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Startups For the Rest of Us

Episode 165 | Our 5 Biggest Mistakes From the Past Year

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[00:00] Mike: This is Startups for the Rest of Us: Episode 165.

[00:04] 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 Mike.

[00:20] Rob: And I’m Rob.

[00:23] Mike: And we’re here to share our experiences to help you avoid the same mistakes we’ve made. What’s the word this week Rob?

[00:22] Rob: I’m pleased to announce that Drip is now out ranking motelyfool.com for the term Drip and I didn’t think I was ever gonna get above that. Drip was on the second page for that phrase for a while and then it climbed up to number 10 and now it looks like as of today in an incognito browser from my current location, ranking for Drip isn’t gonna get me a lot of customers. It’s just gonna make it so that when people hear the product name on the podcast and don’t hear that the domain name is different because it’s getdrip.com, it will help them find it. It would be great to rank number one for that, not for the true organic traffic that it will get but just for the ease of finding me in Google.

[01:04] Mike: I’m looking at it now and you’re actually listed number 6 right below them. Ilovedrip.com is the first one.

[01:11] Rob: I know. I need to look at that site and figure out what they’re talking about.

[01:14] Mike: I think its things to do in Orlando. It says Drip is Orlando’s best kept secret. You now the Blue Man Group? I think it’s something kind of similar to that.

[01:22] Rob: Yeah. So that will be a tough one to outrank. They have quite a bit of authority and history in Google at this point.

[01:28] Mike: Yeah, most likely.

[01:30] Rob: How about you? What you been up to?

[01:31] Mike: Well I started working on some of the MicroConf sponsorships so I’m still trying to get the rate card all straightened out but that’s coming along pretty well and once that’s all done, then I just go out and start contacting the sponsors from last year and see if I can drum up any new sponsors for the conference.

[01:46] Rob: Yeah and that’s microconf.com if you are interested in coming, it’s the conference for self funded startup founders and it is gonna be probably in mid April is what we’re looking at the Tropicana. Our email list is about twice what it was last year so it’s probably gonna sell out fairly quickly again and we should be selling tickets in I’d say by mid January at the latest. Other news for me, I started paid acquisition last week which is a dubious proposition. I was doing it more to test out analytics and to kind of test some landing pages rather than actually get trials. The reason I couch it like that is last week was the week before Christmas and so I knew that getting people to click through and sign up for a 21 day trial when they’re about to probably go on vacation is not likely to happen.

[02:34] As such, as I started running the ads right away, I noticed that my Google goals were not firing when people converted to trial so that is a non starter when you’re running paid accusation so we had to troubleshoot that and figure out how to goals the to fire. It isn’t as simple as it used to be with Google. They made Google analytics so unbelievably complicated compared to what it was even 12 or 18 months ago that getting goals to work is by far more complicated than it was a while ago. So we do have it working as of today.

[03:04] Mike: That’s interesting. I kind of put all of my – not all but quite a few of my Audit Shark marketing activities, kind of on hold for the time being just because its Christmas and I really don’t expect a lot of people to come in and be using it or to sign up for a new trial or anything like that.

[03:18] Rob: That’s why SaaS is so nice right? Because people are still paying a subscription fee for December even though they’re not really gonna but anything new whereas when you have a onetime sale app like I have DotNetInvoice I mean the sales typically just plummet unless we do like a black Friday special or some type of Christmas special. DotNetInvoice takes a big hit in December because nobody really wants to buy go spend a bunch of money in the last two weeks of the year. They’re just thinking about other things.

[03:45] Mike: The counter point to that is the companies that have a giant budget that they lose at the end of the year if they don’t use it so there are some people who will spend the money but…

[03:53] Rob: That’s true. And there are certain pieces of software where it makes sense to start them on the first of the year like a tax software, an accounting software to make a clean break between one year and the next. I imagine that those sales could go up and if you had an app like that, it would make sense to do a special on December kind of saying hey, get setup by January 1, get your books in order, that type of thing.

[04:13] Mike: I’m working out some of the reporting bugs in Audit Shark and on another completely boring note, I’ve been analyzing my Audit Shark marketing efforts to figure out what I should be doing as soon as January starts rolling around and kind of what my priorities are gonna be.

[04:25] Rob: You’re analyzing existing efforts that you’ve made or you’re compiling a list of approaches and tactics that you’re gonna use in January?

[04:33] Mike: Yeah, that’s basically kind of figuring out what it is that I want to do and what I’m gonna do first. That’s more it than anything else. I have a drive to traffic but then I also have to make sure that’s converting and right now, just up until lately I haven’t had the page open for people to come in and sign up so that has been – I couldn’t even measure it before and now I can start to measure it but I still need to get people to decide and because its December, they’re just not gonna sign up or at least I don’t expect anybody to.

[04:58] Music

[05:02] Today we’re gonna recap our five biggest mistakes from this past year. You can look at some of these things and you can say that oh well, if you did something, so correct a mistake, then couldn’t you also see that is your biggest win? And I think there’s certainly cases where that’s true but there’s other cases where you may have strategically chosen to do something in a certain way knowing that it was a mistake but not necessarily realizing how big of a mistake it was.

[05:26] Rob: And you say that because you noticed that several or both of our mistakes are – start with the word not. In other words, it was not doing something or not doing it soon enough is the mistake we’re mentioning. There was a behavior that we realized that has been successful for us but the regret or the mistake is that we didn’t do it sooner in the year. And I think that the point of this episode is not for you and I to sit here and talk through our mistakes but the idea is to get you, the listener, to reflect on what perhaps are your five biggest mistakes from the past year and even looking out perhaps what are your five biggest wins from the past year?

[06:01] And then take the time to maybe analyze why they happen, to analyze how you can avoid making similar mistakes or the same mistake in the coming year and I think another piece to this is kind of asking yourself what gave me to life this year and what sucked a lot of life out of me. Both looking at this as a way to grow your business, as a way to not make the same mistakes because that keeps you going in circles, also as a way to structure your work and personal life so that they are sustainable that they give you life over the course of the next year.

[06:29] Mike: So to kick things off, one of my biggest mistakes was not paying enough attention to my health. Back in August I discovered this health issue that was impacting a lot of the things that I was doing and just my ability to get different things done. Discovering that and dealing with the situation has made all the difference in the world. I was actually able to get to the point where Audit Shark has been launched. There’s still a lot to do of course but I feel like I’m actually making progress at this point as opposed to before where I felt like I was doing a lot but I was spinning my wheels more often than not and not making forward progress. It’s hard sometimes to know the difference between when you’re doing stuff that is moving you forward versus when you’re doing stuff just to kind of maintain your current position that doesn’t actually get you moving forward.

[07:11] Rob: yeah. I’m guilty of this as well. It’s easy to do and it’s easy to just keep going on in auto pilot and ignoring things like really sore shoulders or the inability, people got carpal tunnel, you just charge through and you start taking Advil and you don’t address the real issue and get the fix done, and the longer you get it go on, not only does it get worse but you don’t even realize how much it’s actually impacting your productivity because you forget what it’s like to feel at 100%. Obviously really glad that you caught yours and something that I’m looking to not do in the coming year.

[07:46] Mike: Some of the different actions and I’ve taken since then and it’s just once you have taken those, you look up and it’s just wow, that made such a huge difference. Why didn’t I do this sooner which goes back to what you said? There’s lots of these things you discover them and you just think to yourself why didn’t I do this sooner and the fact is you just didn’t know.

[08:03] Rob: So my first mistake is letting email negatively impact my productivity. Now I have been able to maintain inbox zero now for several months and that has been helpful but it still has not freed me up in the way that I envisioned in my mind that I can someday be freed up from email. I get an enormous volume of email every month and anytime I take time off, I come back and basically lose a solid eight hour day of just going through email.

[08:33] I’ve tried a bunch of different approaches. I don’t think there’s anything feasible. There’s no solution. There’s no answer I have seen to date. A lot of these are coming from my apps and so my VA is already going through support issues and then they wind up in my email to show me that a support issue has been assigned to me so it’s not as if putting a VA looking at my email can handle that because there’s are things I have to do. It’s a mistake I don’t have an answer on how to fix it yet but my hope is that in 2014 this is something that I do figure out a way to reduce the amount of time that I’m sitting there,  working with email.

[09:05] Mike: I do have a couple of anecdotal things. One is you could create an internal email address like secretrob@thenumagroup.com and those are things where the specific internal stuff needs to go to you and then you have somebody look through your regular email. And the other one Ramit Sethi was telling me at behavior con that he can usually tell at this point because he’s gotten so many emails that he can tell within the first couple of sentences whether or not something’s gonna be even worth reading.

[09:31] Rob: I like the secret Rob idea. I would agree with Ramit and I think I now have that ability because I’ve read so many emails. So it’s not the reading that takes the time. Its once I get into it, it’s the decision of do I act on this or not and then if I do act on it, then the real time starts. A lot of it is maybe an academy member, MicroConf attendee, a listener asking for opinion and feedback about their idea, asking about any number of things and since I like helping people and I’ve always felt like it’s a responsibility and something that I want to do to give back to the community, that stuff is quite time consuming. I record screen cast for people. I do all kinds of stuff. I don’t want to leave that behind but I’ve already reduced kind of the number and the time I spent on those responses, I don’t know how far I want to peel that back.

[10:18] Mike: Heard another strategy for allocating specific time blocks. So like an hour or two hours a week or something like that and then once you hit that time, it’s like okay, that’s it. I can’t spend any more time on that stuff. But inevitably, that kind of leads to what you said is letting things just kind of drop on the floor and there’s only so much you can do.

[10:34] My second biggest mistake was not starting a mailing list for my blog sooner. This partially is a result of not really paying attention to feed burner but where I just wasn’t writing for my blog anymore. I’ve talked to enough people where they said hey I really would appreciate it if you start writing a little bit more. Give me feedback on this and a lot of things that I see are just things that would make great blog posts. I haven’t been turning them into blog posts. So I started getting back into that but I started a mailing list several weeks ago and I’ve already got a ton of people who are on my RSS feed kind of converted over onto that. So that seems to be going pretty well.

[11:11] But it just seems like that’s something that I know on the back of my mind I should’ve started that much, much sooner and I just never did. I mean I never really made it a priority. So like as you said you like writing back people and giving them your feedback and thoughts on opinions on things that they’re working on in order to help them. And I kind of feel like this is exactly the same way is helping other people and just kind of giving back.

[11:34] Rob: My second mistake is related to yours. It’s not carving out more time for my Software by Rob email newsletter, the one that I already have. I started a couple of years ago. I’ve been building lists. I have probably 7,000 people, on it and I have emails that go out but not as many as I would like just purely out of the lack of time and of too many things going on in terms of conferences and apps and the podcast and all that stuff. But I’m hoping and I’m planning to give more time to this in the coming year because it’s something that I enjoy.

[12:08] Like you, you and I first met when we were bloggers and we met because we both liked to write and we enjoyed that. We enjoyed convening your thoughts through that medium and I have not written nearly as much in the past year to two years than I did over the previous 5-7. So its something that I’ve let go because it’s so damn time consuming, just sit there and crank out a really good piece of content but I did find that when I’m not blogging and when I’m just sending emails to my list, there are some time saving ways that you can do it in terms of doing a screen cast or just having shorter articles that I never felt comfortable doing with my blog.

[12:45] I think that with not a huge time investment that I could really continue investing in this list and getting solid info out to them. So if you are interested in that and you’re not signed up, it’s called Start Small, Get Big and that’s my email newsletter. It’s at softwarebyrob.com and it’s in the right hand side column. And yours is at singlefounder.com in case you haven’t signed up for Mike’s email newsletter.

[13:07] Mike: My third biggest mistake was not extracting myself from project implementation sooner than I did. And I’ve spent a good deal of time making sure that the people who are working for me on a part time basis have the things that they need to move things forward but I feel like I have spent a lot of time over the past couple of years doing probably way too many things myself. One of the things that I’ve done recently which has really helped out a lot is hired a bookkeeper and her and I sat down for about three hours yesterday basically going over all my business finances and trying to convert everything all over on to one accounting platform so that she only has one spot to go for everything.

[13:47] And then just putting the processes and procedures in place for how to deal with different situations and invoices and receipts. But one of the other things I’m doing is I’m handing her all of my personal stuff as well. So I’m giving her access to my personal bank accounts and whenever I get things in the mail, I’m gonna put them in a box and she’s gonna get them once or twice a week and she’s gonna handle all that stuff. I basically do not want to touch any of that stuff. So there’s all this day to day stuff that I just shouldn’t be handling.

[14:15] That’s something that I’ve been very glad that I’ve dealt with but it’s something probably was a long time and coming just because I didn’t feel comfortable just taking that stuff and handing that off to somebody else. And as I said, there’s a lot of stuff with Audit Shark as well where I worked on so much of it that I’m like oh, this is just this giant unwieldy thing at this point. I don’t know if somebody else can jump in and work with it and that’s definitely not the case other people can make progress on. It’s just a matter of me becoming comfortable with allowing other people to go and do that stuff.

[14:44] Rob: Yeah. So one of your biggest mistakes for the last year turns into basically outsourcing success stories. It’s several places where you are able to extract yourself from the details. And I feel like you started making a lot of progress with Audit Shark once you got other developers involved.

[15:00] Mike: And I think part of that is just the comfortably factor I mean because it’s not like I put somebody in there and said oh I need you to build this giant complicated thing. It was these little things here and there and then as they get more comfortable with the code base, I get more comfortable handing them stuff that’s more and more complicated. So there’s a give and take there. It is a progression. I think it would be difficult for somebody to just jump in right now and just hand them a complicated function. But it’s the on boarding process for getting a new developer up and running with any new code base. I mean the code base is sufficiently large, its gonna be a little bit complicated. You need to have some sort of ramping up period and need to be able to expect that.

[15:39] Rob: My third mistake for the past year was not focusing sooner on figuring out how to fix HitTail after Google’s not provided debacle where they said that they’re not gonna give us the search terms people use to find our website anymore. And this one, it’s a mistake or regret because HitTail is one of my big apps and its definitely lost a good chunk of revenue over the past 3 or 4 months since Google announced the not provided stuff.

[16:07] Kind of the counter point to it is I was looking before Google announced this, how to get keywords out of stuff and Google wasn’t giving this data anywhere else. And just within the past maybe 30 days or so, I’ve noticed that they are giving enough information through the web master tools and I now have an alpha version that I’ve coded up that basically will work around the not provided stuff at least as best as anyone can.

[16:32] And I’m gonna be working with an alpha and beta testers here in January. And I think that I should actually be able to basically get the value back or most of the value back that was lost during this whole thing. I wasn’t able to make this happen sooner before the revenue started to slide on it. I’m pretty confident I’ll be able to build it back up but every time you lose those customers, it’s just so hard to get them back. It’s so much work to replace them.

[16:58] Mike: My fourth biggest mistake was not starting a mastermind group sooner. And this is something that you talked about in the past, having a mastermind group can really be helpful in moving you forward and it wasn’t until I got into it and started having mastermind group meetings that I realized how incredibly helpful it would be. I think that one of the comments that you’ve made in the past is that having people who have kind of heard the story and have heard some of the guts of it from way back when, that helps give them a little bit more context as today’s and somebody that you just met, you kind of give them the story and run down what it is that you’re working on and problems that you’re having whereas if they don’t have that 6 or 12 months worth of history, there may be insights that they’re just not gonna have because they don’t have that history.

[17:43] Rob: So my fourth mistake is kind of funny. It’s almost trivial compared to these other ones we’re naming but basically within the past month I made a $1700 error with Amazon EC2 instances and I went to purchase some of their reserved instances, you can get them a lot cheaper than if you’re just paying hourly and I bought one that was five instances for a month instead of one instance for five months and it just sufficed to say over the course of the next 30 to 45 days it cost me $1700.

[18:17] And what’s interesting about this is the reason that I made the mistake is because we’re just moving so fast. I couldn’t spend the time or I tried to spend the time to research it, the documentation sucks. I emailed support, they were no help. The forums don’t tell you anything so at a certain point I had to make the call am I gonna do this or am I not and it’s on my task list and I need just hide this thing and I need to pay Amazon a higher price or I need to pull the trigger and buy this reserve instance what could possibly go wrong? It’s a result of quick decision making.

[18:47] Now kind of the defense in my mind of it as it happened, I mean when I saw it happened I was like that really sucks that I’m gonna lose this money but if this the worst thing that happens to me this year, if it’s the worst mistake I make this year, I will consider myself very, very lucky. It made me realize just how much I value time more than money. This $1700 error compared to all the decisions that I’ve made quickly or the amount of money that my apps will make me in a certain amount of time, it doesn’t compare.

[19:18] So I think there’s a balance here of like not making stupid or rash decisions but also realizing that if you make 100 or 200 decisions in any given month that being able to make them quick and then live with the consequence may very well be more valuable than sitting there and doing in depth research and never making a mistake but getting 1/10^th of number of things done.

[19:38] Mike: I’ve looked at stuff like that that I’ve done before and I used to do this when I was looking at hard drives and computer equipment to buy and one of the things that I came to the conclusion was at one point I was spending so much time kind of agonizing over the decision between two different hard drives one of which was I don’t know, let’s say as $160 and the other one was $240 or something like that. Which isn’t a huge amount of money but if you spend more than hour making that decision then you’re essentially just wasting money and you extrapolate that over stuff where you’re making decisions over the course of 10 or 15 hours and you’re agonizing over all that time. And at some point, if you would just pull the trigger and chosen the more expensive one, it wouldn’t matter at the end of the day because you just wasted all that time where you’re paying yourself for that time. It would’ve covered the cost.

[0:20:27] And the fifth biggest mistake I would say that I’ve made is depending on Google too much for some of my data and services. And I think this goes back to what I’m referring to as the feed burner debacle right now where feed burner just seems like it is not working on my site. I’m looking at probably switching to feed blitz some time I the near future for RSS from my blog. But it feels like I’m relying so much on Google’s data feeds and services at this point that if something goes wrong and Google decides to change their mind about different things, I may not necessarily have ways of extracting myself and this isn’t just limited to like the Google glass that I got or my Gmail account. I mean there’s a lot of Google services that we use kind of everyday and it makes me worried to be perfectly honest.

[21:13] And I feel like it’s a mistake and I guess at the end of the day I feel like I have so many eggs in Google’s basket that if they decide they want to do something, it kind of goes against my goals then there’s just nothing I can do about it. And I’m certainly not alone in that I don’t think. I don’t know what other options have in some cases. I mean Google web master tools are what they are and they’re great for doing research and they’re great for all this different analysis but there are paid options out there for different things but they only take data so far.

[21:43] Rob: Yeah and anyone who built a rank tracker and has had that API shut down and then the scraping blocked or anyone who relies on Google keyword data for any reasons meaning pretty much every web master in the country and anyone who does email marketing and realize on the image tracking that Google’s now cashing and they didn’t totally break that but they certainly have an impact on it. All of us realized that the impact and the amount of control that Google actually has over a lot of things now.

[22:09] And I can imagine that these changes Google’s making about – I mean they’re kind of putting a quash on SEO and a lot of SEO’s are moving into content marketing. And Google’s starting – it seems with this image move maybe clamped down on email marketing as well but it seems that each of these probably drives incremental revenue for them because you can imagine that people will go out and buy more ads in order to make up for the loss of the traffic and the conversions and such. So it is a scary proposition as you’ve said.

[22:45] And my fifth and final biggest mistake from last year was underestimating the amount of work it takes to launch a new Saas app. I think lesson launching late, I think the bigger thing was how many other projects that launching Drip caused me to push off, just the sheer volume of attention and effort that I needed to spend a long with Derek my developer who was first working half time and then went full time and then I went full time on it, I mean that, I just didn’t anticipate that early on in the year and I always forget how much time it takes to get these things off the ground and get them built up.

[23:19] What’s interesting is that a mistake is different than a regret. I don’t regret doing this. I don’t know that I can put my finger on exactly the repercussions that it had aside from me pushing off a few projects but just remembering that Saas apps take hundreds and hundreds of hours especially if they’re in a competitive market like this where people are already ahead of you in features and you don’t necessarily want to do a feature battle anyways you kind of need to know going into it because I can imagine if I hadn’t started with momentum and someone coding on a full time, this would be a project that someone would think they can get done in a few months and would basically take them to the point where they would probably quit.

[23:57] If we didn’t already have momentum on it and I can see the light at the end of the tunnel within a few months I think it’d be a tough project to launch kind of a major Saas app in a competitive area. If you’re trying to do it on nights and weekends, these markets are definitely getting more crowded as times goes on.

[24:13] Mike: You mean Audit Shark wasn’t an early warning for you?

[24:15] Rob: Indeed. I’ve had a few conversations in the past couple months of folks who are launching Saas and they’re like oh man, I hadn’t realized there’s these many competitors or all the work it takes to actually get this done and launched and all the marketing and all that stuff. And then I think the last kind of honorable mention is kind of maybe a shared mistake you and I made is not starting a podcast mailing list in 2013 because it’s kind of a no brainer. We’re coming on here every week to talk about stuff. We should have a minimum an email signup form and figure out what to send to the audience at that point.

[24:50] Whether it’s probably not an update when every episode goes live because people are already subscribed to them but maybe a call out to some specific comments or some specific news items related to the podcast or just figuring out what it is that we’re able to keep people on the loop on because I know you and I don’t have the time to create a bunch of original content and to start another blog or another full email newsletter. But I still think that there are a lot of listeners out there who would love to keep in touch with what’s going on and having them on a mailing list would probably be beneficial for everybody.

[25:23] Music

[25:26] So give it some thought for yourself. Think about your biggest mistakes potentially how you can stop doing them in the New Year. If you have question for us, you can call it into 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. 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 and we’ll see you next time.

Startups For the Rest of Us

Episode 164 | 50 Mobile Apps That We Use to Run Our Businesses

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[00:00] Rob: In this episode of Startups for the Rest of Us, Mike and I discussed 50 mobile apps that we used to run our businesses. This is Startups for the Rest of Us: Episode 164.

[00:09] 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.

[00:26] 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 sir?

[00:32] Mike: Well, I’m in the middle of DDOS attack against my blog at the moment.

[00:34] Rob: You’re kidding me. What happened?

[00:37] Mike: I had my blog hosted over at WP engine. I think it was a couple of weeks ago where this first started happening. Today it got so bad that you just could not even get to the site and I sent in a support request and they’re like yeah, it’s still going on. There’s really not much we can do about it except we can change your IP address. So here’s the new scene name that you’re going to need to use.

[00:56] Rob: How interesting. And do you think it’s targeting you or its targeting you because you’re on the WP engine? I guess it’s hard to tell right? You just not have idea who’s doing it or why.

[01:05] Mike: I’ve got no idea. It’s not like I’ve gotten any sort of extortion emails or anything like that. It’s just nailed left and right and there’s really not a lot anybody could do about it.

[01:15] Rob: So we are up to 311 worldwide iTunes reviews. We have some awesome reviews recently from Esoterica, he or she’s in Australia. Don’t be fooled by the fact that these guys are develops. Startup for the rest of us is so much broader than that. The episodes are as regular as clockwork both on their release and the killer content. Actionable and realistic information that will keep you motivated in their journey. Really appreciate that.

[01:40] Also Laten in the US says I’ve listened to about five episodes so far and I’m now going back and working my way to the older ones. I’ve already really enjoyed Rob and Mike’s discussions and appreciate the valuable content they share. And then we have Penske also from Australia. Love the fresh approach to your podcast and that it’s full of information that is useful to my everyday business. I find I can listen to you both all day long and still be as hooked at the end of the day as I was when I started. And to wrap us up, we have what’s up dog LA obviously from the United States. He says I’ve never left a podcast review but felt compelled to because I enjoy this one so much just want to encourage Rob and Mike to keep doing what they’re doing and say thank you guys. So if you have not left us an iTunes review, please log into iTunes and we’d love a five star.

[02:24] Mike: Very cool. Thanks everybody.

[02:26] Rob: So MicroConf 2014 in Las Vegas is coming up. We’re just starting to get the details nailed down. Everything’s still tentative but we are talking to the Tropicana hotel again just where we had it last year and we have tentative dates in the middle of April. If you are interested in hanging around with 150 of your favorite web and mobile entrepreneurs, think about heading over to microconf.com and adding your email to that list. We sold out our tickets in about 51 hours last year and form the size of the list at this point, it looks like it will be that fast or faster so I would suggest that if you’re thinking about coming to MicroConf you definitely head over to microconf.com and enter your email. So I heard you’re a glass hole.

[03:10] Mike: Yes. Because I own a pair of Google glass.

[03:12] Rob: What do you think so far? How long have you owned it? I mean tell us the story like have you worn it out and about? Have people given you weird looks? Do you find that it’s useful? I’m just curious to hear your take.

[03:23] Mike: I’ve had it for almost to weeks now. It’s interesting to use so I find that it works really well if you have Wi-Fi or you have it connected to your phone because it uses all of the different Google services and I’ll give you some examples of where I found that it was extremely useful. I was flying home about a week ago and had them on in the airport. I was sitting down. I looked over at this TV screen that was on the wall and I’m trying to find out where my flight was and whether it was on time or not. With Google glass, you can either touch the side of it or you can look up and it will turn on.

[03:55] Well, I looked up enough because I was looking at the TV screen and it popped on and my flight information was right there. And it told me when it was taking off, that it was on time. I could’ve clicked on it and gotten more information about it but it was awesome that information was just right there. It knew I was at the airport. It knew that I had this flight coming up and I presumably wanted information about it. I think I looked up on Google maps on my desktop how to get to some place and then a short time later I was wearing them, I just happened to glance up at something and the map showed up and basically showed me the route that I had previously looked up on Google maps.

[04:32] Rob: Very nice. So sounds fairly useful. Have you worn them out and about and had people stare at you or do you look like a dork when you’re wearing them?

[04:39] Mike: I probably look like a dork when I’m not wearing them so I don’t know if it really makes a whole lot of different. Maybe it’s an improvement I’ve got no idea.

[04:45] Rob: Touché sir.

[04:47] Mike: I definitely noticed that people are looking at me so I see a lot of people doing like a double take. I was at the grocery store the other day and this kid like every time I turned around he was staring at me so you definitely get looks here and there. I’ve got a few people who have asked me about them, just wanted to try them on and check them out. By large, the people who were interested in it definitely wanted to try them out. It’s definitely interesting wearing them. I don’t know how else to describe it.

[05:13] One thing I have noticed is that if you have an iPhone, it tends to be a lot less useful unless you’re on Wi-Fi because it doesn’t integrate with the IOS GPS that is something of a problem. They’re supposedly working on it. I guess they’ve been saying they’ve been working on it for the past six months they don’t have a solution for it yet. And then the other thing is you can’t send text messages through your phone if you have an iPhone. So it makes it a little bit more difficult for that as well. But if you do sync it with your phone, whenever you get high important email through Gmail, it will ding and then you can look up and you can just read the email right there if you’re using Gmail.

[05:51] Like I said, if you’re using Google services, it extremely nice for that because it does integrate with them and it just shows you information like when it thinks that you want it or when it seems to be relevant. I’ve had some tweets that have come in that just kind of showed up there and they were marked as high priority and primarily because I was mentioned in them or something like that so I could go and take a look at them. And you can take pictures. It automatically syncs it with Google+ and backs up everything and them from Google+ you can share it with everybody.

[06:18] Rob: I think the question on everyone’s mind is how has Google glass helped you get Audit Shark to launch?

[06:23] Mike: I can almost give you an answer for that is with that, I could sit there looking at a screen and I could do a Google hangout and I could walk somebody through it.

[06:31] Rob: I mean I don’t relay have Drip or HitTail updates just because its towards – it’s almost Christmas and we’re working away but there’s no major – we’re just rolling out features for new customers as they requested and we have a plan of what we’re doing in January but really nothing new that I haven’t already talked about anything new with Audit Shark, new millstones you’ve hit?

[06:51] Mike: Well this week, we crossed the $1,000 follower threshold for Audit Shark on Twitter so pretty happy about that. The strategy I’ve been using there has been working pretty well and seems to continue to be working so still working on how I’m going to monetize that but I’m thinking it’s more of a marketing channel than anything else, just kind of get the word out to interact with people and get face time I guess.

[07:14] And then beyond that, I’m working on a bunch of different things for next month more or less just marketing strategies and this week we’ve got some more updates that are going into the software. We just put in some new reports, once those are bug free I mean we’re going back to some of my early access customers and basically asking them for money because those were the reports they were looking for but there’s a couple bugs right now we’re just trying to straight out.

[07:34] Rob: Cool. And once that’s done, you’re going to be pushing forward with early access and additional customers and that kind of stuff?

[07:39] Mike: Yup, a couple days from now, I’ve got a call with a reseller who wants to take a look at it and see how it might integrate into their business where there’s an overlap or fit between what Audit Shark does and what their customers need.

[07:53] Rob: Very good. Well as we’re sitting here talking this documentary called the startup kids that I had mentioned a while back, it’s been released and it’s a documentary about young web entrepreneurs in the US and Europe and it has interviews with the founders of Vimeo, sound cloud, Kip, Indinero, Dropbox, food spotting and others. And you can check this out at the startupkids.com.

[08:14] Mike: On Twitter, Damon Clinkscales had sent me a tweet. It was in regards to our predictions episode and they sent me a YouTube video of what looks like a Ted Talk where somebody was talking about all the different things that Google is doing and it basically related very, very well to what I had predicted about companies essentially going down to the micro level and doing micro individual advertisements and feeding people different information. That aligned very, very well of what I said earlier about Google glass whereas I just look up and the information that was relevant to me was right there.

[08:47] Rob: Right. So your predication of kind of personal behavioral targeted marketing…

[08:52] Mike: Has already come true.

[08:53] Music

[08:57] Rob: Today we’re going to be diving into 50 mobile apps mostly to run our business. Let’s dive in here. We had an episode back in February 2011, its episode 37. We talked about the IOS apps that we were using. I listened back to that and realized that it was really out of date. You and I had just gotten iPhones maybe a year before and there just wasn’t that much out. So a lot of things have changed since then.

[09:18] First thing I want to start with is my “bottom four” so those are my apps that are in the bottom row of my iPhone. And for me, I obviously have the phone app. I have the Gmail app instead of the IOS mail app. I have the chrome app instead of Safari and then I have the podcasts app because I listen to so many podcasts. How about you? I’m curios to hear what you’re bottom four are.

[09:42] Mike: Well I left mine to all the defaults. So I just have the phone and then I have the regular mail app and then Safari and music which I also think is the default. I’m curious to know two things. 1) Why you switched out the IOS email client and then why you also decided to just go with chrome? Because for me I don’t really see any difference between chrome and Safari on the iPhone. I know that there’s some rudimentary differences here and there but for the most part, Safari works enough well for me that it just doesn’t matter.

[10:12] Rob: Yeah. So the reason I have Gmail, let’s start with that one. Gmail allows you more flexibility with labels. The labels actually work the way they’re supposed to unlike with the IOS mail app. The labels are colored the same way they are in the web app. Gmail also allows you to actually search your entire library. If you go to search and you type something in, it brings all of your historical emails back whereas the IOS mail app only looks at what it has downloaded locally. It’s more of like an iMap or a local version of the last 100 emails you have whereas the Gmail app is just way, way more powerful like the search actually works just like the web version and I wind up using that quite a bit. There are also more gestures that you can do that can get you between emails really quickly that I don’t know if IOS is implemented or not when the Gmail app came out light years ahead of IOS mail app.

[11:03] Mike: With the IOS mail app, there’s actually two different sections when you’re looking at it, there’s the basically if you have multiple mail boxes setup, it will show you the mail box at the top and then underneath it will show you your accounts. And under the accounts, if you need to search for things on a server, you can go in there and then you can search there and what it will do is it will search your phone first and then it will start searching on the server.

[11:24] Rob: A) It didn’t use to have that and B) that still sounds pretty clunky like you can’t just hit the search thing at the top and type it in. You have to go searching forth through menus.

[11:33] Mike: As I said, it’s kind of similar to Safari where it’s like its good enough and plus I also have an exchange server mailbox.

[11:40] Rob: See, that’s an issue. If you didn’t have that, I don’t think the Gmail app would work with that but I almost guarantee you if you are on the IOS mail app and you switch over to the Gmail app for one week that you will not go back to the IOS mail app. There’s enough features and differences and swipes. There’s all kinds of stuff you can do that if you learn it, it just makes you much more efficient.

[12:01] Mike: Cool. Maybe I’ll give it a shot.

[12:05] Rob: And then the other question was about chrome versus Safari. I switched to chrome maybe a year ago. Safari crashed on me quite a bit. That was the original reason I switched. Tabbing was the other thing. Even now Safari on IOS has tabs, it didn’t when I started and there’s a lot of really cool stuff you can do with tabs in the kind of multi tab view on chrome on IOS. If you just swipe on it left it disappears and you can reorder them. It feels faster as well just like on the actual desktop or laptop. So that’s why I’ve switched. Again it’s a little nuances. When chrome came out on IOS, it was ahead of Safari. Safari may be catching up at this point.

[12:44] Mike: Cool. Like I said, I’ll probably give chrome a shot again. I’ll probably just swap it out on the bottom bar because I do have chrome installed. I just don’t generally use it.

[12:52] Rob: Right. The other thing I like about chrome is all your bookmarks are synced and all your open tabs. I can literally have open tabs on my Mac book air. I can leave and if I’m out I’ll just click it and it’ll say open tabs. I can click Mac book air, it will show me all the tabs that are open there and I can just pop them open or view them right there in the browser so in case I was in the middle of something looking at a doc or looking at analytics or something, pops right up.

[13:16] Mike: Yeah. I use Xmarks for that which is kind of in our next section of office and productivity utilities.

[13:21] Rob: Indeed. So we have quite a few office and productivity apps. My first couple are Trello which I use to manage obviously my Trello queue, my to do list and stuff and sometimes I’ll add things from my iPad or iPhone but most of the time I’m using it if I’m out and about and I want to read my to-do list and think about an item. If I’m going to add it, I will typically actually do that via email. I’ll just pop open the Gmail app and type it in there and send to my Trello address.

[13:48] Mike: Yeah. I also use Trello. Another one I use on the go is Evernote. I don’t think you use Evernote, that Evernote has the worst user interface that was ever designed and created but millions and millions of people use it which is kind of weird way that its gotten this success that it has but I definitely use Evernote on my phone to take notes while I’m on the road because it allows me to throw them into different folders and be able to access pretty much my data repository of all the various marketing and sales things that I’ve run across over the years.

[14:19] Rob: My next one is Google drive and this is basically this allows me to access my Google docs. I don’t use Google drive to store files that I use Dropbox for that but I do use Google drive to access Google docs and I have frequently used it to actually pop open the outline for our podcast and add things while I’m on the go. It was nice. Before they had this Google drive app it was pretty clunky to try to do it in the browser and the Google drive actually makes it useable on an IOS device.

[14:48] Mike: Yeah, I also use Google drive but I use Google drive in combination with an app called Quick Office and Quick Office is also from Google but allows you to create documents where Google drive just always you to access them which is kind of nice because if you’re using an iPad or an iPhone, it makes it very easy to be able to pop it open, start writing a document and then you can send it to you Google drive later on so that you can get it to it from anywhere.

[15:14] Rob: And that is crazy. Alright I‘m making a note to download that. I have never even heard of this.

[15:19] Mike: Yes. It’s very nice. I’ve used quick office a couple of times to write like entire blog posts on a plane and just from my iPad. That’s kind of nice.

[15:28] Rob: Very cool. My next app is called simple note and this is basically like notepad but it’s synced across the cloud and it’s much simpler to access and to open up a new doc and create one like Google drive is. And so I use it for a lot of things that I want to take quick notes about like a shopping list. My wife and I sync up our shopping list through all of our web accounts and through our iPads and iPhones and then we also have some other docs that we’ve created that we collaborate on like Christmas list and that stuff. It’s just a little harder to get to if you make them a Google doc that you have to go in and search and formatting and a lot of clicks and the interface isn’t as easy as simple note which is basically just like I said a note pad, it’s like a little text editor.

[16:15] Mike: That’s really cool. I hadn’t thought about being able to share lists and stuff like that between me and my wife. That’s definitely a good one. I‘ll have to check that one out. I use a combination of SugarSync and Dropbox on my end for syncing files. SugarSync just recently said that they are moving to a paid only model for obviously reasons. I mean you don’t necessarily want to be supporting a ton of free users kind of similar to the way Dropbox has been. I mean at some point it become financially unwielding and unfeasible to support that many free users especially when you’re giving them this space that actually does cost you money.

[16:51] Rob: One more company member we’ve talked about this works like companies start with this premium model and most of them get rid of it because of the pure burden of supporting it.

[17:01] Mike: Yeah, so I do pay for a SugarSync subscription but I also have a free Dropbox subscription so I wonder how long it’s going to be before that becomes no longer free. And I don’t know at that point where I would go Dropbox or SugarSync. I mean I use them both for different things. I have some stuff for one business in one place and then some stuff for another business in the other one. I don’t necessarily like or dislike either one. It used to be that SugarSync I thought have a distinct advantage in that you could specify specific folders that were going to be in it as opposed to Dropbox where everything is all in one folder and then kind of spidered on from there. But I think that has gone away at this point so that they’re much more on par in terms of features so I don’t necessarily have a strong preference either way. It’s just whichever one makes it easier to get the job done and has all the files I need.

[17:48] Rob: My next three apps are pretty standard so I won’t go onto them too far. One is Dropbox which you’ve already mentioned. The next is Skype and the next one after that is Google maps which is a no brainer but I don’t use the Apple maps. I just like the routing of Google maps and now that it has turn by turn directions. It’s a no brainer for me. And then the fourth one which is a little different is called Sunrise and it’s a calendaring app that has I’ll say it has a better UI than the IOS calendar app.

[18:17] So if you’re counting I pretty much use none of this talk IOS apps and I’ve actually heard it’s a pretty common thing that a lot of people use more Google apps and or just replacements for the IOS apps and I think it’s a real problem for them. I know they want to make the money form there in hardware but if they can’t kind of write the core software for their operating system, the best, better than other people, I think that’s definitely something that apple needs to work on. But it’s Sunrise is something it’s something you should check out. It’s a free app.

[18:45] Mike: A couple of the other apps that I have are the office and productive section is Basecamp that I’ve already mentioned I use Xmarks for synchronizing some of my bookmarks. I use an application called Viber which I think I used that primarily when we were at MicroConf Europe because what it allows you to do is allows you to send text messages through Viber to somebody else who has it and across nothing but a Wi-Fi connection. So that was helpful for me because have an iPhone and my wife has one and I just downloaded Viber and we’re able to text each other back and forth without me having to pick up a phone or try to get on Skype and it was just nice to be able to just leave messages.

[19:25] The other ones that I have are an application called Doc Scan which I used for scanning receipts so if I’m out on the road and I’m trying to track expenses for a client, what I can do is when I go out to dinner, when I get the check, I sign the bill then I just take a picture of it with Doc Scan and then at the end of that, weeklong engagement or whatever, I can just then take that, converted into a PDF, send it off to my bookkeeper and my bookkeeper can take that PDF, fill out the expense report and then send an invoice to the customers that I don’t necessarily have to deal with. And that’s worked out really, really well. I’ve been using Doc Scan for probably two years and I basically use it all the time.

[20:04] And then the last one I use is something from Nathan Barry and Commit, allows you to put in a goal that you have and something that you want to do or accomplish everyday and you just enter in a time that you want it to remind you whether or not you’ve done that or not and all it is just a button say whether or not you’ve done that on that particular day. And it allows you to go back one day but it helps you to commit to different goals or at least trying to reach different goals.

[20:32] So for example, if you want to lose weight, you might say did I go to the gym today and you just say yes or no whether or not you did it on any given day and it tracks how long you’ve been doing whatever that action was. So it kind of helps to motivate you because if you’ve done it for 30 days or 60 days you don’t necessarily want to break that cycle so it’s something of a psychological hole.

[20:55] Rob: Our next category is financial apps and I think we have four of them. One of them is just your banking app if you’re part of even small credit unions these days, they have an app especially the large like Wells Fargo and Bank of America and large national banks will have them. The cool part that I found about my banking app is not just that I can check balances and transfer money but I can now deposit checks just by taking a picture of the check using the app and it scans the numbers and imports the whole thing. So I almost never go to the ATM anymore only to pull out cash these days. That’s been a big time saver for me.

[21:28] And my other financial app that I use is called Paid and I’ve mentioned it in the past but it’s basically a Stripe IOS app. It’s not put out by Stripe. It’s a third party but they integrate with Stripe and they can pull down all your data and have some really attractive reports. The design work was done by Ryan Shurf which is your friend and mine. He’s a great designer up in Minneapolis. He’s done a lot of design work for me so the app looks really sharp and it gives you a lot of inside to kind of when you’re next transfer is coming and how much it’s going to be what your revenue’s been and your per customer. It just gives you a bunch of metrics on your iPhone.

[22:04] And the app I think is like $4 or $5. And the other cool thing is if you are doing live customer development say at a conference, you can just punch someone’s credit card number into Paid and you could charge a certain amount of money on it if you are in fact going to do pre-selling.

[22:18] Mike: Two others that I use, I also use banking app for my credit union and you’re right. It’s absolutely nice to be able to just take a picture of a check and just have it deposited automatically. The other two apps that I use are Xero and that integrates with the Xero accounting application. So I’ve started moving a lot of my accounting stuff and consolidating it for my businesses all into one platform and it looks like Xero is going to be that platform. So I’ve started using that and then the other app is the American Express app so I use that to check balances or make payments or whatever.

[22:54] Rob: Well, it seems like I need to download the Xero app because I use Xero and I don’t have the IOS app. Our next category is commerce and this isn’t necessarily stuff we use to run our businesses but we wanted to include it anyways because I use this the first one. The Amazon store app, I use that every day, every other day to order a crazy amount of stuff. And I don’t use it to run my business, what I do use it to do is save time. Since I have Amazon prime, I can get everything in two days. I’m constantly just popping it in to this Amazon app or right on the fly. You don’t need to combine your orders because you have prime right?

[23:28] The other app I have under commerce is my Starbucks app and here’s the interesting thing. I don’t actually go to Starbucks that much but what I like about this is two-fold. 1) I hate those rewards cards and I go to Starbucks enough that every few months I probably earn a  free coffee but this app, if you pay with that Starbucks app it gives you that free coffee. It tracks it for you so you don’t have to carry around that extra card because I’m Mr. Thin wallet. I’m trying to get a really thin wallet.

[23:50] The other thing I like about the app is there have been a couple of times where I’ve left my wallet somewhere and I have no money and I’m super hungry, you can add money to it. You can store value on it like it’s a card and it basically bailed me out because there’s always a Starbucks around and I went there and I got one of their sandwiches but at least I had something without my wallet and it was kind of my emergency fund I’ve realized if I’m standard or out and about somewhere that I can always pick up a little bit of food if I’ve forgotten it.

[24:15] Mike: Yeah. I primarily use the Amazon store app to hunt for different things. I also use the eBay app. So if I’m looking, doing price comparisons or if I’m looking for something that’s hard to find, between those two, I can usually find just about anything for my phone and then I also have the Starbucks app and I also have the Dunkin Donuts app because if you’ve ever been to the New England area, there’s a Dunkin Donuts on like every single corner. It’s just crazy out here.

[24:39] Rob: Alright, our next category is social. First app that I use for social stuff is Hootsuite and that’s what I use to manage my multiple Twitter accounts and what I like about it is it has the swiping left to right of your different brands or your different searches or your different things that you’re looking at. So you can go through not only multiple Twitter accounts here you’re getting mentioned but you can have an embedded search. So anytime mentions MicroConf throughout the year, that’s just one of my tabs that I’m swiping through. So Hootsuite is a definite winner for me. It’s a free app and Hootsuite’s free as well unless you’re over a certain level of usage which I’m not.

[25:15] The other couple are the Facebook app which I use pretty infrequently. I’m not on Facebook that much. Then there’s the kick starter app I talk enough about. I’m checking out kick starter stuff. Yes I actually have checked that out of my phone. It’s quite a good experience. I actually like the experience a little more on my phone and iPad than I do on the desktop web version. And then the last one is Yelp, obviously good for finding a place to eat when you’re somewhere you don’t know.

[25:40] Mike: Yeah. I use an app called Urban Spoon on occasion to find new places to eat. I don’t think use the Yelp app. I also have Hootsuite and then I use the regular twitter IOS app. I use that one primary for my single founder account and then the other ones I kind of manage a little bit here and there through Hootsuite but I don’t tend to use Hootsuite on my phone nearly as much as I do on my desktop. Most of the ones overlap with yours. I also use Facebook but usually when I’m sitting in an airport.

[26:06] Rob: Our next category is media and so this is books, music, movies and TV. My first one is Audible but I listen to probably a couple audio books per month. And I used to sync them via iTunes. I download them to the laptop and then sync it over through iTunes and listen to it in the music app but I realized it was just such a better experience to be able to download it directly over Wi-If. And once audible had all the controls in that 1.5 and 2 times speed, it just made sense to do that. And now I’m actually completely free of iTunes. I don’t use iTunes on my desktop for anything.

[26:40] So my podcast or through my IOS podcast app, Audible handles my audio books and I tried using iCloud and uploaded everything. It scans through and it does the iTunes match and stuff and it was quite buggy for me. I’m on a Mac book air and maybe 50% or 60% of the time I go to play music, it just wouldn’t let me play it and it would blank out and I’d have to reboot the machine. I switched over to this is another app on my phone but I now use the Amazon cloud player and it’s the same basic thing as iTunes match. It’s just using Amazon’s technology.

[27:13] So I have all my music scanned again by Amazon. It matched everything and it uploaded whatever else I didn’t have. You can have it to a quarter million tracks in cloud for lie $25 a year and I think I have 5,000 or 10,000 it’s not that many. So now that is what I use to manage all my music which feels good. I think it’s an adobe air app, my Amazon cloud player on the desktop but their web player is decent and the IOS player is decent and it got me away from using iTunes which has just been an aggravation for me of years.

[27:48] Like everyone, I use the Kindle app. I use Pandora for ambiance music. I like Pandora a lot for music discovery. There’s a Netflix app and a Hulu+ app as well as Amazon instead video and those are the three ways since I don’t have cable. I haven’t had it for years. Those are the three ways that I watched TV shows. A lot of them stream for free or I have premium memberships to all those and I’m able to rent movies for $2 or $3 and I can either watch them on my phone or my iPad or my laptop computer anytime I want or through the Roku  frankly.

[28:19] And the last one is Flickster and this is what I use when I’m out and about. I want to find out where’s the nearest movie theater playing this movie and what are the times? It’s just that GPS but modern smart devices where it just knows where you are and it can tell you the nearest theaters and what’s playing. It really is advancement in modern science and I think we take for granted.

[28:39] Mike: Of those apps, you know what, I have the Kindle app installed but I almost never open it up anymore because I bought a Kindle paperweight last year and since then, I almost never use it on my phone anymore. I only use it on my Kindle and I mostly read books. Like if it’s a business book, I’ll read it on there but I have a bunch of websites where I have the Kindle for chrome plug-in where I can send something to my Kindle and then read it later which is kind of nice and it’s just having that bigger screen is probably what really does it in for the Kindle on the iPhone. I also have Netflix on my phone. I have Hulu+ I have Amazon instant video but I also have HBO go.

[29:20] My wife and are actually looking at getting rid of cable between Netflix and Hulu+ and Amazon instant video. It will probably basically replace cable. But the one thing that I probably won’t be able to keep is HBO so I don’t know what I’ll do when the next season of game of thrones comes out.

[29:36] Rob: Yeah. That’s the one thing that HBO shows can’t buy them on Amazon and iTunes until the DVD’s come out which is like 9 months after they air. Our last official category are utilities and my first one in utilities is password management. So last pass or one pass or first pass, these are all things that help you have really exotic long passwords and being able to log into them on any device. Highly recommend if you’re not using one already to take the plunge and do it. It’s definitely changed my relationships with passwords and actually my relationship – I used to have that guilt of I know I’m not as secure as I need to be with the last pass one pass group, they really make me feel like I’m more source than I used to be frankly.

[30:15] Then we have FTP on the go which is an FTP client, some absolute emergency I need FTP in and I have done this a few times like at a conference. I also have the 2X client RDP which is just a remote desktop connector and it will get into a server so say the HitTail server or another window server where you need a remote desktop in. It’s a no brainer. It’s not great to do on iPhone because its screen is so small but I do have it on the iPad as well and again, only in emergencies I’ve had to log in and kind of swatch something real quick.

[30:45] Another couple are Turbo Scan which is basically just a scanner. So you can take a picture with your iPhone and it will scan the document in as a PDF or JPEG or a GIF and use that to email it to people so I don’t have to go find a real scanner. Then there’s White Noise+ which I use when I’m at a hotel if there’s a lot of noise especially if we’re there with my kids and I think it’s going to wake them up, I’ll just turn on the inside of an airplane noise or some type of white or brown noise.

[21:14] Last couple for me in utilities are the Roku app which is just a remote control for a Roku which allows you to watch internet television on your TV and there’s Quick Reader which is from our own Patrick Thompson at Inkstone Software which helps you learn how to speed read better. And the last one is Air Display which allows your iPad to basically be a second monitor over Wi-Fi. So it’s great for coffee shops if you really need to compare an excel spreadsheet or something you’re working on in two monitors. It’s not super fast, super responsive so you wouldn’t want to be really flipping back and forth a lot but if you’re just trying to compare data or you just want that extra little 10 inch screen sitting next to you, it also chose their battery actually. But if you do need that, I have definitely used this on occasion.

[31:58] Mike: I think out of those, one I would definitely add is I use something called ISSH which is a very similar to what you talked about with the RDP where if you need to SSH into a machine and its an absolutely emergency and it can’t wait for you to get to a laptop then that’s a good option. But I also have an RDP client so that I can get into my servers if I need to. And yeah, password management, tools, similar to last pass or some of those other ones that you mentioned. You said Turbo Scan. I think I mentioned it before, I use Doc Scan for that. How does Turbo Scan work?

[32:31] Rob: You just take maybe two pictures of the document and it just scans it in and spits out like a JPEG. It can do PDF’s and actually I just looked at it and it said you can just do the basic camera then you can do the sure scan 3X and that’s where you take three pictures of it and it merges them and makes completely sure that you have a really high quality image of it like doubles them up over each other.

[332:52] Mike: Yeah. I think its $3 but Doc Scan is $3 as well. That’s a lot of different apps that we just covered and hopefully we went through and helped you guys discover a couple of new apps that you never heard of. I definitely got a couple off Rob’s list that I’m going to take a look at.

[33:08] 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. 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 and we’ll see you next time.

Startups For the Rest of Us

Episode 163 | Our Goals for Next Year (And Why You Should Set Your Own)

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Show Notes

Rob

• 5x Drip
• Get HT back on track
• Throw 2 MicroConfs in a sustainable manner
• Re-launch Micropreneur.com

Mike

• Go full-time on AuditShark
• Finish my security book
• Get back to blogging/writing. 26 blog posts/email newsletters for the year
• Take an extended vacation (2+ weeks)
• Make a conscious effort to improve my health.

Transcript

[00:00] Mike: This is Startups for the Rest of Us: Episode 163.

[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?

[00:24] Rob: December’s a good time to be post-launch I’ve decided. I feel it’s a little bit like a calm after the storm of launch and the calm before the storm of kind of restarting marketing in January. Obviously I’m referring to Drip. It’s just been kind of a time for me to come off of some pretty stressful and kind of high hour count weeks in November and I feel like things are starting to slow down, starting to ease into the holidays. We have a nice big back log of features that we’re cranking out. I keep saying this phrase of I’m cocking the crossbow. I feel like I’m pulling back that mechanism and loading up and having blog posts created and some content marketing stuff and banner ads and all types of ad campaigns.

[0:01:07] I’m getting suited up to do to just pummel the earth with, scorch the earth with in January. So that’s kind of what’s on my agenda. Nothing new in terms of actual marketing. I’m not executing anything right now but just building up that stock pile so I can start off 2014 with a bang. How about you?

[01:23] Mike: Well do you remember all the auto generated content project that I put together like a month or two ago and put out there and was waiting for Google to come in and index all that?

[01:33] Rob: Yeah. That was like Brecht Palombo and Patrick McKenzie had suggested that.

[01:36] Mike: Yeah. So I followed through with that and Google finally decided to come through and index everything. I’ve got something like 600 or 650 pages indexed in Google now. And my organic search traffic has increased roughly 50% to 100%

[01:50] Rob: Very nice. That’s awesome.

[01:52] Mike: The weird thing is that it seems like Google is slowly adding content to their industries over time so not everything – it’s kind of weird because I go into like the web master tools and they are showing that they have indexed 600 pages but it says that it’s not actually looking at more than I think 150 of them for some reason. It’s some weird number that they have in there. And you can see the graph of that number is increasing overtime and I’m not quite sure what it means.

[02:19] Rob: Yeah. I had this happen with HitTail when I first moved it over. I moved the blog to a sub domain and did some other tweaking and at first, Google wouldn’t index anything. The more links I built and the more people started talking about it in social media, the more of the site Google would index. It’s like if you have high authority, it would index everything, but you have to get there first. I think if you just released a brand new domain and you release a thousand pages of content, Google is not going to index that because they only have so many resources.

[02:48] And so that’s my guess of what’s happening is as your site is gaining authority in Google’s eyes and they’re able to slowly add pages into their index and eventually they’ll get after a while HitTail went from 200 and I think it’s up over a thousand pages indexed now so I’d imagine this same thing could happen to you.

[03:04] Mike: Yes so I’m hoping that will continue and I just kind of have to watch it for a little while.

[03:08] Rob: Very cool. Yeah, hopefully that traffic converts reasonably well. I know that long tail traffic in general doesn’t convert as well as more targeted traffic but if you get them on an email list, email mini course and funnel them into just kind of into your funnel I guess. This is a way to handle it and you can convert some of them and make it worth a while.

[03:25] Mike: Well I do have Drip installed so that’s certainly helping.

[03:29] Rob: So I wanted to mention a site, it’s called useronboard.com and it’s been getting some traction in recent weeks. It’s basically a critique of user on boarding for big sites that you’ve heard of like vimeo and Netflix that he did, Trello and less accounting and Basecamp and the site is getting a lot of buzz. It was funny. I followed it through and actually put out by my growth hacker intern and he didn’t tell me about it. I found it actually through social media.

[03:57] His internship ended with me about 10 days ago and he’s now back to doing consulting work and that kind of stuff so he launched the site. He and I had a couple conversations about it but I didn’t know what domain he was going to use and didn’t really know he was going to do these PDF’s critiquing it but apparently he said it’s really taken off and it’s doing well. So it’s a cool idea both from two sides. 1) Just to check out the on boarding, he knows on boarding like that’s what he’s done for a couple years. He’s very knowledgeable about it so it’s neat to see the feedback he gives.

[04:26] It’s also interesting to think about he went from zero audience to I’ll just say a sizeable little email list in a matter of weeks just by putting himself out there and leveraging his expertise. And he had already planned to write an eBook on this topic and release it but this just gives him even more of an excuse. He’s now validated there is a need for this type of content. So if you have a few minutes, checkout useronboard.com.

[04:49] Mike: The other thing I have going on is I went on my email list and invited a bunch of the Linux users into my early access program. So I sent out invitations directly to about half dozen of them. But one of the things that I’ve started to realize in talking to people – because some people would just email me back and say hey I don’t think I’m a good fit but really like what you’re doing and once my business gets to this point, that I’d really like to be able to see what Audit Shark could do and can help me lock down my servers because this is also a problem that I have.

[05:17] And I’ve had enough of these conversations that I’m leaning heavily towards creating a special bootstrapper tier specifically aimed at people who can’t necessarily afford the full pricing for Audit Shark and that’s primarily because I built Audit Shark to kind of raise the general bar of how secure the internet is and how secure people’s servers are out there. So for me it’s not necessarily all about the money. I mean obviously Iwant to make money from it and make a living and everything but at the same time I want to help other people secure their severs.

[05:47] And there are people out there who are building stuff which it may not necessarily be secure and they just don’t know what they’re doing who are freely willing to admit that but they still need help. So I’m looking at creating some sort of a bootstrapper tier specifically aimed at those people so they can get at least some sort of protection in a way that doesn’t break the bank for me. So it’s not necessarily a premium model. It’s kind of like a I’ll say some weird hybrid model I guess.

[06:13] Rob: Dharmesh called it a cheapium model where he said you basically price it kind of at cost to what it cost you for the resources and maybe to support it. But you don’t make any profit. I hear what you’re saying. I’m a little hesitant to endorse it. My big concern would be that if you get 50 or 100 people on this bootstrap startup plan and you really aren’t making any profit, it sucks a lot of resources away from your core profits basically. And given that you’re not venture funded and you do need to make money and that’s the goal, it’s a tough call. It’s not something that I would bite off early on in the products lifecycle.

[06:38] Mike: Yeah. I understand that. I mean the other side of it is it also gives me ability to talk to these people who would use it if it were priced for them and they’re more than happy to start using it and give me feedback because a lot of the I’ll say the solid leads and stuff that I’m getting from people are at much higher price points and they take much, much longer to make the decisions. So I’m getting a lot of bites in that area but its taking much longer to kind of push those people through the sales funnel and I’m basically looking for feedback now. I don’t want feedback in four months. I want feedback now.

[07:19] Rob: Yeah. That makes sense. My concern is you’re going to get feedback from people who aren’t willing to pay for it or aren’t willing to pay very much for it so I’m not sure, I don’t think that’s as good a feedback as if you can just find customers who are willing to pay the full price. I know what you’re saying you have enterprise people who are going to be in the four figures a month range. It’s going to take you six months plus to close them. It’s tough. You know the product better than anyone but I think the market itself is still unknown. And before I went to like a cheapium model I think you have other roads, avenues to explore.

[07:51] Mike: Well, like I said, I’m still looking at it.

[07:53] Rob: Yeah. Here’s the thing, you can do an unpublished version of that, you could let five people in and not make it something they can sign up through from the website. But as you’re having conversation just be like alright, I can give it to you for way less than the list price and basically break it even and then get their feedback. That can’t hurt.

[08:10] Mike: Yeah. I wasn’t thinking that I would put it out there as like click here and get cheapium price.

[08:15] Rob: Got it.

[08:16] Mike: I actually have my developer working on some stuff that will allow me to do some price testing. One of the things that the stuff is working on that would allow me to do is just create a code that I can send to somebody and it would create a very specific pricing tier from them to say okay, well you’ve entered such and such codes so you’ll get these many servers. This will be the price point etc. So that way it’s more based on one on one conversations. It’s not something that you go in and it’s like $5 a month per server or something like that because the business obviously can’t support them.

[08:46] Rob: Right. Yeah. That makes sense. Not a bad way to go. Remember when Richard White talked about launching UserVoice and we did an episode about that. He said that they discounted a lot of their tiers that they priced them high and then they offered pretty big discounts. I think the average discount was 40% or 50% not unheard of.

[09:05] I have one other topic of conversation before that. It was tweeted to me this week but I think both of our opinions probably valid – that was from Brecht Palombo. He’s @brechtify on Twitter. Brecht Palombo, he talked at MicroConf last year. He’s a longtime Micropreneur academy member, lifetime member and he has distressedpro.com it’s his business that he does full time and he also runs the bootstrap with kid’s podcast. He tweeted and he said I need a better business stats review regimen. Would love to hear about yours, maybe a podcast episode.

[09:42] So I don’t think we need to devote a whole episode to this because my regimen isn’t that involved. Here’s what I’d do. Basically I have businesses I’m actively working on. So today that’s Drip. And then I have businesses that are more in the background so that would be everything else that you see. If you go to thethenumagroup.com you’ll see the other apps I have. All of those other ones are basically – they’re not back burnered because that sounds like I’m ignoring them but they are basically moving along well. They are being supported but no major time investment is coming from me.

[10:10] And so with the first category, so Drip, the current thing I’m actively working on, I am pretty much checking stats daily. I have a bookmark. In chrome I have a little folder with a list of bookmarks and it says daily on it. That’s what the folder is called. I right click on the folder and I say open all bookmarks in new tabs and poof, it just opens them all. And this basically brings me into right in the exact page in Google analytics with a time, with a date range that I want to see.

[10:39] It has Google analytics. It has perfect audience which I use for retargeting. It has any ads. If I’m currently running ads on any networks, it has those pages in there. So this thing is in flux. When I stop ads, I will pull it out of this list and it also has my dashboard of Drip itself at other times as I’m doing they’ll make their way in here. So sometimes this will only 3 or 4 pages and other times it can open 6 or 7 different pages. And I will look at this at least once a day when I’m working with Drip and if I’m actively running ads and doing a high ads bend, I will sometimes look at it every hour or two, not all the pages but just the ads bend because things move quickly during the business day.

[11:18] In addition to that, when billing runs every night, I get an email and I almost always pop in typically from my phone because it’s in the evening and I checkout the dashboard to see what happened, see what the billing was, what the expected billing is for the month, see how things have changed, what the churn is, blah, blah. So yes, it all depends on risk tolerance. It’s like if you want to look at this only once every few days then something could go wrong and you could risk basically losing money or not making as much money. So when I’m actively doing stuff, that’s where I am.

[11:50] When I have a less active app like let’s say HitTail where I’m not out there actively hardcore marketing it and pushing it, I will typically check Google analytics once a week sometimes once a month. There are some of my apps that have been on autopilot even longer and those I really do about once a month right around the time that I’m doing end of month financials, I’ll go through all the Google analytics and just check through to make sure there was no big drop. Now again, this depends on your risk tolerance because you could feasibly lose 3 or 4 week’s worth of traffic or worth of sales if you haven’t been paying attention to that stuff.

[12:23] So you need some confidence that things are going to continue to go the way they have been if you are not looking at analytics or sales for 3 or 4 weeks at a time. Anyway, that’s how I break it down and that’s the process I’ve developed over the past couple of years. How about you Mike?

[12:35] Mike: Well, for Audit Shark I get a daily email that gives me all the important things that are going on. It will tell me for example off the top of my head I know that it tells me how many customers are currently in there, how many components which our component is either an agent or it’s an agent list audit that’s been setup for a Linux machine so I know how many servers that the system is designed to be auditing or to setup to be auditing. And then it also tells me the number of controlled points and check so as my developer adds in new ones, I can see that they’re being added in on a daily basis.

[13:09] And then beyond that, I’d say probably once a week or so, I’d go into post mark app and take a look to see the outgoing emails and just making sure there’s no problems. I also get a weekly report from them that tell me how many emails went out on the previous week. Beyond that, I also use dig my data to basically to keep track of the Twitter feed in terms of the number of followers that its gaining over time. I have more than doubled it, almost tripled it in about a month to a month and a half. So I went from around I think it was maybe 170 or so probably two months ago and right now it’s right around 950 or pretty close to a thousand.

[13:48] Rob: Very nice.

[13:50] Mike: Yeah, that’s going extremely well, just continues giving up. I mean there’s a huge jump kind of as I start figuring things out it just jumps dramatically. And then you know the standby Google analytics I take a look at that at least once a week if not 2 or 3 times a week just to kind of see what’s going on across some of the different sites because it’s nice to have that dashboard where it’s got everything in there. And then like I said, I do the same thing with dig my data where I use it as a dashboard where I keep track of multiple products and things that I’m working on.

[14:18] Rob: Very good. Thanks for the question Brecht. Hope that helps.

[14:21] Music

[14:24] Rob: So let’s dive into our goals. Let’s take a look back at 2013 look at the goals we’d setup for ourselves and then we’ll dive into what we’re looking to do in over the next 12 months.

[14:33] Mike: So my first goal from last year was to stop writing code and I think within a week or two of stating that as a goal, I said that I didn’t really want to do it because I actually enjoy writing code. I haven’t really stopped writing code. I still write code here and there usually for bug fixes or things that need to get done quickly, a lot of times I’ll take the stuff that needs to get done and outsource it. But if there’s stuff that is extremely time sensitive, maybe it needs to be done the next day or only a couple of days away and I don’t necessarily have the time to hand it off to somebody, I’ll just do it.

[15:04] I usually handle a lot of the smaller bug fixes as well like if a customer comes up with something and it’sjust not working quite the way that they want or if there’s errors that are getting thrown and I’ll handle those. But for the most part I don’t write I’d say a lot of the core code anymore. I’m basically handing that off doing much more high level design than most of the implementation.

[15:24] Rob: Very nice. Yeah, getting away from code is always hard I think for both of us. Even I’m still writing code at this point because I just enjoy it too much. So my first goal for 2013 was to grow HitTail by 2.5x and that was based on the October revenue which I think is when I had a personal retreat and made this goal. I didn’t make 2.5x. I did get to 2x HitTail from October revenue which was a five figure number already. So it’s not a small amount.

[15:53] The reason I didn’t hit 2.5 well there’s two reasons. One is I did start to back off of it to do MicroConf and then that lead right into Drip. So I didn’t have as much time as I’d like to devote to it. The other reason is that Google did their not provided thing and I saw it coming and started backing off of some of the marketing spend earlier even before Google announced it a couple months ago. And so that had definitely had an impact on the growth. Now I‘ve already talked about on the podcast some efforts that I’m going to be undertaking to kind of get around that but we’ll see how it goes in 2014.

[16:28] Mike: My next one was to launch Audit Shark publically and I would say that I’ve gone ahead and done that even though I’m still working through the early access list and slowly on boarding people and making sure the system can handle it as they come on. But I mean you can go to the site and sign up right now. There’s nothing stopping you. But like I said, I’m working through the early access list with people just to give them a little bit more hand holding and anyone who’s signing up through that is going to end up getting some sort of a discount I haven’t fully published any of that stuff. But there is different pricing for the early access people versus the public pricing.

[17:00] Rob: My second goal was to launch Drip in the spring and then I had a six month revenue mark that I wanted to hit and so I did not launch Drip in the spring. It really started having paying customers around June so it was more summer and then somewhere in there it’s hard to say really what launch was. You could say its November but it was already doing in the thousands a low four figures before then so I’d say it launched in late summer or early fall. I have not hit the six month revenue mark. I mean I really only worked through the list about 30 days ago so I do think I’m definitely on that track to meet or exceed that six month revenue mark but we’ll have to see.

[17:38] Mike: My third goal was to grow to a full time team of at least three people and nobody who’s working on Audit Shark is full time on it yet right now but I do have about five people that are working at least on a part time basis in some way, shape or form related to Audit Shark. So I would say that I definitely did not hit that goal but there was some partial progress on that.

[17:58] Rob: My third goal was to hold another MicroConf that changed the way people launched their companies and I wasn’t even thinking about MicroConfEurope. I don’t think it was an option at the time but I would say that we achieved that with MicroConf in Vegas because MicroConf 2013 in my opinion was the best one we’ve done. Looking forward to 2014 for another.

[18:17] Mike: My fourth goal was to help get my wife’s fitness business system stable and profitable. I’d say that it’s pretty profitable. It’s not necessarily stable. It kind of influx right now but I don’t know whether that’s just because of the different partnerships that she’s kind of looking at or whether it’s because of the time of year because anytime between thanksgiving and new years is not a great time to try and get people to work out.

[18:39] Rob: Yeah. It’s always hard. I’ve heard the fitness business is unstable by definition.

[18:44] Mike: My understanding is that things really pick up in January because people have put together all these new year’s resolutions and it’s kind of weird that I hear that a lot of fitness studios and gyms have these membership programs where it’s like you get subscribed to them on a monthly basis and then people will come for a month or two and then will stop coming for three or four months because they kind of fall off the wagon and then they go to cancel and then they find out that there’s like this $90 or $120 cancelation fee that goes along with it.

[19:15] So then sometimes they’ll delay a little bit more because they’re like I don’t want to have to pay that but at the end of the day they’re going to have to pay to cancel anyway which is kind of weird to me but you think that if you sign up for it then you’re good to go whenever you decide to cancel but that’s just not how it works.

[19:30] Rob: Right. Kind of like you mentioned when business hold their customers hostage.

[19:36] Mike: Yes.

[19:37] Rob: Sounds a little like that. So my fourth and final goal from last year from 2013 was to release three video training courses. The first was a video about hiring virtual assistants and that’s at startupvacourse.com I did get that one done. About three months into the year I figured I wasn’t going to make the other two. With MicroConf taking up as much time as it did and then with Drip being pushed basically back on the launch, it just didn’t seem like the best idea. I wanted to work on my software products instead of focusing on another video course.

[20:12] I would love to do another video course n 2014. I think three is just too ambitious. Recording it wasn’t the hard part. It was getting all the meta stuff together and getting it uploaded and I uploaded to you to me and getting the marketing done. The course was profitable but it’s not worth the number of hours that I spent time on it compared to what I can do with an app like Drip that has recurring revenue tied to it. So we’ll see what happens in 2014 if I do another one. It definitely was a lot of fun to put it together but I think like MicroConf, it’s a lot of effort for kind of a onetime pop or just a one time launch so I’ve kind of for now my site’s on the more recurring stuff.

[20:52] Mike: For my last goal, one was to write a security book who assists with the marketing behind Audit Shark and I’d say I pulled back from that pretty early on just because I knew that it was going to be a big undertaking so that’s still on the back burner at some point. I’ll revisit that. It will probably actually be pushed into this year. I just haven’t gotten back to it mainly because I’ve been involved with Audit Shark. And then the last one was to cut 75% of my travel consulting. And I haven’t cut 75% I probably cut maybe 20% so I’m still working on that. When customers are paying that much for an 8 or 10 or 20 week project, they kind of want to see your face.

[21:28] Rob: Very good. So let’s dive into what we have in mind for 2014. It’s early December so we kind of have 13 months to dig through these and it looks like we each have five goals. You want to kick us off with the first thing you’re looking to do?

[21:41] Mike: Sure. So the first one is obviously to go full time on Audit Shark and it seems like with the product actually launched at this point and on the path to having some real revenue I feel like that is something I should be able to achieve.

[21:54] Rob: Very nice. For me, my first goal is to 5xDrip. Since Drip is still in somewhat early stages, 5x is I think a doable goal. It’s definitely ambitious and it’s beyond what I had in the original marketing plan but things have been going well so far and so I want to set my stats high. So we’ll see if I can get there.

[22:13] Mike: My next one as I said before was to work on that security book so my goal for the end of this coming year is to finish the security book and have it out there as an additional marketing avenue for Audit Shark.

[22:24] Rob: My second goal is to do some work on HitTail. This is actually a short term goal. Really I expect to have HitTail back providing the full value that it was before the Google not provided fiasco. I hope to do that in the next 30 to 60 days. What that means is I’ll resume some of the marketing and kind of do another push. So the goal here is a little loose. It’s to get HitTail back on track. I don’t necessarily have a revenue growth goal because I won’t be hammering on it as much as I do Drip but I want to get it back to where it was pre not provided, get that marketing spend going again.

[22:57] Mike: My third goal is to get back to blogging and writing a little bit more. I’ve started doing this probably more over the last month than anything else. I’ve got a few different blog posts that I got cued up but one of the things that I did was I actually started putting together a real email list for my blog. So it’s not very large right now but if anyone is interested and wants to go sign up you can go to singlefounder.com. I will be posting probably about every other week. I do have several posts that are kind of already cued up. My goal is to publish 26 blog posts through that email newsletter by the end of the year.

[23:28] Rob: My third goal for 2014 is to throw two MicroConfs in a sustainable manner. And what I mean by that is in a way where you and I aren’t so tied to it in terms of all the labor being done. We were able – we were lucky to land Dan Taylor to help us run the MicroConf in Prague and that took quite a bit of the labor off of us. Now I’m thinking what are we going to do in Vegas because it just takes too much time and we want to keep doing it and we want to keep making it better every year but I want to figure out how to make that more sustainable so that it doesn’t detract from the other things that both you and I are trying to do.

[24:04] Rob: My fourth goal is to take a real extended vacation and by extended vacation I mean at least two weeks maybe more. I took a vacation earlier this summer which it was only about a week long. My family and I went out over to Niagara falls, took the kids out there, went on the maid of the midst and basically took an extended road trip through upstate New York and went up to Adirondacks and went camping. I guess I shouldn’t call it camping. I have a cottage up there so it’s not really roughing it or anything. But it was a lot of fun and it was very relaxing.

[24:35] I don’t think there was a time where I didn’t have internet access in some way shape or form through my phone but it was just nice to be able to relax in that way. So I think I’d like to extend that a little bit more and instead of just one week maybe do at least two, maybe more but we’ll see how things go.

[24:50] Rob: My fourth goal for 2014 is to relaunchmicropreneur.com, the Micropreneur Academy with you. We’ve been in some early talks to figure out what to do next because the Micropreneur Academy’s been around for four years now and it just needs some reworking. So we started putting some brain power into that looking at the changes that need to be made and no exact decisions made yet but I think that will be coming here in early 2014. I think our goal is to get it out before MicroConf Vegas. That’s definitely going to be time intensive to get that done as such I have it on the goals list here. And if you haven’t ever checked out the academy it’s atMicropreneur.com and if you have checked it out in the past, know that we will be expecting to release something new, kind of a revamp of it in the next several months.

[25:37] Mike: My last goal is to make a conscious effort to improve my health just in general but specifically one of my goals is to lose about 2.5% of my BMI by the time MicroConf. It’s about 10 pounds or so. There’s obviously differences between losing weight versus losing some fat off of your body and just becoming generally healthier. So I’ve actually been going to the gym quite a bit more than I probably have all year. Things are going reasonably well so far. So as long as I don’t blow up my ankle or anything like that then I should be okay.

[26:06] Rob: Nice. So my fifth goal is an honorable mention and what I mean by this is it was an unpublished goal in 2013 and I have it there in case I get everything else done and have extra time but it’s falling off the list the last two years and I frankly don’t think I will get to it in 2014 but it’s something that’s been on my mind and that’s to do a second addition of start small stay small. Like the academy it’s been out there for several years and it could use some updating and I just have so many new thoughts that aren’t in that book so we’ll see. It will either be late in 2014 or it may move up the list in 2015.

[26:43] Before we started mentioning these goals, we probably should’ve prefaced it but I guess we’ll just do a post script here. I think it’s important for people to understand why we set these goals. I know that as a goal oriented person, if I don’t have these on the list then I can tend to wander. It’s pretty easy when you’re bootstrapped especially if you don’t have a founder, you don’t really have a ton of accountability. And so these goals are part of what keeps me accountable to continuing to push hard over the next year.

[27:14] And I will show probably most of these goals to my mastermind groups. These are written down in my idea notebook that I always talk about and I will come back to them over and over this year. And although they’re not an exactly blueprint of what’s going to happen, I do have a general timeframe of how each of these play out. Probably the month or two, the 60 day period when I think they’ll each be completed and especially with growing Drip, I do have a month by month time table of where I think I can get and how hard it’s going to be to get there.

[27:46] I threw out I want a 5x Drip. I didn’t pull that number out of thin air because it’s a nice round number. I actually looked at how much traffic I think it can drive. I took a percentage of how many people I think will convert to trial. I looked at our trial to paid conversion. I looked at churn. I drew all these numbers into a machine and it gives you kind of a range and I picked the number that I think I can hit but that’s definitely ambitious. So these goals will absolutely drive me over the next 12-13 months and without them, I find that I tend to wander and I tend to hear about some new project or hear about a new idea. I get email pitches all the time to do stuff that sounds like fun.

[28:22] And the problem is if I don’t have these goals that keep me tethered to what I really want and to what I pick out by spending hours and hours of thinking what do I want in 2014, then I will tend to wander. I think most of us do too. It’s the entrepreneurial ADD. And we see a lot of folks who do just wander from one thing to the next and my guess is that having goals could be some type of tether to keep them centered around that. Is that similar to your reason for setting goals or do you have others?

[28:47] Mike: No, it is. And it’s funny you mentioned that you would show this to your mastermind group and let them know what your goals were because speaking of masterminds, one of the things that I do is I take a lot of notes for our mastermind group so usually what I’m doing is I’m taking notes and anytime somebody talks and says these are the things that I’ve done, these are the things that I plan on doing next week, I basically take all the things that everyone says that they were planning on doing next week and then putting them into an email and right after the mastermind group meeting is over, I send that email to everybody. So I sent it to all three of us.

[29:21] And then I also sent one using boomerang for one week later so that it goes out the following week and that way at the beginning of the week, everybody gets these. So it’s not like there’s two weeks in between and you’re rushing like oh its Monday. We’ve got our mastermind group meeting tomorrow. Let me try and squeeze all these things in that I was supposed to be working on for the past two weeks. And instead, they get that email and reminder right away these are the things you should be working on at least start on them sooner rather than later. And then you get that follow-up the kind of in between. And I think that helps people to stay on task because as you said, some of these things, there’s really long amount of time between them.

[29:58] You said that in order for you to 5x Drip, it’s not like that’s going to happen overnight. There’s different goals and milestones that you’re going to need to be able to meet. You got to get to 2x before you get to 5x. And there’s kind of a clear path of progression for being able to do that. And I think being able to refer back to these goals, helps keep you focused on the things that you should be working on. And if you’re getting pulled in directions that are not necessarily in line with those goals, then you really need to reconsider whether or not that’s something you should be doing.

[30:23] Rob: So if you’re looking for some perhaps public accountability, I’d encourage you to sit down, take a couple hours hopefully away from email and away from the distractions of family and try to think of what you hope to achieve in 2014 and we’d love to see a few of your goals since Mike and I have shared ours here, we’d love to see your goals in the comments section of this episode startupsfortherestofus.com and its episode 163.

[30:50] If you have question for us, call our voice mail number at 1-888-801-9690 or email us atquestions@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.

Startups For the Rest of Us

Episode 162 | Our Predictions for 2014

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[00:00] Rob: In this episode of Startups for the Rest of Us, Mike and I will be discussing our predictions for 2014. This is Startups for the Rest of Us: Episode 162.

[00:09] Music

[00:17] 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.

[00:27] Mike: And I’m Mike.

[00:28] Rob: And we’re here to share our experiences to help you avoid the same mistakes we’ve made. What’s the word this week Mike?

[00:34] Mike: Well, I got some exciting news. I sent out an email this morning to my launch list and invited a bunch of people to come out and test the Linux functionality.

[00:43] Rob: Of Audit Shark. Very cool. So Audit Shark is now live right? If people go to auditshark.com they’re able to sign up for a free trial, download the installer and get their server audited.

[00:54] Mike: Yup.

[00:55] Rob: Congratulations.

[00:56] Mike: Thanks. So yeah, all that stuff’s up and running but like I said, in last week’s episode. I mean I’m still going to my launch list and I plan on individually emailing people and trying to get them on boarded and making sure that anyone who’s on the launch list will get some extra special attention just because they were there first and I feel like they deserve a little bit of extra hand holding. I’ll also just established in that relationship I’ll make sure that I’m getting the feedback that I need from people to help flush out anything else that people need. So it’s not like I’m just throwing this out there and saying okay, Audit Shark has launched and hands off and doing nothing but marketing at this point. I almost feel like it’s still sort of a beta launch.

[01:34] Rob: I saw you use the word concierge in the email. I hope people get you’re like up to one hour, my concierge service – so that’s cool. That’s a nice offer. Good luck doing that in December when B-B slows down so much in December so obviously if there’s not a big response to this email, picking stuff back up in January is not a bad way to go.

[01:52] Mike: Yeah. In the past week I’ve had two different companies tell me hey I’d love to look at this but right now is a bad time. Get back to me in the first quarter or January whatever.

[02:00] Rob: So the first month of Drip, of the public launch just ended. So I sent out the big launch email November 6^th. We have a 21 day trial so that will close at the end of November and quite pleased with revenue growth. I probably won’t talk much about revenue after this but I did want to say that first month of revenue was $7,000.

[02:21] Mike: Very nice.

[02:22] Rob: So yeah, I’m quite pleased with that. I figured that with the launch list as big as it was, if I didn’t get over 5,000 I was going to be quite disappointed and so to hit just over 7,000 and that looks like it may even grow a little bit, flat line or grow in December which is saying a lot because that’s always a pretty stagnant month but I’m happy with that. Now the real work begins.

[02:43] Mike: That’s one of the down sides of like launching a product is that you’re fighting all this time to get to the actual launch and you almost feel like you should be able to take a break at that point and it’s just totally not even remotely close to accurate.

[02:55] Rob: Yup. Now it’s all the experimentation, getting all the marketing engine going. How about you? What else is going on?

[03:02] Mike: The other thing in terms of Audit Shark, several people had actually asked me to prioritize a lot of the things that Audit Shark is doing so that’s probably about ¾ the way down right now. Everything on the Windows side is done and then there’s a lot of stuff that is on the Linux side that is probably halfway done at this point. But I would expect the next week or two that stuff will be completed and then my policy developer is going to continue working on all that stuff.

[03:24] Some of the attendees at MicroConf Europe had kind of challenged me to do a little bit more of a fundraiser for a charity based on the talk that I gave. And if you’re interested in doing any sort of year end donations to charities, go to kazoochallenge.com and I’ll be running a fundraiser there to help small children who have gotten cancer and basically just need a little bit of extra help. And you’ll be able to sign up for a mailing list. I’ll be doing a write-up and analysis of all the marketing efforts afterwards probably in January, so just going to talk about what sorts of things worked and what things didn’t. The website again is kazoochallenge.com and you can go sign up there if you’re looking for any sort of year end donations or if you’re just looking to help out people with cancer.

[04:05] Rob: Right. And this ties into your kazoo story that you made during MicroConf Europe and about how different messages sold more because it was in person or didn’t sell. If someone’s wondering what the heck you’re talking about go back and listen to our MicroConf Europe wrap up episode.

[04:19] So I have a couple of things. One is regarding HitTail and I actually want to send a shout out of thank you to Brendan Dunn of planscope.io. He’s a HitTail user and he’s also actually been one of the big early supporters of Drip and a really good first customer there. He has made a suggestion on how to get some value back into HitTail or get more value back because obviously HitTail has lost some value to customers because of Google’s recent not provided move. And at one point I had considered tying into the only place that Google still provides cure and that’s inside the Google web master tools area. But I hadn’t done it because there was a lack of data in there.

[04:58] But recently they’ve actually beefed that up surprisingly enough as they’ve killed off all the other SEO tools and made SEO harder. They have added some data in there and I now have enough that I can run the HitTail algorithm on that data so I’ll be implementing some stuff here in the next couple weeks and I’m pretty excited at the thought of being one of the few keyword tools that can get value out of Google keywords frankly.

[05:19] The other thing is there’s a really interesting article. It’s called the Saas analytics lifestyle. It’s at dirtyanalytics.com we’ll link that up in the show notes but it’s basically an expansion of what you and I talked about when we answered Andrey Butov’s question about how to do the early stage Saas marketing before you have enough volume to split test. What should you be doing? This guy talks about the three stages and the first stages like before you can see trends, it’s kind of like the things that don’t scale stage. And then there’s the seeing trends stage and then there’s the optimizing stage. And he talks about which tools and approaches you can use in each of those. Again, we’ll link it up in the show notes but that’s at dirtyanalytics.com.

[06:00 ] And finally I just read a book that I wanted to recommend to the audience called Masters of Doom and it’s about the guys who started id software, the two Johns who built Doom and Quake and a bunch of other games. Fascinating book, awesome startup tale and then of course like with Twitter and Facebook and these other startups the egos get in the way eventually and after these guys bought a bunch of Ferraris, they wind up kicking each other out of the company. And the company doesn’t work because the two geniuses behind it aren’t together anymore and overall it’s just a really inspiring story. In terms of the early days of when they’re actually cranking 100 hour a weeks in a beach house somewhere, there’s like 4 or 5 – it’s a lake house and they’re building these games, it’s such a fun ride.

[06:41] Nothing in here will help you launch your business aside from motivation. There’s no tactical stuff. There’s nothing that you should follow in terms of marketing approaches or anything because these guys, they were just crazy 20 year olds who coded so much and discovered these amazing game engines. So they invented them. And unless you’re going to go do that, there’s not much overlap with the kind of stuff we do. Overall, one of the better audio books that I‘ve listened to probably in the past six months.

[07:05] Mike: I think I remember hearing or reading recently that John Carmack is officially no longer associated with id software.

[07:12] Rob: How interesting. Yeah because John Romero got kicked out and left years before. I didn’t know. Because the book was written in 2003 so you kind of lose the last 10 years.

[07:22] Mike: I think the story was just he kind of stepped away to do other things but yeah it’s interesting to see how somebody can kind of come so far and say okay I just want to do something completely different.

[07:30] Rob: Yeah, I can totally see it. I mean that guy basically worked from the sounds of it he worked 80 or 90 hour weeks for 15-20 years on just gaming and building gaming and all that stuff. I can totally imagine it. And he made millions of dollars if not tens of millions of dollars and like I said, they literally bought Ferraris. They were like 21 or 22 and they’d go down to a leadership and pay cash. One of them owned multiple Ferraris and would invest six figures into souping them up. So it is that crazy kind of 1980’s excess lifestyle tale, that part of it. But none the less, I have a lot of respect for Carmack in particular. He was the programmer behind it whereas Romero, he’s like the game and level designer but Carmack, it sounds to me like without him I don’t think any of it would’ve have happened.

[08:12] Music

[08:15] Well, every year in around December time we like to talk about our predictions for the next year. And this year I thought it’d also be fun to review the predictions we made for 2013. So about a year ago, you and I went through think I made five predictions and you made four and we’ll run through those pretty quickly and talk about whether or not we feel like those happened or didn’t. And then we’ll talk about what we see coming up over the next 12 months. So I’ll kick us off with my first prediction for 2013 and I said that 2013 would be the year of Pinterest.

[08:43] I’ve been making this kind of the long haul on Pinterest for a couple of years. If you listened back two years ago I think I made a similar call like Pinterest was just going to grow. I think 2012 was a great year for Pinterest. 2013 I feel like although it continued to grow and they raised hundreds of millions of dollars in venture capital at an exorbitant evaluation, I didn’t feel like it was as mainstream. At least I didn’t hear about it from the non-techies that I know as much as I did the previous year. But I do think Pinterest is kind of finding its niche and with the recipes and food, restaurants and there’s design there’s this whole tattoo and clothing and there’s a lot of niches where it’s a big deal.

[09:24] I do think that Pinterest is a gold mine. I think they’re much more commerce based even though they don’t have a lot of like commerce stuff going on. They’re testing like paid advertisements and I think they have the potential to be much more valuable than Twitter. I would say that my predication did not come true that it wasn’t the year of Pinterest that I actually think it could carry over and sometime in 2014 we’re going to be hearing more about how much money Pinterest is making. Even though they may not be as large as Twitter in terms of reach, I think they could actually be much more profitable.

[09:53] Mike: Yeah. I don’t think that I heard about Pinterest from anybody.

[09:56] Rob: Crazy and yet they did raise 2 to 300 million based on a really high evaluation and they released their API within the last month. There’s a lot going on there but it is like you said. It’s not as mainstream as Twitter or Facebook.

[10:12] Mike: One of the other ones I came up with was Google was going to continue to host people for using marketing techniques. They’ve advocated that people use for years with various algorithm updates. And I feel like they’ve done this.

[10:24] Rob: Yeah.

[10:25] Mike: Rob do you feel that way?

[10:26] Rob: Yeah. They’ve done so much. We’ve talked about how they blocked the scraping of their results so you can’t get rank tracking anymore, the not provided that they’ve done additional updates. I think there was a humming beard update. Absolutely. That goes in line with one of my predictions. My prediction was more Google changes that will hammer the SEO’s and I don’t just mean algorithm updates and I think that plays in well with what happened.

[10:49] Mike: Another one of mine was I don’t foresee Apple releasing any brand new products this coming year at least not at the scale of the iPhone or iPad or anything like that.

[10:57] Rob: Right. I think that’s correct because they just released some incremental updates to iPad and their normal laptops and the desktop and then they did iPad mini but I would call that an incremental as well. I think when you were talking about new products, you were basically saying they’re going to release a watch or a television. Those are the kind of things we discussed.

[11:16] Mike: Yeah.

[11:17] Rob: A couple of mine had to do with WordPress. One of them was WordPress will become even more prominent than it already is and I feel like – it’s a fairly safe prediction but WordPress continues to climb in its and how much of the internet it powers and the numbers vary but I think its somewhere around a fifth of the internet like 19% of the internet runs on WordPress so I don’t see that trend subsiding anytime soon. The other prediction was that subscription WordPress plug-ins would start to come around, would gain a little bit of prominence. I don’t think I’ve really seen that and I’m surprised. I’m surprised someone hasn’t figured out how to make that work yet but perhaps it will be in 2014.

[11:57] Mike: Yeah. I haven’t really seen that either but you’ll never know. I feel like it will come around at some point but one of the problems I see with it is just I’ll say the culture around people who are buying WordPress plug-ins because they expect that they buy it once and that’s it. It almost feels like you have to have an additional service behind it that going to continually be updated and used for other things because if everything’s coming into your website it feels difficult to justify pain like a monthly subscription for something that you’ve installed and its running on your servers and the data isn’t really going anywhere. You really need that integration someplace else that’s doing something on the back end.

[12:34] Rob: Right. Yeah. You need an external service that you’re paying for. So my last prediction for last year was the startup bubble would become more evident. Inflated evaluations would continue to rise and there would be either bursting in 2013 or 2014 and then I said this would only mean good news for those of us who don’t need to be acquired in order to build a successful business. Now start evaluations have continued to rise and become inflated as I’ve kind of stepped newly on to the angel investing scene and have been looking at evaluations people are asking. It is absolutely insane to me to see these $5 million evaluations on a company that’s basically two people with an angel list profile.

[13:12] Now nothing has burst at this point. I don’t know if it will happen in 2014 or not but the acquisition of Instragram for a billion dollars and I don’t know, there were few other this year that were just outlandishly in my opinion overvalued based on the value they bring. I’d say this one came through the bursting whether or not that happens this year I guess it remains to be seen.

[13:36] Mike: My last prediction was that Windows 8 was not going to take the world by storm

[13:39] Rob: I would say that was correct. That was probably a pretty safe prediction at the time.

[13:44] Mike: The thing is I haven’t tried Windows 8 yet at the time I played around with it on the surface pro like best buy and things like that so it’s not terribly exciting. It’s new and it’s different but it doesn’t have – there’s like the refinemence that I think that it needs that it still just don’t have yet.

[14:00] Rob: Let’s dive into our 2014 predictions. We each have a handful here. My first is that Twitter will become profitable because they have an IPO so they have to release their info and they are not a profitable company. I think they will become profitable in 2014. I also think they will piss off their users in the process because it’s going to mean ads. One way or another it’s going to mean catering to advertisers. Now the good news is that I think there’s going to be a solid opportunity for paid placement and promotion. They’re already pushing their paid tweets, their sponsored tweets but what we have seen with early ad networks, like when ad words first came up, when Facebook ads first started and now looking at Twitter and I think Pinterest is another one where this could happen. There are opportunities for small entrepreneurs like us to get in and really learn the system before other people know it and there’s a lot of arbitrage opportunities to get in there at those early clicks.

[14:56] Remember the five cent ad word clicks that people talk about? I think there’s potential for Twitter and Pinterest to potentially have those this year. But those things eventually go away. Facebook ads have become more expensive overtime. They’re still workable but they were cheaper two years ago. They were more I’d say more effective based on price a couple of years ago so keep your eye out for that.

[15:18] Mike: My first prediction for 2014 is that Apple releasing any sort of a new product is sort of a give me.

[15:25] Rob: Indeed. So you’re saying like a watch or a TV or something.

[15:28] Mike: Yes. Something along those lines. I mean just something that is completely different than the things that they’ve put out in the past. It’s going to be something that is not an incremental update.

[15:37] Rob: Got it. Yeah and that ties into my second prediction which is that Apple will release an I-watch or some type of wearable watch device. There’s so many rumors about that being in development that I think you’re right. I think they’ve taken a year off from releasing new products and that they kind of got to get back in the game or else stock market’s going to start punishing them.

[15:57] My next prediction is for Saas business that concierge services will become a requirement if you’re in a crowded market. We’ve talked a lot about this software plus a service plus a concierge service and on-boarding service and a hand holding service. And I think that’s going to continue to become – maybe it won’t be the norm in 2014 but the exceptional companies are going to do that in 2014 and I think it will become the norm past that because the market is just they’re getting too crowed. There’s a lot of Saas apps. The secret’s out that Saas is subscription revenue and that it’s a really good way to go if you want to launch a software company. And so in order to set yourself apart, you have to do things that other people won’t and a lot of developers who can write code don’t want to do any type of – basically the schlepping.

[16:45] Remember Paul Gram talked about this? He talked about the problems that are hard that you have to schlep through. And a lot of developers are going to avoid this and so that makes it more lowing fruit for people who are willing to do stuff that doesn’t scale in order to get their business off the ground and concierge is one of those efforts.

[17:03] Mike: So this one for me is a two part one. The first part is that investors are going to pour a lot more money into startups. I feel that way because there’s one of two things that’s happening is the evaluations are going up so investors are just naturally going to start pouring more money into it until it’s just no longer financially viable for them to do so or that bubble just burst. So either way they’re still going to be dumping money into them but I think another reason why they’re going to start doing that is because a lot of the safe haven investments are starting to go away because the economies of the world seem to be coming out of the recessions of the past couple of years.

[17:38] So when that happens, investors naturally start seeing okay well I’m going to start taking more risks because these other safe investments, they’re no longer paying off for me so I’m going to start taking those risks because they will start paying off. And then the second side of that is that I think you’re going to see a lot more of the high profile acquisition attempts start to be turned down. And one that struck me as bizarre was Snapchat turning down or allegedly turning down the $3 billion offer from Facebook.

[18:07] Rob: What were you thinking?

[18:08] Mike: Yes, I know exactly. What were you guys thinking? I have no idea. Sure, it’s yours. I would’ve taken 2 ½ but hey, who’s going to split hairs over that?

[18:17] Rob: Man, my prediction for 2014 is that Snapchat, we won’t even be talking about it by the end of it. I just can’t imagine actually being a viable social network in 12 months and I think that this may go down as one of those major business mistakes not taking the $3 billion check from Facebook.

[18:33] Mike: But I can also see a lot of other people saying well Snapchat turned it down and there must be a lot of smart people working over there so it must make sense at least at some level to turn down outlandish purchase offers especially when Facebook is offering $3 billion because if that’s the case, then Facebook obviously saw something they wanted and they wanted bad. So I can see other companies putting themselves in that position and holding themselves up to that standard and saying well, we have a better product than Snapchat or we’re worth that much too. So I can definitely see people turning down those high offers whether it’s a mistake or not will kind of remain to be seen but I really do think that Snapchat made a big mistake.

[19:17] Rob: My next prediction is about kick starter and I’m a major feened. I’ve probably backed 20 different kick starter projects and in fact over thanksgiving I think I backed like 5 or 6 just surfing around my iPad during that weekend. But I predict that this year kick starters can have a product that is a major multimillion dollar failure and what I mean by that is a project that raises a bunch of money and then doesn’t deliver. They’ve toyed with this in the past. This has happened on smaller levels kick starter has increased kind of their verbiage and their risk verbiage and you have to say there’s a lot of risks in this project and blah, blah.

[19:56] But these kick starter projects are getting bigger and bigger and they’re raising more and more money and it’s just bound to happen based on odds that tens of millions that were raised in 2013 that are basically pledged to be delivered in 2014, my prediction is that something’s going to happen with one of those and then it’s going to be all over the news when that happens. I don’t think it would ruin kick starter and I don’t think it’s the end of the world but I do think that we’ll be hearing about it at some point in the next 12 months.

[20:23] Mike: Wasn’t there a project to fund the company to develop a basically competitor to Facebook? I think there was a group of 5 or 6 people who they were college kids I think out of New York city that raised something like $100,000 and I could see that totally going south because the level of engineering effort that people would underestimate needs to be done to support an infrastructure like Facebook has, I would imagine those type of people just don’t have the understanding of the infrastructure needed.

[20:55] Rob: I don’t even think it’s a technology problem. It’s the momentum problem. It’s the market place problem because what’s the Facebook clone when you have 50 users? For them to get to critical mass would be insanely hard. Even if they can code what’s needed to duplicate Facebook and I don’t particularly doubt that they can, it’s going to be the getting critical mass that’s going to be a problem and we’re seeing that with app.net right now. They’re doing okay but they are struggling to build quickly. And if you get in there, you don’t – there aren’t very many people that you know in there because well, it’s just not big enough.

[21:30] Mike: Unless there’s some sort of integration with Facebook and Facebook has kind of locked everybody out at this point so I don’t see they’re going to be able to suck those users out of Facebook and nobody really wants to float back and forth between multiple social networks I don’t think. Another prediction that I have is that I don’t think we’re going to see a clear winner in either the game console market or in tablets. I think it’s going to go back and forth a little bit especially in the console market juts because of the difference in some of the games that they have because there’s platform specific games for the Xbox 1 or the Play Station 4 and I think depending on what games come out is going to dictate a little bit of that back and forth but those really aren’t going to hit their strive for probably 4 or 5 years just the same way that their previous consoles did.

[22:12] Rob: I can’t comment on the game consoles. I don’t follow that closely enough. I think with tablets, depends on how you define a clear winner because android is out selling IOS now by 2 or 3 to 1. And so if you mean a clear winner in terms of android units moved in 2014 versus IOS, I think android’s going to win. Now on the flip side, Apple has way higher profit margins than any of the android companies, the companies putting out android tablets. So if you go based on the actual amount of net profit produced, then I think Apple will probably continue to be the winner in 2014. Now as we slide into 2015 I think that the margins could be squeezed. I don’t think iPad’s going to suddenly go away in 2014.

[22:54] Mike: I don’t see either android or IOS pushing the other one out and I understand that they’re fighting pretty hard for market share against each other but I just don’t see either one of them dominating the other and I don’t think it’s going to happen anytime soon because there are some people who prefer a much more open market place where they can install anything they want and then there others who would much rather have Apple take control over the ecosystem and say these are things that are allowed and these are things that are not. And just because you’ve got what seems to be a critical mass of each faction, I don’t see either one of them going away.

[23:28] Rob: We have a lot of Apple predictions here because my next prediction is that Apple will continue to lose market share in the IOS market specifically both with phones and tablets as history starts to repeat itself. And what I mean by that is Apple and Microsoft competed with Windows and the Mac OS back in the 80’s and the open version one in terms of market share. And we are seeing a similar trend right now and we’re seeing android take it over. I think android is over between 70% and 80% of the – it’s the mobile OS market, if it’s combined phone and tablet or if that’s just phone. But they are just swarming the market.

[24:07] Now again, the net profit is still with Apple right now for the time being but the net profit was also still with Apple in 1982 and ’83 as they were battling back and forth against the DOS stuff and IBM’s PC. If you look at the trending lines, it’s an interesting trend. Now I say this as someone who essentially owns in this house right now there are eight Apple computers including laptops, iPads and mobile phones and so I am an Apple supporter and someone who like being in that ecosystem. But it’s going to be interesting times over the next couple years to see how this plays out and to see if in fact history does repeat itself with android and IOS like it did with Mac OS and windows.

[24:50] Mike: Why don’t I switch over to Google in a little bit and say I think that the Google glass is going to become publicly available in either really, really late 2014 or early 2015.

[24:59] Rob: How about more of a prediction not like when it’s released but do you think that it’s going to become a mainstream thing? Do you think that a lot of people that is going to sell well or that it’s going to be a flop?

[25:08] Mike: I think that there are going to be certain applications for it that it’s going to do extremely well and I think that they’re going to be in places where you wouldn’t necessarily think that they would be or that they should be and I’ll give you an example. In warehouses, I can see them being very, very huge and the reason for that is back 12 or 14 years ago, I worked on a project for a warehouse where it was basically they were switching over from a paper base system to voice recognition system.

[25:36] So I implemented all these API’s and everything to talk back and forth between databases and a voice recognition unit where instead of somebody using all these papers to walk around the warehouse and get all the stuff they then just would talk into this unit and the unit would tell them where they needed to go and how much of the stuff that they needed to get. And I can see them taking something like that and switching it over to something like Google glass where Google glass shows them the information as opposed to the talking into a headset and having it being voice recognition only.

[26:06] So I think that applications like that where you need to display a lot of data and you really do need to have your hands free in order to do other things construction jobs, I’ll say a lot more of the blue collar type jobs that are out there for that type of experience where they do need that data, anything where they can get rid of the paper, they’re going to start doing that.

[26:27] Rob: So then the answer to my question of do you think they’ll be successful is no because if Google is only able to get Google glass into niche professional applications. It is not going to sell 100 million units which is the kind of success that the iPad and the iPhone and recent innovations have. That’s like the big mark of holy crap, this is an amazing hardware success. If Google sells a couple million glass units, I would guess that it would be dubbed a failure. And I think if it’s a niche thing like you’re saying where you had doctor’s offices or with people in warehouses that those would be the kind of numbers that hits.

[27:06] Mike: That’s a niche that I could see it definitely going in but I mean you think about all the different applications for something like that, you could say oh well, used in doctor’s offices so that the doctor doesn’t have to go back to his computer or go over some place to log in. That would be one application of it or traders on Wall Street. That would be another application. So there’s all these I’ll say really tight niches that it could be used in but I think that there’s a lot of them and I think that Google’s going to depend and rely heavily on their developers to develop products for those different industries to help them sell Google glass.

[27:39] And then obviously Google is going to want to be able to display advertisements and stuff like that later on the future but I could definitely see it becoming a big thing but I don’t think it’s going to become the big thing overnight. It’s going to have to wait until the ecosystem is there for the applications for those different niches.

[27:57] Rob: This is actually a good time that I was going to mention something about catching a wave as its going up and that’s one thing that id software did in that book Masters of Doom I mentioned is they caught the video game wave and they wrote it and they did really well with it but they worked hard and they basically cut a growth market. And in the 80’s that was PC’s and it was PC gaming. In the 90’s that was the internet. In 2000 it was mobile. So talk is that in the 2010’s to 2020’s is going to be wearable’s and also I think drones like flyables and stuff, attaching cameras and different delivery stuff to drone.

[28:32] So if you are looking to get way out there, you’re probably going to need funding to do this or you’re going to need to basically work your butt off to learn the infrastructure ahead of people. Google glass is a place I would look. I would look also at these wearable watches and stuff. These are super risky right? Because you could spend a bunch of – spend a whole year investing time, money, effort into being at the forefront of these things and anyone of them could tank. There’s no guarantee they’re going to work.

[28:57] But those are the places where the biggest Greenfield and is essentially that if you’re out ahead of other folks just like the people who are out ahead of IOS and got their apps on early are the ones that eventually had the amazingly successful games and actually mage quite a bit of money from mobile apps. So my last prediction for 2014 is that integration marketing will pick up steam as more companies offer API’s and become more interconnected.

[29:21] Integration marketing’s something I’ve talked about several times where you essentially integrate your software with other software in order to do two things. 1) to provide value to your users of course but then also so that company will promote you to their audience and that allows you to bring in some of their users to come use your app. I see more and more people doing this successfully and they’re just more API’s. It’s expected now that everybody’s releasing API’s and the need to have integrated data between all these dispersed apps is as high as it’s ever been. And so I think that integrations themselves are growing but I also think there’s opportunity here for entrepreneurs to use these integrations as integration marketing.

[30:03] Mike: So where’s the Drip API?

[30:05] Rob: I have a Drip API. We have a JavaScript one and a rest API. If you got getdrip.com and look at the doc’s link in the footer.

[30:13] Mike: Well I stand corrected then.

[30:15] Rob: Very good.

[30:17] Mike: My last couple predictions are the first one is more of our listeners are going to start to fly solo. I think that as the economy recovers and people become a little bit more stable in their jobs are going to start to look elsewhere because they’re going to become a little bit more risk tolerant just because the job market is improving and they’re going to see a lot of opportunities. Whereas before, it would’ve been a much bigger risk to quit your job and go do something and I think that just based on the general trend that I’ve seen, I think a lot more people are just starting business in general. So I can see a lot of our listeners kind of going that road and doing their own thing.

[30:52] And then the last one that I have I think target marketing at individuals is going to start to become more of a reality. And by targeted at individuals, did you ever see the movie – I think it was Minority Report?

[31:05] Rob: Total Recall is the one I remember but it may have been Minority Report as well where they could look at your eyes and it would speak to you by name.

[31:12] Mike: Yeah. It was Minority Report and I could definitely see that type of tracking mechanism start to become a bigger thing and I’ve seen it a little bit right now. So for example if you have an iPhone and you have the Dunkin Donuts app installed, it can pop up and give you special offers when you’re close to their store. And there’s a bunch of other apps that are doing very similar things but I can see either Apple or Google starting to take some of those things and making them generally available within the platform itself and allowing other applications to hook into those and start just popping those off so that when you’re close to them, there are going to give you that targeted marketing.

[31:53] Rob: Right. So that’s more location based marketing than individual marketing.

[31:57] Mike: It is. But if you have – for example I have the Dunkin Donuts apps so they have an idea of 1) they could figure out where I live just based on where I’m going and then 2) if I’m taking the same route every day, they could basically pinpoint what my route is going to be and then say hey, you’re going to go pass this Dunkin Donuts anyway. Let me pop this up 20 minutes or 30 minutes in advance of when we think that you’re going to go buy there because you go buy here at 8 o’clock in the morning every day. So half an hour in advance I’m going to pop something up that gives you a special offer so that you think about it before you even get on the road.

[32:33] Mike: Right. I would say that’s – I don’t even know that’s a prediction because I think that’s already happening. You’re talking about behavioral based marketing that it looks at your behavior, it looks at your location overtime and basically pitches you things. I think that’s a big part of Four Square. Isn’t it? Isn’t that part of their revenue model? is that if you check into a bunch of places it knows that you’re like a customer of those things and then it makes you offers based on that behavior and location?

[32:59] Mike: It could very well be which makes me correct.

[33:02] Rob: You’re correct already. This is awesome. Congratulations Mike.

[33:05] Mike: Thank you.

[33:06] Music

[33:08] If you have question for us, call 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 and we’ll see you next time.

Startups For the Rest of Us

Episode 161 | 6 Steps for Building an Effective Content Marketing Strategy

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[00:00] Mike: This is Startups for the Rest of Us: Episode 161.

[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.

[00:17] Rob: And I’m Rob.

[00:18] 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 I’ve had a pretty good week in terms of working on Drip. Last week I think I mentioned there were some things went down in terms of email sending and something being shut off and we spent the last week basically diversifying our sending points. So now we’re across 12 domains and multiple email back end providers and all that stuff and then we got that done last week. Its crazy how quickly two people can jump on something like this ad get like an entire new sub system written. My memory kept going back to when I worked – I worked at a credit card company. I also worked at the city of Pasadena.

[00:58] And what we did in 3 ½ days last week would’ve taken probably three months at either those places because so many people needed to be involved. So many meetings had to happen. So many specs had to be written. So much approval had to be gained and here it was like oh crap, we fixed this thing. Last week we had a couple hours where emails weren’t sending and we quickly got that fixed but then it was like how can I make sure this never happens again? And like I said, in 3 ½ days Derek wrote all the code. He and I worked together on getting everything architected and figuring out a bunch of details but that’s pretty much how last week went and it feels good. It feels good to once again knock another one of those things out where it’s solved for the foreseeable future and now we can really move back into building out features that customers want.

[01:42] Mike: I know what you mean especially the part about trying to fix things so that those problems don’t happen ever again or at least that they do then you’ll be able to address them in the future. One of the things I started working on this past week was a support tool box that is specifically designed to call back to some of the API’s that we’re using to do different things so for example regenerating all the reports for either a given customer or for every customer because we have several different reports and they’re all generated based on a series of cues so it’s like just grab the message off the queue and generate the report.

[02:16] Well what happens if in the middle of generating that report, something breaks because our code doesn’t necessarily handle it very well if a partial report is generated or if a piece of it is generated like the place holder and not the rest of it. So I built some support utilities that will allow us to go in and just automatically rebuild some of those which is kind of nice.

[02:35] Rob: Yeah. It’s crazy that typically my dad just told me the last 10% of a project takes 20% to 25% of the time because you always have these little loose ends you didn’t realize were there until you roll some into production and then you have to spend a lot of time troubleshooting. I guess the other update is revenue in November since we did launch to the public. I have a 21 day trial so a lot of revenue, big revenue spike happening as that rolls out. So that feels good. It puts a concrete success metric. It’s not all about revenue but it really does say wow, people are willing to pay for what you built.

[03:10] And so I’m feeling really good about where it is and also being realistic about December is going to be a big slow down as it always is and so long as we can stay flat is my hope during December that heading into January, I’m pretty optimistic about where we’re starting out with. And I’m happy that we got launched. I mean I at one point debated not launching Drip in November and pushing it off ‘til January but given how things are going, it’s just such a motivational thing to have people in there using the app and having pay us money and seeing the bank balance come in.

[03:42] Mike: That’s an interesting point you make about revenue and looking at that as sort of a bench mark because when you got a new product and you’re trying to figure out is it addressing the needs that people have and people start asking you questions about that product, that’s almost always the default benchmark that people go back to. It’s like well, how much money is it making because it’s kind of common number that you can just track across almost any application just like well how much money is it making? It tends to be cut and dry obviously if you’ve got like a Saas model versus a onetime fee. I mean it can be very wildly between them. But there’s still some general I’ll say consensus, ideas about whether or not you’re doing well and it’s only been out for a week or a month or something like that.

[04:23] Rob: Right. How about on your end what’s new?

[04:24] Mike: Audit Shark I suppose has become public knowledge on another podcast but Audit Shark is live at this point.

[04:30] Rob: Can I go to auditshark.com and sign up for a production account?

[04:33] Mike: Yes you can.

[04:34] Rob: Indeed except for I heard a little rumor that I won’t be billed. You don’t have the billing code.

[04:39] Mike: Well the billing code is there. It just tracks it like a Striped ID right now and I’d have to go in and manually do it. That’s more because I just have – I don’t feel like I’ve thoroughly tested the billing code enough so I’m not confident and just flipping the switch and turning it on. That’s not to say that I couldn’t turn it on. It’s just I haven’t tested it to know exactly what’s going to happen if I did.

[04:55] Rob: Right. So you’re taking cards upfront. You’re sorting the token. You run them through Stripe. They say it is a valid card. You’re storing the token locally so that you could run a charge at the end of your trial you just don’t have the schedule tasks up to run the job.

[05:09] Mike: The job is written. As you said, I haven’t turned it on. I haven’t scheduled it to actually run. But I mean aside from that, you could go out there and you could sign up for it but it’s not something I’m actively promoting right now. Literally before this podcast I got an email from my developer saying that he finished one of the reports. And we’re still going to have to work it into the code base over the next day or two. Now that that’s done, that’s one of the things that was holding up some of the people in the early access right now that says this is what is stopping me from pulling the trigger and say yes, I’m willing to pay for this.

[05:38] Rob: Very cool. So now you could go back to your early access list and start working with those folks one on one.

[05:44] Mike: I’m going to go through that list anyway and try to work with people one on one just to use it as a learning experience because those are the people that I feel that I’m going to learn the most from and those are going to be the ones that I can work with. So if they have questions or specific problems, there’s going to be I’ll say a little bit more of a warm relationship already because they’re already on the email list. They’ve already gotten a couple of emails. I’ll be able to go to them and say hey this is who I am. Can I get you to sign up and create an account and walk them through it and try and find out if there’s any specific problems they’re having and get those addressed. And in the mean time, if somebody comes through and signs up for an Audit Shark account, I have no problem with them doing that. It’s just the cold customers right now are still just not necessarily my focus.

[06:25] Rob: Sure and at this point that wouldn’t be my focus either. I just read two books. One is Hatching Twitter. It’s written by a journalist named Nick Bilton and I liked it a lot. It’s a journalist degree telling of the origins of Twitter. And if you’re into that kind of thing, The Facebook Effect was another book and In The Plex was the one about Google. These are all just retellings and reconstructions of the early days of a company. It’s fascinating. It’s a good read. I listen to it on audio of course. It definitely keeps you captivated. Nick Bilton is both a respected journalist but also just a good writer, an engaging writer.

[07:03] And it’s crazy the life that these founders went to to screw each other over and kicking each other in and out of the company at different times. It’s pretty intense. I’m thinking Facebook may have been an exception in terms of the turmoil between the co-founders but Twitter was maybe not quite as bad but there was a lot of chaos and a lot of “best friends” starting this company and then basically screwing each other over and kicking each other out. So I’d recommend it if you’re into that kind of thing.

[07:32] The other book that I’m just wrapping up with is called Remote and it’s by 37 Signals and it’s about working remote and how to manage people remotely and that kind of stuff. All of 37 Signals books, I’m pretty lukewarm about it. There’s nothing new in it that I either don’t already know or haven’t heard before and so I’m always trying to figure out am I too entrenched in this world already since I worked with remote people that this isn’t even written for me. I’m wondering who is this information really shocking to? Are there Fortune 500 companies that read it and think oh my gosh this is news to me because it totally was not news to me. It feels like its stuff we’ve already talked about and we all already know. It’s kind of common knowledge in our field.

[08:12] Mike: I’ll let you know what my thoughts are. I bought it probably several weeks ago and I haven’t had a chance to get to it. I was reading the E-Myth Revisited. Somebody in my mastermind group was reading that so I started reading that. Got I’d say 15% or 20% into it and I understand the gist of it. It actually makes a lot of sense but I don’t know how the rest of it turns out. I don’t know if I’ll keep reading it or just kind of start skimming through it [Cross-talk] a lot of things that are really repetitive.

[08:36] Rob: Yeah. I was going to say if you have the gist of it, my guess is you have the gist of it and you’re not going to get anything out of the rest of it. It feels pretty introductory. I think today we’ve just talked about this stuff so much that it’s going to be pretty obvious to you.

[08:49] Mike: I feel like a lot of the concepts and the things that it goes over obvious but I guess what it brings to the forefront of my mind is more the fact that it puts labels on certain things that I had never really had labels before for. So it makes them a little bit more tangible and not that it didn’t make sense before that I didn’t necessarily know about them in my subconscious but having those labels helps. I think Seth Godin is a big proponent of just creating names for things whether they make sense at the time or not, just create names for something so that it helps you to understand it a little bit better.

[09:19] Rob: Yup. I would agree with that. It’s kind of a common naming scheme for these elements. That’s what we talked about with lean startup. Right? That was kind of one of the benefits of lean startup while it has some of the pros and cons and some things we don’t agree with. The fact that they’ve put a label on a bunch of stuff helps us further the cost so that you can say one word and everybody understands kind of the deeper meaning of it.

[09:42] Mike: Yeah. It creates like a fundamental baseline for terminology. And once you have everybody using the same terminology, it makes it easier for everybody to talk about the same thing because then using the same terms everybody means the same thing.

[09:54] Rob: Yeah, there you go. So last thing for me, I appeared in Techzing episode 246 it’s the most recent episode and I talked a lot about Drip, about the launch, went more in depth to kind of the slow launch approach and then just updated on a number of things. So if you’re into a longer form podcast, a little over an hour but it’s a pretty fun casual conversation where I can go more in depth on stuff, go head over to techzinglive.com and checkout episode 246.

[10:20] Mike: Maybe I’ll check it out. My new iPad air at some point, I’m a little disappointed with the Nexus 7 I think I mentioned a while back that I gotten the Nexus 7 to kind of open myself up to the android ecosystem a little bit and I don’t know whether its android or the apps that are running on it but it just seems like the device crashes more often than – it’s just more noticeable I think than on the iPad.

[10:44] Rob: Right. And so do you have the new iPad air? Did you order one?

[10:47] Mike: Not yet. I’ll probably get it in the next day or two. I’ve looked at it a couple of times here and there just kind of deciding between the iPad mini with the retina display and then the new iPad air and be done with it.

[10:59] Rob: Right. Are you able to return the Nexus 7 or you’re going to give it to your wife or kid?

[11:03] Mike: I’ll probably keep it around just so that I have it. I mean maybe they’ll come up with some operating system updates that will fix some of the minor issues that I’m having. I mean it’s still nice to have because it’s kind of small but I just don’t use it for my email. You can’t really type on it. It’s nice to surf the web for stuff real quick because it’s bigger than my phone but beyond that I just don’t find myself using it very often.

[11:24] Rob: Right.

[11:25] Mike: And today’s geek note of the day is that there’s – did you ever play the lone wolf adventure games like you read them and it’s almost like choosing adventure but you actually have to keep track of some stats for your character like back in the 80’s.

[11:38] Rob: You know, I never did. Its lonewolfthegame.com and they put it into IOS and android.

[11:45] Mike: So it will be interesting to see how that turns out. I think it’s like $5 so it’s a little bit on the pricey side for most apps but…

[11:52] Rob: I’ll drop $5 just to check something out because the visuals are nice. Honestly this attitude in the mobile space is so irritating to me that $5 is a lot of money like that. I buy so many apps just because they’re 99 cents and I just want to check them out. It’s like we – I feel like developers should be paid for what they’re doing.

[12:09] Mike: Compared to the other ones out there and I feel like it’s expensive. And I think that’s changing over time as well.

[12:15] Rob: I’ve heard it’s going down though.

[12:15] Mike: Really?

[12:16] Rob: Yeah, that basically everybody’s giving them stuff away for free and that’s why there’s so many in-app purchases now because people are getting free so they could get on the free charts and they can get the distribution and then do an in-app purchase because not only does it allow you to have a free app but in-app purchases are kind of recurring revenue. They’re not subscription based but they are a long term revenues base versus if you charge upfront it’s a onetime sale to everybody.

[12:43] Mike: I don’t know, there’s a few games that I’ve bought that are like $3 or $4 for the game and it’s just like I would’ve paid $5 or $7 for the game because it’s such a good game but then they have like the in-app purchase. I’m not a big fan of the in-app purchases. They don’t necessarily give you that much more enjoyment out of the game.

[12:57] Music

[13:00] Today we’re going to be talking about how to build an effective content marketing strategy. I’ve seen a couple of things about this over on Twitter and Quora and a few other places. I thought it might be interesting to kind of put together an outline of some of the things that you might want to do if you’re looking at putting together a content strategy and it is something that I’m looking at right now. So some of these are pulled from the work that I’ve been doing but some of them I just did a little bit of extra research just to make sure that we had some more information for the podcast.

[13:27] Rob: Got it. And this is different than SEO.

[13:30] Mike: So with SEO, what you’re really doing is you’re to target specific keywords and trying to draw traffic into your website. So for Audit Shark for example I might say okay, well I want to do SEO because I want people when they search for server security monitoring to come to my website and then signup for Audit Shark. But with something like that, you’re really keying in on very, very specific things that you want because you want those people to be searching for specific key terms. Whereas with content marketing what you’re trying to do is you’re trying to cast a little bit more of a wider net.

[14:03] And primarily the reason you’re doing that is because people who are coming to your website aren’t necessarily always at the same level or same stage in your sales pipeline. Some people are going to come to your website because they just have no idea what they’re looking for, no idea what they should be doing with regards to solving whatever that problem is that your product addresses. So sometimes they’re just doing it for education purposes. Sometimes they’re a little bit further along and maybe they’re doing market research to compare competitors against one another and say which one of these two or three or five am I actually going to purchase?

[14:34] So depending on the stage of the pipeline you might create content for your website or for your newsletter or your blog such that it addresses some of the people who were in those different stages versus SEO where you’re trying to get just like one piece of it. Somebody search for X and I want to draw them to my website.

[14:53] Rob: Very cool. Let’s dive in. It looks like we have six steps here.

[14:56] Mike: So the first step is to plan and really what you want to do is you just need to know what it is that you want to do before you start randomly creating content. What is the purpose of the content that you’re creating? What gaps is it trying to fulfill? Who’s the ideal reader for that content? How is going to help them? Is it going to help them make a decision? Is it going to help educate them? Is it going to help position your product against somebody else’s? Are there certain features that your product has that somebody else’s doesn’t? Can you map specific concerns the buyers might have into their needs?

[15:29] There’s all these different things that go into it but you have to plan these things upfront and there’s six steps that we’re going to talk about here but the first one is planning. You need to know what it is that you’re trying to do before you set out and start randomly creating the content.

[15:42] Rob: Yeah and I think you actually have a really nice set of bullet points here that you just ran through. Let’s include those in the show notes because otherwise somebody’s going to have to frantically take notes on this but you touch on a lot of good points about who is your ideal reader, what stage in the buying process is this content targeted at? If you don’t think that through, you’re going to have exactly what you mentioned which is randomly created content but doesn’t have any type of cohesion or any type of sequence to it. The people who know how to do content marketing and execute on it well, there’s a lot of thought given to this stage, just sitting back and thinking how exactly is this going to help people what stage?

[16:18] And even as you put here, you didn’t mention this but it’s an outline. You said what are the marketing channels you’re going to use? Are you going to put on the blog? Is it going to be an email newsletter? Is it going to be an eBook or a white paper for people download? Are you going to create a tool? Because all of that is content marketing. Anything that folks want to share with each other, you look at hub spot and there’s an SEO site grader. There was some other type of site grader that Dharmesh built. These are all forms of content marketing. I think that sitting down and giving this some thought early on can save you a lot of time. Because if you build something that isn’t helpful to people then no matter how good it is, you’re wasting your time.

[16:54] Mike: That you just touched on in terms of the tools is a very important distinction when you talk about content. Content is not just blog articles. It’s not just text on a page. It can be videos. It can be tools. It can be audio. It can be all these different things that are content but they’re designed and put out there so that they help somebody accomplish something whether it’s their job or educate them about something, it does not necessarily have to be just text. Tools are really, really good examples of things that can draw people in if they’re executed well. But the problem with the tool is of course that it could be very time intensive to build some of those tools.

[17:31] Rob: Yeah. I mean even another example, I have two pieces of content that are interlinked for Drip. I haven’t pushed them out yet but probably will in early December and I’ll try to come back and update these show notes but we basically had a marketing intern for the last couple months and he wrote a really solid blogpost about how to calculate a gold value, how to calculate what a new trial or a new purchase is worth, try to get LTV out of things. So we wrote this post and the more we talked about he said you know, I could build a pretty nice calculator out of this that just asks a couple of questions and then calculates their LTV.

[18:06] So now we have a blog, article and a calculator that he created that set like a pretty good example. I mean everything doesn’t have to be two things that tie together but it’s kind of an example of how this content marketing stuff can run the gambit between like you said, words on a page and actual code being written behind the scenes.

[18:23] Mike: Yeah. And some of that’s cross promotion which kind of goes out towards step four which is publishing. So step 2 is create the content. And unless you’re a deep expert in a very specific field you should probably source it out to somebody else who has the time cycles to dedicate to building this content. The problem with building the content yourself is that its time consuming and its very mentally draining to create long pieces of content or even short pieces of content if you’re trying to build a bunch of them. You’re much better off giving somebody some ideas and guidelines and letting them know what it is that you’re trying to accomplish and letting them go out and actually do the work and then come back to you with it so that you can curate it from that point on.

[19:08] So the actual creation of the content I would probably advise most people to outsource that if you can. But in terms of getting ideas or the content there’s a lot of different places that you can go to. You can look at your keyword searches. You can use questions that are coming in from customers based on your FAQ’s or just your support questions. You can look at social media discussions. You can look at top 10 lists that are out there on the topic that you have your products around. You can also take a look at some of the different customer resources that you’ve put together or you can build customer resources for them.

[19:39] So for example you might want to build a checklist or a template for solving a particular problem like for example with Audit Shark I might create here’s a template or a checklist for locking down your server and these are the steps that you need to go through and oh, by the way this product can do it for you but if you’re going to do it on your own, these are the things that you want to do and these are the important pieces that you really need to pay attention to.

[20:01] Rob: The interesting thing is that creating this content can be done fairly quickly. I think it’s all a balance between how much budget you have and how much time you have. And like you said, if you can, then finding someone who’s an expert in the field and hiring them to do this is fantastic. But if you don’t have the budget to do that, there are ways go getting that same expert on Skype and doing a 10 minute, 15 minute interview with them. And if you ask them multiple questions during that interview you could realistically get one question and turn that into a 2 or 3 minute audio snippet and you’re at least one a week and you get them transcribed. Maybe you do a video interview but you have actual multimedia versions of this that you’re releasing and if you get people involved, that becomes a sequential thing and it can get people really involved.

[20:50] The other thing is to do case studies to interview your customers and find out not just how your product helped them because that’s boring marketing crap. But actually figuring out some tricks and tips that they’ve used to help them in their journey as it relates to not just your product but kind of the field you’re in. So with Drip, I might interview someone not with how Drip helped them but what are some things that they did that really kicked off their email marketing campaign or how did they use email marketing to improve their business and increase it? And other people could think whether they’re going to be a Drip customer or not, they could take and use it with any email marketing software.

[21:25] And another example is something like downloadable landing page templates like that Clay Collins talked about on the podcast a few episodes ago or with Drip, I’ve definitely considered having downloadable email templates, not visual email templates because we don’t do the visual newsletter stuff. But having actual pre-written templates that you kind of fill in the blank like an mad libs, things for five day mini courses and that kind of things that we already have in the app but to be able to give those away to noncustomers all of that is sharable content that someone might be interested in both consuming and then thinking man, this is cool someone’s giving this away for free and they want to tell other folks about it on Twitter. That’s really the goal.

[22:06] Mike: Step 3 in the process is to curate and optimize the content. And for this, if you have newsletters or blog articles, things like that, what you’re going to do is you’re going to want to use attention grabbing headlines and the general rule of thumb that I hear all over the place is spend a lot of time on your headlines because those are the pieces that you will draw people in. And obviously the content itself has to be good but make sure you spend a lot of time on the headlines so that you are attracting the eyeballs in the first place. But also look for places where you can leverage that content for SEO purposes and I really liked your question before about contrast this versus SEO whereas SEO just has one purpose but your content strategy can feed into your SEO strategy.

[22:47] Another thing that you want to do is if you have text for your newsletters or your blog articles, you definitely want to include photos or video or screenshots, slideshows, pretty much anything you can to make it more engaging and then in addition to that, you also want to make it easy to consume for people who just scan content. I’ve talked to other people who they’ve told me flat out they’re like yeah, I don’t read anything on the internet. I just kind of scan for the bullet points and just skip everything else. That is completely foreign to me because I have a tendency to just read things straight through but that has something that there are definitely a lot of people out there who do that.

[23:22] Rob: I think another thing you can do in this kind of curating and optimizing point is to link to external sources. Not only does this give you credibility but those external sources if they’re let’s say a blog or a podcast or some type of one person gig, it’s not some huge company, you can actually contact them and say hey I referenced you here, thanks for the data – that type of thing. They are very much more likely to actually share it to their audience. And if you use them as a reference, it’s likely that they are actually within line of your target market and the people that you’re trying to get this shared too.

[23:54] So you don’t want to go out and be the jerk who says hey, I used your thing. Now can you share it? Now you don’t want to be presumptive but at the same time I think there’s a lot of value in linking to eternal sources and letting folks know that their data is being used to kind of create a derivative work in something that hopefully improves upon the sources that he uses.

[24:16] Mike: The fourth step is to publish your content based on some sort of calendar and consistency can really help draw people back to your side. One of the things that I hear from a lot of different people about the startups for the rest of us podcast is that they love the fact that its every single week and they can always depend on it being out there on Tuesday. That consistency can really help feed people’s desires to have that information. If they know they’re expecting that email on Thursday, there are cases where there are certain emails that I get in my mailbox that I’m always looking forward whether it’s a weekly report or a weekly newsletter about certain topics, there are some that I actually really do look forward to.

[24:54] You can also reuse some of that content for things like social media or your email newsletters, any sort of auto responders or some of your webinars. There’s a lot of different ways that you can – I’ll say cross promote things between one piece of content and another. And then in addition to that, using that calendar can help you with any sort of complicated sales process. So if there are things that people need to do, you can create some content like you can create a video and send it to them and say hey I saw that you started using this feature in our product. Here’s something that might help you. Here’s an educational video that helps people use that and directs them on how best – how to get the most value out of it.

[25:32] And there’s other things that you can use that for as well. If they’re on a pre-sales newsletter for example you could send them a video about how your particular tool helped them solve a specific problem. In terms of publishing your content, you also want to make sure you’re keeping an eye out for ways that you can promote it. One of the obvious was is to ask the people that you’re sharing this content with to promote it. Ask them to share it, send out tweets or Facebook likes or even follow you on LinkedIn or the various other social media circles. There’s a lot of different ways that you can get your message out and get people to share it.

[26:07] And in addition to promoting it yourself, I mean obviously you can do any sort of paid marketing but reach out to influential people in your space whether its bloggers or podcasters, anyone who could help you get the message out in a way that is relevant to their audience and that’s something that is really key. You want to make sure that what you’re talking about or what you’re pitching to people is relevant to their audience and explain to them how is it going to help their audience. Because if you just go to some random blogger and say hey I’d like to be on your show and you explain all the great things about you, well then you haven’t really told them anything about why you should really be on there. How is it going to help their listeners or their viewers?

[26:42] So if you’re not pitching to their audience and their audience’s needs then the chances of them saying yes are probably much slimmer than if you explain it in a way of how it’s going to provide vaulted to their audience.

[26:53] Rob: Even something as simple as having that tweet button and the Facebook like and or share button and a G+ button on your blogpost, your infographic or whatever it is, the piece of content you have, this is something that I see people overlooking and frankly when I’m on my mobile phone, I’m on my iPhone, I click through – if there’s not a button there that I can click to retweet it, there’s no way I’m going to copy and paste the URL out of there, open the Twitter app, write something, copy and paste it in it, it just doesn’t happen.

[27:21] And a lot of folks now are on their phones when they’re looking at this kind of stuff. So you really want to enable one click sharing. And one click sharing is not – it’s a magic silver bullet that’s going to instantly mean everybody shares it but it just pulls away that little bit of friction and allows people to be able to be able to share it more easily.

[27:40] Mike: Yeah, I’m exactly the same way. If it’s not right there if I’m on my phone, chances are really good that I’m not going to bother to come back to it later.

[27:48] Rob: I think the other thing you touched on that I liked – let’s talk about content reuse. What’s interesting is I use to think that you have this blog and you write hundreds and hundreds of posts over several years and people – they’re just digging through the archives or its just dead material. But I finally realized there’s a lot of meat and if you have timeless stuff that doesn’t rely on particular time periods, it’s not a current tech news or something, you absolutely can reuse that and you could compile your old posts into an eBook. You could take old blogposts, put them into your auto responders sequence. I mean there’s so much that can be done with that. Don’t forget.

[28:26] And you can go even further and let’s say you can repurpose a blogpost into a podcast outline or sequence a blogpost into an infographic if you had research stuff. There’s a lot of ways to do this so that if you put time into creating content in the past, you don’t necessarily have to reinvent the wheel today when you do start to upgrade their content again.

[28:45] Mike: Step 5 is to engage with your audience after you’ve published the content. You can ask people to comment or tweet or respond in some way. What is your content ultimately supposed to do? What action is it that they’re supposed to take? And that’s one of the things that you want to address in your planning stage but make sure that you follow-up with it and engage with the audience and really ask them to take those extra steps and as you said in the previous step when you publish something, make sure that you have things like Facebook or Twitter buttons. If those things aren’t there, make sure that you’re putting them there if that’s the way that you want them to share it.

[29:17] Something else that you can do is are you hearing what other things that people are looking for from you for content? Are they asking questions? Are those questions something that you can turn into something else that could be published as new content? Are you asking them to contribute their own content? Those are the types of things that help you I guess fill up your funnel of content that you you’re generating. And then the last piece of step 5 and engaging with them is actually thank them. There’s a lot of people that will just do something because they like the stuff and they think that it’s nice to share. But going back and going out of your way to thank them is actually a very, very effective strategy

[29:55] As part of what my Twitter strategy, what I’ve been doing is taking the people who follow me back or – and this relates specifically to the Audit Shark account, following me back or retweeting things, we’ll go in and we will send them a message hey, thanks to so and so for retweeting this or for favoriting this or for following us back. And it is accounting to me the number of people who when we sent out a tweet that says we just want to say thanks to these five people for following us, it’s astounding to me the number of people who actually turned around and would retweet that. It’s just crazy. And it gets retweeted to like tens of thousands of people which I don’t know why that happens but it just does. It seems like it’s working really, really well and it just feeds that loop because people see that in the other Twitter feeds and then they come back to s.

[30:40] Step 6 is to measure and incorporate feedback from people. What content is it that you put out there that was actually shared with other people? How much was it shared? How many readers did you get from publishing a new piece of content? How many people took the action that you wanted them to take? How did some of that content relate back to your bottom-line revenue? I mean are you able to track some of that information? Those are the types of questions that you want to ask and make sure that you’re measuring different things related to your content strategies so that you know what’s working and you can double down on it and you know what’s not working and back off from those things.

[31:15] Rob: Yeah. But trying to measure ROI on content marketing is very difficult near impossible. The people I know who are doing content marketing successfully and I was actually doing this on HitTail for quite some time was getting a lot of buzz around the blog and it was driving visitors. But it’s so hard to figure out precisely how someone found you and you can see when they convert but it’s hard to attribute what the last click was versus the first click versus the steps they took in between that.

[31:46] And so the measurement is actually a challenge and Google analytics doesn’t do it very well. I know they’re branching into that and looking at attribution models. They would have multiple attributions meaning of someone originally found you through a tweet and then they continued to engage with you maybe through your email sequence or your auto responder or your newsletter and then later they typed your name into a browser window and just came in and converted that it tries to attribute those steps along the way. But don’t get too caught up in trying to get every nook and cranny nailed down.

[32:19] The thing is figuring out how many people you drive to that post initially is going to give you a baseline of what you can expect. And so if you’re only able to drive hundred new uniques to this blogpost you published that’s probably not going to be enough to warrant the cost or the effort. But if you’re consistently getting in the 500 or over 1,000 unique for a piece of content or let’s say you’re getting 100 retweets, I mean there’s some measurement that you’re going to start seeing and it’s just going to start to make sense that you should continue doing this.

[32:51] But I’d say minimum if you’re going to start content marketing, you have to commit to minimum 60 days and maybe 90 days of consistent publishing. I don’t know anyone who does haphazard here’s an infographic now and then a blogpost in a month and then a video interview in two months. It doesn’t work because you don’t build any kind of relationship and you don’t build any kind of longer standing narrative. If you just throw out these pieces of content there’s already so many around that without them being connected to one another and having some consistency, I don’t see how your conversion rate could really increase. The people I know who are doing it are doing it very consistently for a long period of time. And the longer you do it, the bigger that snowball of basically of ROI builds up.

[33:35] Mike: Yeah I mean that’s an important piece that you allude to. It’s just looking at the trend itself not necessarily getting caught up in the fine grain details, you want to look at that trend itself and make sure that what you’re doing and how much time and effort your investing into the content strategy is somehow in some way shape or for really impact your revenue. And as long as your revenue is going up and as you said, if you start out and you say okay well I’m going to try this for 90 days or 180 days I’m going to publish once a week or twice a week.

[34:05] If you can take a look back six months and you see that three months previously after you go this 90 days you saved from three months ago, there’s almost like a clean rise in your revenue for example or this website visits and all these other metrics. You may not be able to individually say well I sent an email to Joe at such and such domain and he came in and signed he up after this particular blogpost but if you can see a trend of some kind and you can see that your traffic or your revenue is going up definitively and you can almost attribute it to when you started your content strategy, then you generally know that it’s working.

[34:44] Rob: And that is the hard part isn’t it? Coming to me, I’m super into analytics and ROI and that’s why I like SEO and paid acquisition because they are so easy to track or they’re easier to track and so content marketing just has fuzzy things around the edges and it’s not super easy to really nail down every aspect of the ROI which makes it not for the faint of heart to be honest. And the fact that you really need to do it for 90 days or more to start seeing the return, you want to do some research into it before you just dive in and think that you can crank out one infographic and suddenly have the success that a kiss metrics is having.

[35:22] Mike: I think part of that problem is the engineer side of most software developers is like you want a concrete answer, math and science is you’re either right or your wrong or there’s some tolerance in which as long as you fall in that range you’re okay. But when it becomes very subjective, it’s very fuzzy around whether or not you’re on the right track and so think that’s what you’re kind of alluding to.

[35:43] Rob: A little bit. Yeah.

[35:44] Music

[35:47] If you have question for us, 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 and we’ll see you next time.

Startups For the Rest of Us

Episode 160 | Advice on Selling a Startup, Early Days SaaS Optimization, and More Listener Questions

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Show Notes

• Question from Bootstrapped.fm Episode 23
• Pipedrive
• Comment on episode 154 from Paul Murray about selling to restaurants
• Brian Casel, founder of Restaurant Engine
• OptInMonster and Drip

Transcript

[00:00] Rob: In this episode of Startups for the Rest of Us, Mike and I will be discussing advice for selling a startup, how to handle your metrics in those very early days of a SaaS app and when we think an idea is interesting enough to pursue. This is Startups for the Rest of Us: Episode 160.

[00:15] Music

[00:23] 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.

[00:32] Mike: And I’m Mike.

[00:33] 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?

[00:38] Mike: I finally fixed a bug that’s been plaguing my policy developer for a couple of weeks now. It’s basically in the synchronization code between his stuff and the cloud. When we poured everything over from visual studio 2010 to 2012, there were a couple of things in the ND framework model that got lost and the time stamp was one of them. So stuff was getting sent up to the servers and then it just wasn’t coming back down.

[01:02] Rob: Yeah, that’s a bummer. Those kind of bugs are brutal.

[01:05] Mike: Yeah, it was really weird because he would do stuff and then he would save it and he would leave and then you come back the next day and then it would be gone and he couldn’t figure out why.

[01:13] Rob: We’ve had a number of little tweaks like that to make as well. Probably the last 10 days have been pretty tough of working on Drip. They’re these tiny little crisis that keep coming up that we have to handle in real time. And Monday morning at 2 in the morning we got an alert that there was something wrong with our email sending and one domain had been blocked and there was just all the stuff so we wound up getting on it pretty early in the morning on Monday and dealt with it and got it handled and got all the emails on and everything.

[01:43] But this real time stuff of actually needing to make sure that emails are sent and having things working real time is a big deal. It has been a semi-catastrophic week. It’s felt like that. No one noticed and we didn’t have down time and we didn’t have outages or anything like that but there’s just been a lot of stress. That’s what comes whit the recurring revenue and the hosted service and the need for high up time.

[02:04] Mike: Yeah, that’s one of the down sides to the whole SaaS model is just the fact that when something goes wrong, you have to get there and try and fix it before customers notice. Just this past week, we redesigned the entire back end storage system primarily so that we could write better reports and we’ve gotten some complaints that the reports were a little bit slow. So right now the reports are just lighting fast but when we’re first putting them in, there were some issues where not everything was being processed correctly so some of the reports just never got generated. And of course I had to go look at the schedule of when people have different things scheduled and say okay well, who’s going to be affected by this? Was there any data that was lost or was there any data that didn’t make it in or wasn’t saved properly then we’re going to have to account for. So that does kind of suck. But in your case it’s a little different because you’ve got data constantly coming into the system. Right?

[02:54] Rob: Right. And we have so many people. We have enough people using it now that there’s pretty much always someone inside the app either a paying customer or a trial user. We’re not in the tens of users anymore. Once you hit triple digits there’s people all around the world basically able to use it and so it’s a lot of work. I come back to the whole thing of like don’t build a SaaS app as your first app. We “know what we’re doing” I’ve built these before and we know what the up time requirements are it’s still a lot of effort in these early days because we’re working with such a small team. We’re just prioritizing features high and trying to get as much stability in everything in this we can.

[03:33] And truthfully I think the silver lining on this is that when we had database performance issues, it totally sucked for about four days and then we got it upgraded to something that should last, a server that would last us for a year and then we wrote a bunch of queries. It’s good that it feels like it’s kind of fixed for good or at least for the time being and the same thing with the one last week like we’re going to diversify. This thing that got blocked, we only had one domain where we’re sending trough and now we’re going to have dozen or more domains and so if anything else gets blocked, we’ll always have that backup which was a plan we were going to do anyway but now it really gave us the impetus to jump on and do it quickly.

[04:08] Mike: Cool.

[04:09] Music

[04:13] Rob: Today we’re going to be running through a slew of listener questions and comments trying to play catch-up for the past couple of months. Our first question comes from – he actually has an anonymous question. He says I’m one of three equal partners in a Saas app that is less than a year old but its gained significant traction. It has more than 75 recurring paying customers and its growing and the average plan is about $30 a month so it’s in the $2,000 to $2,500 a month range. As promising and valuable as the product and all of its assets are, our partnership is not so promising. Personality clashes, lack of focus and location issues, there’s like a 14 hour time difference with one of the partners, these have all been a big deal and they’re beginning to discuss their options.

[04:55] He says one partner might buy two of us out. Two partners might buy me out or we might seek a third party buyer for the whole thing. So he has three questions and let’s take this one at a time. He says if selling the business as a whole to a third party buyer, how do we go about putting a value or asking price on the business. How do we factor in revenue level, software assets, marketing side assets domain authority etcetera? Second question is if my two partners will be buying out my 33% stake, how should I go about putting a value on that aside from whatever we determine the value of the business to be. Would my personal contribution factor into this? And then the third question is there such a thing as a business evaluation consultant or some kind of independent appraiser to help us figure out a fair selling price?

[05:39] Mike: So my take on this is you could go out and find a business evaluation consultant but it would probably cost you a significant amount of money because they’re going to have to do a lot of digging to get you an accurate value for that. And the more time and effort they put into it, the closer the evaluation is probably going to be to accurate but at the same time it’s also going to cost you more money. At the end of the day, the evaluation is only really what somebody’s going to actually pay for it. In terms of selling a business off, those are some really tough questions. I think that there’s definitely – I guess sense of ownership over a lot of the assets and you’re definitely going to probably place a significant amount of value on it that isn’t necessarily going to carry over to what the business is actually worth.

[06:24] I think that’s really common because if you go out onto Flippa for example and you look for websites or apps that are for sale, there’s lots of people out there who are asking prices that are way, way too high for what the app is actually bringing in for revenue and they put such a high value on it because they’re trying to recoup some of the costs of their time and investment and it typically doesn’t work out. People aren’t necessarily willing to pay that. Now your situation may be a little different if your partners are buying you out. I think if you’re trying to sell the entire business to a third party, that third party is not going to care how much time and effort you’ve put into it. They’re going to care about what is the value of this business? What are they going to be able to do with it after they take it over?

[07:03] If it’s your partners by you out, you basically have probably more leverage in that scenario to say look, I’ve put in all this time and effort and I want to be compensated for it because it was a partnership. And if they’re buying you out because the partnership is not working out between the three of you, that’s a different story than you going to them and saying I want out. So I think that you could probably get more money from it from your partners than you would if you went out in the open market but I don’t know what those numbers would actually look like.

[07:32] Rob: If I were in your shoes I probably would look for someone to appraise this and I know some third party folks who are basically online business brokers, they’re reputable. These guys actually know what they’re doing and they know how to deal with Saas apps and e-commerce websites and kind of the stuff that we’d be dealing in. So that would probably be my at worst, that would be my first shot is to talk to this guy and I bet that’d be $500 or $1,000 to get a pretty in depth appraisal from him.

[08:01] Mike: That’s it? Really?

[08:02] Rob: Yeah. Because all you’re going to have to do is provide him with revenue and profit and expenses and that kind of stuff and he’s just going to be able to look at it and run the numbers because he sells multiple businesses a week. I mean really turns them over. So he knows the multiples and how to set prices on businesses that sell. Right? So he does all this for his clients and takes a cut of the sale. He’s just very knowledgeable. So it’s not a process that’s going to take him 20 or 30 hours to value it. And especially it’s not going to be a huge evaluation because it $2,000 or $2,500 a month. Let’s say it did $100,000 a month, that’s a whole different story. You need to be very accurate. There’s a lot going on, tons of transactions coming through, a lot more expenses. But at this simple level at a pretty low revenue rate, I bet that he’d be able to pop off fairly accurate quote almost with just a shared Google doc and 15 minutes of looking at it. And then if you want him to go more in depth, certainly that would cost a little bit of money.

[08:58] So that might be where I start. Now Mike’s point about the Flippa evaluation versus your internal evaluation, that is definitely true because if you go to the open market with this thing, you’re going to less than if you’re selling it someone who knows and trusts you and knows the code and know the business has potential and all of your partners know that. Right? So there’s potentially a premium that they would pay because they just have such intimacy with the app and they know that you guys are taking great care of it. I think the answer to kind of all your questions is to try to find a third party to appraise this and then in my opinion I would first try to sell it to one of the other partners before going to the open market. I just think that’s probably the best outcome. It’s always a tough position to be in. It’s a bummer the partnership didn’t work out and frankly we wish you the best of luck in figuring out.

[09:42] Music

[09:45] Our second question is actually from a podcast. It’s from bootstrap.fm which is Ian Landsman and Andrey Butov’s podcast and Andrey had asked this question several episodes ago. It’s episode 23 of bootstrap.fm and I think we’ll probably just play that right here.

[10:02] Andrey: I’ve been looking at various marketing techniques and trying to grab some of the low hanging fruit, that’s low hanging fruit for me because I haven’t done any of this stuff on the past SEO, all that stuff, AB testing and what not. And it does look like although this advice Saas stuff kind of already lives at the level where the app is liquid enough like there’s a flowing stream of users whether they’re being retained or not, it doesn’t matter. But there’s churn right? Sort of like all the strategies like AB testing and price AB testing and click tracking and SEO and all this stuff that you get to play with is only really liable at that level.

[0:10:47] And then when you’re at the beginning where you have like one sign up and three days and then maybe a couple of it, there’s another sign up later on, maybe a couple days, none of this stuff works yet. You can’t play any of these games. You kind of either have to wait for it or you have to find some other alternative games to play at that level of your app. So if there’s any gurus out there, Rob Walling, Amy Hoy, Patrick McKenzie, whoever is thinking about this stuff and giving advice, optimization for SaaS apps and all that stuff, I’d like to see more content on the early days. And early days doesn’t mean like I opened it up to 1,000 beta testers and 500 of them signed up so now it’s early but you already have churn. I’m talking about like 3 participants and like 10 visitors as a day.

[11:31] Mike: So I think that this is probably a common problem. I don’t necessarily know that I have a lot of great solutions for it. One that I‘m looking into is using – there’s a couple different ways you can do it. You can do it using Trello to kind of move people through what you sales pipeline is because if you get somebody who signs up, the first thing you want to do is you want to make sure that you reach out to them and talk to them. And for your first 50-100 customers, you’re going to probably do a lot of hand holding. So you need to make sure that you reach out to them individually, get them on boarded in whatever way its meaningful because this is not going to scale – it doesn’t necessarily have to either because you can talk to them individually when you’ve only got one person signing up ever 3 or 4 days, that’s not a big deal.

[12:12] So one way is to put the person into Trello and essentially set it up so that you’ve got people moving through a funnel where you’re saying okay, well they initially signed up and then the next swim lane is they’re using the product, are they actively using it, yes or no. Those are the types of things that you want to figure out from them and then you touch base on them and get their feedback, figure out how they feel about it. Is it solving their problem? You do want to have those early conversations to figure out what exactly their problem is and whether or not your application is going to be able to help them with it. If you can get them on the phone, that will definitely help you out.

[12:43] Another option that you can do which does the same type of thing is to sign up for something like Pipedrive where you’re just basically moving people through a swim lane of options and you would manually loop them through until you get them to the point that they’re paying for the product. I think that the strategy is extremely helpful when you’re still in that early beta when you’ve got probably less than 50 customers because you probably don’t have the volume that as you said there was a lot of those sales marketing strategies that simply don’t work until you get to scale.

[13:14] Rob: Yeah, but it’s a lot that’s in line with what you just said. My big thought is at this point you have to have to do things that don’t scale. You have to do a lot of things that don’t scale. It’s going to be basically one on one attention and its going to be almost high touch sales at this point. So like you said, the phone, email, personal emails to the folks, finding out why they’re using it, why they’re not. You recall I had this slow launch that was 90+ days for Drip. And that was basically communicating with and then on boarding like our first 15 paying customers, maybe 20. Now the amount of time that I spent with those customers absolutely wouldn’t scale and it would not be worth it based on the lifetime value of those customers but that’s not what I’m getting out of it. I’m not helping them in order to make that few hundred dollars that I’m going to gather for them.

[14:03] I was helping them use the app and get on boarded so I can find out what issues they were running into so that I could then build an engine that scaled because in this early days I’m manually turning the crank. I’m manually turning that hamster wheel. There’s nothing that’s going to be able to serve a lot of people at that point. So I like to think of it like if I you had a product on Amazon and so people started giving you star ratings, you wouldn’t want to look at them in aggregate yet because when there’s only three reviewers, and if you get a 1, 3 and 5 star, that averages to a 3 star. But that’s not important data. What you want to do is you want to ask the 5 star why they got so much value out of your product and what else you could do to offer the and who they are and how they found you and all that stuff.

[14:43] Then you want to ask the 1 star why they didn’t get the value out of it and then you want to ask the 3 star. All individually, you can’t look an aggregate yet because there just isn’t enough data. So it’s the same thing with your Saas app. You can’t just look at churn rate because your churn rate might be 40% in the first month which it doesn’t even compute. Right? That means like your customer lifetime is 2 ½ months long and it just doesn’t make any sense. So I think at this point, I’d do a ton of hand holding and then the very first thing that I do once you’ve actually publicly launched is that you need to drive more traffic. You can’t optimize unit you have more people in that funnel.

[15:20] And hopefully if you’re a marketer and you have traffic strategies, you can get there in 30 to 60 days to where there’s actually four digits of traffic and certain percentage of people signing up and you can start getting some metrics. If you are still learning marketing it could take you 4 to 6 months just to get to the point where you have enough traffic that you could even think about the optimization strategies like split testing and price split testing and all the stuff that Andrey mentioned in his question. During this time, you really have to pay attention and focus on boarding and focus on what works one on one and how you can then build that into the UI of your app that basically walks them through setup and then a sequence of emails that goes out to them over the trial process and that’s when you’re trying to scale your individual effort that you put in early on.

[16:07] But if you don’t get that learning done where you are doing the high touch part, then you just don’t know enough of exactly what you need to put in the app to get them to their first successful experience with your app.

[16:17] Mike: Something else that I kind of forgot to mention was that when you’re doing this, when you’re working with those people individually, one of the things you have to be able to see is whether or not they’re using your app. And there’s tools out there that you can – there are subscriptions services out there that you can use to help you find this out. But a lot of times you just want to know are they logging in? When is the last time they logged in? And those are very, very simple things that you can just slap a log message into a database to say each person logged in whatever time and then just run a sequel query to say okay well has so and so logged in the past three days or the past seven days?

[16:51] Then before you go talk to them you say hey I noticed that you haven’t logged in three days or since you created your account. Is there a reason why? Is there something I can help you out with? And essentially what you’re doing is you are customizing that person’s experience and then you can take the emails and stuff that you’re sending them, extract them out and then send them out later in an automated fashion once you do get to that scale. But initially you just need to get those interactions going and learn from them to help figure what needs to go into future emails.

[17:21] Rob: Right. And this applies to a SaaS app where you’re actually charging a reasonable amount of money. If you’re selling a mobile app that’s 99 cents apiece, then this doesn’t apply. And if you’re selling a onetime piece of downloadable software even for several hundred dollars doesn’t necessarily apply. This is a common question and there’s obviously no one answer to it. We’ve sat here and given a lot of suggestions but I’m glad Andrey brought it up because I bet it’s more common than we think and I don’t think that those really early days are necessarily addressed that well when we’re talking about a lot of the optimization approaches we do.

[17:50] Alright, so our next question is actually a comment and its from episode 154, its from the comments section on the blog and Paul Murray was referring back to a question that we answered during that episode about someone who is going to try to market to the restaurant industry. And Paul says I spent four months earlier this year on successfully selling mobile web and marketing services to restaurants. Granted you don’t plan on selling this, but might get the nail on the head when he said restaurants are technologically oversee and I was selling products and services that are easy to demonstrate the need for yet so many restaurant owners had their head in the sand when it comes to technology. If you’re going to be planning to sell products to help a restaurant with their back end systems, I can only imagine how hard it might be. Seriously, after my experience earlier this year, I vowed I would never ever try to sell anything to the restaurants again.

[18:40] So that was Paul’s take. Brian Casel has had a different experience with this, a more positive one. You can check out his website at casjam.com and he has a podcast called bootstrap web where he talks a little bit about his product for restaurant engines.

[18:54] Mike: On episode 151 Rick wrote in and said he’d received an email from wpbeginner.com this week that had mentioned a service for building an email list in WordPress. He said that the product was from optinmonster.com and wanted to know if Rob could explain how Drip is different than Optinmonster.

[19:12] Rob: Sure. Optinmonster is actually really cool if you go check out optinmonster.com they basically have an email capture form that is similar to Drip. A couple main differences is 1) Optinmonster is WordPress plug-in so you have to be running WordPress site to use it. The other thing is Optinmonster is a piece of code that you download. It’s a zip file. You install it in WordPress and then you can configure some stuff. But you host everything yourself whereas Drip is software as a service. So it’s a little snippet of JavaScript. You can install it on any website and we capture those emails.

[19:43] Optinmonster is just the capture form whereas Drip captures the emails. We help you setup an email mini-course. We will build your course for you if you have content that we can use in the course and we have a whole email editing interface and we have the email scheduling and you can split test emails in our system. I mean on and on, we’re basically the back end. We provide conversions when people from your list convert to paying customers and we’re starting to put some behavioral and work flow stuff in kind of the emails to say if someone does this then I’ll move into this list or whatever. So we are like an actual whole email provider whereas Optinmonster is just that front in form.

[20:30] Our next question came in via email from David Debour. He’s asking about when we think an idea is interesting enough to pursue. And he says first of all, thank you for all the content you create on your blog and podcast. I’ve been following you for about three years and it’s valuable to know there are others also on this path and to hear a voice opposite the Silicon Valley startup circus. I noticed that you’re working on a few new projects and I’m wondering at what moment do you think an idea is interesting enough to pursue? As solo entrepreneurs we have limited time so I can imagine you did not jump into a project unless you believe it can reach certain goals. For example, a specific revenue target. When is a project worth it in your perspective?

[21:09] Mike: I think that you have the answer to that right in there. Is it going to be able to hit certain revenue goals? And that I think applies more to the products that you’re developing if there’s just a project that you want to work on, you don’t necessarily care about monetizing it then it’s a completely different story. When you set out to meet a very specific revenue target and typically it’s a minimum revenue target and you do the research on it to figure out is it realistic to be able to hit this particular revenue target? And if you feel like it is, you start going down that path and crank it out.

[21:39] I think the challenge is sometimes in finding out or figuring out how to justify what those numbers you feel like they should be. So if you think that an idea is going to be worth $20,000 a month, well how do you know that that’s going to be it? Well you can take what you expect to be able to charge for it. You got to talk to people. You need to make sure that they’re willing to pay what you once charged them and just do the math on it and try and figure out how many people you think would actually be using the service.

[22:06] From there, it’s just kind of a matter of extrapolating to say will you meet that revenue target and how quickly are you going to be able to meet the revenue target because that’s the other side of it is given enough time, you can probably scale any given business but you need to be able to reach out to those people and get them on boarded in a reasonable amount of time. If it’s going to take you 10 years to get to 1,000 customers, it might not be worth it. But you also have to remember that as time goes on, you’re going to be able to learn enough that will allow you to scale your marketing efforts and maybe you only sign on 10 people the first year within that 9^th or 10^th year you might be signing on 200, 300, 400 people a year.

[22:43] Those are things to take into consideration but some of it’s about drive, some of it’s about how much money you want to make and some of its about how much of that you’ve done in the past. So if your previous efforts were getting you let’s say $1,000 a month then your next revenue target is going to be more than that. Typically most people don’t go after a project that is going to make less than their previous ones.

[23:08] Rob: I think there are probably a few different aspects of play into this. I think revenue is one of them and I think revenue is a way that we measure things. Right? Measuring if it’s a larger idea that we’re going after. But I actually think that a project becomes interesting to me if I know that I’m going to learn a lot from it because learning is something that excites me and kind of expanding my knowledge base and going into realms that I haven’t gotten into before something that I need consonantly. So if you are like that as well, I think that should play a factor into whether an idea is interesting and it shouldn’t just be about revenue.

[23:45] I think the other component is feasibility like is this idea feasible for you to build? And I think a bunch of questions you can ask yourself is if you go back to episodes 133 and 134 we did a founder test and we did a product test. Those questions actually plan to how interesting an idea is for me because if I’m not the right person to build this or the idea just doesn’t really pass the product test very well, it becomes a lot less interesting to me because the risk goes way up and the change that I will invest a year of my time and a lot of money and that it won’t work out goes up. So that becomes less interesting.

[24:22] Our next question is about starter apps and it comes via MicroConf attendee Rich Buggy and he basically says I’ve noticed a changed in the bootstrap startup community over the last few years when Rob started promoting the Micropreneur approach, it was about finding small niches and building an income for multiple smaller products. These days, it seems the greater focus on building a single product that can generate $20,000 to $50,000 a month with just you and a VA or two. Typically the developer does the surrounded topic or technology they’re passionate about, something that’s causing them a problem or something they’ve previously worked with and he listed a bunch of examples Brandon Dunn, Nathan Barry, Patrick McKenzie, Brecht Palombo, Rob Walling.

[24:59] Around this time last year I started building a big app. At that time it ticked all the boxes for a good product but it wasn’t in an area that I had passion for. I’ve since stopped developing for a number of reasons I won’t go into. I’d love to hear your opinion on building what I’m calling a starter app versus going after a large product that you are more passionate about or experience with. The starter app obviously carries a much lower risk if it fails but its offset by a much lower reward if it succeeds. By contrast, a larger app carries a much greater reward but you’re typically a more crowded market and it can take six or more months working on the side to get ready.

[25:30] So that we’re mostly on the same page, I’m defining a starter app is something that is the first product you’ve released on your own, can be built and released within 2-4 weeks after hours of development. It’s limited revenue opportunity maybe $2,000 a month. It’s being built so you complete the process of building releasing and running a product and you’ll either flip it in 12 months and move on to something larger or you’ll keep it to supplement income rather than replace it. And for a larger application, I’m thinking of products which scale similar to Drip, live cycle email platforms shopping carts landing page platforms.

[26:01] Mike: Well I think what he described says a starter app is really in many ways the Micropreneur approach. What you started doing, you built a couple of small apps and gradually grew larger apps out of those. So maybe you had one that did $500 a month, another one that did $750 and as you stack these things up, they supplemented your entire income and that kind of became known as the Micropreneur approach. But I think we kind of talked about a little bit previously on this episode where if you start building larger and larger apps over time it’s like your natural inclination is to build something bigger than the previous thing that you’ve built.

[26:40] And part of the reason for that is because you just get more comfortable doing those types of things. You get more accustomed to the different things that you’ve learned about how to put together a mailing list or how to interact with customers or just in general how to sell software online. So it seems to me like this starter app is really just an extension that entire process.

[27:00] Rob: Yeah I’d agree with that and there are several points which made some where he talked about a seeming change in the bootstrap startup community but I don’t know that there has been a change. When I came out and talked about the portfolio approach and the Micropreneur approach of just having multiple small apps and going up the stair step of starting with 500 a month and like you said building up, no one else was talking about that. So I don’t know that there’s as much of a change as that has always been my approach the way I came up and not a lot of other people have done that as far as I know.

[27:30] These days, there is a focus or there are a lot of people talking about building that single product but I think there always have been. The only reason I’m doing it and I’ve talked about is because that’s because what I’m doing now but I would still say that if you’re getting started now, that the portfolio approach, the small stair step approach is the way to go. Some people are talking about info products today a lot more than they used to be. I don’t think – I mean that’s not really how I came up. I came up doing software and web apps and that kind of stuff. I did write my book and launched the academy at some point but I was already there by the time I got there.

[28:05] I have no issue with info products but if that’s not your thing, then don’t think that you have to do that. Don’t be talked into doing that if you do in fact kind of build your empire using SaaS or just smaller websites and smaller ideas. But I think the analogy that keeps coming to mind is there’s college ball. There’s the minor leagues. There’s the major leagues. Don’t feel like you need to jump into the majors because other people are talking about playing in the major leagues. Work your way up there. There’s so much that needs to be learned in terms of marketing experience and in terms of perhaps self confidence, that was an issue of mine and an issue of other folks I know, just having the confidence that you can actually do this and that this is going to work for you and that you can pull it off.

[28:47] All these things are answered slowly over time if you take the time to attack smaller ideas and build them up over time. That’s not to say you don’t have to be excited or passionate about that idea. You don’t have to pick a niche for electricians or for line men or for people getting married if you’re not interested in those niches. You can just pack smaller ideas in niches that maybe you’re interested in.

[29:09] Mike: I think your analogy of college ball and going pro and that type of a sports analogy is very true and it helps people understand that let’s say I wanted to go and be a professional basketball player for example. There’s no way I would just walk up to an NBA team and say hey I’d like to try out. I would really need to practice a lot and get comfortable with all the different aspects of the game and running a business is really not any different and a starter app is a very, very good way to get comfortable with the basics of the game of running a business.

[29:42] Rob: Right. And if we look at the examples that Rich mentioned, you look at Brandon Dunn, he had basically come up through consulting. I would imagine he’s a freelancer at one point and you learn business and marketing skills. Then he hired folks, started a consulting from and he was running like a 10 person consulting firm when he started looking at doing products. So he essentially came up through college ball and the minor through the consulting angle but he had learned a lot from I imagined other mentors and he also had a lot of business and marketing skills that he had packed up from consulting.

[30:12] Nathan Barry launched multiple apps. I think he had an iPad app that was fairly successful. He had multiple other apps that he launched before diving into kind of these larger app ideas and he still not – he doesn’t have a really big app that does a ton of money. He’s still working towards that so he’s kind of working his way up too. Patrick McKenzie, bingo card creator. Right? That started tiny. I think he made a few thousand dollars the first year. Talk about a tiny niche that he grew. Then leveled up to Saas with appointment reminder. Brecht Palombo he has this one app that is distressedpro.com where he’s selling information but it’s kind of like a membership website. From what I understand, that had small beginnings and he learned a lot along the way.

[30:53] Now he was also heavily experienced in marketing and sales because he had run essentially a real estate brokerage and so he already had a lot of knowledge that us as developers would not have by nature. And he came up through college ball and the minor through being a real estate broker and knowing how to close deals and knowing how to talk to people on the phone and close sales. Everybody you mentioned, just because we’re doing the larger ideas now it doesn’t mean that five years ago we weren’t working in small ideas and just trying to figure ourselves out. That’s where I think people typically need to start unless you really are an outlier.

[31:27] There are certainly people who start with the SaaS app and they’re really good or they get lucky or combination of those things and suddenly they have an app doing $40,000 a month after couple of years and that’s great for them. It’s just not the typical situation that I see. Alright, and our final question for the day is from Fredrik Sandabert and he attended MicroConf Europe. He had a question about launching a SaaS app nationally in a non-English country versus globally with different language options.

[31:56] He says I know that Patrick McKenzie has mentioned this a couple of times, I think one of the times was whether someone should do a bingo card creator for Australia as they apparently have radically different rules on how the game works that his bingo card creator doesn’t meet. And at the same time, I know that other people have created clones of SaaS apps you think that would’ve worked out that are not working out. Lastly, my own SaaS app net biljett he says it’s a site aggregating Swedish events like concerts and stuff. There are several of those that have already been launched and all of them have been miserable failures. The thing with mine is that the user can create alerts for interesting things. So they can say they like jazz in Stockholm and then they can get alerts.

[32:34] This is somewhat interesting and it’s related to this topic because it’s not really possible to see as anything other than kind of a locally national thing in Sweden. At MicroConf, somebody told me that Apple tried doing that in iTunes and that it crashed and burned because the data is awful and it’s a mess getting things to work together in the world of events and ticketing.

[32:57] Mike: The basic question is that what sort of criteria do you use to figure out whether or not you can take something that is for English versus going global with it in non-English countries like what sort of criteria can you use when is it a good idea, when is it not and how could you make it work?

[33:16] Rob: Okay, so there’s two points I’d like to make. The first thing is if you have launched an app in the United States or in an English speaking country and you’ve had success with it, a lot of people localize too early. They try to put in other languages way too early. That’s only semi-related to this question but I would encourage you to really fish in your own pond for a lot longer than you think necessary and that your issues with growing your app have nothing to do with it being localized into other languages because that’s a huge waste of time for six months or a year saying well I need to grow the market so I’m going to add a German translation of it. But if you can’t support the app in German, you can’t sell the app in German then it’s really not that helpful.

[33:59] The second thing is I think you have to look at market size and I think you have to realize that if it’s a B-B app versus a B-C because the Swedish events app that he mentions is really more B-C and so could that feasibly work in Sweden? Well sure. Because there’s enough consumers there to make it work. It’s not the typical play that we talk about where we’re going to get actual income. You know he’s probably going to have to either get venues to pay for advertising or there’s going to be a weaker revenue model say than just subscription billing but there’s enough of a market there to do it.

[34:33] However, if you try to go into Sweden and sell to dog groomers or electrical contractors, my guess is that there may not be enough of those to make it a viable market. So I think market size is another big factor you have to play into especially in smaller countries where you language is only spoken in that country and it’s not spoken in other markets around the world.

[34:55] Mike: I think your comment about people trying to go global, create local versions of their apps in other languages was dead on. I mean it’s very difficult to believe that most people who would be listening to this podcast would have completely saturated their own market to the point that they have no choice but to go to a foreign language in order to make something succeed or to grow their product.

[35:17] I totally agree with you about the fact that you have to look at the market size itself and whether or not the market there is going to support that. And then the revenue model is something else. I don’t think it’s any different than launching something in English as it is in launching it in German or Swedish or anything like that. Is the market there big enough for that type of app? You can probably make some generalizations about a particular type of app from a successful one and another market.

[35:45] So let’s say that there’s an English version of something and you want to take that into your local market. Find out what kind of statistics you can find out about them before trying to do that. I mean are they being successful at it? Are they reaching people? How many customers do they have? And some of those things are going to be really difficult to figure out. You could also call them up and ask. I mean a lot of companies if you – I actually had a conversation earlier today where I said how many people do you have using this application? They gave me a ball park number so just give them a call or shoot them an email and say hey, I want to know before signing up for this that I trust that you guys are able to handle this. What other similar customers do you have? How big are the customers that are using it etc? And you can get a ballpark idea of how well they’re doing just from these types of answers.

[36:30] And then you extrapolate that and say okay well in the US market let’s say that you’ve asked that of an English speaking company there’s 300 million people in the US, let’s say that there’s 50 million people in your country just divided by 6, you can get ball park numbers. I think the demographics are definitely going to going to be a little bit different from country to country but you could probably guess a general idea of what sorts of revenue numbers you can probably be looking at based on those things.

[36:56] Rob: Right. And I also think looking at the marketing channel as well because if someone in the US is using a specific SEO tactic and Google is 90% of the market whereas in your market, Google is only 50% then you have to think about that a little bit or someone’s using a lot of Facebook ads and Facebook just isn’t in your country then that is – the market size doesn’t help if you can’t reach them through a channel that the other folks are also using. So there’s obviously a lot of complexity to this question but I hope that will lend some insight. Thanks for asking that Fredrik.

[37:26] Music

[37:29] Mike: If you have question for us, you can call it in to 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. 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 and we’ll see you next time.

Startups For the Rest of Us

Episode 159 | Business of Software 2013

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Show Notes

• Business of Software Conference
• Steve Pavlina: Get More Done in Less Time
• Steve Pavlina: Productivity
• Steve Pavlina’s Ultimate guide to productivity

Transcript

[00:00] Mike: This is Startups for the Rest of Us: Episode 159.

[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: The word is I’m one week past the public launch of Drip and it feels like a lot has happened during that time. Basically last Wednesday we launched the last 1,300-1,400 people on the email list and then it went live with the world. It feels like a good milestone. However, the day that I sent out the emails or about the day before, we started having some performance issues. I think we talked briefly about them on the last podcast and so I couldn’t relish in the victory of the launch because I was basically having to go in and like disable reports for people who had higher volume accounts which are our best customers frankly. It’s the people with the most traffic we’re seeing the most emails. So that is bittersweet.

[01:02] But within two days we went to a new server, got a new AWS instance with an outrageous amount of RAM, moved the database over the middle of the night on Friday night. And at that moment, everything came back up and it was super fast. That was when it was literally 1 AM Saturday morning, that’s when I finally had like the victory rush of we’re done, we’re launched and stable. And then I popped off this quote today to Derek and he thought this was fantastic when my app is unstable, I’m unstable and I’d like to put that in a t-shirt at some point.

[01:37] Mike: Very nice. Well it’s nice to be able to have those performance problems and then you already have the customer signed up and be able to turn around and invest in a matter of infrastructure for that but it kind of sucks that you have to go through all the stress and effort of moving everything over just because you end up with those performance issues.

[01:54] Rob: Yeah. I agree. I mean it’s this balance right? Because the server we moves to is going to amortize out over the course of a year, it’s going to be between $400 and $500 a month for the database server. That’s what we need to sustain growth, what I expect the growth to be over the next year and I wouldn’t have wanted that six months ago. That would’ve saved us all the headache but we would’ve just been dropping tons of cash along the way. This is now the second server we’ve upgraded to. I think this is the beauty of these kind of pay as you go models. You can scale up pretty easily. You just have to have that 20 minutes of shut down time where as long as your database is small enough because it’s only 2 or 3 gigs still, you only need 20 minutes to do it.  And if you can get to it quick and you have an agile team, this is the startup way. Right?

[02:39] If I was at a big enterprise, I would’ve just dropped the coin six months ago and gotten a 68 gig instance for the database but it’s just not something I want you to – you want to spend when you have zero customers using it but it’s totally worth it when you have a couple hundred people actively pounding on this thing.

[02:54] Mike: Well, I’m testing out a new task prioritization strategy. So I’ve had so many things coming in like – I think I’m like most people where I tend to use my email box as – I tend to use Gmail as kind of a task list. I try to keep it under 20 or 30 things but lately it started to grow and become a little bit more unwieldy and getting into that inbox zero has just not been feasible lately. So what I started doing was I picked up a couple of eBooks. They were written by Steve Pavlina. We’ll link to his blog on the show notes.

[03:28] One of the books that I picked up was some advice on productivity and one of the things that I took out of that book was he actually sets up a system so that he has A tasks, B tasks and C tasks. And anything that’s an A task is stuff that will generate some sort of return or still be usable in five years. And anything that’s a B task will have like a life expectancy of two years. And then anything that’s a C task the benefits are going to be no more than 90 days in the future. So anything that’s like paying bills or doing invoicing or sending out receipts and things like that. Those are all C tasks. They need to be done but they’re not necessarily important and they are not going to benefit you 90 days down the road really. I mean obviously you’ve got to pay your bills and stuff versus things like working on your core products or building marketing material and things like that, those could be B or even A level tasks.

[04:19] And he actually suggest that you spend at least 50% of your time on A level tasks and no more than I think around 20% of your time on your C tasks and then everything else kind of gets shuffled in with the B tasks. So at a bare minimum, you’re spending at least four hours a day on you’re A level task. At most you’re spending you’re a 1 ½ on your C level task and then any left over time gets allocated to your B task. And it seems that I kind of supported out my task list according to that strategy and I’m kind of working through it right now and it seems like it might actually work out because I could take a look at anything that’s a C level task. My very first thought is can I send this to somebody else to do?

[04:59] Rob: Yeah, that’s a nice way to do it. I’m actually intrigued by this because what I have is a queue in Trello that pretty much are my tasks and I just have a single queue and I keep it in order and I try to go down that queue as best as I can. And then of course stuff gets assigned to me in FogBugz for support and stuff gets emailed to me in Gmail. So I really do have three queens that I’m trying to merge and manage and I try to get everything into Trello prioritized and that handle it but I don’t like killing 20% of my time just trying to manage the queue. So sometimes of course you just go into email and delete a bunch of stuff and reply quickly without adding it into Trello.

[05:39] So I like the idea of having an A and a B and maybe a C because then those tasks that I’m always prioritizing at the bottom that never get done, a lot of my probably B and C tasks are on there, you actually give yourself permission to go work on them. Right? These are less important tasks but they do need to get done at some point. What I’m wondering is what tool are you using to manage this? Are you putting everything in a spreadsheet or is there a better way because you still have an email inbox with 20 things in it. How do you know what’s an A, B and C?

[06:10] Mike: Well I haven’t really gone through my list of emails yet but I’ve basically been keeping track of a list of what I classify as my A, B and C tasks and some of the emails in my mailbox map back to these. So for example I have pay bills on here. I have send work to one of my contractors, that’s a B level task because it’s more important that I keep him busy because the things that he’s working on are going to contribute to the business in the future and they will have that impact down the road.

[06:38] And then there’s things like soliciting more users for Audit Shark, validating and testing some of the Audit Shark code and working on that core engine I’ve classified as A level tasks. A lot of the emails are in my mailbox mapped back to those high level things. It’s not like I’m going through my email box right now and just saying this is an A level email, this is a B level email or something like that. I’m keeping track of things separately on an index card because I tend to use a lot of index cards just to keep track of things that I have to do that I need to do today for example. And what I did was I just mapped out a bunch of things that I have on my list of things to do and I just put A, B or C next to each of them.

[07:13] Rob: Got it. So for you, it seems like a shorter term thing because that’s not going to work for tasks or like some weeks or months to have them on index cards right? Because then you’re going to write it all the time?

[07:23] Mike: I mean in a lot of times what I’ll do is I’ll throw a bunch of tasks on an index card and my goal is to get through that entire index card and then I just throw it away and that’s the whole point of having an index card because you want to get through. It tends to be a short enough list because you can only fit so much stuff on an index card that it helps you knock those things out. And if you absolutely need to, you can take things from one index card and copy them onto another and put them on the top of the list or something that but I try to avoid doing that if I can.

[07:50] Rob: I did that for a while. I didn’t like it. I felt like a lot of wasted time. It was hard to reprioritize. Like I said, when Trello started and I started using it, I’ve been sold and I’ve been using it since. I have maintained inbox zero. I got to inbox zero right before going to Europe and then I was gone for a month I came back to hundreds and hundreds of emails and I’m down. I think I’m at inbox 5 as of the start of this recording. I’m pretty close to there and I do either – I am able to get most of the things into Trello. What’s nice is that Trello now has an email address unique for your board. So in Gmail I can just hit forward and I list it as the contact name is Trello and so I type in Trello and hit send and it goes into at the top of my Trello board.

[08:32] So then when I go into Trello to look at stuff, I’m able to reprioritize things and then basically I have to go back into Gmail and find it. I mean that’s where the kludge part comes in. I’m using these two systems to manage that single thing but for me so far it’s working. I do think there’s a better way. The better way I think would be to make a cross between Gmail and Trello. Right? Make a plug-in where you can reorder things in your Gmail inbox and add notes and add things just like Trello but do it to Gmail emails right there. You can add metadata and reorder so that they’re not just sort of by date. That’s what I think the best option would be.

[09:09] Mike: Switch over to using something like FogBugz or some other sort of “bug tracking” tool or customer support tool where like you send and receive all your emails out of there and that allows you to add in all those notes. But that’s a total hack as well.

[09:22] Rob: It is. But I can see that working. I wanted to call out a website called beamcalculations.co.uk. This is a long time listener and a guy who read my book and implemented a lot of the stuff that we talked about. His name is Kevin Taylor and he’s at beamcalcs on Twitter. He said Rob Walling, the site I have beamcalculations.co.uk after reading your book, it’s been live since September 25^th and it’s had 16 sales. Great. Thanks to you. So just wanted to kind of call him out as a nice success story, someone who was able to launch and he’s certainly not going to retire off this effort but it’s that stair step approach. It’s getting something out there, getting people to use it, getting your feet wet and getting some experience marketing and actually getting a few dollars in your back account. And once you get that feeling, it’s addictive. Like launching is addictive. And so getting this site out, that will lead to his next idea and his next one and they tend to get bigger over time so congratulations to Kevin on launching.

[10:20] Music

[10:23] Mike: Since you were out during the middle of Business Of Software, I figured we’d go over some of the takeaways form Business Of Software this year.

[10:30] Rob: So you’ve broken it up into you have the hallway track and then you have a few speakers that you took away quite a few things from it sounds like. So why don’t you lead us through that?

[10:39] Mike: The first one was the hallway track and this is just randomly talking to people in the hall and various conversations whether you’re sitting down at lunch or you sit down in the amphitheater and talk to somebody next to you, I was talking I believe it was Brett Palumbo who was telling me that one o the things that he’s found is that when he’s trying and to contact people, the best way that he’s found is to use LinkedIn.

[11:04] Within LinkedIn, you can send direct messages to people. I apologize if I misquoted the numbers and stuff but I believe it was something in an excess of 70% or 80% in terms of the open rate and response rate was something along the lines of 50% for people who are receiving those emails which I think is a far cry from what you would typically get if you’re just cold emailing people or sending out marketing newsletter and things like that.

[11:27] Rob: Well the interesting thing here is you have the social graph so you’re probably tied to this person either directly or at a second level or a third level connection so it’s not a super cold email. There might be a little bit of warmth there and I’d be interested to hear more detail about this maybe I’ll drop Brett an email. But I’m curious to hear how you do this and don’t come off as spammy or solicity or just out of the blue salesy type thing. I know that there’s a balance here and I’m sure you can get there. I’m just curious what the lessons learned are there.

[11:55] Mike: Yeah. I mean we talked a little bit about that and it was more about when you’re first reaching out to somebody you don’t necessarily say hey I’ve got this product to sell you or that I think you might be interested in. It seemed like the best way to reach out to people was to ask them questions like hey I noticed that you’re listed over here or you’re involved in this organization. I’d love to have a conversation about and talk to you a little bit about it or something along those lines.

[12:16] Rob: Very cool.

[12:17] Mike: So the next one was from Rita Gunther and it was very interesting because Rita’s talk seemed very reminiscent of Clayton Christiansen’s. One of the things that Clayton talks a lot about is disruptive technologies and how companies that are large tend to be attacked from underneath by the smaller companies because they’re not really paying attention to them or it’s a very disruptive technology and they don’t feel like it’s going to be relevant in their space. He kind of relates that back to the story of IBM  how they were initially selling these giant mainframe computers and then switched over to mini computers while all their competitors went out of business because they spun up this new division in this completely different part of the country.

[12:58] And a lot of the things that she talked about was how to identify some of the markets that are right for new competitors and she said basically find companies that have hostages, not customers because those are the people who are locked in and the only reason they haven’t gone to find another provider is because they can’t.

[13:15] Rob: Yeah, I’ve talked to a few people who are interested in Drip, some guys  I know and they’ve talked about some larger enterprise marketing software that they’re using. They’re saying that they’re basically not able to sign up without a one year contract that they are essentially hostages for a year. That even if they just want to try it out, I mean you get a two week trial or a three week trial. But after that, you either pay for a year or you can’t use the software.

[13:38] I know sales force is like that and I think the larger enterprise like hub spots that is all annual and I understand that it’s better for their business for their retention and everything but it really does make your customers at some point start to turn against you. You see these companies early on where they have big fans and I think sales force signups have both been in that situation. Intuit was like that when they already had their tax offer. That was really good and everybody loved it. And then at a certain point it feels like they’re just trying to milk money out of you and they have you locked into their ecosystem.

[14:08] So I like the way of thinking about that. If you spot a company or an industry, everybody’s a hostage. I think credit card processing, payment gateways and all that stuff definitely was like that and Stripe came in and said everybody’s a hostage, how can we improve that? I like this approach.

[14:24] Mike: The credit card companies is the one that she specifically called out because nobody really likes dealing with those companies but they kind of have to because they really just don’t have any other choice. And as you said, until Stripe came along and then all these other payment providers came out and started offering other types of solutions so you don’t necessarily need to have a payment gateway anymore.

[14:43] Something else that she talked about was in identifying some of these markets is if the bosses at these companies have a tendency to say one of three things, either 1) I don’t want any surprises. 2) Don’t bring me bad news or 3) Don’t bring me a problem unless you have a solution. Because a lot of times, those are the types of companies especially for number 3 if the boss says I don’t want to hear about problems unless you have a solution for it. Well, if you have a company that can come in underneath them and basically get the from down low like from below their price point or something along those lines, if you don’t have a solution for that, then what will happen is there’s that sort of culture in that company, nobody’s going to bring it to the boss’s attention that it’s going to be a problem for them because they don’t have a solution. So if the boss has kind of made that mandate, nobody’s going to approach him until its way too late and you basically already done the damage to them.

[15:34] Rob: So how would you know that about a company? You’ve had to get some type of anecdotal evidence or you’d have to have some type of business relationship with them at your day job and realize how screwed up they were and then kind of go on the side and build a product to compete with them.

[15:46] Mike: Well I think you can do it a couple different ways. I mean 1) you could certainly probably glean some of that information out of just the way that they do business and I think some of that would trickle down into their customer service but definitely talking to former employees would probably be just kind of a no brainer to me. I mean if you can find some ex-employees of the company and kind of ask them questions about that especially if your already looking at going after a particular market and you happen to run into one of them and you start asking them questions like that and say hey, how did you analyze your competitors and what source of things did they do internally and how it was operated.

[16:24] I almost feel like the larger companies that you suffer some back lash like you were saying before about sales force and some of these other companies where they’re really locking in their customers I sort of suspected it in some ways their internals of the organization are probably run very similarly where it’s just very heavy handed from the top. And you’re expected to follow orders not necessarily be nimble. It’s like they want you to do what you’re told to do and not necessarily think out of the box because they’re trying to drive revenue in a way that they know how versus look for alternatives and other solutions.

[16:57] Rob: I think there’s that part where you can over optimize your funnel or you can over optimize your retention and you try to push the churn down for typically its reason of going public or trying to please share holders or investors often find that founders don’t want to do this kind of stuff. But you hit a point where in my opinion you can just push it too far and that’s when you start pissing off customers and there starts being this movement away from you and that’s where competitors can sneak into a market, identifying companies who have hit that point are good markets for us to enter.

[17:31] Mike: The next person I took a bunch of notes from was Dan Siroker from Optimizely. And he essentially had five different lessons that he wanted people to take away from his talk. And the first one was defining quantifiable success because if you’re not familiar with Optimizely, it’s essentially an AB testing tool for your website and the first lesson was defining quantifiable success. If you’re running any sort of test, you want to understand what are the success measures? How are you going to know whether or not a particular test was successful? And some of that with AB testing just comes in terms of knowing whether a test is statistically significant or not.

[18:05] The second lesson was that less is more. And if you reduce the number of choices the people have, then you can get a lot more return on the choices that you’ve made to implement. So there are several examples that he put out there where for example the checkout process, what people would do is they would rip out all the site navigation. Some people take this for granted that oh, that seems like a no brainer but then there’s other people who look at that and say oh, I wouldn’t have known that would’ve given me a 17% increase in my conversion rate for example. He made sure to call out some things like that.

[18:37] The third lesson he brought was that words matter and he showed several different examples where he was putting different types of text on buttons and asking the audience to kind of weight their opinion on what they thought would do better. There were a lot of people in the audience I mean I would probably say it was 60% or 70% who were wrong on most of these. That was something else that was very interesting as well because words really do matter and he was able to statistically show that there were certain types of words that would show up on buttons that would have a huge increase in the number of click throughs.

[19:10] And in addition to that depending on the audience for example if somebody was a new visitor for the website one set of text might convert better versus somebody who is coming in from a mailing list or had purchased before a different set of text would have a much better conversion rate.

[19:25] Rob: You know, this stuff can get complicated and I think that if you are sitting her listening to this and you’re kind of licking your chop because you have a successful business and you’re looking to squeeze another few percentage points out of it then this kind of – its advanced testing and analytics is what it is. This type of stuff is awesome. If you’re just getting started and you have 1,000 or 2,000 uniques to your website or you’re still building your product, then don’t worry about this yet. I mean AB testing is far off for you at this point and certainly these high, high end ultra optimizations as I would say.

[19:59] Because yeah, if you have traffic let’s say you have a million uniques a month, then it is absolutely worth optimizing every button for like you said, the traffic source like actually changing the text on buttons for traffic source. Amazon.com does this. Google does this. I mean those high volume scaled sites certainly it’s worth it for them. But I advice a listener to not go down the rabbit hole of worrying about stuff prematurely. Basically it’s kind of like premature optimization in that sense.

[20:28] With that said, if you do have a successful business, you have something that’s maybe allowed you to quit your job and you haven’t gone through a round of optimization of tweaking words, of testing different approaches, of reducing choices kind of following the things that Dan talked about in this talk, it can do pretty amazing things for you very quickly. Double digit jumps in conversion rates. Double digit jumps in sales. Even just having someone that you trust come and do a 10 minute screen cast review of your on boarding process and walking through that can give you 20 different ideas to implement and could dramatically increase the number of people that actually use your app.

[21:05] We’ve gone through this already 2 or 3 times with Drip. And one of the big reasons is because we’re emailing that mailing list with several thousand people who I knew were going to come and hit these pages, the pages just some weren’t converting and a lot of people weren’t on boarding early on. There were a lot of questions and so we’ve already gone through their reduced choices as you’re trying to get setup. And I have a lot of different options for getting setup and now it’s basically widdled down to like 2 ½ options. There’s a lot of value to be add here.

[21:33] Mike: The last two pieces of advice that Dan had had is seeking the global maximum because a lot of people have a tendency when they’re doing AB testing to tweak little things as opposed to doing wholesale changes to a page or to a site for example just because it’s so much more difficult to figure out what piece of that redesign for example impacted the conversion rates or was it just one thing? Obviously a lot of things changed. It’s very difficult to pin it down to exactly what it was. But you may very well be missing out on a lot of sales for example if you don’t do this and you end up with a local maximum for your click through rates because you’ve got all these things who are kind of leading you down a path to an overall 8% increase and conversions but if you do the complete site redesign then you may very well find that something completely different could give you 20% lift instead of just an 8%. But it is a huge risk if you start doing those things.

[22:26] Rob: Yeah. You also need a lot of traffic to do that. I’ve only had one site that I’ve ever been able to actually test two very different versions of a page and not just test them against on another but tweak both of them and do essentially multi varied testing over time and actually raise both of their conversion rates and then seeing which one went out. And that’s how you’d find the global maximum. But it is 1) super time intensive and 2) you need a lot of traffic or else it just takes too long. So there’s another thing I’d say save for later unless you do have a lot of traffic coming your way.

[22:59] Mike: The last lesson that we had to share was just start doing AB testing say which as Rob just said you really do need to have a lot of traffic in order to make this worth it. I mean part of Optimizely was really built out of things that were learned from the campaign trail from Obama’s 2008 campaign towards the white house. So there’s a lot of examples from the book that Dan points out. He gave a copy of his AB testing book to everybody in the audience which has a lot of the examples from that campaign and from various other things that they’ve seen and other companies that they’ve worked with. But you’re right. You do need a lot of traffic in order to be able to do some of these things.

[23:39] Someone else I took a lot of information from was Scott from Atlassian. There were several different things that he put out there one of which was internally when they’re developing features, I thought it was really interesting that what they do is they create customer personas with very specific attributes and goals and job titles for those customer personas to help the team understand how the software is going to be used out in the wild. So you’re not just building feature X. You’re building feature X that is going to be used by I don’t know, Sally in accounting who’s job title is CPA for the company or something or maybe she’s a CFO and she’s going to be the one who’s going to be used in this particular feature so she needs to be able to understand it and needs to relate directly to her job. Whereas Dan who’s over in the marketing department is completely not going to care about that feature but it’s going to help Sally which will indirectly help him.

[24:30] Another thing that they do to help keep the team not just interested but on the same page is to explain why those features are useful rather than how great those features are at a technical level because it’s really important to end user that those features work and help them do their jobs. They don’t necessarily care about how technically challenging it was to implement or how much goes under the covers. They want to know what helps them do.

[24:57] Rob: Benefits, not features right?

[24:58] Mike: Yeah. Benefits, not features. Something I found really interesting that Scott said was that he felt like at least 50% of the people there at the conference should go back to the office and fire someone. He said that everyone knows there’s someone they shouldn’t keep but they do because they don’t want to confront the problem. It was interesting that somebody would put that out there in a way that that they did.

[25:18] Rob: Yeah. There’s a book called Fire Someone Today. And I haven’t read it but I’ve had it recommended to me and it’s the same premise is that you should fired someone because you’re not facing up to something. I would think of it as like letting someone go who’s underperforming. But it’s like if you’ve grown to 10 people and you’ve never let anyone go, have you really hired that well or I can see his point that maybe you’re just ignoring the facts that are in front of you seems probably less allocable to me.

[25:42] Mike: There were several reasons that he pointed out why you might want to let someone go and one of them was they were a bad culture fit, bad performance was another one but he also commented that sometimes the company just grows past people. I think this really heavily applies more to Atlassian than a lot of other companies just because at this point Atlassian is I think 700 or 800 employees. And 10 years ago they were just a couple of guys working on a product.

[26:06] And it’s a very different company when you’ve got 10 people versus 100 people or very close to 1,000 people. And somebody who is there in the first year, the second year, they may have been very, very comfortable leading a team that was only 5 or 6 people but then you get into that problem where some people, if you’re just not cut out to be in a company that has grown to the point that it is, then maybe it’s time for you to either move on or to move to a different role inside of the company and that’s something else that he commented.

[26:36] He’s like just because they’re not a good fit for their current role anymore doesn’t mean you can’t look elsewhere inside the company. There may be other things that they can do and they will certainly be appreciative of that fact but nobody really wants to come to their boss and say hey look, I’m really not a good fit for this company anymore. They’re going to go out and look for another job before they start doing it.

[26:53] Rob: There’s a book called What Got You Here Won’t Get You There. And it applies more to growing a company as a founder and the skills that got you here and the marketing approaches and all that. If you’ve 10X then it won’t take you to the next 10x. You have to change your tactics. But I think that applies equally to growing an organization.

[27:12] Mike: Yeah. I said that it’s a very different culture when people are getting hired without the founder’s involvement because the culture in the early days very much revolves around the founders. And then once the founders are no longer doing all of the hiring, that’s at the point where you have to have core values for the company and things like that where you have to have written down what your culture is for the company in order to be able to scale that out to other people.

[27:36] Something Scott had talked about was he said in terms of pricing you get eaten from below, not from above which kind of related to Rita’s talk about how to find markets that are right to be plundered. What he did was he looked around some of the other companies that were selling similar types of software and he realized that their software was actually priced significantly higher than their competitors. So what he did was he essentially looked around and said okay, well how can we combat this? How can we fight this sort of a pricing strategy that could ultimately be your down fall?

[28:09] And what they ended up doing was they created these very small team packages for people and they sold easily six figures worth of software within a couple weeks and all that money I’ve donated to charity so it wasn’t necessarily about the money for them. But it was just interesting how in demand that software was based on the small team sizes. There’s an extra free for like 5 or 10 people. I think its $5 or $10 or something like that.

[28:35] Rob: I think they do Jura this way or they do a bundle of Jura which is their issued tracker with something else. And like you said, it’s like thousands of dollars of tools but they’re basically trying to eat up the market. They’re almost going freeman basically. I guess it’s on premise so it’s like $10 and you just bought a license to it for up to 5 or 10 people. They’re just trying to destroy the lower end market because that’s not what their bread and butter is. And I’ll say it gives them a competitive advantage because it allows them to get people on board with their tool and then as that company grows and then hopefully they’ll be more likely to use Atlassian stuff rather than start with some Saas competitor who just up sprouted and has a couple million funding who’s also trying to take that same market share from them.

[29:19] Mike: Two other points that Scott had made were both about how to price your offerings because they do have a hosted solution and they do have an on premise solution that they give. The point that he made was that when you sell something that is more valuable over time, use a subscription model. And if you sell something, it becomes less valuable over time, get your money upfront.

[29:39] Rob: Do you have examples of something that becomes more valuable versus less valuable? Did he bring up any?

[29:42] Mike: He didn’t specifically but think about this for example, a bug tracking system. If you have a bug tracking system, over time that gets more valuable to the customer because over time, as you add hundreds of bugs or thousands of bugs and cases in there, you don’t necessarily want to lose all that history. So moving to another product at that point, that product that you’re currently on becomes more valuable to you because it has all of that history.

[30:08] Now if you look at something like an eBook, you’re essentially delivering all the value upfront as the person learns from that and consumes it. There’s not really anything else. So getting your money upfront is obviously the natural course for that. I don’t know if we necessarily think about those types of things when we are putting together the offerings, the easiest way to explain that.

[30:30] Rob: Perfect. Those are good examples. So in terms of BOS, you’ve gone every year for the past 3 or 4 years. Do you feel like it’s changed for you or are you still getting the same value out of it that you always have?

[30:41] Mike: It was really high for a little while and then it dropped down a little bit and I think it started to pick back up again.

[30:45] Rob: Got it. So this year was perhaps better than last year.

[30:48] Mike: I would definitely say that this year is better than last year. And I think that part of that was just because the arrangement of the talks and stuff were – they had this back at the seaport hotel so there’s the amphitheater.

[31:00] Rob: It’s also smaller now right?

[31:01] Mike: Yeah, they cut a bunch of people from it. They didn’t sell nearly as many tickets this year as they did last year. I think last year they sold round 450 people. I think this year was around 350. So it’s definitely smaller but it didn’t necessarily feel any smaller this year than it did last year.

[31:17] Rob: That’s interesting. Yeah, because you and I have had some conversations about selling a few more MicroConf tickets like maybe 20 more than last year. Then just growing a little bit and allowing us some flexibility to keep increasing the value of the conference and my gut is that it’s not going to change the feel of it. But the first year I went to BOS it was 200 or 225 people and so for it to be 450, that’s a very different conference.

[31:44] Mike: Yeah, definitely. It just felt different last year to this year. I felt like this year’s conference probably delivered more value than last year’s conference.

[31:52] Rob: That’s good. I haven’t been for the last two years. This year was because I was in Europe. Last year I just opted not to go because the year before, I hadn’t gotten very much out of the conference. I mean it was disappointing. I’ve always been like BOS has always been my number one conference. Three years ago was a little less than two years ago. It wasn’t as good as they wanted it to be so I haven’t gone. Sounds like it has potentially reverted course in terms of the fact that it’s smaller now. I do think that the hallway conversations are probably going to be the bulk of the value and I just need to come to grips with that that I’m basically using it as a reunion to see a bunch of MicroConf Vegas people halfway through the year and that’s okay but I’ll probably focus on that rather on than on the sessions.

[32:34] The sessions and the speakers that they’ve had are for such large companies like hub spot’s going public, Atlassian is has 700 employees. It’s very different than what it was 3 or 4 years ago for someone like me who never plans to go there, go to that level of having a company that large, I’ll go for the hallway track and meet up with people who I know from MicroConf.

[32:55] Mike: That was another interesting thing that I found is there were probably about 30 people there that I knew from MicroConf or like the Micropreneur Academy. So there were a lot of hallway discussions about various things that people were working on or things that we learned or different techniques. And it wasn’t so much focused on the talks and what we were getting out of them as it was like the other things we were doing. So it was very much as you said kind of a mini reunion halfway through the year.

[33:21] Rob: Yeah and that’s a nice way to do it. What’s cool is you get in those conversations and you say what are you up to? How’s Audit Shark doing or what’s working for you with your product? And then someone says I did this crazy campaign on whatever and you’re like I totally need to try that or someone said hey, I had a marketing idea for you and its integrated with so and so, it worked for me. Those are the tips that will make a difference in your business.

[33:42] Mike: I think the last one that I want to bring up is from Greg Bagas and I apologize because I know he listens to this show so if butchered your last name, I’m sorry. He had a very good talk that and something happened I’ve never seen a Business Of Software before but he gave his talk and it was on entrepreneurs and depression. It was related to his struggles with ADHD and being bipolar, he got a standing ovation at the end of it. I’ve never seen anyone at Business Of Software get a standing ovation before. it was a very heartfelt talk and it brought to light I think a lot of issues that most people just don’t talk about in the entrepreneur community because building a business is hard and there’s a lot of struggles that people go through. And for the most part you tend to be alone.

[34:23] If you have employees it’s not like you’re going to talk to your employees about certain things and who else are you going to talk to about them? It was very interesting to hear about his story and have somebody get out there and talk about that particular topic.

[34:37] Rob: Yeah. Bravo to Greg. The video has already been released to the public if you go to businessofsoftware.com it should be somewhere around there. I think sharing a story like that is a really big deal and I think it’s helpful for a lot of people. This issue is coming up more and more. I don’t think it’s going away. These are successful and failed founders I’m talking about very real things that come up in the struggles of just starting a company. I think it’s helpful and I also – there have literally been suicides of venture funded founders who the pressure just gets to them or the stress just activates something in them and this is not something that I guess is uncommon and is kind of coming to light.

[35:15] Talk to Sherry about it quite a bit, my wife, she’s a PhD in psychology and she has talked to a few founders who are experiencing this kind of stuff and she’s actually interested in the topic and we at one point talked about her doing some research and doing a talk on it. So I think there’s more to be said on this topic and I really appreciate Greg for kind of bringing it into light and sharing it in such personal way because I’m sure as I said it resonates with a lot of us.

[35:38] Music

[35:42] If you have question for us, 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 and we’ll see you next time.

Startups For the Rest of Us

Episode 158 | The Reunion Show

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Show Notes

• Drip (Rob’s app)
• AuditShark (Mike’s app)
• Drip “About” Page
• Bootstrapped with Kids Podcast
• HitTail (Rob’s other app)
• Customer Analytcs/Retention Apps
  • Intercom.io
  • Customer.io
  • Woopra
  • Totango
• Numa Group (Rob’s company)

Transcript

[00:00] Rob: In this episode of Startups for the Rest of Us, Mike and I talk about HitTail, Audit Shark and the goings on of the last five weeks. This is Startups for the Rest of Us: Episode 158.

[00:11] Music

[00:19] 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.

[00:29] Mike: And I’m Mike.

[00:30] Rob: And we’re here to share our experiences to help you avoid the same mistakes we’ve made. Mike, what’s the word this week? I haven’t talked to you for almost a month.

[00:38] Mike: I replaced you on the podcast for a little while.

[00:39] Rob: I could tell. I was a little concerned. Dave did such a good job I was thinking uh oh, I might be out of a job. I might need to start and go solo or start my own podcast because yeah, I liked the episodes you guys cranked out.

[00:50] Mike: I hope the listeners did too. I hope they enjoyed a little break from you.

[00:54] Rob: Yeah. So obviously the reason I was gone was for MicroConf Europe. You and I were out of town for a week and then I stuck around for another three weeks with my family. I wanted to work about a half hour a day was my plan. Seven days a week, get up, check email, do some stuff just to make sure I kept up with it. I wound up working about an hour every three days and with the internet connectivity the way it was which was mediocre which was a very rejuvenating month and I got a lot of thinking done, I did come back.

[01:27] We launched Drip to about 1500 people while I was in Italy in October and now it’s kind of cool to see that go on. I would get the emails and then just I wanted to work through the launch list before I got back and that was kind of the only way to do it. I don’t want to be launching in November and December because we know everything calms down during that time. So how about you? Any new updates?

[01:50] Mike: Well, last night as a matter of fact I finally got the Linux support fully functional in the new UI. I’ve been kind of…

[01:58] Rob: You’re talking about Audit Shark.

[01:59] Mike: Since we cut over to the new UI there was a lot of things that just little stuff here and there is like oh I don’t know if this works or I don’t know if that works and so I was just kind of going through everything, making sure that everything still works and for the most part I mean my paying customer is still happy and has made more than one payment than this point so it’s good.

[02:18] Rob: I love that my paying customer.

[02:20] Mike: But I have had conversations with the other people who have signed on and I think I mentioned it on the last episode that we’ve got a concrete list of things that we’re working towards and trying to get those things resolved and out the door. So I’m working on certain things. My developer is working on other things and we’re kind of meeting in the middle because fortunately the things we’re working on are separate from one another and one of the things I was working on was making sure that the Linux support was working end to end. And I finally got that working again. It does work because I do have Linux policies because I’ve got the third guy who’s working for me, he’s building all the Linux stuff. I’m basically making sure that it works in the in the UI and the other developer I have is working on reporting.

[03:02] Rob: Linux is a pretty key piece right? For in terms of the early access customers or the beta list, the mailing list you had. When you’ve asked people, there may even be more interest in Linux support than you have in Windows support is that right?

[03:15] Mike: Yeah. It’s leaps and bounds ahead of Windows actually. There’s a bunch of people who have both Windows and Linux and they’re basically waiting around and saying well, let me know when you’ve got Linux support in there and then I’m willing to kind of take a look and move forward with it but if it’s just Windows I don’t necessarily care right now. And then there’s a lot of people who just have Linux.

[03:35] Rob: Yes, it sucks because you don’t want to be writing a bunch of code right now. What you want to be doing is getting people in early access and marketing and ramping up and basically you want to get to 1.0 as soon as possible so that you can slow down. You’re obviously always going to be building features but it’s like building Linux support is a big endeavor. And so are you at the point where it done and tested or is it kind of like right now we have 2 or 3 weeks to work out the kings basically.

[04:02] Mike: It’s a hard question to answer because there are other several different sides of it so there’s as I said I’ve got one person who’s working on just reporting and one of the things that’s come up is that people want to be able to see – if I run a report now, I want to be able to compare my current results versus my previous results very, very easily and they want to see where things have regressed. So there’s something going in called a regression report and that’s got to be built like currently things are just being stored using a back end blob storage. So there’s not a good way to compare things from one set of audit results to the next, so that’s one piece that’s being built in with the reports and then another one is being able to compare things over date ranges as well.

[04:47] So they basically want to see a priority on the 400 to 600 plus things that are in there now that we’re examining on their servers and they say I need you to prioritize these for me because that would be more valuable to me because right now, we’d basically just say here’s the information. Here’s what’s okay. Here’s what’s not okay but we don’t prioritize it for it. There’s this piece that needs to go in on the reports to be able to show them that prioritization and then in the back end policies, my other developer has to go in and basically assign the priorities to everything.

[05:17] So there’s the two different things that are kind of moving at the same time and then the third piece that I’m working on is basically making sure that the Linux stuff runs end to end which it hasn’t been until last night. So now that’s running, once some of the priority stuff goes in which will have to be done on Linux as well, then the reporting side goes into it and its just kind of like all three things are coming together all at the same time. And once those three things are in place, then it would provide I think the value that it really needs to because I’m going to have the same question marks from people who are using it on Windows as they are in Linux because they’re going to want those things to be prioritized. They’re going to want to be able to see regression reports.

[05:53] And I actually had an in depth conversation with one person who said this information that you’re providing me is awesome but his problem was around the fact that he didn’t want to have to go in every single day and try to remember what was different from one day to the next, what he really wanted he’s just like I just want a daily email that says have things gone off the rails? But it’s called the everything’s okay alarm and it will continue to sound while everything is okay. So basically just a daily email that says hey, nothing’s changed today. Between yesterday and today, nothing has changed. You just haven’t gotten any worse. Not better, but things have just not gotten any worse.

[06:26] Rob: Yeah.

[06:27] Mike: Somebody told me specifically they were like that’s awesome. That’s exactly what I need. And if I had that, it’s like after seeing that for about two weeks or so, I’d probably turn it off knowing that you would let me know if things got worse and he’s like as soon as I decided to turn that off, that’s when I would be willing to pay.

[06:44] Rob: Nice. And this person you were talking is an early access customer is that right?

[06:46] Mike: Yes.

[06:47] Rob: Not a customer but a user, but he’s basically saying that’s what I need in order to pay you. Very good. One feature at a time. It’s like you implement one thing for one customer and then they’ll pay and that will get you this other group of customers and maybe it’s a handful and then you just branch out slowly and it’s just kind of knocking these things off the list that allows you to get a bigger and bigger market. It’s like right now you’ve solved the problem for one person and just slowly over the course of weeks and months you’ll be able to expand that market. So what’s your timeline like? Let’s say like next week do you think you will have enough done that you’ll have another paying customer? I mean what does it look like for you over the next month or two?

[07:30] Mike: The reporting stuff should be going in this week. Now, whether the data is there or on the policies to be able to do the prioritizations and things, I don’t know that yet. I have to touch with the guy who’s working on that and just kind of verify that he’s working in that direction. There’s some things that need to go in his policy builder to help him enable that or to help enable that for him to make it easier so I have another person who’s working on that side of things who he’s supposed to be doing that tomorrow or it might be done within the next day or two after that.

[07:59] So realistically if I had to guess, I’d probably say it’s going to be another 2 or 3 weeks before all of that stuff is completely ready but it will be done in bits and pieces between now and then. So I think that the reporting stuff will be done either tomorrow or the day after. The policy builder stuff hopefully will be done maybe tomorrow or the day after and once then he’s done with that then the policies can be updated. But even after that, the people who I hand this off to, they’re still going to need time to get comfortable with it, take a look at the reports and then make their decisions off of that. And that might take in the first email, it might take 2 or 3 weeks of them getting the emails and reports to be able to say okay yeah, I’m comfortable with this

[08:36] Rob: Right. And that’s that free trial period right? You’ll just be running it manually. But once they actually start using it, they don’t pay you the first day. You give them time to try it out. Like I was saying when I was doing the manual onboard and with Drip, I was giving people as long as they needed to feel confident that Drip was basically making them money, that it was saving them time and making them money. And so some people had six week trials. It was just completely arbitrary but I only had 15 people trialing in and I was manually emailing everybody individually. I was watching all of their accounts. I was watching the number of subscribers, the number of conversions that were coming in.

[09:13] And then at a certain point it was obvious. Someone had like $400 or $500 in conversions come in in 3 ½ weeks. And so I emailed them and said do you feel like this is worth it? And they said yeah. So that’s the nice part about doing manual on-boarding although its time intensive, it allows you to get a feel for how long it takes people. You’re going to be able to look at it based on the complexity of their setup, based on their knowledge, based on how much time they have, you’ll have an idea of like huh, people can actually get value out of this in two weeks and so your trial should be two weeks or maybe it will be 30 days. But whatever it is because right you probably don’t know how long your trial should be. You could take a guess but you don’t really know because you don’t have enough experience.

[09:51] Mike: It’s not even that I don’t have the experience. The problem is that I’ll on board somebody and I’ll ask them a question would you pay for this and let’s say if it had this feature and this feature, then I would pay for it and it’s like okay well then I have to go off and build that feature and make sure that works and it might take 2, 3, 4 weeks to do that. And then once I’ve done that, you’re adding 2, 3, 4 weeks in there. It’s hard to judge at that point. I just don’t – I don’t have the data. I don’t have enough throughput through the pipeline of new customers that are being on boarded to be able to make those determinations in 3 or 4 months I think that will be a completely different story but I have no idea right now. I just can’t answer it.

[10:29] Rob: Right. You’re in the midst of what I’ve started calling the slow launch and this is basically the fact that I had customer zero on boarded onto Drip in April and we are going public tomorrow and it’s not early November. So what happens in that 6 or 7 months span, well, we were doing manual on boarding. We were building features per request just like you said where it would say are you willing to pay for this? It’d say no, I need XYZ feature, we would go build that. And slowly getting one paying customer at a time and then launching to 300, it was exhilarating and it got I don’t know, 50 or 100 trials in the door and then we saw how many converted and you just build from there.

[11:12] I think we have a luxury because we don’t have a venture funded board at our back saying you have to move faster. You have to hire faster. You have to grow faster. Now it could also be detrimental if we’re not super motivated to get things done but frankly if you have a launch list or you have customers who are interested in it, the best thing you can do is implement the features they need before you try to get them into a trial because otherwise you dump them into this trial, you get them on boarded and then poof, they’re like there’s not a value here. And then you have to go build a bunch of stuff and come back to them.

[11:43] I actually think you maximize conversion rates by doing this, this slow launch over time and letting in groups of people, working with them manually figuring out what they want, what they need, implementing it then you let in another 10% or 15% of your list seeing what happens with them. For me it’s been a huge learning experience to learn more about the customers at Drip, the people who it works for and who it doesn’t, the people who really understand it from day one and the people who need more education.

[12:09] Mike: The other thing is and I’m sure Drip is a little bit different than what I’ve got to deal with. One of the guys who had come to me and started talking to me about early access has 70 servers. Of course that falls in kind of like the enterprise space for my product because there’s at least $2,500 a month probably for just that one customer so I went back to my developer and I’m like can we even do this right now and he’s like no.

[12:36] Rob: Yeah, too much volume.

[12:38] Mike: Because things need to be re-architected in the background so as part of this reporting process that he’s working on, that stuff is going to be taken care of as well which is kind of nice to see but a lot of questions and stuff you had to answer about scaling up.

[12:50] Rob: Sure. Yeah, we actually are seeing scaling issues as well. We’re real time analytics. We have every time someone visits your website we got a ping back and we insert a record in the database because we have to be able to track referees of all the new visitors. We’ve tracked every time the popup widget opens to collect an email and we offer all that data up in the app and so we have already upgraded kind of the database hosting twice and we’re in the process of doing it the third time to fix some reports that are starting to get slow for people.

[13:23] The real time stuff which is a massive data collection like you’re doing and like actually HitTail and Drip both do it, it’s kind of a pain but I also think it’s a nice barrier to entry because a lot of folks is not just some simple crud Saas app that someone can build and then host on a shared server. It really takes some expertise to keep this thing running.

[13:45] Mike: Yeah I know what you’re talking about there. I’ve already gotten some complaints about some of the reports in there as well. These reports are slow and I’m like yeah, I know but I’m getting a couple of megs worth of data from just on audit and it’s like okay, well you throw 5-10 machines in there and it becomes a lot of data very, very quickly.

[14:05] Rob: Right. So I guess to wrap up kind of a Drip update, like I said, we launched – it was somewhere between 1200 and 1500 more people during October and then we are launching to the final basically the last 3^rd of the list today. And then by the time this podcast airs, Drip will be live. You’ll be able to go to getdrip.com and basically see the tour and signup for a plan just like anyone else for a free trial. So that feels good. It feels good to finally hit that point although it is a bit anti climactic because we already have paying customers, revenue. Last month was a recurring revenue was up to $1,000 over the previous month and it’s on pace to do that again this month and so we’re already launched in my mind. The public launch is more of a formality at this point. The amount of recurring revenue that we’ve had while we are in early access, it will be several months until we basically duplicate that until we get that much revenue doubled.

[15:10] So about two weeks ago we launched to a group of about 600 on the list and it was before that, we had basically nothing. All we had was a signup page, a signup and a login page and then you can get it and the app was fully done but there was no marketing website. And about two weeks ago we got just a shell marketing website up and it was like an about page privacy policy, terms and service FAQ, just a couple things. And some of it was lorem ipsum and some of it wasn’t finished. I mean it was kind of up there and I didn’t link to any of it. I really just linked to a pricing page where they could sign up. But the pricing page did have footer links to some of those pages.

[15:44] I specifically called that out in the emails and said look this stuff isn’t done but you can poke around if you want. Right away, we started getting emails that are about page was lorem ipsum and some guy tweeted me saying is this serious? I’m going to cancel my trial because your about page isn’t done. And we probably got 4 or 5 emails within a week of people who were flipping out about the about page. It was crazy. It was all lorem ipsum texts. It was our images, the actual images but it’s at getDrip.com/about if you want to check it out. I was totally surprised and the fact that it wasn’t just one person really was indicative to me that people wanted to find out who was behind it or something. There was some desire to see this about page and for it not to just be plain text.

[16:28] Mike: Yeah. That’s kind of crazy. I don’t even know what to make of that.

[16:31] Rob: It makes sense now that it happened but I never would have expected it. I mean if the privacy policy in terms of service for lorem ipsum, they weren’t but if they were, I bet no one would’ve cared.

[16:40] Mike: Well, speaking of adding new content to the website, I implemented that content strategy that Brett Palombo from the bootstrap with kids podcast had talked about on air and Patrick McKenzie had also talked to me about over – I think it was last week I put more than 400 pages of content live on the website that’s all generated from the policies that were executed on people’s machines.

[17:03] Rob: Very nice. Have you seen any results from it yet?

[17:05] Mike: Yeah, Google hasn’t indexed it yet so still kind of waiting for that to happen and then once it does, it will be interesting to see what sort of traffic it generates. I don’t necessarily have very high expectations for it. They’re very, very specific things that if people were searching for those, then great. And maybe they would sign up. I just don’t know. I don’t have a good sense of whether or not those people would come to the site and say oh, well I’m not going to have to do these things on my servers anymore because they may just be doing them as one off things and they just don’t need to do them again. I want to see how it goes. I want to see what sort of traffic comes in but I have to wait for Google to index it because they just haven’t done it yet.

[17:43] Rob: Sure. You can certainly keep an eye on it. I mean you’re going to want a call to action at the bottom of everyone. I would also if you don’t already have the Drip widget installed, I think that will be a nice way to connect with people is to collect their email address because the idea of someone stumbling on it and signing right up for a trial is probably not going to happen that often. But if they’re at least interested in that topic and you can stay in touch with them over time and use your nice auto responder sequence you’ve already created in Drip, that’s certainly a good way to nurture those leads and stay in touch with them. I think that will be a better converting source than trying to get them to sign up for a trial on the spot.

[18:18] Mike: Yeah. Drip is already installed there and it’s already available so when you go to those different policies and the different items that are on there, they do show up right away, the Drip courses down there so they could sign up for it. But yeah, I totally agree with that. I don’t see any reason why that wouldn’t at least help.

[18:34] Rob: Sure, very cool. I did some more investigation and kind of had been watching HitTail over the past month since we last discussed it. Our last update we talked about how Google was going to 100% not provided and I think they’re in the 80% or 90% at this point. what I noticed is that Google at least in the US is about 67% of US search traffic and what’s funny is that HitTail is still doing quite well on the other 33% like it’s using AOL and Bing and Yahoo and kind of the other market.

[19:08] And so there have been some customers who their key word suggestions through HitTail have decreased substantially and that’s a bummer obviously. If they had 95% Google traffic, there’s not much to be done there. But at the same time it hasn’t been as much of an Armageddon as I had imagined. There still is room for there to be keyword suggestions. I mean if you think about it, no one is going to have this data and every single keyword you have now is worth so much more than it was a month ago when it was abundant.

[19:40] Dave Collins talked about that in MicroConf Europe just about how valuable, how hard keyword data is going to be to come by. And so it’s that funny thing of like a tool like HitTail or long tail pro or market samurai, it may take a hit with the not provided stuff. It can still be as or more valuable than any other resource you have because you don’t even have that data in your Google analytics anymore. That’s not the end of the world. I thought HitTail wasn’t going to make it and at this point, it doesn’t seem like that like it seems it’s going to stick around.

[20:13] Mike: So here’s a question for you. You said that when you were on boarding people you were kind of watching to see what they were doing. Did you have dashboards built into your application to monitor I guess user activity and overall user health or did you put that onto another application that you subscribed to?

[20:33] Rob: Are you saying like how often they logged in or something?

[20:37] Mike: Yeah, things like that. So did they perform a certain act? Did they perform a certain action or when was the last time they logged in? Have they sent on a campaign, that kind of stuff?

[20:47] Rob: Right. So we talked about using a service like intercom.io or customer.io or one of those retention services that allows you to have insight into what folks are doing, the further we looked into it, the more I realized that we wanted to just look at our database. It was literally some select queries to figure out what people are doing. Basically we have a last log in date. We also have a number of logins like a quantity of log in for every person and so I can see if they’re active and I can see when they last logged in.

[21:18] And then just by doing a select count from campaigns, you can see if they’ve activated a campaign. We did write some code to go like hit their URL and figure out if they’ve installed a java script. We look in the database to see if they’ve created a goal. There’s there steps someone needs to completely to basically get the full on boarded part of Drip that we can get that all from our own database. We don’t need any type of real instrumentation to do that. And I think if we did need instrumentation I would probably have just built it myself. Again, the further we got, the more I realized well I’m going to have to sink my data and all my customer stuff with an external system. And every time we add, edit, delete something, we need to call out and do that. That just seemed like more trouble than it was worth when we can kind of just run an ad hoc query and get that info out.

[22:03] I do have a dash board. I do have an admin area where it shows me a bunch of checkmarks, who’s done what? Who hasn’t done what? And those people of course get different emails. We have this whole custom email course during their trial that sends them different things at different times based on what they have and haven’t done and it tries to help them get on boarded. And it doesn’t just push it off on to them either. It doesn’t say go do this. It actually says please rely to this and we’ll be in touch. Please reply to this. We’ll do it for you. We’ll walk you through it, that kind of stuff. I’m assuming you’re asking because you’re at the point with Audit Shark that you’re looking at options?

[22:37] Mike: Yeah. I mean I’ve looked at the ones that you have mentioned came across, Woopra and Totango. It’s funny because they all saw a slightly different problem and none of them really solves the problem that I was actually looking to solve. So I can kind mash things together but some ways I’m kind of leaning towards building my own dashboard like you were talking about. It’s just like I don’t want to have to add that to the engineering plea. You know what I mean?

[23:05] Rob: Yeah. No, I hear that. It is when its building new features or building basically that’s instrumentation, it makes it tough. I think it took us less than four hours to do it because it was – I can hack that together with literally some sequel queries that just display on a white background on the dash board. So it’s not like a ton of – unless you have a ton of stuff you need to instrument, it’s not that hard to get this done. Sending the emails is, that’s not trivial. Well actually to be honest, sending the emails isn’t. It’s a big case right? If they’re on this day and they’ve done this, then send this email. The hard part and the part that took longer than the development was writing all the emails.

[23:47] Mike: Yeah. And I’ve already started working on the emails themselves. It’s just the kind of matter of deciding how those things are going to get sent out and how they’re going to get triggered.

[23:55] Rob: Yeah and that was where – here’s what I did. I put together a spread sheet and I looked all the cases and all the days of what people could do on what point and where we wanted it to be and I mapped out how many emails needed to be sent and I gave them all names and then I went off and I wrote all of them and it probably, that process of mapping it out and writing them probably took me 12 hours. It was tremendously time intensive.

[24:22] And then once I had that mapped out, I showed it to the developer, to Derek and he was basically yeah, I can get these to send out based on these cases that you said in like two hours because its literally select this, check if they’ve done that. If I haven’t, send them this variation of it. It didn’t take him very long. So the mechanism of sending the email again is not, I don’t think it’s that intense and I think trying to do it internally, I don’t know, it seemed to work for us.

[24:49] Mike: And I’ve looked at that as well. I don’t think that sending the emails would be that difficult. I’ve got about a third of them written. I think there’s a list of about 15 or 20 that I wrote down different situations whereas like I want an email to be sent out if this happens or for example when they first get their first set of audit results, I want to send them an email and say hey, just letting you know you got first audit results and explain them a little bit and walk them through what the next step of the process is and if they have any questions, to get in touch with me.

[25:16] There’s obviously the other side of it which is the dashboard information is like has this been sent to them? Has this situation occurred for such and such customer and then being able to take those events and just kind of throw them into a database or something like that and be able to report on them. But as you said, I mean I can throw those into my own database and then just report on them. It’s just a matter of the engineering time and effort needed to build those reports. And I‘m kind of leaning towards taking my other developer and putting him on that stuff. I haven’t made a solid decision yet.

[25:48] Rob: Yeah. That makes sense. I think what I found with kind of the backend admin stuff, the reporting like you’re talking about is that figuring out what I want and then kind of specking it out is as much time as to just write it. Since our app is in rails and I don’t code proficiently in rails, it does make sense for me to give it a lot of thought and speck it out and everything. But if it was in a language I knew I would probably at least with Drip, I would probably sit down and hack it out myself. That’s what I did with HitTail when I needed any type of reporting I would just write the sequel and execute it myself.

[26:24] The Numa group which is my little company that has Drip and HitTail and all the other stuff, I was up to five people. Did I tell you that? Not employees because it said W2 versus 1099 was it, really matter but in essence it was five almost full time people including myself and I feel like I should be kicked out of the Micropreneur club for that.

[26:45] Mike: I think the Micropreneur route is more about bootstrapping it yourself than it is about the actual size.

[26:51] Rob: Yeah. I think its bootstrapping. I think it’s also freedom. Like I had again five people including myself so its four folks but I still didn’t need to be anywhere at any given time unless someone ran into an issue, I didn’t need to be online 9-5 on Skype or something like that. I didn’t need to go into an office and see folks. So the freedom aspect that I enjoy was still in place. And to be fair, I mean one guy is Derek – him and I have now worked together for well, about a year and a half I guess. I enjoy hanging out with him. We hang out outside of work. We’re friends.

[27:26] One of them is my support guy. It’s Andy. He does support for the academy and for HitTail and now for Drip. So he’s kind of autonomous unless he has a question he’s just rolling. He’s in another country all together so he’s just rolling and stuff. And then I had the growth hacker intern who I talked about hiring a few months ago and he’s only here for 90 days. He’s a three month internship so he’s leaving at the end of November. And then the other guy was a rails developer we hired through Odesk and he was with us for about maybe 6 or 8 weeks and he got a ton of stuff done. He

[27:59] Actually got caught up and really got Drip to 1.0 like between he and Derek he kind of gave us just enough of a boost to get – now I have a service side API, a JavaScript API, a bunch of reports I needed, just some little things that I felt like weren’t getting done quick enough. And I was planning to keep him around but he was good. He just wasn’t fantastic like he didn’t quite fit perfectly with the team. And so once he had completed his stuff, he was just a little too much work to speck things out and Derek had to spend a little more time going through his code than I would’ve liked. So we did decide to let him go.

[28:35] So now we’re down. It’s down to just me and derrick and Andy again along with contractors, contractors who just kind of work on an ad hoc basis. It feels good. It feels good to slim down for the holidays I’ll say needing to be online lesson handle the fires that come up less. It’s good.

[28:53] Mike: See, part of my version to kicking you out of the Micropreneur club with five people is because I’m currently five as well.

[29:00] Rob: Nice. It all comes out. It is funny. Its funny how you – you get there slowly and it doesn’t feel weird and you know everybody and you hire them slowly and to say you’re five people sounds big. I mean two years ago I would’ve said holy Toledo I don’t want to be working with five people. But I know now a lot of Micropreneur that are MicroConf attendees or bootstrappers from the academy or just folks we know who were solopreneurs for a while and just over time, as you hire people and they’re really good, it doesn’t make any sense not to bring them on full time especially if they’re good and they can be autonomous and you can just kind of roll with it and you get way more done and they’re really valuable to you like the thought of not hiring someone simply for a principal reason because you want to be that true solopreneur, it stopped making sense to me maybe a year or two ago.

[29:55] Mike: Yeah. I totally agree. I mean I realized a while back that the whole single founder moniker is more of I guess a rallying cry against angel and VC funding than anything else. It wasn’t necessarily that you can do everything yourself. It’s just that you can certainly start a business yourself and do a lot of things but in order to make something that extends beyond you, it’s very difficult to do it alone but that doesn’t mean you can’t be the person in charge of everything and kind of manage it all pieces and that’s kind what I’ve backed up off at the moment. it’s just like I’m managing all these individual pieces and kind of putting them together towards this greater goal and everybody’s managing their own work and I’m just managing the interactions between them at this point. But it’s no longer just me.

[30:38] Rob: Right. I always took you single founder moniker that you didn’t want cofounders, not that you wouldn’t hire people. But that it’s you didn’t – you wanted to kind of do the initial founder part yourself.

[30:49] Mike: Yeah. It is. I‘ve had people get confused though so…

[30:54] Rob: That makes sense. You know, this is actually a good time to bring up a question. I’ve received I know – you may have as well. It’s interesting that you and I are attacking larger product ideas. And so someone listening to this might think back to our very first episode where we talk about attacking these super tiny niches, making $1,000, $2,000, $3,000 per app and just cutting your teeth at it and getting some successes under your belt and then kind of scaling up or even just compiling 3 or 4 of those smaller earning apps and being able to quit your job.

[31:30] And I’m kind of moving away from that you would say. Now that I have a couple employees, now that I don’t really have any small apps, I’ve started divesting myself with my really small apps because at this point, they are more trouble than they’re worth because one hour spent building Drip is worth 10 times what was spent building some old B to C app that I had lying around. And so it’s important to clarify that old approach still works. I still see people doing it. I still see people having a lot of success in those niche markets, making a couple grand a month and building their skill set and doing the stair step approach that we talked about.

[32:07] You don’t need to go big. Don’t go – I mean if you’re a first time founder, don’t go build an app like Drip. Drip is in an incredibly competitive market. There’s so many email startups right now. They’re venture funded. There’s all types of stuff going into them. There’s money coming in. The reason I’m attacking it is very specifically because I have the money. I have the experience. I have what, 10-15 successful apps under my belt. I’ve been solo now, full time not consulting for four years. Four years before I brought anyone on full time. So all of that works and you can be totally happy and have a lot of freedom under that model.

[32:44] The fact that you and I have now decided to tackle larger projects that are more – they just take a lot longer to get off the ground. They’re more difficult but they have a larger market space, it’s not something I would advice for a first timer but it is the next logical step for myself and wanting to be challenged and learn and grow. Me doing another app that makes $5,000 a month or $10,000 a month, it just isn’t that interesting anymore because I’ve done it enough that you have to constantly carve yourself out of those new challenges. Have you thought about this at all? Have you been asked that?

[33:20] Mike: A little bit here and there. I’ve heard where you and I are clearly not going after those types of things and it’s not that we’re no longer going after those smaller markets because it doesn’t work. It’s just that our level of experience with those things and the types of thing that we’re interested in doing have kind grown beyond that. It’s not to say there’s anything wrong with them or there’s anything wrong with them or anything wrong with that approach because I agree. I totally think this still works. Especially when you get into things like you’re building and I’m building where it takes lot of effort and expertise to be able to do those things and if you don’t have the experience building a team and putting out good products and building a business, it’s a lot harder to build it from the ground up when you have no experience.

[34:06] I ran into a guy probably less than a month ago who wanted to build a two sided market place for an application. He’d never built an app before. His partners have never done it and he really didn’t necessarily know what he was doing and he was going against venture funded companies and he wanted to bootstrap and I was just like no, this is a bad idea 10 times over. Several other people talked to him and basically told him the same thing. Fortunately he took it the right way and it wasn’t like oh, you guys are just bashing me. It’s like maybe I’ve miscalculated this, maybe I really should take a step back and think about this because they’re going to fumble me and I’m going to waste 2, 3, 4 years of my life doing something that is ultimately not going to be successful because they’ve got the money and they’ve got the backing and I just can’t compete in that particular market because I don’t have the experience.

[34:54] Music

[34:57] If you have question for us, you can call it in to 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. 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 and we’ll see you next time.

Startups For the Rest of Us

Episode 157 | How to get started with info products and WordPress plugins

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Show Notes

• Pinterest Plugin
• Getting started building WordPress plugins
• Appointment Reminder
• Authority by Nathan Barry
• Convert Kit

Transcript

[00:00] Mike: This is Startups for the Rest of Us: Episode 157.

[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.

[00:18] Dave: And I’m Dave.

[00:20] Mike: And we’re here to share our experiences to help you avoid the same mistakes we’ve made. How are you doing this week, Dave?

[00:24] Dave: I’m doing very well again Mike. Thanks for having me back.

[00:26] Mike: I had mentioned to the listeners several weeks ago that one of the things I was doing for Audit Shark was going out and submitting it to a bunch of different application directories where they do announcements for web based startups and new applications that are out there like beta list and things like that. And a few people had emailed into the show asking whether I would share that list, I already went through and shared it with them.

[00:50] But one of our listeners named Robert Gram who’s been at MicroConf, he went through and he actually created a much bigger list than I had. We’ll link to it in the show notes but if anyone’s interested in taking a look at that, it’s over at whitetailsoftware.com and I said we’ll link it in the show notes. He’s got a list of I think between 40 and 50 different websites that you can go to. But I did want to make sure that I shared that with people.

[01:11] Music

[01:14] Today we’re going to be talking about plug-ins and info products versus SaaS products and primarily about how to get started with a plug-in or an info product and kind of contrasting it to a SaaS application a little bit. When you’re looking at these sorts of things, plug-ins and info products versus SaaS products versus SaaS is really just a tradeoff that you’re making. There’s a lot of different tradeoffs that you’re looking at when you decide to go for an info product or a plug-in and it’s just important to be aware what some of those differences are.

[01:41] The first one is the speed to market. With each of these types of products, the plug-ins and info products, they tend to be fast to market versus a SaaS application which it can take you a long time to get to market. Dave, you’ve got a couple of WordPress plug-ins right?

[01:55] Dave: That’s correct. Yeah. I have AWPCP and business directory plug-in and I also have an info product too about how to buy websites and I would definitely say that compared to the time required to develop a full product even in MVP mode, getting something like an info product out is actually much, much faster especially when it’s an area of expertise that you already have.

[02:18] Mike: So really what you’re saying here is that in terms of the different types of products, there’s a sliding scale where with an info product it can be very, very fast to get to market. and then with a plug-in it will take you a little bit longer. But the with a full blown SaaS application it can take you substantially longer possibly even exponentially longer.

[02:36] Dave: That’s right. Depends on how complex that SaaS product is, if you have something that was as involved as Drip, I mean how long has Rob been developing that? That’s gone on for a long time compared to the fact that he was able to collect a bunch of articles and put them together for start small, stay small and in a comparatively smaller amount of time creates something that he could sell immediately and provide a great deal of value and get customers for.

[03:04] Mike: So another thing to keep in mind is revenue sustainability and with info products and plug-ins you get little to no revenue sustainability and that’s really about monthly recurring income versus a SaaS application where you can get that monthly recurring income occasionally depending on whether you’ve got these annual plans or not, you may have to deal with it on an annual basis. But the idea is you’ve got this recurring income much higher price points to deal with versus the info products and plug-ins. Now what about marketing complexity? I know with your different plug-ins you’ve got a lot of different modules that you sell with those. What are your thoughts on the marketing complexity?

[03:43] Dave: It’s something that would go basically from info product to plug-in to SaaS in terms of from simplest to most complex here. So when you talk about an info product, an info product is very much narrowly focused on a highly defined problem. So that might be something like a guide to web application design or it might be how can I charge more as freelancer? I mean there’s a very specific problem and that one info product is going to provide a very specific answer to it.

[04:13] When you move up the scale to plug-ins, initially that plug-in is probably going to be very focused on something that is more simple. But with my plug-ins for example, the applicability of that particular plug-in depends very much on what kind of site that it’s installed in. So for business directories, somebody might be using it in kind of a yelp capacity where they’re trying to make a site that’s all about ratings. And another one might actually be trying to make yellow pages where it’s actually more important to show locations in directories.

[04:45] So I have different modules that you can add on, one that specifically supports ratings and one that specifically supports maps. So you kind of morph the core product depending on what it is you’re looking to do based on the customer’s target need there. And then you can go up a whole other level beyond than when you get into SaaS applications where you have much more general problems to solve.

[05:09] So if you’re talking about something like in Mailchimp it might be as simple as well I just want to collect email addresses and send out blasts to them and then later on it might be well now I need to segment this list and say okay, I want you to send this particular email to this sub segmented list or maybe I want to AB test emails across the list. And I want to try out one version of it to say 10% of my list and I want to try out another version to another 10% and then whichever one did better I want to send that to the remaining 80%. And that’s something that is definitely a much more complex news case than just sort of collecting emails on the first place.

[05:49] Mike: One of the things that you just talked about, it kind of overlaps in feature complexity as well because as you said, something like Mailchimp might have all this different used case scenarios and that goes into the feature complexity. When I was talking about marketing complexity, what I was kind of getting at was that when you’re faced with marketing complexity, it is substantially easier to explain to somebody what you’re offering is if you know exactly what that type of person is going to be. Because if you solve a very, very specific problem, so say you’re solving 2+2 well, the answer’s going to be 4 but you’re trying to explain that to people in a way that they’re going to understand. Versus if you’re trying to explain and you’ve got all these different variables in place, all these different people who might be using the product. Maybe you’ve got designers and developers, managers, things like that.

[06:36] When you’ve got all these different moving parts, it can be very difficult to explain to people what your position is because you don’t necessarily know who’s visiting the site at the time so you have to essentially multiply the full print of your website. You have to talk to different types of people and in different ways and that’s really what I was getting at with the marketing complexity which I think the feature complexity also factors into this. As you get more features, you seem like you just naturally end up with more marketing complexity because of that.

[07:07] Dave: Absolutely. Some of the stuff that you’re talking about, you’re right. I jumped right into the feature complexity thing here and didn’t really talk about that marketing aspect. If you have something that is addressing the needs of various kinds of audiences like I’m thinking of appointment reminder or Patrick McKenzie, he’s got a lot of different kinds of audiences he’s trying to target this thing to, one of which is like medical professionals but you might also do it to massage therapists. Now that’s an entirely different set of keywords he’s got to target different landing pages, different messages, possibly different pain points to make it sound like you really understand their particularly niche.

[07:45] He’s going to have to cater those pages in a very specific way so that the massage therapist feel like yes, I really know that this person gets my problem here. I want to buy their product. That is definitely going to be much harder than if you have a very simple e-product or eBook where you’re saying okay I want to tell you how to raise your prices as a freelancer. That’s a very easy marketing thing by comparison.

[08:07] Mike: And the terminology can very well be different between some of those different fields as well. That also adds to the challenges. So just keep in mind that there’s a lot of these challenges that you’re going to have to deal with depending on how complex the offering is. Something else that factors into is the operational requirements. And by operational requirements I’m really talking about how much it takes for you in terms of your resources and your support cost and things like that to maintain the business operating.

[08:35] So for something like an info product, let’s say that your website goes down. Well, if you have an info product, who does that affect? It doesn’t really affect your customers because they’ve already purchased the product and they have already received it so they don’t have to come to your website. It will affect the people who are coming to your website to buy it but if they can’t get to your website at all, then they’re not quite your customer yet and sure they have a problem with that but the person who that ultimately affects is you.

[09:02] Now with a SaaS application, if you were hosting an application for customer whether it’s infrastructure related or just ancillary to their core business, it can still be a problem for them because you have to make sure that website and that application are up and running at all times. So you have to install monitoring services, you probably want at least a little bit of redundancy. You have to make sure you’re doing backups and all this additional operational things. And that’s in addition to the support burden that you’re going to bear which is going to be medium to very high for a SaaS application and low to medium for an info product or a plug-in of any kind.

[09:37] Dave: Absolutely. There’s definitely a higher stress level when you have a software service application because of that.

[09:44] Mike: Definitely. And as I said before, the one thing that really factors in to that is how tightly integrated into your customer’s business is your product? If it’s quarter operation, if they need your product in order to do business then obviously your support cost and your operational requirements are going to skyrocket. You’re going to have to have a lot more redundancy and a lot more things in place than if it’s just something where they go into your product maybe at the end of the day or once a week or something like that.

[10:14] Dave: Absolutely. Very different, yeah.

[10:16] Mike: So next we’re going to talk about if you’ve taken a look at these tradeoffs. So you’ve decided that you want to go down the road of building a plug-in of some kind. Dave, you’ve got some experience building plug-ins. How would somebody go about learning word press development? Especially where do they get started with that?

[10:33] Dave: Well that’s a great question. First I’d like to say this is not the only type of plug-in that somebody could actually do. There are other ecosystems but I think WordPress is probably one of the most commercially viable and hottest economically that you can really tap into right now. There just seems to be a lot of energy and money in the community as a whole. So it’s probably a good place to focus your time if you’re going to do a plug-in of any kind.

[10:59] But when you get started, there’s tons and tons of tutorials and examples and how to write a WordPress plug-in that have been written at this point that just Goggleing something like how do I write a WordPress plug-in is probably going to get you a million results right off the bat. Starting from that, you can then go to the WordPress codex, codex at wordpress.org and get the basics of what are the things in the WordPress API that are important? How do I actually apply the calls in the API into my plug-in here? What are some architectural considerations that I need to have for a plug-in? And then going with that, you can also look at WordPress best practices, that’s another great thing you can Google for. You could spend easily two weeks on just two activities right there.

[11:49] Mike: That’s a good number to know too. Roughly two weeks for just that. I mean how long would it take you start to finish if you – let’s say I started today. How long would it take me to be able to get the basic knowledge to create just a very simple plug-in?

[12:02] Dave: Obviously that’s going to vary quite a bit on the person who is writing that plug-in. If you have somebody who’s a senior developer coming from a background that allows you to understand PHP very rapidly, so if you’ve been doing C, C++ Java Python and Ruby to a lesser extent or just PHP directly, you can understand the syntax very quickly then you’re going to be able to be productive quite fast.

[12:28] If you’re not as technical, if you’re not as facile on one of those languages right there, it might take you a little bit longer and that’s going to be very much dependent on your learning style. If I were to say how long would it take a senior developer who knew these things in advance to actually come up to speed on the WordPress API and be able to write some very basic stuff in a plug-in, I would say you can do that in under two weeks.

[12:53] Mike: Okay. So when you’re talking about going to look in through these API’s and best practices and the wordpress.org repository, there’s also additional information you can get from those places, not just the technical side of things, but you can also find some underserved niches and abandoned plug-ins there as well right?

[13:11] Dave: Yeah. In fact several people have asked me I’d like to do a WordPress plug-in. You did these particularly WordPress plug-ins for classifieds and business directories. How can I find something that I can serve as well? And one thing that found is that by going and just researching wordpress.org you’d go in there and type a search on something that you might be interested in or something that you might think okay, well if I was building a WordPress site and I wanted to add an events manager or I wanted to add classifieds or a business directory or I wanted to be able to manage RSS feeds, these are just things I’m pulling off the top of my head.

[13:51] But that sort of stuff you can find out what plug-ins exist in there and taking a look at those, you could see well when was the last time it was updated? Is the support forum something that looks like people are posting but the authors aren’t really responding? If you look at this plug-in and there’s a lot of people that are posting on the support forum, that indicates that there’s certainly some level of popularity for it but depending on how the author is responding maybe that plug-in is not doing a good job of supporting it.

[14:17] So you can go through the WordPress repository there to actually find some good ideas and then once you got an idea there, another possibility is that you could actually bootstrap your plug-in development by actually forking an existing plug-in on wordpress.org since everything that goes into wordpress.org is under GPL version 2 licensing, you are actually allowed to grab somebody’s source code lock, stock and barrel and start from scratch on that particular plug-in if you wanted to. There are pluses and minuses to that and you might incur the wrath of the author doing so. But in some cases I know for example there’s competitor to business directory. The guy actually started his directory plug-in using an older kind of abandoned listing plug-in for an address book. So that’s certainly a viable way to go about it as well.

[15:07] Mike: Now you mentioned that everything that goes up on wordpress.org is covered by the GPL. I mean how can you go about building a business? Are there specific business models that you can put together for this plug-ins? It wouldn’t seem like you can sell your WordPress plug-ins directly from there but you could have three plug-ins that lead to premium module or something along those lines. What other sorts of business models could people be looking at or entertain as possibilities for WordPress plug-ins that they’re creating?

[15:36] Dave: Well, turns out there’s four that I can think of that are viable business models. Now like you said, wordpress.org, they’re very strict about you can’t sell anything through there. In fact if you directly have a link on there that isn’t something like a donate, it tends to frown on that. But they’re okay if you like point to a site that says okay, here’s the professional version of the plug-in on so and so site and you can buy it there. But you know, you kind of have to keep it sort of moderated I guess is the way to put it.

[16:08] But the four business models that I know of from other plug-ins are things like premium offering, so you have the free plug-in in the repository and then off on an external site you offer a pro upgrade. So the plug-in that I can think of does this as the Pinterest pin it plug-in by Phil Dirkson. Another one would be the premium add on model and that’s exactly what my business directory does. So you get the core plug-in in wordpress.org and then you can buy add-ons to it, it’s not really an upgrade to the core plug-in so much as it is just things that enhance the functionality to it and then there’s a number of things that you can add on to it.

[16:47] There are some where the plug-in itself is actually sort of gateway to a SaaS product. So HitTail is a great example of this where there’s a WordPress plug-in that goes on to your site that actually does your keyword tracking and then that feeds that data back to HitTail and then HitTail will give you further suggestions based on what that WordPress plug-in is collecting. So it’s not so much that the plug-in itself is making revenue but it’s enhancing an external SaaS site to basically give you another channel of customers.

[17:16] And then the fourth model is where people actually offer paid support for the plug-in. So you get it, you download it for free from wordpress.org but the level of the plug-in might be complex enough that you really need some help in actually setting it up, configuring it, maybe skinning it, that sort of activity is paid for directly on a site. Gravity forms is an example of a plug-in that does that.

[17:42] Mike: So we’ve talked a little bit about some of the different tradeoffs. We’ve talked about how to learn and how to do WordPress plug-in development and a little bit about where to get some ideas and some of the business models that you can put behind those ideas. Most that we’ve talked about so far relates directly to WordPress and plug-in development. The other side of it is info products and people might be wondering where do I get an idea for an info product that would be marketable. I think this is where a lot of people really underestimate their own capabilities. Anyone with a career as a professional developer has something that they can teach somebody and charge for. Pretty much everybody and I can almost guarantee that.

[18:19] For example you Dave, you could easily put together a book on WordPress development. You don’t have to be an expert and that’s the part where I think that people kind of struggle with is like oh, I’m not an expert. The fact is you don’t have to be an expert in order to teach people what you know. Typically if you’ve been working in a particular field or a particular area, you tend to have a lot more knowledge than the average developer about whatever that specific field is. What other sorts of examples can you think of?

[18:48] Dave: Oh, well there’s two great examples of guys that I met at MicroConf. There’s Nathan Barry, he’s got a couple of different eBooks out there that I’m aware of. One is a book on app design and another one is about a web design guide. Clearly these are both areas of expertise of Nathan’s that he’s acquired as a developer over the years and he just simply took the time to write it down and share his knowledge and experience.

[19:14] Same thing with Brandon Dunn and his freelancer’s business guide. It’s basically a guide that solves a very specific problem that freelancers commonly have and that is how much did I charge for what it is I do and if I’m charging already, how can I raise y rates to get better income out of my livelihood? And these questions are things that all freelancers have and certainly Brandon himself struggled directly with but he just took the time to write it down, think about it very thoroughly. I think he spoke with a number of freelancers to get additional input from outside of his own spear of influence and he created this great product that is selling quite well based on his experience.

[19:53] And he certainly wasn’t an expert on it before he started that guide. I spoke with him about it. He knew a little bit about it from his own experience but mostly it was about him being willing to research it and come up with something that he could teach to others in a clear and concise manner, that’s what made it a valuable product.

[20:11] Mike: So that’s one of the ways that you could do it. Another way you can do it is to just find something that you think is interesting and you want to learn about and want to be able to share that information. So for example one of the things that I have an interest in from years and years ago is robotics and partially because I’ve done assembly language programming and done hardware and software interface and I’ve always found it kind of fascinating. But that might be something where if I decided that in the future oh, I kind of want to learn a little bit more about this and maybe build an information product or an eBook about how to do it, maybe I’d put together something on how to interface with the raspberry pie or something like that.

[20:46] And I think something like that would probably do reasonably well and their chances are really good because somebody else has already done something similar and if you haven’t, just look around, feel free to rip off that idea. If you have the inclination and the interest, you can definitely learn enough about a particular topic that you can share that information and charge for it.

[21:08] Dave: I’ve seen the same sort of thing that sort of plays over and over again as like the beginner’s guide to whatever or how I learned X in Y days. There’s lots of people that have gone out that say how I figured out Ruby for the first time or how I went and learn robotics from scratch not knowing anything about electronics. Those sorts of guides seem to be very popular. So even if you didn’t know something, you could write a guide that was kind of following that theme on a subject that you’re interested in and then approach it as a complete novice and basically record your experience along the way with the intent of making an info product out of it.

[21:46] Mike: Yeah and again, this isn’t about pitching or positioning yourself as an expert in the field. It’s really about positioning yourself as somebody who is capable of teaching other people. And as long as you have a message that you can put together that’s clear and people can easily understand it, people are going to be willing to pay for it. And that leads to another point which is when people are looking around for information on the internet, you’re sure they can go and find free information all over the place.

[22:15] I mean if you want to start a business for example, there’s tons and tons of free information out there but there are still people who go out and buy books on how to build a company and how to build a startup and why did they do that? And it’s because that information is complied in a way that is easy for them to consume and has theoretically been have a lot of people look at it and provide feedback and get it to a quality level that’s acceptable for general consumption. Don’t be afraid to put a price on any sort of info product that you’ve put together.

[22:43] Dave: So speaking of pieces and info product I want to share an idea that Nathan Barry actually did and it was part of his talk at MicroConf. He has essentially one product and that’s his various eBooks. But in addition to the eBook, he added on additional let’s call them value services here. So he’s got the eBook itself and then he’s also got an audio version of the eBook and then he’s also got product videos that go with it and some additional resources and instead of just offering the eBook by itself, he’s offered the things at various priced tiers.

[23:21] So you’ve got sort of the value driven eBook for just the people that want the bare bones and then somebody wants a little bit more, they get the eBook with the audio and some screen cast that go along with that. And then for somebody who wants sort like the Grandpre package, they get the audio book, the eBook, the screen cast and all the additional resources that go along with that and they’ve got this great set of price points where you can really actually increase the overall value of what it is you’re offering. So even if you started with an info product, you can actually increase the value as you’re going along by finding ways to create these value adds to it.

[24:01] Mike: Another way to do that is through a simple licensing trick and I think that Patrick McKenzie was the first one that I saw to do this but I know that Nathan Barry does this as well. But essentially it’s charging more for the same products for a slightly different license that allows them to distribute the products within their company. So with Patrick McKenzie, he has an email course where I think he doubled the price if you want to download it and put it on an internal company server and share it with the people in the company. Otherwise you just get like a single license for one person. It’s almost like buying multiple copies of the book for everybody in the company.

[24:38] Well, with that other license you can download the stuff, host it on an internal company server and then anybody in the company can view it. All it is a simple please use this license if you’re going to save it to an internal server and make it freely available for everybody in the company. So that’s definitely another way that you can drive the price point up without doing a heck of a lot of extra work. So let’s talk about how do you go about delivering these types of products? What sorts of methods have you used in the past to distribute like your WordPress plug-ins and your book for example.

[25:21] Dave: Well for me, obviously being a WordPress guy, WordPress was sort of a natural fit for the sites that that I’m actually distributing them on. So I have WordPress based sites that I use WordPress plug-ins that are shopping carts and digital download managers and even in the case of my website buyers guide, there as PDF delivery plug-in on there that I added to that. And then I also added on affiliate programs to those as well. So those are all things that are managed through WordPress plug-ins. You drop them in, configure it a little bit, throw a theme on it and you’ve got yourself kind of a website in a box sort of minimal effort. But that’s certainly not the only thing that you can do. What are some things that you’ve actually done or seen other people do Mike?

[25:56] Mike: For my Altiris training site, I have it integrated into Wistia and I’m just taking credit cards and sending them through stripe. And then once they’ve paid for it, then they get access to the rest of the site and they can view the videos. But other things that I’ve seen people use are Gumroad for example, e-junkie is another one. And then fetchapp and pulley are two others that are similar in that they basically allow you to take your content. You upload it and they will handle a lot of the front end shopping cart so that you don’t have to. And then some of them are monthly fees, some of them just charge you for hosting files or they’ll take a percentage of the sales.

[26:35] So there’s a lot of different services out there that will do it for you if you don’t want to go down the road of setting up your own WordPress site or integrating into stripe. Gumroad is one that I’ve heard a lot more and more lately. But again, there’s a lot of different options out there for people.

[26:48] Dave: Sure, you can also publish it on amazon.com directly if you wanted to. I know a few people that have tried that route as well.

[26:55] Mike: Yeah. I forgot about that. Amazon has their own digital publishing services. So if you wanted to go the route of actually having a physical book, they have an on demand print service that you can use. There’s other publishers other than Amazon that have an on demand model as well.

[27:11] Dave: Right.

[27:12] Mike: I think the last thing we want to talk about today is what source of limitations are you placing on yourself by going down the road of an info product or plug-in?

[27:21] Dave: Well, I think the one thing that is the most limiting of going either those routes is that because you are not going to a recurring revenue model right away that you’re constantly in this I’ve got to keep selling it mode. So you’re always going out there every month starting from scratch and having to dig up customers again. Sometimes in some cases you can resell some things to your customers but it’s not like everybody that was a customer last month can be sold to again this month. So that can be kind of grind and ultimately I think that tends to limit the amount of revenue that you can pull out of one of these things on a long term basis

[28:02] Mike: Yeah. And that goes back to the business model itself. It just makes things more difficult when you’re selling any product that is not recurring because you’re essentially starting from ground zero every single month. I mean you’re always starting at zero. It can become a grind after a while. Especially if you haven’t an automated a lot of your marketing efforts. That can be somewhat challenging. I would also think that for different products especially in the info product space, you will probably run into – I’ll say a cap on the maximum revenue that you can pull in from any given product because eventually you would saturate that market.

[28:36] Dave: Yeah, I think it’s not just market saturation you have to be concerned about but I think info products, let’s call it an expiration date on them because whatever it is that you wrote about it, unless it’s like something truly ever green like you write it now and it’s going to be good for the next 10 years I’ve not seen info products that don’t have to be occasionally refreshed like for example my website buyers guide, it’s a couple years old at this point. I probably ought to go in and actually get current screen shorts of Flippa here but I haven’t done that. So that’s something that’s definitely getting a little stale on that book.

[29:10] Mike: That’s definitely a main issue that you have to be aware of for info products they may very well have a shelf life. I can think of a lot of books. That I purchased in the past where I look at them now and even though it may have seemed evergreen at the time, things have changed enough that they are not necessarily as relevant anymore. So that’s definitely an interesting point to me.

[29:30] Dave: I mean that’s going to be true regardless of the kind of product that you have. I think it’s just very, very poignant on info products. The applicability of that product to a given market not taking into account saturation is definitely going to decay over time whereas if you’re still providing value with a SaaS application, as long as you continue to deliver that value on day 1, day 365, day 730, it’s not going to be as difficult.

[29:58] Mike: Well, cool. So I hope that this has given listeners a good idea of what the advantages and tradeoffs of going for a plug-in or an info product versus a SaaS product. One thing that I think has become more mainstream is to build an info product upfront before you build a SaaS product so that you can get a lot more in depth knowledge about a particular market and then use that as a launching point to build a SaaS product around where that info product is.

[30:28] One of the people that I’ve seen kind of leverage this technique and probably the one I’ve seen leverage it the best is Nathan Barry with his authority book where it’s a book on self publishing and he uses a lot of the ideas from publishing his first two books and he uses that information and shares it with people in his book called Authority. Then he also has a software product called convert kit which is also aimed at people who are doing self publishing. So essentially what he’s doing is he’s creating an overlapping market where he’s got an info product that kind of leads into a SaaS application and then I think that Brandon Dunn also does this with some of his products around plant scope and his info product double your freelancing rate.

[31:13] Dave: Absolutely. Yes he does.

[31:16] Mike: I’ll say it’s starting to become a trend. It is certainly not a bad trend to follow. If you can get an info product out there very, very quickly and the use that to learn enough about a particularly market or use it to gage interest in that particularly market, you can leverage that information to build a SaaS app around it or you can use it as a determining factor to decide not to build a SaaS app because again, building that SaaS app is going to be a very major investment of time, energy and resources and it may not be worth it. And just building that info product could be enough to tell you whether or not it’s going to be worth it or not.

[31:51] Dave: Absolutely and in fact just building that info product does a couple of things. I mean it allows you to sort of dip your toes into the water of how do I market this thing? How do I handle the sales? Are there support issues I’ve got to deal with? I mean sort of like baby steps to the real thing. Right? Where you’re actually getting experience in running this whole business from end to end. In addition I know that Nathan and Brandon both built their launch lists for plant scope and convert kit using their eBooks as a way to get people’s emails for their future products. So not only are you building that product, but you’re also building an audience to sell a product to.

[32:32] Mike: Yeah, that’s absolutely right. And this is in some ways kind of mirrors what Rob and I have discussed in the past about a latter approach where you build these smaller products that enable you to learn the things that you need to be able to make larger products successful.

[32:47] Dave: Yeah, definitely.

[32:48] Music

[32:51] Mike: I think that pretty much wraps this up for our discussion on plug-ins and info product. If you have question or a comment, you can call it in to 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. 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 and we’ll see you next time.

Startups For the Rest of Us

Episode 156 | Leveraging Services to Increase Cash Flow using a Hybrid SaaS Model

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Show Notes

• AWPCP
• Business Directory Plugin
• How to Buy a Website – An eBook by Dave Rodenbaugh
• Built From Ideas

Transcript

[00:00] Mike: This is Startups for the Rest of Us: Episode 156.

[00:04] Music

[00:11] Mike: Welcome to Startups for the Rest of Us, the podcast that helps developers, designers and entrepreneurs be awesome at launching software products, whether you’ve built your first product or you’re just thinking about it.

[00:19] Mike: I’m Mike.

[00:20] Dave: And I’m Dave.

[00:21] Mike: And we’re here to share our experiences to help you avoid the same mistakes we’ve made. How are you doing this week, Dave?

[00:26] Dave: I’m doing pretty good Mike. How about yourself?

[00:29] Mike: Not too bad. Rob is touring Europe at the moment. So post MicroConf Europe, Rob and his family decided they were going to spend some time in Europe and we got almost enough episodes recorded in advance of his trip to cover. Dave I’ve invited you on to kind of bridge that gap a little bit, so why don’t you tell the listeners a little bit about yourself and why you were entitled to be here I’ll say.

[00:56] Dave: My name’s Dave Rodenbaugh. I’m a long time member of the Micropreneur Academy which Rob and Mike run of course. And I’ve launched a few products using what I’ve actually learned in there. Right now I am currently running two WordPress plugins. One is called AWPCP which stands for Another WordPress Classifieds Plugin and this is way for WordPress sites to add on classifieds into their content easily and quickly. I also run one for business directories, same kind of deal which allows people to add yelp like features or yellow pages directories to their current content. And since content just came these days, everybody wants something new and different on their sites.

[01:38] I also wrote an eBook about buying websites on Flippa which I think is actually been mentioned already in the podcast a couple of times and this is a means for bootstrapping your own business without having to build it yourself and that’s on howtobuyawebsite.org. So I’ve been bootstrapping my businesses for about three years now and I have an alter ego as a software consultant and enterprise java land. I haven’t quite weaned myself off that yet but it’s certainly my goal to do that. Rob, specifically told me that I needed to be off of consulting by next MicroConf although I don’t know exactly what the punishment is going to be. I’m trying to shoot for that right now. We’ll see how it goes.

[02:21] Very excited to fill in here this week for Rob. Those are quite some big shoes literally and metaphorically to fill. I mean have you actually seen Rob’s shoe size? I’ll try to be a good sidekick for you this round though Mike. I can’t promise my jokes are any better though.

[02:35] Mike: I’ll go into the typical updates that I usually give. The first on is for AuditShark. I’ve on boarded a couple of new users over the past couple weeks and had some direction conversations with them, trying to get to the root of what’s stopping them from paying for the products. Just doing the typical customer development stuff. And right now primarily looks like reporting is the issue. So they’re looking for some very specific reports that need to integrate into their workflow of how they’re going to use the product and how they’re going to integrate it in into their business. So it’s nice to see that the things that they’re asking for are all on the roadmap but the downside is those things that they’re asking for are on the roadmap. They’re just not quite done yet.

[03:13] I did manage to get the entire tutorial mechanism that Peldi had commented needed to be in place back at MicroConf Europe. I got that into the product. So that’s there now and people can use that and it actually looks really, really sleek. And by the time this episode goes live, I’ll be at the business software conference and I know a bunch of people who are going to be there, also be really good to touch base with those guys again.

[03:39] And then the last thing is that Corey Maass from thebirdy.com he’s launched a new venture aimed at helping people who have more money than time to get their products off the ground. He has a website that he’s put together called builtfromideas.com and it aims to put products from conception to MVP status in about four weeks. Obviously there’s a charge for this. It’s not like he’s doing it for free but it’s essentially a new consulting business that he’s putting together and it sounds like a great concept. I’m really interested in hearing how well it turns out because I talked to a lot of people who definitely have more money than time.

[04:11] And this could very well be a way for them to get a solid developer in place who they talk to, have the discussions with and kind of convey their ideas and bat it back and forth and really collaborate on it as opposed to the traditional true outsourcing model where you hand everything off and hope that what you give back is what you need to succeed with that product.

[04:32] Dave: That sounds pretty cool.

[04:33] Music

[04:36] Mike: So for today’s episode, last year at the Business of Software Conference Gail Goodman had talked about the long slow SaaS ramp of death and we’ve mention it a couple of times. But today we’re going to talk about some ways that you can short circuit that ramp. This is inspired by a blog post that somebody tweeted to me. We’re going to go through this blog post and talk a little bit about how you can jumpstart your SaaS business to bridge that cash flow gap.

[05:00] So within this article it talks about having a certain number of customers and trying to get the six figures whit it. If you just look at the raw numbers, if you have 200 customers each paying about $50 a month then you’ll have about $10,000 a month in revenue which gives you about $200,000 a year plus around $20,000 for yearly expenses, you can almost brute force your way to 200 customers with phone calls, trade shows, meet ups, cold call and that kind of thing. The problem is that getting there can be a painfully long and slow growth curve even if you do brute force that number.

[05:30] Brute forcing it, it can get you there faster but it is still going to take you a while. It could still take you months, upwards of 6, 10, 12 months in order to get to that point until you are self sufficient. So Dave, why don’t you talk a little bit about the basic cash flow problem?

[05:46] Dave: Well sure. The cash flow problem that you have in any sort of software service business is that let’s say you have a business where you’re making $30 a month for a customer and let’s just also say for the sake of argument that your lifetime value of that customer is basically two years worth of revenue. So that’s like $720 worth of revenue that you’re going to get out of them. You’re only getting that in chunks of $30 a month at a time. So what you fundamentally have here is a cash flow issue. All the value of that customer is really locked up in the future of the service that you’re providing to them.

[06:29] Now, there are some ways to shortcut that, in fact this is one of the things that Jason Cohen had mentioned at the last MicroConf and that is to have an annual plan. So you say okay, if you buy a year’s worth of this service upfront, I’ll discount it a month or two months out of there. So instead of paying $360 maybe you’re only paying $300 and you get the entire month. That helps you build some cash up front and it also give the customer a discount so it’s sort of win-win for both of you.

[07:00] The problem is not every customer of yours is going to take advantage of this and still you’re going to have this cash flow problem one way or the other. You might be able to get a little extra cash out of it but you still have the challenge of trying to get new people on board to your service and you got to get them through the sales cycle and you’ve got to convince them of the value proposition and you’ve got to have compelling marketing.

[07:22] So all of that becomes a real drag on your business. It’s really hard to keep expanding your business and adding new features and things like that. If you simply don’t have the cash to pay for it upfront. So one of the things that we’d like to talk about today is how the hybrid model, what we’re calling the hybrid model can solve this cash flow problem.

[07:43] Mike: One of the issues with getting started there that you kind eluded to was the fact that when you are trying to acquire these customers even if you’re not brute forcing it, if you’re doing some of the traditional marketing efforts, you incur some sort of cost to acquire these customers and hopefully you don’t have a very high cost of acquisition for these customers but it still does cost money to acquire them. And that’s part of the cash flow problem as well because that factors into how quickly you can acquire customers because if it cost you $50 to acquire a customer and it takes you a year to make $50 from them, then you can only land so many customers before you’re broke.

[08:24] Then you have to gather money from your existing customer base and once you’ve done that then you can put it towards acquiring more customers. Especially with a Saas model, getting people with an annual plan will help overcome that. But as Dave said, you can’t get everybody on an annual plan.

[08:40] Dave: Sure. it’s even a little worse than that Mike because if you’re having to factor expenses into this whole thing, cash flow is even a bigger problem because it tends to mean that you’re going to emphasize your free channels of acquisition over your paid channels or you may not even have the option to do the paid channels because you simply don’t have enough cash on hand to go and figure out okay, well if I ran this ad words campaign, will I actually be able to pay that back if it’s costing me $25 a click on these ad words key words, am I going to be able to get enough customers out of that? I mean there’s some testing that has to go on during this process of ramping your SaaS app. Right?

[09:22] Mike: Yeah, definitely. I think that’s actually one of the things that pushes people away from doing any sort of paid acquisition is the fact that you don’t know if you’re going to get your money back. And even if you are reasonably sure that you’re going to get your money back, the question is how long is it going to take for you to get your money back?

[09:39] And that’s a very hard question to answer especially when our your cost for acquiring those customers tends to be high and you’re looking at you revenue the following month and let’s say you laid out $2,000 to $4,000 to do some paid acquisition. In the next month you showed increase in revenue of $300 or $500 or something like that and you look at that and said well, I’m not going to get my money back for another six months so I can’t even afford to do more paid acquisition next month. Even though just looking at those numbers you can tell that it would benefit you in the long run but you just don’t have the cash to be able to do that sort of thing. Does this kind of imply that there’s something fundamentally wrong with SaaS?

[10:18] Dave: Well, no. It turns out of course that there’s not. SaaS is just very, very hard to get things started up in a smooth and running fashion. Right? I think the term that Rob likes to use and the term that was thrown around in Gail Goodman’s talk was the fact that this is a flywheel. A flywheel is something that doesn’t just spin up very quickly or spin down very quickly. It’s slow, it’s heavy and once you start it moving, it tends to keep moving at that same speed. So the problem is you’ve got to dump enough time and energy to get that flywheel cranking to start with in order to get your cash coming out on the other side and that’s the hard part of the SaaS right?

[11:01] Mike: Definitely. So one of the things you can do to overcome that inertia problem with the SaaS flywheel is actually to add services and one of the things that I think is very common early on when you have a SaaS business is that it can be very difficult for your potential customers to understand the value of that service especially if you’re not laying it out very clearly for them.

[11:24] How many people are actually reading the marketing collateral that you’re putting together on our website? I get a lot of people coming to my website that clearly they’re not reading the FAQ and they end up on the chat widget and start asking questions that the people who are manning that chat widget are trained to read the FAQ and try their best to answer people’s questions. And it’s amazing the number of people who come through and will look at that and either send emails directly into through the support page or go to the chat widget and start asking the same questions that already appear on the FAQ.

[11:57] Dave: Absolutely. Something else that takes a while to get that slide wheel running is the fact that just getting your messaging and your value propositions right so that it aligns with the problem that the customer has on the first place, that’s a very iterative thing. I remember just listening on this podcast with Rob talking about Drip. All the various things that he had to go through in order to find the right channel to acquire his customers.

[12:23] He started out with some deal on Appsumo but even he said at the time that was sort of one time test to find out if that was actually a good channel of acquisition or not and I think the conclusion that he came to was that it wasn’t. But it certainly cost him a good amount of money to go out there and get that setup and sell all of those things on Appsumo because you don’t get 100% of that revenue right back.

[12:47] So in order to come up with an effective key word campaign, what you really need to do is you need to make sure that you’ve got catchy titles and something that really clicks with the customer’s pain. And you’re not going to get that right out of the gate. I mean you have to refine that each time. So you put something on ad words, you test that out, you see if your customers respond to it and if they don’t then you have to go back and tweak and you don’t really know exactly how long that’s going to take for you to come up with the exact message that’s going to resonate with your customer. So that costs time and it costs money.

[13:23] Mike: Yeah. I think one of the things that resonates with a lot of people especially over the last two MicroConfs where Rob has given his talk about what he did with HitTail was just how long it took for him to get to the point where he really felt like he got his messaging correct and I mean he basically laid it out in a chart and you said here’s the part where I was learning. And basically the growth graph is almost flat and then here’s where I was building and it starts to rise a little bit and then here’s where he was scaling and that process took him a very, very long time.

[13:55] I mean a lot of people come out of the gate, they launch a Saas business and they think that it’s going to be successful very, very quickly and the fact is it turns out that’s really not the case. And it doesn’t matter how large your mailing list is. It doesn’t matter how well qualified that list is. It depends a lot on time and that’s just kind of the nature of the beast because even if you do have a large mailing list you get a lot of people who signed in, they won’t necessarily stick around. They’re going to be basing their opinions off of the initial messaging and unless you nail it right out of the gate, the chances are good that they’re not going to stick around for a long period of time. And that process as you said, it’s very iterative.

[13:34] So let’s start talking about some of the benefits of offering a hybrid model. A hybrid Saas solution gives you long term recurring revenue while the services will help bridge the cash flow gap. And in some ways those services are acting as consulting income but there is a very big differentiator between value added services and consulting and more specifically that is the rate at which you’re charging people. You want the customer to be thinking really, really inexpensive but highly optimized outsourcing. That’s what you want them to think and that’s how you essentially need to present it to them.

[15:06] And these services that you’re offering can drive a lot more value for individual customers in the short term for three very important reasons. The first one is it’s more cost effective for the customer than hiring as consulting. The second is this offering can be customized on the fly without having to write code. And when you’re writing an application, it’s always expensive to write code. That’s why everybody or at least most people design their products first, do mockups, things like that. It’s a lot easier to change things in design phase than it is after you’ve already written a code.

[15:36] So if a customer says hey I need you to do XYZ, the software may not do that but that’s okay because if you have the capability to kind of build it on the fly then it doesn’t matter. And the third thing is that it reduces the risk of the customer for investing their time, money and effort into learning your product but not get in the desired results. If you’re working alongside of them, it gives you a lot of flexibility and a lot of leeway to get them the information and the data they need along with the results that they need without writing the code or relying on the products to do all of those things which it may not have the capabilities to do just yet.

[16:11] Dave: So Mike, in the discussions that I saw from MicroConf Europe I heard somebody mentioned something about a concierge service. Is that what you’re talking about here?

[16:19] Mike: I don’t think so. So in MicroConf Europe there was a lot of discussion about a concierge service and I almost see that concierge service is a fancy way of saying human assistant on boarding. You eventually do things for free for the customers to get them on boarded because you know that the lifetime value for those customers is going to be high enough to justify the initial labor cost but you want to be able to get them on board and you’re trying to decrease the barriers to that entry so that you can start getting their feedback and leveraging their monthly payments.

[16:50] And obviously at scale, this doesn’t work. But early on you need to get them on boarded and get them pass the painful parts of the on boarding process while you iron out those wrinkles. Offering services along with your product is completely different than a concierge service because you’re charging people for the value of the human labor that you’re providing not necessarily the service itself. Obviously you’re going to charge them for whatever your service is but you’re charging them specifically for the services that you’re offering and you can price these based on value.

[17:20] Presumably you’re working with these customers hand in hand because you’re trying to jumpstart their business a bit by leveraging the product you’ve build and it does give you that immediate cash flow but more importantly than that, it gives you knowledge of exactly how they need to integrate your product into their business processes. So it lets you get that inside view that you would probably not have if they just signed for your service and were paying you $50 or$100 a month because you’re working hand in hand with them. You’re going to get that inside view of exactly how it integrates with their processes, what tools do they use, how they’re using the data and it gives you insights that you would not normally be able to get.

[17:58] Dave: I get it. Okay, yes. So as it turns out this is actually something that without really knowing what the terminology was that I kind of ended up migrating my two WordPress plugins to among the way. I had a number of customers that were always begging for I would need to have feature X or I really wish that your produce could just do Y. And I kind of push them off a lot of the time and I said hey, why don’t you go to Odesk and hire a developer on there. We’re really working on the features that are going on and the plugin right now and I don’t have time to do this.

[18:35] And eventually I realized that was just dumb. I mean I’m turning down things that people really want to see in the plugin. When I kept hearing the same feature over and over and over I realized I really needed to either put that into the plugin myself or have them sort guide what that feature was so it was something that was valuable to them. So I started adding what I sort of called it was the custom feature model. But basically it goes like this. Somebody is working with the classified or the business directory plugin and they come to me and they say yeah, I really want feature X, doesn’t really matter what feature X is.

[19:08] And then I say okay, well here’s what’s it going to take to add in feature X. And that feature is something that would be generally useful to the plugin and something that would be useful to the community as a whole so everybody who’s using classifies would want that or everybody who’s using a business directory would probably want that. And then we go back and forth. We get it to their liking. We go back and forth in this interactive process, once we agree upon what the feature is actually going to be, we’ll integrate it into the main plugin itself and then we’ll release that so that they have access to it indefinitely for the future for all their upgrades. And the rest of the community gets a cool new feature added on without them having to do anything about that.

[19:50] So it’s definitely been pretty successful in the plugins that I’ve run so far, I probably do about four figures of revenue of just this custom staff that’s being added onto the plugin in addition to the regular product sales that I’m doing as well.

[20:05] Mike: So when you’re having people do that, are there requests that you deny as well? There’s two different sides of this I think. One is you’re essentially taking feature request from people and charging them for building those things because they need them now. They need them probably on a timeline. So there’s also a flipside to this and that’s the fact that not every request that comes in is something that you can just arbitrarily say yes to. I mean you also have to kind of draw the line some place and say there are certain requests that people are going to make that I just can’t do. Right?

[20:36] Dave: Oh my god, yes of course. So I get probably about 50% of them I put in sort of the outlandish category.

[20:43] Mike: 50% really?

[20:45] Dave: Yeah. It’s really that high. I’ll get people coming in and they’ll say hey, can you do like this whole site customization for me? No, I’m not going to build all these features around the plugin that are for your site for example. Some of them could be some very weirded requests. Once I sort of cut out these outlandish ones there, then I can fine tune that a bit and say look, is this feature that you’re asking for something that somebody else in the community might also want? It doesn’t necessarily have to be something that everybody could use but at least try to think of it, is this something that at least maybe 10% of my other customers could probably use. And then if that’s the case, I’ll try to include it.

[21:20] Mike: I mean that’s just saying that you can double your business overnight by accepting this outlandish request.

[21:26] Dave: Well, but actually it’s another problem and that is a scalability issue. So I have a limited number of develops that work with me on these plugin and if I were to start engaging them and say okay I want you to work on this outlandish site request over here where the guy wants everything purple on his site. Well that guy, once he’s engaged in all that work, he’s not available to do somebody else’s totally reasonable feature request or it might be that outlandish feature request is something that’s going to take him like two weeks of his time to customize for this whole site because it’s very elaborate and it’s very detailed.

[22:01] Well that’s two weeks of opportunity cost that I’m losing and I can’t really use him for priority support request. I can’t use him to build additional features into the plugin that I might want to put in there that are on my long term road map. I can’t use him to do other customer requests that actually aren’t outlandish and might only take a day or two. And trying to get a new developer trained up on that code base is something that takes time and if I can’t keep a developer busy all the time then he’s going to wander off and not going to be available for that.

[22:31] So I have to balance the availability, the cost and the utility really of what it is they’re asking for and see if it’s something that kind of benefits everybody across the board as opposed to just benefit just them in particular.

[22:45] Mike: I also think there’s a bigger problem there in that if you go through this massive undertaking for somebody else, realistically you then have to support whatever those changes and modifications are for this other customer and they’re going to have some expectation of when you come out with a new version of the plugin that they’re going to have access to all those features so then you’re on the hook for supporting them moving forward and it’s really just not cost effective to support them ‘til the end of time even if they are paying 20% of the cost of the plugin at that point.

[23:17] Dave: Right. Absolutely and in fact that’s another policy that have is whatever feature somebody asks for, it’s something that I roll into the main plugin and that’s just really good sense so that if they want to upgrade in the future, they automatically can do so without worrying about whether I took that out or – and I don’t have to worry about okay, I’ve got this custom branch over here that I built for Bob. Did I put all of the bug fixes into Bob’s branch that I put into the trunk? I don’t want to deal with that particularly when you’ve got dozens and dozens of customers that are asking for custom stuff. You really just kind of want one main development branch and everything is in there so that you can support that in a reasonable way for everybody.

[23:58] Mike: So before the podcast you had mentioned that copy hackers also does this to some extent as well. Right?

[24:04] Dave: Absolutely. There’s actually a slightly different model though. They’re doing product sales directly on their websites. It’s eBooks about how to do amazing things on getting copy that converts and ways to write that are more compelling than when you might just do it off the cuff for example. And when you make a product sale with them, you end up getting added to an auto responder email list and then copy hackers will send you emails about here’s a tip for this and here’s a trick for that and hey did you know this?

[24:37] And then during that auto responder series you’ll eventually get something that says hey, by the way we’ve got custom consulting services that allow you to do things like advanced copywriting seminars, here’s a way that you can get a site review from us. So these are definitely very high end high touch semi-consulting kind of services here but it’s clearly a very substantial part of their business model because they’ve got this auto responder series that’s built around trying to get you to buy these things at the end. So I’m sure that Joanna Wiebe and  company are getting some serious benefit out of this.

[25:15] Mike: So those are some great ways to take the products that you have put out there and essentially start bringing in more services income because of those products. One of the things that I’ve been looking at is how I can do that with AuditShark. And I came up with a short list of things I kind of wanted to go through them with you. And just kind of discuss what sorts of things fall under the concierge category versus which ones fall under the service category. And remember the concierge is essentially assisting the customers with on boarding versus services which is an going up sell that you’re essentially charging them for labor and the value that you are providing for them.

[25:52] Dave: Sure.

[25:53] Mike: So the first couple that I have is installing the AuditShark agent. Seems pretty clear I could offer that as a service and I know that there are companies out there that will charge for setup and installation. But it seems to me this falls more under the concierge service. Do you think I should charge for that or no?

[26:10] Dave: Well this actually reminds me of a quote that’s in Gail Goodman’s Business of Software talk and that is the number one way to get the customer to stay is to get them successful early. So installing the AuditShark agent is absolutely a core piece of your software offering. If they have trouble installing that, would they get any benefit out of your product?

[26:31] Mike: No, not at all. In fact, if they don’t install it, they get zero benefit.

[26:35] Dave: Yeah, exactly. I mean there’s definitely some things that you want to smooth out and make as clear and as easy to use as possible. I remember that quote from Patrick McKenzie at I think it was the second MicroConf. He said you want to script the first five minutes of your application like the invasion of Normandy. This is definitely one of those things is that you want to make your installation of the AuditShark agent the absolutely smoothest possible.

[27:03] But when you’re first starting out, you don’t know where people are going to struggle with that. So this is a great example of early on to make it a concierge service you install it, you get to learn where those problems are in the installation and then you can use that knowledge later to do that scripting of the invasion of Normandy thing like Patrick says.

[27:24] Mike: Right. So the next one was a consultation on the product capabilities and what it can do and how they should be using it. Concierge or service?

[27:34] Dave: I think that one should probably be concierge and once you kind of figure out what product capability they’re asking about the most, this is something that you can probably make a web page out of. So when somebody asks you about that, maybe you can start up an auto responder series and give them the top five things that everybody’s been asking about the product capabilities in that auto responder.

[27:57] Mike: I was almost thinking a webinar actually, free webinar about what it can do for them, how can they specifically solve certain problems that they may be having or don’t even necessarily know that they have.

[28:07] Dave: So you’re thinking it’s more of this is before they’ve really bought the thing as opposed to after.

[28:14] Mike: Well, I think it should be moved to before. So what I find is obviously there’s the tutorials and stuff once you get into the product but before that, people might have questions about how would I use this? How would I integrate this into my business? So I think in some it’s really just educating them about what the product does and why it does the things that it’s doing. So in some ways I think that there are certain information that would be presented after they purchased and there’s other information about that would be presented before they purchased. And I think before, it’s really about what problems it’s solving and then afterwards it’s about how to do that with the products. And when I came up with this, it was really about after they have purchased.

[28:54] Dave: Yeah, that totally sounds like a concierge thing. It was educational that that seems like something that you want to give away.

[29:00] Mike: So the next one was a consultation on what the customer should be doing security wise. So essentially have a discussion about for example how many servers they have, what type of servers they are, what they’re doing today, what they might want to be considering doing in the future, how AuditShark can kind of play into that, what are your thoughts on that?

[29:18] Dave: I think you can go either way on this one but I’m going to lean towards concierge because AuditShark is early enough in its lifecycle that you might actually find this space of customer’s engagement to be actually very educational for you and find things that AuditShark might be missing as key or core features. So probably I would say concierge.

[29:44] Mike: The next one is building custom policies for customers where if they have specific requirements that need to be met, an ISO standard for example or specific things in PCI or the SAQ’s compliance, something along those lines that they need. What do you think? Where does that fall? Would that be under service or would that be under concierge or does that depend a lot on how much effort it takes?

[30:03] Dave: I would say this is something that you might keep in your back pocket as a customer could say hey, I’m really interested in AuditShark and I’d like to sign up for two years but I need the small change to a custom policy and then you look at it, it actually is really a small change. So that kind of thing you might do as a concierge to sort of land the customer but if a customer comes to you and says I need this totally complex custom policy that you’ve never done before, that feels like kind of service thing like it’s an add on to an overall product that they might be getting there. I would say it would very much depend on the situation and the customer’s request.

[30:43] Mike: So it seems like in cases like this, it might be a little difficult to put together something along those lines of a standard offering to say it’s going to cost $300 per X because there’s such a variable time commitment on our sides to be able to do that and in addition it may be something that depending on what it is that they’re specifically asking for, maybe something that could be integrated into the product or maybe something that’s completely custom for that. And maybe that falls under two different packages, one where there’s a lower cost if it gets integrated into the product or a higher cost if it’s more of direct consulting engagement.

[31:16] Dave: Yeah, something like that. I would say that this is going to be one of those things that you’re going to go through and figure out how much time is required to build a custom policy. And it might be that you come to this number it says it always takes two hours to build a custom policy of average complexity. And so if that’s the case then you can sort of put a standard price on it. But if it’s anything like when I add features to the plugin, when somebody asks for something, I never know whether it’s a 2 hour change or an 18 hour change. That’s something that my developers usually have to come back and tell me.

[31:49] So I can’t really put standard prices on those features and I think you will know after you’ve done say half a dozen custom policies as to whether you can offer that as a standard thing or you have to kind of estimate it on a per customer basis.

[32:03] Mike: I can do ball park estimates based on just the operating system or the type of application as to whether it would be 80 hours or 120. It typically tends to be one of those two numbers. It depends exactly on what the operating system is and how complicated the benchmark is that they’re trying to have implemented. Something else is reporting I think that when most Saas applications launch, initially they have very, very little reporting. What are your thoughts on where reporting falls into this thing?

[32:31] Dave: You know, based on my experience with reporting and the enterprise java space and previous to that C and C++ reports are almost always so accustomed to whoever that customer needs to find out whatever magic metrics they’re trying to get to that this absolutely positively feels like a service that you would what to as a value added thing. It’s going to be kind of time consuming. It’s going to be customer specific but at the same time it’s going to build high value for them and make them want to use your product that much more. So I wouldn’t do that as concierge for sure.

[33:04] Mike: But aren’t some of those reports that are being built, aren’t they the type of things that other customers would want? If you have a standard SaaS app application there are going to be different types of reports that could be generally useful to everybody. I mean well, aren’t there going to be situations where you’re going to go to those customers and have to make a judgment call and say well, I don’t want to charge you this full amount because this is going to be generally useful to everybody.

[33:28] Dave: Early on the in the product here, I presume that you don’t have any reports built into AuditShark at this point because of where you’re at in the app is that right?

[33:35] Mike: I have one.

[33:36] Dave: Well, yeah, I mean this early in the product probably don’t know what reports the customers are dying to have. So you might say hey you know what, I’ll split the cost of this report with you to build it here but it’s going to be pretty substantial. If you don’t have this report in your application, I just don’t want to get your service at all. That might be something where you say alright, I’ll build it and I will get your business after that.

[34:00] But I think it’s going to be on a case by case basis. it’s going to really depend on the report. If it’s a very elaborate specific report that that customer is probably the only one that will ever want that, well that would definitely be a service. If it’s a generally useful report and it’s something that you were planning on adding anyway, maybe throw it in just to sweeten the deal for the customer or maybe you split the cost with them, I don’t know. I think it’s going to depend.

[34:26] Mike: Part of the reason why I’m going through some of these is to give you guys some ideas about the different things that you can do in your application whether or not you should be charging for them. Another one I came up with was analyzing reports and providing situational base recommendations. And that’s very clearly a service because you are not only looking at a report that is specific to a customer but you’re then providing them recommendations based on the output of that report. So again that’s very much a consulting arrangement.

[34:55] And then the last one was providing remediation services and for AuditShark when it identifies something that’s wrong, the customer right now has to go fix it. I could theoretically automate the remediation but I don’t want to because there are a lot of considerations around that. For example what if something goes wrong, who’s responsible for that, what happens if the machine reboots in the middle of the day? There’s all this scheduling and what happens if something goes wrong and it needs to be rolled back. Is that something that’s possible with the product?

[35:23] There’s a lot of problems with doing that stuff in an automated fashion and it seems to me that making that into a service offering is a very much a value add for the customer and I can charge them based on for example the number of things that I’m fixing. And at that point, the real key to the value proposition here is that I’m essentially rewriting what they’re being charge for. So no longer am I saying give me $50 or $75 an hour and I will work for you for that time period. I’m saying here’s a fixed unit of work which may take 5 minutes, it may take 5 hours but you’re getting a set cost for it.

[36:01] That’s kind of the ideal situation to be in when you’re trying to offer services to people because you’re going to be able to know what your cost are for the time period that you’re talking but you’re no longer billing directly for the hours that you’re working. You’re charging based on the value that you’re providing with the customer, not the time that you’re providing the customer.

[36:20] Dave: Absolutely. In fact your remediation services remind me of exactly what Rob does with HitTail and the article writing service. Wouldn’t you agree?

[36:29] Mike: Totally, yes it definitely does.

[36:30] Dave: Yeah. I mean that was something that Rob didn’t have right away and eventually he realized that was the one thing everybody really wanted after they got these long tail key words is a way to take advantage of that with Google SCO and having that service that wrote the articles for you was a great way to do that. So you might have the side remediation service consulting thing.

[36:51] Mike: Yeah and that’s something I‘ve had a hard time pricing. Some of them are very, very quick to do but there’s also potential for things to go horribly wrong. So I’ve been a little bit gun shy in terms of moving forward with this piece of it. I mean I’m reasonably confident of my own abilities to look at things and say yes or no, this could have major effects on somebody’s systems. But there’s always that possibility I mean whenever you reboot a machine, you never necessarily know what other things have been done on it aside from the changes that you’ve made that a reboot is going to cause those things to service.

[37:24] Dave: Yeah, totally agree. That’s definitely something that you want to have humans involved with. So be very careful there.

[37:31] Mike: So we talked a lot about the cash flow problem with SaaS and some of the benefits that a hybrid model can bring to the table and resolving some of those issues. But where does this hybrid services model really fall down? There’s got to be places where adding services into the mix just simply doesn’t work.

[37:47] Dave: Yeah. I can speak a little bit from experience on this here. One of the places that it really doesn’t scale in my plugin is there’s a point at which I have to balance features that I want to add versus features that customers want to add. And sometimes it’s very easy to thread those two together because I’m just not getting very many customer requests. But like the past few months I got swamped with all these customer requests and so my developers are constantly filling and estimating these particularly client requests and they’re not doing other things that I’ve been trying to push the roadmap along for the plugin or to do releases or other things.

[38:25] And I’m spending more time managing those customer projects instead of going and doing things like training a new support guy or witting documentation for the website or doing marketing or promotion or working on other projects. When you’re working on something like this, you kind of start it out without the intention of it scaling but at some point you get so many requests for it that it stops being able to scale even in a manual manner anymore.

[38:52] You have to kind of setup back and say is this something I want to keep doing? Do I want to expand it by adding another person who’s dealing just with these requests now or do I want to just stop offering it all together and say I have enough customers that I don’t need this to generate my revenue anymore. I want to focus on something else. So that’s definitely something that the plugin have struggled with and continue to struggle with.

[39:16] Mike: Does that give you justification to raise the price of some of that custom work?

[39:20] Dave: it probably does but there’s definitely price points which the customers will simply say that’s not something I’m willing to pay for anymore. I mean I’ve already seen that one. If somebody comes to me with one of the outlandish requests early on my modus operandi was to basically come back to them and say alright, that’s going to be doable but it’s going to cost you $1500. And for the most part, the customers got the hint at that point and said oh well, okay that’s too expensive. I’m not going to do it.

[39:46] Somebody actually took me up on that one time so what the hell was their problem. Once they called my bluff I had to actually go and do it. So that was a good three months of custom work that followed having to suffer through that because there was definitely a lot of back and forth and iteration and I said to myself no, I’m never going to do that again. You really have to be careful about what you wish for there. Raising the prices isn’t always the solution.

[40:13] Mike: Yeah I’ve been at situations like that myself where I gave somebody a price thinking they’re definitely going to say no and then they said yes and I’m like oh shoot. Now I actually have to go do this. But it sort of makes up for it because they’re paying you really well but sometimes the headaches are not just worth the money.

[40:29] Dave: Totally not worth the money.

[40:32] Mike: I think one of the really nice things that this article that we’re looking at as roadmap for this podcast pointed out was that in the early days of the product, think of the services side as a life support or plan B for your SaaS app, I really like that way of thinking of this.

[40:47] Dave: Yeah, that is nice. It certainly does help you get pass that cash flow gap right away which is a major problem for sure.

[40:55] Mike: So to kind of recap a little bit, we’ve talked about the cash flow problem. We’ve talked about some of the benefits of the hybrid model and how there are differences between a concierge service and the paid value add services that you’re offering. Again it’s just very important to keep in mind that there’s a difference between services that you’re offering to on board people which is the concierge side of things versus the services that you are charging them additional money for.

[41:22] And that could be product customizations, it can be analysis of reports. It can be custom pieces of the product that you’re building. There’s a lot of different ways you can provide value with your products to the customers without resorting to writing additional software. Again, this falls very much under the services umbrella and people definitely understand services. With the new SaaS app sometimes it’s difficult for people to understand those.

[41:45] Dave: And the one thing I’d like to close with is that in Gail’s Business of Software talk, another thing that she sort of closed it up what was you don’t really own the gas pedal on word of mouth. The best gas pedal is a great experience and in this particular case, if you do a product and service hybrid you’re going to be giving people that great experience early on so that’s really going to help drive the growth of your business quite a bit.

[42:10] Mike: That’s a great way to wrap it up. If you have question for us, you can call it in to 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. 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 and we’ll see you next time.