marla

Show Notes

• Elias Baez from Charity Sky
• MicroConf Europe
• Copyblogger’s Authority Intensive

Moving from Windows to Mac

• VMware Fusion
• Flexiglass
• TotalFinder
• Ultraedit / SublimeText
• Camtasia Studio
• Call Recorder for Skype
• Amazon CloudPlayer
• Transmit FTP
• Pixelmator

Transcript

[00:00] Rob: In this episode of Startups for the Rest of Us, Mike and I talk about moving from Windows to Mac OS 10. This is Startups for the Rest of Us: Episode 185.

[00:07] Music

[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.

[00:24] 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 sir?

[00:29] Mike: I got an email from Alias Base from Charity Sky and he’s running an indigo go campaign to convert his company from an LLC into a 501 C3 registered charity. And the reason I’m bringing this up is because primarily our audience is kind of focused on developers and this company Charity Sky is trying to focus on providing software development training to K-12 students. So if you’re interested in supporting that effort, head over to their website. Its www.charitysky.org if you’re interested in helping fund that cause or some information there, it links over to their indigo go campaign.

[01:04] Rob: Very cool. Well I just got back from Denver. I was at Copy Bloggers Authority Conference and I had a nice dinner with several local Micropreneur there and then the conference was Thursday, Friday and the highlights for me were Seth Godin. He’s definitely a good speaker and he’s a motivational inspirational and then Joanna Weeb of Copy Hackers. She delivered a really, really good talk. We may ask her to do it at a future MicroConf because it was just good. It was a lot of stuff about split testing buttons but not just a bunch of examples it was like mindset of how to get inside the head of someone and how to structure buttons split test. So it was really well done and those were my two favorite ones.

[01:42] To be honest, the rest of the conference, it was so-so. I wasn’t really wrapped up in it. I’ve been a fan of CopyBlogger and Brian Clark for years but it wasn’t a great fit for me and neither was the audience. I was kind of going out on a limb, going to a place where I didn’t know anybody and there were just a lot of freelance copywriters and some copywriters for Fortune 500 companies and there were some info marketers and that kind of stuff but it wasn’t necessarily an audience that I really need to connect with. Aside from those two highlights I didn’t take a ton away from the conference. So to be honest best part were the long conversations.

[02:15] Joana Weeb was there, Lance Jones and Ruben Gomez and actually decided on like a completely new pricing structure for Drip, some headline ideas, how to describe what Drip is becoming, that was really the value but its funny we could’ve just kind of hung out for a weekend and  probably gotten the same value out of it.

[02:30] Mike: That was cool. But I mean at the same time you knew going into it that you were kind of going out on a limb and it was outside of the industry and the types of people that you typically hang out with so you know, it was a risk one way or the other.

[02:42] Rob: Absolutely. And for people you know for copy writers or the info marketers or people who are more in that space, I think it was a really good conference and I think there were some talks that probably resonated with them more than with me.

[02:52] Mike: Cool. Well speaking of conferences, tickets for MicroConf Europe are going to be going on sale shortly  so if you’re interested in that, head over to microconfeurope.com to get on the early bird mailing list and you can be notified when those tickets are made available. Tickets aren’t expected to hit the public market so if you’re thinking of going, you should definitely be on the mailing list but that said, if you signed up for the mailing list last year you’re all set. You’re already on there and we’ll be sending out those emails and within a the next  couple of weeks I think.

[03:18] Rob: Yeah and the speaker lineup is shaping up. So far it’s you and I, we have Dave Collins who’ve spoken at several MicroConfs and has always been a fan favorite and then we have Rachel Andrew from Perch and she does a lot of speaking. I’ve seen a few videos of a few of her talks. She’s top notch. So very excited. Perch is CMS that they sell and the design element to it is really high quality so excited to have her speaking to our audience.

[03:44] I got to be honest man. Last two weeks have been really crappy. I got hit by the tax man this year. I had a pretty big tax bill and then I had a couple other things come through unexpectedly, big expenses so it’s just hard to see cash that you’re stock piling go poof but I feel like I’m kind of recovering from that and I’m trying to get my bearings and, adjust my business frankly because I don’t have as much – I don’t have as large a stock pile that I have that I was going to be using to fund the growth of Drip and HitTail so I’m having to adjust to a few of my approaches.

[04:14] Mike: That’s demoralizing. When tax time rolls around you know that it’s coming but I think the issue is that you don’t necessarily know at any given point how bad it’s going to be until it’s too late and it’s like you can’t really mentally prepare yourself. So it can take a little while to get over and then you have to play around it and move some things around and hopefully it doesn’t hurt too bad but it’s rough.

[04:34] Rob: Yeah. I think demoralizing is probably the best way to summarize it.

[04:36] Music

[04:40] So today we’re going to be talking about moving from Windows to Mac and you and I both done this in the past couple years. I did it just over a year ago.

[04:47] Mike: I started using a MacBook Pro back in 2005 or so and this was back when I was doing some consulting work for Dell and Dell was actually very upset with me because I refused to trade in my MacBook Pro unless they were able to give me a comparable Dell machine and they couldn’t do it.

[05:03] Rob: Nice. So have you used a Mac since then?

[05:06] Mike: Well I used it for a couple years and then I went off of it because at the time they were having a lot of driver issues and it would just overheat to the point that I literally could not even touch the machine. So I kind of abandoned it for a little while. And then I went over to a MacBook Air about the time that my back was really giving me a lot of trouble. Been on Apple hardware ever since.

[05:27] Rob: Right. For me it was the switch was when Windows 8 came out because I looked at Windows 8 and I thought you know, there’s going to be a decent learning curve there. If I’m ever going to make the switch it’s probably best to do it now. And I was already being drawn in by the amazing hardware and the gestures and the other stuff we’ll talk about today kind of the pluses of moving over to OS 10 and to the Mac hardware. What I found is that the more people I’m talking to these days, a lot of developers and kind of the early adaptor tech crowd are either already on Macs or they’re moving there.

[05:58] And there’s quite a bit to think about when you’re evaluating this decision and I didn’t find any great resources on it so now that I’m kind of a year past it I had a bunch of software that I have to buy. I have a bunch of stuff that I replaced with free tools. I know what the benefits and drawbacks are at least for my usage of it and it’s probably comparable to yours if you’re listening to this. So that’s really where we’re talking through is kind of another source of up to date information for you. So I wanted to start off by saying you know, when I was using Windows, I was on Windows 7 and XP before that I kept thinking man, when I move over to OS 10, because I’d use Macs back in college right in the late 90 and I kept thinking when I move over to OS 10 it’s just going to be like all unicorns and rainbows and just amazing.

[06:36] But what I found is the  two are quite comparable. There are obviously big differences but they each have their pluses and minuses. I have not felt like OS 10 is some magic silver bullet that is like way, way better than Windows. I think it has its own flaws. Have you found the same thing?

[06:50] Mike: Definitely and that’s why we run them both side by side because there are certain things that I like how OS 10 handles a lot better and then there’s other things where I like how Windows handles them better.

[07:01] Rob: Right. I consider myself Mac first. When I moved from Windows to Mac I wanted to be on OS 10 most of the time and only moving to Windows emulation when I needed to and so that’s really – because I still have some legacy.net code that I tool around in and I have some times classic ASP obviously for HitTail and you can’t do those on a Mac. So I replaced all my apps in the Mac world. I got the Skype Mac and I got an FTP program and I’ve got a bunch of other stuff and spent several hundred bucks to start with to kind of get that up to speed but since then, everything’s worked out. But I think your Windows first. When you boot up you have most of your productivity and stuff in the Windows emulator.

[07:41] Mike: For me it depends a little bit. If I’m using my desktop because it’s a custom built machine obviously that’s just Windows so there’s not even the option for OS 10. On my laptop I’ve got a MacBook Pro and for that, I run Windows on top of VMware Fusion and I don’t have Windows startup unless I need it. So the majority of the time I’ll be doing most of my stuff inside of OS 10. There will be times where it’s like if I need to fire up Visual Studio obviously I’ll just go over to Windows. I don’t use Unity or anything like that. I just – I basically three finger swipe and then I’m in Windows and then just use it directly all inside of one window.

[08:16] There’s not a lot that I do over on the Windows side other than using Visual Studio. There’s not much else. I mean I will do some browsing but I’ve got Skype on both Windows and on OS 10 and then there’s not a lot else though where I really need it. It’s just if I’m doing software development, I’ll use Windows. If I’m doing anything else, I’ll use OS 10. And that’s only because all of my development stuff is in Csharp.net.

[08:40] Rob: Right. And I’m in a similar boat. My .net development is very, very limited now. It’s really only bug fixes. I don’t do really major features anymore so it’s probably less frequent than you. But I’m the same way. I bought VMware Fusion. We’ll talk a little bit about that later. There’s a bunch of different ways to kind of have Windows in a VM on Mac hardware. That’s the best way that I found after doing a bunch of research and per your recommendations. So I think lets maybe talk a little bit about some drawbacks of moving and then we’ll talk about the benefits. And I think I actually have more benefits than drawbacks here.

[09:12] But the first drawback and this is one of the reasons that I wasn’t going to do it was because you have to rebuy a lot of software. There’s some stuff that’s just not free you like Camtasia Studio and if you want Snag It or something like that you kind of need to rebuy Mac version. Because once you have the Windows version it doesn’t port over and there’s probably several other apps that are like that. We’ll get into them a little later.

[09:33] Mike: I think one of the bigger things for me especially early on was the learning curve of understanding what some of the different buttons did in OS 10 and realizing that just fundamentally the way that they worked is different than in Windows.

[09:47] Rob: You know for me, that was a big mental issue. I didn’t want to switch because I didn’t want it to hammer my productivity and I found that I switched pretty quickly. It was less than a week of disruption. I mean within a day or two I was moving at like 80-90% speed and then within a week I was really not noticing the difference anymore. Having been on Windows now for what? 13 years before then, having your shortcuts, your control C instead of command C I thought would be a big issue for me but turns out it wasn’t. I was able to relearn it pretty quickly.

[10:17] Mike: Yes, see I didn’t have as many problems with things like that like when I’m in OS 10 I just know that its command C and if I’m in Windows its control C. For me the bigger issue was that certain keys like all along the top. OS 10 has all the function keys that if you hit those typically like you’ll change the sound volume or you’ll increase or decrease the brightness. When I’m in Windows, when I’m doing software development, I need to be able to use those function keys when I’m in Visual Studio so I actually remapped all those so that in OS 10 I actually have to hold down the function key in order to increase or decrease the sound and things like that. So slightly switched but it just worked out that well for me.

[10:56] Rob: Got it and yeah, I hold down the function key when I’m in Windows, to do the same thing since I’m in Windows less but those function keys have gone in a way when I’m trying to hit F5 to do a build or something and I’m actually just lowering the brightness of my keyboard. I think the other thing that I’ve run into that was unexpected is my MacBook Air and a bunch of the other MacBook Pros and MacBook Airs of friends and family have wireless and or Bluetooth difficulties just like here and there they’re intermittent but almost every time I flip my MacBook Air open it takes 30 seconds to a minute to connect to wireless and often I’ll have to turn it off and turn it back on. And I was thinking I must have a defective MacBook but a lot of folks have told me they run in the same thing. So this was unexpected. I didn’t think about that but I do think that it’s something to be aware of. Have you run into any issues like that?

[11:44] Mike: Yeah, mostly around the wireless stuff. It’s irritating. It’s not that it doesn’t work. It’s just there’s times where you just expect it to just function right out of the box and just do what it’s supposed to do and it just doesn’t. One thing I found that seems like it had helped with that is I bought one of Apple’s Time Machines with the built in wireless end router and 2 or 3 terabyte hard drive or something like that and that seems to be flawless. I don’t ever have problems with that. Whenever I’m at home, it’s never an issue. When I’m out on the road and trying to connect to Wi-Fi at hotels or customers and stuff like that then it seems like it’s more of an issue but whenever you get into enterprise Wi-Fi there’s – I don’t know why but for some reason I always have these weird quirks and they don’t necessarily work very well when it comes to Macs.

[12:29] Rob: Right. I only work from home one day a week anymore because we have an office and often work from the apartment at the beach on Fridays and so if I bought an Apple router it wouldn’t help me that much because I’m connecting to other people’s Wi-Fi so often. But the Bluetooth thing for me too is I have a wireless keyboard and a Bluetooth mouse both at home and work because I prop the monitor up so that its good – ergonomics right? So I have the wireless stuff and that’s where the Bluetooth has been funky. It works most of the time. It’s reliable but it will cut out now and again just in the middle of me doing something and I’ll just have to put my hand on the laptop until it stops. It will only cut out for 20 seconds but it might happen like once a day and each thing disconnects. This is kind of like not the end of the world but it is an odd kind of side effect.

[13:18] Mike: I’m surprised that happens because I have a Bluetooth keyboard for my iPad and I don’t have any issues with that. Just starting up it takes a few seconds to sync but it never has an issue so surprised you have the issue on the laptop.

[13:32] Rob: I think the next drawback is potentially expense. It’s like you can get a decent Dell laptop for $400 or $500 that’s what my last Dell cost me and it was solid. It moved fast and it had a nice screen and all that stuff and obviously getting a MacBook or a MacBook Air is going to be 2, 3, 4 times that. Now on the flipside the Macs and the Mac books, they really retain their value like when you’re done with them the resale value is very high.

[14:00] Mike: I think you have to seriously qualify decent Dell.

[14:04] Rob: Yeah that’s true.

[14:05] Mike: I think the issue is when you’re buying – like I went with a high end MacBook so with that, I mean I got a 512 gig SSD drive and 16 gigs of RAM. So to get something similar on the Dell side I guess you’re not looking at $500. You’re looking at easily $1200 to $1500 if not more. And that’s it if you don’t just buy something low end and then rip some of the components out and then replace them with your own.

[14:29] Rob: Right. I think the next drawback potentially is I found the windowing like the window management and the maximizing and moving Windows around and general its gotten better with the newest OS 10 Mavericks but frankly I find it to be not as good as Windows.

[14:44] Mike: Yeah I think out of the box it’s not as good but there’s a lot of third party apps that you can use. There’s definitely ways around that.

[14:51] Rob: Right. And the last throwback I listed is that if you are Windows or .net developer obviously you are going to need a VM, virtual machine of some kind in order to run Windows and do the development. That’s not a major drawback. It’s actually less painful than I thought it would be and like you said if you just have it in a separate desktop and you do a three finger swipe into it, it’s pretty seamless aside from the keyboard shortcut switch and needing to hold down the function like it’s barely noticeable.

[15:16] Now let’s dive into the benefits. The first thing that got me was the hardware is amazing. It’s gorgeous. It’s an aluminum body. The keyboard just feels like a dream. It has backlighting. It’s just perfect. It’s such a well constructed product. The track pad is the best I’ve ever used hands down. The keyboard is probably the best I’ve ever used hands down. The screen is probably the best screen on a laptop I’ve ever used so I mean it is top notch and I could not find for any price, I could not find a comparable Windows laptop. This was about 14-15 months ago. I was looking for the same type of thing aluminum really good keyboard, really good track pad and as far as I know it just doesn’t exist.

[15:50] Mike: Yeah I think for me the look of it wasn’t so much a big deal for me. I didn’t really care that it had an aluminum body. For me it was like the hardware specks, the keyboard took a little getting used to so I wasn’t necessarily used to the little chiclet keys and things like that. And then the tack pad I have to agree with you totally on that one, I mean the track pad on the MacBook Pro is awesome. It’s better than any other track pad I’ve ever seen on any other laptop. And then of course as you said the screen. You can’t find a screen that is good as what Apple ships with theirs.

[16:20] Rob: The next benefit I have is the gestures and the clickability of the track pad. They make it completely useable. I’m almost as effective and as productive just using the track pad as I am with the full mouse and keyboard setup and I’ve never even come close to that with any type of Windows setup. And it’s purely because there’s so many gestures you can do with the two finger scrolling, the three fingers swipes back and forth between desktops, even with a single monitor at a coffee shop I can do things that would typically take me multi monitors at home because you can swipe back and forth so quickly to compare things.

[16:53] Mike: Yeah I found the same exact thing, just the multi finger gestures is really what makes that even possible because I’ll find myself when I’m using other people’s laptops I’ll find myself trying to use two finger scroll and things like that and it just doesn’t work in Windows and it’s not that you would expect it to but on my MacBook because I have things over on Windows and running through VMware the two finger scroll does work in Windows. So its disappointing to go to somebody else’s laptop that track pad just doesn’t support it because they don’t expect you to be using multi finger gestures.

[17:26] Rob: My son uses my old Dell and whenever I get on it to help him out it is painful to hit a webpage and then have to just tack pad over to the scrollbar on the right and drag it down to move anything. It just feels incredibly inefficient. The next benefit I have is I don’t feel like I need to download a Windows update every week. There are some OS updates that come through but it’s not all the time and I always felt like with Windows every time I was booting up there was like a Java update and Adobe update, all the stuff that I was downloading all the time and they were huge updates and they took forever and the computer would reboot and all that stuff.

[17:59] The updates on Mac are just they’re fewer and far between. They seem to download really quickly and every once in a while one will require a reboot but even that, when it reboots, it brings everything almost back to where it was before it rebooted like I’ve been kind of impressed with that, that it doesn’t impact my productivity as much as rebooting a Windows machine where you just come back to the bare desktop and all your Windows are closed.

[18:23] Mike: I think the two things that you said there are Adobe updates and Java updates. I think that’s the killer. I don’t think it matters what operating system you’re actually on. But in terms of Windows updates I mean the other thing I’ll point out is I almost never reboot my virtual machine on my MacBook. I’ll do the Windows updates when they come out but I don’t tend to restart that machine. What I’ll do is I’ll just suspend it and then I just close my Mac book and that’s the end of it. It’s like I don’t even have to restart the machine most of the time.

[18:49] Rob: Another benefit is that you don’t need to run virus scanning software antivirus because there just aren’t that many viruses for OS 10. I don’t know if that’s a huge benefit for me. It’s probably a bigger benefit for someone who’s less technical because I always just ran antivirus and was careful what I clicked on but I think it could be a benefit especially for like family members as they’ve asked me what computer they should get, I’m a little more willing to recommend a Mac even though its more expensive that I think it could be potentially be safer for maybe someone like my mom.

[19:16] Mike: Yeah I don’t necessarily see this as a huge benefit either. I guess it’s nice to know that you’re probably not going to get one but I don’t know as not running antivirus software at all is really going to make that any better.

[19:27] Rob: Yeah and I think the last two benefits that I see, these I didn’t know in advance but like OS 10 has some pretty cool stuff built into it that I had to get add ons Windows to get and it’s like if you hit command space in OS 10 you get the spotlight search and you can search everything on your computer not only documents but you can search programs and everything. So I don’t have many programs in actual apps like in my bottom bar to quick launch. I just hit command space start typing the name and hit enter and it brings it up. I had an add on called I think it was Simple Run or something like that that I use on Windows but then every time that I reinstalled Windows which I did every two years I’d have to reinstall that and configure it and I had a special config file I had to move and it was just kind of a pain and so to have this working is a really nice hack for me.

[20:14] And then the other thing is the Preview in OS 10 works really we like if you open a PDF doc in there, I don’t even download Adobe Acrobat because preview works so well and you can even manipulate Adobe Acrobat documents, PDF’s if you have two you can merge in together, you can swipe pages between them and you can delete pages out of a PDF. You can add pages to it. I mean its pretty darn powerful just the simple – what I thought was a pretty simple Preview app built into OS 10 is actually more powerful than I thought it would be.

[20:44] Mike: Yeah I don’t find that in Windows that finding the apps is really all that much of a challenge because you just hit the widows button and then start typing and you can do the exact same thing that you’re doing over in OS 10 with the command space. It’s identical. It works the exact same way. The one thing I have noticed that you haven’t mentioned is that backups on OS 10 if you’re using Time Machine and you have a Time Machine device on your network, it’s just almost flawless and I actually ran into issue with one of my earlier MacBooks. I had a MacBook Air and it looked like things were going a little flaky with it so I took it back to the Apple store and they took a look at it and said oh yeah we think your video card is fried and I’m like great, I’m now going to move everything over and all this stuff.

[21:26] And they just said okay we’ll just swap it out and they just plugged a thunderbolt cable into a new MacBook and then they plugged it into mine and they ran this program that just moved everything over, had all my programs, all my settings, all my data, everything and I didn’t have to worry about it at all. And just in looking back at Time Machine Time Machine is very similar, obviously it will be a little bit slower but I would say functionally equivalent.

[21:48] Rob: Yeah, that’s really nice. And that’s what you get with– you get iCloud backed up on your phone, your iPhone or iPad and it’s amazing. I have problems with an iPhone and I brought it in and they nuked it, gave me a new one and everything was back pretty much the way I’ve had it and I was really impressed with that. So I didn’t know time machine could do it to that extent but I will likely be looking at getting one. Because I have Crash Plan and Dropbox and stuff so I’m backing everything up but it would still take me all the time to reinstall the apps. If Time Machine can handle that for me and actually does more of like an image, that will save me a lot of time and it will definitely be worth it.

[22:21] I think the last benefit that I was looking for is with Windows, you get this cruffed and it’s either the registry or there’s just something about it when you install and uninstall apps they leave stuff and OS slows down over time. If you have a Windows installation that’s 5 or 10 years old, it gets really, really slow and you have to repave it. On my laptop I would reinstall Windows every 18 to 24 months. From what I‘ve heard, from what I’ve seen, OS 10 does not have the same issue. So I’m not very – I’m only 15 months in but I’m looking forward to having this install of the OS around for quite some time.

[22:57] Mike: Yeah I think part of that is on the Windows side at least most people don’t defragment their registry and the registry just it’s kind of like a database where the file itself gets locked on disk and it grows over time and shrinks and there’s stuff being inserted into it and it doesn’t have a really good way of defragmenting it. So I’m sure that somebody will write into us and say that I’m totally butchering the explanation but I have seen that where if you just defrag the registry it can seriously speed up your machine especially on older ones. But then again if you’re going over to an SSD, a lot of those programs just go away anyway.

[23:32] Rob: So now we’re going to take a look at a couple things, one is software and I also have a little bit of hardware and its basically stuff that we either had to buy to make the transition or stuff that was free and we’re able to just easily replace. So the first section here is stuff that was free so on my Windows machine I use certain apps like Chrome, Skype, Remote Desktop to get into Windows serves remotely, all that stuff is available for OS 10. So Chrome and it works almost identically, Skype, the UI was all different but I get used to pretty quick and then Windows Remote Desktop is there, Crash Plan which is what I use for backups that had a client  for both and Dropbox and Audacity which I us for audio editing. So all of those apps were easy free downloads and I was able to just seamlessly replace them.

[24:16] Mike: Well there’s one thing that you mentioned in there that I don’t think a lot of people know is that you can get a Remote Desktop for Windows client on the Mac. Most people don’t realize that there is a Mac version of that that allows you to connect to Windows machine so like if you have  a windows server you there you can just RDP into it directly from OS 10.

[24:34] Rob: Right.

[24:35] Mike: I think other than that, I also installed Evernote. I have Evernote, Dropbox and Sugar Sync on both my Windows and on my OS 10 machines. And I use that to sync back and forth between my desktop, my virtual machine and my OS 10 machine. Other than that, I also have Microsoft Office installed which get it through MSDN but if you have an MSDN subscription it comes free with that whereas the Mac version of office did not use to come with that.

[25:01] Rob: Right. That made sense. I do have Office as well. Because word and excel, the UI’s is better than Pages and Numbers. I do use Keynote though now instead of PowerPoint and like you I get the Office suite for free with MSDN. Now let’s talk a little about stuff we bought. The two hardware things that I bought when I moved over to OS 10 was 1) I bought a smart mouse which is like $70 or $80 but allows you to have the gestures because you get so spoiled by the track pad being able to flip between desktops and do all kinds of scrolling and stuff that a normal mouse would almost feel like subpar to the track pad. And so instead of trying to get a Bluetooth track pad, you don’t have quite as much settle control I got the smart mouse and to me it’s like the best of both worlds. I get the gestures but I also get the fine grain control of a mouse. Do you use a smart mouse or an external mouse or do you only use a track pad?

[25:53] Mike: I use an external USB mouse that connects – it’s got like a little USB dangle that I just plug into it but it’s a Microsoft Arc Mouse.

[25:59] Rob: So you use a Microsoft mouse with you OS 10 laptop?

[26:03] Mike: Yes.

[26:03] Rob: Perfect.

[26:05] Mike: I tried using one of the external track pads though but I didn’t feel like it worked as well as the one that’s built into the laptop.

[26:10] Rob: The other thing I bought was I upgraded my external monitors because the display of the Mac book is so nice that I couldn’t  use these old crappy four year old Dell monitors that it had. So I upgraded to like the brand-new Dell IPS monitor which is quite similar. It’s not exactly the same as the Apple cinema display but it’s about as close as you can get to it not paying an exuberant amount. So at both home and the office I upgraded that and using the thunderbolt cable just gives you the best quality external monitor experience I’ve ever had.

[26:40] Mike: Yeah I don’t really use an external monitor for my MacBook working off of my desktop anyway.

[26:44] Rob: The rest of this is really software and this is stuff that I had to buy in the transition. 1 was VMware Fusion that we talked about earlier which is the Windows emulator and I researched this a lot and I took your recommendation but also went out and read all the articles and there’s these different pluses and minuses between Parallels and VMware Fusion and then there’s an open source free version of this. As I got to this, VMware Fusion was I think the right choice and I have had no qualms or issues about it.

[27:11] Mike: I stand by my decision to use VMware Fusion as well and it’s not that I think any less of parallels or anything like that. I know people who’ve used Parallels but I just haven’t really had any problems with VMware so it’s worked out well for me plus I use VMware on Windows as well so it’s just familiar to me.

[27:28] Rob: Natural fit for sure. The other software I bought was Flexi Glass and it’s just a little utility you can get in the Mac app store kind of emulates some of the Windows widowing stuff so when you actually close a window with a right click, now in OS 10 if you’re running Flexi Glass it actually closes the entire program so that you don’t close these Windows out and then have all these programs running in the background which I think to me is like a drawback of OS 10 that everything stays running where as in Windows if you click the X, the program actually shuts down. And so Flexi Glass does that in a few other kind of advanced windowing features that I think Windows beats OS 10 on but Flexi Glass does a pretty good job of emulating that and I actually bought that based on your recommendation.

[28:08] Mike: I still love Flexi Glass. One of the other things that it also you to do is allows you to just use keys to snap Windows around on the screens so you can make them use the right half or left half of the screens and things like that. And it just makes the experience a little bit nicer and slightly more Windows like and especially just in terms of being able to lock those Windows onto ½ of the screen or the other or center them or go full screen and things like that it just gives you the shortcuts, keyboard shortcuts to make that stuff easier to do.

[28:34] Rob: Another app I bought was Total Finder and that’s from Micropreneur Academy’s own Antonin Hildebrand Total Finder is cool now since then like I think Mavericks introduced tabbed finder windows and total finder has had that for years but Total Finder still have some other advantages. It has keyboard shortcuts like I hit option E to open my finder window and I use that constantly, constantly doing it kind of like I used to use – I guess it was Windows E to open explorer. It’s basically the same thing. I know they’re competitors and I know that mavericks has played a little bit of catch-up with it but I would still recommend checking out Total Finder. It’s dirt cheap for all the value I get out of it.

[29:13] Mike: I use Total Finder as well. The other one I use is a program called Text Wrangler and Text Wrangler is probably a little bit different than Ultra Edit but it gives you the ability to write text documents and search them easily. I almost use it in some ways it’s kind of like a glorified note pad ++ application.

[29:34] Rob: Yeah that what I use Ultra Edit for. So I’ve Ultra Edit since 1999 or 2000 on Windows. It is better on Windows because they built it there first but they have an OS 10 version and aside from a few bugs here and there, it’s pretty comparable. So since I know all the shortcuts and the ins and outs of it, I got a copy of Ultra Edit and then Sublime Text is the other one. It’s kind of a famed Ruby text editor I know programmers in languages use that as well so I have both Ultra Edit and Sublime Text for my text editing and like you said I use Ultra Edit. It’s kind of like a little note pad thing that’s always there and that’s where I’m keeping a lot of notes and the when I move them into permanent places they’ll go into Google docs or presentations or such.

[30:11] Another thing that I bought was FTP software. I learned that Transmit which you can get I think it’s $20 on the Mac app store, just works great. You can edit files on the server, do some basic stuff like that. Ultra Edit has advanced file editing on the server capabilities so if I’m going to do a lot of stuff I’ll use Ultra Edit because it has all the syntax highlighting but Transmit is perfectly adequate. I wouldn’t seek out a free version I’ll put it that way just because for the $20 one time you get the updates and you know the program’s going to be around.

[30:41] Mike: I don’t even think I bothered installing anything on OS 10 for that. I just do those things over on the Windows side.

[30:47] Rob: How about for image editing? I used to use Paint.net in Windows which is an open source app that it’s like a simplified version of Photoshop which is perfect. I don’t need all the features in Photoshop and I don’t really want to – I don’t do enough image editing that I want to pay for something. So I looked around for quite a while and I found Pixelmator and I love it. I don’t remember how much it was, $30 or $40 it wasn’t very much. It was in the app store and I use it probably every day or two just to edit a photo or to mock up a screen cap, mark something up. It’s pretty powerful. If you do any image editing in OS 10 or do you it do all in Windows?

[31:22] Mike: I don’t do it all I just hand it off to somebody else to do.

[31:24] Rob: Nice. Yeah. I take probably 5 or 10 screenshots a day and send it to people and I have to call things out and that’s typically what I use this for.

[31:31] Mike: Okay, on OS 10 I use Snaps Pro because most of the stuff, if I’m doing that, usually I’m on the Windows side and I use Snag It and Snag It has built in capabilities for annotating images as you take the screen shots.

[31:45] Rob: Yeah I have Snag It too. I bought it for OS 10 and I don’t use it because I use the built in stuff from the Mac just because its keyboard shortcut it’s so simple. What is it like command shift 4 I think. So that’s what I use. I should probably use Snag It since I bought it. Just a couple more that I bought. I had to buy Camtasia Studio because I do a lot of screen casting for both VA’s and other purposes and I had it on Windows and I had to rebuy it in the OS 10 app store and that was I think $300 on Windows and I think the app store version is like $99 but if you can get a more full OS 10 version for like $300 and it’s actually better.

[32:21] So I don’t really know the ins and outs since I don’t do a ton of editing anymore if I record and I need to edit I typically send it to someone else to do the edit so there’s certainly some ins and outs but to only pay $99 for it was pretty cool and now I can do native screen cast because the first few weeks I was like flipping over into VMware Fusion and the Windows every time I want to record a screen cast and that was just a little bit of a pain because your USB stuff, the headset wasn’t connected and I’d have to disconnect and reconnect and stuff. But do you record screen cast in OS 10 or you do it all in Windows?

[32:50] Mike: No, I do it all in Windows. If I’m doing a screen cast its usually I’m doing stuff inside of AuditShark, the desktop edition or the web edition but typically in the desktop edition and I need it to run on Windows anyway.

[33:00] Rob: Got it, last couple things that I bought when I moved to OS 10 are I bought Call Recorder to record Skype calls primarily for this podcast frankly and I had used Pamela on the Windows side. And then I actually moved away from iTunes. I’ve heard iTunes works better once you’re on OS 10 because it sure didn’t work very well on Windows. I’m purely in the Amazon world now the ecosystem so for all my music is up on the cloud player. iTunes match did not work for me. It would not license a bunch of my files and pretty often I would not be able to play my music for multiple devices which is just amazing to me even on Apple hardware it wasn’t doing it so eventually I just moved all the way to Amazon and it’s been really nice. I have not missed iTunes one bit and I do my audio books now through the Audible app on my phone.

[33:43] I do my Podcast app on my phone and then all my music’s in the Amazon cloud player and it has a desktop client for Mac, Windows and I think Linux and has a web client and has all the mobile OS that you would need. I think that about wraps up things that I purchased when I transitioned over. Do you have any others that I left off the list?

[34:01] Mike: Like you said I’m probably more slanted towards the Windows side and I use this stuff on OS 10 primarily to I’ll say do offline thinking when I’m not directly working on a product if I’m working on marketing stuff or trying to creatively think about solutions to marketing problems and things like that. But if I’m going into the technical side I go into Windows. So I think that about wraps us up. If you’re thinking about switching over from Windows to Mac hopefully this episode will give you some things to think about.

[34:31] If you have a question for us, you can call it into our voicemail number at 1-888-801-9690 or email it to us at questions@startupsfortherestofus.com. Our theme music is an excerpt from “We’re Outta Control” by MoOt used under Creative Commons. You can subscribe to us in iTunes by searching for startups or via RSS at startupsfortherestofus.com where you’ll also find a full transcript of each episode. Thanks for listening. We’ll see you next time.

Show Notes

• Copy Blogger’s Authority Intensive conference
• Dreamhost
• Amazon Web Services
• Rackspace
• Digital Ocean
• Windows Azure
• Grou.ps
• Chargify
• Recurly
• ChargeBee
• KISSmetrics

Transcript

[00:00] Mike: This is Startups for the Rest of Us: Episode 184.

[00:03] Music

[00:10] 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.

[00:19] Rob: And I’m Rob.

[00:20] Mike: And we’re here to share our experiences to help you avoid the same mistakes we’ve made. What’s the word this week Rob?

[00:24] Rob: Things are good. I am in Denver for copy bloggers authority conference. I think it’s called the authority intensive. So this is more about copywriting, content marketing and that kind of stuff so I plan on knowing almost no one who’s attending which is always a good thing to kind of expand the network and then hoping to obviously meet some folks and learn more about the modern day tricks and stuff that content marketers are using and so fun so far.

[01:49] Mike: Cool.

[00:50] Rob: Yeah and had a good dinner last night with several Micropreneur, MicroConf attendees, academy members just folks who follow the podcast. Ruben Gomez was there and Dave Rodenbaugh and Rudy from higher flow which is now square hire I guess and several other folks. So it was a good time.

[01:06] Mike: That’s awesome.

[01:07] Rob: How about you? What’s going on?

[01:08] Mike: I’m trying to wind down my consulting a bit and my schedule has shifted a little bit. So I said that I was originally scheduled to be done or at least be taking a break from it for a while in September and it looks like it will be next month instead of September. Shaved about three months off that schedule, kind of looking forward to it.

[01:23] Rob: Very nice. Congratulations man. Very nice. You’re going to have more time than you know what to do once that’s all over.

[01:29] Mike: Well that is the plan.

[01:31] Rob: Yeah indeed.

[01:32] Music

[01:35] Mike: This week we haven’t done it in a while so we’re going to go through a bunch of listener questions. They’re kind of stacked up but we’re going to try and do our best to work through them. And the first one comes in from Brecht and he says Mike and Rob I’m a faithful listener by having found you only about a year ago I can’t say I’ve listened to all of them. I was wondering if you’ve ever discussed online storage in detail. I’m working on a web app for the construction industry. I’m wondering where this should ultimately be hosted. I find myself wanting to know more about services such as AWS and I thought others might have some similar questions. If you think it’s appropriate, I’d love to hear more about where you guys host your apps and the cost that you guys have. Tanks for all the free info you guys provide.

[02:10] Rob: Yeah I mean there’s a ton of options out there. I don’t think there’s any one right answer. I’ve always thought and I’ve used shared hosting on Dream Host for years. Dream Host is not a fantastic host but they’re very inexpensive and if you’re going to be building your app for six months, then it’s a great place to pay – is it $10 a month now? I don’t know what it is but it’s very, very inexpensive and you can host rails there. You can host PHP. Some Linux hosting so you can do a bunch of stuff. That is where I’ve had an account there for 7 or 8 years.

[02:38] As your server gets older, they don’t upgrade it and it gets slower and slower especially for the first several years it will work really well but I see Dream Host as a place to go, get cheap hosting and then once you get traction on something, and then once you get traction on something, once you’ve launched then you move over to one of the more expensive providers like an AWS or like Rackspace. Now I’ve heard bad things about Rackspace’s cloud servers from a friend of mine, a startup founder. He said that the performance isn’t that great so he may have to go and Hostit like an actual dedicated box or something. I haven’t done it. I haven’t used their cloud servers. We use Amazon EC2 now and that works great but it’s pretty freaking complicated. You know?

[03:15] It’s not something like Dream Host you enter a few things boom you have a website up. So if you’re more of a beginner, that’s a good place to go. Amazon is a learning curve just to learn how to provision boxes and you get bare metal and you have to install everything. So there’s a lot of time investment there but it’s certainly a good solution long term. And then what’s nice about doing with Amazon ultimately is that if you do need to store files, you have S3, if you need DNS, they have DNS service so they have a whole ecosystem around it. The one other place that I’ve heard about that’s pretty up and coming is called Digital Ocean and it’s simple cloud hosting built for developers. That’s their headline.

[03:49] And I know some folks using them. They have really cheap VPS. You can get like a $5 a month VPS through them. It’s only half a gig of memory and 20 gig SD drive but they’re scaling up really fast. So that’d be someone I’d keep my eye on and for $10 you can get 1 gig of memory so I haven’t tried it personally I do know a founder who’s using it to great effect so maybe if you have the experience, I’d kick it off with Digital Ocean instead of Dream Host and give it a try if you’re willing to experiment with it.

[04:18] Mike: Just to kind of piggy back on the things that you said about Dream Host I use Dream Host as well and I’ve also kind of encountered some of the speed issues that Rob has over the years because they don’t tend to upgrade those machines terribly often but about a week or two ago, I got an email from them saying that they were going to be upgrading my machine. So they took my VPS and they actually moved it to another machine that has an updated hardware platform. So things seem to have gotten reasonably fast on that machine. So they do upgrade them on occasion but Rob’s definitely right. I mean they will go for years without upgrading it especially if nothing breaks.

[04:53] On the Rackspace side, what I found was that their version 1 cloud servers were quite a bit slower. Recently they’ve started doing everything on their version 2 of their cloud platform and their version 2 servers are all backed up by SSD drives. So there’s a huge difference between version 1 and version 2. You do have the option to migrate from version 1 to version 2 but I haven’t done it yet because I have a lot of stuff on there and there’s a lot of DNS entries that I would probably have to upgrade because they are switching things from IPV4 to IPV6 and I don’t know all the implications about the additional IP addresses that I’ve had there.

[05:28] So the last thing that I used is Microsoft’s azure platform. So I’ve got some servers out there. Initially they seemed like they were a little slow but I think that it’s in many cases very similar to what rob experienced with AWS is especially when you’re going towards the hosted platform for azure where there’s a huge learning curve to be able to spin up and spin down those machines and get all the software and everything else that you need installed on it and be able to deploy new builds and things like that. It can be extremely complicated so there’s a huge learning curve there.

[06:02] If you can get away with avoiding all that stuff, I totally would before going to that. I think that it’s great for having the back end and all the different storage options and load balancing and all that kind of stuff but I almost feel like its overkill for I’ll say entry level Saas applications because you don’t necessarily need all that stuff. You can get away with just a single server at Rackspace or something like that. And you can also get just a single server as a VPS over on the azure platform but it’s just a sort of different technology there.

[06:30] Rob: Yeah. This is such a form of premature optimization or can be. Unless you have paying customers or a decent size launch list then I would choose cheap hosting. I would go with Dream Host or I would take a flyer on Digital Ocean do a $10 a month thing and build and deploy on that. Until I have a reason to move off of it and bite the bullet. That means until you have enough load or until you’re having enough problems that you need to do a migration. We had to do a migration of the drip database within the first few months because we got a bunch of customers, had a bunch of load and we moved from a Roku post grade instance so I moved into EC2 and it did suck like it was I’m not going to paint a pretty picture of it but we got it done really quickly and I don’t regret the fact that for the previous year we weren’t on this enormously expensive database server which is what we’re on now.

[07:20] Because a, it saved money and B, we didn’t need to get a DB involved because the post grade one, we had to do the backups and did a bunch of other stuff for us. So at this point it was like well this idea is viable. we have paying customers and it justified me A) getting a DB involved then paying him to get everything setup with backups and all that kind of stuff and B) just to do the move and to really get a beefy server. So this is one of those things to put off as long as possible within reason I mean if customers are having issues, that’s the time to start making a quick move to a new server platform.

[07:51] Mike: Anything where you’ve got a virtual machine of any kind, you always have the option to throw money at the problem and buy yourself time and that’s kind of the bottom-line here. If you can buy in to a VPS at the lowest possible level you can always throw more hardware and more money at the problem later when you do have paying customers. So thanks for the questions Brent.

[08:09] Our next one comes in from Joel and he says hi Mike and Rob. My question is how do you know when to pivot? I’ve been putting it off because I feel that many entrepreneurs pivot too early. My Saas app launched three years ago and is making a steady income. It’s a horizontal membership management tool for nonprofits but I found that 80% of my customers are youth ministries. Targeting this market specifically might have an upside but it’s not a guarantee and I don’t want to lose the other 20%. So what’s the rule on when to pivot to a specific vertical? Is it 80-20, 90-10 60-40 or something else? Thanks. Joel.

[08:38] Rob: I guess it really depends on the growth. So first of all I don’t think there is a role. I think it’s got to be a gut feeling. I think that putting it off as long as possible is probably a good thing because I also think a lot of entrepreneurs pivot too early. With that said, if you’ve been flat in terms of earning for 6-12 months and you’ve tried all the marketing approaches and the optimization and I mean whatever approaches you can to grow this and its not growing, then that’s where I start thinking about not pivoting but about either niching down which is what you’re looking at or niching out, deniching and going to a more horizontal.

[09:13] Since you’re already horizontal, I would consider just putting a landing page or kind of a mini marketing side together for the niche for the youth ministry niche that you’re looking at. And experiment with starting to drive traffic to that page and set to the home page if they’re coming from the youth ministry places. Or if you already have a bunch of organic traffic and it’s all going to the home page, then switch the home page and then add a separate landing page for everybody else for the generic version and start trying to send your generic traffic there.

[09:41] I don’t know if that’s as much a pivot as just trying to position yourself. Right? Trying to hit different audiences with your marketing. It actually requires major feature revamps, that’s what I would consider that’s a product pivot. You’re talking more about a market pivot, a market or a marketing pivot and those two are of different levels of effort because market and marketing can be changed fairly quickly whereas product involves getting developers involved, writing new features, changing on boarding, changing on boarding email sequences, it’s a whole different deal. So if it has been a while and you haven’t had growth I would first look at trying to do a market pivot but almost splitting it like I said where you have multiple sites and landing pages and you can cater to multiple markets and only kind of worst case would I then think about okay am I really going to change the app in order to cater to this audience?

[10:31] And I would also ask, is there a way that you can find this out without going and writing code? What’s the quickest way to validate this assumption? Could you ask your existing customers? Could you ask your existing trial users? Do you have an existing email list of people who’ve been going through a mini course that are just prospects and not even trial users. Could you try to survey those three audiences with questions that will get rid of this assumption so you’re not just guessing but you’re actually getting some data upfront that can help guide this whether you make this pivot and then what kind of pivot it needs to be.

[11:02] Mike: Yeah as Rob was talking, one of the things that I thought about was there’s a website that I’d look at a while back for managing membership website called groups is grou.ps and if you go to their website, they have – it seems like if you start looking at their website, and try and figure out whether or not it’s applicable to you, they have like all these different landing pages all over the place that target all of these different niche markets that might want to use their product like they’ll have specific areas and landing pages for youth ministries. They’ll have one for coaches, college coaches, high school coaches. They’ll have some in there for like ballets, just all this stuff in there that they’re trying to market to all of these different things.

[11:41] And it seems to me like if you’re a small business, it seems like doing a lot of those all at once is probably very, very difficult to do and I think that Rob’s kind of on the right track going down and in figuring out whether or not you can validate those assumptions about whether or not the specific markets are going to be more applicable or kind of the valuable area to go after even if you ignored those other ones. I mean can you market much more effectively the app to just youth ministries versus that other 20% was your message getting deluded by trying to gather that other 20% and increase that percentage.

[12:14] It almost feels like if you’re not doing that already and you’re kind of originally gathering that 80% already, it almost seems like doubling down on that would probably be the way to go. I mean it seems like if you focus on them, you would probably attract a lot more than you already are because they may not be finding you. How are these people getting to your website? I would start backtracking a little bit and see if maybe your marketing message is getting spread through these ministries? I mean maybe that’s where a lot of the source of your marketing efforts are coming from, it’s not from you directly it’s from these people sharing the word. They go to conferences or talk to each other and say hey, well how do you manage your membership? How do you get people to come in a lot more? And maybe they’re sharing it. So it maybe has this sort of viral component to it that other industries that might use your products might not have. So Joel, hope that helps. Thanks for the question.

[12:58] Our next one comes in from Stefan and he says hi guys long time listener here. I have a question for you about Saas billing. Do you use a specialized payment provider such as Chagify, Recurly or ChargeBee to handle recurring payments done in retry management or do you manage all this through custom code? I’m looking to switch to one of these providers as my biggest headache right now is managing failed payments. It’s turning into a real time sync. As you know, customers do not like updating credit card details. All the best, Stefan.

[13:26] Rob: So I don’t use Chargify or Recurly. In some apps we use PayPal subscription which I don’t recommend. In other apps we use Stripe and we custom code everything because I want to be in full control of everything. I would actually recommend going to Stripe and using their subscription API. They will handle a bunch of that stuff for you. They handle the dunning emails. The retry manage all that stuff and it just requires – there’s no extra cost for that. The nice part about doing that is its cheaper than using Chargify Recurly or ChargeBee me because they add an extra percentage on top of a service like Stripe.

[14:03] In addition, once you get that going, there are some providers that are now tying into Stripe that are doing like phone calls to your customers to get them to update credit cards. So one that I know of is called Churn Buster. Its churnbuster.io I’ve had a look inside that but I can’t use it. I would use it in a heartbeat but I can’t use it because with Drip and HitTail we don’t use a subscription API. We just use the bare bones make a charge API and we have all the scheduling and the retry and stuff built into our code.

[14:33] Now the reason we did it that way is 1) because it didn’t take that much time to write. We already had it built for another app but we’re able to just move it in and 2) because there’s some really fine subtleties that I wanted to be in control of in terms of upgrading and downgrading on a monthly basis based on usage and if you have that it does get a little more complicated because you have to keep hitting and updating subscriptions through the subscription API but all that said, if you can, let’s say you have a reason not to, I would consider using that subscription API because not only do they give you the basis for it but then there are these other services tying it into that I think can help with the dunning emails and the retry management that you’re talking about.

[15:10] Mike: Yeah. The only downside to using that which I use it for one of my apps is you basically have to create web books on your side to be able to handle those call backs to your application to be able to perform those different actions which is not a terribly big deal I don’t think because you’re still going to have to write code to handle a lot of the stuff anyway. Another option is to use bestunning.net and they have basically a mechanism that hooks into that stuff for you and again you’re probably going to have to write some code there as well.

[15:38] Personally I kind of went the custom route just like Rob said to just kind of be in control of the entire process from beginning to end and you know exactly what’s going on and if you have special cases, you don’t have to worry about it. You don’t have to worry about working around somebody else’s API. You don’t have to worry about somebody else doing something that’s going to break your stuff. The biggest thing that I have to worry about is whether or not Stripe is up and running and whether everything works properly. As long as they’re making sure that all their code is backwards compatible with other API’s I really don’t have to worry too much about it. If you don’t have the time then definitely use one of those other options but I think that if you do, then investing in writing that code yourself is probably a better option. So thanks for the question Stefan.

[16:15] Our next question comes from Khalil and he says hi Mike and Rob. I’m building a startup in Saudi Arabia which involves a centralized website to act as a portal for patients in the kingdom to create appointments with any medical provider in the region online. Currently we’re looking for an early adaptor for our system but all medical centers that we’ve visited so far is skeptical of having an integration with our system. What do you think we should do? How do I get enough trust form these people to have them act as an early adapter for a medical application?

[16:45] Rob: As a first time bootstrapper, I don’t know that I would go after medical applications. In the US they have HIPAA laws which are the health privacy act laws and they are very, very strict and it requires a lot of work and typically medical providers won’t work with some bootstrapper like a single founder with no funding and just kind of person off the streets so to speak. It’s tough to say. I would hate to tell you to bail on this idea but this seems like an uphill battle. If you can’t even get people to talk to you about how are you actually going to make sales on the long run?

[17:18] Mike: It sounds to me like the value proposition doesn’t overcome the trust issue. I don’t know exactly how you would overcome that trust issue, I mean really, maybe you go after universities where they have a little bit more openness with regards to the information that they’re sharing for example. So there’s any sort of clinical research or something like that on going on where they’re going to be publishing and sharing the results of those things, then potentially that’s an avenue but I think that going after those medical centers directly would probably be difficult just for the reasons that Rob pointed out.

[17:48] Rob: Try an alternate route first because you’re trying to attack that problem head-on right now. Right? You just go into the big medical place trying to go in there but if you can figure out someone who maybe doesn’t have the restrictions of the medical privacy like Mike said, people are doing research or someone who’s already make it public or just somewhere where it’s a little bit of an easier in, that’s what I would look to do because the value proposition outweighs the risk.

[18:10] If you’ve tried to validate that and you’ve talked to 10 facility and they all basically said no chance, then to me you’ve kind of validated that the assumption is incorrect so then the next step is what do you do? I don’t think it’s well how do I build trust? How you build trust is you’d raise a bunch of money and build a huge product and I mean that’s how you build trust. You say we’re backed by so and so. What are they going to trust? What name can you have on your board or what name can you have as an investor or what certification do you need? I mean these are the things that would build trust but all of those things has completely changed the shift of your business. They’re expensive, all of these things make it really, really hard. To me it’s a non bootstrapper friendly business at that point.

[18:50] And so that’s what I would look as how can you take this idea and move it into something that is not either so heavily regulated or just so heavily not as willing to move forward with new technology like the medical field probably is.

[19:01] Mike: My thought with modern pivot there was that you could essentially leverage the university’s name and say we’re working with this university over here and they’re using it. So it’s good enough for them. And a lot of those universities have relationships with hospitals and medical centers in the region because if they trained doctors at the university then those doctors need to go to do their residency some place and you can kind of leverage their name.

[19:28] Now, it’s not say that you don’t go after that and just stay there. I mean that’s entirely possible. It maybe that it’s very lucrative to stay over there but I think that would probably be the easiest way but as Rob said, just going head on is just probably not going to work. It seems like you’ve validated that’s not going to work. I think that the appropriate thing to do would be to kind of pivot a little bit and then see if that works and if not maybe look around and see what your other options are. So thanks for the question Khalil.

[19:52] Our next question comes in from Paul. Hi Mike and Rob. I love your podcast. I’m very happy I found you guys. Here’s the issue I have. I run an ecommerce business in the past that I started from scratch that allowed me to learn every aspect of the business from marketing and technical to customer service and operations. It also helped me identify many gaps that are there in the ecommerce business. One of the gaps I identified was the inability for smaller merchants to obtain a discounted shipping rate from major couriers unless they ship large volumes. Also here are only a few order management systems that allow multichannel processing and provide shipping discounts.

[20:23] So about six months ago I decided to build a system that will integrate with multiple sales channels so that will multiple sales channel such as eBay, amazing, magenta, big commerce etcetera as well as shipping carriers. The system provides merchants with a simple way to print multiple shipping labels using discounted shipping rates. I was able to negotiate volume discounts with DHL and UPS and I’m now negotiating with the United States postal service. About halfway through development and I’ve dropped a significant portion of my savings into it which has put me in a slight state of anxiety. I find myself jumping around constantly changing scope from starting small and building a system for eBay only and for DHL.

[20:57] The next day I wake up and feel that customers would not be interested in only those two options and I changed the scope to eBay, Amazon and a major shopping cart working with DHL, UPS and FedEx. Listening to your lean startup episode kind of put things in perspective and I’m more confident about the strategy now.

[21:12] Rob: My first advice to Paul is I don’t think that you can go based on your gut feeling because day to day your gut feeling will change especially if there’s a lot of money on the line and you’re stressed about it. I think you should stop writing code and I think you should talk to people who are willing to pay you money for this. I would try to connect if you’re not already connected with the tropical MBA audience, there’s ecommerce podcasts, there is the Dan and Ian’s DC. There’s a lot of ecommerce folks in that space who are they’re nice folks. They’re willing to lend an ear and if you run an ecommerce site you may know a few but that would be my question is what are they doing and what can you build for one customer or five customers who are willing to pay you money?

[21:53] So if they only need eBay and DHL and they’re like yes I would pay X amount for that, find them and build the product for them. But if they say no, it has to have all these things, then either decide to build all those things which sounds like a ton of work to me or find someone who has a little simpler use case.

[22:07] Mike: You get those first couple of customers that need one of them. I mean I can’t imagine that a small retailer would have a preference for who they want to use. Do they want to use DHL or UPS or FedEx or the postal service? It seems to me like they would have a preference and on their website they’re probably only offering one or two of those options. So build those options for that one customer and then expand from there. I don’t think that you need to launch with all of them. You need somebody to pay money of course but starting with one customer, two customers or three customers who have overlapping needs, that helps gets you where you need to be and eventually down the road sure you can put those other things in the roadmap but I don’t think that they need to be there on day one.

[22:45] Rob: Right. And this is something that Dan Norris had talked about who launched informally where he built 15 integrations or something. He said he regretted doing that he should’ve started with one, figure out if it was valuable and then expanded from there. So I will link towards that. I would also say you mentioned the value proposition. There’s these two sentences. You said one of the gaps that I identified was inability for smaller merchants to obtain discounted shipping rate unless they have large volume. So that’s one value prop. Then you say also there are only a few order management systems that allow multichannel processing and provide shipping discounts. So we have discounts and we multichannel processing. Which of those is most important? Which one is the wakeup in the middle of the night what are the ecommerce people really want? Do they want discounts or do they want multichannel?

[23:27] Because my guess is it’s not both. And if you dump one of those, you make this a lot simpler because if you dump the multichannel, and you just go after discounts then I would just start with one provider. Right? But if you find out that no, these guys really want multichannel and discounts would be nice, obviously discounts are always nice. Right? But the multichannel is super important, then your revenue model comes into place. Because if the discounts aren’t as important then you can take the cut or you have some play there. But trying to offer both discounts and multichannel I guess there’s a reason that hasn’t been done already either dealing with complexity or price so I think you kind of want to nail then that single value prop of these early stages of bootstrapper you can’t serve too many masters with your product.

[24:08] Mike: Yeah. It seems like going overboard on simplifying it would probably be appropriate because if you get rid of the multichannel and then just focus on the discounts it makes your marketing proposition a lot easier too because you can say hey if you sign up for this service, we’ll be able to get you volume discounts and well be able to save you X dollars a month on your shipping based on whatever percentage is and we’re only going to charge this month to you. So it’s a no brainer at that point. It makes selling people very, very easy at that point.

[24:34] Rob: Right. Get big company discounts even if you’re low volume. Right. I mean that’s kind of the headline that I would start with if that’s truly the value prop.

[24:43] Mike: So second point was I want to your opinion about my business model. Most of the competitors out there are all based on monthly premiums ranging from $50 to $150 monthly. I thought that I would not be changing my customers anything but take a small cut of the shipping labels that they print. Being that I’m providing a discounted rate I thought I would charge a small percentage of the label cost without the customer ever feeling impact.

[25:02] I think this is a bad idea and the reason is because you almost get into the situation where you’re going to end up with a lot of people signing up because they want to check it out because they’re not paying a monthly fee and whether they use it or not is almost immaterial to them because if they only pay for it when they use it then if they’re going to use it a lot then great. But you may very well end up attracting a lot of the people who don’t necessarily have a lot of money. They don’t have enough volume and you’re going to have a thousand customers that give you like pennies on each month. And I would be very concerned about that.

[25:38] I mean you’d much rather have 50 customers paying you $50 a month than 1,000 or 2,000 customers each of whom you’re only getting maybe $3-$5 a month because they’re only shipping out one or two things. That would be an area of big concern to me.

[25:53] Rob: I have concern I think this could work but I think it needs a specific couple things to fall into place. 1) That percentage should not be small. You need to make a substantial amount on each package and that’s where I was saying if you can nail it down that they really just want the multichannel, you don’t even need to talk about discounts. There’s a company right now and I forget if there called shipped or ship it, they are making all their money because they give these massive volume discounts and they will take your stuff and ship it for you but they just charge you the rack rate, the list price for the UPS stuff and they take the entire float in between that and that can be several dollars per shipment and that’s the kind of revenue you’re going to need especially if you’re going after small ecommerce sites so what do they ship? 10 things a month? 30, 40, 50 things a month? We’re not talking about thousands a month or else they’d get the volume discount.

[26:44] So if someone’s only shipping 20 things a month and you’re making 20 cents per then you’re making $4 a month off you customer. You’re done. You’re never going to be able to acquire customer for less than that. So if you are going to try to go after this model, I’m talking a buck, $1.50 per shipment that you need to make and so then those 20 shipments actually makes you $20-30 a month and if they stick around then you do have some kind of lifetime value there. I like the idea of trying to go around the monthly subscription model that the other guys are doing however you’re a bootstrapper and that makes it a lot harder because the clearest path to revenue and profitability for you is to have recurring revenue.

[27:25] And so to me, this can be something to try out but in the first month or two, if you have people signing up and their volume is really low and you’re not making enough money, I have seen a number of companies including shoppify. When shopify first launched, all it was was a cut. It was a percentage. There was no monthly fee. Within six months they had a $20 monthly fee and now if you look at them, their monthly fees are pretty substantial to be honest based on volume. And the reason they did that is because that’s the way you grow and that’s the way you actually build a profitable business is having these monthly fees for better or worse I know that some customers may not like them but the customers that do and the customers that actually are willing to pay it are going to be the best customers. Those are the ones that you really want to get in and use the product.

[28:08] So I’m a little concerned about it. The ones that I know that take that percentage are typically funded companies and they can outlast. And in fact if you go back and watch Jason Cohen’s talk from MicroConf 2013 he talks about the idea of bootstrapped business and he says don’t build a business where you’re taking a small percentage off of each transaction because you’re probably not going to get to the level of volume. And so that’s what I’m saying. If you do take a percentage, it needs to be a large one.

[28:32] Mike: His third question is what do you think is the best approach to make this type of product? I thought it was just starting out with 1-2 customers and have them running with it for some time. I could also use my ecommerce business for testing.

[28:41] Rob: That’s two different questions. Right? One is how do you market this and two is like you’re talking about doing customer development. For customer development I would hope that by this point that you have 5 or 10 people lined up that are really chomping at the bit to use it. If you don’t, please stop writing code and please go find these people whether it’s through your network which is probably where I’d start, whether it’s their forums, whether it’s through writing into tropical MBA podcast, whether it’s I don’t want to get down and send a bunch of email but it’s that’s type of audience where there’s going to be people who can at least tell you if they need it or not. Right? It’s going to be an easy discussion when you talk to 30-40 of ecommerce vendors and they all say hey, this is fantastic. Heck yes, build this. This is what I need. Or they all say this isn’t really solving my problem. And that latter response is going to be really disappointing to hear but it’s better than continuing down a path that may not yield you anything in the end.

[29:34] Mike: Right and those discussions are going to help you formulate what the best approach to market the product is because they’re going to tell you where they would’ve searched for it or where they already searched for it and what sorts of things that they’ve looked at and what they found lacking. I mean just talking to customers and asking them bluntly what else have you tried or what else have you used to solve this problem that has not worked? You get that answer back from people and they will tell you not only what they’ve tired but why it didn’t work for them.

[30:00] And that can guide you to figure out how your products needs to be positioned in terms of the negative marketing effects to say this is not how we work. We do this other thing over here and you tell that to people upfront because chances are really good that other people have encountered that same problem and they tried whatever the other solution was, it didn’t work for them and the reasons were the same. And you can leverage that to your advantage with your own application.

[30:26] Rob: Yeah and I think the answer to the first part which is what is the best approach to market the separate product, its every marketing approach that I would use for any SaaS app because that’s essentially what this is. There’s SEO. There’s content marketing. There’s paid acquisition. I mean it’s all the stuff that I would use. There’s no best approach. It’s that you have to try a bunch of stuff, figure out what works and double down on them.

[30:45] Mike: And his last question is my other concern is the competition. These guys were all pretty big with deep pockets and provide many more features in a shooter period of time. I would argue that’s probably not true. The fact that they’re bigger means that they’re probably going to ignore you and even if you come out with some great feature, they’re probably just – even if they do see it, they’re probably just not going to bother implementing it because it’s just going to take so much time to implement it in their environment because of corporate red tape. If they are that big, they will largely ignore you until you start stealing enough business and any given market where they have sales reps and they will notice at that point.

[31:21] But I remember talking to the VP of marketing of several companies that have been purchased under his watch and he basically said flat out he’s like large companies will not notice you until multiple sales reps have their deals stolen from them and they tell their manager in the same quarter because there’s relatively high turnover there and you just will not get notched. I would not worry about that.

[31:46] Rob: I think the only thing you need to figure out is how are we going to answer the question when someone says how is your product different than big competitor? Right? You need to be able to answer that in one sentence very quickly and not need paragraphs of like well we have these other features and we have blah, blah it’s like what is the value prop? You can say well they only do one shipper and we do all five or they don’t gave you bulk discounts even if you’re a small vendor. Those are the two things that you’ve mentioned that peaked my interest the most.

[32:15] So if they do both of these things then I don’t know what your competitive advantage is. And if they don’t do those things but those things aren’t important to potential customers then you’re going to have a real struggle. But in terms of big competitors, I would not even worry about them at this point especially if you’re building something that is different enough that small businesses will take notice.

[32:36] Mike: So Paul thanks for the question and we have a second Paul for our last question. He says hey guys, I started listening to the show a couple months ago and its really changed how I think about my startup. Want to say thanks to both of you for such an awesome podcast. My question is this. I sell downloadable shrink wrap software, analytic tools like Kiss Metrics make it possible to see that Joe visited my website, browsed some pages, subscribed to a mailing list and downloaded the software. But then there’s a disconnect. Joe works for a big company and his company only buys software from approved vendors so the person who enters their credit card to buy the software usually isn’t Joe. They may even work from a different company. From analytics point of view, are there ways to know that it was Joe who eventually bought a license even though someone else actually paid for it? How can I test ways to increase the chance that Joe will buy a license if I can’t tell whether Joe did buy a license? Thanks. All the best.

[33:20] Rob: Well, first thing is you can’t. I mean there’s no way to do it for sure. But the first thing I would do is start doing email domain match ups. I know you said it could be from a separate company. My guess is that’s less of the time. So if you can start matching up the domain name of the email address, cross everything right across your marketing funnel, your trials, your downloads, your page, your customers and just match those up then it can at least give you some insight that there were multiple people from the same company looking at and buying.

[33:49] We’ve done this. I’ve done this with .net invoice because we see similar stuff or multiple people from the same company evaluated and a different person buys. So that’s a decent way to do it. The other way I would do is when someone buys a license, I would either have a question right there when they buy it or I would have email follow-up that basically says how did you hear about this? Can you please let us know if you’re buying this? Are you buying this on behalf of someone else? How about that question on the purchase page? Ask if they’ll enter a name or enter an email or enter a company name. Just try to get a data point there. But that’s the only way.

[34:20] Mike: I mean in terms of something like Kiss Metrics, you’ve got all the data down to the point that where they downloaded the software, what you don’t have is the person who came in and actually made the purchase and should be able to basically hand some of that information off to a VA or something like that to have them basically take a look at that very last stage in the funnel where there’s a purchase being made.

[34:41] The other thing you could do is you could also try and match it up on the licensing itself. So when you send them a license, ask them to register the software and as part of the registration for the software ask them for their email address and you may be able to open up a browser something like that and get their cookie information that way but obviously that’s not going to work if they’re installing it on a server and they downloaded it from their desktop so there’s some issues there. But you may very well be able to get them to enter in their own personal email address there and use that as essentially a mechanism for feeding some of that information in. It’s not full proof. It’s probably the best you can do but I think that in general, I think this entire problem is pretty hard to solve.

[35:20] Music

[35:24] Rob: If you have a question for us, call our voicemail number at 1-888-801-9690 or email us at questions@startupsfortherestofus.com. Our theme music is an excerpt from “We’re Outta Control” by MoOt used under Creative Commons. Subscribe to us in iTunes by searching for startups or via RSS at startupsfortherestofus.com where you’ll also find a full transcript of each episode. Thanks for listening. See you next time.

Show Notes

• Dan’s 7-Day Startup Book

Transcript

[00:00] Rob: In this episode of Startups for the Rest of Us, Mike and I have Dan Norris on the show and we talk about five startup rules to live by. This is Startups for the Rest of Us: Episode 183.

[00:09] Music

[00:18] 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.

[00:26] Mike: And I’m Mike.

[00:27] Rob: And we’re here to share our experiences to help you avoid the same mistakes we’ve made. What’s the word this week Mike?

[00:32] Mike: I’m experimenting a little bit with some various bio hacks to help improve my overall health. Some things are just basic things like just going to the gym on a very regular basis but some of them are I’ll say a little bit out there and so far though it seems to be working. There are certain things that I’ve noticed for example. I’m working less hours and it feels like I should pull back on spending time working out but at the same time I recognize that if I do that then what’s going to happen is I’m going to spend those additional hours working on my products and stuff but at the same time, my productivity is going to drop. So it’s this weird state where I know in the back of my mind that I really shouldn’t do that but it’s like I want to.

[01:16] Rob: I’m a little confused. You’re working less hours by choice and that makes you feel like you should workout less?

[01:21] Mike: No. I’m working less hours and I’m spending that time instead working out.

[01:26] Rob: I see.

[01:27] Mike: So in the back of my mind I’m like I wish I had more time to work on this stuff. Where can I get that time from? and the natural place to get it from would be to stop working out.

[01:37] Rob: Exercise.

[01:38] Mike: Exactly. Exercise. But I know that if I do that, it’s going to negatively impact my productivity when I am working.

[01:42] Rob: When you are working, right.

[01:42] Mike: And the other thing, my wife’s a fitness instructor so she actually put together one of the workout routines for me and I tried it out and afterwards I gave her a call and I was like I think you’re trying to kill me because that was really rough. And she’s like it couldn’t have possibly been that bad and then she tried it and she’s like sorry.

[02:00] Rob: Nice. She was trying to kill you.

[02:04] Mike: I think so.

[02:06] Rob: Hey, I have a couple things this week. The first is a congratulations to a three time MicroConf attendee, his name’s Robert Grzesek and he writes software that controls mills which are little wood – well sometimes they’re very large but sometimes smaller, things that cut wood to make cabinets and to do really intricate cuts and he said that they take in the software, he’s been doing it full time for years. They’ve taken it as far as they could so they decided to actually launch their own mill to build some hardware. So we launched a kick starter and they wanted $30,000 and it was funded the first day. They’re now a $61,000 and they have 29 days to go still as the recording of this podcast. We’ll link it up in the show notes or you can also search on the Nomad CNC mill. So check it out for sure and congratulations to Robert for getting that up on kick starter.

[02:56] The other announcement from the community is Brennan Dunn is going to be on Edinburgh in Scotland in June. He’s going to be talking at the Our theme music is an excerpt from “We’re Outta Control” by MoOt used under Creative Commons. disruption and publishing conference on June 20^th. Brennan’s also looking at putting together a workshop about online marketing and starting a business so if you’re interested, if you know Brennan and you’re in the Edinburgh area, I would recommend that you drop him an email at brennan@planscope.io and let him know that you’re interested so that when he tours there he can be in touch.

[03:22] Mike: Very cool.

[03:23] Rob: So today Mike and I have the pleasure of welcoming Dan Norris on the show.

[03:27] Dan: Hi guys, thanks for having me. I’m super excited. I’m a huge fan of the show so I’m looking forward to the conversation.

[03:32] Rob: So Dan, if you haven’t heard of Dan, he has his own podcast. He has a blog. He has a startup or 2 or 3 at any given time. Dan I know I’m not doing what you’re up to justice. You want to get folks a little 30 second intro to what you’ve been up to the last year or two?

[03:47] Dan: I at the moment really got one business and that makes me very happy because in the last year we’ve had about 4 or 5. Most of them have failed. At the moment our business is WP Curve. I’m on the web press small jobs for $69 a month and we operate 24/7. About 10 months ago I had just kind of a big failure with my last startup and those were a couple of weeks away from needing to get a job. And I launched WP Curve in that time we signed up 250 customers and we’re up to about $16,000 a month and sort of experienced in the last 18 months a massive failure and the opposite of that as well.

[04:18] Rob: You tried to validate along the way. You built a list and then in the end it didn’t work out that well and so you wrote a post kind of postmorteming that and we walked through some of those steps and talked about lean startup and startup validation and stuff like that.

[04:29] Dan: Yeah and I contacted you guys recently because I’ve sort of written a book that talks about that journey that I went through about that failing business and what I got right with the current business and it talks about the validation aspect and the book’s called The Seven Day Startup so it’s about launching quickly and I think what we’re going to talk about today is some of those lessons.

[04:49] Rob: Yeah. That’s right. It was episode 142 called the startup validation work and then we did a follow-up episode 145 which was this lean startup work for bootstrappers. As Dan said, he contacted us, one chapter in particular stuck out to me. It’s either 13 or 14 business rules to live by, startup rules to live by. Which is it Dan? Is it business or startup?

[05:09] Dan: Well I talk about that a little bit in there. I think it depends what you like but I like the word startup because I think it sort of feels as if you’re working on something a little bit more exciting than just creating a job for yourself. So I like that word better than business.

[05:22] Rob: Cool. So today we’re going to be talking through a handful of these rules to live by. Obviously we won’t be able to get through all of them so I guess let’s dive into the first one. You have a rule, it says test every assumption. The biggest question I have about it is how is it possible to test every assumption?

[05:38] Dan: I mean this is being one of my biggest lessons and I think it’s the whole reason why I kind of had a year working on the business but didn’t work and seven days working on a business that did work because the business that I worked on for seven days I didn’t make any assumptions because I didn’t have time. So I simply just launched and didn’t know what the right pricing was. I didn’t know where the people wanted this. I didn’t validate it. There was no time for validation or pricing or anything. I just launched it and then I worried about all that stuff afterwards. As a result, the kind of hidden benefit was that all the decisions I made ended up being made based on real information from real customers rather than assumptions.

[06:14] So I suppose there’s a lot of ways to do it but I think especially for bootstrappers, the best way to do it is to launch as quickly as possible. That way, every decision you’re making is based on how people are responding whether they’re getting their wallets out, what they’re telling you about the product, how to improve it rather than sitting around kind of debating is this a big problem? Is it valid? Do I need to run some paid ads to test email opt-ins or whatever all that stuff and cutting a lot out of it and instead just making decisions based on real information from real people.

 

[06:42] Rob: You know what would you say to a founder who might be listening to this or an aspiring founder for that matter? Who he was in your shoes a year ago where you were working on a software product and you had to spend some time building something. You couldn’t just launch in seven days because you were building a Saas app. Whereas your new product is more of productize consulting. You have a staff who are doing things but you really didn’t need to spend time to build software upfront.

 

[07:06] Dan: Well, we’ve also launched a web press plug-in within one week during that period, it failed but I still followed the same process and I’ve got examples in my book of people who’ve launched businesses very quickly. A week is hard for a software business. It’s probably one of the harder ones to do but I think that’s a consideration for a bootstrapper. One other chapters in my book I go through like what is a good idea for a bootstrapper and the amount of time it takes to build the product is a consideration I think whether or not it’s a good idea. If you’re in a situation like you are where you’ve got a bunch of success and you’re kind of free to explore, you don’t need your next startup necessarily to be a big success. If it fails, you’ll be fine. That’s a different situation that I was in and probably a lot of your audience are in. In that situation, I think you’re better considering an idea that enables you to launch quickly and don’t think about a startup that’s going to take you 12 months to build for at least for your first one.

 

[07:53] Rob: Yeah on the show here we often say 4-6 months of part time work that’s kind of been the rinse that we’ve thrown out. You’re bringing the ball way back to the seven day thing. I suppose if its software maybe you’d give them a break and let them spend a month or something.

 

[08:07] Dan: No I think with the example that I run through with my own product it’s actually really cool because when I started my business informally it was effectively a analytics dashboard. It took me about 10 months before I really knew that it wasn’t going to work and it took me 6-8 months of full time work and many tens of thousands of dollars to get my first paying customer. And to run about the same time, Baremetrics, have you talked about Baremetrics on the show? Their stripe analytics?

 

[08:32] Rob: We haven’t but the owner Josh Pigford or the founder, he did an attendee talk at MicroConf.

 

[08:36] Dan: Yeah and that’s one of the examples I got for my book. He was able to start a business that was very similar to what I started but he was able to build it very, very quickly and he’s done extremely well in a very, very short timeframe. And there’s other examples as well. There’s a company called launch rock truck that launched on startup weekend and with a couple of days they’re on tech crunch and the within a couple of months they were funded. It’s difficult with software but it’s not impossible.

 

[08:59] Yeah, if you’re running a service, it’s definitely easier to launch quickly but I still think you’ll be better off at figuring out a way to test your assumptions properly. There’s another good example in the book where I talk about a guy who started a deal site for wine and his assumption was people didn’t necessarily need discounted wine. What his assumption was people would get a bunch of different wines and they didn’t know what they were going to get. So they pay $15 for a bottle of wine, they might get $100 bottle of wine or they might get a $15 bottle of wine. So it wasn’t necessarily cheaper but those surprise elements, so what he needed to test was will this side actually work? And he tested that by having a party and everyone who walked up at the party paid $15 for a bottle of wine and some people got a $15 bottle of wine, some people got a $100 bottle of wine.

 

[09:40] And he just looked at what people did and what they talked about, whether they engaged with each other, what they’re excited about the process and that was enough for him to get some validation around that the concept was right before you actually spend any time on software.

 

[09:51] Mike: It sounds to me like the whole premise behind testing every assumption is not necessarily about testing the assumptions. It’s about more about moving quickly and doing things as fast as possible so that you get to that point where you do have the data.

 

[10:05] Dan: Yeah. I think before you launch, I think it’s more about not having assumptions. If you can launch quickly and not really having assumptions before you launch, but after you launch, we just keep coming back to this in our business. it’s like every time we make a decision, we just think about okay are we making this because we are sharing something that we don’t actually know and if that’s true then what I’m going to actually ask your customers is it important that we offer 24/7 service? Is it important that we offer unlimited fixes? We assume it is but why don’t we just ask people make sure this is actually something that they care about before we kind of make decisions around those things. I think there’s a way you can interpret it before you launch, after you launch in every decision we make we try to do it without assumptions.

 

[10:40] Rob: I’m curious. You mentioned Josh with Baremetrics and how he did it in a week and that it took you 10 months. What was the difference there? Were the products really that similar or did you build a much larger product?

 

[10:52] Dan: I definitely built a much larger product but I did that because I was working on assumptions. The difference is before we launched, I built something that I thought I needed. He built something that he thought he needed but neither is new. So I spent a long time – like mine had a lot of integrations with about 15 different other products. So it was the analytics dashboard that brought in data from a whole bunch of places so it’s much more complex to build I imagine than Baremetrics was when he started. But at the same time, I only built that because I thought that’s what people wanted.

 

[11:19] So I made a massive mistake there in assuming that people actually wanted to pay for that. What he did was he thought people wanted to pay for it but he didn’t waste time trying to figure that out. He just launched it and then kind of just gained that natural momentum which is something we’ve noticed with this business but never happened with my last business. It just didn’t hit that point where it just started to kind of build on its own.

 

[11:38] Rob: Right. I like the idea of launching quick. I love hearing the story of Brennan Dunn launch a WordPress plug-in in a wakened and Josh obviously launched Baremetrics in a week. I just don’t know how far you can take that that. In terms of the analytics package you were developing, I know you were developing, I know it was large and let’s take a look at drip. I mean we basically spent four months half time and then another two months full time before we got it to market because it was just a bigger package. It sends email. It does real-time analytics. I validated it before hand as much as I possibly could by going outland having the conversations. I’m sure you’ve heard the story sending emails, getting people to commit to paying and all that’s tuff which I think you did some of that as well but it didn’t work out quite as well. I like the idea of what you’re saying like trying to get something out in seven days. I just don’t think it’s possible in every situation.

 

[12:24] Dan: Sure. There’s a few things on side to that. One is that what I needed to do with informally was to find out if people had this problem and I could’ve done that without software. I could’ve created a form where people clicked the button, connected to analytics, chose a bunch of their favorite services, click save and then give them a message and say your report will be ready in 24 hours. I mean with WP Curve, I had a live chat on my phone that sat next to my head every night I bed in case it went off for the first two months because I was offering 24/7 and it was just me.

 

[12:53] I could’ve done something exactly like that with – formally I could’ve said your report will be ready in one hour service and just processing the report and I could’ve just easily done it manually and presented the report to them and then asked them to pay. I couldn’t have done that in seven days as opposed to 10 months to build the actual whole application.

 

[13:09] Rob: That I like. That makes total sense. I’ve talked about doing that if I were to launch HitTail from scratch I wouldn’t go build software. I would do exactly as yours saying. I would have someone on the back end manually grading and ranking things based on the data someone submitted or Drip, we didn’t need – we really didn’t need to spend that much. It’s like you said, I was at a place where I could have a developer working on it but we could’ve won off – I already had the thing built on HitTail. I could’ve installed the widget manually on the next person’s site and we’ll link it up to a Mail Chimp account that I had secretly sending auto responders. I mean I totally could’ve cobbled that in a week so that I like. It’s the idea of an MVP is not a prototype that people get confused thinking MVP is a prototype. The MVP is just the minimum way to check that next assumption to validate…

 

[13:52] Dan: That’s exactly right and one of the quotes in the book was something like people focus on the minimum and not the vital which is I think the problem is they treat it like a product like you say and they focus on doing as little possible but is this actually viable for someone to actually pay for it and does it solve their problem? And that’s what you need to focus on and to do that quickly sometimes it’s not software you need to build. Sometimes there’s another way to build it. But the other thing I’d say about drip is I think it’s worth considering whether or not drip is a good idea for particularly a first time entrepreneur who’s bootstrapping.

 

[14:23] So in the book as I mentioned before, a list of criteria for good ideas and one of them is the ability to build it and test it quickly and Drip might be a good idea for 3^rd and 4^th time entrepreneur but it may not be a good idea for a first time entrepreneur because it might be just too hard and too competitive to build something like that. I’m sure a lot of people have come before you and in fact I know people who build similar products to this and they failed so I think that’s worth thinking about as well.

 

[14:48] Rob: Yeah I think that’s a good point. I have recommended people against going into this market because it is so competitive. So you’re right. I don’t think a first time bootstrapper should dive into this. Cool. I think that piggy backs really well on a second rule which is solve problems as they arise. Can you talk a little bit about what that looks like?

 

[15:04] Dan: I’m very big on this. Again, I mean the first 10 months of my last business, I mean I spent so long trying to get the perfect payment gateway. I could’ve set a pay – with this business I set a PayPal in 30 minutes. With the last one it took me six months to setup a US bank account and to setup brain tree and to get a really nice integrated seamless payment from within the app but why? It wasn’t a problem. So why was I even working on that?

 

[15:27] So now, as an example, we’re a support business and we didn’t have a support help desk until we got to 250 customers a couple weeks ago. We literally just got a support desk and we’ve been using Trello and it’s been working perfectly fine until it began a problem in which case we knew that we would have to upgrade and solve that problem. There’s a lot of examples like that in our business where if you focus on problems you actually have, you end up doing what your customers want you to do rather than kind of acting on assumptions and just working on a whole bunch of stuff that really doesn’t matter.

 

[15:56] Mike: That’s more about solving the problems that you have versus solving problems that you’re going to have.

 

[16:01] Dan: Exactly. And predicting the problems again I have is part of the problem is that people end up being very, very bad predictors of what’s going to happen in their business because there’s just way too many unknowns. Some people think of it like it’s some kind of experiment entrepreneurship but there’s just too many unknowns. When you launch it – because you don’t even know six months down the track if you’re going to be doing the same thing that you’ll be doing. So why on earth would you plan for like anything, a hosting, I’ve heard you talk about Rob with your setting up service or what not. It’s generally these problems. They’re easy to solve quickly then they shouldn’t be solved in a way where you’re trying to predict what’s going to happen because 99% of the time you’re going to be wrong and it will mean that you’re working on the wrong things.

 

[16:35] Rob: Yeah that’s right. It’s pretty mature optimization. And about how it’s so easy to prematurely optimize credit card payment gateways hosting. I mean I’ve seen people with $500 hosting plans, $500 a month dedicated hosting plans, signed a one year contract and then not get any traffic for six months and it’s just a waste of resources at that early phase.

 

[16:54] Dan: Yeah. The optimization thing is a big – I have a friend too who’s debating what help desk to install and he’s got – and I asked him how many customers do you have and he said I’ve got about 10 customers. And he spent a couple of weeks evaluating what help desk to install and I’m like what’s wrong with email? I mean we’ve got 200 customers and we have a help desk. Like that’s not a problem you should be solving. The problem you should e solving is you need more customers. You can’t have a business with only 10 low fee monthly customers.

 

[17:20] So I think if you try to solve problems that you don’t have, you end up not working on things that are really important. You kind of get distracted and optimization’s a big one like everything you read online is about optimizing through conversions or setting up your analytics or improving the SEO and everything’s about fine tuning something that’s already working. But when you start out, you haven’t got to the point where it’s working yet so you need to be focused on getting it working before you do any of the optimization stuff which I know you guys talk about a lot.

 

[17:46] Rob: Yeah. I think especially if software developers are starting businesses, we tend to gold plate our software because we’ve often worked in enterprises where you know, as soon as you deploy, a million people are going to be using it tomorrow. So you know that it has to be robust. So then when you step aside and you go to build your startup, your prototype basically or your MVP I should say, we are naturally inclined to gold plate it because we think we’re going to have a million users and we don’t want to have to change stuff down the line. And think it’s been a big lesson certainly for me 10 years ago as I stated learning these but if there’s something that you can easily or even with several days of work change later, then make the decision really fast. Right? Do the minimum amount of work and then fix it later.

 

[18:26] There are certain things that you can’t do that with data models are often really hard to change so I do tend to put a little bit flexibility to those and there’s certain other things. But for the most part, you can get around a lot of things later.

 

[18:38] Dan: Yeah.

 

[18:37] Rob: Cool. So let’s dive into our next point, your next rule which was look for sources of momentum. You want to tell us what you mean by that?

 

[18:46] Dan: Yeah. This is another interesting one. We’re talking about the Baremetrics story before and just the fact that – because I wanted to cover like the marketing that he did in my marketing chapter because I’ve got a chapter that talks about 20 different ways to market a business and I wanted to kind of learn how he marketed that and he basically emailed me and said all I did was told people about it after they signed up, people tweeted it and then it just grew. He tried a bunch of different ways of marketing it but what worked was people talking about it.

 

[19:12] And like with my last startup I focused so much on different ways of marketing and I think I had 25 different ways I was testing and I had a big post on your blog about all these different ways I’ve build an email list and different traffic strategies, everything else. But I just couldn’t get that point where I was getting any momentum. The only thing I’ve got momentum with was my content and that ended up being a big asset. But the actual business didn’t get any momentum. And with WP Curve, the opposite is being true like we haven’t done any marketing other than just doing what we do, our content, our podcast and what not. We haven’t done any paid acquisition. All we’ve done is encourage people to tell people about it and try to do a good job.

 

[19:47] Yeah, and the momentum itself is brought forward. So I think when people start businesses, they kind of hope they’re going to get to that point of momentum and that’s why I like the idea of launching very quickly so that you can tweak things or maybe you can just completely kill an idea just for whatever reason is just not getting that momentum and it’s hard to predict but when it happens, you’ll notice it and it happened with Baremetrics and this happened with us. I think that’s really what people want when they start. So looking after those, it might not be like in your actual business as well like I said without content I noticed that traffic momentum was really good like I was starting to get rankings and traffic and mentions and back links and everything for our content.

 

[20:24] So we really doubled down on that and that’s when I ended up kind of building our list and enabling us to keep up WP Curve. For other businesses, there might be something else but for me I noticed content and I noticed this particular idea was starting to build momentum and then it just sort of gets a life of its own.

 

[20:38] Rob: Got it. So to be clear, you’re not saying that you should focus on word of mouth with this. You saying you should try several approaches and really pay attention to whichever one starts building momentum.

 

[20:48] Dan: Exactly. And I think that part of that as well is just relying on your own data or not making assumptions based on other data as well. So with the marketing, there might be 20 different ways you could potentially market something. 19 of them might not work for whatever reason. I mean it might work for someone else. They might not just work for you. Sometimes it’s just not a good fit with the founder and that’s something I’ve found like I’m just not good at certain types of marketing but I am good with other types of marketing and testing a bunch of stuff basically enables you to widdle down what’s working and find something where you can get that natural momentum and you just get an uplift that its sort of bigger than whatever you’re putting into word.

 

[21:25] And that’s when you really need I think to kick your business off. I think it’s very difficult to do the typical sort of four hour work week, send a bunch of ad words traffic to a page and then work out that you can make more money than you’re spending. I think that’s much, much more difficult than people realize and I think businesses do need that natural momentum so try a bunch of options, workout what works for you and for the business and stick with what works.

 

[21:44] Mike: Another thing I want to point out to our listeners is what you’re talking about here in terms of looking for sources of momentum is really about marketing and business momentum. It doesn’t really have anything to do with your own personal momentum, your own personal motivations which kind of leaves us directly into the next one which is managing your own motivation. We’ve kind of talked a little bit about that and what you mean by managing your own motivation versus the momentum of the business.

 

[22:08] Dan: Yeah, I think momentum covers every aspect of business. Motivation is so important that you can’t oversight how important it is. I don’t know exactly how to go about keeping that passion for the whole time you’ve got a business but you really need to love what you’re doing. You need to visualize what you’ll be doing everyday in your business. That’s one thing I kind of point I’m trying to make in the book is what will we actually be doing during the day? Every day in your business. And do you love doing that? What would you do what job doing that? I’ve started businesses where I’m doing cheap E-commerce type stuff like iPhone cases and stuff like that. And it meant that I had to sit around packing envelopes all day and it was horrible and I hated it and it failed.

 

[22:47] I mean that’s very, very easily avoided because I knew that I just didn’t want to sit around packing envelopes. So I think it’s definitely worth thinking about how your idea is going to manifest in terms of your daily work. If you were thinking about a cofounder, I think that’s been a huge motivation factor for me and momentum has role as well. I mean even just the success of our content is a really big motivating factor for us, the vanity metrics all going up is a motivating factor. Relationships and networks, all that kind of stuff. And helping other people, all that kind of stuff really helps you wake up in the morning and love what you do and that’s something that’s kind of a rule that you need to live by otherwise you’re just going to burn yourself out and fail or just want to get back and get a job because it can be tough.

 

[23:52] Rob: Yeah, I think a big driver for me in terms of motivation lately especially has been community. It’s both my mastermind groups as well as the Micropreneur in the academy and at MicroConf and then here at my local tech scene. I live in Fresno, California and 3-4 years ago there really wasn’t much of a tech scene but one has formed here down town. And I have a little office with 26-27 other software companies and that is it’s amazing to go down with the energy and just being able to be around other people. So I’m a big proponent of being around others who are doing interesting things and are not – the more you hangout with other folks who are doing salary gigs and you’re trying to do something interesting it’s like they just talk about different things and they think about different things and they complain about different things. Not the same mindset that we do. I think community really plays a big part of that especially for me.

 

[24:15] Dan: Yeah and one thing that a lot of people do is work from home by themselves and they kind of think that working from home is going to be this amazing thing but it’s actually not that much fun to sit around by yourself at your computer working. That’s definitely consideration for motivation. I’d like to talk to you about what you’re doing locally because I’d like to do something here. Just get that same.

 

[24:33] But I think what you guys do with the content as well and with the event, you’re helping a lot of people and that’s sort of – because you’re putting into the community you’re also getting back from the community and I think that’s probably a really big thing for people to consider. And we try to like be generous with our time and give a lot of our content out to other places and do lots of interviews and just take calls of people who have questions and that kind of stuff is a really big motivator as well.

 

[24:57] Rob: The last rule we’ll look at today, Dan you have many more in your book as I mentioned, is manage churn. You want to tell us what that’s about?

 

[25:04] Dan: Yeah. I like this and this assumes you’ve got kind of a recurring business where you know when someone stops using your service. People will leave and I like the idea of really focusing on that because it gets you focusing on exactly what your customers think about your service. It might be a better way of putting it is lose retention rather than focusing on the negative. But we had Sean Ellis on our podcast and we were kind of looking for a bunch of growth hacks from me to work out how we could grow the business and his basic message was you need to look at retention and referral. So you need to look at do people want to stay on as a customer? If not, why not? And do they tell other people about it and refer other people and that’s what’s growing our business despite all the content we do and everything else we do.

 

[25:46] It’s literally just about making sure that what we’re doing is good quality and the customers care about it and sometimes it’s difficult to know that but if customers start leaving which they will then that’s a really good point to work at exactly why. And what we did there is just send them a really simple email. We’ve tried a bunch of things. This one works better than the others and we just send them an email with the subject did we do something wrong? And it’s just one line that says I noticed you canceled. Did we do something wrong? That forces most people to reply. We ask them why. They left, they won’t tell us. But if we asked them did we do something wrong, they’ll tell us exactly why they left.

 

[16:15] And that encourages the appeal of your service to customers because you’re effectively stopping people from leaving which means you’re making them happier and improving your product and that’s probably – I mean focus on product was another thing I had in my list. It’s effectively the same thing. It’s focusing on making sure people love your product so much they stay and they refer to other people.

 

[26:32] Rob: Yeah. I really like how Sean Ellis [0:26:33] [Inaudible] there with. Are they telling other people and are they sticking around? Right? Because I think there is a lot more discussion online about optimization as you said, driving traffic, those are the approaches. There’s less and less said the further down the funnel you get. And as you get to the point of I actually have customers, how do I keep them and then how do I get the customers to tell other people. Those are super advanced things and we don’t tend to get into them. And I don’t mean advanced by they’re complicated. I just mean that I don’t think there’s nearly as much information about those topics than the ones at the front end and I think the reason is most people are in the beginning stages and they’re not the point where worrying about churn maters because like you said they only have 10 customers or they have 0 customers and they’re still building and just driving traffic at that point is perhaps the bigger concern.

 

[27:19] But I definitely like the one line email that you’re sending with Drip we do the same thing when people cancel. The email is a little different. It’s two lines. And it’s from me, from the CEO and it basically says please respond even if you only have time to write one line, I’d really appreciate it and it’s an enormous reply rate. And I get a lot of good feedback about pricing or just that they’re in a different situation. they’re a blogger and it’s too expensive and they can use a free plan or some other tool or even if it’s not something that I’m directly going to build a new feature, at least I have an idea of who our product is really working for and who and why it’s not working. And the audience of who and why it’s not working for them.

 

[27:53] Dan: That’s right. You learn a lot from there. There’s a lot of problems that you can solve that come as a result of asking people that like we have a lot of people – not a lot of people. It’s not uncommon for people to sign up with us and then cancel after a day because they assume something in that service like I assumed it was some multiple websites or the [0:28:09] [Inaudible] agency and we can support all their clients for $69 or whatever. So those problems can be easily fixed. We wouldn’t have necessarily known that but because they arise occasionally then that can be easily fixed by changing the copy on the website.

 

[28:21] And as you said, a big factor in churn is who are the people to start with? Who are the people you’re attracting in the business to start with and are they the right people? And once you start realizing the types of people that leave, you can start honing in on the types of people that don’t leave and therefore getting those to your side on the first place and focusing on working on how you can get those people as customers which is going to increase your retention overall.

 

[28:42] Mike: I think the other thing about churn that most people don’t necessarily think about out-front is if you got 100 customers and you lose five of them in a month it’s like okay well that kind of sucks but I can probably scrounge up five more customers but what happens when you get to 500 customers or 1,000 customers because then, those things, the churn starts to scale up as well as the percentage may stay the same but the actual number of customers increases.

 

[29:07] So if you have a 5% monthly churn, by the end of the year you’ve actually got a 54% yearly churn which is just abysmal for your business. I mean it will kill it and you have to be able to address those issues and make your product or your service better. And if you’re not doing those things, if you’re not actively focusing on reducing and managing that churn it will eventually kill your business because you’ll get to a point where you’re losing more customers than you’re gaining.

 

[29:30] Dan: That’s right. And I think the solution may not be simple either and I think some businesses have more churn and others like a service. With ours, it’s always going to have a bit more churn and like hosting for example where people just aren’t going to leave unless the provider does something bad. They’re just going to stick around. Whereas with ours, we need to keep our value. So the solution to churn might be totally different but it’s something that we’re really, really conscious of. It’s kind of a complex thing. I don’t know if you talked it on your show about metrics and stuff with churn but if you haven’t I’ll send you some notes and links that might be useful for your audience.

 

[29:58] Rob: Yeah. We probably need to dive into it in a future episode because it is very complicated. Even just building a churn dashboard is hard because you have to have all these cohorts and there’s a lot of different ways to interpret things. Do you include annual plans? Do you include comp people? I mean there’s this whole if people can’t cancel, if they churn because of credit card failure versus voluntary churn, tons of stuff. And then as you said, it’s never one thing that you need to do to fix all your churn. There’s typically like 8 different things to serve 8 different audiences who are cancelling.

 

[30:28] And as a note, folks if you listen to think one, there’s an Saas app or planning to launch one, there’s an app that’s called keepify.com and it helps at least does some predictive work for you to figure out who’s going to be canceling soon based on behavior.

 

[30:43] Dan: Yeah I think like you can get carried away with all the metrics and that may not be so useful to someone who’s just starting. But what is useful is focusing on your product and working out why people are leaving. And that’s why churn is useful because you’ll get direct information from customers that tells you honestly why they left and that’s something that you should be focusing on because it’s product and if you improved the product then you increase retention and you increase referrals.

 

[31:05] Rob: Very good Dan. Thanks for joining us today. Do you want to give folks an idea of where they can find a book? Because obviously we’ve just spoken about 5 of the 14 rules you have and then you have another dozen or so chapters and I think the book is free. Is that right?

 

[31:18] Dan: Yeah. It’s not out yet but it shouldn’t be too far off. If you go to wpcurve.com/sevendaystartup at the moment it’s just a landing page for an email opt-in, that’s the list that I use to email. I send one weekly email and I’ll send the book through to that list. When the book’s actually out, we’ll just put it up so people can grab it. Might be able to send you a direct link but it’s still a few weeks away.

 

[31:37] Rob: Very cool. Well thanks again for coming on the show man. It was good to have you.

 

[31:40] Dan: Yeah hopefully it’s useful if people got any questions I’m just dan@wpcurve.com feel free to send me an email.

 

[31:45] Rob: And you also blog at…

 

[31:47] Dan: Yeah everything’s wpcurve.com so I didn’t really delve into that but that’s some – we’ve kind of put all of our stuff on to that site now so wpcurve.com/blog and there’s about 300 posts up there. Just eBooks and email courses and a whole bunch of stuff. A lot of that stuff is not really WordPress related. It’s kind of startup and business type related so that’s going to be useful for your audiences podcast with Sean Ellis and Noah Keg are portably the two recent one that we’ve done are the best for your audience.

 

[32:14] Rob: Yeah. You put out a ton of content. You’re very open with what’s going on and over the last year or two as you’ve started businesses so it’s definitely a lot. If folks haven’t been over to WP Curve I would recommend checking out all your content.

 

[32:27] Dan: Thanks. I’d love to have you guys on the show soon as well.

 

[32:29] Rob: Yeah absolutely.

 

[32:30] Dan: Sounds good thanks for having me.

 

[32:32] Mike: Thanks Dan.

 

[32:33] Music

 

[32:26] Mike: If you have a question for us, you can call it to our voicemail number at 1-888-801-9690 or email it to us at questions@startupsfortherestofus.com. Our theme music is an excerpt from “We’re Outta Control” by MoOt used under Creative Commons. You can subscribe to us in iTunes by searching for startups or via RSS at startupsfortherestofus.com where you’ll also find a full transcript of each episode. Thanks for listening. We’ll see you next time.

 

 

 

Show Notes

Transcript

[00:00] Mike: This is Startups for the Rest of Us: Episode 182.

[00:04] Music

[00:10] 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.

[00:19] Rob: And I’m Rob.

[00:20] Mike: And we’re here to share our experiences to help you avoid the same mistakes we’ve made. What’s the word this week Rob?

[00:23] Rob: Well, feels good to get back in the swing of things after MicroConf last week. I spent about 8 hours going through email, had several hundred in the inbox but I go to inbox zero again yesterday. It feels good to get back working on Drip and HitTail again. Drip is still 1-2 weeks out from the launch of behavior email or email automation and I thought we were a couple weeks out a couple weeks ago but just due to us leaving for MicroConf and all that stuff things get delayed. Well we talked to the UI I should say with myself and Derek and we’re getting moving on it. I’m not doing a ton of marketing on Drip right now just because all the marketing changes once that’s out because we become a different tool for kind of a different audience to be honest. We still have our old capabilities but it’s just a different thing.

[01:10] Mike: Cool.

[01:11] Rob: How about you?

[01:12] Mike: I think I mentioned in the last podcast that I was taking a vacation out in the desert. The plan was to go out and drink whisky and smoke cigars and I had maybe one glass of whisky and no cigars the whole time. I actually fell asleep on Thursday like right next to the campfire twice in the same day.

[01:26] Rob: It’s exhausting. I felt the same way. I slept a lot. The extrovert hangover I kept saying.

[01:32] Mike: Gotcha. Well I think being in the desert it just dries you out and dehydrates you so even if you don’t drink, you still just wake up with a hangover.

[01:40] Rob: And I guess on the Brightside for me HitTail is looking to have one of its best growth months ever but just in monthly recurring revenue growth and it’s moving back towards in the previous high that I had it at and this is due to getting away from tracking code and using the Google web master tools importer. So it’s good to have a win now and again to keep you motivated. There was like several months there where it just felt like all losses and the winner, it discourages you especially if it comes during that dark and cold time of year, glad to kind of be through that and be able to kind of hang my hat on something for the time being. And it’s not that Drip is not doing well or that MicroConf was a success. Drip is doing well but to really have something going up into the right is always a good motivator.

[02:24] Music

[02:27] Mike: I guess we’re talking today about the state of AuditShark.

[02:30] Rob: There were several comments in I think it was in the 170’s. Folks just asking about AuditShark you hadn’t given a thorough update in a while. I know that there’s been stuff going on behind the scenes. Some of it is sensitive. Right? It’s stuff that you can’t necessarily just come out and say what’s going on because so we wanted to kind of get passed MicroConf and get to a point where we could spend a whole episode digging into a lot of the specific comments, thoughts, questions that folks had. And there were several different commuters on both sides of the table. There was a guy named Mathew, Larry Scott Charles and Josh, thanks for your comments. But I think we’re going to cover four main topics today. These are all brought up by commenters specifically.

[03:09] The first one is slow progress. Like what do you say to the slow progress of AuditShark? Second one is the target market like do you have a target market? And the next one is talking about features and development versus talking about marketing, talking more about writing code than talk about marketing and the last one is about whether you are following your own advice. Someone put it if you wrote in to startups for the rest of us, what would your advice to yourself be?

[03:33] So let’s dive into the first one here. We’re going to talk about slow progress. I have a couple quotes. One quote is what do you say to AuditShark and its very slow progress? The other one is in the episode about 12 ways to know when to bail on your project and that was episode 171 at least 10 ways clearly applied to AuditShark. Now I actually don’t think 10 of those ways. I think maybe half of them applied but what are your thoughts on this? You’ve been working on AuditShark I think or about four years now and you started with a target market of banks that didn’t work out you’ve since been looking for a target market and like web and online folks were the market for a while, it seems like that maybe has or hasn’t worked out and you’re working on new stuff. I guess the first thing that you should probably comment on is what do you say to the fact that AuditShark feels like it has pretty slow progress?

[04:22] Mike: Well I think that most people who listen to the podcast don’t necessarily realize that I own three different companies, one of them is a consulting company and then my software company and then the Micropreneur academy with you. And with the consulting company, really, I spend a huge amount of time there which I’m not particularly happy about but the fact is that I’ve spent years where I’ll spend between 40 and 45 weeks a year on the road. Of that time, I’ll fly out on a Sunday and I fly back on a Friday and between travel and the actual work schedule, I’m probably putting in 60+ hours a week just doing the consulting stuff.

[04:56] So it doesn’t leave a whole heck of a lot of time outside of that in order to work on it and that’s kind of why I really went down the road of hiring people to kind of bring in and help put different pieces of AuditShark together because I was spending so much time on the road and what that allowed me to do is it allowed me to do the consulting which is essentially high pay and then turn around and take that pay and allocate it to different contractors who cost significantly less than me and then I can manage them. But that’s still not easy to do because they’re still a huge latency you’ve got to deal with.

[05:26] But at the end of the day when you’re working 60 hours a week during the week from Monday to Friday and then you go home and you want to spend that time with your family. Realistically it’s hard to allocate a lot of extra time to AuditShark and I’ve been able to do it but it’s still hard.

[05:41] Rob: Right. And you’ve been working on it for four years. The first two years you were trying to code everything yourself and so you would come back from consulting and some weeks you were getting like three hours a week of coding but you were talking about it because there’s a product you’re working on but it wasn’t like you’re making these massive strides towards the goal and it wasn’t until you’re a couple years in that you really started and you were able to let go of some of the code base and kind of outsource it. And then that is when you actually started making more coding progress. Right?

[06:10 ] And you’ll notice a shift at that point. I don’t remember but what episode it was but a lot of feature started getting built at that point and then that wasn’t like another year and you were moving forward but what I think your blind spot during that time is I don’t think you went out and find the market or you thought that you had the market but it just wasn’t there and then that’s been like kind of the last year has been coming to that conclusion of like oh no, I missed the mark on this. The market that I thought wanted it doesn’t want it and then since then you’ve been trying to find what that is.

[06:36] Mike: Right. And that market was banks. I was originally going after small banks because I saw this list of I think it was around 8,000 banks or something like that 8,500 banks. And of those, only 10 took up the top 80 or 90% of the market. So the rest of the market was left of these much smaller banks and I thought oh well they have regulatory compliance. They need to do this stuff. And what I found out after talking to them, I realized that and I’ve already built a bunch of stuff they said yeah, we’re interested in that. And then when I went back to them and said hey, I’m almost ready to show you something, that was when I started getting into more in depth conversations with them they said well, actually we have a third party company come in and do those audits for us. We don’t do it on a regular basis.

[07:18] There were a couple of different things that kind of went through my mind at that point. One is like I could say I could go to the third party people that they have come in that these consultants but at that point it’s not necessarily going to be something that the banks are going to end up using on a regular basis. They basically need it once and then that’s it and they don’t need it again for another year and then I’m like well that’s not really an ideal Saas model for me. That’s not what I want.

[07:43] The other thing is I knew that scaling up and trying to go after a bunch of those companies was going to be somewhat difficult so I kind of backed off of that. I didn’t really want to go the third party auditor route at that time kind of looking back on it, it might have been a better idea but I guess I didn’t think hard enough about it.

[07:57] Rob: I think you were locked in the Saas. You really wanted the subscription revenue and you’re already year two into building this web app, this web version of AuditShark and that didn’t necessarily apply as well to third party auditors.

[08:11] Mike: It did but I missed it. And the reason I missed it and the reason I missed it was I was kind of focused on the idea that the banks would be using the software. So I was like oh, well the banks are only going to use it once a year. They really don’t need this so maybe I should go out and find another market. Completely overlooking the fact that if I went instead to those third party auditors and said hey, would you be willing to use this on each of your customers? And although the products benefits their customer, I would charge them instead I just totally missed that.

[08:38] Mike: Yeah. That makes sense. This actually might be a good transition point into point number 2 which is about target market and we can come back to the 12 ways if we have time. But there are multiple comments in terms of target market. These are all quotes from the comments. One person said maybe if I understood AuditShark’s target market a little more and how Mike is going to attack it, I would have more confidence in his advice. Honestly, I think he’s still searching for a market, one that I’m not sure truly exists other than one of customizations for each prospect or client. That was one comment.

[09:06] The next one was what is AuditShark’s target market? Has that changed since 2011? And then the third one was more of a compliment and it says I disagree with the naysayers. Mike has moved on. He’s bringing his product to different markets. He’s now moving on to security companies and auditors. So talk a little bit about that specifically obviously you said banks didn’t work out, third party auditors didn’t work out at the time but it sounds like that might be a good market. But where do you stand today and why do you stand there? You know? Like what evidence do you have that the market you’re talking about is probably viable?

[09:37] Mike: In terms of the people who are using it, as I said before, I completely missed the fact that I could charge those third companies money instead of the banks because my thought was well banks need this particular function done. They’re the ones who should be paying for it. And that’s not actually the case. The case is that these third party auditors are the ones who use the software on behalf of the bank and then they use it and they mark it up to the banks so they charge the bank however many thousand dollars to do an audit and then they pay me some small specific fees associated with the number of machines that they audit in that environment. And like I said, I missed that upfront. It makes a lot of sense and then people that I’ve talked to, that’s exactly how they operate and they’ve said yeah, so I will pay X dollars a month for this particular piece of software that does XYZ.

[10:24] Rob: So the question on the table then is what is your target market today?

[10:28] Mike: The target market is essentially auditors who have to do that as part of their job. It’s essentially looking at the target market as if when you build a product, who has this particular problem? Who is bleeding from the neck and needs this problem solved? And it’s really the auditors who come in and say okay I’ve got a job to do. I have to go out to 50 machines or I have to go out to 100 machines and I have to gather all of these settings.

[10:49] Well each one of those settings takes you a minute to gather which a lot of times they will because and you might have a list of 150 things that you need to look at. And if each of those takes you one minute to get then that’s 150 minutes which is about 2.5 hours per machine. If you have 100 machines that’s a huge chunk of time, talking 250 hours to pull back that information. You have a piece of software that can pull it back very, very quickly for you, you don’t have to spend 250 hours on it. And what’s that worth? Well if you’re times $50 an hour, times 250 hours, if you’re paying less than $12,500 for that, that’s a no brainer.

[11:23] Rob: Right. So you know that there’s a problem out there that people need to be auditing AuditShark can do that, now how do you know this aside from saying there’s an X billion dollar market and I have to grab 1% of it. I’ll be successful like you’ve told me offline that you’ve been in specific talks with dollar amounts mentioned like there’s stuff going on. So why don’t you talk a little bit about that?

[11:45] Mike: Sure. To give a little bit of background from 2003-2005 I worked for a company called Pedestal Software. And they sold compliance software. From 2005 to about 2008 or 2009 I worked doing consulting on that piece of software because in 2005 the company was sold and then I just kind of struck off on my own and I was brought in to do consulting on that product. And I implemented it, extremely large companies like Johnson and Johnson, Pfizer, NASDAQ, the Department of Defense, united health group, DuPont, all these different companies that are not small companies. And I saw exactly how they did it. I saw exactly how the process that they used and what sorts of things were important to them and what sorts of things weren’t?

[12:25] So when I took that knowledge and went offline and started building AuditShark, I knew what these auditors were looking for. It wasn’t s as if I just plucked this thing out of the sky and said hey I’m going to do some research, maybe do some keyword stuff. The way I looked at it was I had this domain expertise that probably nobody else in the planet really has like 1) I’m a software developer and 2) I’ve done consulting in this very, very specific niche industry for four years. So I know what’s important to them. I know what will work and I know what will not. So to bring them back to specific numbers, since January, I’ve been discussing with a specific customer and it’s an enterprise deal. And enterprise deals take notoriously long to come through.

[13:05] The second thing is that it is an enterprise deal. You’re basically swinging for the fences. It’s not like you can sell them some software and go little ways and then have them buy more later on. When they buy software, they buy lots and lots of licenses all at once. So for them, it’s not going to be a small purchase. They don’t buy 5 or 10 licenses, see how it goes and then by 30 million licenses, that’s just not how it works. Basically they look at all their available options. They evaluate them kind of widdle it down maybe do some demos and trials and then they pick one and then they buy it and they move forward with it.

[13:37] So you’re going to get either lots of revenue or zero. And I didn’t really want to come to the podcast and say oh I’m really working on this enterprise deal and then 3 or 4, 5 months down the road have it come up to zero because that’s really what was going to happen or could happen.

[13:50] Rob: Right. And by working on the enterprise deal, you mean you had multiple calls, you’ve done a demo. You’ve submitted pricing. Right? I mean you’re way well into this discussion.

[13:59] Mike: Exactly. And at this point, as far as I know, my product is the only one being recommended at this point. They’ve looked at other products and the other products simply don’t do what they need. I don’t think that’s any small coincidence based on what I said before about me being an expert in this particular field and as a side note I really hate saying that I’m an expertise in this but the fact is I’m a software developer and have done consulting in this particular space. I know exactly what they want, I know exactly what they need. Combining those two things, it kind of does make me an expert in this very, very specific thing that they need.

[14:30] Rob: Right. We all know that deals fall through all the time. Right? So there’s not a huge amount of certainty but you do know that there’s interest and you do know that the people that you’ve demoed to and talked to the guys that are actually going to be implementing it really, really liked it like it’s a neck bleed situation for them so that implies – right? It could simply that there are other people who also have the neck bleed situation and you’re saying that based on that four years of consulting you did, you know that it’s a neck bleed situation.

[14:55] And then the other thing is the deal, even if it goes through, it could take another – who knows? Six months. It could take another 8 months right? You just don’t know they could budget it for the later half or whatever I mean this stuff takes a long time so it’s not something that’s going to come through next week. it’s not 100 trial users that convert in 21 day trials but if this one hits or one like it, it’s a little bit of a game changer for you.

[15:19] Mike: Yeah, definitely. Starting pricing for that is six figures and that’s starting and they would buy quite literally thousands of licenses and if it goes well, they could roll it out enterprise wide which is a multiple of roughly 25 times that. Obviously I can’t charge them gobs and gobs of money because there’s kind of an upper limit to software when you get into the enterprise space because of volume discounts. You look at any software that’s out there, some vendors who sell MacAfee policy auditor which is a somewhat similar product but if you look at theirs and the pricing for it, their pricing drops down to I think 5 or $6 per machine at some point and that’s after you get passed like 50,000 machines. But their pricing on it I think is 30 or 35 and that’s just to buy one license for it and if you buy one license, it costs you $35. If you buy 50,000 it costs you $5 for each of them instead.

[16:07] Rob: Right. But let’s focus on this target market thing. So that, it’s a sold lead in this niche. It’s a Fortune 500 company that you’re talking to [Cross-talk] I don’t think you’ve said it yet. And I think the thing that you’ve gained out of this is even if the deal doesn’t go through, you have a decent level of confidence that there are other companies like this and if you can get in there and do the high touch sales, and this is enterprise sales. Right? I mean you’ve been spending time talking to these guys that this is a possibility for you and I think another thing that you told me offline that perhaps opens this up to be more possible for you is consulting. How much consulting are you going to be doing moving forward.

[16:42] Mike: Virtually none. I basically put in to have my time cut to pretty much zero starting in mid September and depending on how paperwork and PO’s go it may actually be quite a bit earlier on that. And then my consulting would go to zero and I’m not worried about the money because like I said I’ve got income sources. What I really need is I need those 60 hours a week back so that I can focus on getting AuditShark in front of customers and talking to them. I mean that’s really the big thing is being able to have the time to talk to people because if I’m on the road, it’s hard to step out in the middle of a workweek with a customer and then say oh, I need to take an hour off because I need to go do this software demo or make some phone calls and do some cold calls or follow-up on emails with these other people. You just can’t really do that.

[17:26] Rob: Yeah. And your progress is slow as a result. Right. I think the other thing in terms of the target market, you also mentioned another potential client it seems like in the same market but they’re not in enterprise. They’re more that external auditor. The Fortune 500 you’re talking to the internal auditors. These are people who work for that company who want to do auditing and they buy do a large one time purchase like you said being the six figures probably whereas there’s that external auditor market that you referred to earlier who would perhaps be auditing banks or just be auditing anyone who needs auditing. A there’s a small company that has said that they are very interested in AuditShark. Is that right?

[18:04] Mike: Yup. The major difference there is more or less there’s two things. One is the size of the company and the second one is what machines they’re going to be using the software on. So when you’re talking about the enterprise customers, the internal auditors, they’re auditing their own machines. And they’re auditing tens of thousands of them in some cases. When you’re talking about the external auditors or the third party auditors as I’m calling them, they are much more smaller this particular company has less than 10 employees and all of them go out to customers on a regular basis an audit their machines and their books and everything else.

[18:36] And it kind of ties into financial services but it allows them to act as an up sell because if they’re coming in to audit their books they can say well we can also do a risk assessment or risk audit on your computers to see how much of your financial information is vulnerable to external threats. So they can essentially use that to up sell their own services and this particular company does that on a very regular basis. And some of their customers are Fortune 100 and 500 companies. They do have in roads into some of these larger companies who maybe want a second set of eyes on their machines or kind of look over what their internal auditors have done because there are known and documented cases where they’ve gone out and they said okay we’re going to have the IT director go out and do these audits and everything’s managed internally and then they have third party auditors come in and say what a second, these results don’t match up. Come to find out their IT director falsified results.

[19:30] So as the CIO or CEO of the company you are criminally liable for some of those things in a public company. You do not want to be signing off on stuff that could put you in jail. So that’s the reason why they have these third party auditors come in sometime even though they have their own set of internal auditors. They want this third party checked because it helps keep them out of jail. And they’re spending the company to do it so it’s really no sweater off their back.

[19:54] Rob: Right. So as I said you’ve spoken with one firm who is interested. I imagine you have a list of additional terms or other ways to get in contact and try to explore that market which is heavily overlapping with it’s just internal versus external. Right? And they would use the same piece of software at your desktop edition you spent several years building the web version and it seems like the desktop edition which is kind of been off shoot to that has really gained a lot more steam, a lot faster than that web version did.

[20:22] Mike: Right. And I think there’s a couple different reasons for that. I think the primary reason for that is that it’s so quick and so easy to demo. I mean you literally you open it up, you click file, load and you open up a policy. You can do it against local hosts or another machine but literally you just type in a machine name, you hit audit and boom. It just starts pulling back results from that machine. You don’t need to install software on it. You don’t need a lot of configuration. If you need to put in your credentials you can but if you’re already logged into widows with the credentials that have access to that machine, you’re just going to start pulling back results. And that’s an extremely powerful demo to be able to show to an auditor.

[20:58] Versus the web version where it’s like oh well you have to sign up for an account. Now you have to download this piece of software. And then you have to install it and you need to type in your credentials when you install it and now we have to wait a few minutes for it to sync up and now we can schedule something and then you wait for 3 or 4 minutes and then you can look at results in the web interface. It’s a totally different demo scenario. The desktop edition was essentially built in order to overcome that. At the same time, that desktop edition also serves other purposes.

[21:25] Rob: Right. And it sounds like it’s had faster uptake. And you know the desktop version was a little controversial. I mean I brought it up I think on the podcast and then again off line and several folks in the comments brought it up and this is kind of point three which is you talking more about features and development versus marketing. So here’s a couple quotes. 1) It says Mike you do seem to talk about this feature or code or making it do this and that instead of how many customers you’ve acquired this week. It definitely seems more like the internal side project which clearly you get enjoyment out of and then someone else said 1) stop writing code. 2) Get customers now.

[21:59] And I had kind of said a variation of this to you offline. Right? Of like you talk a lot about the development you’re doing especially when the desktop version came up, I asked you specifically like who requested that? Why are you building another app or another off shoot or another interface? No one has offered you money for this. I guess the first question I have for you is why did you go build this desktop version when you’ve already spent all this time building a web version?

[22:24] Mike: Well I mean the primary reason was because I needed something that I could demo easily. What I wanted to do ultimately was have a video on my website that would kind of walk you through it but I also realized that just looking at the video, reading some stuff on it wasn’t necessarily going to be what would drive traffic or drive people to kind of come in and actually take a look at it. What I was hoping to do was basically take that and use it as sort of a marketing thing where I could put it on the website and say hey you can download this and this is what the web based version of the tool would do.

[22:54] So my initial intention was to take in and say okay well you can use this against just local hosts or you can type in one machine or two machines or something like that but when I started building it and actually saw what was really kind of possible with it, it kind of brought me back to between 2003 and 2005 working on security expressions and how quickly and how powerful that was to show to people. And I think that I’ve kind of forgotten that. When you put that in front of somebody, it’s actually quite amazing. I’ve heard from people who have looked at and said wow this is really awesome. I can’t believe that you’re able to do this.

[23:26] So that kind of turned the conversation a little bit and was probably not until I had really started going down the road of development of the desktop edition and say hey maybe I should take this and make this off shoot of the product that hooks into the web’s system as opposed to just kind of an independent marketing thing. The other thing I wanted to was I want to be able to use it to draw publicity to do AuditShark for some very specific circumstances. So recently for example the heart bleed problem has kind of surfaced on the internet. Well how do you know if your servers are susceptible to heart bleed? Well you kind of probably have to go do quite a bit of research and figure out what heart bleed is and how you know whether you’re susceptible to it or not.

[24:02] If I can take a version of AuditShark and essentially package it with a pre-built policy file that only does one thing which looks to see whether or not you’re vulnerable to heart bleed and package it and allow you to download it from my website, then that would be something that would be probably inherently valuable to a lot of people because they’re not going to want to come to my website type in their credentials to their Linux servers and say hey, go check my servers. That’s just not going to happen. And if it did happen, I’d love to have your credentials but that’s not what I was looking for. What I was looking for was something I could put on my website that would address some very, very specific scenarios. So any specific vulnerabilities or worms or things like that come out and be able to put that out there and use this sort of marketing play.

[24:46] And in the past what I’ve seen other companies do is if there’s major exploit of credentials from different companies, if there’s an exploit where they pull a bunch of passwords, they will setup websites where you can go in and you can type in your username and it will tell you whether or not the password was leaked. And I found that to be extremely useful because it’s interesting to find out whether or not your password was leaked to different sources and that’s really just a marketing driver. And that’s how I view that.

[25:12] Rob: So what do you say to the sentiment of someone saying stop writing code and get customers now? Like have you stopped writing code or have you slowed it down because for a while I mean it was several years. You just talked about new features you were building without customer request. It wasn’t someone saying I’m willing just talked about new features you were building without customer request. It wasn’t someone saying I’m willing to pay you money if you built this next feature like what’s your status?

[25:31] Mike: So right now there code has slowed to a crawl. There’s a few minor things that are going in. I call them minor but they’re actually pretty important. So for example licensing. Licensing was not in there. When I started handing out demons of the AuditShark desktop edition, we hard coded the date. It was like here’s the date and it just simply will not work after this. We could build the licensing mechanism but that’s going to take time. Let’s just get this out the door. So there were shortcuts that we took very, very intentionally because we wanted to get it out the door and get it in people’s hands and they’ve taken a look at it. They said wow this is really awesome. I love what it does.

[26:04] And I’ve gotten a few requests but we really haven’t gone down the road of implementing any of them. really what we’ve been focusing on is some clean up, making sure that the code isn’t going to crash or handles edge cases a little bit better because there are certainly places where it doesn’t handle everything as well as it could. And then the reporting is going to be a focus moving forward but we really haven’t put any effort into that either. So there’s a lot of things that could be done but I’m really not working on them. I do have some contractors who are working on some stuff but I’m just not – that’s not my focus right now my focus is kind of revamping some of the marketing on the website, talking to customers directly and doing whatever I can to kind of extricate myself from the consulting so I have more time to spend on that stuff.

[26:48] Rob: Right. Okay. Now in looking back over the past year where you perhaps haven’t had as much focus on that as maybe you should have, why did you decide to continue building and not getting – making phone calls to customers and that kind of stuff.

[27:04] Mike: Well it’s hard to make phone calls when you’re pegged at 60 hours a week during the work week. So this is a B to B product and it’s hard to get in touch with those people. The demo alone for the enterprise customer took me probably close to 8 weeks to schedule a time to have that demo. It’s just not easy to do partly because of my schedule, partly because of their schedule.

[27:21] Rob: Right. And this is one of the reasons we talked about – maybe it was probably two years ago about the enterprise marketing you had said I don’t really want to go into it because I don’t have time to do all the sales calls and to do stuff during the day and that kind of stuff and so it surely makes sense that at this point if you’re kind of your life situation or your work situation’s changed then perhaps that market’s more open.

[27:43] Mike: Yeah I think it’s a lot more viable now than it was even 4 or 5 months ago. Part of that is because of the desktop edition and the directions that it’s turned.

[27:51] Rob: Well let’s jump to the fourth and kind of final point that I pulled out of the comments and it was about not following your own advice. So here’s one quote from the comments. The commenter said in one episode, Mike even said not to take his own advice with respect to his work with AuditShark. And the next quote is what do you say to people who say you are not following your own advice with regards to timeline, remember, we always say 4-6 months and you’re now 4 years in, having a market before you build which thought you did but maybe you didn’t do as thorough of a job as you should have in identifying that market and talking to them. And then currently although today isn’t applicable but maybe six months ago when this comment was posted, not having a target and continuing to build an app and not putting the brakes on development.

[28:37] Mike: I think a lot of the reason we give people general advice about a timeline is there’s a few different things that factor in. One is the motivation to actually continue and two is how long is it going to take you to figure out whether or not somebody’s actually going to pay you for something. And again this is general advice versus specific situation advice. So the advice I think that we tend to give and the advice I tend to give is general advice. But when you start talking to somebody about a very specific situation, there’s always exceptions and I’ve been accused in the past of treating AuditShark like a special snowflake and in some ways I would say that it is and the specific way that I would say that it is do I know what people really want? Are there specific features that I’m aware of that they need? And there really are.

[29:21] I mean I know what the used cases are. Do I know that people will pay for it? Yes I do know that they’ll pay for it. Do I have everything set in stone as to exactly how I’m going to get in front of five more enterprises, no I don’t. That’s what I would say a shortfall but I don’t think that’s the end of the world either especially if I’m able to kind of cut back on my consulting and right now I’m in the process of talking to enterprises and able to successfully do that and move the process forward while I am still consulting as much as I am. I get the sentiment. I do understand it but I think that in parts of this, some that advice just simply doesn’t apply. I think our general advice is also not to go after enterprise markets.

[29:57] Rob: That’s right. And that’s the difference. When I bought HitTail and you were working no AuditShark, we kind of started averaging from that first step of the stair step where I say get something that’s making 1-1,000 grand a month, WordPress plug-in, a Photoshop add on, an eBook, whatever, some small niche app. But at certain point when you’re going after a mid 6 or a 7 figure business stuff does start to diverge. You have to take different steps to do it. So I’m not necessarily agreeing with you in saying that you should go beyond 4 to 6 months because I know that the fact that you’ve spent as much time as you have, it’s taken its toll right? I mean it’s taken its toll on your motivation. I imagine you’ve questioned whether you should keep going but frankly have been impressed with your willingness to continue because most people I know if they get a couple years into something there, just not ever going to make it to launch and frankly you did. You have a completed product at this point.

[30:53] Mike: That could also be called stubbornness or stupidity. You can always look at those things in retrospect and things are either genius or just stupid and it really depends on what the outcome is you know?

[31:02] Rob: Yeah so it seems like the summary I mean the three points here were you know, not following your own advice on timeline, having a market before building and then having a target market. Timeline yeah, it seems like you’ve kind of agree with that. The shorter the better, should’ve been 4-6 months, probably should’ve chewed off a smaller problem but you’re here now, what can you do looking back? Having a market before building you thought you did, I think that’s a mistake you’ve admitted to in the past on these episodes right? That you wish you’ve done more due diligence with the market you wish you’d nail it down better before you started building.

[31:13] Mike: Yeah I think with that though, there’s two different pieces of that because our general advice is make sure that you have a market for the product before you start building it and I think it’s more to make sure that there’s a problem that is worth solving to people. So I built a piece of compliant software that will go out to machines and pull back information and allow you to validate settings. And that is a problem that definitely needs to be solved. But there’s lot of different ways to solve that problem and a lot of different people to solve that problem for. And I solve the problem but I didn’t necessarily nail the initial market that I was going to go after. Problem definitely needs to be solved. Did I get the right people the first shot? No, I don’t think that I did.

[32:07] Rob: You had problem solution fit. You didn’t product market fit because you didn’t know what market you should go after. And I think to be honest, myself and the listeners doubted that you had problem solution fit and some may sill doubt that you have problem solution fit. I think you had confidence the whole time but maybe haven’t quite been able to convince us that it has and I think the fact that an enterprise has now essentially submitted you in for budget or whatever step you’re at at this point that they’re seriously considering moving forward and you gave them a quote and stuff, I think that led some creating to the fact that you’ve at least solved their problem and with another consulting firm looking at it I mean there’s becoming more evidence of that.

[32:46] Mike: The underlying issue there is that there’s a big difference between developer and cis admins so like I’m very much across the line there. I do a lot of systems administration with my consulting, managing large networks of machines with enterprise software packages so I get how that stuff works. I get how active directory works and how you would use a lot of the different enterprise tools just to manage the machines in an enterprise. So I don’t think that’s common knowledge. I think that most people who do know that who are developers are very much minority. There’s not a lot of people who are developers who also kind of cross over into that systems admin area.

[33:25] So I think that’s probably where a lot of this confusion comes from because as developer you’d have to ask why do I need to know what a registry key is set to and it’s like well you know, because that could indicate whether your firewall is on or off and if you have 10,000 machines, you need to check, how are you going to do that? Oh let me just write some code for it. And my response is exactly. That’s how you do that. But what if you need to check a different registry key or what if you need to check services or what if you need to check file auditing settings, or all these other things? So my code base is essentially an engine that will allow you to do all of those things in a much more simplified mechanism that will remotely go out to all those machines and pull back that information.

[34:07] Rob: You known one other thing we haven’t brought up at all Mike is your health issue that you had for like 2 or 3 years that again you don’t want to blame for lack of progress or lack of motivation on a health issue but certainly played a part in the fact that things have taken you a while to get here.

[34:23] Mike: Yeah. I would say that the health issue has probably been going on for more than two years. There’s probably close to four which I indirectly in some ways blame on the level of consulting that I’ve done over the past several years because it has ramped up a lot and it has gone into travel. So as I started working on AuditShark, I could almost probably guess to say yeah my health issue is kind of arose partially as a result of me doing consulting and AuditShark at the same time. I’m sure that it factors into it, by how much? I don’t know. But yeah I mean the health issue is definitely a big thing. I brought it up at MicroConf and I actually had probably 2-3 dozen people come up to me after my talk and explicitly thank me for talking about the issues and bringing them to people and just kind of bringing them to light.

[35:10] So that it’s not as if everyone’s kind of going through those things alone and I showed graphs and I think that was probably one of the more powerful parts of my talk was showing when I got a diagnosis exactly aligned with when some of my website traffic and Twitter following, all of those things, they started kind of taking off all at the same time. And then a few months later I think it was December that I kind of officially launched AuditShark, that’s not too far after August. Going back to that, I think that I could probably blame some of the lack of progress on AuditShark on some of those health issues but I don’t really want to use it as escape either. And I definitely didn’t want to bring it up last August-September timeframe because I didn’t really know what it meant at that time either. In retrospect I can see there are some pretty clear uptakes in a lot of different things since that time. So I think a lot of things have changed over their past 6-9 months.

[36:05] Rob: I would agree I mean especially in the last six months I think that’s where in seeing your graphs for your Twitter followers and your visitors to the website and just the level – it was right after that you’re like hey I have these landing pages. Hey I have some ads running. Hey I have retargeting. Hey I have – you know what I mean? You were just getting yourself in gear on the marketing side in a way that I had not seen in the previous 3.5 years on AuditShark and that’s when you started making this progress. Right? I don’t think it’s by mistake that suddenly you’re talking to a Fortune 500 company in January. I think that all plays into it. Right? You get your mojo back and then you really start hitting things hard and something comes out of that.

[36:40] I think overall in summary we’ve talked about slow progress. We’ve talked about whether or not you had or have a target market talk about focusing too much no features right? Versus development. And on following or not following your own advice but I think the bottom-line is that you’ve made mistakes going through this. We’ve talked about that before. And you’re going to get more mistakes. We’re all going to make more mistakes moving forward before you get your product to where you want it to be for sure. But it seems that at this point you have a much better grip on these issues that I think you’ve had in the past 3-4 years. There’s more confidence. You certainly have more confidence in what you’re doing. I can just tell when we’ve had conversations about it.

[37:20] You haven’t taken the shortest path. I think that’s the one thing that I would say is like it’s taken you four years to get here. I think you could’ve done it in a year. I mean it is a bigger project. All these things compiled, there were mistakes. There’s health issues, there’s 60 hour workweeks. There’s all that stuff and that kind of all adds up to just leading to a very long path which is often hard to travel.

[37:44] Mike: I think everybody wishes that whatever they’ve done that was difficult took them a lot less time to do it but at the end of the day I can’t say I’m disappointed with where things are at right now because I think that things are in a really good spot right now. It’s not to say that I don’t have a lot of work cut out for me going forward. At the same time I think I’m well positioned to be able to take the work and effort that we’ve put in so far and kind of take that to the next level.

[38:06] But one thing I did talk to a couple people about was how I talk about things on the podcast because I guess it’s not very clear to most people that when I say I’ve done this or I’ve done that, I generally mean we. It’s something that I need to work on. It was the team behind me that basically hired out of the consulting revenue. There’s a lot of things that they’ve done and pulled together at my direction that I probably just didn’t have time to do on my own. So that’s something that I kind of need to correct moving forward I think.

[38:35] Rob: Because it’s implying that you are still writing code?

[38:37] Mike: Yes.

[38:38] Rob: You’ve actually been less focused on the technical stuff over the past 6-12 months than it might appear if you were listening to the podcast because a lot of times you said I did this whereas it was your developer.

[38:48] Mike: Right. A lot of times I’ll scope something out and I’ll say okay here are the screens. This is what it’s got to look like. This is how it’s going to function. And then they’ll go do it. There will be some back and forth between them and it’s not like I’m not involved at all, it’s just that I’m usually double checking work doing testing things like that. I’m still technically working on it but I’m not necessarily writing the code for it. I do still feel like I’m involved in it.

[39:08] Rob: So if you have a question or a thought or a comment on what we’ve talked about in this episode, you can call our voicemail number at 1-888-801-9690 or we’re always available via email at questions@startupsfortherestofus.com. You can subscribe to us in iTunes by searching for startups or via RSS at startupsfortherestofus.com where you’ll also find a full transcript of each episode. Our theme music is an excerpt from “We’re Outta Control” by MoOt used under Creative Commons. Thanks for listening. We’ll see you next time.

 

Show Notes

• MicroConf 2014

Transcript

[00:00] Rob: In this week’s episode of Startups for the Rest of Us, Mike and I discuss our takeaways from MicroConf 2014. This is Startups for the Rest of Us: Episode 181.

[00:08] Music

[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.

[00:23] Mike: And I’m Mike.

[00:24] Rob: And we’re here to share our experiences to help you avoid the same mistakes we’ve made. So we’re still here in the Tropicana in Las Vegas. We just wrapped up a 2 ½ hardcore days of speakers. There’s 9 speakers, 11 attendee talks, 210 attendees this year. I had a great time. Pretty tired but I think it was worth it.

[00:43] Mike: It’s totally worth it. I mean every year I came back and thinking to myself you know, a little bit scared just kind of like oh, what are we going to do next year? We’re going to be able to deliver because expectations have been so high and everyone comes up and says oh I love this conference, it’s great. The next year comes along and it’s just everyone, you get the exact same feedback. It’s awesome to be able to kind of continuously do that year after year but of course it continues to set the bar at just a really high level.

[01:06] Rob: Right. Yeah this is definitely the most exhausting but probably the most fun 72 hours of my year and I guess now we have two of them because Europe is in October. Actually I guess we can announce that now. We just got confirmation from the hotel that MicroConf is going to be in Prague October 27^th and 28^th, that’s a Monday and Tuesday. If you came to this MicroConf and if you didn’t get enough, you’re glutting for punishment, head over to microconfeurope.com and we obviously are building that early bird mailing list.

[01:34] Mike: Talked to a couple people last night and I told them what it was and several of them are like oh, I can’t wait to go to that one or I’m definitely going to look into that because some of them are based over here and we had a bunch of people who had gone to MicroConf Prague and they actually didn’t come to the one in Vegas in previous years because they were wondering like is it really worth the flight over there? Then they went to Prague and said oh, I’m totally going to the one in Vegas and then got to the same thing over here where I’ve kind of explained to them we’re trying to replicate the exact same experience that they get here so people don’t say this MicroConf over here is better than that one and we don’t end up with disparities between them.

[02:09] Rob: What my favorite part this year I think when we stood up and asked for show of hands and said who here hasn’t – to at least one previous MicroConf and it was somewhere in the 60% – 70% range, a very high return rate. I think it speaks to how tightly knit the community feels here because I feel like a lot of people know each other. I know there are a lot of first timers. We could see it on the – we had a little rip on the badge but the people who come back, it just builds that momentum and it makes you feel like you’re coming back to hang out with a bunch of friends and talk about really interesting stuff that you can’t talk about the rest of the year.

[02:43] Mike: Yeah I think that’s a really, really good point because one of the things that people have told me kind of throughout the conferences that there’s nobody who lives near them that’s doing the same types of things. So they in many ways feel very isolated because they kind of feel like they’re working in a vacuum. There’s nobody around that they can really talk to and MicroConf gives them that excuse to not only come to Vegas and hang out with a bunch of people but to learn lots of things that are really going to help them with their business throughout the year.

[03:10] Rob: Yeah I mean I think we’ve talked about it recently though like doubling down on community is something that we’re diving into and with Micropreneur academy and now Founder Café and two MicroConfs in a year, that’s where I think so much of the value is, and masterminds. We’ve dove into that as well so it makes natural sense that having a conference like this and getting everybody together in the same place is probably more valuable like Ted said the first year and like I say every year from the stage is probably more valuable than the talks is to just get together and share experiences and really get other people’s insights and know what you’re up to.

[03:45] Mike: I think that was probably one of my favorite parts of the conference was just the fact that we were able to bring 210 people this year and it didn’t feel that large. I mean there were a lot of people who said oh, how many people you have? They hear 210 and they’re like whoa, that’s a lot more than I thought. It doesn’t feel that big. And I think part of that was just the logistics of the room because the room that we had this year was wider than it has been in years past. So I think that worked out really well. But the quality level of the attendees I mean I can probably have talked to anybody there and I didn’t get a chance to talk to everyone but I talked to a lot of people and it was just everyone had something to share that you could learn from and that’s really a cool experience. It doesn’t matter who you talk to. You can learn something from them.

[04:26] Rob: Yeah. I had 2 or 3 people come up and say oh, the conference is smaller than it was last year. For whatever reason whether it was just the room size or just that they felt they knew more people but last year we did about 170 something and this year right about 210. In terms of things that could go better, things that we would improve, I think that the big thing that we ran into this year for the first time ever surprisingly enough was the Wi-Fi was really erratic. But we pay several thousand dollars, 3 or 4 grand every year to get custom Wi-Fi dropped in and it’s supposed to b able to support hundreds and hundreds of deceives and obviously people were getting kicked off. It worked a good chunk of the time but people were getting booted. That was pretty disappointing when we called the Cox out several times to take a look at it but it was erratic. That was probably kind of my low point.

[05:10] Mike: Yeah. I think that was probably the low point of the conference for me as well is just the Wi-Fi kept going up and down and it was really nice to have a conference coordinator who could really just kind of actively go after that and say hey you guys really need to fix this and call them and have them come back a couple times because otherwise we would have to do it and that kind of takes our focus away from the conference and that can be tough for me because you really want to be able to guide the conversations and talk with people and interact with them and make sure that the conference is going well and you don’t have to deal with the infrastructure problems. It was great to have him be able to actively deal with that stuff while we’re managing other things.

[05:43] Rob: Yeah that’s been one of the real bonuses of being able to grow the conference a bit is that we’re able to afford a coordinator and he’s taken a huge amount of the work away from us so that was super helpful. Thanks to Zander for doing that. So let’s talk about some of the talks that impacted us. We obviously can’t talk about all of them. They were including attendee talks which are shorter takes about 12 minutes a piece, there were a total of 20 talks. There are several here that I wanted to bring up with the first one is your talk. You went on Monday morning. You talked about – to be honest, you started talking and you were talking about your Twitter strategy about building your Twitter following that you had like a long tail SEO strategy and it felt as you were going through said you have like pieces, five acts.

[06:25] And you got three acts in and I was like where is Mike going with this? My inner monologue was like I don’t know what he’s doing. And then you stepped through and in the fifth act you kind of did the big reveal. This is why all these graphs started growing up at this time because basically that health problem that we’d actually talked about this in what 20 episodes ago and you’re like that health problem was basically fixed at this point or we figured it out and now we started taking some medication. That like brought it all together and I got that same feedback form a number of people who were like at first I was wondering where Mike was going with it and then at the end it had a real impact on people and a lot of people were asking questions about like you know, how that felt.

[07:00] Because you mentioned testosterone, it’s a testosterone level that was messed up. I could already tell people were like asking how did you get tested? Did you go to a doctor? Did you hurt yourself? There’s obviously other folks in the audience who are struggling with similar types of stuff. So I think that was a big deal. How did you feel about it?

[07:17] Mike: I thought the talk itself went really well. I mean in years passed there have been certain parts of talks that I’ve given where I feel I’ll say a little disjointed or forgetful about these sorts of things that I was talking about and this one was definitely longer than previous talks that I’ve done but it all felt very, very smooth to me. I’ve never felt at any point during the talk and this one just it seemed like it just flowed for me. I got through it and I had probably about two dozen people come up to me afterwards and talk to me and ask me various questions about it because at the end of the day it wasn’t necessarily about my particular health problem. The point that I wanted to raise is that if you’re not taking care of yourself, it’s very difficult to take care of other people including your customers, your friends, your family and obviously family is part of why we do this and we want to be able to live a lifestyle that is beneficial to us and be able to spend that time with them. And if you’re not doing things that you love then kind of what’s the point?

[08:11] But if you’re not taking care of yourself you can’t put yourself in that position. And if you get into a situation where some of these things are affecting you let’s say for example you have some sort of hormone imbalance and it’s affecting your work, well what do you do to get out of that? Well you work more because you think that working more hours is going to help. And the fact is it actually doesn’t. It hurts you because then you’re working more hours. You’re more tried. Your mental energy drops and it becomes the snowball effect where you’re actually going in the wrong direction. You’re working more to catch up but it’s actually hurting you more. And you don’t realize it.

[08:46] Somebody pointed out to me, it’s almost like the example of putting a frog in boiling water and it’s so hot the frog jumps out. But if you’re sitting in that water and it slowly warms up over time, you can kill the frog and it will just die because it doesn’t realize that it’s being boiled to death and that’s exactly the same position that I kind of ended up in. It was just things were going wrong and it was slow enough that I didn’t realize it like if you break your leg, you know something that’s and that’s seriously wrong but if you have some sort of hormone imbalance that takes place over time and whether that’s trust or your work is impacting you, you’re not getting enough sleep at night, you’re not exercising they take a toll on you over time and it’s slow enough you don’t realize how bad that problem is until something breaks or something kind of snaps you out of it. And that was really the point that I wanted to make to people and I heard a lot of people who were just having random conversations, talked about health issues. It was really, really awesome to see.

[09:40] Rob: Yeah. And what was cool is you had a bunch of graphs and you had a graph of the number of Twitter followers you had a graph about of the number of I think it was unique visits to you website based on organic traffic. And they basically were bumping along the bottom and then on a certain day, boom, they all spiked up and you had like 2 or 3 of those and you put a big red arrow and the dates were all basically within a month of each other and that was the month that you figured this whole thing out. I don’t think that’s a coincidence. I mean that’s what you’re pointing out right? It’s like your motivation before that was very low and you just didn’t want to work on things and then when you turn it around, it’s a stark contrast. This is self care. It’s like caring for yourself and understanding when – you’re lows and how long those lows are happening and why they’re happening and if it’s going on longer than a month or two then there’s probably something to be fixed.

[10:27] The next talk, Sherri Walling’s talk, my wife’s talk piggy backed really well on that and she spent a full 40 minutes diving into the various causes of it and how to have time in and then how to have a time out from work and time in includes things like retreats, mastermind groups, it’s diving into your work but organizing it and getting support, organizing the thoughts in your head around it and then the time out is things that are away from work and those are – she had a bunch of them. It was like service, travel, vacation time with family, time away from screens, that was a big one right? Like screen free Sundays, yeah there was a lot in that. I actually want to go back and watch the video again and kind of take some notes. I’m looking forward to puling some more action items out of her talk.

[11:08] Mike: I think what was really cool about her talk was that one of the things she did was extremely simple. It was just she did this very simple breathing exercise and I took a glance around in the middle of it just to kind of see like who is participating in it and everybody was. It was so simple and it was so short due. It didn’t take any time or effort to do and it worked. I mean people felt better. I felt better afterwards and it was just so simple and it’s something that you could do at your desk. There’s just you’re breathe in and out a couple of times very regimented pace and just really concentrate on your breathing and it’s just a very simple hack, it’s a body hack is really what it comes down to and it just works. And I think that’s not something that people really think about while they’re sitting there and saying oh I got to rustle with this problem and I’m all stressed out and just take a step back and breathe a little bit and things get better

[11:54] Rob: Yeah and I saw a tweet from a MicroConf attendee returning home who said I used the Zen founders deep breathing on the way home because I’m a nervous flyer and it got me through the flight.

[12:04] Mike: That’s awesome.

[12:05] Rob: Yeah. I think what might be the most memorable talk of this year was that Jesse Mecham’s talk. Jessie is the founder of youneedabudget.com YNAB and it’s downloadable desktop software, it’s a budgeting software. So it may be similar to like the quick end or something. He nailed it. He had the mix of humor, interesting story. He’s at 27 employees now and I think the title of the talk included the number 4 million dollars in revenue I don’t know if that’s this year or what year it was but obviously a very large company that’s selling $60 onetime fee software to consumers.

[12:43] But what was cool was he went through his first five years. I think he’s been in business nine years and he just went from day one and told all the stories and the foibles and how he had no idea what he was doing, there was no hacker news or quora, he didn’t listen to any gurus, no methodology, he just tumbled his way though and had some really actionable takeaways for people who are hesitating or who feel like they need to read one more book to do it because his whole point was to start doing stuff. And as simple as that sounds, he just had story after story example after example of him doing stuff, it not working but as he iterated, it grew and he showed the doubled revenue from 200 to 400 to 800 by doing little tips and tricks so his was definitely one of my favorites.

[13:24] Mike: It was actually really interesting to see that his first product was not a piece of software it was an excel spreadsheet that he was selling, that’s kind of a proof of concept but it was just really cool to see like he made all these mistakes and did all these things you would look that and say oh that will never work and it’s like it did work because people actually had that problem and were willing to pay for it. And as you said, over time, he’s iterated and done better and almost up to 4 million in revenue na 27 employees and you don’t get that overnight. It did take nine years to get there but he’s there right now and it’s awesome to see that path that he’s gone through and you’d look at and say oh, yeah, sure, he’s done this overnight and it’s like no there’s this long process behind it and it just takes time and effort and just continuous iteration.

[14:08] Rob: So I closed up the first day talking about Drip, the title was something like how I launched a Saas app to $7,000 in recurring revenue in month 1 and it was the story of Drip of how I validated the idea and then the slow launch that we did and user onboard and that kind of stuff and it felt good about the talk. I think after last year’s talk which is how I grew HitTail I don’t know if this was as good a story. Right? Because the story’s not done yet but I did get positive feedback on the on boarding part specifically because I really walked through how we onboard people with Drip and it’s a high performing on boarding process and we spent a lot of time on it so that I hope is a big takeaway that people took from the talk.

[14:47] Mike: I think one takeaway that maybe you kind of mentally glossed over because to you, it’s not necessarily relevant but I think that a lot of other people see it as relevant is that in MicroConf the kind of experiences that you see and hear is not just in the success stories but it’s also the failures and the things that you get into something and you make a mistake and then you go back and say okay well what can I do differently? And the one slide that really sticks out in my mind is you had a slide where there was this road and there’s just this giant boulder in the middle of the road. And you got to a point where it’s just you’re trying to move forward and you couldn’t. There’s this giant roadblock and you had to backup and say okay well now what? How do I get through this roadblock?

[15:23] And the answer is you don’t in some cases. The answer is go in a different direction because that’s just to possible. You can’t go in that direction because you’re not going to be able to. It’s going to take too long. It takes too much effort and resources that you simply don’t have right now. That definitely impacted a lot of people because they look at that and they say hey, even Rob Walling makes mistakes. some people were kind of talking about this quote which was don’t feel bad about what you’re doing because what you’re doing is you’re comparing your daily life against other people’s highlight reels. And that’s so true and it’s really nice to see people sharing not just the successes but also the failures and the mistakes made along the way so that other people can learn from them and realize that everyone makes mistakes, everyone has these times where they just can’t proceed forward and you have to take a step back and you have to reevaluate and sometimes reevaluating means going in a different direction.

[16:15] Rob: Yeah. That’s a good point actually. Several people came up and mentioned that. I was kind of deliberate about it in the talk but I realized there were even more mistakes I could’ve called out and I think that would’ve been beneficial but I think I had 2 or 3 foibles that I did during that launch and during building Drip that I called out. The particular mistakes aren’t important but you’re right. It was just so people could see oh, he took missteps and how did you handle them because we’re all going to take missteps and it would be nice to know how to do it.

[16:39] The other thing that I called out that folks mentioned was I talked about a couple points where I was really disappointed. I was really anxious. I was depressed. I just felt like crap because something didn’t go right. We spent a month doing something and I felt like we’re not moving forward. And to stand up on the stage and say this part really sucked, I saw tweets about that people saying wow now I don’t feel bad when that happens on my product because I know that basically we all go through this.

[17:05] Mike: What did you think of Annie’s talk?

[17:07] Rob: So Annie Cushing is a Google analytics genius I’ll say. She basically dropped so much knowledge in the first 120 seconds of her talk that it made me embarrassed to think that I’ve ever logged into a Google analytics account. She knows Google analytics better than anyone I’ve ever seen. So if you haven’t heard of her, you can go to annielytics.com and that’s just what she does. That all she does 40-50 hours a week is consult and build custom reports and she knows it in and out better. She knows every little nook and cranny and all the weird bugs and errors that I would look at and say oh that’s an anomaly but she’ll just call like there’s four errors in this report and here’s how you get around them and I love it.

[17:46] I mean I think she had 9 or 10 questions that every entrepreneur should be asking their analytics. I mean it wasn’t the obvious things. Right? It wasn’t like oh how many visits do I get? It was like digging in and looking at like which competitors might be spying on you or which of your products is the most successful? I mean she was pulling data that I didn’t even know where data would be.

[18:07] Mike: And then there were other things she talked about like last click attribution which if you’re not familiar with what that is, it is how is it that somebody clicks on something and then it buys your products. Where is the credit for that click going to? And it’s not necessarily actually where they last clicked because maybe they came in through social network or a newsletter or something along those lines and maybe it went to your website and then there was a direct link back to your website and then they bought something, it’s like where does that credit go? And really it gets distributed but it could be very difficult to find out some of that information and she shed a lot of light on to that process and how you should really be thinking about it. And I thought that was really cool. It was nice to see her dig into Google analytics because I think so many people use it and it’s just so hard to understand if you’re not an expert in it.

[18:54] It was nice for her to share that kind of knowledge with everybody and there was a huge amount of response from that and I remember talking to somebody who was sitting in the back of the room. They commented to me oh yeah in the middle of her talk there were probably 30 or 40 people who were rewriting some of their Google analytics campaigns and custom reports just based on the stuff that she was saying. So I don’t know if Google tracks that form a single IP but I’m wondering if it got flagged for something.

[19:16] Rob: Yeah. I think she probably combined a 4 or 8 hour workshop into a 40 minute talk. I mean that’s basically what it felt like. I think another notable one was Brandon Dunn and his talk was six tricks that helped me triple my Saas growth rate. He talked about reducing churn through some targeted emails and even personal emails. He’ll turn off his auto responder sequence inside his trials then he’ll just send personal one on one emails from him to people who are using it. And he has the whole required text field when you cancel because he really wants to find out why you canceled. And there were four other tricks and obviously it’s helped him grow plan scope. Almost everyone in the audience can probably take something away from his talk.

[19:57] Mike: The really interesting part about his talk was the six different things that he had were actually at six different parts of the interactions with customers. So he had one trick that he did upfront and another trick in the middle and basically ran the gambit through all these different scenarios so it wasn’t like there was one part of this funnel where he did 2 or 3 different things and made things better. It was just six different points throughout the sales process. He did six different things and overall it grew his on boarding rate and his conversation rate for something like 30% 33% I think he said. It was really cool to see the multiplicative effect of implementing all of those different things.

[20:34] Rob: And then sprinkled throughout the days we had sessions of attendee talks. We had a really good showing. We had 42 attendee talks submitted this year and we only had time to do 11 of them. All of them did quite well. I mean I heard people getting takeaways from pretty much every talk that was given very high bars set every year. This year with MicroConf we actually pulled three speakers from attendee talks last year, Nathan Barry, Bandon Dunn and Sherri waling and moved them into kind of the main stage speaker so I can see that certainly being an option next year as well.

[21:08] One talk I wanted to call out is Dave Rodenbaugh’s talk which was titled how to buy your way to fame and fortune as a bootstrapper. And he basically talked about acquiring WordPress plug-ins which is something that not a lot of folks have done, not a lot of folks have acquired software because we all want to build it but it was a very well told story and obviously quite a big success for him. I think that was a good one. And Dave’s just been – he’s been all for MicroConf and we’ve encouraged him to do attendee talks in the past. It was good to see him get up and share his knowledge to the crowd.

[21:35] Mike: Yeah, I really liked how he tied that together and showed that not only was he acquiring things but he acquired them and then showed kind of afterwards all the work and effort he did and put into it to make those products better and 90% of it was really just the marketing side of stuff. He acquired a product that didn’t have good marketing and he turned that around and was able to essentially tell a great story to the customer such that they were able to buy a slightly tweaked and slightly better product than it had previously done. But it already had a solid code base. It wasn’t that the product was bad. It was that the marketing was bad. And he took that and he ran with it and he built decent businesses out of these WordPress plug-in.

[22:15] Rob: And of the 11 attendee talks, 2 of them were about WordPress plug-in. John Turner did his talk on how I built the six figure WordPress plug-in business while working a day job and John actually still has his day job. He said it’s low stress and really doesn’t have any desire to leave but he has the coming soon plug-in and I think there’s one maintenance mode plug-in as well. He just kind of walked through the whole story of kind of discovering the academy basically. It was cool to hear his story because I’ve heard it through tweets and things here and there but to actually hear it full on about how reading through the stuff in the Micropreneur academy changed his thinking to go niche and that once he did that, things really picked up for him. He’s at 800,000 downloads from wordpress.org. He has a couple of plug-ins and he had a theme online for a while that I think he took off but I definitely enjoyed his story.

[23:04] Mike: Yeah. I think the number of 800,000 downloads just kind of blew my mind. it’s just like wow you know, that’s a huge footprint and it gives you a huge number of people to sell your products to and he also talked a little bit about some of the pitfalls of dealing with that and how he was able to grow his business through interacting with the WordPress ecosystem.

[23:25] Rob: Another attendee talk that I got a lot of comments on was by Harry Hollander of Moraware software and it was called sales calls don’t need to be painful. What I liked about this is Harry’s a developer. He’s like us. He doesn’t want to do sales calls and he specifically called that out and he said their sales cycle used to be 6-12 months and it would be 30 hours working with a customer to get them committed to using their software. They build software for countertop installers. And through just honing their questions and kind of figuring out a better process, they have moved that down to I think it was three hours that they now spend with customers and it’s like a couple of weeks.

[24:05] So it’s just an amazing story of kind of iterating – they didn’t split test in the traditional sense but they really just tried a bunch of different things and they basically boil it down to asking four questions of someone you know they’re on a sales call with. I don’t remember the four questions. Do you?

[24:21] Mike: There were four questions that the very first question was what are you doing today? And the idea behind that question is they want to find out in Harry’s business they have software that helps people schedule kitchen countertop instillations. So their first question is how do you schedule kitchen counter top instillations today and if their answer is we don’t, that’s kind of the end of the sales call. You don’t need to go any further because their software and their products just can’t help them. So that’s a very good qualifying question.

[24:47] And then their follow-up questions, the second question is what works about that process and the third question is what doesn’t work about that? The fourth question is what will happen long-term if you don’t change the way you’re doing things? Harry actually mentioned that’s a very good way for the customer to talk and get it out that they’re essentially selling themselves on this new product that they’re looking at because they know that they need to get off of their current system and this other product can help them, the product that Moraware Software provides but the customer is essentially talking themselves into buying something to solve their pain point. How much is it going to cost them if they don’t switch and that’s really the bottom line is they want the customer to talk. And he said one of the really hard parts about this is to ask the question and then shut up. He said that’s really, really hard to do.

[25:34] Rob: He said he’s done almost 2,000 sales calls and that he pretty much knows there’s only two different answers to the first question as an example. So he knows what they’re going to say before they say it but he said that’s not the point. You still have to ask it and you have to be quiet so that they can basically talk themselves into realizing how much value they’re going to get out of your software.

[25:55] Last couple attendee talks that I liked, one was from Ryan Delk. He’s head of growth at Gumroad and Gumroad is a service that helps folks sell products like typically one time downloadable so a lot of info products, music, I think they have videos and you know, movies and such. But a lot of info marketers are starting to use them. And they have done, seen thousands of launches so they have all kinds of data and he was able to break out some really interesting things about pricing. He was saying that you should have tiered pricing and that it should be around 1X 2.2X and 5X and those are the best numbers they’ve seen.

[26:34] So obviously if you’re 1X price is just for the eBook and it’s $19 then 2.2 times that is around $40-45 and that should be your next tier. And then you go up about another 2.5 times that. so you’d go up into the $90 or $99 range and you obviously have to add more value to those higher ends but he’s saying what when people do that, that they get like another – I think it’s an additional 62% of revenue and there’s just a substantial amount that comes from that middle and that top tier and that’s just one of the things. I mean they were like 6 or 7 points he dropped like that in the span of 12 minutes.

[27:06] Mike: I think the number he showed were probably the best part of it because it was actual data about not just what you should do but why you should do it and what the average results are from doing that. That was probably the most powerful part about it was as you said they’ve got access to so much data and statistics they can run those numbers and correlate them and provide them back to people and say these are the things that are working and this is why you should do these things and this is going to be the results of those things.

[27:33] Rob: And I think rounding us out for this episode is the attendee talk by Samuel Hulick. It was called UX basics that convert users into customers and Samuel was actually my marketing intern that I had hired last year and he’s then started useronboard.com where he does a lot of on boarding critiques and he’s written a book. And actually that was cool. He basically is giving the book away to everybody who attended MicroConf. We had a couple nice giveaways. I give away my startup VA course as well. But Samuel’s talk I thought was good. I love his Mario analogy where he says your customer’s Mario and your customer doesn’t want the flower that they’re going to capture. They want the result which is turning into the large Mario that spits fireballs and he has that analogy in his book as well. It definitely hit home with me because it makes me realize of course they don’t want the product. They want what the product turns them into.

[28:26] Mike: Yeah I thought that was really good analogy partially because it demonstrated like for example if you’re the small Mario, there are certain attributes that the person has. There may be a little bit less apps to do things or take risks but when they turn into fireball Mario it’s just like oh, I’ll take it. I don’t really care. It’s not going to do anything to me. It’s not going to wreck my world because I got this power behind me at this point and I’m not going to die if I go down the wrong path. And it’s very interesting to see that analogy just because I think that most people don’t necessarily realize that as you said, it’s not about the product. It’s kind of what the product turns you into.

[29:03] Rob: So we did video all the talks including the attendee talks and as soon as we have those, they will be available in the Micropreneur academy. It will probably be a month or two and then I’d imagine we’ll make most of them available in about 10 months as we’re promoting the next one, we’ll be releasing those. We know we never released the attendee talks form last year to the public so we should probably do that soon.

[29:25] I really wanted to take the sponsors, the folks who have essentially allowed MicroConf to be possible. Kiss Metrics sponsored this year as well as Software Promotions and Balsamic, Bid Sketch and Cumbia returning sponsors, Constant Contact sponsored several times and User Hue which is Lance Jones of Copy Hackers was really cool and User Hue actually gave us some oculus riff headsets to give away, three of them and that was a big hit. Constant contact also gave an iPad air so that was as a way to make the event memorable. It’s cool.

[29:55] Mike: Also software promotions, I was working on a video course for SEO. I think it’s called SEO demystified that they’re giving a pretty sizeable discount to all of MicroConf attendees and it’s Dave Collins who’s behind that and he does some really, really great work so I would definitely take a look at that if you guys have an opportunity. It’s coming out soon I think. He said that the target date was May 15^th but whenever it comes out, he’s definitely going to make that discount available to all the MicroConf people.

[30:19] Rob: So I think that kind of wraps up our take always from MicroConf Vegas 2014. If you’re interested in perhaps hearing about MicroConf 2015 which should be hopefully next April, head over to microconf.com get your name on the mailing list. We sold out in around 20 minutes this year so I don’t know what next year is going to look like. Every year it seems to get it takes about 1/20^th of the time so hopefully it won’t sell out in a minute next year. But also as I said earlier, we’re doing MicroConf Europe and microconfeurope.com gets you there. We are putting together that mailing list as well.

[30:53] Mike: If you have a question for us, you can call it into our voicemail number at 1-888-801-9690 or email it to us at questions@startupsfortherestofus.com. Our theme music is an excerpt from “We’re Outta Control” by MoOt used under Creative Commons. You can subscribe to us in iTunes by searching for startups or via RSS at startupsfortherestofus.com where you’ll also find a full transcript of each episode. Thanks for listening. We’ll see you next time.

 

Show Notes

Transcript

[00:00] Mike: In this week’s episode of Startups for the Rest of Us, Rob and I are going to be talking about the benefits of SaaS. This is Startups for the Rest of Us: Episode 180.

[00:07] Music

[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 Mike.

[00:23] Rob: And I’m Rob.

[00:24] Mike: And we’re here to share our experiences to help you avoid the same mistakes we’ve made. What’s the word this week Rob?

[00:28] Rob: Well, this one will come out when we are in Vegas at MicroConf. So I like you haven’t really gotten anything done in the past week because we’re just wrapping up a bunch of final details so that’s really my only update. For folks who are MicroConf, looking forward to seeing you.

[00:42] Mike: Yeah I’m kind of in the same boat as you are, just wrapping up stuff at MicroConf and I do have to say I am really, really looking forward to my camping trip/ vacation after MicroConf is over and not necessarily because of all the work and stuff going into MicroConf there’s lots of other stuff going on too but I really just need a vacation.

[00:58] Rob: Yeah and you’re going unplugged right? Like into the desert or something?

[01:01] Mike: I’m going to try and turn everything off.

[01:02] Music

[01:06] Rob: We’re going to be talking about the benefits and drawbacks of software as a service and choosing that for your app and whether you choose that over desktop or mobile or other things. Now this came about because I was listening to bootstrapped.fm with Andrey Butov, Ian Landsman and episodes 35 and 36 they had some long discussions about how Saas is potentially overblown or over hyped that it’s not applicable for everything that it’s not applicable for everything that it’s overused in some cases and all that stuff.

[01:34]The people are kind of defaulting I think in the broader startups basis especially people are not really – the big funded companies are really going towards the recurring revenue and the SaaS stuff. So it got me thinking that there are some cases where it’s a really good idea and there’s some really good reasons to go with SaaS and at the same time there are some really poor implementations of it and there are some times where you shouldn’t go after SaaS. And so that’s what we’re going to be diving into today, the benefits and the drawbacks. And to kick us off, what we really wanted to do is kind of define what SaaS is. The further we got into it, even you and I have maybe a disagreement over certain apps like is Dropbox a SaaS app or is it a cloud app? These are the five classifications I have.

[02:15] First is software is a service. Right? This is a SaaS app. These are things like Sales Force, Bid Sketch, Mailchimp, HitTail, Kiss Metrics. They’re web apps that live on a single server. They have multi-tenant data bases and people come and pay a recurring typically monthly or an annual fee to access the web app. So it’s basically a hosted web app. The next category is a desktop app. So this is Photoshop, an FTB client, just WinZip, all the stuff we think of as running in the desktop.

[02:45] And then the third category is server apps. So these are things that also run on a local computer. They aren’t necessarily a desktop app in the way that we think about it so it’s something like maybe MYSQL or exchange server or even think about FogBugz, not the on demand version but the one you download and install. WordPress is the same way. If you got a wordpress.org you download something, you install it on a server so it’s not a SaaS app but some people seemed to be confused and think that any time you have a web app, even if it’s downloadable that it’s Saas and in this case we’re saying it’s not.

[03:16] And then the last couple categories, one is mobile, IOS, android apps, the other ecosystems. And the last one is cloud. And I was putting things like Dropbox or Amazon S3 or Amazon’s cloud player in this thing that I don’t consider SaaS because the core interface is not a web interface.

[03:33] Mike: I guess I was just thinking because I mean we were discussing whether Dropbox for example, should that be considered desktop app or should it be considered a SaaS app? And obviously you came back with this third category that’s kinda a cloud app. And I think kind of differentiating it makes a lot more sense than specifying it as strictly a desktop app or a SaaS app. But I look at something like Dropbox and I say well, I guess in some ways I am paying for the software but really I’m just trying to synchronize my files back and forth. So I use the free version.

[04:02] So to me, I don’t think of it as SaaS because I don’t pay for it. I don’t know if I really think of that as SaaS and I think that’s more because of the web interface I’ll say but like S3 for example, that’s online storage so yes that’s a subscription model but I don’t necessarily think of that as SaaS. That’s more like hosting fee if that makes sense.

[04:22] Rob: So you are agreeing of pulling these out of the SaaS category into something. I called it cloud and it seems like these things, a lot of them are storage based and the recurring fees – Amazon doesn’t have a recurring fee. It’s usage based. It’s not a flat recurring. Dropbox does have a recurring fee.

[04:40] Mike: Yeah. I don’t think I have a problem calling Dropbox a SaaS app of some kind.

[04:44] Rob: Is it SaaS or is it desktop?

[04:46] Mike: Like I said, I think putting it in its own category because it kind of bridges the divide but because you do install it on your machine but there’s components that operate out of the cloud without those it would be kind of useless.

[05:00] Rob: Yeah and see that’s how I see the difference here is that if you install Photoshop or you install just a simple desktop Microsoft word, something that installs, I know they all have these cloud components now that had been retrofitted in but you could use them completely offline and there’s no drawback to it whereas you can’t use Dropbox or Amazon S3 or Amazon’s cloud player which is their music service but the core thing is that you can stream it from anywhere. So that’s why I’ve created this fifth category of cloud that I want to kind of differentiate between what we’re talking about today which is SaaS. Right? And these are two different things.

[05:34] Mike: the one thing I would point out though is for something like Dropbox, they do have a local LAN sync so you don’t actually need the cloud for it.

[05:41] Rob: Right.

[05:41] Mike: I think that’s why it’s so confusing as to how to categorize it because they have this LAN sync where even if you’re completely disconnected from the internet, you can still sync between two different machines.

[05:52] Rob: Right.

[05:52] Mike: So at that point it’s a cloud and it’s like well, kind of. It’s over the network but it’s not necessarily outside. When you look at something like that I mean from Dropbox’s perspective, you would rather people do that because then the data is not hitting your servers more than once or people aren’t hitting your servers.

[06:09] Rob: Yeah. No. I bet 99.9% of Dropbox users are not using that and the real Dropbox that I guess I’m referring to here is the one that needs the internet that use the bone of the benefit is that you don’t have that local, if the building burns down, you don’t worry about your data.

[06:27] Mike: Right. But this just operates in the background. What I mean is it’s a feature where there’s a copy the file locally while you go out to the internet and pull it down if you can pull it from somebody’s machine nearby that it’s all over the local network.

[06:38] Rob: So it’s a form of cashing it.

[06:39] Mike: Kind of. Yeah.

[06:41] Rob: But the cloud is still the premier or the first class [Cross-talk] I think it’s still a cloud app of some kind. This one all seems to be API based. If you think about it like Dropbox, you could really think about it as just storage somewhere and then a bunch of different ways to get at that storage. There’s like 10 different UI’s based on your platform. There’s all the mobile versions and all the desktop versions in a web version and all that stuff, S3 similar right? Amazon cloud player, similar. There’s a bunch of different desktop and web versions and mobile versions. I think that’s where maybe cloud comes through where it’s a little different. SaaS I think is web. The web is the primary interface. Even if data’s coming in from trafficking code or from other API’s or anything. The primary way that you get at that data is go to a website and you log in and that’s I think the differentiating thing that I think about when I’m looking at these two categories.

[07:30] Mike: I think that’s partially where SaaS kind of came from I mean because you look at something like Basecamp or Salesforce and that historically where these things came from so when you think SaaS, you immediately think web application.

[07:41] Rob: Right.

[07:42] Mike: I like having cloud as kind of its own separate category because it sort of implies that there’s this other category that yes its sort of Saas but there’s also local components that may operate independently sometimes but for the most part they really need to interact with that piece that’s out in the cloud that you may very well a subscription service for.

[08:03] Rob: Right. And I don’t like the cloud as such a buzz word and everybody’s using it these days but I do think it’s a decent application of that category. So let’s move on a little bit and look at – I had one thought on why SaaS is being so dramatically adapted like it really has been this upward trend. And if you look back into around the year 2000 there were probably just a handful of SaaS apps. It just was so hard to build really good apps that could even come close to mimicking a desktop app.

[08:33] And then as AJAX and browsers and coding technology on the web got better, 37 Signals becomes popular, Salesforce, kind of pioneers through it, Constant Contact, these really early writers in the SaaS market and I remember seeing them early on I think wow, I would never do that. I don’t want my data stored out on their server. We have to pay every month instead of I could just host in on my desktop box here. I remember hosting like an email server just so I could send out small email blasts because I didn’t want to pay the $20 a month or whatever to Constant Contact.

[09:03]But the thing is as these things have gotten cheaper they’ve gotten more reliable and as I have multiple devices, SaaS has really taken off because it gives you access to that stuff from everywhere. So I think a lot of the desktop apps and a lot of the paradigms that we saw in the 80’s 90’s and early 2000’s have now been moved or are moving to the web.

[09:22] So in the old days you buy like a proposal, you download a proposal software, you install in your desktop and you build it, now you’d go to a place like Bidsketch. In the old days I would think you’d download long tail keyword tool and install it on your desktop and now you might go to something like HitTail that’s all in the cloud. So there is definitely a trend and pretentiously a faddishness and I think that’s where there is some backlash. I think people could be pushing into SaaS for the wrong reasons, taking a look at the benefit and not think about the drawbacks or just over extending themselves into it.

[09:51] Mike: For the benefits and the drawbacks, I mean there’s two different perspectives to look at. I mean first one is from the perspective of the user and the other one is from the perspective of the developer and those two things can be wildly different. I mean something that is good for the user may be bad for the developer and vice versa.

[10:07] Rob: Yeah, exactly. So let’s dive into those. Let’s first talk about the benefits of SaaS over other forms like the installable apps from the user’s perspective. The first one is there is no installation and I don’t know about you but I change laptops now every 18 months. I have a bunch of different devices and multiple desktop, multiple laptops and so I do not have to install something and keep a DMG file or an EXE file depending on your platform. Keep that handy or else have the log in so I can go back and download it when I download my next version. Is it even going to be compatible with the new OS, all that stuff goes away when you’re using a SaaS app from user’s perspective.

[10:42] Mike: I cheat on that front because I just take full drive snapshots and backups so if I ever have to reinstall my machine I just lay the image back down and I don’t have to worry about it but I think that’s partly because I know how to do that stuff because I’ve done it for so long to me it’s not a big deal but I think that most people in general probably don’t necessarily have that knowledge,

[11:03] Rob: Yeah so that’s one way around it but obviously like you said most people aren’t going to do that. The next benefit of SaaS from a user’s perspective is there’s no upgrades so stuff is just upgraded in place. Right? The web app is there. It’s always new. It’s the newest version. Hopefully if they’re continuing to work on it and fixing bugs as they come up whereas if you’re on a desktop or a severer and you have an old version, the upgrade process can be and will be at some point a big pain. It will take a bunch of time. If you have a bug or a security vulnerability you have to drop everything you’re doing and you have to do an upgrade. And if that breaks things, if the data changes, it can be a hassle. And this all goes all the way from server apps that I’ve had to maintain to desktop apps like if I would upgrade to a newer version of like Photoshop, Microsoft word or whatever, you have all these files that might now be incompatible, some of them gets skewed up during the upgrade.

[11:56] With QuickBooks, where is your data? Where does that live? ITunes is the same way. Like when I would move from one laptop to another, just getting that data was always the biggest hassle of the move. Was trying to find like the QuickBooks file and make sure I had everything in the iTunes library and so not having to upgrade and not having to maintain the local files to maintain your state is definitely one of the pluses that I see for SaaS.

[12:18] Mike: I think there’s a difference between maintaining your files and kind of the title of this particular point which is no upgrades and I’ll give you a prime counterpoint for it that we’ve actually run into. PayPal’s upgrade of all of your data to the new PayPal interface.

[12:35] Rob: We have not done that because I’m too scared. But that’s PayPal. See, that’s two things. 1) It’s PayPal and I don’t trust that they’re going to do a great job with it and be one that will get better over time and 2) this is like something they’ve been regretting for years. It’s a huge upgrade that they are like actually migrating data. And if you don’t know what we’re talking about, if you log into your PayPal account, some people are seeing this thing that says migrate to the new PayPal. I think they’ve written a whole new UI. I’m sure it’s going to be cool. They’re mucking with data at that point. If you think about what’s your experience with most SaaS apps. The ones that work pretty well, you don’t even know that they moved, that they’ve added features. You don’t even know if they’ve changed the back end data model because they’ve just taken care of it.

[13:10] Mike: That is the general rule I think for most SaaS apps. They do upgrades and they can do an upgrade in the middle of while you’re using the software and you just don’t notice because they basically got a switchover mechanism where you just don’t even notice. You’re suddenly using the new version…

[13:26] Rob: Right. And it’s not that way every time, not for every SaaS app, not for every user. You run into same issues but by and large for me personally the experience of not having to upgrade software anymore is a big plus. And I think for most consumers, most people who aren’t heavily technical I would say it’s probably a plus for them as well.

[13:45] Mike: Yeah and I think there’s two reasons for that. One is how many different applications does any given user given company have that they would need to upgrade on a regular basis and what is the schedule of those upgrades? I mean if the software does not upgrade very often then it’s probably not that big a deal so for example something like word only comes out every couple years of sequel server for example but then you have other things to take into account like a service packs and security patches and things like that. So I think those things kind of create a differentiator a little bit but yeah I mean obviously not having to upgrade the SaaS apps is something that is attractive for most companies.

[14:25] Rob: The next benefit was when you get a new computer, there’s no reinstall. There’s no looking for that installation file. There’s no trying to find your data and moving it over and making sure you get everything.

[14:35] Mike: Or your license key, god that’s the worst like when you have to track down all your license keys for everything, it’s a nightmare.

[14:42] Rob: The next benefit of SaaS for the user is the lower upfront cost since it is a subscription, you may not have to drop $300 or $400 at one time, maybe you can pay $15 $20 a month for it even out that spending over time.

[14:54] Mike: Hopefully leveling out your total cost of ownership and if you go and sign up for a piece of software that really just isn’t working out then you haven’t just sunk a couple thousand dollars into a piece of software that becomes shelf ware because you know, it just didn’t work out for you. You can at least try things out and it cost you a lot less initially to get started with it.

[15:16] Rob: Alright, our next benefit for users is that SaaS apps accessible from most devices. So I work sometimes on a desktop sometimes among someone else’s laptop, sometimes I’m on mine I’m on my iPhone, I’m on my iPad. frankly sometimes I’m at a public computer at a hotel and my data is accessible from all those places and that’s a perk that you don’t have with something like if I’m accounting in QuickBooks on my local machine even if it’s on a network drive, unless I made that accessible from the outside world which obviously I wouldn’t recommend from a security perspective then you can’t get access to your data sometimes when you need it on the road. I know SaaS apps are not ideal when you’re logging in form a mobile browser but still I’ve done it and it works.

[15:57] Mike: Right. If you’re using a password manager for them then you’re kind of screwed.

[16:00] Rob: On contraire sir now if you use I think it’s last pass, they have a browser and the passwords auto populate in it so it’s the last pass browser. I think tying with this accessible from all devices is that multi-user capabilities are easily built in. It’s not to say that they’re free but with things, I’m thinking of like trying to share QuickBooks files in the old days or trying to share word docs you’d like email them around or you would put them on some share drive and then two people would open them at once and things would crash whereas with the SaaS app ideally if you have a team or you have multiple people who need to look at your accounting or who need to work on a single doc the collaboration is a lot easier to do and it’s kind of handled for you assuming that the developer has built it.

[16:46] Mike: That’s a very subtle differentiator there between multiuser versus collaboration because just having multiple users doesn’t mean that collaboration is easy.

[16:54] Rob: Right. Like real time collaboration is a whole other thing but yeah, I’m just saying multiple people at least being able to kind of edit and view stuff maybe not at the same time.

[17:03] Mike: Just being able to collaborate on the same data set that’s the important piece of it. It’s not just having multiple users because I think with QuickBooks for example on the downloadable one, you can have multiple users but it doesn’t really do any good.

[17:17] Rob: And the second to last benefit from a users perspective is that your data is stored for you and it’s backed up for you and you don’t have to worry about having crash plan or other things running locally. You don’t have to worry about a backup not running and losing your accounting data or losing a bunch of word docs because in theory the SaaS app that you’re entrusting them to is taking care of the backups and they have that all handled. Now we’ll look at the drawbacks in a second and one of the drawbacks is a potential of that not happening but assuming it is and it’s a reputable company and they’re getting stuff done, it does take some of the burden off of your shoulder as a user.

[17:52] Mike: And the last benefit is that companies who offer SaaS apps have to continually earn your business or you can leave at any time. So if you’re running into issues or you have bad experiences with their support or with their software, because of that lower outlay of cash up front, the cost of switching through, the monetary cost of switching to you, but it’s a lot less than it would be than if you were to invest a whole ton of money upfront into the solution that ultimately find out doesn’t meet your needs.

[18:22] Rob: Let’s dive into some of the drawbacks of SaaS for users there are quite a few of those as well. First is recurring charges. And depending on how long you use an app it may be cheaper to pay that big upfront fee than to pay that fee every month. And I know that some people just don’t like subscriptions. Right? They don’t want to pay the monthly fee and they prefer to just kind of plunk it down and be done with it.

[18:42] Mike: Yeah. I know people who have gone out and specifically purchased the installable version of a piece of software because they didn’t want to pay for the recurring charges. And interestingly enough one of the founders of Atlassian had kind of talked a little bit about whether or not you should do a SaaS version of something versus a onetime charge for it and his differentiator was essentially does the app become more valuable over time? And if the answer to that is yes then you should charge a subscription fee for it. And if the value of that drops over time then you shouldn’t get all your money upfront. And I thought that was a really insightful mechanism for determining whether you go more towards the SaaS model or more towards a onetime fee for a piece of software or for anything for that matter.

[19:29] Rob: Another drawback of SaaS from user’s perspective is frankly web apps are often not as powerful as desktop versions or downloadable versions of software simply because the desktop has a decade or two of programming that API’s are stronger. It’s local so things can be faster if you’re going to do heavy image or video manipulation, there’s just a lot of cases where building a desktop app is actually better from a usage perspective when you’re actually inside the app working on it.

[19:55] Mike: Some of it has to do with the processing capability, some of it’s just a matter of what’s possible in the web across browser mechanism versus what’s possible on a desktop because with a desktop typically you’re deciding what the operating system is going to be that you’re developing for and you can say okay I’m only developing for Mac or I’m only developing for Windows. And if you start going down the road of developing for both, a lot of times not all the time but a lot of times, the complexities of having two different versions of the same piece of software is a different skill sets, it costs a lot more in terms of time and money and implementation than if you only chose one platform and you’re essentially limiting the scope of what you’re going after.

[20:37] Rob: And I think this gap is narrowing over time. Certainly 10 years ago there was a huge gap between what you could do in a desktop and in a web app and that’s smaller now with just all the web technologies, Ajax and front end stuff that’s come about. But still you see older web apps especially like you log into PayPal, it is grindingly slow. I mean you’re not even trying to do anything exotic and it is painful to use the web app.

[20:58] Someone actually built a desktop front end for PayPal where you download it and install it and then in the background it would check every X minutes and it would download all your transactions so that you could then actually search them and not have to go get a cup of coffee while you waited for the transactions to appear. It’s a pretty clever idea basically outlining a desktop interface over what is now a pretty legacy app.

[21:21] Mike: Another drawback of SaaS over an installable piece of software is that it cost you a lot more to switch in some cases and the real issue here is that if you’re trying to switch from one application to another, if you have a desktop app that you’re switching to another desktop app then you can run them side by side and you don’t have to worry about importing all of your data in one shot and you also don’t have to worry about how am I going to go about doing this without paying for two different subscriptions?

[21:48] Because with the SaaS app you literally have to dump all your data, get it over to the new system, get it in there and make sure that everything’s working and that can be a huge undertaking in terms of time and effort to do that. But if you have two desktop apps and you’re switching from one to another, you can move some of the data over and just the stuff that you need that it’s kind of like your active working set and the rest of it you can leave in the old app and if you ever need to go back to it or moving forward you need to get at it, you just fire up the old app and you can get to it. But with SaaS, that’s a lot more difficult. You really need to kind of bite the bullet if you don’t want to be paying both of those subscription fees at the same time.

[22:25] Rob: The next three drawbacks are all interrelated and it’s privacy of your data, security of your data and backups of your data. And so privacy is is someone else able to access that data is this other company since its not living on your premise, are they able to look at that data? Security, is it going to get hacked? Is your credit card or other sensitive data going to get stolen? Because you are now in control of that security and you’re entrusting that to a third party SaaS provider and then backups. Are they actually doing backups and are they actually going to be able to recovery your data or if they go down and everything’s gone, you really didn’t have necessarily an opportunity to at least be responsible for that so people who like to have more control over it and don’t want to entrust it to a third party, these are three pretty major drawbacks for users.

[23:13] Mike: I think all three of those boiled down to one thing. It’s like do you trust the vendor in terms of the privacy, security and backup? Do you trust that they’re doing the right things and have they told you what it is that they are doing so that you do have that trust in their process?

[23:28] Rob: And then the last drawback is that too many logins, I hear people complaining I have 50 logins, 100 logins to different SaaS apps and that’s just a pain. So I think it’s more of a minor inconvenience that can be solved with a password manger like one pass or last pass.

[23:40] Mike: Yeah. I have over 500. It’s ridiculous.

[23:44] Rob: Wow, in your password manager?

[23:45] Mike: Yeah just in general. I have over 500 different logins and that’s probably on the low side.

[23:50] Rob: That’s another – the whole password issue needs to get solved. That’s not the right way to authenticate anymore like somebody needs to figure out a better way to do that because username password thing, it’s just too easy to hack. Nobody remembers them. Unless you’re using a password manager, people use the same one over and over and there’s just major security issues with it so I’m hoping that someone will fix this in the next few years, come up with a major innovation in that space.

[24:12] So now let’s dive into the benefits and the drawbacks from the developer’s perspective. So this is the founder or the person who’s building the software. What are your benefits? What are your drawbacks? And let’s start it off with one of the big benefits that’s always mentioned is no installation support. And so if you have a desktop app, you have a server app, everybody who does a free trial you have to support them. You have to give support to people who may never pay you and I don’t know if you’ve ever logged into a customer server that is completely catastrophically in bad shape with all kinds of crazy stuff going on but even if you have an app and you’ve tested in on all the platforms over and over, it works fine. It installs for you.

[24:50] But they go install it on their 20 year old server running windows 95 you have to then help them or else you just kind of – A) you get a bad rep or B) you’re just never going to make the sale. Right? So not having to deal with that as people are installing and trying to get some value out of your software is a major upfront time saver that I would say is the benefit for Saas for developers.

[25:10] Mike: Just over the last couple of weeks I’ve talked a little bit about in the past about the desktop version of Audit Shark. I had request to support, installing it and running it on windows XP and I’m just like unless you have a lot of money to spend on this particular thing, it’s probably not going to happen.

[25:26] Rob: Yeah, exactly.

[25:27] Mike: Plus you have all these conflicts that you can run into on somebody’s machine just because they’ve got other software or if it’s not like something where you’re hooking into IS or a patch here or something like that if you’re opening your own ports for example you could write in the port conflex or other services that just shut things down. So for example I’ve seen a lot of antivirus software that will just say hey, I don’t trust your software and it just shuts it down. I mean I’ve seen it do that before with just the installer so it just says I don’t trust your installer and boom, done, it just kills it.

[25:57] Rob: Yeah. We used to spend a lot of time when .net invoice was selling at its peak. I would spend a lot of time doing support and troubleshooting people’s servers and I’d log in and it was just crazy the setups they had and how old they were and how many – just how poorly it was setup and yet it’s my responsibility as the owner of my product to be able to figure out how to make that work. And so we would invest hours into software people had bought it and it was kind of like if you say no or you just say ah, your server’s too screwed up then they just say alright then give me a refund because we had a 30 day refund policy. So you’re basically saying I don’t want to invest this time here but I know that money’s going to basically come out of my bank account if I don’t so I always struggled with that. I know that as you hit scale, it might get a little better but that’s definitely one of the drawbacks of having to install stuff.

[26:43] I think tying into this is upgrade support. Whenever we’d release a new version of .net invoice or if you release a new version of a desktop app you then have a lot of customers that are upgrading all at once. So you can have several thousand people who are now running into issues whether it’s their data, whether it’s an incompatibility with their OS or something like that, so upgrade support from the developer perspective can also be a big burden especially when you only do upgrades say 2 or 3 times a year you release a new version and it’s like boom, go ahead and just knock off the next week or two just to help people get setup with that.

[27:18] Mike: Just to be clear, I mean this is something you can in some ways run into if you’re hosting a SaaS app just because in some cases you are going to have to move or migrate somebody’s data from kind of an old version to a new version or something. I think that the headaches are significantly less than if you got an installable component that runs on their desktop because they’ve got dependencies to worry about as well.

[27:40] Rob: The next benefit is that troubleshooting bug fixes all that stuff, it’s easier because everyone’s using the same code base and it’s easier to reproduce errors. When you have that single web server and everybody’s using it, I mean it’s pretty rare that we are not able to reproduce an error that someone’s run into, it only tends to be browser plug-in and that kind of stuff. But overall troubleshooting bug fixes, the fact that you can release bug fixes instantly if it’s affecting a lot of people is a huge plus more as the desktop app you have to roll out a new version and notify everybody and then they get upset. If you do that too many times, people start getting really upset about it whereas the SaaS you can just do it silently in the background, you fix the stuff you’re improving the software constantly and no one really needs to be bothered with it.

[28:24] Rob: I think the other benefit is that you own the platform itself that its installed on so that you can hook into it and troubleshoot stuff directly on a server and there’s only one place to do it that you don’t have to go 3 or 4 different places on a customer’s environment with what as you said can be totally screwed up machines and you also don’t have to worry about VPN-ing in. You don’t have to worry about any sort of security or firewall issues with that sort of thing. If it’s your server, you can kind of control everything.

[28:53] Rob: the last benefit we have from a developer’s perspective is the recurring revenue. It’s that you don’t start each month at zero dollars in revenue. You’re really always chasing the next sale as I saw back in like 2008, 2009 somewhere .net invoice’s revenue catered 80% in one month when kind of the recession hit. And that was a big wakeup call. I already had some recurring stuff but I realized, boy I really want to double down on recurring businesses so that that doesn’t happen when I’m really paying employees and not really reliant on that revenue.

[29:23] And so I know there’s both sides to recurring revenues. Some users may not like it but from a business perspective, from a founder’s perspective, this is the Holy Grail. And this I think is the number one reason that so many of the Silicon Valley and funded startups are heading into this market is because of the recurring revenue and not having to do the enterprise sale stuff of this huge contracts and chase them down and get these big revenue spikes. The recurring revenue really is a good way to go.

[29:48] Mike: I think that’s the point though is that it takes out the revenue spikes and evens out your cash flow and you can see generally much further in advance if your revenue is starting to trend downwards. So if your revenue craters 80% in one month I mean it’s really hard to see that coming but if you start seeing significantly higher numbers of people kind of falling out of your funnel or cancellation, things like that, you can keep an eye on it a little bit better I think.

[30:15] The other thing I think is that if a recession hits or something mass market comes into play where people are going to stop paying for stuff, they’re not going to make capital purchases anymore they’re going to pay ongoing expenses but they won’t necessarily make new ones. That’s the kind of thing that you probably run into is that people stop paying for new stuff. But if they were already paying for it, they love to get rid of that. They kind of cut all new purchases first and then if it’s an ongoing issue, an ongoing economic meltdown, they will start cutting back on other things but they won’t do that right away. So for example when the economy tanks, consulting was the very first thing to go because that was something that people were actively paying more money for.

[30:55] Rob: Alright now, let’s look at some drawbacks of SaaS from a developer’s perspective. The first one is that you have to maintain up time and that down time is a really big deal. This is lot more complex than releasing an app into the wild. Once it’s installed on the user’s system, it’s their responsibility to keep it up, to maintain the data, to keep the server running. But with SaaS, it’s your responsibility and this is not trivial unless you are technical you have someone who is solid at technical stuff and you’re able to take care of the backups and you’re able to really maintain that uptime to a certain level, you’re not going to last as a SaaS provider.

[31:28] Mike: I think it’s one of those things that when people are first building their apps they probably spend a lot of time on because they’re like I don’t want this thing to go down. It’s gotta be rock solid and I’ve seen people spend lots and of time. I’ve done it myself on making sure that the service is going to be up almost 100% of the time and that’s really hard to do first of all just from a technical perspective but at the same time like they’re going to be times where you just need to do some scheduled down time and there’s nothing you can do about it. But I think that’s one place where people spend probably far more time especially early on when a minimal number of customers would be impacted by down time anyway.

[32:06] Rob: Another drawback from a developer’s perspective is you have an obligation once you launch a SaaS app and people are using it, you can’t just walk away from it or abandon it. It’s obviously not great if you build a desktop app and do the same thing but at least people can continue to use it and get value out of it. If you walk away from a SaaS app, it has a limited lifespan. Either the server’s going to have an issue at some point, it’s going to get bugs. It’s going to security flaws. It just needs maintenance or else this thing will run into itself into the ground a lot faster than desktop apps. So there’s an obligation there.

[32:36] The worst thing you can do it’s not to get zero customers, it’s to get like 50 or 100 customers and then want to walk away from it because you’re kind of letting those people down they’ve invested in you, they believed in your app and now what are you going to do? Just tell them go spend their time and migrate to another platform or something. I mean there’s an upfront commitment I think when you launch a SaaS app then it’s probably not as important as with a downloadable installable app.

[33:00] Next drawback of SaaS from a developer’s perspective is platform and browser compatibility issues and this is basically the troubleshooting factor of someone is using a crazy browser on a Linux system where they have privacy plug-ins or cookie blockers or ad blockers or all kinds of stuff, this is where it gets complex and if you can’t reproduce it, it does become kind of pain. That’s probably the most complex kind of bug fixing and bug trucking stuff that we’ve seen trying to reproduce things where people have weird configurations. Luckily it doesn’t happen very much, not nearly as much as I saw when installing downloadable stuff for customers.

[33:39] Mike: Yeah I mean this is where some of the issues coming up with the minimum version number for different browsers that you support and then just the sure number of browsers I mean are you supporting Firefox? Are you supporting opera, chrome, IE? What versions of IE? The compatibility issues between them and understanding what versions of jquery or what different plug-ins could potential impact your software? That can be a huge – not a huge undertaking but it can be a big deal for what you’re trying to support and its costly in terms of time to troubleshoot those. Once you figure them out it is hopefully helpful moving forward as you kind of scale up the company and get more customers but initially those interactions are going to be in some cases long and protracted and just difficult to get through.

[34:22] Rob: This is definitely a drawback but the thing I like about it, because we had something with someone who use an IE7 or IE8 with Drip and they ran into something, might have been HitTail actually and we went in and it took like 4 hours just to – we had to get a virtual machine setup this whole thing but when we finally figured it out it was a weird thing in IE and we fixed it and now if anyone else comes along with IE8 it’s fixed for them because we have one version of the code and that’s where the benefit is of like – it’s always such a hassle with desktop installation because you have to deal with their configuration and once you fixed it it’s not fixed for everyone so you may have to do things multiple times.

[34:58] Mike: When you’re doing that type of thing and this kind of leads into the last drawback which is that when you’re interacting with those customers, it’s an opportunity for you to either lose a customer or gain their loyalty. I mean customer support is really, really key when you have a SaaS app because every single time you interact with a customer if you lead them with a bad taste in their mouth they can say you know what, I’m really tired of these guys, I‘m just done. I’m going to leave. And then you’ve lost that revenue for that customer from that point forward.

[35:26] Rob: I think this is something that people don’t always realize but people can leave SaaS apps pretty easily. It’s definitely a benefit for the customer I think that customer support is so critical with SaaS. So I think kind of to wrap us up and summarize, you might be thinking, listening to this, so when should I make something a SaaS app? When should I make it a desktop app or downloadable app? And I like to think about it on kind of three distinct categories. The first is functionality. Like is the functionality better served by making it a desktop app or a mobile app or some type of cloud app then do that. But if it’s better served as a web app then go that route.

[36:02] The second is the market. is the market that you’re going to be selling into, are they willing to go subscription and are they willing to pay a price that makes this thing maintainable because B to C SaaS apps are really, really hard. B to B, not so difficult. So think about the market and look at that aspect of it. And the third one is do you have the expertise? Do you have the experience or do you have the money to hire someone who really knows what they’re doing because SaaS is not something that I think these days that beginners can just dive into and do it right. If you can get an app built, you can throw it up on a $10 shared hosting account, you don’t know how to do the security, the privacy, the backups, all this other stuff.

[36:39] So if you don’t have any experience with it, I’d encourage you to go get the experience or to get enough money to hire someone who’s really solid at this and who could build a SaaS app right. So those are kind of the three elements that I think about if someone were to be deciding whether to build SaaS or not.

[36:54] Mike: I think it’s interesting to note that when you look at those three things, not one of them was directly on our list of benefits or drawbacks. It’s all about the user’s interaction with the software and has very little to do with the ancillary stuff like is it secure? Do they have to support upgrades or installations? It’s all about the functionality and can you get to the market with that type of product and are you going to be able to compete with it?

[37:20] Rob: Right. I think some of them planned – the privacy, security and the backups plan to the expertise part…

[37:24] Mike: Yeah but I think that’s more of a perception issue that may very well be left over from legacy apps that people are already used to in that space for example.

[37:33] Rob: I don’t know if just perception – I actually think that truly having privacy, security and backups is important, not just the perception of having good privacy, security and backups and to do that, you have to have expertise in SaaS. We have to know what you’re doing to do it right.

[37:49] Mike: Right. But I’m talking about the user’s perspective of them being comfortable with that sort of thing. So for example, if you’re going after manufacturers for example, manufacturing in general they want everything in house. They want it local because that’s what they understand and they’re comfortable with and if you come out with a SaaS app for something that would replace something that they already have a desktop app for, I think you would have a very difficult time going into that market just because they’re not used to that kind of things. So you’re going to have a much harder sale even though the app might be better.

[38:20] Rob: Right. That makes sense. Yeah. And I think for the record I said this before probably on this podcast but definitely in talks that I’ve done that personally I will never build a non-recurring app again. Now it may not always be a SaaS app because you could build like a cloud app that’s recurring or there are other ways but for me, having done business with one time purchases with stuff I have to install on people’s computers, all that outweighs any of these other benefits that I get from those things. So I will purposefully only select ideas where I don’t have to build an app that installs on other peoples software where I have to support that and where there’s only a one time sale and I don’t have recurring fees.

[38:59] Mike: And I think that’s something that you take into account way, way before you even start writing code.

[39:04] Rob: That’s exactly right. That wraps us up for today. If you have a question for us, call our voicemail number at 1-888-801-9690 or email us at questions@startupsfortherestofus.com. Our theme music is an excerpt from “We’re Outta Control” by MoOt used under Creative Commons. Subscribe to us in iTunes by searching for startups or via RSS at startupsfortherestofus.com where you’ll also find a full transcript of each episode. Thanks for listening. We’ll see you next time.

Show Notes

• Sarah Hatter’s book The Customer Support Handbook
• How to Connect with Industry Leaders to Grow Leads – RivalFox’s follow up to last episode  http://t.co/aRpcCtilv1
• Totango 2012 SaaS Conversions Benchmark

Transcript

[00:00] Rob: In this episode for Startups for the Rest of Us Mike and I discussed when you should ask your customers for credit cards. This is Startups for the Rest of Us: Episode 179.

[00:08] Music

[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. What’s the word this week sir?

[00:29] Mike: As you know, MicroConf is just a couple of weeks away. I do want to send out a congratulations to Brian Marble and Eric Nagem. Each of them won free tickets to MicroConf compliments of Constant Contact and Balsamic respectively. They got an email from or mailing list at startupsfortherestofus.com and entered into those contests and were selected as the winner. So they get a free ticket to MicroConf and if you’re interested in hearing other things about some of the stuff that Rob and I are working on or other things in the startup community then head on over to startupsfortherestofus.com and you can sign up for the newsletter there.

[00:59] Rob: I had a coupe notes about last week’s episode and some other thoughts. One is that Rival Fox which they wrote the blog post that we based the episode on, they published a follow-up to that. We’ll have a link to that in the show notes but you can also go to Rival Fox’s blog and hear about that. The other part is we had a question about how to manage bug tracking and how to modify existing features even if you’re a developer and you don’t want to modify those features. And when I brought that up to Derek my lead developer he said write tests like spend the extra 20% of your time and write test or the more test coverage you have, the more confidence you can have to modify existing features.

[01:38] And if you’re a founder and you’re not the actual developer, then give your developers that extra time to be able to write test and that’s something I’ve realized with Drip we have a luxury that we don’t have with HitTail because Drip has extensive test coverage and HitTail does not. And so there’s a little more trepidation to go in and modify the guts of the code because you always run the risk of breaking something.

[01:59] Mike: That’s something that has completely slipped my mind as well. I remember a while back I was writing some stuff inside of the core of Audit Shark. I was changing how the engine itself was working to make it more efficient and then I made a bunch of changes to it and then I ran through my suite of the unit test which runs a couple hundred tests on the core of it, core auditing engine and there were a bunch of them that passed but then there was this whole slew of them that failed that it was something really small, some edge case that I hadn’t thought of while I was implementing the fix or the update and it just all these things failed that I probably would not have noticed or recognized until it got out on the field and it was too late. So yeah, definitely those unit tests can certainly save you when you’ve got things that are very intricate or complicated that are interacting between each other.

[02:43] Rob: Absolutely. And the other benefit is that when you do find a bug in production, then you go into your code, you fix it and then you write a test that ensures that bug will never get into production again. So over time you can always discover new bugs as you’re introducing new code but all that existing code it’s just locked down and you become so much more confident. You can make grand sweeping changes and actually feel okay about them because like you said, you don’t have to test every nook and cranny because your test handled the bulk of that for you. They obviously don’t handle 100% of it but they handle quite a bit of it.

[03:17] Mike: Hey, I asked someone to point out – if anyone follows Sarah Hatter and her team over at Cosupport, they just launched a new book called The Customer Support Handbook. They started selling it I think back in December and they were basically selling pre-released copies of it that came bundled with a basket and all these atomic fireballs and various other things. But you can go out to Amazon right now and get it and we’ll link that up in the show notes. I kind of glanced through it yesterday when I got my copy of it. It looks pretty detailed so far. I think that Sarah’s got a really good handle on customer support and if you don’t know who she is, she handled the customer support for 37 Signals for a long time before she kind of struck on her own and created the company Cosupport.

[03:56] Rob: Yeah. I hadn’t noticed the launch. I’m glad you pointed it out. I’m going to be buying the Kindle version. It looks like it’s only $8 on Amazon, it’s kind of a no brainer. One other update for me on Drip specifically, we are maybe hopefully only two weeks out from having this email automation. It’s like marketing automation but it’s specifically with email and place and Drip. And from what I can tell and from what both existing customers and some prospect, I think it’s going to open as something to do with pretty broad market and it’s a hungry market, a marketing atomization’s kind of a new thing. I mean it’s not super new. Infusion Soft’s been around for several years but it’s really starting to hit its stride and I feel like people are getting into it more even folks like who own Saas apps or the info marketers used to just have a single list are now moving people between multiple list based on that user’s behavior.

[04:37] Frankly there are some tools out there that do it but everyone who uses them tells me that they suck it’s kind of like when everybody uses QuickBooks but everybody hates it, that’s what I’m hearing about, tools like Infusion Soft and I guess Marketo is good but it’s like a couple grand a month or something. I mean it is a space that I think could be right for some disruption so I’m excited to get that out and to basically do a pretty big marketing push into that market because it really does change the value proposition of Drip.

[05:06] Mike: Let me get this straight because I haven’t asked you about this before but by email atomization you essentially mean that there are triggers that the user can kind of trip over and trigger inside of Drip. Let’s say I run Audit Shark and somebody goes into Audit Shark and does something whatever that something is. Maybe they’re not just signing up for a trial but it could be something that they setup their first system for example to be audited and then that fires like a callback into Drip and Drip will send them an email that you guys monitor all of the interactions between the user and that email and send it out and figure out whether they actually read it or not and can do follow-ups and things like that.

[05:41] Rob: That’s exactly right. And so it can be triggered based on obviously signing up for a trial would be a good one. You could put your whole trial sequence inside Drip and we use liquid templating so you can have if then so if they’ve done this and haven’t done that you can – modify the text in the email ad you can just have a fairly standard template if they convert to paid then you can automatically move them into paid customer list or the current customer list. And like you said, as they use a new feature or if they don’t log in for X amount of days or month or whatever, there’s just all these behavioral things that can be done in an app.

[06:15] Now there’s also stuff on the marketing side where if they click this particular link in an email you can tag them. They click an SEO link, it brings them into a blog post. Talks about SEO, you can tag that person they’re interested in SEO. And so you can then say when they get done with their current sequence, move them to my other sequence my SEO sequence and then when they get done with that, funnel them back into the main sequence. So there’s both a marketing angle to it and there’s also like an in-app more of a Saas app type model behind it.

[06:42] So I’m interested to find out which one of those is bigger because I know people doing both of those sides of it but without actually getting into it and starting to market all I won’t know which of those markets is bigger and hungrier for this type of automation.

[06:54] Mike: That’s cool. Sounds really neat.

[06:55] Music

[06:58] Well as you said in the intro, today we’re going to be talking about when to ask your customers for credit cards. This question gets asked to us quite a bit so I thought we would do a whole episode on the topic and talk about some of the pros and cons of some of the different approaches and I think one of the big things that we get is why do we recommend asking for credit cards upfront when some of the data that’s floating around out there if you look at the date itself it kind of clearly shows that the opposite is actually more profitable.

[07:23] Rob: I think what we’re going to see today is the short answer to this question is you should ask for credit cards upfront. But it’s not like a 90-10 situation where 90% of the time you should ask for credit cards upfront ad 10% you shouldn’t. I’d say it’s more like a 60-40 or a 65-45 where when you hit these certain milestones this critical mass when you have enough time to do certain things, then switching to no credit card totally makes sense. But without having an entire episode to expound upon that, that’s always been the answer that I’ve given folks when in doubt, ask for credit card upfront. So I’m excited to dive into this topic honestly because we’re going to be able to give it a lot more talking through.

[08:01] Mike: So I think we’ll start into some of the pros to asking for a credit card as part of the signup process and then we’ll talk about some of the cons of that and then we’ll talk about asking people for credit cards after they’ve started their trial. To begin with, some of the pros of asking them for a credit card as part of the signup process is that theoretically it filters out some of the people who are not serious and the idea here is if you ask somebody for a credit card than they must be serious about it because they’re clearly willing to pay for it.

[08:26] I think that’s a good qualifier but I also think that not necessarily true. It’s not an absolute role that says hey, if somebody gives me their credit card then they’re absolutely willing to pay for it and that’s totally not true because in most people’s marketing materials, it typically says something along the lines of 30 day money back guarantee or whatever the number of days is. You’re saying that you’ll give them a refund. The problem with that is they see those things and to them there’s really virtually no risk for them to put their credit card and the fact of the matter is if they do put their credit card in, they can always come back later and if you do charge them, they can do a charge back just thinking that filters out all the non-serious people is just not necessarily correct.

[09:03] Rob: Yeah. I think I see it the other way. In Drip I have a two step signup process. The first step doesn’t mention credit card your email and password and then the second step ask for credit card. So I have information on people who aren’t entering their card. I can see who gets through and I can see who doesn’t enter their card and far and away the people who don’t enter credit cards are way, way less qualified and I can tell because I have there the URL that they enter and I have their email address. Right? So I can tell if it’s a business address and then I can tell what the URL is.

[09:36] And by and large the people who are skipping out and not entering their credit card in the second step, not starting a trial either have a fake URL, they have URL that’s like a default WordPress install, they have some type of a micro niche site that is never going to work for Drip anyway. It’s not going to be worth the money to pay for it. The just have 404’s or they just have URL that doesn’t even have a site up. It’s not 100% but I would say it may be 80% plus of those people. So for me through that experience, and my intuition says that you will get more qualified people and then for that experience, that’s kind of the data point I’ve used.

[10:13] Mike: I pointed out that it’s not necessarily true because I think there’s the inclination for people to believe that if I ask for a credit card then I’m only going to get people who are well qualified and I just want to point out that there are going to be people who come through there that are not…

[10:28] Rob: That’s definitely true. Also from experience. Yup.

[10:30] Mike: So the second part is that you don’t have to follow-up and ask them for a credit card. I mean if they’ve signed up, they put in their credit card information, you don’t have to follow-up with them later and in some ways that’s a benefit to you but it’s not necessarily benefit to the customer because they do have to enter in their credit card upfront. So if you’re basically making it so that they have to kind of stop what they’re doing if they wanted to go through the signup process and they’re not able to just do the signup process, I’ve read various blog posts from people who have said flat out I didn’t sign up for such and such service because my wallet was upstairs and I would’ve had to go upstairs go get my credit card and then I just never went back to it.

[11:08] So I think that lowering that barrier entry can certainly help you but clearly one of the benefits of asking it for as part of the signup process is you don’t have to ask for it later. You don’t have to follow-up with them.

[11:18] Rob: I’ll add two points to this. The first is if you ask for credit card upfront you should always email every customer before their trial expires and let them know their card is going to be charged in typically three days is the rule I use. This is not I take a credit card and the drop out of site and try to be forgotten. That’s not how we grow apps. That’s not how you build a successful app. You definitely need to touch base with folks before they’re charged and every month when they’re charged you send them a receipt and you offer refunds if people want to cancel at that point. So that’s first thing.

[11:49] The second part is if you do implement a two setup signup process where you get someone’s email and their chosen password the first step and then credit card the second, that gives you an opportunity that if someone doesn’t complete the process, you can feasibly ping them a day later and say hey I noticed you didn’t sign up. Was it the credit card? Did you not have your wallet or something like that because I have actually had a Drip customer tell me the exact same thing. I do this. We have a Drip sequence people are subscribed to. It’s only one email long and basically just touches base and says hey you didn’t sign up with your card. Did you need assistance or did you just forget or whatever?

[12:23] But that then coverts a few more of those people who like you said their wallet was upstairs and maybe this time their wallet isn’t upstairs so that’s a way to kind of get around that not having credit card on hand objection.

[12:33] Mike: I don’t think that’s terribly common to have that two step process. I sign up for a lot of services over the past couple years and there’s not very many that have that two setup process for where you’re creating your account you enter in your email address and password and maybe a URL or something like that and then on the next page, you ask them for credit card information. I don’t see that totally often. So I think that’s definitely a good takeaway for people who are listening to this.

[12:57] Rob: I haven’t seen very much either and it’s been quite successful with this at Drip.

[13:01] Mike: The third benefit to having a credit card as part of the signup process is you get a higher trial to paid conversion rates. And if you go back and look at the Totango Saas report which we’ll link to as part of the show notes. You look at that and it pretty clearly illustrates that the people who come in and enter in their credit card information upfront typically have a higher trial to paid conversation rate.

[13:24] Rob: This is a little bit of a vanity metric. Obviously someone paying you money is not a vanity metric but if you’re not looking then down the line that I think we’re going to get into here pretty soon. I’m talking about how many people churn out over the next few months, you’re not looking at the full picture. This would be kind of a weak argument if I were to say well the only reason you should do is because they’re trial to paid because if you don’t retain people for very long and everybody cancels in the first month then obviously that’s not ultimately the best thing to do.

[13:50] Mike: So let’s talk about some of the downside of asking for the credit card upfront. Obviously the first one is to get lower signup rates. Again that’s something that kind of way with the people who are signing up. I mean do you want a lot of people who are not very well qualified or do you want a few people who are very well qualified? So that’s something that you have balance to there.

[14:08] Rob: Let’s talk a few numbers. We do have this Totango report that we’ll link up. They give some ranges and they’re pretty accurate as far as my experience has been. And they basically say if you’re asking for credit card upfront you tend to be around a 2% visitor to trial signup and I’ve seen 1-2% as a general rule for Saas. Now with no credit card required they have 10% as their kind of general ballpark so it’s about a 5X difference. It’s about 5 times more trials or as you said, I guess you said lower signup rates so it’s about 1/5 of the trials coming through your funnel if you’re asking for credit card.

[14:44] Mike: And this is on page 8 of that report. The next thing is that you’ll tend to not engage with customers as much because you already have their payment details and what happens is that you have stopped trying to earn their business. So you’ve got this pay wall up in front of your app and in order to get into your app you basically force them to give you their credit card information and then once you’ve got it, what I’ve seen is a tendency to stop doing marketing to those people, to stop trying to continue to sell them on the product because they’ve already bought it.

[15:12] So I think the mentality is really well they’ve already purchased it. What do I need to keep selling them on it? I think the reason for that is you want to make sure that they follow through and don’t do a charge back that they don’t cancel that they’re still going to be a customer after 30, 60, 90 days because you want them to get into your system and stay there. I mean the lifetime value of that customer is going to increase over time. So you want to do whatever it takes to make sure that they stay there for a long period of time.

[15:39] Rob: Yeah I think this is a common mistake. I think you’re right. It’s a crutch to fall back on the fact that you asked for credit card to assume that the people are then just going to onboard themselves. You still have to spend a lot of time getting someone, using the app, getting value out of the app so that when they get that three day prior to charge email that they do in fact want to stick around and that they don cancel right away. Now at the same time it tends to be easier to get people who have entered their credit card to get onboard because they are a little more qualified.

[16:07] They have slightly more invested because they have given you credit card details that they know if they don’t get on boarded that they need to remember to cancel on that kind of stuff. So there’s a balance here but I think it’s a no-brainer that if you are asking for credit card or not that you still have to spend the time to engage you customers during that trial or else you’re going to lose them whether you have their credit card or not.

[16:27] Mike: The next sound sides of asking for their credit card upfront are you end up with a lower paid retention rate after 90 days and a lower end to end conversion rate. And again this goes back to the Totango report and these are in relation to asking for a credit card and the numbers that they show are that after 90 days the retained paid customer after that 90 days is 60% with a credit card require but its 80% if you do not require a credit card. And on the end to end conversions it’s .6% if you require a credit card and 1.2% if you do not require a credit card.

[17:00] Rob: Right. So they’re saying you convert twice as many people with no credit card. Now you have to manage five times the number for trials but you convert twice as many with these numbers. These numbers vary in both directions, both credit card and credit card not required. So it truly does depend on your product and how well you’re able to handle onboard and just how engaged you are and how much you’ve optimized that funnel, a broad swaft across all the companies that Totango studied certainly indicates that end to end conversion rates with credit card are lower.

[17:30] Mike: So let’s talk a little bit about asking for credit cards after somebody has created their account and started their trial. One of the first things that you’ll see is that you get a significantly higher signup rates and the Totango report shows it’s about five times what it is as if you were to ask for credit cards upfront.

[174:8] Rob: I think it’s at least five times. I’ve seen apps where they might get a 1% before credit card and they can get well up over 10% without credit card so 5 in my experience has been the low end and I could easily see 10 or 15 X more trials which can be a good thing. If you can handle that volume it’s actually you can optimize stuff a lot quicker if you’re getting that many trials. Right? Because you just have so much more volume coming through your funnel.

[18:15] Mike: I think that’s something else to point out is that just because you have a lot more people coming through your funnel, that doesn’t necessarily meant that you have the time to follow-up on. I think one of the key things that a lot of this data doesn’t necessarily tell you is that you really need to be able to have the resources behind you to follow-up with these people if you’re not requiring a credit card. If you got and just kind of assumes that you have 10,000 visitors a month to your website and these are the approximate numbers that it’s going to shake out to but that comes out to 1,000 trials a month. And 1,000 trials a month is a lot more difficult to manage than 200 say.

[18:54] Rob: And you’re jumping ahead to one of the cons but the point is it’s the downside of the pro that we’re discussing. At a thousand trials a month, if you have any kind of manual setup or any kind of code you need to install or any step that might require assistance, you are going to need like a half time or a full time support person just to help with on boarding if you’re driving that many trials. It’s night and day. Think it 5 times the amount of support than the asking for credit card route. and so that’s where if you’re a company and you have 5 or 10 people or you can hire full time support person, then yes, moving towards not asking for credit card is something I would recommend at least testing.

[19:31] But if you’re a solopreneur and you’re working on a Saas app on the side nights and weekends you launch it and you’re just trying to scramble and get enough money to quit your job not asking for credit card can be kind of real danger zone because you just don’t have the bandwidth to be able to onboard and engage with the volume of trials that you’re going to get.

[19:50] Mike: I think one of the weird things about this report is that it shows that when you’re not asking for a credit card the number of free users to free trials to paid users is significantly lower than if you’re asking for a credit card but then the number of those people who end up paying you for more than 90 days is about 20% higher. It’s 80% versus 60% for a credit card. I don’t see anything in here that kind of explains why that is. That’s one thing that it’s a question mark.

[20:16] Rob: Yeah. I think that it’s that people are making a very deliberate choice to convert to paying customer. And it’s not that the people who enter their credit card upfront and then get the three day email and see it and they kind of say well I’m going to keep using it. I’m not on boarded yet but I’ll just stick around for a month or two. I mean I’ve done this several times. Then you get 2 or 3 months down the line, your card’s been charged and you eventually cancel. I think that’s what’s happening with those folks whereas on the other side where you’re 20 days into a trial and it’s kind of like hey, have you gotten value out of this? If so, enter your card and we’ll move you into a paid account. That’s a very deliberate decision.

[20:53] And I think those folks don’t enter a card unless they’ve on boarded and gotten value out of the app and by that time, they’re just much more likely to stick around so that’s – you’re right. It doesn’t say that – that’s kind of my theory on why the retention rates are there dramatically higher. It’s a very stark difference and that leads to the other two pros you were going to mention which is that you have a higher paid retention rate after 90 days not asking for credit card and at least according to this report and their study that you have a higher end to end conversion rate.

[21:22] Now the tough part is if you’re doing this on your own, I would always recommend to test. Right? You got to test both approaches. It’s pretty complicated to do so. It’s not like setting up a Google split test. There’s a lot of numbers and a lot of things you have to look at over an extended period of time and so this is not something that I would recommend that again if you’re doing it on the side, you’re more of an entry level entrepreneur or you’ve just launched, it’s like this is a complex beast and you can easily look at the wrong metrics or not look at it over a long enough period of time and make the mistake and judgment.

[21:52] And that’s again why the short answer I have is always get the pre-qualified people, ask for credit card upfront. But the longer answer is as you get more advanced, you can do something like this. Very similar you know how I talked about a freemium being the samurai sword that if you don’t know what you’re doing you can cut your arm off but a master can do amazing things with it.

[22:09] I kind of feel like this credit card debate is the same way when you’re getting started the easy way is to ask and then down the line you can test and or you know what you’re doing more and you know more about your value prop and you’re just able to encourage people who haven’t given your credit card to enter that credit card. You’re on boarding so much better and you just have a lot more to lend to optimizing that process.

[22:31] Mike: I guess the way I see it is you don’t necessarily understand or fully comprehend what it is that’s resonating with your audience yet.

[22:39] Rob: So it’s not that you don’t know what you’re doing. It’s just you don’t know what your audience is thinking yet. So by asking for the credit cards upfront, you kind of filter it down to the people who really need it and make the decision upfront hey I know that I need this and this guy supplies so I’m going to pay for it and then you talk to those people and then eventually down the road when you get more resources available to you then you can kind of convert over.

[23:02] Rob: That’s right. Yeah, that phrase you don’t know what you’re doing yet, I use that for myself when I’m still learning about how to market an app. Until I find that place where I can scale it and I’m still in that learning phase. Right? So it doesn’t mean you’re a beginner versus advance. It just means you’re still trying to figure out that value proposition that resonates with folks.

[23:20] Mike: I think the biggest issue with not asking for the credit card is you need to follow-up with people a lot and you need to optimize that because you have to have a lot of information from your customers in order to be able to do it effectively because you can create email sequences and follow-ups and all these other things but if you don’t have like for example the resources to call people back and ask them questions or ask them why they haven’t done something then it doesn’t matter. That’s going to drop your ability to convert people from a free trial into a paid conversion.

[23:53] Rob: Yeah. If you look at the people who are not asking for credit card and having success with it and make sure that last part is there because a lot of people are not having success with it and don’t know any better. But if you look at a Kiss Metrics, if you see someone who’s making it work, they have invested hundreds of hours into making that work because you have to optimize this part of the follow-up sequence. You can’t just dump someone in and expect them to get started. You need to either be making phone calls, you need an expertly written email trial sequence, you need a lot of on boarding in the app. There’s a lot that goes into this that that is harder here than it is if you ask for credit card upfront.

[24:31] And so if you don’t have week’s worth of time to not only put out a V 1.0 but to watch how that works and measure it in terms of your on boarding into trial emails and that whole process then this is where it can be a danger zone. Use that phrase again, if you don’t know what you’re doing yet then this is a lot harder than it looks to actually make these numbers work the way that Totango shows.

[24:53] Mike: Yeah, one of the interesting things that I’ve heard that the business of software conference a few years ago was there was a round table discussion and there were a bunch of people from some fairly large companies there and one of the people was there from Red Gate and he flat out said that as part of their trial sequence and stuff they basically ask people for some information about themselves like their email address and phone number and things like that. And what they started doing was they started calling people 20, 30 days after they downloaded a trial. And what they found was after doing the measurements and stuff was that the purchase price, the average purchase price of somebody that they called was something like 60 or 70% higher than it was than if they did not call.

[25:39] It was enough like you at that and say what’s 60-70%? It was something the difference in actual numbers was something like $1,300 to $2,400 $2,500 or something like that. So the cost of them not making that call was something like over $1,000 and they were consciously choosing to not make that call and they’re just like we don’t know why we’re not doing this. We just don’t have the ability to call. We’re not consciously choosing to call those people. And they’re making enough money that it does necessarily mater to them but they could theoretically have been a lot more successful if they were calling those people.

[26:12] And you would think that a company their size would be able to afford to hire people to just go out and call people and it was just not something that they were doing this time.

[26:21] Rob: I think you’ve made a good point there that if a company like that can’t make this worked without credit card and that they aren’t doing the right steps to actually get this 1.2% conversion rate that Totango’s report talks about, it shows you that it’s difficult. It’s not impossible for a small shop to do it but if you’re one person, two people, three people, it is going to be a challenge and you’re really going to have to know what you’re doing and be willing to invest a lot of time in it until you see the numbers grow. It’s not something you can just set one time and forget.

[26:49] Mike: Yeah, I think the other thing that brings out is that you can’t really treat those free trials as if they were just a black box. I mean you really need to engage with your customers and that makes a huge difference in whether or not they cancel or whether they fork over their credit card and actually pay for the service. I mean the other side of that is how quickly they realize the value versus when they perceive the value of the products makes a huge difference as well. So if you put together this great marketing story for them and they look at that and they say oh yeah, I see the value in that. Here’s my credit card information.

[27:22] But if they don’t actually see the value of that, then an maybe it takes 30, 40, 50 days for them to see the value, that makes a big difference as well. I think Rob you’ve kind of talked a little bit around this in the past by discussing how you’ve – I think it was the length of your free trial for I believe it was HitTail. You dropped it from like 28 days to 14 days or 21, something along those lines.

[27:43] Rob: Yeah. When I first acquired HitTail, the trial was 60 days long and I immediately moved it to 30 and then I moved it to 21 after maybe 6 months of testing and it allows you to iterate faster and it also frankly we had improved the product and so people got value out of it sooner. And the more you learn about how quickly people get value out of it the shorter you can make that trial. Having a 7 day trial is not a bad thing. If you give people value in the first few hours having a 24 hour trial or no trial, charge them upfront and then refund them, that’s how a lot of web host do it because as soon as you have a web hosting account, you have space on the server. You’re getting value out of it.

[28:20] And to be honest, I’m actually considering either going with no credit card with HitTail jus as a test or also testing asking for a charge upfront. Because as soon as you get into HitTail now, there’s no tracking code and there’s no weight anymore. Right when you get in your link it up to your Google web master tools account, boom, you get suggestions right away within minutes of being in. So the length of time until that awesome experience, that literally went from 15, 16 days that a lot of our customers was taking down to about 5 minutes. So realistically my whole on boarding flow should change. I can take better advantage of that frankly.

[28:53] So there’s a lot of options here and I think that the more data you have and the more that you’ve seen your customers get value out of it, the more behavior you’ve been able to witness it just gives you more areas in your quiver in order to test new things.

[29:06] Mike: Something else that we haven’t really talked about yet is that the Totango report really differentiates in three different categories not just two. The first one is the credit card required upfront. Second one is credit card not required upfront and then they have this third category where what they call it is best in class Saas leaders. If you look at that category, it’s essentially people who don’t really fall inside those numbers. They were doing significantly better than all of the other people in there. So maybe they’re looking at the top 5% or 10% of the Saas companies that are feeing data into their system and saying what are these guys doing? How are they doing so much better than everyone else?

[29:46] And it’s interesting because they point out that one of the things that those best in class people do is they don’t restrict that top of the funnel. They don’t ask for credit card upfront which kind of makes sense because we kind of talked about that but the other thing that they have to do is they have to monitor those trial users and in any group of trial customers there’s going to be some people who are more inclined to buy from you just because of the fact that whether it’s who you are or whether they really need the product.

[30:13] Again, it’s those people who probably would’ve given you their credit card upfront if you’d asked for it but by following up with those people and actively looking for them in their metrics and say oh, Sally joined today and she spent two hours inside of our applications so clearly she needs this. So let’s follow-up with her today versus Joe who signs up and then doesn’t log in for four days he’s probably not nearly as well qualified.

[30:39] Rob: I’d also be really interested to see the worst in class and when they’re doing differently. I think that would be really educational. But this is cool to see. They say the best in class companies have that large top of funnel they don’t ask for credit card, says they have awesome content. They do a lot of inbound marketing. They obviously have a higher touch approach to sales because they doing lead scoring and they’re nurturing those trials and they’re focusing on the people who are getting value out of it or who feasibly could. And you know, as we’ve said, that does definitely take more effort than some people have at this point in their product.

[31:11] Mike: And they’re also actively reaching out to people who are essentially at risk customers. I remember Dharmesh Shah at the Business of Software conference had said flat out that they have the CHI’s, the customer happiness index and they can essentially predict when somebody is going to cancel and they were using them to identify those people and in advance of them cancelling would call them up and say hey, we just want to know what we can do to help but he basically said that you target those people and try to make sure that they have everything that they need so that they don’t cancel.

[31:43] Rob: Yup and the Totango report says proactively reach out to at risk customers to offer help. And so that’s not just an automated email follow-up sequence that means either manually emailing someone or better yet getting on the phone with them and that’s what these best in class companies are doing and I think that’s the part that people skip over when they read this report or when they hear oh, I shouldn’t ask for credit card. There is some effort here. Well worth it if you’re at scale because the numbers are very different it’s a whole other side of the business that you definitely need to focus on if you want to make it work that way.

[32:16] Mike: Yeah and I think that’s probably where a lot of the confusion maybe comes from where we tend to recommend A) ask for credit card upfront unless there’s very specific reasons that you have for not doing so and it’s because all of that active follow-up, the proactively reaching out who are at risk and nurturing those leads as they come in. When you have so many people who are coming in, it’s hard to follow-up with all of them and again you don’t necessarily know your marketing message upfront. So those things make it difficult to manage that large number of people versus asking for their credit card upfront, trying to do your best to kind of pre-qualify people and using that credit card and then following up with that smaller group of people so you get to that scale.

[32:57] I heard a podcast had Ruben Gomez on there and he said he was actively testing without a credit card now in order for him to iterate faster. It was a very interesting podcast. If I find it I’ll link it up in the show notes but it’s definitely a good listen to hear what his process was for that.

[33:15] Rob: Yeah and that’s a good example right there. You could point to Ruben and say well he’s doing it, I’m going to do it too but Ruben has a lot of experience and has a lot of info about his customers and he’s done extensive interviews, a whole back story to that that you don’t know about. So if you’re at his level and not just his level as a marketer and a founder but his level in terms of knowing your customers then you should absolutely dive into that. It takes time to get there.

[33:38] You know with all this, I will point out that I’m definitely considering testing no credit card with Drip and with HitTail as I’ve already said. It’s not always this blank recommendation. Like I said it’s not a 90-10 thing. It’s really in the middle and it depends on the situation you’re in and I think that’s why we wanted to spend a full 30-40 minutes talking about it today because the short answer doesn’t really give the full picture. I think how I feel about this subject.

[34:04] Mike: One thing that you’ve mentioned to me offline was that in some cases that you felt that some people use not asking for credit card is a crutch for overcoming bad marketing. Why don’t you talk a little bit more about that because I thought that was very insightful.

[34:16] Rob: Yeah, I mean you see some folks just getting started, asking for credit card upfront and no one’s signing up and then they basically say well, it must be because I’m asking for credit card instead of saying my marketing is not very good. My messaging isn’t very good. My website’s not doing a good job of convincing people that this is actually a valuable product or it really isn’t a valuable product and I didn’t test the market in advance. And so it’s easy to fall back on not asking for credit card to try to open up the funnel and I think that’s tempting to do.

[34:43] now on the flip side if you do open it up to get more people into that funnel and then figure out why people are getting on boarded and try to figure out who is actually getting value of it and you’re really going to dive into that, then I can see that being a decent move but the real beginner folks that I have seen try to do this weren’t going to that extent. They were just opening up the credit card hoping that more people would convert and that was it.

[35:09] Opening up to more credit card is the first step of a long series of a lot more work that you need to do to then optimize your positioning and your value prop on your website, upgrade your marketing, update the copy, there’s lot that needs to be learned and done once you do that. It’s not just this secret trick that you can use to suddenly skyrocket your growth.

[35:32] Mike: Yeah and kind of hidden underneath there is if you’re going to go that route, there’s nothing to say that you can’t figure out what your marketing message is doing wrong and then go back and start asking for credit cards again upfront afterwards. Because if your goal is to open it up just to get more people in because asking for credit card upfront is not working and you’re just trying to get people in to the sales funnel to talk to them and kind of understand what it is that their needs really are and then you tweak your marketing messages and then you revert it back.

[36:02] I mean I don’t think that there’s anything wrong with that but it has to be a deliberate choice to be doing that too. I think that as you said, people used as a crutch for bad marketing and then they still don’t fix their marketing. They just say oh, well this increased my sign up rates. So I’m going to leave it as is and not do anything.

[36:17] So hopefully that this whole discussion kind of clarified what our recommendation is and why it is that way even though it does in many cases go against what this Totango report recommends. But if you have question for us, you can call it into our voice mail number at 1-888-801-9690 or email it to us at questions@startupsfortherestofus.com. Our theme music is an excerpt from “We’re Outta Control” by MoOt used under Creative Commons. Subscribe to us in iTunes by searching for startups or via RSS at startupsfortherestofus.com where you’ll also find a full transcript of each episode. Thanks for listening. We’ll see you next time.

Show Notes

Transcript

[00:00] Mike: This is Startups for the Rest of Us: Episode 178.

[00:03] Music

[00:11] 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.

[00:19] Rob: And I’m Rob.

[00:20] Mike: And we’re here to share our experiences to help you avoid the same mistakes we’ve made. What’s the word this week Rob?

[00:24] Rob: Well, I found a new tool that’s helping me unsubscribe from a lot of email newsletters and it’s called unroll me. It’s unroll.me. I put it in my Gmail account and it scans through all of your emails and it figures out how many emails subscriptions you have. I think I had 211 that it identified. Now, some of them are things like Amazon so I’m not going to unsubscribe from those. But there were a bunch that either I just don’t recognize or there are things that I subscribed to a long time ago and I’ve ever unsubscribed from. So just one by one you click the link and it tells you you’re unsubscribing from these things. So I’m assuming since they parsed the email, they grabbed the unsubscribe link and go hit it with an HTTP post.

[01:06] Then you can do a roll up of all the rest of them or as many as you want so you can say well I want like Groupon and Living Social and maybe my Facebook updates and a bunch of other things. I want you to Unroll Me to grab those when they come in, compile them into a digest and then pop that back basically into my inbox only once a day so you can say I want it to run every morning at 9 AM or every afternoon at 3 PM just so you’re not getting that constant stream of kind of these info notifications and stuff. So it’s really – I’m not using that piece of it, the rollup yet but I did go through and unsubscribed from probably 70 or 80 of those 211.

[01:43] Mike: Wow. I am just shocked that you have like 211. Although I haven’t run it against mine so I have no idea what…

[01:50] Rob: I’ve unsubscribed from a ton of things. I don’t tend to don’t to subscribe to a lot of things and I unsubscribe quickly so I bet you’ll be over 200 as well. I heard this originally on another podcast. And the guy said he had 227 and he didn’t think he’d have that. So my guess is by the time it finds everything – because there were some things from like a couple years ago that I haven’t received an email in a while so…

[02:09] Mike: Okay, so it like goes all the way back into your mailbox and looks…

[02:11] Rob: In your archives. So what’s going on this week?

[02:14] Mike: I’ve been kind of following things on the internet lately and Nathan Barry just released a course on how to double your launch revenue. And from the looks of it, it looks primarily aimed at educational and information course type products. It looks pretty good. It looks very, very high quality. I mean just look at some of the other things that Nathan’s done. He’s also a speaker at MicroConf but he does do a lot of really, really good stuff and look at the stuff he does do. It is very high quality.

[02:37] Rob: Indeed. Cool. So I’ve been thinking this week. Based on a discussion over on podcasts just called Bootstrapped, it’s at bootstrapped.fm and Ian Lanceman and Andre were discussing the term growth hacker. Ian hates term growth hacker which is fair enough. But I was thinking does growth hacker – is that term useful? Is there any use to it or not? And it got me thinking about how new words come into our lexicon, words like freemium that you’ve never heard of before maybe five years ago or pivot or cloud computing web 2.0 crowd source, long tail, there’s these terms that are kind of invented and then they’re given a meaning. They’re infused with a meaning based on the original person, the person who coins it typically gets to define a meaning. But then that meaning kind of often runaway from them. Right? Because it depends on how people use it.

[03:20] And so you think about the long tail like Chris Anderson wrote the book about the long tail and when it first came up, it had a certain meaning. I think that meaning has stuck pretty well. Right? It hasn’t been like abused in a bunch of ads and used poorly whereas that term web 2.0 came out and it made sense at the time. It was like oh, this is a different web. The first web was all about brochure wear and the second web I think what was it about? Like self publishing right? It was kind of blogging and stuff in 2002.

[03:48] But then it got so overused by people who didn’t know what it meant that it became irritating. Right? And then there’s a backlash against it by the Technorati don’t want to use that word because it’s now considered lame. So I think it can go either way. And we’ve talked in the past when you know I’ve talked about lean startup about how a lot of words that came out of that like pivot and maybe product market fit which I know is actually originally from Mark Andreessen. When you hear them too much you start saying oh, these are just bogus words. But they give us a common vocabulary. Right?

[04:17] When I say pivot, whether it irritates you or not, whether you feel it’s a buzzword or not, it has a real meaning and we all know what that meaning is and it’s a nice short hand to have. That’s how I’ve viewing growth hacker as like a short hand that people understand yes, it is just a marketer but it’s a little different. Would you say Noah Kagan is just a marketer? There’s something different about him than the people with clip boards and spreadsheets that I worked with back at the credit card company. It’s a more specific term. That said, growth hacker is being used and abused everywhere and I think that the term is probably now bankrupt that it is more annoying than is useful. What’s your take on this?

[04:51] Mike: I still feel like the term growth hacker is not as clearly defined as it probably could be and I think that when I hear terms like that, they can mean one of our like 30 or 40 different things. I don’t give them a lot of credence and I probably think less of them just because I hear people use them and they mean something different based on who you’re talking to and at that point, it just loses all relevance to me. So that’s why those things kind of irritate me and I really think it just boils down to the fact that there’s no concrete definition and not everybody is using the same terminology. I think it just needs to be – calm down a little bit, solidify what it really means.

[05:30] Rob: Yeah. If you go to – Sean Ellis coined it and then Andrew Chen kind of expounded on it so that’s the original definition of it. I respect both those guys as marketers and as people who’ve grown companies. But then you’re right. There’s a book on growth hacking by some PR guy who I don’t have a ton of respect for. He’s a good PR guy but I don’t have a ton of respect for in terms for in terms of like growing startups. Right? And I view growth hacking is like getting inside a startup and going after numbers and elevating the thing and not using spammy techniques as is often said but that’s how I view it.

[06:01] Whereas other people think oh, growth hackers are more like the original growth hack that Andrew Chen talked about as air b and b basically spamming craigslist. And so that maybe gets it off on the wrong foot because now growth hacking is kind of equivalated with maybe some blacker hat techniques.

[06:15] Mike: For me, when somebody says growth hacker, I think of it as something that is kind of going back to your example where you said it’s Noah Kagan and would you just classify him as just a marketer and the answer is no, he’s not. But at the same time, when you say growth hacker it encompasses so many things that it kind of lost its meaning. To me, it’s almost like you say growth hack and you’re basically saying everything except for doing all the traditional marketing things that you would’ve done 10 or 15, 20 years ago. That’s what it means to me in which that doesn’t really clearly define it and that’s the problem that I see.

[06:50] Rob: Yeah so if you’re listening and you’re interested in another discussion of this where I was originally inspired, it’s episode 36 of bootstrapped and we will link it up in the show notes.

[07:01] Mike: We’re coming up on MicroConf so I figured it’s time to startup our quest for good MicroConf jokes to kill time. So I have a question for you. What is the best place to hide a dead body?

[07:11] Rob: I don’t know.

[07:12] Mike: Page 2 of Google search results.

[07:13] Rob: Nice. How about at the top of the organic search results? Because have you looked lately? Have you searched and seen like 4 or 5 ads that Google is putting above the organic results and they took away the background color and it is not very easy to tell that these things are ads. Boy, if you start to block out – because our eyes we start to blackout banners and we start to block out things like these, the little yellow ads without the background color, it really does look like organic results.

[07:42] Mike: They’ve been doing this for years though. I mean they’ve been gradually moving things together and blurring the line between the paid search results and the organic search results.

[[07:51] Rob: But they have not did it like this though. I mean this is a big step that the background color has always been different and they’ve always made it really clear. They either put a box around it or that background color showed you where the ad started and where they ended and now it’s harder to tell. In addition the ads up top used to look different than the search results and they don’t. It’s almost the exact same format. There’s a title. There’s URL and then there’s some result text and then there’s links. I bet they’ll get a lot more clicks on ads.

[08:15] Mike: Yeah. I feel like it’s been like that for quite a while now.

[08:18] Rob: No, this is just a recent change.

[08:21] Mike: We’re on different data centers though. We’ve checked that before.

[08:23] Rob: Yeah I know but people were talking about it just in the past week or two on the other podcast I listened to is definitely a recent change.

[08:29] Mike: Got it. Well today we’re going to dive in some listener questions. So our first email comes in from Jake Berdis and he says hi Rob and Mike. I just wanted to say a massive thanks for all the inspiring info you share through the startups website and above all on the podcast. I’ve been a listener for the last year or so and the value you are sharing has been a huge help to me in setting up my own business. We offer websites as a service as opposed to software as a service and the best thing is I just made my first two sales. It’s so true what they say. They’ve completely changed the way I think about things. Before the sales, I was confident my idea was a good one for sure but I had days of uncertainty and sometimes staying motivated was a real struggle. Now I know that if one customer’s willing to pay for my solution then there are more out there who will be too. Thanks again guys.

[09:09] Rob: Nice. So that’s a little success story from a listener and I am definitely a believer in those small early wins. Getting a sale at some point and having someone you don’t know actually pay you money, the first time that ever happens, no matter how much we say it here, you’re not going to realize how big of a deal that is and how it really does change the way that you view business because suddenly it becomes wow, I can do this. You have doubts until that point that you can ever actually get someone to pay that money.

[09:38] Mike: Well the other nice thing about that is that as you build those sales, they stack on one another. It kind of builds up your confidence in charging down the road for it and it gives you the confidence in saying to people hey this is wroth something and this is why it is priced at this point because it is valuable to people and this is what people are getting out of it. So Jake thanks for sharing that with us.

[09:58] Our next one comes from nelson Whitmore and he says hey guys, I’m working on my first enterprise SaaS business and I’ve got a great product sweet in mind for home builders. I’m trying to take the lean approach and haven’t started coding anything yet. The platform I’ve designed has three products that I could sell independently but having all three is what will really make the platform work. When I go to validate the idea with potential customers, do I pitch the whole platform do I just pitch the first piece and give small product out there and up sell later down the road? Thanks. Love the show. Nelson.

[10:26] Rob: Well, so Nelson is talking about two separate things. One, he’s talking about validating the idea and then the second part is he’s talking about building. So those are two separate steps. I think that when I originally pitch it, I would lead in with just the first of the three parts but I would mention that, the 1 year or the 18 month game plan is to do all three of these things. And the interesting part is perhaps what you’ll find out then is that the second or third parts are more important to the potential customer than the first one is and there, you’re just gathering information. So you’re not actually tying to enforce the plan on them but you’re kind of saying here’s what I plan to do. Do you have any feedback? Is there a better way for me to do this?

[11:02] Then the second step is you’re now going to go build something for these customers. I would absolutely not build all three points. I would not try to build or market or launch all three of them. I would build the first one as quickly as possible would get it out, get people using it, see what value they can get out of it, see how you need to iterate on it and try to market that. And you’re going to learn so much from that that my guess is your vision of how the second two need to be built and rolled out is going to completely change.

[11:30] Mike: I totally agree with the second half of everything you said about just building one thing. The first half, I think I would probably advise trying to figure out which of those three things is the one that should be built first? I think I’d really drill into that with people and maybe you lead with a different product because you really want to figure out which of those three products is the one that you should go after first because it maybe that people are not interested in the second or the third product at all. Maybe they’re interested in the third but not the second or vice versa or maybe they’re just not interested in either of them. And you really need to figure out whether or not people are going to give you money for it based on going out and looking for that product on their own as opposed to just having a conversation with you about it. I mean is it something that you’re going to be able to sell and not face to face I’ll say.

[12:15] Rob: Yeah. I think it’s easy to have this grand vision of a big suite of products. I’m not just going to build Microsoft word. I’m going to build word, excel, PowerPoint and all these other things. But it’s kind of like slow down, pick the one that you think you can get the most traction with first and then once you’re – you’re going to spend six months or a year. I know it seems like oh it will take 2 months to build and get it out there. It’s going to take forever, a lot longer than you think. Once you get to that point then you’ll have customers and you’ll have a bunch of knowledge and then you’ll be able to basically stack the bricks and kind of stair step yourself up.

[12:45] Mike: So Nelson I hope that helps. Thanks for the question. Our next one comes from Stanley Tan and he says hey Rob, I’m loving your podcast because you talk from a startups point of view about getting your 10^th user and not from a company getting their thousandth user. I have a couple of questions for you. The first one is are you using a system to track your bugs? Second, how do you keep your product bug free, third, how does your team handle the process of pushing out new features and fourth, how do you improve an existing feature? The reason for this last question is my developers has untouched an existing feature because they said it will cause the system to be unstable. Thanks a lot. I appreciate it.

[13:18] Rob: For bug trucking, we use Fog Bugs. It’s good. I don’t think it’s the best of breed anymore. It was probably the best of breed in 2005 or 2006. I think there are newer tools out that if I were starting from scratch I would probably use them. I’ve actually considered moving over to something GitHub for tracking. There’s a big switch in cost but Fog Bugs is what I use. I use their on demand hosted version.

[13:40] Next question was how do you keep your products bug free? Well there are no bug free software products in the world so don’t think that you’re going to have products that are bug free. But the way we keep HitTail and Drip from having a lot of bugs is that we – customer support and we fix them quickly. We deploy almost daily to Drip. We probably have 3 or 4 deployments a week where we push new stuff out. Most of that is features but as bugs are found, we take care of them fast.

[14:08] His next question is how does your team handle the process of pushing out new features. We use GitHub and we have – web developer does a pool request and then we merge it into the trunk and then the trunk always compiles. There’s over 1,000 unit tests written for Drip and so anytime we check something into the trunk and we do a deployment, before that happens, all the tests have to pass. And so that’s how we push out new features. And so a new feature push and a complete deployment of everything is literally one command that activates a script and that deployment takes several minutes because there’s a restart a bunch of stuff, copy a bunch of code. Check things out, put a label but it’s all automated.

[14:47] With HitTail, pushing out new features is a little more manual but we use Git for it but it’s just a lot of command line, several command line things to copy something in and out of somewhere else. But that gives us a flexibility to easily rollback. Everything is versioned and so if I do a deployment and stuff chokes, I can roll it back pretty easily unless there are a lot of database changes. And then, fourth question less related to deploying he says how do you improve an existing feature.

[15:14] And I mean every developer – no developer wants to touch existing features that other people built but you just have to. That’s a bottom-line. If you’re a competent developer, if you’re working in the industry and you’re actually working on code whether it’s yours or other people, you need to get over it and you just spend the time to do it. It takes longer. Yes, it’s not as easy but there’s so much software written. All software is legacy software at this point and so when I improve an existing feature, I get in, try not to break things and then I QA it and have someone else QA it and you basically do the best that you can.

[15:43] Mike: There are going to be times where you’re going to have to touch a feature that is going to impact a lot of different things and it could very well be that by tweaking that feature you’re going to introduce a bug. I mean that’s just the nature of software that just happens. There’s not a lot that you can do about it. Systems to track bugs I use Fog Bugs. I also use Pivotal Tracker. Fog Bugs seems like its losing ground in the industry and there’s a lot of other things out there that would probably work better for me so I’m kind of experimenting with Pivotal Tracker right now. I will probably do some more experiments with Jira and go from there kind of figure out where I want to go with it.

[16:18] But as you said, there’s a huge switching cost so with Pivotal Tracker, I used it on a project that we were doing for part of MicroConf which seems to have worked out a little bit and then I’ve got another project that I’ve been working with Pivotal Tracker on and it seems like it’s working pretty well but I still want to give some other tools a shot. And then in terms of keeping a bug free – there isn’t software that’s bug free really what I tend to do is I look for the bugs that I can live with as opposed to the ones that are just going to totally destroy the product or make it completely unusable. I mean if the product’s unusable, you got to do something about it but if there are things that won’t work as well as you would like, you kind of have to look at those and say I’ll live with them for now. For now maybe a couple of days, a couple of weeks, might be six months to a year, it depends on what other things come up as a priority.

[17:07] And then in timers of pushing out new features for Audit Shark, what we have is several branches like each person has their own individual repository and then there’s kind of main branch and when you finish merging everything from all the repositories into yours, you can push it to the main branch and then what happens is on the build server, there’s – I use a product called final builder which basically runs through all the unit tests, does all the complies, packages everything up and then pushes that out to as yours to make sure that everything’s working the way its supposed to. So I guess that kind of wraps up how we handled the technical side of the things that we’re doing. So hopefully that helps you out Stanley.

[17:47] Our next one comes from peter Allen and he says I’m launching an app this summer and building a launch list. One of my main competitors signed up. It doesn’t feel right to be emailing my competitor all the news about the new project. Wondering what your thoughts are on this. Should I take them off the mailing list?

[18:0] Rob: That’s an interesting one. I think your competitor’s going to find out your info whether he’s on the list and you send it to him or not. With that said, I don’t know why you wouldn’t take him off. I’ve never had this happened. I don’t know if I would or wouldn’t. Not sure that I have a strong sense of what I would do if this happens. So I think I would go with your gut feeling if you’re concerned about him finding stuff out then pull them off. You have any thoughts on it Mike?

[18:23] Mike: I don’t know. I’m torn on this one as well. I don’t think that there’s any harm in taking them off because he is one of your main competitors, you may as well take them off. But at the same time, what you probably should have done by now is go over to your competitors website and take a look at their stuff and sign up for any mailing list that they have so that you see what they’re doing. So you’re probably doing it yourself and if you’re not, you probably should be.

[18:43] Rob: And it sounds like he’s leaning towards pulling him off and so I guess if you’re leaning towards that, I would probably just do that.

[18:50] Mike: I don’t think there’s anything wrong with taking him off. Especially since you’re kind of still in the pre-launch phase and if you haven’t launched the product yet, if you’re still trying to build up that marketing side of things, then there’s nothing to say that they couldn’t go out there and do the same things that you’re saying in your mailing list which are I’ll say quasi-private. But the second you launch and your website is up and live, everything’s public. So if you’re banking on them, never come into your website and see what you’ve got going on then that’s not just realistic if it’s a matter of trying to keep things kind of under the radar and only for the people on your mailing list up until that point then that’s a different story and I don’t see any issue taking them off.

[19:29] Our next question comes in from Simon Edwards and he says hi guys, love the show. I’m massively inspired. Now if I can just kick the corporate stooge gig. My question is where do you find software for sale? I know Rob bought the invoicing software from somebody but how did he find it? I’ve looked at a bunch of sites but most were selling ad words sites or scripts, not functional software. I think taking something that is 60% done will get me over the hurdle I need to clear. Any advice is much appreciated. Thanks.

[19:51] Rob: So I’ll start by saying don’t buy something that’s 60% done. Buy something that’s done and is close to having customers and product market fit meaning it already has solved the problem for specific market. That’s the ideal scenario that you can buy something that already has that and just use marketing to grow it. But if you buy a half finish software product, you’re better off just writing it from scratch in general. So I wouldn’t look to just buy a code base. If you want to go buy a code base, go to Google and type in like clone script like PHP clone scripts and go to those sites. And there’s clones of all types of stuff that you can get for $50 or $100. So if you just want code that does something, that’s where I’d head.

[20:27] But when you’re buying an app, think of it about buying existing marketing because that’s what the real value is, its revenue and the marketing that’s already been done. So there’s already inbound traffic if there’s existing customers those are just so much more important than the code that you’re going to be buying. The first part of the question was about where to find them and we actually recorded a podcast back in 2010. It’s episode 15, how to buy a web application and most of that still applies if you go back and listen to it but in general the apps that I have purchased I have found on forums. That’s where I found .net invoice. It was on the old site point forums.

[21:00] I have purchased them on Flippa and you’re right, Flippa is a big mass of junk but you have to dig for the diamonds if you’re going to buy something there. Right? Everyone logs in and thinks they can type in SaaS and find this amazing SaaS deal and that’s not how it looks just like the guys who make money on real estate don’t just walk down the street to the for sale sign and buy the house and they flip it for a bunch of money. That’s not how it works. You have to put in time. You have to learn in. you really have to invest the time to filter there.

[21:27] The third thing I’ve done is cold emailing and that’s how I found HitTail and that was an app that I had used and I emailed the founder and she wasn’t really maintaining it anymore and so she was willing to sell it. And then the other thing I’d look at is brokers. There’s some good brokers feinternational.com is one and empire flippers is another. And those guys have higher and apps and it’s probably purchase price between $20,000 and a couple hundred grand there. But those are the higher quality ones that actually have customers and they’re real businesses, they’re not just someone wrote some code and has it up on a server somewhere with zero marketing and zero customers.

[22:00] Mike: So Simon, I hope that helps. Our next one comes from Chris Kirkland. He says in episode 169 he stated that starting a community based website is hard. This was talked about around the 30 minute mark going into the podcast. Do you consider social networking site the same as community based websites? I would like to build a social network focused on helping businesses to promote their services and products similar sites like LinkedIn, talk biz now etc. Can you give me some insight on the best way to do this or this is a long journey?

[22:28] I think the big challenge you run into with these – any sort of community site whether it’s a social network of any kind of a community based website, the value really doesn’t come in until you hit this critical mass. And getting to that critical mass can be a long slog and the issue with that long slog is if it takes you too long to get that critical mass then you run into issues where people think that the site’s abandoned, they’re to going to come back to it and people are just not going to give it a chance. And you can try to re-invigorate the site later on after you get – let’s say you get 300 or 400 or 500 people and you can email them all and say hey, we’ve just done a new site redesign or something along those lines that kind of bring them all back at the same time and hopefully that can kind of jumpstart things if things have fallen by the way side.

[23:14] But the bottom-line is building those community based websites, really has those two factors where you have to reach that critical mass and it has to be within a certain timeframe and if you don’t do it quickly enough, then the site is just never going to really take off. And those are the two key things that you have to keep in mind when you’re trying to market it. The best hitting to do I would say is actually focus more on building email list because with an email list you can wait unit it gets to that critical mass and then invite them to a site and that will probably workout a lot better for you but you still have to be able to have something to say to that community.

[23:49] Rob: Yeah, building a community site you have to have the community first. That would be my advice. If you look at all the communities that you’re familiar with that you’ve seen work let’s say all the jolan software forums, where did he start? Well he had the blog, he had the people, boom, he sent them there. When they started stack overflow, Joel and Jeff both had enough people to get a community site going because your community site or your social network, your forum is worth nothing until there are X number of people there and that X might be 200 active users, that’s a bare minimum you can have just to support it and then keep it alive.

[24:24] And when you have 10 you may as well have zero because those 10 are going to leave because no one else is there. You have to instantly jumpstart it to that minimum number and I don’t know if 200 is a number. I’m kind of just drawing that out. But you look at thread list which is the t-shirt community site, that started as like forums for artists and then thread list now has voting where you can vote on t-shirts. They would never have been able to make that happen if they started it from scratch but if they had the audiences and then a bunch of copy cats came in and tried to do the same thing but they just said oh it’s the technology and they built the same thing but they didn’t have the artist there willing to vote on it.

[24:57] I would even say it’s a long slog like SaaS because at least SaaS you can start it if you have two customers who are paying you, you still have two customers who are paying you the product’s still valuable to them. But with something like a social network or a community site, you have to instantly jumpstart it to a certain amount or else, it’s a ghost town.

[25:12] Mike: Yeah. And I think that’s part of the reason behind the success of the Micropreneur Academy and MicroConf because we had this community in place, rob stated the Micropreneur academy from his blog and kind of brought people into that community. Form the Micropreneur Academy we started the podcast and then when we decided to go out and do MicroConf we already had this community of people that we were tapping into from both the podcast and from the Micropreneur Academy. So we were able to make that jumpstart happen but if you aren’t able to do that, it’s just not going to work.

[25:42] Our next question comes in for Jim Monroe and he says hi guys, I’ve looked at several methods of coming up with ideas from niche websites included in the Micropreneur Academy and via research I’ve gone with my top traffic pics but I’ve had difficulty when it comes to creating useful or shareable content with a niche that I’m not an expert in. I like to create useful content to attract visitors and newsletter signups and not just regurgitating the junk I’ve read about said topic on the internet let alone do it on a weekly or more frequent basis. Do you have any suggestions on generating the content base for a new niche website? Do I just avoid content marketing like this even if the niche appears to be a good one? Outsourced article writing or just BS my way through it? Thanks guys. Still digging the podcast. Great work.

[26:21] Rob: I think it depends on how big of a product you’re looking to build. If you’re trying to do a SaaS product and you want to grow it to tens of thousands of dollars a month in revenue then you either need to be into that niche enough that you’re able to create content or you need to have the funds to hire someone who can create high quality content and that’s going to be between 1 and $300 per sharable blog post.

[26:45] But if you’re looking to create just a tiny little ad sense micro niche site then yeah, you can either crank out some articles, do some research, crank out some articles or you can hire someone $20 to $30 per article and go that route. It’s kind of up to your goals there. I think that if I was going to be diving into a SaaS app that I’m going to do for the next two years, you’d want to have at least some interest in it or some knowledge of it. I don’t think you need it in every case. I guess I’ve seen people have success but that’s not the case but it does depend on your personality.

[27:12] Mike: Yeah. I think Rob’s got it right. I mean it’s a balancing act of how much revenue you’re expected to come out of this versus how much you’re going to put into it. And if you can afford to spend the money and its going to be something that you’re going to be working on for a long time then go ahead and spend the money on it now but if you can’t, then you kind of have to do it yourself until you get to a point where you do have the money to spend and hire other people to do it because there’s going to be a lot of other things that you need to focus your time on especially for something that is going to be a big commitment on your part in terms of time for the business moving forward.

[27:45] Rob: I also think that content marketing is not for everyone. There’s a difference between tactical niche terms and long tail keywords that you’re just trying to attract traffic to that you maybe researched some Google ad words or the Google ad words planner I guess is what its called now or use a tool like long tail pro or HitTail or market samurai and you get keywords and then just want to build kind of a larger surface area, search engine surface area, that will bring in traffic.

[28:11] But then there’s the other side through content marketing based on how I understand it or how I would define it is it’s more of super high quality stuff that gets shared. It’s more buffer and kiss metrics and biz sketch. I mean these are people that are very experienced and they get 50 or 100 tweets each. They’ll pull in some search engine traffic for sure but they’re not solely focused on keywords. They really are focused on getting traffic through social sharing. So it depends. I don’t know if you’re defining content marketing as that but that’s how I would differentiate between those two things.

[28:42] Mike: Our next question comes in form David Welton. He says hi, at MicroConf Europe Rob mentioned he tends to move to something new every year. Another presenter Peldi mentioned that for him, balsamic was where it’s at and he’s happy with that. Any ideas about deciding on when and how to move on from something or not to and how to go about doing so. PS, thanks for having a transcript available. David.

[29:02] Rob: This one depends on your personality. Peldi I think is just committed to his app and he loves being in the space that he’s in and the bouncing to another thing probably sounds like a ton of work or just a headache that he wants to avoid and he’s built up – what does he have? 12 employees now? So it’s a company and he’ll probably be happy doing that for 10 or 20 years. I enjoy the change up of working on something pretty new about every 18 months and so for me, working on the same app for 10 years sounds like a grind.

[29:30] And so I think it’s more of a personal choice in terms of how to go about doing so, the way that I’ve done it when I’d move on is I’d find someone to be either the product manager or if it doesn’t need new features, some of my sites and apps are mature and They don’t actually need code written then I just find someone to handle the tier one support and then you essentially step away and you move on to that next project.

[29:53] Mike: I would say that if you are bored with something you kind of need to move on or if you could just get to one point where you know that it’s not going to grow any further, it almost doesn’t matter what you’re doing or if something happens at the market place that you just don’t have any control over and it looks like it’s going to probably shut down or eventually destroy the business then you might want to move up that time table moving on to something else so that you’re in a good position so that when that does happen that you moved on to something else completely so you’re not depending on that revenue stream anymore.

[30:24] I really think that rob’s right. it depend a lot on your personality and whether or not you’re looking for new things and get bored with any specific thing that you’re working on. And if you’re just not interested in that then you kind of need to move on and find something else and whether you sell that product or keep it as a portfolio piece, again that’s kind of a personal preference thing but it also depends a little bit on your resources and whether or not you can manage that as a product inside your portfolio.

[30:47] Rob: I think you actually made a good point about if you’re getting bored with a product that it’s probably time to move on and I think there’s balance there right? If you’re bored with it for three weeks, give it some more time. But if you’re bored, unmotivated for six months, the product is having revenue you just can’t get it passed the plateau and you just have no interest in working with it then yeah, it’s better to move on to something that interests you and that you can actually invest energy and grow than to just have this kind of ongoing struggle and to see this thing wasting away because it’s just a drag on your motivation.

[31:19] And if you’re bored with it and you really don’t have the motivation after months and months of trying, it’s better off in someone else’s hands frankly and that person is either someone you hire to manage it if there’s enough money there or doing a sale and then take that money to go then launch your next effort. I do think it’s easy to get – do some franchise when something gets hard and then want to give up after – it’s too hard to grow this. I‘m just going to bale on this thing. I do see people bouncing around and never really having bigger successes because they don’t stick with stuff long enough but that comes back to knowing yourself like do you tend to stick with stuff long or do you tend to give up on stuff too quickly, trying to think it through potentially get some outside advice as well hopefully from your mastermind group.

[31:57] Mike: Yeah that reminds me of quote from the movie American gangster. Quitting while you’re ahead is not the same thing as quitting.

[32:02] Rob: Yeah. If you have question for us, call our voice mail number at 1-888-801-9690 or email it to us at questions@startupsfortherestofus.com. Our theme music is an excerpt from “We’re Outta Control” by MoOt used under Creative Commons. Subscribe to us in iTunes by searching for startups or via RSS at startupsfortherestofus.com where you’ll also find a full transcript of each episode. Thanks for listening. We’ll see you next time.

Show Notes

• The RivalFox post
• RivalFox’s follow-up post, on how to connect with industry leaders

Transcrip

[00:00] Rob: In this episode for Startups for the Rest of Us Mike and I discussed how a SaaS app called RivalFox launched to $2,000 a month in recurring revenue. This is Startups for the Rest of Us: Episode 177.

[00:11] Music

[00:18] Welcome to Startups for the Rest of Us, the podcast that helps developers, designers and entrepreneurs be awesome at launching software products, whether you’ve built your first product or you’re just thinking about it. I’m Rob.

[00:28] Mike: And I’m Mike.

[00:29] Rob: And we’re here to share our experiences to help you avoid the same mistakes we’ve made. What’s the word this week sir?

[00:34] Mike: It’s getting close to MicroConf. One of the things that we try to do every year is to setup a website where people can connect with each other. This year we’re doing something similar and this year again we’re on a new one but I’ve been neck deep in technical issues with the new site so that people can connect with each other and there’s issues with permission where people are trying to log in and create their accounts and they can get in and they create their account but then they’re not able to access the site for some reason. It basically just says permission is denied. So it’s taken up a lot of time but it’s one of those things where it’s time sensitive, kind of eating up a lot of time right now.

[01:07] Rob: And this is one of the struggles of doing multiple things since you are doing consulting. You’re working on Audit Shark. You do the podcast. You’re doing MicroConf. I mean it just – it does stack up and some weeks I find that some multiple week stretches I’m just not able to really focus on my business and it’s obvious that this week is one of those weeks for you.

[01:26] Mike: I’ve made some progress here and there but then you’re just running the technical challenges and it’s not like you can carve out an hour or two and say okay, this is how long it’s going to take because you just don’t know. I mean it might take those two hours, it might take 6 or 7 and you just go no idea until it’s over and done with.

[01:41] Rob: I want to call out a couple of complimentary iTunes reviews that we’re up to 331 worldwide reviews. David Solberg from the US says wow, they give solid no hype advice about running a small lifestyle tech business. In addition they let you know what they’re up to which gives you a window in the day to day or how to run this type of business. What sets this podcast apart is a lack of winning the lottery philosophy a lot of people seem to have. I’m actually a little upset that this podcast doesn’t cost anything. It seems unfair to the value I’m getting.

[02:11] And then Gavin Hamar from the United Kingdom says the tips I’ve learned from rob and mike have helped me grow my bootstrapped startup sendable.com to six figures in monthly revenue and from just myself working in my spare bedroom to a 10 person company. Although I’m no longer a solopreneur, the excellent advice they give applies to anyone running a small SaaS business. Really appreciate the reviews guys and if you ever reviewed us in iTunes, that’s the best way to help pay us back if we’ve done anything that has helped you in your business or just kept you entertained. Log it into iTunes and giving us a five star. We’d really appreciate it.

[02:44] Mike: Cool. What else have you got going on?

[02:46] Rob: Well the other thing I wanted to call out some places. I’m going to be out and about over in the next few months. So if you’re coming to MicroConf in mid-April I’ll obviously be there for several days. If you’re going to the copy bloggers authority conference in Denver in early May I’m going to be there. Ping me on Twitter or something, we can setup a time just to hangout and then I’m going to be speaking at the small is beautiful conference in Glasgow, Scotland in June. If you’re listening to this, you’re going to be at any of those, let’s make sure as the date approaches maybe a week or two before, just ping me and we’ll figure out a way to hang out.

[03:20] Mike: I’m looking at kind of scaling back some of the consulting that I’m doing, see how that kind of impacts different things.

[03:26] Rob: Sure. So I want to dive into today’s topic. We’re going to be talking about how a Saas app named RivalFox launched in $2,000 a month in recurring revenue. And this is based on a blog post on their blog. We’ll obviously link that up in the show notes. The blog post is titled how we grew our SaaS startups MRR, stands for monthly recurring revenue from 0 to over $2,000 in under a month.

[03:48] Now, you might be wondering why would we be talking about a SaaS app that “only” and I’m putting that in air quotes, it only grew to $2,000 a month in the first month. Because it’s a super realistic number to shoot for. Even without a big launch list, even without a ton of marketing experience, that’s a very viable thing to hit. Now if you’re not able to hit $2,000 I wouldn’t throw in the towel or I wouldn’t be too disappointed. I know many successful founders these days who launched to 500 a month in recurring revenue in the first month and now they’re doing literally tens of thousands of dollars. It’s just that the long, slow, upward trend of a SaaS app takes time.

[04:25] But what I liked about their post, their post is in line with a lot of stuff we’ve said in the podcast in the past but I liked that it’s their story and I liked that they lend some of their own insight and thoughts to it and it’s really not that complicated the way they lay it out. I have it broken down into eight steps that they took, it’s pulled right from their blog post and then there’s six key lessons that they point out afterwards kind of afterthoughts. So I want to walk through these steps and then Mike and I can obviously give our interpretation, some of these I definitely agree with and others I feel like they could have improved.

[04:56] Step 1 RivalFox took was to setup a landing page. And they used launch rock. Other options that I’ve seen work really well that are super easy are kick off labs. There’s the WordPress coming soon plug-in from John Turner and frankly there are bazillion theme forest static HTML landing pages. What do I like about this? It’s what I do with all my apps. It’s what I recommend everyone do even if you’re not really in an online niche. If you see someone in person or you talk to them on the phone, I’m sure you can get their email address or get their phone number, that’s awesome. But it’s like maybe a little bit less of a confrontational or hard sell way to say you know what, make sure to check out the website…whatever and email and we can let you know or you can actually go into people’s email in there if they give you permission.

[05:41] There’s a ton of ways even if you’re not doing strictly online marketing. Having a landing page up and at least having a presence that looks attractive and it gives you a value proposition is frankly a really good way to get started building that list.

[05:54] Mike: Yeah. I think the real value here is in some ways you’re validating interest in the idea and obviously there’s a huge difference between what you ultimately deliver versus what you kind of promise and when you’re preparing people on your landing pages for what it is that you’re eventually going to be offering. But at the same time it kind of gets you that foot in the door to open up the dialogue with people and really find out some of the subtleties of what it is that they’re really looking for because you might have a general idea and for RivalFox, I mean their tagline here is monitor competitors create opportunity.

[06:25] So the idea here is that they’re going to be monitoring your competitors and if you’re interested in that kind of thing you signed up for and they can initiate a dialogue with you that allows them to start asking more in depth questions for example like how would you like to monitor your competitors? What sorts of things would you like to monitor your competitors for? Is it social engagement? Is it how many times they’ve updated their website. All sorts of different things. But the key here is that you really want to be able to open up that dialogue with people who are coming to your website and that’s really what the purpose of these is for.

[06:53] Rob: The second step RivalFox took was to setup a blog and they said that they received well over 10,000 page views within six months and to quote them from their post they said “the traffic was great but the conversion rate from blog readers was lower than we had hoped as were newsletter signups. We decided that we needed more prominent calls to action so we introduced a screen for newsletter signups and linked with Aweber. This was featured front and center and increased our newsletter signups 100%.”

[07:20] We also introduced a popup which opens after 10 seconds and asks if they want to check out the RivalFox page. This popup increased the number of people going from the blog to the trial page from 5 to 15% which skyrocketed the number of leads. So these are good suggestions and you can use them as you feel that they jive with your audience. Some people don’t want to do popup at all. So they either have like an ethical aversion to them or they feel like it’s going to drive their audience away.

[07:44] And pretty much all the test when I’ve seen people use some kind of popup, some kind of motion whether it’s just a little like a Drip opt-in widget in the lower right that kind of pops up or it’s an actual in your face div kind of modal popup, those things will increase your signups dramatically over just having like a static widget in your right hand side bar or something.

[08:05] Mike: Yeah. I think this is one of those classic things that you come from a developer mindset you don’t necessarily want to bother people because you wouldn’t want to be bothered and it’s sometimes getting in people’s faces and asking them explicitly to opt-in to something that you have to offer is really going to make an impact in your business because the signups are going to be dramatically higher than if you didn’t do that. And I’ll say it’s one of those balances. It’s a delicate balance you have to make between your developer mindset versus the marketing mindset and really in cases like this, your marketing mindset, as long as it’s not negatively impacting the image of your company you really need to lean towards those things that work better even though they’re not things that you would be interested in or you they’re not things that you’d like to do.

[08:47] Rob: And I think I’d also like to comment on the step is to setup a blog. I don’t think that’s necessarily the step number 2 you want to take in every case. I think that if you are a good writer and you’re going to hustle and put together sharable and super valuable content the people are actually going to engage with, then I think it’s a no brainer and I think it’s a great way to start getting traffic and getting social media shares.

[09:10] Social media, for what it’s worth is a decent way to share. It’s a decent way to spread the word. It’s also a decent way to start getting Google rankings pretty fast. If a lot of people start talking about you especially they do G+ shares, Google takes notice of that and they know that people are talking about it. So if you’re going to put in the effort or you have the funds to hire someone who’s a really good writer, not like a $20 per article person who’s kind of just going to slam something together but really good content then I think that blog is valuable.

[09:38] On the other side once you start getting any traffic, if you use a tool like HitTail and you install it and you start getting some suggestions and you do want to go with some less expensive $20 articles you can do the Ruben Gomez approach which is to have your main blog with really highly viral content that’s high quality and then have a separate article section that’s not linked to or visible in the main blog feed because you want that to stay super high quality and you get articles for $20 a pop that are valuable but they’re just not as high end. They’re not as long and they’re not as in depth and you put them in this article section that’s just a separate category on the blog and then you put an article’s link in the footer of your website.

[10:16] That article section will start to build up that snowball of long tail traffic and for that purpose I absolutely think that it’s almost a no-brainer because it’s so cheap and because it’s not a ton of work to do that. I think that most companies, if you’re going to do any type of online marketing or any SEO effort, I think that is definitely worth it. The content marketing side where you do have the blog and you have the highly viral content, that one, it takes either more time or more money than a lot of folks have so that’s one where I would think twice about it really before diving into it too hard.

[10:48] Mike: All that stuff’s a balancing act is about where you spend your time and if you have the money to outsource the creation of that writing for your blog or for your website then sure, definitely, go down that path because you’re trading your money for time that other people are going to spend building that stuff and obviously there’s still also the creative side that you don’t necessarily have to worry about. But it’s always a balancing act like how much time do you have, how much money do you have and what sorts of things are possible and feasible given the constraints on the resources that you have.

[11:18] Rob: I think the other thing I would add to this step is there’s often something that you can give away on a landing page that could potentially have more value than actually trying to – I’ll constantly crank out a series of blog posts because that’s kind of a flywheel that you have to keep up with if you want the blog to stay active. And so if you look at giving away sample templates or an eBook or a tools list or a screen cast or something and then you setup a landing page that it is targeted at a specific Google keyword, something that a lot of folks are searching for, that’s another way to think about this as driving this inbound traffic. Blog is one way but I think a landing pages and then long tail SEO are probably the other two ways that I would look at early on.

[11:58] The next step that RivalFox took is they say to consider guest blogging and to quote their article, they say B to B marketers who use blogs generate 67% more leads per month than those who do not. Building an audience and establishing trust takes time but sometimes this can be sped up through guest blogging. Now, they said that they had taken two stabs at guest blogging. They did not receive a ton of traffic but they still thought that you should at least consider it if your niche lends itself to that.

[12:26] And I like this approach. I think that if you start a blog on your own site, that’s great for that long tail traffic and that’s great for the long-term traffic of building up a flywheel but it takes time to do that whereas if you go out and guest post you’re able to get guest posts on affiliated sites or sites that are in the same niche as you that’s a really quick way to get several hundred clicks through to your website either to a home page or frankly a landing page that gives something away is so much of a better way to do it to actually in your byline where it says so and so wrote this post is the founder of this, if that blog will allow you to give something away and to say – to receive my free 20 page eBook or my top 10 tools that you need to – in this case of RivalFox, the top 10 things you need to know about your competitors then they click through, they give an email address and they’re able to download that, that’s a great way to build that launch list.

[13:14] Mike: I heard an interesting interview with Nathan Barry on the product people podcast with Justin Jackson. Nathan had talked a lot about doing exactly that where he basically was trying to tap into other people’s audience as opposed to relying on SEO and various other mechanisms for building up his email list, what he did was instead he started tapping into other audiences that were kind of overlapping because they already have a built in audience and building one from scratch is obviously a lot more difficult than it is to go out and tap into these existing audiences. And one of the things that he did which struck me as interesting was he didn’t necessarily just rely on that byline. What he did was he actually asked hey can I put in a little widget here or something that basically allows them to sign up directly for his mailing list.

[14:03] So in that way, he’s essentially helping to limit the number of people who are kind of falling out of that funnel which I thought was a really great idea. I mean if that’s something that you’re able to pull off when working with anyone you’re doing a guest post for, it sounds like that would be a much preferable way to do things just because you can limit the number of people who are falling out of that funnel.

[14:22] Rob: Yeah. I like that idea although if I were letting someone guest post on my blog there’s no way I’d let them put an opt-in widget on any of the blogs that I have. But if you can find someone to do it, sure, it keeps them from having to click through.

[14:34] Mike: I don’t think it was specifically an opt-in widget but there was something specific that he was doing. He wasn’t just relying on the byline. I think maybe he has something in there that said if you’re interested in hearing more sign up on this page or something like that. So it wasn’t like it was just using the byline to come to his site. It was essentially taking that byline and directing them to more of a landing page.

[14:53] Rob: Right and I think there’s another really good way to do it is if you’re able to naturally just mention your product inside the blog post and you’re not trumpeting it or trying to market it but you really mentioned it as a example or somehow get a link in there, if that post does get a lot of traffic, you will get a lot more clicks than just having something in the byline. The fourth step that RivalFox recommended was to take advantage of social media. And they said for us, as a B to B company most of our social media leads come from twitter and Quora. We have plenty of views from LinkedIn but they didn’t convert. The LinkedIn visitors were in the competitive intelligence industry and while they might be interested in what we’re doing, our product is not geared for them.

[15:33] But then they go on to talk about a single Quora post someone mentioned them in and they received quite a few clicks and I guess the conversion rate was 15% from visitor to trial which is a really nice number. So I’ve definitely seen especially in the B to B space Quora, LinkedIn and twitter, those would be my three – Facebook and Pinterest are obviously better for the prosumer or the consumer markets but these are all decent channels and as much as I’m not a fan of trying to build up that following, I don’t believe in building up that big Twitter following to try to one day convert people, I really think that works well if we’re going to do a lot of content marketing and going to be putting out your own content just building the audience for the audience sake I think is a very long way to look at it.

[16:15] So certainly being on Twitter and sharing your stuff and other stuff is good and obviously Quora and LinkedIn can bring in traffic as well. So there’s something to be said about social media. It’s not nearly as valuable as direct paid traffic to a landing page or obviously building up your own email list.

[16:32] Mike: I think the interesting thing about some of those things is when you’re looking at websites like Quora, there’s generally a discussion that’s going on that if you can find the right discussions, you can kind of gently pitch your product in there as a potential option. So people are talking about a specific problem that they’re having, you can talk about your products and say hey, just as a disclaimer, I own this product but it addresses this particular problem. And anyone who’s searching on the internet is inevitably going to come across that as one of the options in Google or ping or wherever they’re searching.

[17:04] If they click on 2 or 3 different links and then those links come back to your site because they’re talking about solving that particular problem. Your product that solve it and then they link through their to yours, it essentially widens the net that you’re casting for attracting traffic. So I can definitely see how that stuff can help. I think with regards to Twitter, I totally agree with you. it just depends on why it is you’re creating that following. If it’s just creating a following to have a following its probably not going to do much for you but you I believe have to have a specific goal and set of strategies in mind for what you’re going to do with that audience once you’ve got it. Because again just attract people and then either not do anything with them or hope that they’re going to convert because you have to have a plan in mind for that.

[17:46] Rob: Yeah I would agree with that. The fifth step is to have a private beta. So they gathered some users inside and then they gathered feedback. They let people signup and then after 29 days they sent them a survey. I definitely think that this kind of early access private beta approach is the way to go and to not do a launch, I guess they had 700 people on their email list and they only let a few into this private beta and if you’re going to figure out people who are actually going to give you good feedback that can somehow get that info out of a survey or just because you recognize names on the list, that is a far better way to go than just emailing 10 or 20 people randomly because you are trying to get folks who are going to have a high correlation with your perfect audience.

[18:26] The idea in the old days if you’ve built up this launch list of 700 we would really just email that whole launch list let everybody in then just scramble to try to keep them around and if you have the time to go through this private beta and not only test out your app but test out your on boarding process, your support process, tweak your app, add features, get it to where you really are providing a lot more value that by the time you email those 700 people you’re going to convert so many more of them than if you have just emailed them all in day one so I do like that RivalFox did this.

[18:56] They don’t say in here whether they charge during the private beta. I think it’s fine not to charge but to make it upfront apparent that people who are in their beta are not going to get a free lifetime account because you don’t want people who are in their who want it for free. The best feedback is going to come from people who are willing to pay for it even if they don’t have to pay for it during that private beta but as soon as it’s out of that that they’re willing to dive in and become a paying – maybe a discounted but a paying customer of yours.

[19:22] Mike: Yeah. I think when you’re going through the private beta, one of the things that you can do is you can look for the people that are signed up to your email list or have kind of signed up early on and just go through them and look those people up by domain names. And this works a lot better if you have a B to B product because then typically those people are signing up under their business account because it can be really hard to tell unless you’re using something like report of whether or not somebody’s Gmail account is kind of associated with any given business.

[19:51] So it helps to be able to filter those down and figure out who they’re working for and whether or not they are actually going to have the problem that your product solves. And those are the people that you really want to target as your early access or beta users because they’re the ones who are going to give you the most valuable feedback as opposed to as Rob said, the people who are just kind of looking for some sort of a freebie or a very steep discount on software that they may or may not necessarily use going down the road.

[20:17] Rob: Step six is now that you’re in beta, submit to startup directories and services. What’s cool is they give a list of here of who they submitted to and how many signups they got from each. So beta list which is betali.st is one that I’ve had a lot of success with. RivalFox said they’ve gained over 400 signups in two days with a 30% conversion rate from visitor to trial. Then they said they submitted to CSS mania and they got 15 signups and then killer startups, they paid $167 to I guess be featured within 48 hours because killer startups has a 3-6 month review window unless you pay. But they said they only got 4 signups. There’s plenty of other places. They list them all here. We’ll link over to it.

[20:59 But this is a no brainer. Right? You’re not going to build a flywheel here and you’re not going to make tens of thousands of dollars but for the time that it will take you or the few dollars you have to pay a virtual assistant to submit to these directories, it’s a no brainer to do it. And one of our listeners Robert Gram has posted a more extensive list over on his website.

[21:18] Mike: It’s at whitetailsoftware.com.

[21:20] Rob: He put a nice list together. I think he had his VA do it and I definitely recommend submitting to as many as you can to help build that list.

[21:27] Mike: And the nice part about that is that a lot of that stuff you can use AVA to go through that list and have them kind of filter out which sites are probably not going to be a good fit based on the types of questions that they’re asking or have them go through and kind of aggregate all the different things that they are asking so that you can figure out what information you should be submitting. But as Rob said, that’s a onetime thing. It’s not like you’re going to get a flywheel out of this and it’s not like you’re going to do it more than once but it can provide some decent inbound traffic just because of the way that those sites work.

[22:00] Rob: Step seven for RivalFox was to have an open beta and they said use mailchimp or your email provider to announce it. They had a list of 700 people and they said that they got 300 signups which is really high. That’s very, very impressive. They must have a very targeted list and a nice sequence of emails. They also talk a little bit about – they say do you pay in advance or not? Should you ask for a credit card upfront? And here’s the quote from the post. He says “at first we started with credit card required which lead to 20 customers who signed up but only 8 which remained customers after the trial. After one month we switched to no credit card required. Many more people signed up for the free trial and our conversion rate grew 5 to 10%.”

[22:39] So obviously they’ve gone without credit card. I would like to dig in through their conversion rate a little more because he doesn’t say what that 5 to 10% rate is if that’s visitor to trial or if that’s trial to paid. The recommendation I mean the pass is my default ask for credit card upfront I think there are cases when you shouldn’t or when you get down the line and you understand your funnel and you have enough data to actually test, you should absolutely test. But in the early days my default is always to ask for credit card for you want to get the feedback from the people who are actually willing to pay for it.

[23:08] But with that said, I mean you mentioned a couple episodes ago, you’re going to be pulling your credit card down. I know two other people right who are testing without having a credit card upfront because they just want to get more people into their funnel and see what they can do. So there’s a case to be made for both.

[23:23] So those were the eight steps that RivalFox used to launch to $2,000 in recurring revenue. Now then they break down six key lessons that they took away. The first one is they take about their traffic breakdown and they said that they received plenty of leads on a daily basis and the average breakdown was 32% organic search traffic 13% referral traffic 28% social traffic and 26% direct traffic. So that gives you an idea of kind of the four areas that they were really aiming at and then one of their recommendations is to start blogging as soon as possible and you can imagine that since it worked well for them, that would definitely be a recommendation.

[24:03] Then they say connect to industry leaders for opinions and basically said that they were using social media to connect with industry leaders who shared their content provided invaluable insight into their product. I’d frankly be interested to see an entire blog post breaking down how they did that, what they did and what the results from that were. It’s a very high touch and time intensive thing to do especially pitching kind of industry leaders or just people with big social followings who you kind of know of. It’s kind of an outbound sales like an outbound reach approach of getting people to kind of retweet your stuff but it can obviously work.

[24:39] And their fourth takeaway was to experiment in a controlled way and they said that while reading advice by fellow entrepreneurs is helpful, there’s no perfect formula for how to launch your product. Do controlled experiments to see what’s best for you. And they said that they reduced their trial period to 14 days instead of 30 and they used intercom.io to contact people and they concentrated on people who signed up for the trial. They increased their conversion rate from 4.7% to over 14%. That’s a really nice way to go.

[25:05] And see if they’re not asking for credit card, you almost have to do that high touch inside sales stuff. I don’t know anyone who’s making no credit card work without using intercom or using phone. Email doesn’t typically cut it. It’s typically not enough but you actually need to really be touching base with folks who are getting into that funnel if you want to close them if they haven’t entered their credit card.

[25:26] Mike: I think the key piece of advice here to takeaway is that experimenting in a controlled way such that you’re actually measuring things and I think I did it as well but I would try something. I wouldn’t necessarily take a look at some of the stats associated with it. I’ve just kind of ballpark it or try go from a gut feel to whether or not it was working and that’s really not a good way to go. It sounds reasonable because you’re trying to say okay I’m trying to save time so I don’t want to setup anything to measure things.

[25:54] But at the same time I mean if you’re not measuring, how do you really know especially over a long period of time if you’re trying a couple of different things and you may be able to pay attention to it for a couple of days or for a couple of weeks but after that time period, if you don’t have systems in place that are going to be doing those measurements for you then it’s really, really hard to look back from 3-4 months later and say oh, I wonder how that went. And then you have to go back and try dig up statistics and it’s so much harder to try and retroactively do that than if you just setup the systems and software in place from day 1 to start measuring that stuff that you need to measure in order to figure out whether your experiments are working.

[26:29] Rob: Yeah, that’s a good point. And even without having to do a complicated setup you can go into Google analytics and create a goal using URL and that used to be easier than it is. Now it’s pretty complicated frankly. It shouldn’t take you more than 5 or 10 minutes to do that and of course I recommend doing that as soon as you have a landing page up, you create the goal of someone subscribing right away you’ll start seeing which traffic source is your message resonating with. As soon as you get into beta and you have a trial, it’s obviously a no brainer to create a goal for people signing up for a trial so that you can really see which traffic is converting.

[27:00] The fifth key lesson that they pointed out was to concentrate on inbound leads and they said connect your sales team to inside leads and concentrate on making those first customers 100% happy. And this is basically the high touch model we talked about. Getting those first 10 paying customers or 20 paying customers is so invaluable that its worth speeding a lot of time because you can learn a lot from them and it really helps shaping your product if you have some good folks in there early.

[27:25] And the sixth key lesson that they mentioned before they closed up the blog post is to not be afraid to ask people to pay early. They said if you asked people if they like your product, most will say yes. The real question is do they like your product enough to pay for it? The earlier you can get this information and the earlier you can start making revenue the better. So I feel like this conflicts a little bit with their thing of like to ask to pay in advance or not kind of credit card mentality upfront about not asking for credit card but I think maybe they’re only talking about in the early days of their product rather than in the early days of a trial.

[27:56] Mike: They did switch over their strategies. I mean they started asking for credit card upfront and then later on they removed that requirement and they start having those discussions and following up with people with intercom.io and in those cases if they asked if they liked their product then people say yes then they ask them if they’d be willing to pay essentially early before their trial period is up and I think in those cases – what’s your take on this? I mean would you offer them some sort of incentive for paying before their free trial is up or what?

[28:27] Rob: Yup. That’s a really good way to do it. That’s a common way to get more people signing up. It can skew metrics down the line. It can skew churn metrics and all that stuff. Yeah, early on that’s probably what I would do. Either a discount or hopefully not a discount but some type of something you can give away to them that is really valuable.

[28:46] Mike: Yeah, I was thinking that it might skew your churn as well because if they’re incentivized to pay early in order to get that incentive and they’re really not necessarily a good fit for the product then your turn will go up down the road and that obviously throws a wrench into the system but I’ve definitely looked to give them something. I just don’t know what it would be. I mean I think it depends a lot on your product, maybe some sort of educational or informational product that helps them use your tool better or allows them to grow their business in a way that the tool isn’t able to do explicitly.

[29:19] Rob: Yeah. I think overall I like their approach. What I like is this – I’m hoping that the blog post really lays out everything. I’m concerned that they may have left some stuff out. It’s pretty simple approach. It’s the landing page. They blogged. They did guest blogging. They use social media then they did the private beta, they listened to those customers. They submitted a directories then they did an open beta and that was it. They launched to 2,000 a month in recurring revenue.

[29:41] So while it’s not always that simple for sure, you have to build a product that people are actually interested in. Build a product people want. You have to have your pricing in check. Your marketing, your message, I mean there’s so much more to it but just in terms of kind of driving traffic and getting people in, seems like they did a pretty good job and I think 2,000 a month in recurring revenue on your first month is absolutely nothing to sneeze at.

[30:02] I do wonder if they vetted the idea before hand, if they had some early adapters or some people before they put up the landing page that said yes I really want that or if they just went off on their own and built it because if they did, it feels a little bit like a luck thing that they launched to 2,000 a month that they kind of got lucky with the idea. I think without getting some feedback early on and just taking an idea and running with it, the odds are that you’re going to build something that no one wants. I’d like to hear about that, about how they validated or if the validated early on.

[30:31] Mike: Yeah that would be kind of interesting to hear. I mean if you look back through some of their blog posts I mean it doesn’t seem like many of them are related explicitly to how they got started and how they’ve done things. I mean maybe the really, really early posts are but a lot of the later ones just aren’t. I think that wraps us up. If you have question for us, you can call it into our voice mail number at 1-888-801-9690 or you can email it to us at questions@startupsfortherestofus.com. Our theme music is an excerpt from “We’re Outta Control” by MoOt used under Creative Commons. Subscribe to us in iTunes by searching for startups or via RSS at startupsfortherestofus.com where you’ll also find a full transcript of each episode. Thanks for listening. We’ll see you next time.

Show Notes

• Vitamin vs. Aspirin

Transcript

[00:00] Mike: This is Startups for the Rest of Us: Episode 176.

[00:03] Music

[00:10] 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.

[00:18] Rob: And I’m Rob.

[00:19] Mike: And we’re here to share our experiences to help you avoid the same mistakes we’ve made. What’s the word this week, Rob?

[00:23] Rob: Things are good. I got two good pieces in use this week. One is we confirmed our final speaker for MicroConf. Many of you know Brennan Dunn from Planscope and he had done an attendee talk last year at MicroConf that got good reviews and then he had one of the highest voted antendee talks of this year and we decided to kick him up into the main stage. So he’s going to be talking about six tricks that helped him triple his SaaS growth rate and he sent me an outline of it and it looks pretty good. So I’m excited to have that nailed down and of course to have Brennan up there. So we have a good lineup this year.

[01:01] And then the other thing that’s going on is HitTail has just been doing really good in the past three weeks since I was able to get kind of the rewrite or the revamp done where I pull a Google web master tools keywords and work around the whole not provided thing. So I pretty much had a solid uptick in all metrics across the board. Trials are up, trial to paid conversion is up. Number of paying customers is up. Churn is down, all the things that you hoped for. So it feels good to have a win. I felt like I hadn’t one in a while. Good growth projected this month after maybe 4 or 5 consecutive months of either flat or minor decline.

[01:37] Mike: Very cool. I saw that HitTail started having a lot more I’ll say relevant keywords terms that it was suggesting because I hooked up mine to the Google web master tools and it pulled out something like 80 or 100 different terms that it said that I should take a look at whereas before it’s just not turning out very many.

[01:55] Rob: Right because there wasn’t enough traffic that was provided. Most of your traffic’s not provided so wasn’t able – didn’t have any data to work from. So it’s definitely way more valuable. Like I said its way more valuable to me in my own sites so I know it’s more valuable to other folks using it. So that feels good. How about you? What’s been going on?

[02:12] Mike: I want to issue kind of a correction from a couple of weeks ago. There was a website that I mentioned that I came across where I discovered the momentum plug-in for chrome was Scott Watermasysk. So we’ll put that in the show notes but I wanted to make sure we give credit where credit was due because I’m fairly certain that he was his. He did mention it on Twitter so I apologize for not saying it but at the time I just couldn’t remember.

[02:32] The other thing is that the inbox pause plug-in, it went haywire on me today so I couldn’t unpause my email and I freaked out because I had the check box clicked where it says hide the label that we put on all of the folders. So I couldn’t even go there to find it and I had to dig through the Gmail settings to figure out how to get my email back.

[02:53] Rob: Were you ever able to fix it?

[02:55] Mike: I guess the way that it works is when you click on the pause, what it does is it creates a rule. It removes the inbox tag from all of your incoming emails and then it adds them to this other inbox-pause-whatever the date is and it applies that label to it. But it hides that label if you clicked the checkbox. So I was able to go in and find it just by looking at all the tags and I said okay well, first of all delete this rule that is moving things over there and then I went in and took everything that was in there, moved it back into inbox and then I deleted that label and then everything showed up and then it said oh its unpaused. So I don’t know what happened. It just went haywire and it would not unpause for some reason. It just kept giving me this error message in Gmail. It was kind of freaky.

[03:38] Rob: Sure. So a warning to folks using inbox pause, it may not work all the time.

[03:42] Mike: Yeah but there is a way to get it back so it’s not a total loss. And then last thing is in terms of the marketing stuff for Audit Shark I think I’ve identified at least part of my marketing problem and I think that part of the issue is that I need to niche it down a little bit. One of the things that I found in talking to people is that Audit Shark is really implemented as a compliance product. And I’ve been kind of pitching it as a security product but security and compliance aren’t exactly the same thing. I mean there’s overlap but security’s much bigger market and compliance is just like a really small subset of it but a lot of my marketing materials talk about security.

[04:19] I mean if you go to my website there’s a drip campaign there for talking about securing your severs and it’s not about compliance or anything like that. And really, security in general is not what Audit Shark is good at. It’s good at compliance. So compliance is the name of the game that my target market is playing and I’m not speaking the same language. So I have to dig in there and start fixing that is really what the issue is.

[04:44] Rob: Yeah and I think this cropped up because you’ve done like a market. Originally it was going to be more about bank compliance and then you started looking into SaaS and kind of online businesses that have servers and that market is like larger and potentially easier to access and so I think probably those two messages have gotten mixed up in your marketing as you have attempted to make that switch.

[05:10] Mike: Yeah. That’s absolutely right. And there’s a lot of my site that needs to be updated and I’ve gone through and looked at my metrics and stuff for the SEO and things that I’ve done and I get a lot of traffic for compliance but once you get to my site it talks a lot more about security. So the reason you would click around on the site would be different that the reason you ended up on the site. So my bounce rate is probably higher than what I would like it to be.

[05:33] Rob: Right. So you mentioned that you’re going to niche it down to compliance from the larger security and compliance. What brings you to that?

[05:41] Mike: I have prospects who I’m talking to right now and in fact I have a demo for one tomorrow that they’re specifically looking for a compliance product. I’ve had conversations with some people who are in my early access program and try to figure out why it is that they’re not interacting with their software as much as I would’ve thought that they would or they’re not taking actions on things. Some of those conversations have really kind of lead me to the conclusion that what they’re looking for is security versus what the product provides as compliance. So do I educate them? I need to kind of figure out what the direction is going to be there. And I have some ideas about exactly what I’m going to do.

[06:16] Rob: Yeah and we talked a little offline. It seems like we should dive into that a little deeper in a couple of weeks I think just an episode where we really dive into where Audit Shark is. Be looking for something here and sometime in April where we will actually dive into this stuff deeper and address – there’s been some comments posted on the blog people asking what’s up with audit shark? What’s the status? And we’ll carve out a whole 30-40 minutes and really dive into that.

[06:39] Music

[06:42] Mike: Today we’re going to talk a little bit about troubleshooting customer engagement. One of the issues is if customers aren’t engaging with your product especially when you’re kind of in an early access phase, you really need to find out why. And it’s not just about learning what sorts of thing that they’re having challenges with. It’s about understanding it and figuring out where those customers fit into your future plans because obviously you want to make money from them but at the same time learning information from them is a lot more valuable than any money that they could give you. So if they’re pointing you down the wrong path, its probably worth a heck of a lot of money to find that out before you go too far down that path.

[07:21] Rob: So this is troubleshooting the lack of customer engagement is that right?

[07:24] Mike: Correct.

[07:25] Rob: So you mentioned early stage customer engagement. Is that what we’re going to focus on with this or do you think it applies even later once you’re already scaling up?

[07:32] Mike: I think that it applies much more when you’re early on because once you’re scaling up, you’re trying to do more optimization of where things are at and what things you can do to improve some of the different conversion rates and the different metrics that you’re looking at. But when you’re early on, you’re really trying to figure out is this the right messaging at all and are these the right people who are in my target market because there’s a difference between getting 5 or 10 people to pay for something and getting 500 to 1,000 people to pay for something.

[08:01] I mean once you’ve kind of gotten to that point where you have a critical mass, it’s not really a question of are you talking to the right people because you’ve kind of got the proof that you are talking to the right people. But before that point, there is that open question is like what are these people actually interested in and what’s the messaging you can or you should be using for discussing it with them and attracting people to your website and push them through you sales funnel and all that other stuff.

[08:26] Rob: Very cool. So it looks like we have 10 points of discussion here.

[08:29] Mike: The first one is that even before you started talking to them you have to clearly identify the problem that your product is trying to solve. List the specific pain points that your customers are having and try to map out what your application does and how it applies to each of the pain points. Because if you can’t map your product and the solution that you have on to their pain points, then chances are good that there’s going to be some sort of disconnect that you’re going to need to be able to deal with.

[08:57] And when you identify what your solution does before you talk to the customers, then you kind of have it in your head exactly how it maps for you and when you start having these conversations with them you can figure out from their standpoint whether it does or doesn’t do that because just having that in your head doesn’t necessarily mean that its true or they may see it very different than you do.

[09:19] Rob: I think that’s something that a lot of us miss because we have a vision for our product. We have a vision for what we think it should do and the problems that we think it should solve. And that’s all good but you need to hold that very loosely, really view it as a hypotheses and always be asking is this actually the pain point it solves? Is this actually how its going to accomplish the end goal? If you have verbiage that you’re using incorrectly you can really drive people away even if your suffer does actually solve their pain point.

[09:50] If you niche it down to the point where you say hey this is more for salon owners and then you realize oh there’s actually this other market that’s using it and they’re being driven away, it’s really important to find out. So that’s where keep it as a hypothesis not until you really find that fit where you know your product is being actively sought by a market and you can start scaling it up that I think that’s when you lock it into place.

[10:16] Mike: So the next step is once you’ve clearly identified the problem, you reach out to each perspective customer individually and you start asking questions. And I think the email is good but if you can get them on the phone that’s infinitely better because you can ascertain certain things about how somebody feels about some aspect of their product or their solution based on whether they pause for example.

[10:36] If you ask them a very direct question and they say “well…” and they pause for a couple of seconds before really giving you an answer then you know that you’re off base. You know that there’s something wrong and you need to start digging. Your goal here is to just get information. You want to ask questions and shut up. Because I had a conversation earlier today with somebody and I was talking to them and I asked a question and they said well it does this but it’d be nice if it did something else. It was just a slight variation on it.

[11:03] And I could’ve opened my mouth and started saying well I can do this, this and this. But then at that point you’re kind of talking them into what your proposed solution is rather than really listening to them and figuring out what their problems are with the software, with the solution that you have. Because the fact is that you can probably talk them into thinking that you can fix everything. The reality is some people are just not going to be a good fit for your product and you need to figure that out. And the only way you’re going to figure that out is to shut up once in a while.

[11:31] Rob: Man, I got into long email conversations with several early Drip customers. Some of them were 20-30 emails long back and forth. I jumped on the phone with a few of them but I learned a lot about the ideal market or at least what I currently think is a good market for Drip. And I also learned that there were some specific markets that I probably wouldn’t have entered into but it was some folks that were recommended from another Drip user. This is when I had about 10 people using it. I let the guy in because he was a higher profile person.

[12:05] I had a feeling it wasn’t going to be a fit and sure enough the feature request that he made were stark contrast to the software and SaaS entrepreneurs that are already using it and getting enough value out of it that they were willing to pay for it. I think that one on one stuff especially early on it gives you such insight. Way more insight or way more value than any money they would pay you. I do think you should charge folks that are using your product in the early days because you want them to have some skin in the game because if you just comp everybody then you don’t know whose feedback is more valuable. You don’t know who’s willing to pay for it or not.

[12:35] But with that said, you’re not charging them for the revenue itself. You’re really just doing that so you know their feedback is valuable enough that you should consider it. The idea is that if you’re in kind of early access or you’re in a beta and you have customers that are using it but they’re not really using it, they’re not actually doing that much n the app and you kind of feel like everybody’s just drifting away, you’re not learning much, that’s really when you start working down these steps that we’re talking through.

[13:00] Mike: So the third point is that you don’t need to ask the same questions of every customer. And in fact, asking the same question in different ways to different people can yield different answers. It’s one thing to ask the same question to five different people because you will get five different answers but you can take what you learned from the first person that you asked the question and use that to tweak the question and ask the second or third person something that is a little bit different or dives in a little bit further.

[13:26] Because once you get to a point where you are learning the same things, then you can ask the fourth or fifth person a variation of that question. You can start drilling in to find out additional information. Because you don’t want to overload those people. You don’t want to go back to the first person and say well I talked to these other two people, let me find out some more information about this one piece. Because the reality is that the context of that conversation is gone so it’s going to take you a little while to kind of get back into it and you don’t necessarily want to overload any given person who was in your early access especially if you want to be able to keep them around as a customer.

[13:58] Rob: The questions you asked will depend on the answer to the very first question which will typically be something like hey, so is product name working for you? Right? And you’re just trying to find out kind of a general thing. If you’re on the phone, this works really well because then they can respond and you can dive in and they might say no I haven’t really had the time to check it out. Oh you haven’t. Did you know it only takes 5 minutes to get setup? Would you like to do it o n the phone or on Skype together?

[14:24] And then you’re going to start seeing where they say well I would love to. I’d love to see the value it provides and then you get them to that next step, they’re a little more engaged and then you can find out if there’s kind of a deal breaker down the line. But if they say no, I just really – I don’t really have time to invest in the next – then you know that it’s probably not an aspirin pain point for them. It’s not something they need so desperately. It’s a lower priority thing. On the other hand if you say is product working for you and they say yeah. It’s doing a great job. It does exactly what you said. And then your next question is cool. Is it worth X dollars a month? And x dollars is your price point obviously and then you get to see what they say to that. And that will take you one of two directions.

[15:01] If they say yes then bam, you have your first paying customer. And if they say no then you try to dig in to why not? There’s probably some alternative solutions that they’re coupling together that are cheaper or it solve a pain point but the pain point isn’t worth your price. Maybe you have to lower your price or consider at least for this person lowering the price. There’s a lot of different rows you can go down but that’s how it spiders out kind of as a decision tree and those are the kinds of questions that they work really well on the phone. The amount of learning you do, you can do it in a short period of time even with half a dozen or a dozen people answering these questions is just mind blowing.

[15:34] Mike: So one of the things that Rob just brought up which kind of leads into the fourth point is what types of questions you should ask them. Because obviously you’re going to start out with is the software working out for you? But if people are not using your software, the thing that I found that works really, really well is to ask why using you software hasn’t become a priority for them. And there’s a lot of different reasons that they could give you. I mean it might be because you’re not solving their problem. You’re solving a related problem. It’s not quite what they need or just not a present issue for them. Maybe they don’t understand your products and are confused and in which case getting on a Skype call could probably walk them through the product and then you can use that as a learning experience to figure out what sort of help and tutorials or maybe video intros that you need for them.

[16:16] There was a blog post that one of their biggest competitors for fog bugs was actually just spreadsheets and pencil and paper because people just have that stuff readily available and it’s easy for them. If they have that as an alternative then you have to figure out how you’re going to overcome those challenges. But that comes back to the marketing that you put forth and how you portray that to the people. The last thing that asking that kind of question brings to the surface is they may have realized that they just don’t need it. And as you phrased it it’s a vitamin. It’s not necessarily an aspirin for them.

[16:47] Rob: And point five is to identify common themes across the customers that you speak with. So things like the customer size, customer industry, there’s specific needs or used cases for your solution, how badly do they need it? Is this a required task they have to do everyday and you’re going to save them 50% of their time or is this something that it’s nice to have that every once in a while they might need to do and it would make them sleep better at night but it’s not a requirement.

[17:11] There’s a lot of different examples of this. I think with my apps drip has worked out well with SaaS providers and software companies that are selling downloadable software also some information product folks that are using it. And it hasn’t particularly worked out well with bloggers and people who are used to getting stuff for free or people who are really price sensitive and it’s not worth the convenience factor to use Drip and HitTail is in a similar boat but I can pretty well nail down size and the industry and the use cases for my apps.

[17:46] Now in terms of HitTail, since it’s so much more mature, I have a much more concrete idea of who that is. But in the early days it’s hard to know. It’s hard to know who to listen to and so trying to identify common themes of people who are having success with your app and really going down that road is a big deal. It just gives you a lot of insight into who’s using t, who’s getting value out of it? Who’s not? Who’s willing to pay X for it and who’s not?

[18:12] Mike: And that kind of leads into a couple of other things, not just identifying common themes across the customers but identifying common phrases they use, common terminology because when you’re talking to people you need to be able to speak the same language and if you’re not speaking the same language then you either need to establish that with them and say this is what I mean when I say X and this is what I mean when I say Y. But the reality is you’re probably better off changing your terminology to match what your customer’s is rather than trying to educate them about what your terminology is. It’s just going to be easier.

[18:43] Your SEO’s going to be easier. Your marketing is going to be easier because you don’t have to try and educate people in your SEO campaigns for example. And then the other thing is that does your solution meet a very specific paying point is a necessarily thing or is it just nice to have? And I think these ties back really well to the talk that you gave in 2012 at MicroConf about the different types of apps and you kind of gave four different I guess categories that they fell into. There was an aspirin, a vitamin complex or new or entertainment.

[19:16] And depending on where in those categories your app falls, people are probably going to be willing to pay more or less for it or they’re going to view it as something that’s absolutely necessary. So aspirin type products, they absolutely need them. They have to have them in order to run their business. Versus the vitamin type product which it’s nice to have but not necessarily. They can probably get away with it. So very similar to bug tracking software. You can get away without a bug tracking software if you’re diligent about it or if you’re the only person using it then you don’t necessarily need it. You can get away without it. But obviously as your company grows you kind of need something like that.

[19:50] And then there’s the complex or new solutions that don’t really have an existing competitor that you can map it against and they’re so new that nobody’s able to compare your product against others because there’s just nothing else there. And then there’s the entertainment where the people are using it to waste time. It could be movies or songs or it could be games, those types of things.

[20:14] Rob: And figuring out how to make your software product an aspirin product if possible is a big win. If you find out that you’re in the vitamin zone and you can somehow move it into the aspirin area, it can have a stark impact on not only your ability to market it, to get more people interested in it but your retention rates. Because if you’re an aspirin app and people are already using it, they’re just so much less likely to cancel.

[20:42] Mike: I think that’s something important because there are definitely cases. Basically the early access in customer development that you did with Drip which was you found that there were certain types of people that Drip was a really good fit for and for them it was more of an aspirin. And then there’s other types of people that you found that it didn’t work as well for and those people kind of fell into the vitamin area. The product itself is not different in any way, shape or form. It’s just that how they view it is different. And that kind of falls into making sure that you are pitching your products to the right types of people.

[21:15] Rob: Yeah and this holds true no matter what you’re selling, if you’re writing a book or creating a course or writing software or throwing a conference, certain people are just going to be right in your core demographic and they’re going to absolutely love it and need it and certain people are going to be on the fringe right? It’s that vitamin area of like they’re interested in it but it’s just not critical to what they do and then other people, it’s not going to be good for them at all.

[21:40] So the idea is how large can you make that inner aspirin circle? That inner circle of folks who really need access to this or who really need the information that you’re building. That’s really the art of all this is figuring out how to build something that enough people want really badly that you can build a viable business out of it.

[22:00] Mike: So when you’re talking to people, that’s something you need to keep in mind is that are the people who are in your early access program or in your beta program, are they the right people or are they the wrong people? And if they’re the wrong people, how is it that they ended up in there? Is it because of your marketing? Is it just because you were comfortable talking to them? Is there a right person that you need to target instead? You can do that in some respects by making customer profiles and I think there’s a lot of different companies who’ve had different ways of setting up customer profiles or customer personalities.

[22:32] I think that Atlassian uses like a monkey that sits at their table at every meeting. They’re like that’s the customer. What would they think of this? That can certainly apply back to when you’re talking about the things that you do for the early access customers and the things that you’re putting on your website or your marketing materials like are you talking to the right people? Are you targeting the right people? Or – and this is kind of the worst case scenario. Is the product that you’re building simply not necessarily for any of them and is it a dead end?

[23:00] Rob: Yeah. And there are a lot of roads to go down before you get to that dead end place. I tell people if you still have motivation and you’re still interested in this product, don’t give up yet if you’ve maybe launched and you don’t have a bunch of interest but you really haven’t pounded the pavement to find out if with just a minor feature tweaks to the product, you can satisfy a different market’s need for that or with a few tweaks to your marketing, the exact same product could satisfy a different market’s need.

[23:29] Obviously if someone’s done that over and over and still is not finding it then that’s at the point where A) if you’re losing motivation that you should consider throwing in the towel. But I have to admit like five years ago I didn’t really understand the whole kind of pivot thing where you pivot a product from market to market or you’d even add features to kind of try to find a new target audience but I totally see that now of how a single product can provide different amounts of value to different markets if you look for them and if you talk about your product using the right language.

[24:01] Mike: So some things to keep in mind when you’re going through this process though is that this is time consuming. It takes time to schedule calls with people and get the emails out and even sometimes just to get responses. I mean there will be cases where you can send an email to somebody 2, 3, 4, 5 times and not get a response at all. And then suddenly somebody emails you back or they give you call back. It’s definitely something that is time consuming but at the end of the day you really need that information if you’re kind of floundering in terms of getting people to use your product and figuring out why.

[24:35] Because if you do need to make a pivot, you do need to know what it is that turned them off and kind of categorize them as a prospective customer and say okay, how do I tweak my marketing to avoid that type of person or avoid attracting that person initially so that I don’t waste a lot of time with them and classify people kind of across your customer base.

[24:55] Rob: Yeah. You’re going to need at least I would say 10-15 hours a week depending on how many customers you have and how in depth you’re interacting with them. That’s what I was spending during that early access time. A lot of emailing and some Skype calls and a lot of thought. Because then you take that data and you have to kind of look at it and analyze and figure out what to build or how to change the verbiage. You’re doing a lot of talking so it’s not something you can cram into 2 or 3 hours a week. It really is quite a bit of effort to go through this process and really try to figure out who’s engaged? Who’s not? How can you make those who aren’t engaged more engaged or are they just not a good fit?

[25:34] I guess that wraps us up for today. If you have question or comment, call our voice mail number at 1-888-801-9690 or email us at questions@startupsfortherestofus.com. Our theme music is an excerpt from “We’re Outta Control” by MoOt used under Creative Commons. Subscribe to us in iTunes by searching for startups or via RSS at startupsfortherestofus.com where you’ll also find a full transcript of each episode. Thanks for listening. We’ll see you next time.