one of them is a procedure for dealing with Twitter. There’s specific documentation in there that’s written out about what to do at certain times and certain things that come up, but then I also have places where there’s a video that I just link to directly from there. And then I have the user name and password that’s stored directly in there, so I host everything out on screencast.com. And it just makes it easy, because if I ever need to change the password, I can just go into the Google doc, change it. If they need access to it, they just go in there, and it’s right there. And they can not only see the written documentation, but there are some places where it’s a lot easier to show somebody than it is to write it out. So, I use kind of a hybrid of that mechanism.
[27:24] Brian: Yeah, that’s a great point. I think I do a pretty similar thing. I give my team access to our folder in Google Docs. I do like to include both the visual and the written description. We also use a lot of screenshots, and we notate the screenshots. For that, I use Droplr. I’ll grab those screenshots, put the notations in, drop it into the Google Doc. In addition to that, I’ll actually describe the steps.
[27:46] Mike: Let’s move on a little bit to marketing a productized service. I know that there’s a huge amount of talk in terms of marketing a productized service. What are some of the things that you can think of that people might want to keep right at the edge of their mind when they’re looking to put together a productized service?
[28:03] Brian: For one, when you productize your service, you can begin to market it as if it’s a product just like any other product; and that’s kind of what’s so great about a productized service. You can really make use of all the other tactics that we’re constantly learning about. I think really the most important thing comes down to knowing your customer, really getting to know who that customer is. I spoke earlier about focusing in on one customer, one particular person. Since your productized service is focused on serving that one type of customer, you’re able to really research and learn everything that you can about them; because your goal is just to get lots and lots of any and every type of customer. Your goal is to find that one, focused customer and find more of that person. When you really understand who they are, or what they do, what their primary pain and challenge is, what are the hurdles that they’re trying to get past, you begin to see these patterns as you’re interviewing customers, talking to them on a daily basis, emailing with them. And when you really get to know them, everything else becomes easier – you know, writing landing pages, communicating your service, coming up with the perfect pricing or the perfect pitch, the value proposition, even designing the scope of your service: what’s included, what’s not included, how can we provide the most benefit possible.
[29:21] Mike: Yeah, I think knowing your customer, obviously, is a very important piece of this. It helps you to communicate your message to the customer and make sure that everyone’s on the same page. It also helps you if you want to do, like, SEO, or keyword optimization, or anything like that; because if you’re speaking the same language as them, in many ways that productized service is not really much different than an actual product. By clearly defining that, again, it’s just no different than selling an actual product versus selling a service. It’s just you’ve got everything prepackaged.
[29:51] Brian: It also goes back to speaking with your customers and listening to what they’re telling you, whether it’s your prospects that you’ve been speaking to as a consultant or your current and past clients. What are the things that they’re asking you? How do they describe their pain point? How do they describe the service or the product? And then you can use their language, literally take it out of their mouths and put it onto your landing page. When you truly understand what their core pain is through those constant discussions with that one type of customer, you know exactly what to lead with when it comes to your top headline, or the way that you describe the benefits that your service can offer.
[30:31] Mike: Brian, if people want to find you and learn more about the productizing services crash course that you’re offering, where can they find you?
[30:36] Brian: Yeah, so right on my site, casjen.com. On the home page, you’ll find a free crash course on how to productize your service. And then I also have the advanced training course called “Productize,” and that is at casjam.com/productize. I’m also “Casjam” on Twitter. [I’d] love to connect there. You can always reach me Brian@casjam.com.
[30:56] Mike: Well, Brian, thanks for coming on the show.
[30:58] Brian: Thanks for having me, Mike. It was fun.
[31:00] Mike: 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 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.
- Software Promotions
- Dave Collins on Twitter
- – or – https://www.softwarepromotions.com/forms/website-teardown/
- Dave’s direct email address: Dave@SoftwarePromotions.com
[00:00]Mike: This is Start Ups for the Rest of Us, Episode 207.
[00:10] Mike: 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 Mike.
[00:18] Dave: I’m Dave.
[00:19] Mike: And we’re here to share our experiences to help you avoid the same mistakes that we’ve made. Well, this week Rob is Thailand so what I’ve done is I’ve decided to invite Dave Collins from Software Promotions onto the show. So why don’t you just introduce yourself a little bit, talk about who you are, what it is that you do, how long you’ve been doing it, kind of what the relevance to our audience is.
[00:38] Dave: Well I’m Dave Collins, I’ve been working in let’s say online software and marketing types of things since 1997 somehow. And over the years, the work that I’ve been doing has evolved quite a lot but it’s mainly concerned with Google side of things so we were doing SEO actually before most people knew what Google was – actually we were doing SEO before most people knew what SEO was. These were the days of AltaVista, HotBot, LiveCast, InfoSeek, so a lot’s changed but a surprising amount has actually stayed more or less the same in the core principles of SEO. As AdWords kind of became the big thing we started doing more and more of it and here I am today.
[01:23] Mike: Cool. So one of the reasons I wanted to have you on was because a few weeks ago I had mentioned one of the talks at Business of Software that was from Rand Fishkin and he was talking a little bit about what Google’s doing, why they’re doing it, and what other people should be paying attention to and what lies ahead for Google and for how the rest of online marketers should pay attention to what they’re doing and how they should be reacting to it. So since you’re firmly entrenched in this space I wanted to bring you in and talk a little bit about what Google’s goals are, why they’re doing the types of things that they are, and what the rest of us can do to respond to those things. Because, obviously, they issue an update, your search engine rankings can go up or down – for most of us I think those rankings tend to go down based on whatever it is that they’re doing, because something that was perfectly okay to do yesterday is now no longer okay so now the rest of us have to do a lot more work in order to keep up with Google. So why don’t you talk a little bit about what Google’s main direction is right now and why they’re doing it.
[02:19] Dave: Okay, so there’s been an awful lot going on in the last few years, I’d say the last two or three years or so have seen more by the way of dramatic change than all the other years I’ve worked in SEO put together. What it’s all about, people often get hung up on the different names of the updates and the algorithms and the filters – like Panda, Penguin, Hummingbird – if you sort of take a step back it’s actually pretty simple. It’s all about Google trying to get rid of what they refer to as “search engine spam,” and what they mean by that are basically garbage, low quality sites that show up in the search results. Google ultimately wants to provide people with what they’re looking for as quickly and efficiently as possible so what they’re trying to do is get rid of all of these – you know all the sites that you carry out a search and the first, second, third, and fourth aren’t so good and they’re not relevant, and some of them are junk, and some of them sell things totally unrelated to what you’re searching for? So that’s it, just about clearing up the mess, really.
[03:22] Mike: I assume that you’re talking in some cases, I’ll call them “farms” of websites and I’ll throw eHow and About.com into this bunch because I know that I’ve gone to those sites and they happen to have ranked very highly for something and you go there and it’s completely not relevant. One of the things that Google is doing is that they’re moving these things around a lot; those types of sites are simply not relevant. Why is it that Google is so bent on making sure that people are getting the search engine results that they’re looking for?
[03:50] Dave: Well, there are a few things to take into account here. The number one factor by far is that in a sense, Google is literally fighting for their survival. What I mean by that is that Google depends almost exclusively on their income from advertising; some of it from their partner sites, from the display of content network and a lot of it comes from the actual ads that Google themselves show. When you go to Google, the ads that show on the right hand side and usually two or three about the organic searches, that’s where the money comes from. So what’s happening here is Google is very aware that if they don’t start clearing up the quality of their organic content – the normal listings – after a while, people like you and I, if there are people like you and I and everyone out there, eventually we’re just simply going to get frustrated by the really poor results we get, by the number of awful quality sites that we have to wade through to find what we’re looking for.
[04:49] If that happens, the disaster scenario for Google is that people like ourselves think, “Maybe there’s something better out there. Maybe I should try Bing, maybe I should try Yahoo!” DuckDuckGo. When enough of us start doing that, the revenue that Google is going to get from their ads is going to fall at a pretty alarming rate – alarming for Google, anyway. It’s Google peering into what might be in the future, and I think it’s a really important point that a lot of people don’t quite get is that although Google don’t actually make money from the organic results – in other words, from the non-ads – although that they don’t make money from it directly, this is the base upon which everything else is built. This is why we go to Google to search. That’s what they’re defending here.
[05:40] Mike: So essentially what we’re looking at is Google is trying to pump up the number of searches that people are doing on a monthly, weekly, or even a daily basis, and they want those search results to be relevant because they’re afraid that people will leave, and if they leave that ad revenue goes down. And obviously, the difference between five billion and four and a half billion searches per day is a fairly large chunk of their revenue. And I think that is there’s something to do with the sticky factor as well – I’ve been using Google for probably at least ten years now, and the fact is, I don’t go anywhere else right now because Google provides results that are good enough for me. But I do see your point where if it got to a point where I would do a search, and then do a search, and then do another search, if I’m still not finding the things that I need, I might very well go elsewhere. But I haven’t really felt the need to do that because they are providing me good enough search results at this point.
[06:31] Dave: Exactly, that’s exactly the point. You actually more or less took the words out of my mouth. What I remember is back in the day when I first started SEO, there was a scenario where you had a number of big, main search engines like AltaVista, like HotBot, you had these various options to choose from and ultimately what it boiled down to is over time the more you used them you kind of knew that AltaVista, for instance, was quite good to find articles. You knew that InfoSeek was quite good when it came to finding things that you wanted to buy online – online shopping. And Google, I suspect, absolutely dread that scenario reoccurring. They don’t want Google to be an option, they don’t want people like you and I and everyone else to have links on their browser to Yahoo!, Google, Bing, whoever. They don’t want all these options, they want “this is the source of everything,” which is why they’ve added so many things to their search platform over the years; they want this to be a one-stop-shop, if you like, for everything.
[07:32] Mike: Yeah I remember at one point my favorite search engine was actually MetaCrawler because it would aggregate the top results from places like Google, and Yahoo!, and Bing, and Ask.com and About.com and all these other ones and I didn’t have to go to multiple search engines. I just went there and because it was aggregated from all the top results I didn’t really have to worry about it as much. And I don’t even remember what the trigger was for me to move over to Google, but eventually I just did full time and I haven’t really looked back.
[08:00] One of the things that I see Google doing, especially in the search results, is that there’s little icons that show up next to some of the different content results and I know that’s related to authorship. Why don’t we talk a little bit about some of the authorship because those things in the Google search results I think are going to be relevant to people who are putting new content out there, because just having the little icons of who wrote it or the company where that content came from, it draws your eye I’ll say. But I want to drill in a little bit and talk a little about that.
[08:31] Dave: Okay, so what authorship is about, ultimately, is Google is, if you like, joining the dots, connecting content that people wrote with the actual people themselves – authors with their actual content. So the idea is I write a certain blog post on something amazing that’s going on in the SEO world and when that shows up when you carry out a search in Google, instead of it just being the regular format, you’d see a tiny little photograph of me, which is quite eye-catching to have a photograph next to the listing and it makes it stand out. Now, what happened then in a way that was quite predictable, it’s almost like it’s an ongoing game of cat and mouse between Google and the people trying to squeeze Google for whatever they can, even trying to trick Google, just trying to work Google to their own needs, it’s this constant cat and mouse game. So the idea of authorship was, I think a very nice one, I’m sure it was in no small part, rather, down to Google very much wanting to push people onto Google Plus because that’s a really nice and easy way to do that and to push a platform.
[09:36] So what happened was, searches started to show up with the little pictures, obviously that catches your eye – which in an SEO world is magic, that’s what you want, you want people to look at your content – so what then happened was, all the other SEOs started going “That’s a great thing that we can do, look how this one stands out. What we should do for our content and our clients’ content is we should also start putting up pictures.” So everyone started doing it and for whatever reason Google then pulled the plug on it. Now, Google’s line is that ultimately it just wasn’t worth their while, in a sense; there was little to gain and nothing to show for it. What struck me about the whole thing is that for some reason a lot of people made a big deal out of Google pulling the plug on authorship; this is what they do the whole time, they try different ideas, they try different platforms and either they say “This works, let’s make it, let’s write it in stone, let’s adapt it as a norm” or they just discard it. And in this case it was just discarded and it’s a shame. We’re talk about SEO, but for all intents and purposes we’re taught by Google’s optimization, they call the shots, they decide what they’re going to pull the plug on and all we can do is follow.
[10:52] Mike: Well, one of the reasons that they initially gave for using authorship is to identify the original – I call it the source of authority – for a particular article. And I always felt like that was a great way to help keep people from scraping content from other people’s websites and then putting it on their own as if they were the original author. Is there still a way to do that and flag some content as “We wrote this original content so nobody else should be claiming it and posting it all over the place or syndicating it. I still should be getting the credit for this original piece”?
[11:24] Dave: You’ve touched on a really important topic which is that Google hates other website regurgitating content. So you mentioned eHow, for instance, there’s nothing original there, they just scrape other content, put it on their own site, draw in traffic, and what we do is, we search for something and we find ourselves in this situation where we might click the first five sites as they show up in the results and three or four of them or even five of them could actually have identical content. I agree that was definitely a factor. In answer to your question, bizarrely, there isn’t an easy way of you basically registering your content and saying, “This is mine. Hey Google, if you see it elsewhere, know that they’re copying us. We’re the original.” [12:10] There is, however, a kind of basic hack, if you like, on what we do with content like that when we really want Google to understand it’s ours and we created it. As soon as it goes live, we always have a Rel= canonical tag that points to the URL, but as soon as it goes live in the Google webmaster tools account, we simply submit the page – not the whole website but just that content – to Google and in a way we hoping that we’re saying to Google, “The first time you read this was here, we submitted it, we drew your attention to it, your robots crawled across it, it showed up in your index so you should know that when other versions of it pop up that we were the original.”
[12:53] Mike: Do you think that one of the other reasons why Google might have gotten away from identifying the original author is so that they themselves can scrape some of that information and post it up on the top of their search results? If you just go to Google right now and you just type in “weather,” for example, it will show you information for weather on where you’re currently located, but they basically scraped that from weather.com and you could type in “Boston” you’ll get information about Boston. But that stuff is obviously scraped from other places. I mean, could one of the reasons they got rid of authorship is so that they can scrape information themselves and not look bad?
[13:27] Dave: There’s a certain irony here that Google, in a sense, is cracking down hard – really stamping down – on websites that don’t have original content. But in a way, the website that’s now being the mother of all scrapers, if you like, is Google because, like you said, I typed it, I knew what I’d see, obviously, but as you say, I typed in “weather” and there’s information that I can see for where I live in the UK and it’s attributed, so they’ve got a little note underneath saying that it’s taken from the Weather Channel, but the fact is, as you said, it’s not their content. And if you think about it, when you have this content that shows up in Google’s results, a scrape of the content instead of a link, this is a nightmare, this is beyond a nightmare. Because we create great content, ultimately, to entice people to our websites, to demonstrate to them that we are genuinely experts in these areas – this is what a lot of online marketing is about, it’s demonstration of knowledge, entice people in and show them how good we are.
[14:30] And Google in a sense, they are sort of planting a very large bomb underneath that whole idea and they’re saying for certain types of information you don’t need to go to the website anymore, you can just come to us. Why go click on the link when they’re going to display that information right up there for you. So in a way they’ve gone from being a portal, if you like – you go, you search, you click, and you get taken – and they’re starting slowly to move over to the different model which is you go to Google and you find what you’re looking for and that’s it, job done.
[15:03] Mike: Yeah, I remember there were a couple of tweets back when Matt Cutts from Google announced that they had this new tool that would allow you to submit information to Google about when you found scraped content that was out on the internet and you could report it to Google. And I distinctly remember that there was a tweet saying “Found one” and it showed a picture of the Google search engine outranking somebody whose original content was there and obviously Google had scraped the content and put it up there as if it was their own. The pain point there for those people who have that original website is that they are no longer getting that search engine traffic which, quite frankly, kind of sucks for them because Google is taking essentially their search engine content and placing it up there on Google’s website so that you no longer have to go to that website to get the information which is essentially taking website visits away from them, which may very well funnel them into different marketing campaigns. So they’re no longer getting that traffic at all, so there’s no more of these entry points that people might be going through. In a way, I guess, you could say Google is essentially stealing revenue from these companies.
[16:11] Dave: Yeah, very much so. It sounds almost overly dramatic and everyone likes to hate the big company so Google gets a lot of flak. A lot of businesses and companies are doing – if you take for instance any tourist-based website, let’s say you sell burgers say somewhere nice like SoHo in London, that’s your thing you sell handmade, beautiful burgers that don’t give you food poisoning, that’s what you want to be known for. So what you’re likely to do in days gone by is that you put up knowledge that would be useful to people who might be interested in what you sell, so you might put travel information, you might put useful addresses, you might put train times and all that sort of thing. All those things were quite legitimate and there all based on this idea that people who come to SoHo will want to know this information.
[16:59] We’ll give it to them and while they’re here, they’ll know a really good place to get burgers that won’t give them food poisoning. Now in a sense, those things are working less and less, more or less on an ongoing on a daily basis even, because that information is just going to be there without having to click on the link and it’s a really huge, huge difference. And ultimately, what can you do about it? You can’t fight Google.
[17:23] Mike: I think we’ve talked quite a bit about some of the bad things that Google is doing, why don’t we focus a little bit more on some of the things that people can do to increase their search engine rankings. What things are important, what things are not, and where should we really be spending our time. We need search engine rankings, we need to be able to get people to click through those search engine results and onto our website, but even before that, you need to be able to rank up in the search engine rankings. So let’s talk about some of the techniques that people can be using. What sorts of things should we be doing?
[17:54] Dave: The single biggest threat to SEO for normal business is paralysis by analysis. It’s that we know that SEO really should be on our to-do list, in fact most of us probably have SEO on our to-do list and it’s been there for so many months if not years. And we’re in this strange position that, first of all, we’re not sure what to do and there’s also a great deal a fear that we all hear about the algorithm updates. The horror stories where people get banned or people’s traffic falling to minuscule proportions. And we even hear of people being punished for something they didn’t even know wasn’t allowed. There’s very much a temptation to stay parked and do nothing, and I think that’s a really dangerous thing to do because the whole ecosystem, if you like, of SEO is changing so much on an ongoing basis.
[18:50] People are now being penalized for things that, in the past, were absolutely 100% fine. In terms of practical things that normal businesses can do with limited time and resources – the first thing is simply do something. I always fall back on my, if you like, golden rule of SEO which is: if you create good quality and original, unique content that’s relevant to your target audience, you can’t go wrong. It’s so simple, don’t write, don’t create pages of content for Google and their spiders, but create pages of content that people are actually going to find useful. And obviously the people you’re aiming that at is the people who you actually want to come explore whatever it is you’re selling on your website. And it sounds so simple, it sounds too good to be true, and the “But I don’t know where to start” type of answer that I’ve heard many variations of, I think in terms of answering that issue, the biggest mistake that I see people make is they think of creating related content.
[19:58] So, for instance, let’s say that you sell ecommerce services, so you have something that people can simply drop on their website and start selling whatever it is they sell online more or less immediately. The mistake is to say, “What I’m going to do is write lots of articles and create lots of content about ecommerce services” because that’s actually not of interest to people who might be interested in signing up with you – they’re not interested in articles about your service. What they are likely to be interested in is “How do I sell my products online? What’s the quickest and easiest way that I can accept credit cards without setting up a merchant account? How do I accept PayPal transactions without a PayPal account?”
[20:39] Content like this is what people are going to be looking for and actually Google gives us a great tool, Google’s Keyword Planner, so the way that works, without getting into the depths of it, is that you put your keywords into it and it spits back a load of relevant and associated phrases – a lot of which will be wrong, and the numbers are certainly very wrong – but these are keywords that Google consider relevant to your actual search and that’s a really good starting point. Again, the golden rule is: good content, original content, and it’s got to, got to be of interest to the people who you want to reach.
[21:15] Mike: So essentially you can create articles that are directly related to your products but those are only going to be of interest to people who are already on your website and trying to find out information about it. Instead what people should be doing is “genericizing” it a little bit and saying, “Ok, well this is what our product is, but in general, how would you solve this problem if you weren’t using our product? What are the different options? What are the different things that you can do – for an ecommerce provider – how would you sell your products online?” Instead of talking about your products, you talk about – in general – what are the steps that you need to go through to put your product online and sell it. And those are the things that will show up in Google’s search results, correct?
[21:53] Dave: Exactly. I’m a big believer that most searches, ultimately people go there because they have a problem; they have something that needs fixing, something that’s broken, something that’s causing them pain. “Where can I find the cheapest X?” But people ultimately go because they have a pain point or a problem, and that’s the answer, that’s what you need to be providing the answers for very much: “How do I? How can I?” These sorts of queries.
[22:20] Mike: Now what about educational content like, for example, Rob has DRIP and one of the sales pitches for it is that you can essentially send out emails to people with an educational email campaign. Would it be advisable to not only use the content for those emails in the email campaign, but to also put the content of those emails on a blog, for example, or some other place where you’re posting content regularly to essentially walk people through? Because it seems like if you’re only putting it in that email sequence, then only the people who sign up for it are going to get it. But however, you could also leverage that as content on your blog or various other places in your website where you’re also going to rank for as a search engine. What are your thoughts on that?
[23:03] Dave: In days gone by, a good and effective approach would be to write content – it doesn’t matter whether it’s for a website or an email, whatever – create content, pay someone, some company twenty to thirty dollars and they then send it out to hundreds, or even thousands – even tens of thousands – of websites that would in inverted commerce syndicate the content. In other words, copy it. And that actually worked very well. Nowadays we’ve actually gone a full 180 degrees and the fact that you and I had this conversation just a few minutes ago of “How do I make sure people don’t copy my content?” that’s symptomatic of this complete reversal so now we want to have this content and we don’t want it to be seen as duplicate because even having a network of your own websites and having duplicates of the content is potentially very dangerous. The good news is, though, there are very, very easy ways to do it. So if you’ve got – in the example that you came out with, let’s say you’ve got your content that’s going to go out in an email newsletter like DRIP – you’re quite right, it’s a shame if Google ongoing spot this and it’s a shame if people who aren’t signed up for your content don’t spot this and if you think about it, this content is hidden away, it’s literally in its own little protective bubble and the only way to get into that protective bubble is to subscribe so Googleare not going to see that content at all.
[24:27] So I would advocate using that content somewhere on your website where you can put it to best use, but I very much like this idea of if you create some really great content, use it wherever you can, use it to the best possible use. Let’s say I write a very fascinating article, some of the finer intricacies of search engine optimization 2014, but I could also think it’s going to be quite good on this website, and then this website, and that’s where you have to be careful. If I’m going to put the content in two different places that Google are going to find it, the bottom line is that it’s fine to do that – it really is fine – but you’ve got to make sure that, in effect, you’re waving a flag to Google and saying “This content exists somewhere else and it’s here” and it’s using that tag that I mentioned before, the REL = Canonical. If you look that up on Google, it’s very, very basic and this kind of defines the source, the original version.
[25:28]So if you’ve got site1.com and site2.com and you have the same article on both, the correct way of doing it is to put your article on site1, put it on site2.com and assuming that site1 is the stronger, have the canonical tag on the site2 content pointing to the site1 version of it. So in a sense you’re saying to Google, “It’s ok, we’re not trying to trick you, we’re not trying to copy, we’re not trying to deceive you, this is a copy and this is where we got it from.”
[25:57] Mike: That seems like one of those details that you would know if you were kind of entrenched in this space but it doesn’t sound to me like it’s something that I would have ever searched for. Like, the average person listening to this is going to say, “That’s very interesting, it’s awesome that I could re-use content in such a way on the internet that I’m not going to be penalized by Google for it because I’m basically following their rules with this” but at the same time, how would I even know that? It sounds like one of those obscure details that, unless I’m entrenched in this industry and I’m spending lots and lots of time here, I just wouldn’t know that and I wouldn’t think to search for that. How would I even stay informed about these types of things?
[26:37] Dave: This is a very real problem. Five years ago, especially ten years ago, it didn’t matter, you didn’t have to worry about these things, you didn’t have to worry about doing something that you thought was legitimate and then paying for the consequences a year or so later when you get really hit by Google or InfoSeek or anyone. Today, as you’ve said, it’s a very, very real problem, and there are a lot of businesses out there using perfectly legitimate techniques and – I have to stress, this isn’t a moral issue. The whole white hat SEO that’s the type of SEO that if you like, doesn’t “trick” Google in any way it follows the rules and black hat SEO, that’s all about tricking and hacking. This isn’t a moral question; there are no rights or wrongs. Google seems to have somehow almost persuaded a lot of people out there that these rules are more or less moral or legal issues and there’s nothing illegal or immoral about breaking these rules.
[27:39] However, it’s a really good idea to know what these rules are because, unlike five or ten years ago, they can really, really hurt you. And just like in legal situations, ignorance is no excuse for breaking the law. And it’s a very big problem and, unfortunately, it’s a part of doing business online today that you do need to tune in to what’s out there. The easiest way is to follow some good authorities in the search engine world. So, for instance, if you go to Moz.com you’ll find a blog with some very, very good content talking about signal to noise ratio. There’s so much noise, there are so many people who don’t understand the whole cause-correlation-effect type thing at all. So you see people who stop advertising on Google AdWords and watch their rankings fall in the organic listings and immediately say, “Hey, there’s a link. If you don’t pay enough Google will pull the carpet out from under your feet on the organic listings.” It’s a really good idea to find the good voices that are out there: Moz.com is a really good starting point, as I’ve mentioned. If you search for names like “Search Engine Land,” Barry Schwartz, Danny Sullivan, these are people who really, really know what they’re talking about. You’ve got to find the right people to follow and listen to what they say.
[28:59] Mike: It seems like there’s multiple levels of knowledge that you have to have. Obviously there’s the broad knowledge that you want to have about the different ways to rank your website but it just feels like when you’re not focused on trying to increase your search engine rankings or increase website traffic, I feel like you miss a lot of things that are going on. A lot of the suggestions you just gave are really good. The other question I have, though, is how much time does it take for the average person to stay on top of the SEO that’s going on for their website. Is there a minimum amount of time that you should be spending on it?
[29:35] Dave: The answer depends on your website, your situation and your history, level of competition, what you’ve done so far, but my simple rule of thumb is anything is better than nothing. So if you pencil into your calendar thirty minutes every Tuesday morning and all you’re going to do during that time is log into your analytics account, set up a segment – so you’re only looking at the organic traffic – open up the date range to the last year, and just have a look what’s happening. Straight away, that whole thing will take you a minute, two minutes at the most, and straight away you’re going to see if there’s a problem.
[30:09] Is your organic traffic drying up? So that’s a pretty simple indicator. Google Webmaster Tools – I’m always amazed how many people haven’t set up Google Webmaster Tools accounts. If you haven’t, just go to Google, search for Google Webmaster Tools, it’s so straightforward to set up the account. The beauty is, there’s nothing to install on your website, you don’t need to put code on all your webpages – it’s not like analytics – and there’s some incredibly useful information in there, some very clear pointers from Google about “this is a problem, this may be an issue” and they will let you know in no uncertain terms if you’re being hit by a penalty or even if there’s a general big, serious technical problem. Putting those two together – analytics and Webmaster Tools – you can spend five minutes a week and you’ve got those two things covered. Now, that’s not doing SEO but what you’re doing is you’re at least aware if there’s a problem.
[31:03] I’d say for a small business – I mean, we’re a tiny business, our company we only have two full-time people – we have the same problem that any other small business has which is that we don’t have enough time to do it. So if you can be spending an hour a week, just an hour a week on creating new content, spend five minutes making sure everything is ok, the other fifty, fifty-five minutes purely on creating this good, really good content for Google, but primarily for your site visitors, that’s huge. That means at the end of the month, realistically, you’ll have two or three brand new pieces of content and that’s really, really important. You’ll make significant progress with that one hour investment per week. Also one other thing: bearing in mind, I’d say about sixty to seventy percent of the companies that come to us to handle their SEO come to us because there’s a problem, the other thirty forty percent basically want more targeted traffic from Google.
[32:01] Sixty to seventy percent some to us because there’s a problem, they’re checking their analytics at some point and they suddenly say, “That’s why we’re not getting as many sales. Our traffic from Google literally dropped to a tenth of the level that we used to get and that was two or three months ago” so a very panicky email, and very panicky phone call basically saying, “Please fix this quickly!” Another good, simple rule of thumb is proactive is very much the way to go. If you can keep an eye on these things, even on a really, really busy week, I guarantee you have five minutes to check your analytics and webmaster tools.
[32:39] You have, let’s say, another five minutes to just keep an eye on what’s happening on some of these blogs like on Moz, like Danny Sullivan, like Barry Schwartz. That ten minute investment could make the most enormous, enormous difference so you hear that there’s something out there: someone from Google, Matt Cutts from Google mentions there’s an issue, that this is something to be aware of. Every time he opens his mouth, more or less, it’s like holding up a sign saying, “This will become official Google policy within the next year or so.” And just monitor these things because being aware and taking steps to prevent getting in trouble is a whole lot more effective than trying to fix it once it’s broken.
[33:21] Mike: You mentioned that it only takes five minutes or so each week and I think that’s just one of those tasks that just kind of falls between the cracks and they just never seem to get to it and then you go a couple of weeks, then you go a couple of months, and then you just start never checking it. We’ve talked in the past at MicroConf before about the idea of having a Marketing Monday where you just spend all of your activities that one day a week concentrated on your SEO, making sure that you’re putting out good content, managing and building different marketing campaigns for your website, reaching out to people – whether it’s email newsletters, things like that. One of the things that I’ve started to find really helpful lately is to take those things and say, “Okay, this is what I’m going to do for task X.” So one of the things that I’ve started getting into is doing webinars, and there’s a lot of things that go into that so you have to create it in Go2Webinar, you have to advertise for it a little bit, you have to set up the landing page, there’s all these different steps that go into.
[34:18] For something like managing your SEO or just kind of double checking to make sure that things aren’t going wrong, take those steps and put them onto what I’m calling action plans. And, essentially, an action plan is a list of to-dos that you need to accomplish in order to feel good that you have finished whatever this particular task is. So, for example, reviewing your website stuff, those are the two things: go into Google Analytics, and go into the Google Webmaster Tools. Those two things and then just, say, check these five settings. That’s it. That’s all you need to do, but unless you write those things down and actually put them on a list that you’re supposed to go through that to-do list, it seems to me like those things just completely slip through the cracks at some point and then you just never get around to them.
[35:02] Dave: Yep, I couldn’t agree more. I think it’s fascinating what you said because I hear this the whole time of people who say, “It’s only five minutes,” so because it’s only five minutes and this particular Monday or Tuesday is so packed and hectic – and I’ve got the meeting, and I’ve got the phone call, and I’ve got the content – because of this it’s so easy to just brush it aside. I think a good way to look at it is, look at it as brushing your teeth, it doesn’t matter how tired you are, it doesn’t matter what time you get in at night – or, for that matter, how late you oversleep in the morning – you never think, “Yeah, you know what? I’m not going to brush my teeth, I’m going to save that three minutes or four minutes and I’m going to get that extra three or four minutes sleep.” It’s a similar logic it’s just like you said, this process list is invaluable so if you have your three or four points, do you have a checklist, for instance, for any process that I can put into a list, it makes the whole lot easier. So, until SEO becomes burned into your brain, it’s a good idea to have “Tuesday 10:15, check the twelve – thirteen month overview in Analytics, check the Google Webmaster Tools, check some of the blogs that I look at, and start sketching out the next piece of content. And you hit that 30 minute point or the 45 minute point, whatever you’ve scheduled, but then it’s done. If you do get hit, the results of a so-called “Google slap” can be catastrophic.
[36:28] Mike: I think the other distinct advantage of putting them together in a checklist like that is that you can take that checklist and you can outsource it to somebody and document exactly what needs to be done and, that way, you are no longer doing it. I’ve been viewing my job as the entrepreneur to be putting together those checklists and saying, “These are the things that need to be done. I don’t necessarily need to do them but I need to figure out what needs to be done so that I can either outsource that or not forget the critical steps along that path.” Because, as you said, if you start forgetting those things, bad things will eventually happen.
[37:00] Dave: I remember one of your MicroConf talks that I think handled this exact podcast that we’re recording right now, if I remember rightly, there’s a step-by-step process that you and Rob go through and, if I remember rightly, other than the actual recording, everything else was outsourced. And I remember frantically writing this down or typing it into my Evernote and I just thought that was just fantastic.
[37:24] Mike: Well I think that’s a great place to wrap things up. Why don’t you tell us where people can find you if they’re interested in either having a website reviewed or talking to you a little more about SEO or just where they can find you.
[37:35] Dave: Ok, I’ll never miss an opportunity to plug myself so our website is SoftwarePromotions.com, you can find me on Twitter. I’m @TheDaveCollins – in other words, someone else got Dave Collins so I’m @TheDaveCollins for Twitter. Any questions about SEO, genuinely, depressingly I actually do enjoy, even love talking about it so Dave@SoftwarePromotions.com.
[38:01] Mike: There’s a website that you have called WebsiteTeardown.com, and if you’ve never had your website torn down before and are interested in having somebody who’s very, very good at it, go there, sign up, you can click on there and it’ll take you through to the Software Promotions website and you can sign up to have essentially have a website teardown done for you that will look at your website – Dave or Dave’s partner will take a look at it. It’s fascinating the types of things that you’ll learn from someone who’s looking at your website with a fresh set of eyes who also has that SEO background to it. They can tell you the things that you’re doing right, the things that you’re doing wrong, and where you can improve those things. And Dave’s done a number of them at MicroConf, he’s very, very good at them. He did some recently at the Business of Software as well. I would highly, highly recommend it if you’re having problems getting conversions on your website or driving people through to a sales funnel.
[38:54] So Dave, thanks so much for coming onto the show, we really appreciate it. If you have a question for us or you can call it into our voicemail number at 1-888-801-9690 or you can email it to us at Questions@StartupsfortheRestofUS.com. Our theme music is an excerpt from “We’re Out of 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.
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[00:00] Rob: In this episode of “Startups for the Rest of Us,” Mike and I update you on Drip, AuditShark and other things that have been on our mind. This is “Startups for the Rest of Us,” episode 206.
[00:17] 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.
[00:25] 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, sir?
[00:31] Mike: Well, I’ve been actively firing myself from virtually every job I have. [Laugh]
[00:34] Rob: That’s a good way to do it.
[00:36] Mike: Well, I’ve been bringing on a couple of developers, and I brought on somebody to kind of do, like, DevOps stuff for me. And I handed of the build server stuff to him. I had somebody reach out to me on Twitter, asking me some questions about it probably a month or two ago. And he actually offered to do some stuff with me, but I’ve already got somebody who could do that kind of stuff. The question was, “Would you be willing to pay for it?” And it’s like, “Well, yes, I would; but I also have somebody in-house who can do that kind of stuff.”
[01:02] Rob: Right.
[01:03] Mike: So, I handed it off to him. And he’s done a good job with it. He set up the build server. He did a bunch in conversions. He’s upgrading the software. The admin password on our server expired. It’s like, “Okay. Well, that’s something we should clearly probably be doing ourselves”; because, you know, it’s kind of a best practice for security purposes anyway. So, he wrote up a process on how to do it and then changed the password and, you know, we’re setting up a system so that it’ll start reminding us to go in and change those passwords on a regular basis. And it’s nice to be able to have those people on your team that kind of understand that the processes are really what help drive the business and create value behind the company.
[01:39] Rob: Right, right. And if you’re listening to this and you don’t know what “DevOps” means, it’s essentially keeping your developers productive, and it’s often doing stuff like performance testing and maybe performance tuning. It’s helping with keeping the servers running and patched and all that type of infrastructure stuff. It’s stuff that, if you’re not a developer, you typically think developers do; but, frankly, developers should be creating things and building and writing new code; and they shouldn’t be worried about the underlying plumbing. And so when you hit any type of scale, even if you get maybe two or three developers cranking pretty hard, one of them needs to be a part-time DevOps person. Or, you need to find one; because enough stuff starts to crop up with scaling and performance and all that, that somebody typically needs to take care of it.
[02:21] Mike: When I was on my personal retreat last month, one of the conclusions that I came to was that, as kind of the founder of the business, my job isn’t necessarily to do any specific thing – other than to identify the things that are most important and figure out how to do them and put a process in place so that I can essentially backfill it when I’m done figuring it out.
[02:40] Rob: Exactly.
[02:41] Mike: And that’s kind of what I’ve been focusing a lot of my efforts on over the past month or so, and so far it’s been working out really well. So, I hired a couple of new developers. I’ve got somebody whose sole job is to make updates to the website. I’ve got two people whose sole job is to work on AuditShark, and I’ve got one guy whose sole job at the moment is to basically just do the DevOps stuff. And then my sole job at the moment is just to do sales and marketing, and I’m trying to figure out how to fire myself from that as well at some point in the future – or, at least put processes in place for certain pieces of it. So, for example, like scheduling webinars and setting things up and then delivering the webinars. Once I’ve got the process down for how to do that and how to make it effective, then I can document the process, hand it off to somebody and do everything else –
[03:25] Rob: Exactly.
[03:25] Mike: – and move on to the next problem.
[03:27] Rob: Exactly. The key thing you said there is until it’s effective, because anything before that is premature optimization – right – and you’re trying to create a process around something that doesn’t work yet. I always plan when I’m doing things that I need to get it to effectiveness. And if it never gets to effectiveness, then I scrap it. But once you get to effectiveness, then you’re right. You have to find someone else to do that because, as the founder, your time is more valuable.
[03:46]I am almost wrapped up with a two-hour audio documentary of the process of building and launching Drip, and it was essentially culled from nine hours of audio. It was the conversations that Derrick and I had over the course of about nine months. And every week, essentially we recorded a podcast; and some episodes are, like, eight minutes; and some were up to 30 minutes. So, it’s a total of nine hours. Trying to get it to around two hours, and it really tells the story from just after inception until we launched last November. It was a trip to hear all the things that are really boring about it. Like, if I released the whole nine hours, there are just entire things we talk about that are really important at the time, but are completely boring to listen to. And then, frankly, it’s agonizing to listen to some parts; and those are the best parts. Those are the most interesting parts, where we hit these huge roadblocks, and you hear myself or Derrick just talking about how hard it is and how much of a struggle it is and how bad we’re feeling about it.
[04:44] Mike: If there was no conflict, then there’d be no story. [Laughs]
[04:47] Rob: Right, right. But the victories are also pretty cool, too – you know, getting through the struggles and then finally getting people in. And you can feel the excitement in our voices, and you can just feel the momentum build over time. And so it’s cool. It’s nice because it’s longitudinal – right? It’s, like, nine months; and it just flips. You know, five minutes, and then there’s a little musical interlude. And then – boom – we’re week later. And so you can instantly hear. You can binge-watch it. You know, it’s more like watching “House of Cards” rather than watching a season of “Breaking Bad,” where you have to sit there and wait for the next episode to come out. So, hopefully, I’ll have that out sometime in early November.
[05:21] Mike: Cool. Well, I started on a new section of the website that I’m kind of designing how I want it to go, but it’s essentially going to be a series of videos demonstrating how to use AuditShark to solve a variety of different IT-related problems. It was contacted by somebody who had had an employee quit. That employee was in the IT department, and they said, “Well, we need to know where this person had access to stuff.” You know, somebody leaves the organization, and you need to know what sorts of access rights they had on different machines around the company. So, at that point, it almost takes a security review to say, “Okay. Well,” you know, “where did they have access?” What sorts of sensitive information were they privy to? Do they still have access to that?” because that’s a really big one. Just disabling somebody’s account and active directory is not the cure-all that some people think it is. You know, there may be a VPN account that’s disconnected from that, and you might not know about it. Or, there’s local accounts on different machines that you can then use to escalate privileges, and there’s all kinds of different ways around it. But unless you have the ability to go out and look at your network and pull this information in, then you don’t know really what to do.
[06:25]So, the point is that I’m going to put together a series of videos on how to use AuditShark to solve a variety of security issues in the IT department. There’s a couple different reasons for that. One is kind of educational material so that people can understand how to use the product. So, if they come to the website, [and] they see this section of videos, they can take a look at them and see not only how the product works, but what types of problems it can solve. And then the second piece is that, if I’m able to do it right, then I could also leverage those pages for SEO; because the videos are going to show up a little bit higher in Google for ranking for different key terms. So, I’m going to try to experiment with those and try to figure out how to put that out there and achieve both of those goals at the same time.
[07:06] Rob: Right. Very nice. Yeah, you do need a video site map in order for Google to detect those. I like the idea.
[07:12]With Drip, I have the same thing at kb.getdrip.com, our knowledge base. And it’s just a simple knowledge base, and I have a section called “Rule Blueprints,” and it’s basically blueprints for different ways that people are using Drip. So, one is SaaS, registration and onboarding without trial. And you could, like, a four-minute walk-through of how I have all that set up and then send educational emails based on in-app? actions – right? And there’s a short video to show how someone could do that. So, it’s the same type of stuff. You’re trying to get scenarios into people’s head of how you can actually attack those and accomplish them with your app.
[07:49] Mike: They’re not interested in buying your app. They’re interested in buying a solution to a problem. And if you lay out those problems, that’s what they’re interested in. If you can map those problems on your website to the problems that they’re having and clearly demonstrate that you’re able to solve them in a way that’s acceptable to them, [that] builds trust; but it also builds confidence in your abilities to deliver something that’s going to solve their problem.
[08:10] Rob: Right. And you know what I want? For these videos to be able to be turned into almost a step-by-step thing with a few screen shots. And I would definitely pay money for that, because I have a bunch of screen casts in the kb that are really good, but I’m already starting to get requests – and I knew that I would. People want a full, text version of it, because they’re at the airport; or, they’re on a modem, or whatever, and they can’t get access to the video. Or, they don’t want to watch the video, or whatever. The thing is recording a video is five times faster than actually typing out a to-do and putting the screen shots and all that stuff in. I’ve timed it as I’ve checked it. And so for now, I’m more focused on improving the product than improving the docs. But if someone could save me the time, and I can put out screencasts and then have them magically turn into a well-written – not just a transcript, but a well-written, step-by-step thing, that’s worth some money to me, for sure.
[09:02] Mike: Well, funny you should mention that, but if you go to cascadecontent.com, you will find exactly that.
[09:08] Rob: Wow. Look at this! Drip is on the move. It feels good to get to this point, but it’s finally growing. It’s starting to grow at the rate that I want it to be. And, you know, if you remember my MicroConf talk from a couple years ago, I talked about building early on. There’s building, there’s learning and then scaling. And the building part is only minorly agonizing, because you’re impatient and want to get to where you can scale. The learning part is terrible, because the whole time, everything’s up in the air. You’re trying to figure out, “What are we building?” “Why are building this?” “Should we build this feature?” Who are we building it for?” “Who are our customers?” and every criticism that comes through, you’re really sensitive to; because you just don’t have a lot of feedback yet on your app, and you’re trying to get to scaling. And then once you start to scale up and you start the growth and you figure out some repeatable stuff and you’ve actually build some features people want – that’s really when things start to get fun, in my opinion.
[10:00]It’s a bit of a false dichotomy, because it’s not like, “Oh, we’re not learning anymore.” We’re definitely still learning and still adding features quickly, but we’ve built something that enough people want now that there’s been a noticeable drop in churn. It’s actually the lowest churn that I’ve ever had on any of my apps. And with growth picking up at the same time, it’s just noticeable. You know, it’s really time for me – I’ve started scaling up marketing, but the more people that I can get even to the home page, or just get interested in Drip, the faster the growth will happen. It’s got a bit of a vanity metric, because you can measure different months; but over the past 13 months, it’s averaged 19 percent growth month over month. But early on, like 11 to 12 months ago, the revenue was so small, that that number is kind of – you know, it’s like a triple-digit growth that month. So, if you go back six months, I think it’s like – I don’t know – 17 percent. So, that’s a little more realistic.
[10:50]So, it really is getting to a place where things are starting to pick up, and it finally feels good. It’s like things are paying off.
[10:57] Mike: Yeah, I think one of the reasons you find that your churn is so low is it’s difficult to move off of Drip. It would be a huge amount of work to take all of your marketing stuff out of Drip and put it into some other marketing platform. It’s a huge barrier to leave.
[11:13] Rob: It’s not actually that big, if you think about it. In fact, we make it as easy to leave as MailChimp or Aweber does, you know? It’s the same type of thing. You just need to copy and paste some emails and export subscribers.
[11:24] Mike: Sure, but mentally it’s a huge roadblock.
[11:25] Rob: Yes, that’s right. That’s right. It is. There was one customer who wanted to leave, and we helped him move his stuff over. It’s not an issue. But we have definitely helped more – several dozen people, frankly, move over from other services.
[11:37]The churn rate being low is a combination because, depending on your business, typically, your first 60 days, maybe 90 days of churn is pretty high if you ask for a credit card up front; because some people will stick around just because they don’t want to cancel and they kind of think they’re going to use it. And then once people are onboarded and they’re using it actively, then that’s your real churn rate. That’s what I consider your actual churn rate. But before that, you might have a 30 percent churn rate in your first 60 days, and then you might have a 3 percent churn rate per month after that. So, when I say that I’ve had the lowest churn rate I’ve ever had, I actually mean both – that initial 60-day period and ongoing after that. So, I think it’s a combination of getting more people onboarded and getting value out of the app. And I think that goes to all the time we spent on our onboarding process. I also think it’s that people are getting a lot of value out of the app.
[12:29] Mike: You know, part of that’s going to be the types of customers that you’re targeting, because obviously you don’t want to target customers who are not going to be a good fit, which means that they would leave earlier than they might otherwise. So, it’s kind of like people are investing in the platform because they think that it’s going to work out and help their marketing efforts. And if the churn rate is low, then clearly that is probably the case.
[12:51]Well, I’ve started using Zapier a lot more for automating various tasks, and if you’re not familiar with Zapier, it’s essentially a service that you can subscribe to that will leverage the APIs and the hooks between different applications. So, there’s [sic] things for Basecamp and Gmail. And I think there’re some things in there for Drip as well –
[13:08] Rob: Yeah.
[13:09] Mike: – but Google Docs. I mean they have a laundry list of – I think it’s over 100 different applications that they hook into, and you can send data back and forth between them using these things called “Zaps.” I’ve started using it to essentially start doing things that are I’ll say more tedious than anything else. So, for example, my bookkeeper – there was a bill that was actually missed the other day. I happened to catch it in time, but it was only because I happened to be logged into American Express at the time, so I made the payment. It wasn’t a big deal. What I did was I went in and set up a Zap so that on the 15th of the month, it would just go in and create tasks automatically so that when she’s done with each of them, she just checks them off. So, that way, one of them doesn’t get missed.
[13:49]So, I’ve started using that for weekly and monthly tasks that people need to be doing and then using it to kind of move data back and forth to help with automation of various things that a lot of times they’ll just get done when I get to them as opposed to just having them happen on a scheduled basis.
[14:09] Rob: Yeah, that’s a nice way to go. Anytime you can take advantage of that, automation’s a big win. I’m a big fan of Zapier, and you know what I found out? I talked to Wade, who’s the founder, and he said they pronounce it as “Zap-ear.” I think they have more than 250 apps now integrated, and you’re right. Drip is one of them, and it’s crazy that stuff that you can do without writing any code if you know how to utilize Zapier. The documentation page for Drip, actually – you know, we have our REST API, our Java Script API. We have API wrappers, and then one of them is Zero Code API. And I say use Zapier to connect Drip to hundreds of web services without writing code and just link over to the Zap on there for Drip. But that was per their suggestion. I actually think it’s kind of a clever thing, because if you’re a non-developer and you want to tie into our API, Zapier really is the easiest way to do that.
[15:02]So, scaling issues – they’re tough. It seems like every two months, we run into something that takes one of us out of pocket for a couple days. But I ran a big import last week that choked things for a few hours and, frankly, it was painful. And Derrick went and rewrote some code, and then we upgraded the servers the next day, and now we have – I think we’re up to eight production servers, maybe nine, because we have a bunch of job servers in a database in the front end and all this stuff. But it’s the real-time analytics, the real-time reporting stuff that kills you. And we’ve had to scale up faster than I thought we would and, luckily, we’ve been preemptive about it. We’ve had very few issues – no issues in months that have really affected any customers, but it’s about every two to three months [that] we’re seeing something crop up where we notice things are slowing down, and we have to implement caching, and we have to add a server to this, and we have to rewrite and optimize this thing.
[15:51]And this is actually where that DevOps thing comes in. The reason I’m also thinking about it is I have a DBA who is someone who optimizes apps. And I mentioned him a couple episodes ago. He’s at rubytreesoftware.com. His name is Creston. He, I think, is going to be helping us by looking through; doing stuff that, frankly, my developers aren’t that interested in doing; and I’m not in doing it either – which is finding those performance issues and either making recommendations for how to fix them, or actually going in and refactoring code to make things faster; because to date, I’ve been throwing money a the problem – right – just throwing more processing power: bigger servers, more servers, scaling up and out. And at this point, I think we need to find that 5X win, and I only think that’s going to happen by actually getting in there and rubbing elbows with the code.
[16:38] Mike: I know what you mean about having people go in and do things that’ll help make it more scalable. I mentioned in the past that I brought on somebody whose sole job is to write unit tests. And over the past five weeks or so – four or five weeks – he’s added, like, 200 unit tests to the system. It’s been really nice to see all those tests go in. The fact that the vast majority of them are still passing – there’re certain ones that are not passing just because I don’t have the back-end infrastructure to actually run the tests properly. But the rest of them, he’s finding things that probably shouldn’t fail, or wouldn’t be an issue in the production code, but they probably need to be fixed. And it’s nice to see that there’s that reliability that is being baked directly into the product. And infrastructure really isn’t any different. I mean if you have a DevOps guy who can go in there and really take a look at that real-time analytics and say, “Oh, well, did you know that at 3:45 a.m. yesterday, there was a spike, and the spike lasted for five minutes? We need to figure out what that was.” If you’re not actively monitoring all that stuff, you can run into those bigger issues down the road.
[17:43] Rob: Yep, totally agree. I have become a big fan of New Relic. Finally installed it on our servers, and there’s both, like, a Ruby gem that goes in the app itself and can report on some stuff, and then you install it on the server. And the server stuff is amazing. I mean it just gives you – all the reporting that you would normally get by defaulting graphs and stuff from a Windows server, like with PerfMon; but it gives it to you for all the LINUX servers, and then it’ll alert you if things go over 90 percent CPU usage, or running out of disk space, or all this stuff. And with eight or nine servers now running, plus however many – I think we’re running three for HitTail – it’s enough that you just can’t manage that all on your own, you know? And so having the alerts, even though some of them are false alarms, is really helpful. And so there’s a pretty beefy free tier with New Relic. And if you’re on LINUX servers and you’re not using it, I would recommend that you give it a shot; because it gives us a lot of data that we’ve used to troubleshoot things and to see, like you said, spikes. There’re CPU spikes. There’s RAM spikes. There’s all types of stuff that we just weren’t picking up on before we had it installed.
[18:48] Mike: Yeah, I think it’s things like the RAM and CPU spikes that are not inherently visible to most people. I mean I have New Relic installed on my Windows server. It’s interesting the sheer amount of data that you can get out of it and the granularity that you can get out of it as well, just being able to drill in there and see all that information. And it can give you insights that you wouldn’t necessarily have otherwise without that monitoring software. I mean without it, you’re really blind. You have no idea what’s going on. And the only time you do know when something is wrong is if a customer calls and says, “Hey, I can’t get to my data,” or, “The site’s down.” Your default assumption or belief is that the application and server are up and running, and sometimes they’re not.
[19:26]So, hey, I think you mentioned a couple of weeks ago that you still maintain Inbox Zero on a regular basis?
[19:31] Rob: I do. Well, I come close to it most days, yes.
[19:34] Mike: I’ve been failing more and more regularly to come anywhere close to Inbox Zero.
[19:39] Rob: [Crosstalk] – right? What’s the cause of that?
[19:40] Mike: I think it’s because I’m neglecting my email. The fact of the matter is there’ll be email that’ll sit there, and I just haven’t really decided what to do with it. Or, it’s stuff that I know that I need to come back to later on, so I’m like, “Oh, I’ll put this on my task list”; but I don’t necessarily take it out of my inbox, because it’s something that I need to – like, I need the information in there, as opposed to just the high-level task, to go do it. Know what I mean?
[20:02] Rob: Right.Yeah, that’s a bummer. You know, the way that I’ve handled that is, if you go into that email and you hit “Forward” and then forward it to your Trello board, it’ll take the body of it and forward it into the Trello issue. And so then you have all the information. And even if for some reason it gets truncated, at least you have the subject line, and you can always go search for it in Gmail. So, that’s what I’ve done, because I can’t stand having clutter in my inbox if I’m trying to get to Inbox Zero.
[20:25] Mike: I just need to figure out how to get some of those things out of there. Some of them are just bugs [and/in?] cases from from Fogbugz that people have done, and I just need to go back and review it to make sure that everything is functioning the way that it’s supposed to. Or, I need to go do a code review, or something like that. And it’s like, “Oh, well, I need to know where that email is.” And I suppose I could probably say, “Okay. Well, here’s the case number,” or whatever and just link to it –
[20:45] Rob: Right.
[20:45] Mike: – but it just sits in my inbox to let me know that I have to do it.
[20:48] Rob: To be honest, that’s been one of the biggest for me, too – is exactly that. It’s Fogbugz issues that I need to QA, or I need to get back to someone on. Those are the ones that I struggle with the most, because if I get five or six of them, do I really want to create five or six new Trello things and then reorder everything? Or, do I just want to crank through them in one batch at some point in the future?
[21:04] Mike: Yeah, that’s exactly the same issue with me. It’s easier to just leave them in my inbox and then come back and deal with five or six of them, or ten of them at a time than it is to create the five, or six, or ten different things in Trello.
[21:15] Rob: So, I have a few favorite, new podcasts I wanted to mention. Some of them are in the tech space, but of the handful that I’ve really enjoyed over the past several months, the first is “How to Build a Rocket Ship.” And this is by MicroConf attendees Matt and Joelle. And then they have another guy who works with them, named Michael. It’s 20-minute interviews with startup founders, and it’s really well down. It’s nice that it’s short, and it’s nice that it tends to cover one topic, and you don’t hear the same stuff that you’ve heard from people like Hiten Shah or Ruben, or me, who’ve been on other podcasts. They pick a topic, and they dive into it. “How to Build a Rocket Ship” is one of my new faves. Have you been listening to it?
[21:52] Mike: I have, yeah. Actually, I heard your interview with them a couple of weeks ago. I heard Hiten Shah’s as well.
[21:57] Rob: Yeah, it’s good stuff. The next one I like is “Bootstrapped Web,” and this is Brian Casel. And he’s switched formats, and he now has a co-host named Jordan, and they’re talking about their businesses, and they’re giving tips. I mean it’s a similar format to “Startups for the Rest of Us,” where they give their own story, but they also share tips. And so far, I think it’s a big improvement over where they were at, and so I’ve been listening to that.
[22:18] Mike: Yeah. I haven’t listened to that one, but Brian is putting on a – it’s called “Big Snow, Tiny Conf” up in Vermont. And that’s in January. And I think last year they did it, and they only had – it was, like, five people. But it’s basically like a ski or snowboarding vacation for a couple of days, and you just go up there and talk about business. And in some ways, it’s kind of like a mini mastermind group, but it’s a very compressed schedule from, like, a Monday to a Thursday. And then they do attendee talks and stuff like that. But it’s limited to, I think, eight or ten. He also puts it on with another guy named Brad, who is also at MicroConf, but we can link that up in the show notes.
[22:55] Rob: A couple more that I’ve been listening to. One is “The Linchpin” podcast, and that’s from Damian Thompson over at linchpin.net. And he also changed format from interview to he and a co-host discussing stuff. And then the last two are pretty nerdy. One is called “The History of Rome.” It is really the history of Rome, and it’s a dude who’s obviously a Ph.D. It’s ten- to 15-minute episodes. It’s really cool. What I like about it [is] it’s just really palatable. You know? It’s a little bit like Dan Carlin’s “Hardcore History,” if you’re ever listened to that, except it’s super short. It’s, like, ten- to 12-minute episodes. There’s 176 of them, and it’s done. Like, he did the history of Rome. There’s no more to be done, so he ended it. I’m like maybe 60 episodes in, and at times it’s a bit dry because it’s the history of a civilization; but fascinating just to hear the rise and the impending fall of this – and to understand it at a deeper level than I ever have, because I never really cared about this stuff in the past. So, it’s [as] good as, or better than, any audio book I could get on the subject, I’m sure.
[23:51]And then my last one is “Daily Tech News Show.” It’s with Tom Merritt. I’ve been a fan of Tom Merritt for years. It’s my favorite daily tech news show, and it helps me keep up-to-date with stuff that’s going on. It doesn’t help me in my work at all, but it is that thing that helps relax me on my drive into work or on my drive home. So, I just wanted to mention those in case folks are looking for new listens.
[24:12] Mike: Well, I think the only other thing that I have is that I’ve been a lot of personalized and one-on-one discussions for AuditShark. And I found that those seemed like the best way to close sales. I think there’s [sic] a couple different reasons for that. One is you get somebody on the phone, and if they clearly know what they’re talking about and, you know, it’s easy to talk to them about the different problems that you’re having, and they can walk you through how they can solve those problems, then it’s easier to buy into what the solution is. And the other thing is that getting to the point where you’ve got that one-on-one discussion with somebody, you’re getting a lot more – the focus of their time. If you send them an email, they might look at it for, like, a minute or two. But if you have an hour-long discussion with somebody, you’re getting a lot of in-depth information not only to them, but from them. And that’s been kind of the basis for a lot of the changes that we’ve been making internally within the products to make it do different things. And it’s not necessarily somebody says, “Hey, could you do this?” It’s more like, “Well, I like the product, but these are the types of things that I’m doing,” and you have to read between the lines a little bit to figure out what it is that they’re actually trying to do versus what they’re telling you they want to do; because sometimes what they are doing and what is the right solution for them are not the same thing.
[25:21] Rob: Right. And often they will state a solution that is very limiting. They’ll request a feature that only they would ever use. But if you’re thinking from a higher-level perspective of “how could everyone use this?” you can often make it more configurable. Or, you can build a feature in a different way that’s more flexible and that can fix their issue, but also perhaps implement another feature that you’ve already had requested. So, there’s definitely an art to this, to trying to interpret what users are asking for and figuring out if you should build it and how to build it.
[25:51] Mike: Yeah. The other thing I’ve noticed is that the sales cycle for this is probably a lot longer than I’d like it to be. It’s several months long. So, I’d really like to try to start identifying ways to bring that down. I feel like part of it’s features, and as much as I hate to say that – but in some cases, there really are. There’s [sic] certain things that people have said, “Yeah, this is great, but we really need it to do this in order to move forward.”
[26:13]The other thing that I’ve found is that people need customization, which is a kind of interesting piece of it; because in some cases, that can just be services. So, doing services engagement where, if they buy the software and they buy these services to go with it, we’ll build a bunch of stuff for them in the policies itself; because it’s different than writing code for the products; because the policies are more applicable to their environment, but the product is built to have these policies, that you create them and then plug them in through the engine, and then it pulls back the information that you’re requesting. So, that’s more of a customization piece, but it’s custom for their environment. And it’s been an interesting to position that as sort of an upsell opportunity as well.
[26:51] Rob: Yeah, I was going to say that. I mean I think that could be a great way, especially early on, to make a good chunk of money and try to fund it – maybe not something that’s scalable, but maybe it is. I mean you’ve heard the term “consultingware,” which is where you have the big, $300,000 enterprise product. And then you sell – or, maybe it’s a $100,000 enterprise product, and then you sell $900,000 of consulting services on it, you know, to make it this seven-figure deal. And while you don’t have to get ridiculous like that, starting off with a $5,000 product, you know, with $10,000 or $15,000 of customization is an interesting way to increase the initial sticker price there.
[27:25]The thing you said about sales cycles being long – that’s not surprising to me, because it’s enterprise sales. Right? I mean you’re essentially selling into companies that are going to be moving slow. So, two to three months doesn’t even feel that long to me.
[27:36] Mike: Yeah, most of it’s about just kind of getting their attention and getting on their schedule, because they have to get it on their schedule and say, “Okay. Well, why should I even pay attention to you?” because these tend to be the upper-level people that I’m talking to in companies, and I’ve found that a lot of the companies that I’m talking to are under 500 employees. I just need to find ways to reduce that time period, because if I can’t reduce that time period, then it’s hard to scale up revenue without just stuffing the funnel with tons of people and running around like a chicken with my head cut off, trying to follow up on everybody.
[28:07] Rob: Well, that’s what I was going to say. I think that’s what most enterprise sales people do is they stuff the funnel and run around like a chicken with no head. I don’t know how you’re going to reduce that sales cycle. I mean those companies are just slower movers than we are. And I would think it’d be more like six months if it’s truly an enterprise that has to get budget approval and get their IT department to prioritize it and that kind of stuff.
[28:28] Mike: The enterprise ones I would expect no less than six or eight months; but, like, that’s why I’m trying to target a lot more of the smaller companies, because they tend to have smaller budgets, for sure; but they also have a lower number of resources. So, any tool that you can bring into the environment which allows them to automate some of the things that they’re doing and make it less tedious or expensive for them to do it in terms of resources and time – that’s kind of a no-brainer for them. So, those are the places where I’m seeing a lot of traction and a lot of success. They take one look at it, and if they have a need for it, it’s a no-brainer. They know exactly what they want, what they’re looking for; and they kind of have an idea of what the next steps are, but even in those cases, a lot of what I find is they’re just so busy doing their existing work, that they don’t have a lot of time to dedicate to actually doing the evaluation. They love the idea. They like it, and they want to move forward; but finding time for them to actually commit to looking at and moving forward – that’s where the challenge is. I can certainly schedule webinars and things like that and go over things with people one on one, but that doesn’t necessarily free up their time commitments for all the other IT-related stuff that they’re doing.
[29:36] Rob: Right, yeah. And that’s a struggle of one-on-one sales – right – of enterprise sales. And that’s what the good salesmen that I’ve known – I mean like Steli I’m sure if you talked to him about it, he would have a number of thoughts about how to get around that. Actually, Damian Thompson, from linchpin.net, he’s a very good sales guy. And he – we should have him on the show at some point to talk about this, because I think what you’re asking is a common question. And having never done a lot of enterprise one-on-one sales, I don’t necessarily have the answers; but I do know that these are the ways that good salespeople are different. It’s funny, because we can identify good developers, and I know a good developer, and I know the difference between a good developer and a bad developer. It’s harder with salespeople aside from bottom line. “Well, how much did they sell?” But I think there’s some subtle things, and they kind of get this intuitive sense of how to do exactly what you’re saying. Like, they find ways to get past those roadblocks, and there’s a certain amount of natural ability in doing that; but I also think that there’s definitely a lot that can be taught.
[30:33] Mike: If you have a question or a comment for us, you can call it in to our voicemail number at 1.888.801.9690. Or, email it to us at firstname.lastname@example.org. Our theme music is an excerpt from “We’re Outta Control,” by MoOt, used under Creative Commons. Subscribe to us on iTunes by searching for “startups,” and visit startupsfortherestofus.com for a full transcript of each episode. Thanks for listening, and we’ll see you next time.