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In this episode of Startups For The Rest Of Us, Mike interviews Mojca Mars, a Facebook Ads expert, about what things you need to do before you even begin running Facebook ads. Some of the topics discussed include lead magnets, custom audiences, email sequences and more.
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Mike: In this episode of Startups for the Rest of Us I’m gonna be talking about Mojca Mars about the foundational work you need to do before even getting started with Facebook Ads. This is Startups for the Rest of Us episode 387.
Welcome to Startups for the Rest of Us–the podcast that helps developers, designers, and entrepreneurs be awesome at building, launching, and growing software products, whether you’ve built your first product or you’re just thinking about it. I’m Mike.
Mojca: I’m Mojca.
Mike: We’re here to share our experiences to help you avoid the same mistakes we’ve made. How are you doing this week?
Mojca: I’m doing very well this week.
Mike: You just got back from an extended vacation, didn’t you?
Mojca: Oh, yeah. I did. It was actually a seven-day vacation. I wish it was a little bit longer but the good thing about it is that I turned off everything. I turned off my phone, I wasn’t on my laptop, and I was completely offline, aside from my Kindle, but that was about it and it felt amazing.
Mike: I used to own a cottage up in the Adirondack Mountains up in upstate New York and it did not have electricity or running water. I noticed that when I went up there–because I just couldn’t charge my phone or anything, I just left it off–just the feeling of being that far disconnected. You couldn’t even hear the refrigerator hum because there was not a refrigerator. It was just very relaxing. I don’t know if you found something with like turning off your phone for that long.
Mojca: Yeah. I was at the beach actually and it felt so good not having my phone and not checking my notifications every two seconds. My brain started to breathe again.
Mike: Yeah. It’s almost like having a giant reset button for your brain.
Mojca: Oh, yeah. It was so good.
Mike: That’s awesome. Today I wanna have you on the show because you are a Facebook Ads Expert and you’re also an Author, a Public Speaker. You spoke in a Double Your Freelancing Conference, you spoke in a FemtoConf, you spoke in a MicroConf Europe this past year, and you’re also speaking at MicroConf in Vegas this coming Spring in about five or six weeks.
I wanted to have you on the show and have you talk a little bit about Facebook Ads because it’s something that we get asked about but I wouldn’t say that we have nearly the level of knowledge that you do so I think that you could definitely shed some light on the topic for us and for the listeners.
Mojca: Yeah. I would love to do that. Yeah.
Mike: Aside from the Facebook Ads Expert, Author, Public Speaker like leave anything out that was a major.
Mojca: Not really, just maybe an interesting story that I actually got fired from my first job.
Mike: Oh.
Mojca: Yeah. That’s how I got into the business of Facebook Ads.
Mike: I was gonna say I hope it wasn’t a Facebook Ads job that you got fired from.
Mojca: It wasn’t a Facebook Ads job, I was a copywriter at an advertising agency. It was similar but not the same. But the thing is that I started to notice that all of our clients were asking about social media—Facebook—and our agency, they weren’t interested in that. We started to drift apart and they fired me. That’s how I got into the business.
Mike: You kind of fell into it, it wasn’t like you actively sought it out and decided, “Hey, I’m gonna do this.”
Mojca: I was thinking about it for a while. I was always saying, “I’m gradually going to make that transfer or that change and gradually go from being employed to working for myself.” But then I got fired and I said, “Okay, this is my chance.”
Mike: Not everything kind of goes exactly as planned anyway. I think there’s a lot of people who listen to this show who’ve kind of just fallen into whatever it is that they got into. I don’t think that that’s necessarily uncommon but it’s interesting that you took that opportunity or took that—I don’t wanna say low point in your career—but like that native experience and turned it around into a greatly positive one.
Mojca: Exactly, yeah. Looking back now, that kick-in-the-butt was the best thing that happened to me.
Mike: Awesome. I wanted to talk to you today specifically about setting up a foundation for how you’re going to run Facebook Ads. We’ve talked a little bit about this before the show about what is it that people need to know, what common mistakes they make. I wanted to walk through what you feel is the foundational things that people need to put into place before they even start running Facebook Ads because I think it’s very easy to get wrapped up in all the things that you need to do in order to set up a Facebook Ads account but not think about the fundamental framework or structures that you need to have in place to actually manage an advertising campaign using those tools that they provided. I wanted to talk through those and just figure out what exactly it is that people need to do first.
Mojca: Yeah. You are totally right about that. I think that when a person decides to use or to start experimenting with Facebook advertising, they all just say, “Okay, I have a product to sell, what can I do now? How can I sell this product with Facebook?” But they don’t think about the other things that you need to have updated or you need to have ready to go when you start advertising.
Mike: Right. I think the first one that you had thrown out there was a lead magnet. I think this is something that most people—myself included—kind of put at the end of the list. But we’re gonna talk about that first because it’s almost like the most important thing that the have to have in place.
Mojca: Oh yeah, absolutely. I think it’s the most underestimated marketing asset when it comes to your Facebook advertising.
Mike: Let’s talk about the lead magnet itself. When you’re creating these Facebook Ads, what forms can a lead magnet take? What sorts of things should you be advertising to people in order to move them through that sales funnel using a Facebook Ad?
Mojca: Yeah. It should be something that’s very valuable and just easy to consume so you don’t want a very long ebook, let’s say, that you offer for free. You want it to be like a snackable PDF, a cheat sheet, or maybe, let’s say, a chapter of your ebook, let’s say just a free chapter, a couple of pages, something that’s easily consumable. Once they download it, they can browse through it very quickly and get the sense of your business, of your expertise, of what do you do, and so on.
Also, one good lead magnet is, for example, an email course or a webinar. Webinars do really, really well with Facebook Ads. If you, let’s say, sell services or a software and you can have a webinar on that topic explaining something your software does, or not your software but maybe just talking about your expertise and what your software, some problem that it solves, that’s a very good start. Having a webinar on that topic is a great start.
Mike: There’s two things that I kind of wanna unpack that you just said. The first one was like a full book is not a good idea. Why is that? It seems to me like the more value you’re giving them upfront, isn’t that better?
Mojca: With a lead magnet, you want that lead magnet to be very snackable. Usually, we advertise the lead magnet to someone that has visited our webpage for the first time. We want to offer them something for free but we don’t want to overwhelm them with different possibilities and we want them to get that value. Let’s say you had someone does visit your webpage and soon after, he or she sees a Facebook Ad for your lead magnet. If it’s the ebook, they won’t go through that ebook, they won’t read it through if it’s a 50 page long ebook because they don’t know you at the moment. They will download it but that lead is not going to be very qualified so you want to offer a very snackable asset like a PDF so they would go through it and they will be interested in seeing more of that.
Mike: I got it. That’s like actually a very subtle difference, I think because like an ebook for example, they might download it and according to Facebook would be a conversion but later on I guess moving them through your sales funnel, they’re gonna end up to be a poor converting prospect because they just didn’t read it.
Mojca: Exactly. I think that’s one of the aspects that a lot of marketers are forgetting about so you don’t want to just collect leads, you want to get quality leads, someone that you can convert at the end.
Mike: Excellent. It’s not even just like how much value you are supplying to them, it is the appropriate amount of value at the stage of the relationship that you’re in.
Mojca: Exactly. That’s a perfect description.
Mike: Perfect. The other thing that you said was that email courses and webinars do really well. Could you unpack that a little bit? Why is it that those do so well?
Mojca: For webinars specifically, it let’s you connect with your target audience in a totally different way. They see your face, they get to know you personally, so to speak. That’s a good connection to establish with your target audience. You want them to connect with you on a personal level because they would be easier to convert.
I’ve done this for such a long time so I have a ton of webinars and I do them very regularly. I see that change in my target audience. Once I started doing webinars, I started collecting a lot more leads because people were drawn to me and were drawn to my personality and my content and they wanted to get advice from me. That really helped with all of the other marketing aspects. The people that came to my webinars came to another webinar that I had later on and they just stuck to it. That was a really big difference, just connecting with them on a totally different level.
Mike: Does that impact the initial conversion rate or you’re really referring to the total conversion rate from first touch to end when you’re hopefully making a sale? Obviously, those two things are different but it goes back to what I just asked about delivering the appropriate amount of value based on the stage of the relationship. Is it localized or is it really like a global improvement?
Mojca: It works both ways. People are really easy to convert and come to webinars. When they see an ad for a webinar, they usually sign up very quickly and they also come to the webinar. That conversion is really, really easy.
The people that come to the webinars are more likely to purchase. That happened to me time and time again. People that actually attended and came to my webinars, they were so easy to convert at the end because we had a totally different relationship than someone that just downloaded a lead magnet and read through it and that was it.
Mike: Awesome. I think it absolutely has a much bigger factor associated with that. Anything with either advertising or demos. I found that demos for example convert really, really well just because there’s that one on one interaction, but I think even in a webinar, you can get a good sense from somebody whether or not they are selling snake oil versus actually committed to solving whatever the problem happens to be.
Mojca: That’s a good point. I worked with a lot of software companies and demos, they work amazing. We frequently have webinars that are just pretty much live demos and people sign up to that and people convert at the end. At the end of a demo, we offer let’s say, a free trial or a special price for the software and they convert really, really well.
Mike: Now that you’ve got an idea for lead magnet or you’ve gotten one developed, how do you go about promoting that on Facebook? Because that obviously lead the next step like you have to have that asset first and then once you have that, then you have to promote it whether it’s through retargeting audience or to a completely new audience. How do you go about putting it in front of people and finding the right people to do it?
Mojca: You have two different objectives that you can use when it comes to advertising lead magnet. There’s this thing called a Lead Ad, Facebook calls it a Lead Ad. It’s basically a type of ad that lets a user download your lead magnets, PDF preferably, in just a couple of clicks. Facebook collects your email and basically kind of passes it on to you.
The other objective that you can use is more like a traditional ad that is called website conversions. You can choose whatever feels good for you. Lead Ads are very easy to set up so you don’t even need a landing page, you just need that lead magnet and Facebook will take care of the rest.
On the other hand, you have the traditional ads called website conversions. Per my experience, website conversions, when it comes to Lead Ads, tend to work a little bit better although you still need a landing page. The set up takes a little bit longer but it converts a lot better and the leads are more qualified. But anyone listening to this podcast, I do recommend experimenting with both objectives and see what works for you and what type of leads you get from each of these objectives.
Mike: I understand in general why it’s best practice to experiment with those things. But what sorts of things have you seen when you go through and start doing the experimentation? Because you’ve said that the website conversions tend to work better even though the Facebook Lead Ads are easier to set up. What have you seen as a direct result of the experiments?
Mojca: With traditional ads, with website conversions, the cost per lead was a bit higher but the quality of those leads was definitely better than the leads that we collected through Lead Ads. Maybe that has something to do with just how easy it is to collect leads with Lead Ads so a lot of people just collect those two buttons and download the lead magnet and you have their email. Just people really going to the landing page where you have your lead magnet described for example, that’s a bit harder to do. I think, that’s where most quality leads come from.
Mike: Now that we’ve kind of gotten through the lead magnet itself and talk a little bit about how to promote them inside of Facebook, the next step is taking a look at the email sequences that you need to setup because obviously, once somebody has downloaded the lead magnet, you want to be able to email them. Obviously, your Facebook is gathering their email address. Then the next step is to put them in some sort of email campaign. What sorts of things should people pay attention to there?
Mojca: When it comes to email sequences, I think that like you said, this is definitely one of the things that you do need to have set up before you start advertising because once a person downloads the lead magnet, you want to do something with that lead, not just have it on your email list and that’s it.
Usually, I recommend doing five to seven emails long email sequences that talk about a specific topic that has something to do with the product or a software or a service that you’re going to pitch at the end. Each email sequence that you write has to have some sort of an outcome. You want to reach or you want to achieve a goal at the end. You definitely want to pitch that goal or to pitch something at the end whether that is an ebook, a service, a software.
Mike: Somebody just came to mind as you were talking about pitching the product or service in that email sequence, one thing that I was wondering about was going back to the lead magnets, will a good lead magnet be a video versus a webinar or a demo? Because it almost seems like that’s a way to automate that piece of it without actually being there.
I’ve seen a lot of webinar like automated webinar things and they tend to look very scammy. I’m curious to know whether just like a video hosted it like YouTube, or Wistia, or Vimeo or anything like that. Is that a decent lead magnet or not?
Mojca: I have a love-hate relationship with automated webinars. Like you said, they do look scammy and people recognize that and people tend to move away from that kind of content. What I would recommend is, like you said video demos that aren’t kind of gift wrapped into, “Wow, this is a live demo that we’re doing and everyone knows that it’s not a live demo.” Maybe just say, unpack that into, “This is a video demo that has been pre-recorded, etc., etc.” If you pack it like that and offer video content as a lead magnet, that’s definitely a very good way to go about it especially because video consumption is on the rise and people are watching videos regularly so just doing that is definitely a great way to go.
Mike: I was just trying to think about how to combine the two things without actually being present because automated things, if people are working on product themselves, it will be in present for webinar is not always the easiest thing in the world. Video’s kind of the next best but you’re absolutely right. Everytime I go to one of those automated webinars where they tried to pitch you do something live, it really comes across the wrong way just because you’re using that.
Mojca: Yeah. I think it has an impact on your brand as well. People will look at you in a different way once you do that. Like I said, if I do any demos or anything like that, I pack it in a different way. I don’t say, “Yeah, this is the live demo that we’re doing.” Everyone knows that it’s not. But I just pack it, “Here’s a video con, here’s a video over demo.” I’m not trying to say that it’s live or anything. I’d want to kind of communicate that integrity.
Mike: Okay. Kind of going back to the email sequences, you said pitch your products or your service at the end. Did you mean by the end of the entire series or was there something specific, should your goal for the entire email sequence of five to seven emails be the same at the end of each email or is it wise to kind of divide it up and have different mini goals or something like that along the way? I’m not sure how to get too complicated with it, that’s really what I’m saying.
Mojca: Yeah. I don’t wanna get too complicated with it as well. I think it depends on how well structured your funnels are. Some people have the same goals for every email sequences and some people have mini goals. Some people have two different funnels and two different email sequences for two different target audiences so it all depends on what setup you have.
If you’re just starting out, I do recommend just making it easy on yourself and just have one goal. As your business gets more structured, you can definitely work your way down and just kind of create different funnels and work your way from there.
Mike: I think that’s the best advice; don’t create more complexity just for the sake of creating complexity.
Mojca: Yeah. I did that, I did that once and I regret it.
Mike: I think we all do.
Mojca: My Drip is going crazy with the different funnels and it’s just too complicated and whenever I login, I just get so stressed. It’s my own downfall too.
Mike: Now that we’ve got the lead magnet in place, we’ve got the email sequence set up, what’s the next step? It seems to me like you need to dive into Facebook at some point along the way if you’re gonna get into this Facebook Ads. What’s the first step in setting up Facebook Ads?
Mojca: The absolute first step that you should do is implement a Facebook Pixel to your webpage so you can retarget anyone that visits your webpage. You want to do that as soon as possible so you are collecting all of that data before you launch your first campaign. That is one step that a lot of people just forget to take once they are ready to implement their first campaign they’re like, “Woah, how am I going to retarget people?” The first thing, the absolute first thing is to implement a Facebook Pixel to your webpage and it’s a two minute task so it shouldn’t take you too long and it just has a lot of benefits to it.
Mike: You can just install this on your website even if you are not running the Facebook Ads, you can always just put it there and then go off like create the lead magnet and then email sequence and then come back to this.
Mojca: Oh yeah, absolutely. You can do it right away and maybe come back to it after two months. You don’t need to be creating the campaign immediately after you implement your Facebook Pixel. Actually, the preferred way is not to launch a campaign, especially not a retargeting campaign, immediately after implementing a Facebook Pixel.
Mike: Why is that?
Mojca: The most effective campaign to start with is a retargeted campaign where you are retargeting for example people that are visiting your web page so people that already know what you do. Without a Facebook Pixel implemented to your site and without all of that data collected, you won’t be able to retarget people so you would be stuck with interest targeting and targeting based on different interests and behaviors which is a good approach but definitely not as effective as retargeting.
Mike: Got it. Once you’ve got the Facebook Pixel in place, is there anything especially need to pay attention to when you’re implementing the Facebook Pixel or is it just like you install this one little snippet and everything takes care of itself?
Mojca: You install this one little snippet but you have to install it in the right place.
Mike: Oh, okay.
Mojca: Yeah.
Mike: You really have to follow their guidelines of exactly where it needs to go?
Mojca: Yeah. You need to put it in the head section of your webpage. A lot of businesses do a mistake and implement it into a body section. For example, that Facebook Pixel triggers just on their homepage, not on their whole webpage. Just be careful where you implement it. Facebook has really clear instructions on how to do that. It’s really, really easy. You just have to implement it once in the head section and you’re good to go.
Mike: Awesome. Now that we’ve got the Facebook Pixel in place, what’s the next step? How do you get started setting up who’s gonna get targeted? Assuming the Facebook has been there a little while–should you start with retargeting? Is there a different approach that you should use?
Mojca: If you have your Facebook Pixel implemented for a while, let’s say for a month and it has collected a lot of data from your website visitors, you definitely want to implement a custom audience. Custom audiences is a fancy word of you uploading your email list or just connecting your Facebook Pixel to custom audiences and just build up your retargeted audience, so to speak. That’s definitely the first thing that you should do because custom audiences take a little while to properly populate, it doesn’t take a day but it does take an hour so you want to take care of that before you launch your first campaign.
Mike: This is one of the situations were even though you wanna get it done right away, you wanna be able to allocate that hour to go over and get this taken care of, it could very well take you two, three, five hours, depending on how long it takes Facebook to process things and put things together for you.
Mojca: Yeah. You can actually, as soon as you implement a Facebook Pixel, you can actually create your first custom audience of just retargeted audience of your website visitors, you can create it immediately. Even if you come back after a month, that audience will still grow and regularly update day after day. You don’t need to wait for a month and then create a custom audience but you can do it right away and just wait for it to populate properly even if it takes a month.
Mike: Got it. You uploaded, you set up this custom audience, you recommend getting started with the retargeting audience first.
Mojca: Yeah. Correct.
Mike: After that, now you’ve got this retargeting audience set up, now what?
Mojca: Now, what you wanna do is because you want to start retargeting and you want to start retargeting people with a lead magnet, you need to let Facebook know somehow what a conversion is.
Setting up a custom conversions is the right thing to do as a next step. You have a custom conversions tab in your Facebook Ads Manager. Basically what you need to set up is you need to let Facebook know what your Thank You page is. For example for this lead magnet, this is the Thank You page and you connect Facebook to that Thank You page. Anytime someone lands on that Thank You page, the Facebook Pixel gets triggered and Facebook recognizes that as a conversion.
When you set up custom conversions, you will be able to optimize for those conversions. For example, you will create a campaign that’s called website conversions and you’ll say, “Okay, I want this website conversion.” Facebook will optimize everything properly. When someone downloads or converts, Facebook will analyze that person and then target similar people to that person because they are able to optimize based on conversions because you created that custom conversions in the first place.
Mike: Now, I know that you can go in there and you override that and just say, “I’m gonna manage this based on behaviors or interests or things like that.” Is that something that you would recommend people do or do you generally recommend that people just let Facebook analyze that data itself? Because I think the concern that people have—myself included—is that what an incentive does Facebook have to make them convert for you because the more that they put those advertisements out, the more clicks that they get even if it doesn’t necessarily convert. It kind of makes you pay more. It’s almost like not in their best interest to drive the greatest returns on that. What kinds of things do you have to comment on about that?
Mojca: When it comes to retargeting people, especially if I work with smaller audiences, I tend not to narrow down based on interests or behaviors, it will impact the results if I narrow it down especially if an audience is already really, really small. If an audience is a little bit bigger, I do experiment with narrowing that down. That said, as you said, Facebook has its own ways of analyzing who to show your ad to. Based on my experience, that works really, really well. I mean, not only would generate a lot of leads for a very effective price, those leads are actually of good quality as well.
That said, if you do work with interest targeting and if you’re using interest targeting as your targeting approach, or behavioral targeting for that matter, you do want to narrow it down based on different behaviors so you don’t want to, for example, target two million people and let Facebook do its job because they won’t attract the most quality audience, to be honest.
Mike: I guess one of the ballpark ranges of, in terms of size, when should you decide to start tweaking based on behaviors or interests and things like that versus when should you just let Facebook do its job. Is there guidelines around like different sizes?
Mojca: If you have, let’s say, a retargeted audience of 100,000 people, I would definitely start playing with narrowing that down.
Mike: Got it. Anything less than that, maybe you could probably make a judgement call around 50k or so but less than that is fine just let them retarget.
Mojca: Yeah, yeah, yeah. It really depends on the service that you’re offering of yourself or whatever. It’s not really the size of the audience but the ballpark figure would be around 100,000 people. You can start playing around with it with a little smaller audience, like you said 50k. That said, what I do recommend is just keeping your eye on that campaign in case you noticed that, “Okay, that approach definitely isn’t working.”
Mike: Okay. Again, all of this stuff that we’ve talked about just in the past couple of minutes is really for a custom audience built around retargeting?
Mojca: Correct. Yeah. Because like I said, retargeting is the best way to start with Facebook Ads.
Mike: Okay. Now that the we’ve got the custom audience based on that retargeting campaign, we’ve got the custom conversion set up for our Thank You page, is there anything else that we really need to pay attention to or does that really put us in a good position to start optimizing from there?
Mojca: That definitely puts you in a good position. You will have all the assets in place to successfully launch your first campaign with Facebook Ads.
Mike: The other one that I’ve heard people talk about in addition to retargeting audiences is look alike audiences. Can you talk a little bit about specifically what those are and how those play into people that you’re retargeting from your website?
Mojca: For sure. Look alike audiences are basically cold audiences that are created on top of some data that Facebook has or basically the data that you provide to Facebook. For example, let’s say you have collected a lot of data on your website visitors, you have 1,000 website visitors connected to your Facebook Ad account. But you do want to experiment with cold audiences but you’re not sure what interests to use, what behavioral targeting to do, you’re not exactly sure how to go about that. But you do know that your website visitors are very qualified.
What you can do is create a lookalike audience based on your website visitors. What Facebook will do is they will analyze your website visitors and they will analyze their behaviors, their interests, their demographic data, where are they coming from, how old are they, and they will create a brand new audience based on that information. A lookalike audience is an audience to feel that, don’t know who you are, it’s a cold audience but it’s built upon, for example, website visitors. It’s built up on a custom audience.
Mike: Got it. They work together not necessarily directly opposing from one and each other.
Mojca: Yeah. Correct, correct.
Mike: Okay. Once you’ve got all of these fundamentals in place, at this point you obviously can go and you need to start optimizing things but I think the other approach that I can think of here is to go back and start almost like creating a sequence where people are moving through a sales funnel. Does that really not makes sense in this case where you’re moving them from one Facebook conversion to the next? Is it the point to really just get their contact information or email address and put them on your newsletter?
Mojca: Creating different funnels definitely makes a lot of sense but I also wanna come back to what we previously talked about. You don’t want to make things too complicated for yourself. If you already have a funnel that starts let’s say with the lead magnet and then with the demo and then gradually ends up with a pitch, you definitely want to implement that to your Facebook Ads. But if you don’t have that funnel already developed, you want to make things as easy for yourself as possible and maybe just use one lead magnet. Once they go through an email sequence and at the end kind of connect Facebook to your email sequence again and start pitching them when they enter the pitch sequence in your email sequence as well.
Mike: Got it. That makes a lot of sense. One of the things I did before this episode is I went on on Twitter and asked people if they had any questions for you. I’m gonna go through a couple of questions here and just kind of rapid fire through them and let you kind of answer them.
The first one is from Jamie Laurence. He said, “Is it morally wrong to use Facebook Ads? It feeds the money machine and makes us culpable in data collection.” I think what he’s really referring to is the new information kind of coming out about like how much data Facebook is actually collecting on people, which I think people knew but I don’t think they had ever looked at it before, had a way to look at it.
Mojca: Yeah. I think that’s a fantastic question and it’s definitely something that we need to be talking about. I talk about it with my clients, I talk about it with my students, I talk about it with everyone that wants to talk about it. I wouldn’t exactly say that it makes us culpable because the data collection that we’ve seen was a different one, it was a misuse of data, it was a criminal offense. It’s not similar to the data collection or targeting options that you see on Facebook. There are different nuances to it. That said, what I do think is that you have to decide on your own.
When you do Facebook advertising, the truth to it all is that you will be investing in Facebook. You will be investing in that business funnel, you will be investing in data collection as well. If you feel fine with that, by all means, just continue advertising and just use Facebook advertising as it is intended for you to use it. If not, just not don’t do Facebook anymore, don’t do Facebook advertisements anymore.
To be honest, I did have a couple of clients that left for that specific reason. With the upcoming news, they just decided that they don’t want to invest on Facebook Ads anymore, they don’t want to support that and I support their decision. I know where they’re coming from so I’m fine with it. That said, I do think people will still advertise on Facebook. But coming back to the idea, what I do recommend is just using Facebook advertising as it was intended for you to use it.
Mike: Yeah. I saw an interesting–it was a meme but it was a picture about the US government going in and starting to look at Facebook and how they’d announce that they were gonna do an investigation. On the page itself where they said they were investigating them, it said, it had a Share this through Facebook link.
Mojca: They probably had a Facebook Pixel implemented to their page as well.
Mike. I’m sure that they did.
Moving on, Jeremy asked, “Can Facebook Ads be visual rather than text based? My product is visual and I’d rather show it to people than tell them about it.”
Mojca: Oh, yeah, absolutely. I do support any visual based ads. What I do recommend is—I’m not sure about the product that he was referring to—if you have an opportunity to use video to show off your product, by all means, do that. It’s a similar approach that ecommerce businesses have been using all that time. They are really, really visual based, they have a lot of images or videos of their product. If you have a product that’s similar to that, you can, by all means, go ahead and use the same approach. Like I said, coming back, I do recommend using video in that case, it brings the best results.
Mike: With the video, this kind of goes into how you structure your Facebook Ads, maybe we touched on that for a couple of minutes, but obviously, there’s lots of different ways that you could advertise on Facebook. One of them is to have a video and you could also have like long form copy, short form copy. Could you just kind of touch very briefly on each of those and what your experience has been with them because I don’t necessarily think that we’ve talked about the specifics of what you’re going to put in your ad once it’s out there.
Mojca: Yeah, for sure. First of all, referring to long form copy, what I recently discovered through multiple A/B tests that I’ve done with all of my clients is that long form copy works really, really well, especially if you are advertising a software or a service business, long form copy tends to work really, really well.
Videos as well, along with long form copy. For example, if I’m working with a client that is trying to promote their software, we use long form copy so it’s a very long sales page like copy along with a video of them. It tends to work really well. But for other businesses, I have a couple of ecommerce companies that I worked with this as well, we don’t use long form copy but what we do use is a lot of images of their products.
But if you have a software company, if you offer services, what I do recommend is A/B testing with copy. Launch an ad, one ad with short copy, same visual, one ad using a short copy, one ad using a long copy. I’m definitely taking a bet on that and I think that long form copy will prevail on that case.
Mike: Awesome. The next question comes from Ed and he asked, “Will Facebook tracking effectiveness drop as more people use ad blockers?”
Mojca: Yeah. I love that question. They have been actually saying this for years now. For years, my clients have been coming to me saying, “More and more people are using ad blockers, is effectiveness going to drop?” Actually, we haven’t seen a bigger drop since I started talking about this with my clients two years ago. I think maybe that that drop is gradual, but to be honest, right now I would say that it’s not going to affect Facebook advertising as we might think that it’s going to affect it.
Mike: Our next question comes from [Kelso] and he says, “Do you have any case studies that you can point us to for successful ad campaigns? The second question he says, “How deep should you go with segmentation?” Do you have a couple of things we could link up on the show notes?
Mojca: I’m actually working on them but you will be able to find them on my webpage, definitely.
Mike: Awesome.
Mojca: A couple of results, with Facebook we’ve seen—I’ve worked with an ecommerce company—and we’ve seen up to 400% ROI. That was actually a standard especially when we did retargeting, we had 400% ROI. Or for example working with software companies, one software company in particular, we were paying $20 for an acquisition where lifetime value of a customer was $500 or right now I’m working with another software company and we are paying $50 for a conversion and they’re paying on Google $500 for the same conversions. It’s been incredibly effective.
But as far as segmentation goes, I definitely recommend as much segmentation as possible. That said, you always need to be careful of potential reach, you can segment all you want but if, let’s say, a specific custom audience that you really segmented out, the potential reach is only 20 people, that will not be effective. Be careful of that.
Also you need to keep in mind that the more segmentation that you have, the more work you’ll have with your Facebook Ad campaigns so you really need to decide if you want to do that or not. Segmentation is incredibly effective when it comes to Facebook Ads, like I said, it’s a tricky thing to do especially if you’re working with a bit smaller audiences, but if you have a lot of data collected already, by all means, segment as much as you want, I really recommend it.
Mike: This kind of brings me to a couple of questions. I kind of specifically had like when you are looking at what your ad spend is gonna be and what your minimum reach are, are there kind of guidelines that you would follow? Say make sure that you’re spending at least this much on a daily or weekly basis and make sure that your reach is at least this because otherwise, it’s probably not worth your time. Is there some quick calculation you could do based on “performance metrics” or average conversions kind of going through those Facebook Ads to figure out like if its 20,000 people, you have to have a conversion rate of at least 10% in order for it to be worth it if your cost per good sold is X. Is there anything like that that you can go and point to?
Mojca: Everyone asked me about that and that’s a very, very hard question to answer because for example, I’ve worked with multiple software businesses and they are so different when it comes to conversion rate and ROIs. With each and every customer, and with each and every client, I have to figure out a way of how to properly measure that and how to properly determine how big of an investment we need in order for our Facebook Ads to be effective. If you’re starting with Facebook Ads right now, if you haven’t done this before, I do recommend starting it slow. Don’t say, “Oh well, we have a well established business and we can spend $10,000 a day on Facebook Ads. Let’s just do that.”
Even if right now you have a lot of assets that you can promote, you have the money to do that, I definitely recommend starting slow with investing $50 a day or $100 a day and just kind of seeing what do you can do with that money and establishing where the ROI is coming from and what you need to do and what kind of cost per lead magnet download you can get for that kind of money. Just filling your way through that and then investing more and more once you get the hang of it.
If you do have a small business, so to speak, for example you’re just starting out, you just launched your new product, it hasn’t generated any revenue yet but you do want to experiment with lead generation with Facebook advertising, I recommend starting with $10-$20 a day and just seeing how that goes.
Facebook offers a lot of different tracking options, you can really track your ROI, you can input for example for each lead or for each conversion, you can connect that conversion to a specific value and Facebook will track ROI. It all comes down to your setup and so on.
Mike: Thanks. That’s extremely helpful because I think that the ballpark numbers that people have, people just don’t even really know where to start in terms of how much to spend, I mean is it $5, $10, $20. I think that the guideline of $10-$20 a day, at least to start of with especially if you’re just starting out and you just have a new business or product that you’re pushing out there, it sounds totally reasonable and I think within the reach of most people. We hear people talk about like you just mentioned, $10,000 a day, some products are just not even gonna make that in a year. It’s just not realistic.
Mojca: Yeah, yeah.
Mike: I think the last question I had was how do you go about managing or documenting your custom audiences and the custom conversions because one thing that I find, especially when it gets into like marketing automation side of things, you tend to lose track of stuff over time even if you’re working on it right now, it’s very easy to forget all the specifics of it and a week or five weeks or two months down the road. How do you go about tracking those things in a way that’s going to be easy for you to come back to later?
Mojca: Yeah. I absolutely know what you’re talking about because you have different campaigns within Facebook, you have different custom conversions, different custom audiences, just a ton of different things that you need to be tracking off and you need to have a higher level approach and just a higher level view on.
First of all, what I would emphasize is to properly name your custom conversion so you don’t get lost in, for example, lead number one or lead number two, you want to name them properly. Kind of the formula that I use on Facebook when it comes to custom conversions is I describe that custom audience as much as possible. For example, if you’re using a retargeted audience, I use website visitors 180 days landing page or website visitors 180 days this blog post. I use very specific names that I always know what this is when I come in Facebook.
Same for custom conversions and I document everything in Google Docs or Spreadsheets. I also document a lot of my custom conversions especially audiences and basecamps so I have documents for each client, for different audiences, it piles up, I tell you. Just using Spreadsheets, I think that is kind of the best way to go about it just to keep track of everything and for you not to get lost in the amount of data and different audiences and custom conversions and every other assets.
Mike: Awesome. I think that’s probably a pretty good place for us to wrap up. Is there anything that you wanna add or leave the listeners with?
Mojca: Maybe just giving one advice. I know that the Facebook might look very overwhelming. When you decide that you want to start advertising, you come on Facebook and you open up your Facebook Ads Manager and there are a ton of different options that you can choose from, don’t be afraid, it’s all very manageable. Facebook is really trying to simplify the process of advertising. Just like I said, start slow, invest a couple of bucks in launching your first campaign and see where that takes you and I promise that it will be worth it.
Mike: Awesome. If people have questions for you or they wanna follow up and kind of check into what you’re working on or if they wanna have you manage their Facebook Ads, where can they find you?
Mojca: Yeah. I would love for them to write me, I have my email so mojca@superspicymedia.com. I would be more than happy to answer any questions or hesitation or to just help them with setting up their first campaign. Send me an email at mojca@superspicymedia.com or if you’re interested in my blog posts and videos that I publish, services, you can find me on superspicymedia.com and you’ll find everything there.
Mike: I also see a link here for the facebookadsacademy.com?
Mojca: Oh, correct, yeah. I have the Facebook Ads Academy. If you’re just starting out with advertising and you need someone to pretty much hold your hand and help you with launching your first campaign or if you already launched the campaign and you have a question of how to set things up or what does this mean or what do these results mean, Facebook Ads Academy is definitely a great way to start. It’s basically a community of small business owners, we just help each other out when it comes to Facebook advertising, give each other advice, comment on specific visuals or copy.
Mike: I could say from experience that looking through the Facebook Ads Manager right next to somebody else who’s supposedly using the exact same thing, sometimes the interfaces can be very different from one to the next. I remember you telling me over FemtoConf that the ads manager, they’re running like a couple dozen of them at the same time basically A/B testing between them. Your interface could very well be different from somebody else’s.
Mojca: Yeah. I actually heard that they’re running hundreds of different Facebook Ads Manager. You might have a Facebook Ads Manager version that I do not have. I used to remember FemtoConf, I think they were like three different versions of Facebook Ads but it’s just that we were working with.
Mike: Yeah. They were like six or seven people in the room which makes that even scary.
Mojca: Yeah, it was crazy.
Mike: I think that about wraps us up for the day. Mojca, thank you very much for coming on the show. I really appreciate you having you.
Mojca: Thank you so much for having me.
Mike: We will see you at MicroConf in about five weeks or so too.
Mojca: Yeah. I’m so excited. This is going to be my first time in Vegas.
Mike: Awesome. You will be there straight through Growth Edition through Start Edition.
Mojca: Oh yeah.
Mike: If anyone is there, feel free to stop by and say hi.
Mojca: Yup.
Mike: If you have a question for us, you can call it into our voicemail number at 1-888-801-96-90 or you can email 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 and visit startupsfortherestofus.com for a full transcript of each episode. Thanks for listening and we’ll see you next time.
Welcome to Startups for the Rest of Us–the podcast that helps developers, designers, and entrepreneurs be awesome at building, launching, and growing software products, whether you’ve built your first product or you’re just thinking about it. I’m Mike.
Mojca: I’m Mojca.
Mike: We’re here to share our experiences to help you avoid the same mistakes we’ve made. How are you doing this week?
Mojca: I’m doing very well this week.
Mike: You just got back from an extended vacation, didn’t you?
Mojca: Oh, yeah. I did. It was actually a seven-day vacation. I wish it was a little bit longer but the good thing about it is that I turned off everything. I turned off my phone, I wasn’t on my laptop, and I was completely offline, aside from my Kindle, but that was about it and it felt amazing.
Mike: I used to own a cottage up in the Adirondack Mountains up in upstate New York and it did not have electricity or running water. I noticed that when I went up there–because I just couldn’t charge my phone or anything, I just left it off–just the feeling of being that far disconnected. You couldn’t even hear the refrigerator hum because there was not a refrigerator. It was just very relaxing. I don’t know if you found something with like turning off your phone for that long.
Mojca: Yeah. I was at the beach actually and it felt so good not having my phone and not checking my notifications every two seconds. My brain started to breathe again.
Mike: Yeah. It’s almost like having a giant reset button for your brain.
Mojca: Oh, yeah. It was so good.
Mike: That’s awesome. Today I wanna have you on the show because you are a Facebook Ads Expert and you’re also an Author, a Public Speaker. You spoke in a Double Your Freelancing Conference, you spoke in a FemtoConf, you spoke in a MicroConf Europe this past year, and you’re also speaking at MicroConf in Vegas this coming Spring in about five or six weeks.
I wanted to have you on the show and have you talk a little bit about Facebook Ads because it’s something that we get asked about but I wouldn’t say that we have nearly the level of knowledge that you do so I think that you could definitely shed some light on the topic for us and for the listeners.
Mojca: Yeah. I would love to do that. Yeah.
Mike: Aside from the Facebook Ads Expert, Author, Public Speaker like leave anything out that was a major.
Mojca: Not really, just maybe an interesting story that I actually got fired from my first job.
Mike: Oh.
Mojca: Yeah. That’s how I got into the business of Facebook Ads.
Mike: I was gonna say I hope it wasn’t a Facebook Ads job that you got fired from.
Mojca: It wasn’t a Facebook Ads job, I was a copywriter at an advertising agency. It was similar but not the same. But the thing is that I started to notice that all of our clients were asking about social media—Facebook—and our agency, they weren’t interested in that. We started to drift apart and they fired me. That’s how I got into the business.
Mike: You kind of fell into it, it wasn’t like you actively sought it out and decided, “Hey, I’m gonna do this.”
Mojca: I was thinking about it for a while. I was always saying, “I’m gradually going to make that transfer or that change and gradually go from being employed to working for myself.” But then I got fired and I said, “Okay, this is my chance.”
Mike: Not everything kind of goes exactly as planned anyway. I think there’s a lot of people who listen to this show who’ve kind of just fallen into whatever it is that they got into. I don’t think that that’s necessarily uncommon but it’s interesting that you took that opportunity or took that—I don’t wanna say low point in your career—but like that native experience and turned it around into a greatly positive one.
Mojca: Exactly, yeah. Looking back now, that kick-in-the-butt was the best thing that happened to me.
Mike: Awesome. I wanted to talk to you today specifically about setting up a foundation for how you’re going to run Facebook Ads. We’ve talked a little bit about this before the show about what is it that people need to know, what common mistakes they make. I wanted to walk through what you feel is the foundational things that people need to put into place before they even start running Facebook Ads because I think it’s very easy to get wrapped up in all the things that you need to do in order to set up a Facebook Ads account but not think about the fundamental framework or structures that you need to have in place to actually manage an advertising campaign using those tools that they provided. I wanted to talk through those and just figure out what exactly it is that people need to do first.
Mojca: Yeah. You are totally right about that. I think that when a person decides to use or to start experimenting with Facebook advertising, they all just say, “Okay, I have a product to sell, what can I do now? How can I sell this product with Facebook?” But they don’t think about the other things that you need to have updated or you need to have ready to go when you start advertising.
Mike: Right. I think the first one that you had thrown out there was a lead magnet. I think this is something that most people—myself included—kind of put at the end of the list. But we’re gonna talk about that first because it’s almost like the most important thing that the have to have in place.
Mojca: Oh yeah, absolutely. I think it’s the most underestimated marketing asset when it comes to your Facebook advertising.
Mike: Let’s talk about the lead magnet itself. When you’re creating these Facebook Ads, what forms can a lead magnet take? What sorts of things should you be advertising to people in order to move them through that sales funnel using a Facebook Ad?
Mojca: Yeah. It should be something that’s very valuable and just easy to consume so you don’t want a very long ebook, let’s say, that you offer for free. You want it to be like a snackable PDF, a cheat sheet, or maybe, let’s say, a chapter of your ebook, let’s say just a free chapter, a couple of pages, something that’s easily consumable. Once they download it, they can browse through it very quickly and get the sense of your business, of your expertise, of what do you do, and so on.
Also, one good lead magnet is, for example, an email course or a webinar. Webinars do really, really well with Facebook Ads. If you, let’s say, sell services or a software and you can have a webinar on that topic explaining something your software does, or not your software but maybe just talking about your expertise and what your software, some problem that it solves, that’s a very good start. Having a webinar on that topic is a great start.
Mike: There’s two things that I kind of wanna unpack that you just said. The first one was like a full book is not a good idea. Why is that? It seems to me like the more value you’re giving them upfront, isn’t that better?
Mojca: With a lead magnet, you want that lead magnet to be very snackable. Usually, we advertise the lead magnet to someone that has visited our webpage for the first time. We want to offer them something for free but we don’t want to overwhelm them with different possibilities and we want them to get that value. Let’s say you had someone does visit your webpage and soon after, he or she sees a Facebook Ad for your lead magnet. If it’s the ebook, they won’t go through that ebook, they won’t read it through if it’s a 50 page long ebook because they don’t know you at the moment. They will download it but that lead is not going to be very qualified so you want to offer a very snackable asset like a PDF so they would go through it and they will be interested in seeing more of that.
Mike: I got it. That’s like actually a very subtle difference, I think because like an ebook for example, they might download it and according to Facebook would be a conversion but later on I guess moving them through your sales funnel, they’re gonna end up to be a poor converting prospect because they just didn’t read it.
Mojca: Exactly. I think that’s one of the aspects that a lot of marketers are forgetting about so you don’t want to just collect leads, you want to get quality leads, someone that you can convert at the end.
Mike: Excellent. It’s not even just like how much value you are supplying to them, it is the appropriate amount of value at the stage of the relationship that you’re in.
Mojca: Exactly. That’s a perfect description.
Mike: Perfect. The other thing that you said was that email courses and webinars do really well. Could you unpack that a little bit? Why is it that those do so well?
Mojca: For webinars specifically, it let’s you connect with your target audience in a totally different way. They see your face, they get to know you personally, so to speak. That’s a good connection to establish with your target audience. You want them to connect with you on a personal level because they would be easier to convert.
I’ve done this for such a long time so I have a ton of webinars and I do them very regularly. I see that change in my target audience. Once I started doing webinars, I started collecting a lot more leads because people were drawn to me and were drawn to my personality and my content and they wanted to get advice from me. That really helped with all of the other marketing aspects. The people that came to my webinars came to another webinar that I had later on and they just stuck to it. That was a really big difference, just connecting with them on a totally different level.
Mike: Does that impact the initial conversion rate or you’re really referring to the total conversion rate from first touch to end when you’re hopefully making a sale? Obviously, those two things are different but it goes back to what I just asked about delivering the appropriate amount of value based on the stage of the relationship. Is it localized or is it really like a global improvement?
Mojca: It works both ways. People are really easy to convert and come to webinars. When they see an ad for a webinar, they usually sign up very quickly and they also come to the webinar. That conversion is really, really easy.
The people that come to the webinars are more likely to purchase. That happened to me time and time again. People that actually attended and came to my webinars, they were so easy to convert at the end because we had a totally different relationship than someone that just downloaded a lead magnet and read through it and that was it.
Mike: Awesome. I think it absolutely has a much bigger factor associated with that. Anything with either advertising or demos. I found that demos for example convert really, really well just because there’s that one on one interaction, but I think even in a webinar, you can get a good sense from somebody whether or not they are selling snake oil versus actually committed to solving whatever the problem happens to be.
Mojca: That’s a good point. I worked with a lot of software companies and demos, they work amazing. We frequently have webinars that are just pretty much live demos and people sign up to that and people convert at the end. At the end of a demo, we offer let’s say, a free trial or a special price for the software and they convert really, really well.
Mike: Now that you’ve got an idea for lead magnet or you’ve gotten one developed, how do you go about promoting that on Facebook? Because that obviously lead the next step like you have to have that asset first and then once you have that, then you have to promote it whether it’s through retargeting audience or to a completely new audience. How do you go about putting it in front of people and finding the right people to do it?
Mojca: You have two different objectives that you can use when it comes to advertising lead magnet. There’s this thing called a Lead Ad, Facebook calls it a Lead Ad. It’s basically a type of ad that lets a user download your lead magnets, PDF preferably, in just a couple of clicks. Facebook collects your email and basically kind of passes it on to you.
The other objective that you can use is more like a traditional ad that is called website conversions. You can choose whatever feels good for you. Lead Ads are very easy to set up so you don’t even need a landing page, you just need that lead magnet and Facebook will take care of the rest.
On the other hand, you have the traditional ads called website conversions. Per my experience, website conversions, when it comes to Lead Ads, tend to work a little bit better although you still need a landing page. The set up takes a little bit longer but it converts a lot better and the leads are more qualified. But anyone listening to this podcast, I do recommend experimenting with both objectives and see what works for you and what type of leads you get from each of these objectives.
Mike: I understand in general why it’s best practice to experiment with those things. But what sorts of things have you seen when you go through and start doing the experimentation? Because you’ve said that the website conversions tend to work better even though the Facebook Lead Ads are easier to set up. What have you seen as a direct result of the experiments?
Mojca: With traditional ads, with website conversions, the cost per lead was a bit higher but the quality of those leads was definitely better than the leads that we collected through Lead Ads. Maybe that has something to do with just how easy it is to collect leads with Lead Ads so a lot of people just collect those two buttons and download the lead magnet and you have their email. Just people really going to the landing page where you have your lead magnet described for example, that’s a bit harder to do. I think, that’s where most quality leads come from.
Mike: Now that we’ve kind of gotten through the lead magnet itself and talk a little bit about how to promote them inside of Facebook, the next step is taking a look at the email sequences that you need to setup because obviously, once somebody has downloaded the lead magnet, you want to be able to email them. Obviously, your Facebook is gathering their email address. Then the next step is to put them in some sort of email campaign. What sorts of things should people pay attention to there?
Mojca: When it comes to email sequences, I think that like you said, this is definitely one of the things that you do need to have set up before you start advertising because once a person downloads the lead magnet, you want to do something with that lead, not just have it on your email list and that’s it.
Usually, I recommend doing five to seven emails long email sequences that talk about a specific topic that has something to do with the product or a software or a service that you’re going to pitch at the end. Each email sequence that you write has to have some sort of an outcome. You want to reach or you want to achieve a goal at the end. You definitely want to pitch that goal or to pitch something at the end whether that is an ebook, a service, a software.
Mike: Somebody just came to mind as you were talking about pitching the product or service in that email sequence, one thing that I was wondering about was going back to the lead magnets, will a good lead magnet be a video versus a webinar or a demo? Because it almost seems like that’s a way to automate that piece of it without actually being there.
I’ve seen a lot of webinar like automated webinar things and they tend to look very scammy. I’m curious to know whether just like a video hosted it like YouTube, or Wistia, or Vimeo or anything like that. Is that a decent lead magnet or not?
Mojca: I have a love-hate relationship with automated webinars. Like you said, they do look scammy and people recognize that and people tend to move away from that kind of content. What I would recommend is, like you said video demos that aren’t kind of gift wrapped into, “Wow, this is a live demo that we’re doing and everyone knows that it’s not a live demo.” Maybe just say, unpack that into, “This is a video demo that has been pre-recorded, etc., etc.” If you pack it like that and offer video content as a lead magnet, that’s definitely a very good way to go about it especially because video consumption is on the rise and people are watching videos regularly so just doing that is definitely a great way to go.
Mike: I was just trying to think about how to combine the two things without actually being present because automated things, if people are working on product themselves, it will be in present for webinar is not always the easiest thing in the world. Video’s kind of the next best but you’re absolutely right. Everytime I go to one of those automated webinars where they tried to pitch you do something live, it really comes across the wrong way just because you’re using that.
Mojca: Yeah. I think it has an impact on your brand as well. People will look at you in a different way once you do that. Like I said, if I do any demos or anything like that, I pack it in a different way. I don’t say, “Yeah, this is the live demo that we’re doing.” Everyone knows that it’s not. But I just pack it, “Here’s a video con, here’s a video over demo.” I’m not trying to say that it’s live or anything. I’d want to kind of communicate that integrity.
Mike: Okay. Kind of going back to the email sequences, you said pitch your products or your service at the end. Did you mean by the end of the entire series or was there something specific, should your goal for the entire email sequence of five to seven emails be the same at the end of each email or is it wise to kind of divide it up and have different mini goals or something like that along the way? I’m not sure how to get too complicated with it, that’s really what I’m saying.
Mojca: Yeah. I don’t wanna get too complicated with it as well. I think it depends on how well structured your funnels are. Some people have the same goals for every email sequences and some people have mini goals. Some people have two different funnels and two different email sequences for two different target audiences so it all depends on what setup you have.
If you’re just starting out, I do recommend just making it easy on yourself and just have one goal. As your business gets more structured, you can definitely work your way down and just kind of create different funnels and work your way from there.
Mike: I think that’s the best advice; don’t create more complexity just for the sake of creating complexity.
Mojca: Yeah. I did that, I did that once and I regret it.
Mike: I think we all do.
Mojca: My Drip is going crazy with the different funnels and it’s just too complicated and whenever I login, I just get so stressed. It’s my own downfall too.
Mike: Now that we’ve got the lead magnet in place, we’ve got the email sequence set up, what’s the next step? It seems to me like you need to dive into Facebook at some point along the way if you’re gonna get into this Facebook Ads. What’s the first step in setting up Facebook Ads?
Mojca: The absolute first step that you should do is implement a Facebook Pixel to your webpage so you can retarget anyone that visits your webpage. You want to do that as soon as possible so you are collecting all of that data before you launch your first campaign. That is one step that a lot of people just forget to take once they are ready to implement their first campaign they’re like, “Woah, how am I going to retarget people?” The first thing, the absolute first thing is to implement a Facebook Pixel to your webpage and it’s a two minute task so it shouldn’t take you too long and it just has a lot of benefits to it.
Mike: You can just install this on your website even if you are not running the Facebook Ads, you can always just put it there and then go off like create the lead magnet and then email sequence and then come back to this.
Mojca: Oh yeah, absolutely. You can do it right away and maybe come back to it after two months. You don’t need to be creating the campaign immediately after you implement your Facebook Pixel. Actually, the preferred way is not to launch a campaign, especially not a retargeting campaign, immediately after implementing a Facebook Pixel.
Mike: Why is that?
Mojca: The most effective campaign to start with is a retargeted campaign where you are retargeting for example people that are visiting your web page so people that already know what you do. Without a Facebook Pixel implemented to your site and without all of that data collected, you won’t be able to retarget people so you would be stuck with interest targeting and targeting based on different interests and behaviors which is a good approach but definitely not as effective as retargeting.
Mike: Got it. Once you’ve got the Facebook Pixel in place, is there anything especially need to pay attention to when you’re implementing the Facebook Pixel or is it just like you install this one little snippet and everything takes care of itself?
Mojca: You install this one little snippet but you have to install it in the right place.
Mike: Oh, okay.
Mojca: Yeah.
Mike: You really have to follow their guidelines of exactly where it needs to go?
Mojca: Yeah. You need to put it in the head section of your webpage. A lot of businesses do a mistake and implement it into a body section. For example, that Facebook Pixel triggers just on their homepage, not on their whole webpage. Just be careful where you implement it. Facebook has really clear instructions on how to do that. It’s really, really easy. You just have to implement it once in the head section and you’re good to go.
Mike: Awesome. Now that we’ve got the Facebook Pixel in place, what’s the next step? How do you get started setting up who’s gonna get targeted? Assuming the Facebook has been there a little while–should you start with retargeting? Is there a different approach that you should use?
Mojca: If you have your Facebook Pixel implemented for a while, let’s say for a month and it has collected a lot of data from your website visitors, you definitely want to implement a custom audience. Custom audiences is a fancy word of you uploading your email list or just connecting your Facebook Pixel to custom audiences and just build up your retargeted audience, so to speak. That’s definitely the first thing that you should do because custom audiences take a little while to properly populate, it doesn’t take a day but it does take an hour so you want to take care of that before you launch your first campaign.
Mike: This is one of the situations were even though you wanna get it done right away, you wanna be able to allocate that hour to go over and get this taken care of, it could very well take you two, three, five hours, depending on how long it takes Facebook to process things and put things together for you.
Mojca: Yeah. You can actually, as soon as you implement a Facebook Pixel, you can actually create your first custom audience of just retargeted audience of your website visitors, you can create it immediately. Even if you come back after a month, that audience will still grow and regularly update day after day. You don’t need to wait for a month and then create a custom audience but you can do it right away and just wait for it to populate properly even if it takes a month.
Mike: Got it. You uploaded, you set up this custom audience, you recommend getting started with the retargeting audience first.
Mojca: Yeah. Correct.
Mike: After that, now you’ve got this retargeting audience set up, now what?
Mojca: Now, what you wanna do is because you want to start retargeting and you want to start retargeting people with a lead magnet, you need to let Facebook know somehow what a conversion is.
Setting up a custom conversions is the right thing to do as a next step. You have a custom conversions tab in your Facebook Ads Manager. Basically what you need to set up is you need to let Facebook know what your Thank You page is. For example for this lead magnet, this is the Thank You page and you connect Facebook to that Thank You page. Anytime someone lands on that Thank You page, the Facebook Pixel gets triggered and Facebook recognizes that as a conversion.
When you set up custom conversions, you will be able to optimize for those conversions. For example, you will create a campaign that’s called website conversions and you’ll say, “Okay, I want this website conversion.” Facebook will optimize everything properly. When someone downloads or converts, Facebook will analyze that person and then target similar people to that person because they are able to optimize based on conversions because you created that custom conversions in the first place.
Mike: Now, I know that you can go in there and you override that and just say, “I’m gonna manage this based on behaviors or interests or things like that.” Is that something that you would recommend people do or do you generally recommend that people just let Facebook analyze that data itself? Because I think the concern that people have—myself included—is that what an incentive does Facebook have to make them convert for you because the more that they put those advertisements out, the more clicks that they get even if it doesn’t necessarily convert. It kind of makes you pay more. It’s almost like not in their best interest to drive the greatest returns on that. What kinds of things do you have to comment on about that?
Mojca: When it comes to retargeting people, especially if I work with smaller audiences, I tend not to narrow down based on interests or behaviors, it will impact the results if I narrow it down especially if an audience is already really, really small. If an audience is a little bit bigger, I do experiment with narrowing that down. That said, as you said, Facebook has its own ways of analyzing who to show your ad to. Based on my experience, that works really, really well. I mean, not only would generate a lot of leads for a very effective price, those leads are actually of good quality as well.
That said, if you do work with interest targeting and if you’re using interest targeting as your targeting approach, or behavioral targeting for that matter, you do want to narrow it down based on different behaviors so you don’t want to, for example, target two million people and let Facebook do its job because they won’t attract the most quality audience, to be honest.
Mike: I guess one of the ballpark ranges of, in terms of size, when should you decide to start tweaking based on behaviors or interests and things like that versus when should you just let Facebook do its job. Is there guidelines around like different sizes?
Mojca: If you have, let’s say, a retargeted audience of 100,000 people, I would definitely start playing with narrowing that down.
Mike: Got it. Anything less than that, maybe you could probably make a judgement call around 50k or so but less than that is fine just let them retarget.
Mojca: Yeah, yeah, yeah. It really depends on the service that you’re offering of yourself or whatever. It’s not really the size of the audience but the ballpark figure would be around 100,000 people. You can start playing around with it with a little smaller audience, like you said 50k. That said, what I do recommend is just keeping your eye on that campaign in case you noticed that, “Okay, that approach definitely isn’t working.”
Mike: Okay. Again, all of this stuff that we’ve talked about just in the past couple of minutes is really for a custom audience built around retargeting?
Mojca: Correct. Yeah. Because like I said, retargeting is the best way to start with Facebook Ads.
Mike: Okay. Now that the we’ve got the custom audience based on that retargeting campaign, we’ve got the custom conversion set up for our Thank You page, is there anything else that we really need to pay attention to or does that really put us in a good position to start optimizing from there?
Mojca: That definitely puts you in a good position. You will have all the assets in place to successfully launch your first campaign with Facebook Ads.
Mike: The other one that I’ve heard people talk about in addition to retargeting audiences is look alike audiences. Can you talk a little bit about specifically what those are and how those play into people that you’re retargeting from your website?
Mojca: For sure. Look alike audiences are basically cold audiences that are created on top of some data that Facebook has or basically the data that you provide to Facebook. For example, let’s say you have collected a lot of data on your website visitors, you have 1,000 website visitors connected to your Facebook Ad account. But you do want to experiment with cold audiences but you’re not sure what interests to use, what behavioral targeting to do, you’re not exactly sure how to go about that. But you do know that your website visitors are very qualified.
What you can do is create a lookalike audience based on your website visitors. What Facebook will do is they will analyze your website visitors and they will analyze their behaviors, their interests, their demographic data, where are they coming from, how old are they, and they will create a brand new audience based on that information. A lookalike audience is an audience to feel that, don’t know who you are, it’s a cold audience but it’s built upon, for example, website visitors. It’s built up on a custom audience.
Mike: Got it. They work together not necessarily directly opposing from one and each other.
Mojca: Yeah. Correct, correct.
Mike: Okay. Once you’ve got all of these fundamentals in place, at this point you obviously can go and you need to start optimizing things but I think the other approach that I can think of here is to go back and start almost like creating a sequence where people are moving through a sales funnel. Does that really not makes sense in this case where you’re moving them from one Facebook conversion to the next? Is it the point to really just get their contact information or email address and put them on your newsletter?
Mojca: Creating different funnels definitely makes a lot of sense but I also wanna come back to what we previously talked about. You don’t want to make things too complicated for yourself. If you already have a funnel that starts let’s say with the lead magnet and then with the demo and then gradually ends up with a pitch, you definitely want to implement that to your Facebook Ads. But if you don’t have that funnel already developed, you want to make things as easy for yourself as possible and maybe just use one lead magnet. Once they go through an email sequence and at the end kind of connect Facebook to your email sequence again and start pitching them when they enter the pitch sequence in your email sequence as well.
Mike: Got it. That makes a lot of sense. One of the things I did before this episode is I went on on Twitter and asked people if they had any questions for you. I’m gonna go through a couple of questions here and just kind of rapid fire through them and let you kind of answer them.
The first one is from Jamie Laurence. He said, “Is it morally wrong to use Facebook Ads? It feeds the money machine and makes us culpable in data collection.” I think what he’s really referring to is the new information kind of coming out about like how much data Facebook is actually collecting on people, which I think people knew but I don’t think they had ever looked at it before, had a way to look at it.
Mojca: Yeah. I think that’s a fantastic question and it’s definitely something that we need to be talking about. I talk about it with my clients, I talk about it with my students, I talk about it with everyone that wants to talk about it. I wouldn’t exactly say that it makes us culpable because the data collection that we’ve seen was a different one, it was a misuse of data, it was a criminal offense. It’s not similar to the data collection or targeting options that you see on Facebook. There are different nuances to it. That said, what I do think is that you have to decide on your own.
When you do Facebook advertising, the truth to it all is that you will be investing in Facebook. You will be investing in that business funnel, you will be investing in data collection as well. If you feel fine with that, by all means, just continue advertising and just use Facebook advertising as it is intended for you to use it. If not, just not don’t do Facebook anymore, don’t do Facebook advertisements anymore.
To be honest, I did have a couple of clients that left for that specific reason. With the upcoming news, they just decided that they don’t want to invest on Facebook Ads anymore, they don’t want to support that and I support their decision. I know where they’re coming from so I’m fine with it. That said, I do think people will still advertise on Facebook. But coming back to the idea, what I do recommend is just using Facebook advertising as it was intended for you to use it.
Mike: Yeah. I saw an interesting–it was a meme but it was a picture about the US government going in and starting to look at Facebook and how they’d announce that they were gonna do an investigation. On the page itself where they said they were investigating them, it said, it had a Share this through Facebook link.
Mojca: They probably had a Facebook Pixel implemented to their page as well.
Mike. I’m sure that they did.
Moving on, Jeremy asked, “Can Facebook Ads be visual rather than text based? My product is visual and I’d rather show it to people than tell them about it.”
Mojca: Oh, yeah, absolutely. I do support any visual based ads. What I do recommend is—I’m not sure about the product that he was referring to—if you have an opportunity to use video to show off your product, by all means, do that. It’s a similar approach that ecommerce businesses have been using all that time. They are really, really visual based, they have a lot of images or videos of their product. If you have a product that’s similar to that, you can, by all means, go ahead and use the same approach. Like I said, coming back, I do recommend using video in that case, it brings the best results.
Mike: With the video, this kind of goes into how you structure your Facebook Ads, maybe we touched on that for a couple of minutes, but obviously, there’s lots of different ways that you could advertise on Facebook. One of them is to have a video and you could also have like long form copy, short form copy. Could you just kind of touch very briefly on each of those and what your experience has been with them because I don’t necessarily think that we’ve talked about the specifics of what you’re going to put in your ad once it’s out there.
Mojca: Yeah, for sure. First of all, referring to long form copy, what I recently discovered through multiple A/B tests that I’ve done with all of my clients is that long form copy works really, really well, especially if you are advertising a software or a service business, long form copy tends to work really, really well.
Videos as well, along with long form copy. For example, if I’m working with a client that is trying to promote their software, we use long form copy so it’s a very long sales page like copy along with a video of them. It tends to work really well. But for other businesses, I have a couple of ecommerce companies that I worked with this as well, we don’t use long form copy but what we do use is a lot of images of their products.
But if you have a software company, if you offer services, what I do recommend is A/B testing with copy. Launch an ad, one ad with short copy, same visual, one ad using a short copy, one ad using a long copy. I’m definitely taking a bet on that and I think that long form copy will prevail on that case.
Mike: Awesome. The next question comes from Ed and he asked, “Will Facebook tracking effectiveness drop as more people use ad blockers?”
Mojca: Yeah. I love that question. They have been actually saying this for years now. For years, my clients have been coming to me saying, “More and more people are using ad blockers, is effectiveness going to drop?” Actually, we haven’t seen a bigger drop since I started talking about this with my clients two years ago. I think maybe that that drop is gradual, but to be honest, right now I would say that it’s not going to affect Facebook advertising as we might think that it’s going to affect it.
Mike: Our next question comes from [Kelso] and he says, “Do you have any case studies that you can point us to for successful ad campaigns? The second question he says, “How deep should you go with segmentation?” Do you have a couple of things we could link up on the show notes?
Mojca: I’m actually working on them but you will be able to find them on my webpage, definitely.
Mike: Awesome.
Mojca: A couple of results, with Facebook we’ve seen—I’ve worked with an ecommerce company—and we’ve seen up to 400% ROI. That was actually a standard especially when we did retargeting, we had 400% ROI. Or for example working with software companies, one software company in particular, we were paying $20 for an acquisition where lifetime value of a customer was $500 or right now I’m working with another software company and we are paying $50 for a conversion and they’re paying on Google $500 for the same conversions. It’s been incredibly effective.
But as far as segmentation goes, I definitely recommend as much segmentation as possible. That said, you always need to be careful of potential reach, you can segment all you want but if, let’s say, a specific custom audience that you really segmented out, the potential reach is only 20 people, that will not be effective. Be careful of that.
Also you need to keep in mind that the more segmentation that you have, the more work you’ll have with your Facebook Ad campaigns so you really need to decide if you want to do that or not. Segmentation is incredibly effective when it comes to Facebook Ads, like I said, it’s a tricky thing to do especially if you’re working with a bit smaller audiences, but if you have a lot of data collected already, by all means, segment as much as you want, I really recommend it.
Mike: This kind of brings me to a couple of questions. I kind of specifically had like when you are looking at what your ad spend is gonna be and what your minimum reach are, are there kind of guidelines that you would follow? Say make sure that you’re spending at least this much on a daily or weekly basis and make sure that your reach is at least this because otherwise, it’s probably not worth your time. Is there some quick calculation you could do based on “performance metrics” or average conversions kind of going through those Facebook Ads to figure out like if its 20,000 people, you have to have a conversion rate of at least 10% in order for it to be worth it if your cost per good sold is X. Is there anything like that that you can go and point to?
Mojca: Everyone asked me about that and that’s a very, very hard question to answer because for example, I’ve worked with multiple software businesses and they are so different when it comes to conversion rate and ROIs. With each and every customer, and with each and every client, I have to figure out a way of how to properly measure that and how to properly determine how big of an investment we need in order for our Facebook Ads to be effective. If you’re starting with Facebook Ads right now, if you haven’t done this before, I do recommend starting it slow. Don’t say, “Oh well, we have a well established business and we can spend $10,000 a day on Facebook Ads. Let’s just do that.”
Even if right now you have a lot of assets that you can promote, you have the money to do that, I definitely recommend starting slow with investing $50 a day or $100 a day and just kind of seeing what do you can do with that money and establishing where the ROI is coming from and what you need to do and what kind of cost per lead magnet download you can get for that kind of money. Just filling your way through that and then investing more and more once you get the hang of it.
If you do have a small business, so to speak, for example you’re just starting out, you just launched your new product, it hasn’t generated any revenue yet but you do want to experiment with lead generation with Facebook advertising, I recommend starting with $10-$20 a day and just seeing how that goes.
Facebook offers a lot of different tracking options, you can really track your ROI, you can input for example for each lead or for each conversion, you can connect that conversion to a specific value and Facebook will track ROI. It all comes down to your setup and so on.
Mike: Thanks. That’s extremely helpful because I think that the ballpark numbers that people have, people just don’t even really know where to start in terms of how much to spend, I mean is it $5, $10, $20. I think that the guideline of $10-$20 a day, at least to start of with especially if you’re just starting out and you just have a new business or product that you’re pushing out there, it sounds totally reasonable and I think within the reach of most people. We hear people talk about like you just mentioned, $10,000 a day, some products are just not even gonna make that in a year. It’s just not realistic.
Mojca: Yeah, yeah.
Mike: I think the last question I had was how do you go about managing or documenting your custom audiences and the custom conversions because one thing that I find, especially when it gets into like marketing automation side of things, you tend to lose track of stuff over time even if you’re working on it right now, it’s very easy to forget all the specifics of it and a week or five weeks or two months down the road. How do you go about tracking those things in a way that’s going to be easy for you to come back to later?
Mojca: Yeah. I absolutely know what you’re talking about because you have different campaigns within Facebook, you have different custom conversions, different custom audiences, just a ton of different things that you need to be tracking off and you need to have a higher level approach and just a higher level view on.
First of all, what I would emphasize is to properly name your custom conversion so you don’t get lost in, for example, lead number one or lead number two, you want to name them properly. Kind of the formula that I use on Facebook when it comes to custom conversions is I describe that custom audience as much as possible. For example, if you’re using a retargeted audience, I use website visitors 180 days landing page or website visitors 180 days this blog post. I use very specific names that I always know what this is when I come in Facebook.
Same for custom conversions and I document everything in Google Docs or Spreadsheets. I also document a lot of my custom conversions especially audiences and basecamps so I have documents for each client, for different audiences, it piles up, I tell you. Just using Spreadsheets, I think that is kind of the best way to go about it just to keep track of everything and for you not to get lost in the amount of data and different audiences and custom conversions and every other assets.
Mike: Awesome. I think that’s probably a pretty good place for us to wrap up. Is there anything that you wanna add or leave the listeners with?
Mojca: Maybe just giving one advice. I know that the Facebook might look very overwhelming. When you decide that you want to start advertising, you come on Facebook and you open up your Facebook Ads Manager and there are a ton of different options that you can choose from, don’t be afraid, it’s all very manageable. Facebook is really trying to simplify the process of advertising. Just like I said, start slow, invest a couple of bucks in launching your first campaign and see where that takes you and I promise that it will be worth it.
Mike: Awesome. If people have questions for you or they wanna follow up and kind of check into what you’re working on or if they wanna have you manage their Facebook Ads, where can they find you?
Mojca: Yeah. I would love for them to write me, I have my email so mojca@superspicymedia.com. I would be more than happy to answer any questions or hesitation or to just help them with setting up their first campaign. Send me an email at mojca@superspicymedia.com or if you’re interested in my blog posts and videos that I publish, services, you can find me on superspicymedia.com and you’ll find everything there.
Mike: I also see a link here for the facebookadsacademy.com?
Mojca: Oh, correct, yeah. I have the Facebook Ads Academy. If you’re just starting out with advertising and you need someone to pretty much hold your hand and help you with launching your first campaign or if you already launched the campaign and you have a question of how to set things up or what does this mean or what do these results mean, Facebook Ads Academy is definitely a great way to start. It’s basically a community of small business owners, we just help each other out when it comes to Facebook advertising, give each other advice, comment on specific visuals or copy.
Mike: I could say from experience that looking through the Facebook Ads Manager right next to somebody else who’s supposedly using the exact same thing, sometimes the interfaces can be very different from one to the next. I remember you telling me over FemtoConf that the ads manager, they’re running like a couple dozen of them at the same time basically A/B testing between them. Your interface could very well be different from somebody else’s.
Mojca: Yeah. I actually heard that they’re running hundreds of different Facebook Ads Manager. You might have a Facebook Ads Manager version that I do not have. I used to remember FemtoConf, I think they were like three different versions of Facebook Ads but it’s just that we were working with.
Mike: Yeah. They were like six or seven people in the room which makes that even scary.
Mojca: Yeah, it was crazy.
Mike: I think that about wraps us up for the day. Mojca, thank you very much for coming on the show. I really appreciate you having you.
Mojca: Thank you so much for having me.
Mike: We will see you at MicroConf in about five weeks or so too.
Mojca: Yeah. I’m so excited. This is going to be my first time in Vegas.
Mike: Awesome. You will be there straight through Growth Edition through Start Edition.
Mojca: Oh yeah.
Mike: If anyone is there, feel free to stop by and say hi.
Mojca: Yup.
Mike: If you have a question for us, you can call it into our voicemail number at 1-888-801-96-90 or you can email 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 and visit startupsfortherestofus.com for a full transcript of each episode. Thanks for listening and we’ll see you next time.
Episode 386 | Balancing Feature Development with Marketing, the Cost of Technical Debt, and More Listener Questions
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Show Notes
In this episode of Startups For The Rest Of Us, Rob and Mike answer a number of listener questions. The topics include balancing development and marketing, overcoming hesitations about partnering, and the costs of technical debt.
Items mentioned in this episode:
Rob: In this episode of Startups for the Rest of Us, Mike and I talk about balancing feature development with marketing, the cost of technical debt, and answer more listener questions. This is Startups for the Rest of Us Episode 386.
Welcome to Startups for the Rest of Us–the podcast that helps developers, designers, and entrepreneurs be awesome at building, launching, and growing software products, whether you’ve built your first product or you’re just thinking about it. I’m Rob.
Mike: I have the plague.
Rob: We’re here to share our experiences to help you avoid the same mistakes we’ve made. You were sick all weekend?
Mike: Yeah. My eldest son got sick the last Wednesday, I think it was. It was like Wednesday and Thursday and we sent him back to school on Friday. Then my wife got sick between Friday and Saturday and then I got sick between Saturday and Sunday. It’s been a rough week to say the least.
Rob: Yeah. That’s brutal. Being sick just tears you up, means you can’t get anything done, especially when you don’t have vacation time, you don’t have to paid time off and you’re trying to drive a business forward, it’s like every hour is precious.
Mike: Yeah. Fortunately for us, it was kind of over the weekend but still we’re recording now, we don’t usually record till Thursday but today’s Monday and after this podcast episode, I’m probably gonna go to bed.
Rob: Right, right. Yeah. Today, we’re actually continuing kind of a continuation of last week’s episode. I had picked out several questions last week that you and I were gonna go through and answer and we only got through a couple of them because the GDPR conversation was so extensive. I think that was a good thing. I think we went in depth and gave ideas and feedback but it meant that we had this big block of unanswered questions and I wanted to keep going with them.
Now we have a few voicemails and some others today. But before we do that, I want to tell you, I know I haven’t talked about Drip features in a while but I’m pretty excited about this upcoming feature. We’ve been working on it for–I’m trying to think–it’s gotta have to be about four months now so it’s one of the larger features we’ve embarked on but it’s a visual email builder.
Mike: Oh, nice. What’s that involve?
Rob: A lot of stuff. Yeah, you can imagine not only the frontend which is obviously a lot of dynamic stuff, a lot of Javascript and pointing and clicking and moving things around the screen but then taking something that is essentially JSON and translating into the table-based email render to HTML is a challenge.
We found some AltSize and trade secret workarounds that we found, we’ve really done a lot of research and I think I’ve done a good job with it. But what I’ve heard from folks who have built visual email builders is building the visual portion of it is one project and it will takes six months or nine months, depending on how many […] we have on it and how good they are. Then just doing the table-based rendering and getting all of that to work and working all the clients is at whole separate project. It can take as long as building the actual visual builder. This is why a lot of upstart ESPs don’t build them because the time investment is so extensive.
Mike: When you say rendering the stuff and the clients–I understand what you mean by the differences between them–but when you go back to the visual email builder, what advantages does that have over what Drip does now?
Rob: Right. Today, Drip just has a nice little WYSIWYG text editor and I’m still gonna use that. I never use visual email builders because I like the personal interaction or it just feels more like you’re getting a plain-text email when you send using our standard plain-text template. This is how I’ve always recommended doing it. I believe the conversation rates are higher when you do that.
However, there are a few industries where they have done tests–so they’ve done tests across many industries in terms of visual email with a lot of images and table-based layout, two columns and this and that versus just something that kind of looks like a plain-text email, much like we send out to a MicroConf list, or I send out to my blogs Software by Rob list, they tend to be more personal. It’s from Rob Walling, Founder, it looks like he’s actually typing it to you. But there are few industries—ecommerce is one and travel is another—where having back these more exotic layouts and emails can and will convert better.
Since we do have a large ecommerce contingent and since we’ve been focusing on commerce-based businesses, people who are selling things, we have found a time to break ground on a visual builder. It allows you to do the things where you see the fancy, neat template, you can just insert your images and have that layout. It’s not something I’m gonna recommend for everybody but there are instances and match your converts better.
Mike: Got it. Kind of like if you go over to MailChimp for example, they’ve got like 30 or 50 different templates you can choose from and okay, that makes sense.
Rob: Exactly.
Mike: That makes sense.
Rob: Right. We won’t have 30 or 50 templates to start with but obviously that’s a direction that you’ll wind up going and it’s become table stakes. Again, in certain industries if you’re doing ecommerce and you’re working with companies using let’s say a platform like Shopify, BigCommerce, or WooCommerce, or if they have their own custom solution for ecommerce, they tend to want to send emails with a lot of images and not just to frustrate top to bottom flow where it’s image-text, image-text, you wanna have things that just look nicer than that.
Mike: Yeah. Things that come to mind for that are things like Amazon, Newegg, or ThinkGeek, all those, it’s exactly the same. I totally get what you’re saying where that’s going, but it totally makes sense.
Rob: Yup. The reason I’m excited about it is because I feel much like we did with workflows, we went back to the first principles and said, “What did everyone else do wrong? What do we hate about builders? How can we do this differently?” It isn’t just look at what everyone did and copy the best features, just like we’re doing things that are different than anyone else. There are obviously gonna be commonalities. There’s stuff on the left that you’re text and your image block and your divider and whatever, then there’s the email on the right. That’s common stuff but there’s certain paradigms that we use that I think are superior and gonna make for a better user experience.
The team has been working hard on it and everytime I see it down the road, I’m like, “Man, this is super cool, actually. I wanna use this even though I don’t really…” Like I said, I don’t use other visual builders as a rule when I’m writing my emails because I’ve always liked the more plain-text feel.
Mike: Awesome. Let’s dive right into the episode and they’ve got a couple of questions outlined here. Let’s get started on this.
Rob: For sure. Our first one is a voicemail and it’s about how to balance feature development and marketing specifically for an IOS app. But let’s hear the question and we can figure out what form we wanna answer it.
Steven: Hi Mike and Rob. This is Steven Johnson with […] Plus, an iOS and Mac app for hikers. My website is […]studios.com. I have a question about how you work […] user feedback. I’ve been getting a lot of feedback about my app on the Apple Watch, it’s still like I’m missing out on some opportunities as well as on just keeping up with where the market’s going.
However, right now I’ve really been prioritizing a lot of marketing efforts, working on conversion rates, lowering churn, […] partnerships with business development and […] by knowing […] you talk a lot about having more marketing always speeds out features and I completely agree with that. I’m just trying to figure out how do I kind of balance these two priorities and knowing how to balance user requests that come in, especially one that feel like the market’s making changes and I feel like am I missing out on something, maybe I am and maybe I’m not, but I know that there’s opportunities that I’m not capturing with my marketing, I know there’s conversion opportunities as well as churn that I need to work on. I’m just curious about your thoughts on that. Thanks for the show. Love what you guys do. Thanks.
Mike: I think this is an interesting question mainly because it’s an iOS and Mac app but there’s also the recurring annual subscription from productivity. I think the prices–there is a free plan–but then they range from $20 a year up to $80 a year which is of around what, $5-$8 a month, something along those lines. I think that the challenge here is identifying why that churn happens. Is it legitimately because people are churning out and they’re no longer using it or is it just they find that the app doesn’t help them nearly as much as they thought it would? I think it’d be easy to assume that, “Oh, you should be doing this.” Or, “You should be implementing that feature.” But I think I might dive a little bit more into the churn itself and start ask a lot more detailed questions about why the people aren’t using that.
My concerns/fear here would be that what you’re offering people is conceptually what they want but either the implementation itself is not really what they’re looking for or it doesn’t really quite match up with what the value proposition they were sold on is and it could turn out to be that somebody tries one app and they think that it’s gonna work and once they get out of the field and they’re using it, it sort of works or does most of what they want but it’s not quite enough so they just decide to switch and use something else. Maybe look at your performance metrics or your usability metrics to see like are people actually using it after three or four months in or is it that they’ve paid for and it was a low enough price point that they said, “Well, I paid $50 for this and it’s not a big deal so I’ll just try this other thing over here for another $50.”
As I said, the fear/concern that I would have is something that people use and it may just not be able to deliver on the promise. It’s not to say that you can never deliver on that promise. The fear that I have is it even possible to do what it is that they really want. I don’t know the answer to that, you have to ask people to find out. But as you said, the other component is like do you invest more on the marketing side and try and ramp it up or do you drill in and start trying to fix those things and add more features?
I think the first place to start to find out why people are churning out and what the fundamental issue is there and from there look back and say is it important enough for you to fix? The reason I say that is because there’s a question for road map and what is the most important to you, not roadmap, runway is more it than anything else, are you able to make ends meet with the app the way it is or are you chewing through runway and sort of losing money on it as you’re going along? In that case, you need to lean more towards scaling things up and then fixing things versus being able to make ends meet on a regular basis and you don’t have to worry about it as much. At that point, you can dig in and start fixing things in the app. That’s probably the place that I would start. Rob, I’m sure you have some thoughts on this as well.
Rob: Yeah. This is the age-old question. I think it’s a really good one to think about. I think in general, as developers, we think features are the answer, and in general, they are not. Not to say, all at all times because in certain markets, in certain niches, it really will make a big difference like Drip launching workflows was game changing for us, it doubled our month over month growth. It can happen.
But so many of the little features that are constantly being requested, if you have thousands of users you’re gonna get 50 or 100 feature requests a month and most of them you need to not build. Not only to keep the product simple enough that it doesn’t become bloated, but because you just don’t have the time to build them all. The caller is so much closer to his business than we are so it’s hard for me to make a recommendation to him, but my recommendation in general would be stir away from the mindset that I just need this one more feature to do this thing, unless everyone’s requesting it.
There comes a certain point where 10% of your feature requests are for the exact same feature. At that point, that’s when we break down–in the early days, we build a lot more now, we have a team of 18 developers or whatever, but in the early days when we were super cash and resource trapped, it was pretty much no by default and yes to these highly focused things that we knew were gonna move the needle. That’s how I balance it.
I think that the caller’s approach to doing joint ventures and focusing on marketing is genius. That’s exactly what I would be doing because the more marketing you do, assuming it’s effective, the more revenue you get, and that revenue will allow you to then hire a contractor in essence or perhaps the first time employee, how ever you wanna work it. But hire a developer that you can supervise because that will then, I should take one step back first, first person I would hire is a part-time VA to handle all your support, if you’re still handling that, because that will free up.
Then start thinking about hiring someone to write the code and this is the part that developers always struggle with because no one “is going to write the code as well as I do.” However, if you can free up 12-30 hours of your time in a week and features are still moving forward and you have some budget to pay someone, it can be game changing for your business and that frees you up to focus on really moving the needle.
I think marketing in the early days is such a big deal because you need to get the revenue to allow yourself to start stepping away from certain roles that while you may enjoy doing them are probably in the early days are less effective and what more if the needle is matched.
Thanks for the question. I hope that was helpful. Our next question is about overcoming hesitations about partnerships to move the business forward.
Joshua: Hi Mike and Rob. This is Joshua from [Perspexa Labs]. First, thanks so much to this podcast. Every episode is invaluable. My question is this, how do I overcome my hesitancy of partnering with someone to move the business forward?
For context, I run a B2B SaaS company that offers monthly subs in the range of 100-350 a month, and we’ve plateaued about $2,500 in MRR I co-founded the business with an office colleague but I just realized circumstances he really isn’t able to participate materially in the business anymore and our product is solid at this point but I know we need to move the needle and sell the marketing in a big way. Try as I might, I just can’t seem to crack that nut.
I know that finding the right person to bring onboard will probably do wonders and turn us into a vital business but on a do-it-yourself-er and I just have trouble, one, convince myself that I ought to do this, and two, coming up with the vital way to achieve it. Any advice for effectively a solopreneur who doesn’t wanna be stuck in a half business for forever? Thanks so much for the both of you. Everyone, go leave a review to this podcast on iTunes. Thanks guys. Bye.
Rob: Joshua was kind enough to also send us an email with a bit more background and he said, “The main product outreach is at [perspexalabs.com], we’ve got a core group of customers and service businesses like pest control and electricity and we’ll soon be getting into healthcare providers because our revenue is only $2,500 a month with margins of around 70%. It’s not enough yet to pay salaries. I’m guessing that bringing someone onboard will probably need to be an equity arrangement which I’d be fine with.
With regards to my own efforts to sales and marketing I’ve gone to the Traction book and tried several different approaches including online ads, cold-calls, cold-email outreach and attended a very targeted trade show. That really hasn’t generated fruit as nearly all of our current customers are referrals from other customers. Unmentioned to my question bills are related issue, should I let my current co-founder remain in the business? I’d really like him to be here if we can get into healthcare because of his connections, but I know this isn’t the first priority anymore.” What do you think, Mike? It’s a tough one.
Mike: Yeah. I think you can almost divide this into two entirely different things. One of which is what to do about the co-founder and then the other is how do you move the business forward when you’ve got $2,500 a month and not enough money to do a lot and you’ve also obviously got the co-founder onboard and I don’t know what the relationship there is in specifically call that out.
Rob: It sounds like it’s still amicable and he’d like to keep him on if they were to go into healthcare but not if they don’t. You don’t know if they vested so the first thing is that you should have done four year vesting probably so that your co-founder wouldn’t own the entire percentage that they had. Because if they decide to leave, that will go back into the pool to get the next person.
Mike: I think, with regards to what to do about the co-founder, that’s probably the first thing to do. It sounds like you wanna keep them on but the question is how much is he going to be able to contribute. As Rob said, the vesting schedule maybe he owns 25% because he’s stuck around a year, 50% because he’s stuck around for 2 years. That seems to me like the first thing to look at and try and figure out and if he has to walk away because he’s just not involved, that doesn’t mean he still doesn’t own a certain percentage of the business anymore and can’t contribute under the […] capacity or something along those lines. That’s something I think you have to work out with your co-founder and sit down and have an honest conversation about what him stepping away from the business really means for the business and for the relationship between you guys.
Then once you’ve figured that out, the next question to tackle is what do you do about the business itself. I think you didn’t specify what your own personal situation is or whether you’re taking money from the business and living off of it. But with the $2,500 a month, it sounds to me like because you’re a do-it-yourself-er, it might be a viable strategy to go out and find a business coach who can walk you through a bunch of different things and that does a couple of things.
One, is it avoids handing equity over to somebody else, and two, it still allows you to do those things yourself and you get that personalized assistance from somebody else and a sounding board from somebody who’s vested in the business because you are paying them to give you ideas and take a hard look at what it is that you’re doing and how effective those things are but you’re still doing those things yourself and you still don’t necessarily hand over control to a third party or a co-founder or another partner in the business and avoid some of those other issues that maybe you’re struggling with right now.
I don’t think that it’s wise to introduce too many changes all at once. That could be a nice bridge scenario where you are involving somebody else but you’re not handing over the reins to somebody else in a co-founder capacity while you’re having your current co-founder step away from the business a little bit. That’s probably where I’d start looking and see if that makes sense to you.
Rob: Yeah. I think you’re right, there are two separate issues here, it’s existing co-founder and then pulling on a new partner. I think given that the business you have to de-risk the business a small amount that bringing on a new partner, you could obviously give equity without giving an enormous amount. It wouldn’t need to be a third of the equity or something. It depends on your aspirations and think where the business is headed and who you can find but I’m thinking in the 10%-20% range given where you are. If you were gonna go raise funding and you’re gonna go try to find like a COO or something or a CTO, they get 5%, but you’re in a little bit different situation because it doesn’t sound like you’re gonna get so big so fast, that that’s gonna be warranted. As a result you have to bump that equity to 10% or 15% or whatever. But at this point, in my opinion wouldn’t just be an even split.
I think the hard part is finding that person and vetting them and it’s like a marriage because you guys are gonna have shared ownership of things and breaking that up later can be like a divorce. I think getting over your hesitation is one thing, but I think the harder thing is to find someone who is good enough or who’s gonna work with your style, who’s willing to be in the trenches with you, who I think it really wants to stick around and is able to work because it sounds like this is gonna be nights and weekends, people are not cut out for that in general, most people just think they wanna do it and then a month or two months and they just flick out or they just decide not to do it.
I think finding someone who meets all this criteria is really hard but I think if you can, then what I would look at doing is definitely have kind of a trial period, maybe 90 days, just to say how things feel, I would definitely have four year vesting on that with the one year cliff, meaning they don’t get any shares until they’ve been around for a year. I think that’s how I would approach it and I would look to be meeting people in person so I would be going to the MicroConfs and the businesses software and these conferences where there are folks who could potentially be in that pool for you separately regarding your current co-founder. I think you just need to make the choice sooner rather than later whether they’re going to healthcare. If you’re gonna go onto it and he wants to stay around, you wanna keep him around, that’s great, and if you’re not, then I think the decision is made there.
I know it’s not always that crystal clear but it does, given that information you’ve provided, seem perhaps how I would perceive. Thanks for the question, hope that was helpful.
The next question is about technical debt. Mike, does technical debt really come back to bite you?
Mike: Oh, yeah. No question on that.
Rob: Alright. The subject line of the email is actually, “Have technical debt decisions been easy to pay down later or did they really come back to bite you?” He says, “Love the show, listened for the past year, really love the practical advice. I’m looking for your technical perspective about what matters in the early days of getting a site running while keeping customers happy with mission critical data, building a data heavy B2B SaaS startup.
The frontend is in Angular, the backend is in Rails, intermediate self-taught developers, new things I haven’t done before can sometimes take a week or two to figure out. I’m making early technical debt tradeoffs hosting using Heroku versus AWS, database PostgreSQL versus Aurora, and the other miscellaneous things relating to data structures.
I’m not looking for technical help but the question is more geared to your experience of how much this stuff matters up front and really needs to be solved to get functional versus it’s not too hard to change it later. Theoretically important but won’t kill you so pick the simpler thing even if you know you’ll need it to change it after launch. Am I wasting a lot of time by taking the shortcut now and having to pull the app apart later to move it around when I have real customers using it in production?”
Mike, this is not gonna be as long as GDPR, I promise, but I feel like we have a lot to say on this, so go. Just start rolling with this. What do you think?
Mike: Yeah. Do we have like beeps cued up immediately for all the profanity that’s about to be dropped on this?
Rob: Yeah. Technical debt, it’s a *.
Mike: Yes, it is, yes, it is. I think looking back on this particular piece of it, some of the things that he had brought up, the things like hosting and the database selection and the data structures that you’re using on a backend, some of those can be really hard to change later on, versely impossible. In some cases, you’re looking at a complete rewrite.
You at least have to have enough technical knowledge to make those decisions in a way that is not going to completely kill the app later on or force you to do an absolute rewrite from the ground up. That said, I do know people who have done complete rewrites after they’ve gotten to a point where they’ve gotten customers onboard and it basically delays things, you may have to take three, six, nine months of accepting the fact that you’re just not gonna make any progress on the features in order to fix that fundamental positions that will bust it.
Then, there’s kind of a second level which is where you’re trying to make decisions about how do you structure the data or how do you create the database in such a way that it makes easy to do certain queries or provide a solid error handling, error returns to the API for example. I think in those cases, you can mitigate them to some extent by using dependency injection and creating these interfaces that sit in front of it and if you need to rewrite one, then you can, you’re almost swapping out an entire layer of the application for another in a very specific way.
I’ll give an example with Bluetick, like the backend storage system for storing emails has been rewritten four times. It’s because at first it was like let’s just get something working and then it was trying to optimize for local storage and then the next level was things are not working in local storage because there’s so much data coming in at all times like I just can’t scale that much on one machine and then I kind of move everything into the cloud and into the Azure tables in no sequel storage. Then the fourth rewrite was essentially making that more scalable and optimized.
Each level on the way like there was some level of rewrite but because it was essentially being able to flip a switch and say instead of using this set of data structures, you can do those on a per user basis or on small sub-segments of the users and not affect others. I would definitely do some research on dependency injection.
The other nice by-product of them is that it helps with writing unit test to be able to make sure that those things that are working from one version of your rewrite to the next in that particular component or module. Beyond that, there’s always gonna be things that you run into where you think that one way is a good way to solve a technical challenge and you turn around and find that it just wasn’t, you get down in the weed sometimes and you realize that you made a really, really big mistake and the only way to resolve that at that point is to rewrite it and there’s nothing you can do at that point.
The only way to have mitigated those four types of problems is to run into them and then realize after the fact that it was a mistake. It’s really hard to generalize from one application or problem space to the next and say like, “Oh, you should never do it this way. You should always do it this way.” Those things don’t apply. Each problem space has its own unique way of storing data or things that need to be surfaced to the user and you don’t always know what those are until afterwards. Sometimes, you just make the best decision that you have and you find out later that it was wrong, there’s nothing you can do.
Rob: Yeah. I would just say in general, technical debt is underrated in the startup space. I think people think that it’s not a big deal and it’s a way bigger deal than most people do because if you aren’t technical, it’s hard to understand why you can’t just quickly rewrite a piece or quickly change a decision you made later. These metaphors don’t always work but it’s akin to building a building and then needing to go back and replace the concrete foundation because you poured it incorrectly. You literally have to jack the building up and it’s just painstaking and agonizing to replace that and that’s what code is. You’re building things on top of each other.
I think of it like a 4×4 matrix where there’s basically two binary things. One is I know that this is a shortcut and I’m gonna take it anyways versus I don’t know this is a shortcut like I accidentally introduced technical debt. I think that’s the switch you’re talking about.
Then I think the other one is it’s easy to undo later versus it’s a complete fiasco to undo it. You can imagine that 4×4 matrix and we’ll go through all of those matching up but obviously any decision you make on purpose to introduce technical debt, you need to explore and thought experiment like how hard is this to undo later. If it’s hard, then don’t do it.
There were a lot of decisions Derrick and I made in the early days that were very slow, they caused Drip development to be very slow in the early days and it was pretty agonizing when we were bleeding cash and we couldn’t get the features out the door to keep people from churning because it was a very specific feature set that people wanted, and it was taking us months to build them and it was because Derrick wanted to build them very carefully with extensive unit test and he wanna do it right and he had to refactor the database twice in the first year of the app, because the app went from a very simple thing to very complicated thing.
It was agonizing but it was the right decision, because now, it would be catastrophic right now, we would probably have to have rewritten major parts of Drip. I don’t know if it would have impacted the acquisition or if it just would have been post acquisition or what it would have been but it would have been really hard and between he and I, we figured out a good sense of what was gonna be hard to change later–things that are easier to change later like you said where you can just build an interface and then swap it out later. Obviously those are the ones that you can maybe take shortcuts on.
But I think some people take shortcuts on like not running unit test, some people make cold-quality shortcuts where they just start hacking things together and later on, everything’s buggy because you took a shortcut and you didn’t build that right in the first place. In general, I have seen no less than half a dozen or maybe closer to a dozen companies get to the point where they’re between 10k and 50k MRR, they’re growing fast and they have to rewrite their entire codebase. I’ve seen some that have done it more than ones.
It is so painful to spend six months of standing still while your competition gains on you because you took shortcuts in the early days. Now, you’re just hanging out, waiting to build more features until your codebase can be completely rewritten. I would say proceed with caution, obviously, you’re always gonna have some level of technical debt, but be very deliberate about those choices because I think it’s easy to be in such a hurry to get to the point where you have more revenue and this is certainly a tradeoff because in the early, early days, when you just trying to get to $5,000 or $10,000 revenue, you’re gonna have to make some trade offs but try to take shortcuts on things that are easy to change later. That’s how I think about it.
Mike: I think one of the biggest places to make that trade off is that when you’re looking at unit tests, I’m not saying you write unit tests for everything because I certainly don’t think that that has a ton of value for a startup but I do think that there’s value in having like continuous integration server of some kind or a build system put in place so that later on you don’t have to figure out, “Okay, how am I gonna deploy my app?” You want that to be a systematic thing where you can literally just click a button and it runs through everything and is able to deploy the app.
But with that comes at least some level of unit tests or a mechanism for running those, and even if you don’t write a ton of unit tests, as bugs come in, you should be adding those unit tests to make sure that if a bug comes in and it breaks something that you had a unit test in there so that later on, as you’re making other changes, it doesn’t break that again.
Like I said, I don’t think you should write unit tests for everything, but I do think that as those bugs come in you should be writing them to make sure that once you fix a particular problem that you don’t have to refix it 3, 4, 5, 10 different times moving forward because it just keeps coming up.
Rob: Thanks for the question. I hope that was helpful.
Next question is from Jay Pablo Fernandez and he says, “I just finished going through all my newsletter subscribers and I noticed there are a few industries that are well-represented such as education, health, IT and government. When it comes to my product, they all use it in the same way. The feature set they made is pretty much the same. I wouldn’t say they are verticals in the SaaS way of thinking. I can sell to all of them or I can focus on one industry. Are there any advantages to either approach?”
Mike: I think this is a tough question, as you said you don’t wanna paint yourself into a corner and make people think that you don’t serve their industry. I think what I would do in this case sn focus on the specific problem that you solve and then maybe have different case studies for each of those industries and even segment your list a little bit so that when you talk to them, when you’re sending out newsletters or you’re sending out articles to them, maybe you’ll only send an article that highlights a case study for the electric and gas industry to those people who were subscribers that fit into that bucket. It seems to me like that would probably be an appropriate way to go, but at the same time there’s value to be had to for saying, “Hey, this also works in other industries because there’s gonna be some crossover between them.”
Let’s say that you have a case study on the nuclear power plant industry, if it’s safe enough for them to use, pure application, then whatever other industry they happen to be in, they would probably translate that and say, “Oh, well, if these guys are using it, then surely it’s passed master and I could use it as well.” I would think about it in terms of just trying to make sure that you’re covering enough of each of them but not focusing so hard on any of them that it makes people think that, “Oh, this is not for me.”
Rob: I think I might try to run an experiment. He has this list and he has these four sectors, four verticals, and I would consider trying to do physically exploratory calls, I don’t know if you wanna call it customer development or even just sales calls, if the product’s already there, across all of them, and figure out that you wanna validate your assumption that they use it in the same way with the same feature set. Because I find that a little bit hard to believe, just having run the apps that I’ve run, different industries tend to want slightly different feature sets and have a slightly to just enough it settle but by the time you really get and they start using it, it becomes a pain-in-the-butt to have four different industries or wanting something just slightly, “Oh, just tweak this one thing, oh, can I just have a setting to do this? But we have a permission in the reporting thing.” It’s just enough that there will be a difference. I guess it’s what I’m guessing.
If you have the time to do this upfront and just have a bunch of phone calls with these folks and try to do the demos and try to figure out is it truly gonna be something that they all can use, then that’s fine. But I do think you’re gonna find differences in payment terms, like you said sales cycle because government’s gonna take forever to come through, maybe in your early days since you’re trying to get ahead of funding running out or whatever, you go after the ones that close quickest, which I don’t know if that’d be IT, education, sure it seems like it’s gonna take a long time too, so focus on the one that are gonna close the quickest and get the early value in order to keep around long enough to focus on all four.
But I would try to answer that question, there’s still a question in my mind of is the product actually gonna serve all four? If that’s the case and you can work your entire list and work all four of them at once and try to get as many customers paying you on day one, then that’s what I would do. Right now, you’re just trying to get revenue and see how people use the app and if they’re gonna get value out of the app and there are across four different industries, then you’re gonna learn more about all four and maybe later you decide to focus down on one industry.
I do think that there are some advantages focusing on one industry in terms of how your marketing can really speak to people so you’re gonna close more deals probably, how you are sales conversation can focus on them, how your features set can focus, and how word of mouth would be such a big component of it. Assuming that people in your industry hang out at conferences, or hang out online, word of mouth if you just become the defacto in in the industry and in a vertical then you can land and expand words like, “Alright, we are the go-to for this task in the IT space. Now we’re gonna start adding on these other verticals.”
That’s the other way to approach it. It’s just a pick one based on your information so far, your best guess, and then later on, a year or two down the line, once you own a big chunk of this, you’ll expand into the others but I feel like you don’t have enough information to do either approach right now and I would try to close as many deals as I could, see if they actually will all use it and then try to make the decision once you have a little more information.
For our final question of the day, we have a question from Ed Freyfogle. He was a MicroConf Europe speaker this year. He says, “Hey, guys. Long time listener, first time asker. One target audience of my SaaS service is academic researchers. They are not the best customers as typically they’re low budget and they only need this service for a project or semester. Nevertheless their niche seems to like my service. Often they ask for academic discounts. My pricing is already very affordable and I offer discounts for annual purchases. Still, I can’t help but wonder if I might be able to grow this niche by offering an academic discount.
Alternatively, I have also thought about selling to universities and offering them a bulk rate. But so far I’ve always been busy with other things so I haven’t acted on this idea. I’m wondering if you guys have any advice on academic discounts in general, how to ensure they are not abused by other customers and selling to universities. Thanks for the great show, I learn a lot.”
This is a tough question. I like the fact that he’s thinking pretty strategically about it. I think that if you haven’t had the time to try to sell to the universities and offer them a bulk rate, if you haven’t made the time, it’s probably not that important. That’s where I found like this is right. It’s like you go toward the money’s coming in and your biggest fires are. I’m guessing that unless you are to hire someone to handle that that it’s not gonna make it to the top of your to-do list anytime soon.
I tend to think about discounts in two ways. There is academic and then there’s non-profit discounts. I don’t know if you have a non-profit discount as well, that’s something that I would consider modelling it after and there you just ask for proof of their non-profit status which can totally be abused. I think with DotNetInvoice we had profit one and it was maybe 1 in 20 or 1 in 30 who ask for it and show the stock seemed a little bit like, “You signed up with this just to get the discount.”
In terms of academic stuff, it depends on what volume you have coming in, it’s like if it really isn’t education it’s 1 in 50 people ask for it. You can always have an unpublished academic discount and you just need to get proof from them, I don’t know it’s a student ID or if it’s a professor ID, what it is, but it’s gonna be a process, it’s fairly lightweight. I personally don’t see a huge drawback to doing it. I’m curious when people email and ask for academic discounts and you say no, how many sales do you think you loose? Is it worth even doing any of this effort to get those sales?
Your pricing is already reasonable, if you offered another 20%, 30%, 40% off for academic discounts and that’s probably the range, I would think, although I haven’t done any research about this, but mentally it would be in that range. Is that worth it if you have to go through validation of some type of ID, I don’t know, there’s some trade offs here.
If the volume is high enough that you’re asking this question, I would probably just do an experiment where the next time I got an email about it, I would say, “Yes, we have a 25% discount, but you have to prove you’re a student or you’re faculty.” See where it goes from there and handle it as a one off to start and then I don’t know if it has support people or not, but if you distract them to do that and then tally up in a Google Spreadsheet how often it gets asked and which sales come through, you can start getting at least a little bit of data about it.
Those are my initial thoughts without a ton of experience, to back that up, it’s more of the got feel, so much of entrepreneurship is making enough as you go along. It’s just figuring out what’s the priority and making the best judgment call based on the information you have. What do you think, Mike? You have other thoughts?
Mike: I’ve looked at the academic discounts in the past. You just do a quick search for academic discounts for software and you’ll find that they can be upwards of 85% which is extremely high especially for something like a SaaS, I mean. Is the money that you’re getting even enough to offset the cost of you actually doing business for that person? I don’t know the answer to that. I think you need to figure out what that is.
Rob: Yeah. I know that Microsoft and Adobe and those guys discount because they’ve been pirated so much. Too often students who don’t have the money and they do these huge discounts. When you’re a SaaS app, especially when you’re Bootstrap like this and cash is important, there’s no chance I would offer a discount that large.
Mike: Yeah. I mean I think that part of the reason that those types of companies offer discounts that are high is one, it’s downloadable software so they don’t have to worry about their own cost, and two, they’re really just trying to make sure that there’s some form of legitimacy for the software that you’re using and giving that high of a discount helps them to get market penetration so that Microsoft has 90% market penetration on the best app for Office and Windows.
I agree, I wouldn’t go that high, but it’s not to say that you couldn’t have a discount for students versus a discount for academic researchers/the university itself. Because if somebody’s using it for a class, then they’re probably not going to be able to pay nearly as much as the person who’s doing it for the university and offering it on behalf of the class itself. I might think about that, but I do agree with Rob that you probably want to go through and run at least some tests to find out like what is it that people are using it for.
Something else to consider is that if somebody is purchasing it on behalf of the classroom because they’re teaching it, what’s the value of having those people in the class know about your product and then they leave and graduate and go out and do things in the workforce and having them know, “Hey, I can come over to opencagedata.com and buy this stuff off-the-shelf and we use it in our classroom so it has a lot of legitimacy.” There’s probably some value in that, I don’t know what that level is because I mean if you go through like an engineering degree, chances are good you’ll probably use Autocad some place along the way. When you get out into the industry like you first thought is, “Oh, I need to create some 3D models of something. Where’s the copy of Autocad?” There’s a student discount that you can get but once you get out in that at the real world, your company has to pay for it.
Having those people go to their bosses and say, “Hey, I use this data over here from opencagedata.com. We should buy a license for that.” There’s value there. I don’t know what that is but I definitely think there’s some value there. I would look into it, I don’t know how much time and effort I would spend on it because the return on that is probably gonna be wild. It’s gonna be a couple of years.
Rob: Yeah. Those are good points. I like your idea of not making an academic discount but making it a student discount. It’s an interesting thing because students really don’t have the money whereas if a university is buying it for a class, they do have some budget, and he’s right, his prices are reasonable like a university should be able to afford it.
Mike: Even with like a student. A student could probably get away with a free trial or even like the extra small plan that they have there for like a class or project or something like that but the university, if it’s for a class, and they’re buying it on behalf of the students for a class, I’ll offer them a 30% discount if you’re a student and you just want to use it for yourself, maybe it’s a 60% discount. I don’t know, but if you separate them, I think that there’s a way of targeting those people in that way that says, “Oh, we give individual students 60% and for universities we give them 30%.” It shows that you’re doing both. It shows you’re helping out on both sides.
Rob: It’s a question of whether or not the volume of incoming request warrant spending the time to figure all this out. If the answer is no, we have reasonable prices and we aren’t able to support any of these because you don’t have the bandwidth. It’s less about money and it’s more about Bootstrap startup with not a lot of time and just having yet another program to maintain and then we have to get a fax of your idea or an email with a screenshot and then check that off that it’s approved and then they just want more process that you have to wait if that’s gonna be worth it for in order to make another few discounted sales.
Mike: Thanks for the question, Ed. I think that about wraps us up for the day. If you have a question for us, you can call it into our voicemail number at 1-888-801-96-90 or you can email 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 and visit startupsfortherestofus.com for a full transcript of each episode. Thanks for listening and we’ll see you next time.
Welcome to Startups for the Rest of Us–the podcast that helps developers, designers, and entrepreneurs be awesome at building, launching, and growing software products, whether you’ve built your first product or you’re just thinking about it. I’m Rob.
Mike: I have the plague.
Rob: We’re here to share our experiences to help you avoid the same mistakes we’ve made. You were sick all weekend?
Mike: Yeah. My eldest son got sick the last Wednesday, I think it was. It was like Wednesday and Thursday and we sent him back to school on Friday. Then my wife got sick between Friday and Saturday and then I got sick between Saturday and Sunday. It’s been a rough week to say the least.
Rob: Yeah. That’s brutal. Being sick just tears you up, means you can’t get anything done, especially when you don’t have vacation time, you don’t have to paid time off and you’re trying to drive a business forward, it’s like every hour is precious.
Mike: Yeah. Fortunately for us, it was kind of over the weekend but still we’re recording now, we don’t usually record till Thursday but today’s Monday and after this podcast episode, I’m probably gonna go to bed.
Rob: Right, right. Yeah. Today, we’re actually continuing kind of a continuation of last week’s episode. I had picked out several questions last week that you and I were gonna go through and answer and we only got through a couple of them because the GDPR conversation was so extensive. I think that was a good thing. I think we went in depth and gave ideas and feedback but it meant that we had this big block of unanswered questions and I wanted to keep going with them.
Now we have a few voicemails and some others today. But before we do that, I want to tell you, I know I haven’t talked about Drip features in a while but I’m pretty excited about this upcoming feature. We’ve been working on it for–I’m trying to think–it’s gotta have to be about four months now so it’s one of the larger features we’ve embarked on but it’s a visual email builder.
Mike: Oh, nice. What’s that involve?
Rob: A lot of stuff. Yeah, you can imagine not only the frontend which is obviously a lot of dynamic stuff, a lot of Javascript and pointing and clicking and moving things around the screen but then taking something that is essentially JSON and translating into the table-based email render to HTML is a challenge.
We found some AltSize and trade secret workarounds that we found, we’ve really done a lot of research and I think I’ve done a good job with it. But what I’ve heard from folks who have built visual email builders is building the visual portion of it is one project and it will takes six months or nine months, depending on how many […] we have on it and how good they are. Then just doing the table-based rendering and getting all of that to work and working all the clients is at whole separate project. It can take as long as building the actual visual builder. This is why a lot of upstart ESPs don’t build them because the time investment is so extensive.
Mike: When you say rendering the stuff and the clients–I understand what you mean by the differences between them–but when you go back to the visual email builder, what advantages does that have over what Drip does now?
Rob: Right. Today, Drip just has a nice little WYSIWYG text editor and I’m still gonna use that. I never use visual email builders because I like the personal interaction or it just feels more like you’re getting a plain-text email when you send using our standard plain-text template. This is how I’ve always recommended doing it. I believe the conversation rates are higher when you do that.
However, there are a few industries where they have done tests–so they’ve done tests across many industries in terms of visual email with a lot of images and table-based layout, two columns and this and that versus just something that kind of looks like a plain-text email, much like we send out to a MicroConf list, or I send out to my blogs Software by Rob list, they tend to be more personal. It’s from Rob Walling, Founder, it looks like he’s actually typing it to you. But there are few industries—ecommerce is one and travel is another—where having back these more exotic layouts and emails can and will convert better.
Since we do have a large ecommerce contingent and since we’ve been focusing on commerce-based businesses, people who are selling things, we have found a time to break ground on a visual builder. It allows you to do the things where you see the fancy, neat template, you can just insert your images and have that layout. It’s not something I’m gonna recommend for everybody but there are instances and match your converts better.
Mike: Got it. Kind of like if you go over to MailChimp for example, they’ve got like 30 or 50 different templates you can choose from and okay, that makes sense.
Rob: Exactly.
Mike: That makes sense.
Rob: Right. We won’t have 30 or 50 templates to start with but obviously that’s a direction that you’ll wind up going and it’s become table stakes. Again, in certain industries if you’re doing ecommerce and you’re working with companies using let’s say a platform like Shopify, BigCommerce, or WooCommerce, or if they have their own custom solution for ecommerce, they tend to want to send emails with a lot of images and not just to frustrate top to bottom flow where it’s image-text, image-text, you wanna have things that just look nicer than that.
Mike: Yeah. Things that come to mind for that are things like Amazon, Newegg, or ThinkGeek, all those, it’s exactly the same. I totally get what you’re saying where that’s going, but it totally makes sense.
Rob: Yup. The reason I’m excited about it is because I feel much like we did with workflows, we went back to the first principles and said, “What did everyone else do wrong? What do we hate about builders? How can we do this differently?” It isn’t just look at what everyone did and copy the best features, just like we’re doing things that are different than anyone else. There are obviously gonna be commonalities. There’s stuff on the left that you’re text and your image block and your divider and whatever, then there’s the email on the right. That’s common stuff but there’s certain paradigms that we use that I think are superior and gonna make for a better user experience.
The team has been working hard on it and everytime I see it down the road, I’m like, “Man, this is super cool, actually. I wanna use this even though I don’t really…” Like I said, I don’t use other visual builders as a rule when I’m writing my emails because I’ve always liked the more plain-text feel.
Mike: Awesome. Let’s dive right into the episode and they’ve got a couple of questions outlined here. Let’s get started on this.
Rob: For sure. Our first one is a voicemail and it’s about how to balance feature development and marketing specifically for an IOS app. But let’s hear the question and we can figure out what form we wanna answer it.
Steven: Hi Mike and Rob. This is Steven Johnson with […] Plus, an iOS and Mac app for hikers. My website is […]studios.com. I have a question about how you work […] user feedback. I’ve been getting a lot of feedback about my app on the Apple Watch, it’s still like I’m missing out on some opportunities as well as on just keeping up with where the market’s going.
However, right now I’ve really been prioritizing a lot of marketing efforts, working on conversion rates, lowering churn, […] partnerships with business development and […] by knowing […] you talk a lot about having more marketing always speeds out features and I completely agree with that. I’m just trying to figure out how do I kind of balance these two priorities and knowing how to balance user requests that come in, especially one that feel like the market’s making changes and I feel like am I missing out on something, maybe I am and maybe I’m not, but I know that there’s opportunities that I’m not capturing with my marketing, I know there’s conversion opportunities as well as churn that I need to work on. I’m just curious about your thoughts on that. Thanks for the show. Love what you guys do. Thanks.
Mike: I think this is an interesting question mainly because it’s an iOS and Mac app but there’s also the recurring annual subscription from productivity. I think the prices–there is a free plan–but then they range from $20 a year up to $80 a year which is of around what, $5-$8 a month, something along those lines. I think that the challenge here is identifying why that churn happens. Is it legitimately because people are churning out and they’re no longer using it or is it just they find that the app doesn’t help them nearly as much as they thought it would? I think it’d be easy to assume that, “Oh, you should be doing this.” Or, “You should be implementing that feature.” But I think I might dive a little bit more into the churn itself and start ask a lot more detailed questions about why the people aren’t using that.
My concerns/fear here would be that what you’re offering people is conceptually what they want but either the implementation itself is not really what they’re looking for or it doesn’t really quite match up with what the value proposition they were sold on is and it could turn out to be that somebody tries one app and they think that it’s gonna work and once they get out of the field and they’re using it, it sort of works or does most of what they want but it’s not quite enough so they just decide to switch and use something else. Maybe look at your performance metrics or your usability metrics to see like are people actually using it after three or four months in or is it that they’ve paid for and it was a low enough price point that they said, “Well, I paid $50 for this and it’s not a big deal so I’ll just try this other thing over here for another $50.”
As I said, the fear/concern that I would have is something that people use and it may just not be able to deliver on the promise. It’s not to say that you can never deliver on that promise. The fear that I have is it even possible to do what it is that they really want. I don’t know the answer to that, you have to ask people to find out. But as you said, the other component is like do you invest more on the marketing side and try and ramp it up or do you drill in and start trying to fix those things and add more features?
I think the first place to start to find out why people are churning out and what the fundamental issue is there and from there look back and say is it important enough for you to fix? The reason I say that is because there’s a question for road map and what is the most important to you, not roadmap, runway is more it than anything else, are you able to make ends meet with the app the way it is or are you chewing through runway and sort of losing money on it as you’re going along? In that case, you need to lean more towards scaling things up and then fixing things versus being able to make ends meet on a regular basis and you don’t have to worry about it as much. At that point, you can dig in and start fixing things in the app. That’s probably the place that I would start. Rob, I’m sure you have some thoughts on this as well.
Rob: Yeah. This is the age-old question. I think it’s a really good one to think about. I think in general, as developers, we think features are the answer, and in general, they are not. Not to say, all at all times because in certain markets, in certain niches, it really will make a big difference like Drip launching workflows was game changing for us, it doubled our month over month growth. It can happen.
But so many of the little features that are constantly being requested, if you have thousands of users you’re gonna get 50 or 100 feature requests a month and most of them you need to not build. Not only to keep the product simple enough that it doesn’t become bloated, but because you just don’t have the time to build them all. The caller is so much closer to his business than we are so it’s hard for me to make a recommendation to him, but my recommendation in general would be stir away from the mindset that I just need this one more feature to do this thing, unless everyone’s requesting it.
There comes a certain point where 10% of your feature requests are for the exact same feature. At that point, that’s when we break down–in the early days, we build a lot more now, we have a team of 18 developers or whatever, but in the early days when we were super cash and resource trapped, it was pretty much no by default and yes to these highly focused things that we knew were gonna move the needle. That’s how I balance it.
I think that the caller’s approach to doing joint ventures and focusing on marketing is genius. That’s exactly what I would be doing because the more marketing you do, assuming it’s effective, the more revenue you get, and that revenue will allow you to then hire a contractor in essence or perhaps the first time employee, how ever you wanna work it. But hire a developer that you can supervise because that will then, I should take one step back first, first person I would hire is a part-time VA to handle all your support, if you’re still handling that, because that will free up.
Then start thinking about hiring someone to write the code and this is the part that developers always struggle with because no one “is going to write the code as well as I do.” However, if you can free up 12-30 hours of your time in a week and features are still moving forward and you have some budget to pay someone, it can be game changing for your business and that frees you up to focus on really moving the needle.
I think marketing in the early days is such a big deal because you need to get the revenue to allow yourself to start stepping away from certain roles that while you may enjoy doing them are probably in the early days are less effective and what more if the needle is matched.
Thanks for the question. I hope that was helpful. Our next question is about overcoming hesitations about partnerships to move the business forward.
Joshua: Hi Mike and Rob. This is Joshua from [Perspexa Labs]. First, thanks so much to this podcast. Every episode is invaluable. My question is this, how do I overcome my hesitancy of partnering with someone to move the business forward?
For context, I run a B2B SaaS company that offers monthly subs in the range of 100-350 a month, and we’ve plateaued about $2,500 in MRR I co-founded the business with an office colleague but I just realized circumstances he really isn’t able to participate materially in the business anymore and our product is solid at this point but I know we need to move the needle and sell the marketing in a big way. Try as I might, I just can’t seem to crack that nut.
I know that finding the right person to bring onboard will probably do wonders and turn us into a vital business but on a do-it-yourself-er and I just have trouble, one, convince myself that I ought to do this, and two, coming up with the vital way to achieve it. Any advice for effectively a solopreneur who doesn’t wanna be stuck in a half business for forever? Thanks so much for the both of you. Everyone, go leave a review to this podcast on iTunes. Thanks guys. Bye.
Rob: Joshua was kind enough to also send us an email with a bit more background and he said, “The main product outreach is at [perspexalabs.com], we’ve got a core group of customers and service businesses like pest control and electricity and we’ll soon be getting into healthcare providers because our revenue is only $2,500 a month with margins of around 70%. It’s not enough yet to pay salaries. I’m guessing that bringing someone onboard will probably need to be an equity arrangement which I’d be fine with.
With regards to my own efforts to sales and marketing I’ve gone to the Traction book and tried several different approaches including online ads, cold-calls, cold-email outreach and attended a very targeted trade show. That really hasn’t generated fruit as nearly all of our current customers are referrals from other customers. Unmentioned to my question bills are related issue, should I let my current co-founder remain in the business? I’d really like him to be here if we can get into healthcare because of his connections, but I know this isn’t the first priority anymore.” What do you think, Mike? It’s a tough one.
Mike: Yeah. I think you can almost divide this into two entirely different things. One of which is what to do about the co-founder and then the other is how do you move the business forward when you’ve got $2,500 a month and not enough money to do a lot and you’ve also obviously got the co-founder onboard and I don’t know what the relationship there is in specifically call that out.
Rob: It sounds like it’s still amicable and he’d like to keep him on if they were to go into healthcare but not if they don’t. You don’t know if they vested so the first thing is that you should have done four year vesting probably so that your co-founder wouldn’t own the entire percentage that they had. Because if they decide to leave, that will go back into the pool to get the next person.
Mike: I think, with regards to what to do about the co-founder, that’s probably the first thing to do. It sounds like you wanna keep them on but the question is how much is he going to be able to contribute. As Rob said, the vesting schedule maybe he owns 25% because he’s stuck around a year, 50% because he’s stuck around for 2 years. That seems to me like the first thing to look at and try and figure out and if he has to walk away because he’s just not involved, that doesn’t mean he still doesn’t own a certain percentage of the business anymore and can’t contribute under the […] capacity or something along those lines. That’s something I think you have to work out with your co-founder and sit down and have an honest conversation about what him stepping away from the business really means for the business and for the relationship between you guys.
Then once you’ve figured that out, the next question to tackle is what do you do about the business itself. I think you didn’t specify what your own personal situation is or whether you’re taking money from the business and living off of it. But with the $2,500 a month, it sounds to me like because you’re a do-it-yourself-er, it might be a viable strategy to go out and find a business coach who can walk you through a bunch of different things and that does a couple of things.
One, is it avoids handing equity over to somebody else, and two, it still allows you to do those things yourself and you get that personalized assistance from somebody else and a sounding board from somebody who’s vested in the business because you are paying them to give you ideas and take a hard look at what it is that you’re doing and how effective those things are but you’re still doing those things yourself and you still don’t necessarily hand over control to a third party or a co-founder or another partner in the business and avoid some of those other issues that maybe you’re struggling with right now.
I don’t think that it’s wise to introduce too many changes all at once. That could be a nice bridge scenario where you are involving somebody else but you’re not handing over the reins to somebody else in a co-founder capacity while you’re having your current co-founder step away from the business a little bit. That’s probably where I’d start looking and see if that makes sense to you.
Rob: Yeah. I think you’re right, there are two separate issues here, it’s existing co-founder and then pulling on a new partner. I think given that the business you have to de-risk the business a small amount that bringing on a new partner, you could obviously give equity without giving an enormous amount. It wouldn’t need to be a third of the equity or something. It depends on your aspirations and think where the business is headed and who you can find but I’m thinking in the 10%-20% range given where you are. If you were gonna go raise funding and you’re gonna go try to find like a COO or something or a CTO, they get 5%, but you’re in a little bit different situation because it doesn’t sound like you’re gonna get so big so fast, that that’s gonna be warranted. As a result you have to bump that equity to 10% or 15% or whatever. But at this point, in my opinion wouldn’t just be an even split.
I think the hard part is finding that person and vetting them and it’s like a marriage because you guys are gonna have shared ownership of things and breaking that up later can be like a divorce. I think getting over your hesitation is one thing, but I think the harder thing is to find someone who is good enough or who’s gonna work with your style, who’s willing to be in the trenches with you, who I think it really wants to stick around and is able to work because it sounds like this is gonna be nights and weekends, people are not cut out for that in general, most people just think they wanna do it and then a month or two months and they just flick out or they just decide not to do it.
I think finding someone who meets all this criteria is really hard but I think if you can, then what I would look at doing is definitely have kind of a trial period, maybe 90 days, just to say how things feel, I would definitely have four year vesting on that with the one year cliff, meaning they don’t get any shares until they’ve been around for a year. I think that’s how I would approach it and I would look to be meeting people in person so I would be going to the MicroConfs and the businesses software and these conferences where there are folks who could potentially be in that pool for you separately regarding your current co-founder. I think you just need to make the choice sooner rather than later whether they’re going to healthcare. If you’re gonna go onto it and he wants to stay around, you wanna keep him around, that’s great, and if you’re not, then I think the decision is made there.
I know it’s not always that crystal clear but it does, given that information you’ve provided, seem perhaps how I would perceive. Thanks for the question, hope that was helpful.
The next question is about technical debt. Mike, does technical debt really come back to bite you?
Mike: Oh, yeah. No question on that.
Rob: Alright. The subject line of the email is actually, “Have technical debt decisions been easy to pay down later or did they really come back to bite you?” He says, “Love the show, listened for the past year, really love the practical advice. I’m looking for your technical perspective about what matters in the early days of getting a site running while keeping customers happy with mission critical data, building a data heavy B2B SaaS startup.
The frontend is in Angular, the backend is in Rails, intermediate self-taught developers, new things I haven’t done before can sometimes take a week or two to figure out. I’m making early technical debt tradeoffs hosting using Heroku versus AWS, database PostgreSQL versus Aurora, and the other miscellaneous things relating to data structures.
I’m not looking for technical help but the question is more geared to your experience of how much this stuff matters up front and really needs to be solved to get functional versus it’s not too hard to change it later. Theoretically important but won’t kill you so pick the simpler thing even if you know you’ll need it to change it after launch. Am I wasting a lot of time by taking the shortcut now and having to pull the app apart later to move it around when I have real customers using it in production?”
Mike, this is not gonna be as long as GDPR, I promise, but I feel like we have a lot to say on this, so go. Just start rolling with this. What do you think?
Mike: Yeah. Do we have like beeps cued up immediately for all the profanity that’s about to be dropped on this?
Rob: Yeah. Technical debt, it’s a *.
Mike: Yes, it is, yes, it is. I think looking back on this particular piece of it, some of the things that he had brought up, the things like hosting and the database selection and the data structures that you’re using on a backend, some of those can be really hard to change later on, versely impossible. In some cases, you’re looking at a complete rewrite.
You at least have to have enough technical knowledge to make those decisions in a way that is not going to completely kill the app later on or force you to do an absolute rewrite from the ground up. That said, I do know people who have done complete rewrites after they’ve gotten to a point where they’ve gotten customers onboard and it basically delays things, you may have to take three, six, nine months of accepting the fact that you’re just not gonna make any progress on the features in order to fix that fundamental positions that will bust it.
Then, there’s kind of a second level which is where you’re trying to make decisions about how do you structure the data or how do you create the database in such a way that it makes easy to do certain queries or provide a solid error handling, error returns to the API for example. I think in those cases, you can mitigate them to some extent by using dependency injection and creating these interfaces that sit in front of it and if you need to rewrite one, then you can, you’re almost swapping out an entire layer of the application for another in a very specific way.
I’ll give an example with Bluetick, like the backend storage system for storing emails has been rewritten four times. It’s because at first it was like let’s just get something working and then it was trying to optimize for local storage and then the next level was things are not working in local storage because there’s so much data coming in at all times like I just can’t scale that much on one machine and then I kind of move everything into the cloud and into the Azure tables in no sequel storage. Then the fourth rewrite was essentially making that more scalable and optimized.
Each level on the way like there was some level of rewrite but because it was essentially being able to flip a switch and say instead of using this set of data structures, you can do those on a per user basis or on small sub-segments of the users and not affect others. I would definitely do some research on dependency injection.
The other nice by-product of them is that it helps with writing unit test to be able to make sure that those things that are working from one version of your rewrite to the next in that particular component or module. Beyond that, there’s always gonna be things that you run into where you think that one way is a good way to solve a technical challenge and you turn around and find that it just wasn’t, you get down in the weed sometimes and you realize that you made a really, really big mistake and the only way to resolve that at that point is to rewrite it and there’s nothing you can do at that point.
The only way to have mitigated those four types of problems is to run into them and then realize after the fact that it was a mistake. It’s really hard to generalize from one application or problem space to the next and say like, “Oh, you should never do it this way. You should always do it this way.” Those things don’t apply. Each problem space has its own unique way of storing data or things that need to be surfaced to the user and you don’t always know what those are until afterwards. Sometimes, you just make the best decision that you have and you find out later that it was wrong, there’s nothing you can do.
Rob: Yeah. I would just say in general, technical debt is underrated in the startup space. I think people think that it’s not a big deal and it’s a way bigger deal than most people do because if you aren’t technical, it’s hard to understand why you can’t just quickly rewrite a piece or quickly change a decision you made later. These metaphors don’t always work but it’s akin to building a building and then needing to go back and replace the concrete foundation because you poured it incorrectly. You literally have to jack the building up and it’s just painstaking and agonizing to replace that and that’s what code is. You’re building things on top of each other.
I think of it like a 4×4 matrix where there’s basically two binary things. One is I know that this is a shortcut and I’m gonna take it anyways versus I don’t know this is a shortcut like I accidentally introduced technical debt. I think that’s the switch you’re talking about.
Then I think the other one is it’s easy to undo later versus it’s a complete fiasco to undo it. You can imagine that 4×4 matrix and we’ll go through all of those matching up but obviously any decision you make on purpose to introduce technical debt, you need to explore and thought experiment like how hard is this to undo later. If it’s hard, then don’t do it.
There were a lot of decisions Derrick and I made in the early days that were very slow, they caused Drip development to be very slow in the early days and it was pretty agonizing when we were bleeding cash and we couldn’t get the features out the door to keep people from churning because it was a very specific feature set that people wanted, and it was taking us months to build them and it was because Derrick wanted to build them very carefully with extensive unit test and he wanna do it right and he had to refactor the database twice in the first year of the app, because the app went from a very simple thing to very complicated thing.
It was agonizing but it was the right decision, because now, it would be catastrophic right now, we would probably have to have rewritten major parts of Drip. I don’t know if it would have impacted the acquisition or if it just would have been post acquisition or what it would have been but it would have been really hard and between he and I, we figured out a good sense of what was gonna be hard to change later–things that are easier to change later like you said where you can just build an interface and then swap it out later. Obviously those are the ones that you can maybe take shortcuts on.
But I think some people take shortcuts on like not running unit test, some people make cold-quality shortcuts where they just start hacking things together and later on, everything’s buggy because you took a shortcut and you didn’t build that right in the first place. In general, I have seen no less than half a dozen or maybe closer to a dozen companies get to the point where they’re between 10k and 50k MRR, they’re growing fast and they have to rewrite their entire codebase. I’ve seen some that have done it more than ones.
It is so painful to spend six months of standing still while your competition gains on you because you took shortcuts in the early days. Now, you’re just hanging out, waiting to build more features until your codebase can be completely rewritten. I would say proceed with caution, obviously, you’re always gonna have some level of technical debt, but be very deliberate about those choices because I think it’s easy to be in such a hurry to get to the point where you have more revenue and this is certainly a tradeoff because in the early, early days, when you just trying to get to $5,000 or $10,000 revenue, you’re gonna have to make some trade offs but try to take shortcuts on things that are easy to change later. That’s how I think about it.
Mike: I think one of the biggest places to make that trade off is that when you’re looking at unit tests, I’m not saying you write unit tests for everything because I certainly don’t think that that has a ton of value for a startup but I do think that there’s value in having like continuous integration server of some kind or a build system put in place so that later on you don’t have to figure out, “Okay, how am I gonna deploy my app?” You want that to be a systematic thing where you can literally just click a button and it runs through everything and is able to deploy the app.
But with that comes at least some level of unit tests or a mechanism for running those, and even if you don’t write a ton of unit tests, as bugs come in, you should be adding those unit tests to make sure that if a bug comes in and it breaks something that you had a unit test in there so that later on, as you’re making other changes, it doesn’t break that again.
Like I said, I don’t think you should write unit tests for everything, but I do think that as those bugs come in you should be writing them to make sure that once you fix a particular problem that you don’t have to refix it 3, 4, 5, 10 different times moving forward because it just keeps coming up.
Rob: Thanks for the question. I hope that was helpful.
Next question is from Jay Pablo Fernandez and he says, “I just finished going through all my newsletter subscribers and I noticed there are a few industries that are well-represented such as education, health, IT and government. When it comes to my product, they all use it in the same way. The feature set they made is pretty much the same. I wouldn’t say they are verticals in the SaaS way of thinking. I can sell to all of them or I can focus on one industry. Are there any advantages to either approach?”
Mike: I think this is a tough question, as you said you don’t wanna paint yourself into a corner and make people think that you don’t serve their industry. I think what I would do in this case sn focus on the specific problem that you solve and then maybe have different case studies for each of those industries and even segment your list a little bit so that when you talk to them, when you’re sending out newsletters or you’re sending out articles to them, maybe you’ll only send an article that highlights a case study for the electric and gas industry to those people who were subscribers that fit into that bucket. It seems to me like that would probably be an appropriate way to go, but at the same time there’s value to be had to for saying, “Hey, this also works in other industries because there’s gonna be some crossover between them.”
Let’s say that you have a case study on the nuclear power plant industry, if it’s safe enough for them to use, pure application, then whatever other industry they happen to be in, they would probably translate that and say, “Oh, well, if these guys are using it, then surely it’s passed master and I could use it as well.” I would think about it in terms of just trying to make sure that you’re covering enough of each of them but not focusing so hard on any of them that it makes people think that, “Oh, this is not for me.”
Rob: I think I might try to run an experiment. He has this list and he has these four sectors, four verticals, and I would consider trying to do physically exploratory calls, I don’t know if you wanna call it customer development or even just sales calls, if the product’s already there, across all of them, and figure out that you wanna validate your assumption that they use it in the same way with the same feature set. Because I find that a little bit hard to believe, just having run the apps that I’ve run, different industries tend to want slightly different feature sets and have a slightly to just enough it settle but by the time you really get and they start using it, it becomes a pain-in-the-butt to have four different industries or wanting something just slightly, “Oh, just tweak this one thing, oh, can I just have a setting to do this? But we have a permission in the reporting thing.” It’s just enough that there will be a difference. I guess it’s what I’m guessing.
If you have the time to do this upfront and just have a bunch of phone calls with these folks and try to do the demos and try to figure out is it truly gonna be something that they all can use, then that’s fine. But I do think you’re gonna find differences in payment terms, like you said sales cycle because government’s gonna take forever to come through, maybe in your early days since you’re trying to get ahead of funding running out or whatever, you go after the ones that close quickest, which I don’t know if that’d be IT, education, sure it seems like it’s gonna take a long time too, so focus on the one that are gonna close the quickest and get the early value in order to keep around long enough to focus on all four.
But I would try to answer that question, there’s still a question in my mind of is the product actually gonna serve all four? If that’s the case and you can work your entire list and work all four of them at once and try to get as many customers paying you on day one, then that’s what I would do. Right now, you’re just trying to get revenue and see how people use the app and if they’re gonna get value out of the app and there are across four different industries, then you’re gonna learn more about all four and maybe later you decide to focus down on one industry.
I do think that there are some advantages focusing on one industry in terms of how your marketing can really speak to people so you’re gonna close more deals probably, how you are sales conversation can focus on them, how your features set can focus, and how word of mouth would be such a big component of it. Assuming that people in your industry hang out at conferences, or hang out online, word of mouth if you just become the defacto in in the industry and in a vertical then you can land and expand words like, “Alright, we are the go-to for this task in the IT space. Now we’re gonna start adding on these other verticals.”
That’s the other way to approach it. It’s just a pick one based on your information so far, your best guess, and then later on, a year or two down the line, once you own a big chunk of this, you’ll expand into the others but I feel like you don’t have enough information to do either approach right now and I would try to close as many deals as I could, see if they actually will all use it and then try to make the decision once you have a little more information.
For our final question of the day, we have a question from Ed Freyfogle. He was a MicroConf Europe speaker this year. He says, “Hey, guys. Long time listener, first time asker. One target audience of my SaaS service is academic researchers. They are not the best customers as typically they’re low budget and they only need this service for a project or semester. Nevertheless their niche seems to like my service. Often they ask for academic discounts. My pricing is already very affordable and I offer discounts for annual purchases. Still, I can’t help but wonder if I might be able to grow this niche by offering an academic discount.
Alternatively, I have also thought about selling to universities and offering them a bulk rate. But so far I’ve always been busy with other things so I haven’t acted on this idea. I’m wondering if you guys have any advice on academic discounts in general, how to ensure they are not abused by other customers and selling to universities. Thanks for the great show, I learn a lot.”
This is a tough question. I like the fact that he’s thinking pretty strategically about it. I think that if you haven’t had the time to try to sell to the universities and offer them a bulk rate, if you haven’t made the time, it’s probably not that important. That’s where I found like this is right. It’s like you go toward the money’s coming in and your biggest fires are. I’m guessing that unless you are to hire someone to handle that that it’s not gonna make it to the top of your to-do list anytime soon.
I tend to think about discounts in two ways. There is academic and then there’s non-profit discounts. I don’t know if you have a non-profit discount as well, that’s something that I would consider modelling it after and there you just ask for proof of their non-profit status which can totally be abused. I think with DotNetInvoice we had profit one and it was maybe 1 in 20 or 1 in 30 who ask for it and show the stock seemed a little bit like, “You signed up with this just to get the discount.”
In terms of academic stuff, it depends on what volume you have coming in, it’s like if it really isn’t education it’s 1 in 50 people ask for it. You can always have an unpublished academic discount and you just need to get proof from them, I don’t know it’s a student ID or if it’s a professor ID, what it is, but it’s gonna be a process, it’s fairly lightweight. I personally don’t see a huge drawback to doing it. I’m curious when people email and ask for academic discounts and you say no, how many sales do you think you loose? Is it worth even doing any of this effort to get those sales?
Your pricing is already reasonable, if you offered another 20%, 30%, 40% off for academic discounts and that’s probably the range, I would think, although I haven’t done any research about this, but mentally it would be in that range. Is that worth it if you have to go through validation of some type of ID, I don’t know, there’s some trade offs here.
If the volume is high enough that you’re asking this question, I would probably just do an experiment where the next time I got an email about it, I would say, “Yes, we have a 25% discount, but you have to prove you’re a student or you’re faculty.” See where it goes from there and handle it as a one off to start and then I don’t know if it has support people or not, but if you distract them to do that and then tally up in a Google Spreadsheet how often it gets asked and which sales come through, you can start getting at least a little bit of data about it.
Those are my initial thoughts without a ton of experience, to back that up, it’s more of the got feel, so much of entrepreneurship is making enough as you go along. It’s just figuring out what’s the priority and making the best judgment call based on the information you have. What do you think, Mike? You have other thoughts?
Mike: I’ve looked at the academic discounts in the past. You just do a quick search for academic discounts for software and you’ll find that they can be upwards of 85% which is extremely high especially for something like a SaaS, I mean. Is the money that you’re getting even enough to offset the cost of you actually doing business for that person? I don’t know the answer to that. I think you need to figure out what that is.
Rob: Yeah. I know that Microsoft and Adobe and those guys discount because they’ve been pirated so much. Too often students who don’t have the money and they do these huge discounts. When you’re a SaaS app, especially when you’re Bootstrap like this and cash is important, there’s no chance I would offer a discount that large.
Mike: Yeah. I mean I think that part of the reason that those types of companies offer discounts that are high is one, it’s downloadable software so they don’t have to worry about their own cost, and two, they’re really just trying to make sure that there’s some form of legitimacy for the software that you’re using and giving that high of a discount helps them to get market penetration so that Microsoft has 90% market penetration on the best app for Office and Windows.
I agree, I wouldn’t go that high, but it’s not to say that you couldn’t have a discount for students versus a discount for academic researchers/the university itself. Because if somebody’s using it for a class, then they’re probably not going to be able to pay nearly as much as the person who’s doing it for the university and offering it on behalf of the class itself. I might think about that, but I do agree with Rob that you probably want to go through and run at least some tests to find out like what is it that people are using it for.
Something else to consider is that if somebody is purchasing it on behalf of the classroom because they’re teaching it, what’s the value of having those people in the class know about your product and then they leave and graduate and go out and do things in the workforce and having them know, “Hey, I can come over to opencagedata.com and buy this stuff off-the-shelf and we use it in our classroom so it has a lot of legitimacy.” There’s probably some value in that, I don’t know what that level is because I mean if you go through like an engineering degree, chances are good you’ll probably use Autocad some place along the way. When you get out into the industry like you first thought is, “Oh, I need to create some 3D models of something. Where’s the copy of Autocad?” There’s a student discount that you can get but once you get out in that at the real world, your company has to pay for it.
Having those people go to their bosses and say, “Hey, I use this data over here from opencagedata.com. We should buy a license for that.” There’s value there. I don’t know what that is but I definitely think there’s some value there. I would look into it, I don’t know how much time and effort I would spend on it because the return on that is probably gonna be wild. It’s gonna be a couple of years.
Rob: Yeah. Those are good points. I like your idea of not making an academic discount but making it a student discount. It’s an interesting thing because students really don’t have the money whereas if a university is buying it for a class, they do have some budget, and he’s right, his prices are reasonable like a university should be able to afford it.
Mike: Even with like a student. A student could probably get away with a free trial or even like the extra small plan that they have there for like a class or project or something like that but the university, if it’s for a class, and they’re buying it on behalf of the students for a class, I’ll offer them a 30% discount if you’re a student and you just want to use it for yourself, maybe it’s a 60% discount. I don’t know, but if you separate them, I think that there’s a way of targeting those people in that way that says, “Oh, we give individual students 60% and for universities we give them 30%.” It shows that you’re doing both. It shows you’re helping out on both sides.
Rob: It’s a question of whether or not the volume of incoming request warrant spending the time to figure all this out. If the answer is no, we have reasonable prices and we aren’t able to support any of these because you don’t have the bandwidth. It’s less about money and it’s more about Bootstrap startup with not a lot of time and just having yet another program to maintain and then we have to get a fax of your idea or an email with a screenshot and then check that off that it’s approved and then they just want more process that you have to wait if that’s gonna be worth it for in order to make another few discounted sales.
Mike: Thanks for the question, Ed. I think that about wraps us up for the day. If you have a question for us, you can call it into our voicemail number at 1-888-801-96-90 or you can email 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 and visit startupsfortherestofus.com for a full transcript of each episode. Thanks for listening and we’ll see you next time.
Episode 385 | GDPR, Preparing to be Acquired, Technical Debt, and More Listener Questions
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Show Notes
In this episode of Startups For The Rest Of Us, Rob and Mike talk about GDPR, preparing to be acquired, and technical debt. With the regulations of GDPR coming into effect, the guys discuss how it will affect small businesses and what you should do. Also an in depth discussion on things to have in order before you get acquired.
Items mentioned in this episode:
- Mike’s Indie Hackers Article
- Mike’s Interview on Product People
- Sherry Walling Interview on Mixergy
- FemtoConf Recap
Rob: In this episode of Startups For The Rest Of Us, Mike and I talked about GDPR, preparing to be acquired, technical debt and we answered more listener questions. This is Startups For The Rest Of Us episode 385.
Welcome to Startups For The Rest Of Us, the podcast that helps developers, designers, and entrepreneurs be awesome at building, launching and growing software products whether you built your first product or you’re just thinking about it. I’m Rob.
Mike: And I’m Mike.
Rob: We’re here to share our experiences to help you avoid the same mistakes we’ve made. What is our word this week, sir?
Mike: Why is it in Zencastr it says Chronomustard?
Rob: Chronomustard, that’s my name this week. I think that’s gonna confuse our editor. I’m trying a new thing, creativity. I’m trying to enter a different name each week just to see if I can make you laugh.
Mike: They usually do make me laugh, I appreciate that.
Rob: For sure. What’s going on this week?
Mike: I did a demo yesterday for a customer who’s looking at switching over from a competitor and they have a bunch of different users for the product that are in the competitor. When I went through and was doing the demo, afterwards he’s just like, “Wow this is way more advanced than what we’re currently using.” I’m just thinking to myself, “Is that a good thing or a bad thing?” Apparently it was a good thing.
They were looking through and signing up for it. Next week they’re gonna reach internally. Hopefully they’ll turn into a fairly large customer for Bluetick.
Rob: It’s always good to get off a demo and get that feeling that you’re gonna be making more money, it’s always worth it.
Mike: What was really interesting to me was just the fact that they had said how advanced it was in relation to this competitor because the impression that I get from their website and all the things that it seems like it does is that it’s probably more advanced than Bluetick but I got the distinct feeling that that was not the case.
I knew that they were having problems with it but I wasn’t clear until the phone call and exactly what those problems were and how they were dealing with them and what they were looking to do.
Rob: That’s awesome, man. Do you have any avenue if you sign this guys up that you’re able to find more customers like them?
Mike: I do but I think it’s gonna be more word of mouth relationship than anything else. This one came through a personal relationship so it’s not as if they came in through a marketing channel or anything like that. I knew who the person was and contact them and went from there.
Rob: You could also think about going to build with your Datanyze. Since they are using this competitor pulling down the list to people who are using the competitor doing the cold email thing, we talked a little bit about that last week. It’s obviously time consuming but that can be an interesting avenue if you do know that you are better than a specific competitor.
Mike: I don’t know how well BuiltWith would identify that because it’s through email so there’s no really a lot of onsite stuff that’s gonna tell me who’s using that unless they have a JavaScript which I don’t have that so nobody will be able to use BuiltWith to reverse engine but maybe they do, I’d have to go take a look though.
Rob: Probably be worth a few minutes. You have been busy, man. I was pleased to see an article on Indie Hackers, Starting and Growing a Conference for Internet Entrepreneurs, got quite a few upvotes. You said you spent several hours doing this, it’s one of the most in depth Indie Hackers Q and A I had seen.
Mike: I spent a lot of time on that, probably close to a day and a half to two days. I threw in the word because I was curious since how long it actually was, it came in at 6000 words.
Rob: It’s like a book chapter or two. It has screenshots and everything, you did a really good job. If folks are interested in hearing about the history of MicroConf, what it was like starting it, how it runs today. There’s just a ton of insight stuff, although some of it is projected revenue, I think you gave this year. Some years don’t include MicroConf Europe, it’s not all exact but there are graphs and everything that I think that Indie Hackers folks put together.
Mike: They took the attendance numbers and extrapolated with the revenue was from those numbers. It’s off a little bit but it’s not really that big deal, it’s more of the trajectory, I think, that’s important to see.
Rob: It doesn’t include sponsorships and all which are big chunk. It’s fun for me to read because I could be like, “Oh yeah.” I was nodding along like, “I remember that. I can’t believe Mike remembers this.” You are pulling stuff out, all the anecdotes that I had long forgotten.
Mike: Some of the things I had to go back. I looked through my email to see when it was that we first started talking about MicroConf and I traced it back to the exact day which I don’t know if we talked about. We had a name for it before then and we were talking about it separately and just calling it a conference or we had the name and we picked it on the day and went from there.
I don’t remember how long we talked about it before we decided to register the domain name and start looking forward or if it was just like spare the moment thing.
Rob: I remember being very spur of the moment. It just made sense, it was like, “Why don’t we just do that?” That’s cool. There’s a lot of engagement, a lot of really good comments and in depth discussion going on and 36 upvotes, I get the feeling that’s quite a few for most articles. Anyways, if you’re interested in hearing that story, we’ll link it up in the show notes but you can obviously go to indiehackers.com and give it a search. You also went on Justin Jackson’s podcast, MegaMaker. It was a couple weeks ago.
Mike: I think that was last week as well. We recorded it and then it went live either later that day or the very next day. It was all about MicroConf itself and what Starter Edition was about. We’ve announced that Justin Jackson is going to be emcee for Starter Edition.
We did that last year, Starter Edition as well, with Jordan Gal from CartHook. He was the emcee for that, we basically turned over the reins to him and let him run the show at Starter Edition which was really cool because it’s nice to be able to sit back a little bit and enjoy the conference a little bit more. I don’t know how you feel about that but it’s nice to let somebody else take the reins for a little while.
Rob: That was something that Zander, our conference coordinator, encouraged us to do because since Growth and Starter are back to back, we’d be solo energy by the fourth day of trying to emcee and run the conference that I think he knew that it would just wouldn’t come off as well as it could. Jordan certainly knocked it out the park as the emcee that was really, really good and to give them their style up there on stage is fun.
You know, with Starter, Justin is such a good fit for it because that is really the crowd that he is talking to everyday and interacting with so he knows that crowd perhaps these days, you know better than I do in all honesty. It was years ago that I was really knee deep in all of the transitioning from developer to marketer and talking about all that stuff. He just has his finger on the pulse of that. I think he’s a good fit to emcee. This year he’s also doing a talk which is cool.
Mike: How about you, what have you been up to?
Rob: I’ve just been working, kicking back a little bit. I have a spring break coming in a week or two. We are heading down to Florida, starting to warm up in Minneapolis but still in the 30s and we wanna get some sun. It’s an easy flight down to Miami and we rented up Big Ol’ Airbnb off of 80 and we’re looking forward to that.
I was enjoying, I don’t know if you’ve heard it but Sherry was on Mixergy. It’s actually her second time on Mixergy. Her first time, it was when she interviewed Andrew Warner and put it on ZenFounder and he simulcast that basically onto Mixergy. But this time it’s called Keeping Your Feet Together As A Founder and it’s Andrew Warner interviewing Sherry about the book and about the stuff she’s doing in the entrepreneurial communities. It’s really a pretty intense interview but it’s really good. Have you had the chance to listen to it?
Mike: I have not, no. I don’t get a chance to listen to Mixergy too often. I’m actually about two months behind on most of my podcast at the moment anyway.
Rob: I listen to select Mixergy interviews just because there’s a lot of them and they are long but this is one that obviously I jumped on, I just wanted to hear the content. It’s a good one, we’ll link it up in the show notes but you can obviously search for Sherry Walling Mixergy and find that in Google.
Mike: Awesome. What are we talking about today?
Rob: We’re gonna answer a bunch of listener questions and see how many we get through. It was cool, we were down to one listener question. When we announced it on the show, I think we’re up to 12 or 15 now and so we can hammer through. I feel like this cadence every other week answering these questions has become something that I’ve enjoyed and I’ve gotten positive feedback about it.
Voicemails are even better because it shows people that there are all these different people with different businesses listening to the show. You and I know we have tens of thousands of listeners but as a listener, you don’t know that. It would be hard to know or understand your fellow listeners and your fellow entrepreneurs doing it. I have enjoyed this and I think we’ll keep doing it as long as the questions keep coming in.
Our first question today is for me, it’s actually from a guy, Louis. He said, “The question I have is what would Rob wished he had prepared in advance in going through the process of selling Drip? Imagine there might be things like intellectual property who may have purchased the use with his own name but now need to be transferred to the company, manuals and processes, bank issues such as PayPal not being able to transfer, etc. The list could be endless, maybe a good topic for a book.”
I’ve actually thought about this. There are two thing I wanted to say here. The first is I’m gonna make an announcement but not really an announcement, Mike, I haven’t even told you this. I’ve started writing what I think may become a book. That’s the exact right response. I don’t know if it will yet. My goal for this year is not to tackle any big new projects.
There’s a lot to tell, there’s a lot of story that has happened since the last book I wrote. Maybe it’ll just be about Drip and the trials and tribulations, the last year of personal finance hell and being unable to fund the business and then the year of the acquisition and then the year of moving. As I started thinking about it, I was like, “Isn’t this interesting enough? Will anyone care?”
I sat down with a notebook and I just wrote out what were the most stressful parts of my life both personally and professionally since 2011 in essence. The list was crazy long. Each of them just shaped into this narrative and they link together in this very interesting way. Even if I were to write about acquiring HitTail and not use it in the book, it’s still […] for me to write about the process of growing it and then selling it. There’s a bunch of stress that went along with that sale.
I started just thinking about all the stuff that happened growing Drip. I made this big list, when I looked at it I feel like it’s interesting enough, at least worth sitting down and hacking some stuff out. I had like three pages of just bulleted list. About a week and a half ago, I just sat down one evening, I started doing it on a weekend. It’s kind of writing itself because it’s a narrative. I’m pulling out actionable things but I’m trying to get the grit of what it was actually like.
I have emails, I have Voxers, I have all this, I have my MicroConf talk from last year talking about the sale and my thought process, I started to listen to that and transcribing pieces of it. It’s cool in this day and age, all the digital elements that we have because I can’t remember exact dates but Gmail sure doesn’t forget. It remembers the exact date of this email that I sent to Derrick about this topic.
I’ve literally just been doing it on the side almost as a journal but trying to be very honest about everything, trying not to sugarcoat things. I’m about 7000 words in and it has just poured out of me, it’s all out of order, I just picked the next thing on the list that I think, “Man, I really wanna write about that today,” and I’m cranking it out.
I don’t know if it will be a book, I don’t know if I will ever release it but it’s something that I think could have the potential to be that. It’s always funny, when I got this question I started thinking, “Maybe that should be a piece of this.” Because I don’t just want it to be a narrative, I actually want it to be in typical or a podcast style and MicroConf style. I want it to have lessons that people can take away.
Whether they’re acquired or not, even just the growing part of it, the mistakes that they can avoid that I made or smart decisions that we made that I feel like people can learn from.
Mike: There are two pieces of that because there are people who would read that just because they know who you are or they’ve seen you speak and they just want the inside baseballs so to speak. They’re interested in the story, I totally hear what you’re saying about having the lessons but I think you could do both where you’ve got the story itself and then after each chapter or after each section you have a list of things that you personally pull out and be like, “Here are the lessons that you could take away from this, here’s the story piece of it and then here’s the lessons that go with each of these.”
Some of them may not have any lessons at all, it’s just something happened and you got lucky or unlucky and you just had to deal with the consequences or fallout. There may not have been anything that you could do about it. Maybe that’s the lessons, you can’t plan for everything but I think that it’s still going to be interesting to a lot of people.
Rob: I appreciate that. I kind of think of it as I think of any MicroConf talk I’ve ever given or at least the best talks that I’ve given tend to be a story, like a hero’s journey and then pulling out super actionable tactical things. That’s how I’m envisioning it. I’ve read only a couple books like that, I like it because it’s different, it’s not just a narrative. I want them to be not obvious takeaways, it’s not like work hard and persevere and you will make it. It’s not stupid stuff like that.
I realized that I think I’m telling myself that I don’t know if it’ll be a book so that I don’t feel in pressure or anxiety. I don’t want to feel forced to write it, I don’t want the writing to feel forced. I’m telling myself no one will ever read this because I wanna tell the story honestly, because there’s obviously a lot that went on that no one else knows that was very internal, that was between Derrick and I or between Clay and I or whatever.
Eventually, I’m sure I’ll have to edit some of that out but I’m trying to get it all out and then evaluate, is this worth doing? Maybe it’s an ebook or maybe it’s a series of blog posts that I’ll release or maybe it’s an audiobook, I don’t even know. It’s an interesting project. Hopefully it’ll turn into something.
Mike: Man, if it doesn’t, you did it for yourself and that’s not a big deal either. There’s something to be said for just doing things for yourself once in a while.
Rob: Exactly. That’s what I said, it’s like what’s the worst that can happen, I should just write this out. If nothing else, my kids can read it someday or something.
Mike: All of these aside and back to the question, are there any top level things that you can take away that you wish you had done that were probably a major things that you either overlooked or hadn’t thought about upfront that needed to be transferred or you wish you had done?
Rob: The prep work that I think everyone should do that you don’t think about is it’s far more mental prep work than anything else. I listened to the book Built to Sell three or four times, I listened to Finish Big multiple times, I did a lot of journaling, I did a lot of thinking. You have to know what your deal breakers are, you have to know probably what your drop dead price is. There’s a bunch of stuff that you need to think about and that it the prep work that I would focus on. I’ll just put that out there, first and foremost spend more time doing that.
The examples that the guy brought up, the guy who answered the question, most of these were not an issue. He brought up intellectual property, I had already transferred all of that into an LLC. If I hadn’t done that, it would’ve been disastrous, it would’ve been a huge pain in the ass.
One big thing that I do think you need to think about as you’re building your companies to have a clean IP, meaning that all of your contractors who touch your code, all of your employees who touch your code, you need to have them sign in their employee agreement, it should say, “Everything I do, the company owns.” I had that, I had only missed one contractor. I went back and asked him nicely, we still have a good relationship and everything was fine.
Had I not had that, it would’ve been really tough because when we went through the acquisition, they needed that. This funded company is not going to pay a premium for my startup if there are IP holes that someone could come back later and sue them or ask for ownership with the code or whatever. It’s not something you think about when you’re two, four or five person startup but it’s something that you should definitely have.
I signed to the same employee agreement, and Derrick signed, even us cofounders. We had to have agreements that basically Drip, the S Corp that owned everything own everything, that Derrick and I couldn’t walk away with that. That’s one thing I would think about.
The guy mentioned manuals and processes, that was not an issue because we were an eight person team and they’re acquiring the team. They weren’t looking to automate everything. I think if the team was walking away, yes they would want manuals and processes to hand off to the next team but there was zero questions about that. There were more questions about what our vacation policy and HR staff and employment agreements looks like than anything like that.
In terms of bank issues, they didn’t acquire the company, if you think about it. They acquired all the assets of the company and that’s typically how it’s done because they don’t want any of the liabilities. They left an S Corp that Derrick and I still own the same amount that we’ve always owned, they just bought all the internal assets of it including the code and the goodwill and the recurring revenue and employment agreements and all that stuff.
As a result, the corp still owns the bank account, they didn’t acquire any of that stuff. Thankfully we never had to setup a PayPal account or anything like that. Same thing with domain names, we just transferred them over. They were all in the GoDaddy account and we transferred them over to their GoDaddy account.
The only other thing I could think of as I was going through this list that I think would be interesting to think about it they ask for, this is typical, the standard due diligence stuff, all corporate documentation, your articles of incorporation, every single amendment you’ve ever made to them, everything. Have that all in one place because going out and finding it and scanning it is a pain in the ass.
Having record keeping doesn’t seem like a big deal when you’re a three person startup or when you’re a solo founder. But if you’re ever planning being acquired, you probably want all of this stuff somewhere so it doesn’t take you weeks to put these docs together.
The next thing is having really solid books, basically having income statements for every month. For me it was literally just a Google Doc with revenue, expenses and that kind of stuff. I also had Xero, the accounting software that they could look at. When they were asking for high level numbers, top line revenue and that kind of stuff, I was sending them Google Docs.
They’re gonna ask every single service you use, what’s every SaaS app that you pay for? Hopefully they’re all on a credit card, you could just go to credit card, that’s what I did and just started listing those out. Copies of leases and every contract you’ve ever signed for every service. Transferring the Stripe account did happen because all the subscriptions were in there.
That’s the high level overview, I think it’s something that I hadn’t thought about. When there’s a technology transfer, you think more about, “Boy, the tech has to be good and has to be automated and you want processes in place.” When it’s a company acquisition, it can be different. When people bought HitTail just as a product, they didn’t ask for articles of incorporation because they weren’t buying the team, it wasn’t a strategic acquisition. Those are my high level thoughts.
Mike: I hadn’t realized that they did not acquire the entire company itself and they were just acquiring the assets from the company. That’s the way that my wife had purchased the fitness studio that was in town. She didn’t acquire the business, she acquired the assets of the business.
I was very clear to her about just because the records of the business were obviously a little screwy and the person who own the business before couldn’t really explain certain things and was a little cagey about certain pieces of it where I’m just like, “Do not acquire the business.” Because let’s say she’s got a car, for example, that is owned by the business, if you acquire the business, you’re also acquiring the debts that go with it and any liens or anything else that goes with it. You will be on the hook for those things. If you don’t know about it, it doesn’t matter, you still have acquired them which may suck.
Rob: If you buy the company, you acquire the assets and all liabilities. That’s why almost without exception, anyone who knows what they’re doing, when they buy a “company” they’re just buying the assets of the business, that’s the standard. When Facebook bought Instagram, you can bet, their lawyers did not buy the Instagram LLC or C Corp. They bought just the assets of it.
As a result, you have to then list out what all the assets are which is interesting because you have to list out your code and the database and this, it’s just a big long list of stuff.
Mike: With my wife, there was a tax bill that ended up coming in. It was sent to her and she’s like, “No, this isn’t me because I didn’t acquire the business.” There was stuff that came up afterwards that had she’d acquired it, she would’ve been stuck with it and there is nothing she would’ve been able to do.
The other thing I find interesting is that when I worked for Pedestal Software and they got acquired by Altiris, the Altiris acquisition team came in and they handed us, all the employees, these documents that we had to sign that were basically more or less a copy of what our previous agreement with Pedestal had been for all the IP rights and signing them over to Pedestal but it was their version of it.
We’d already signed all the stuff but they said, “Yes that’s fine and everything looks good but you also have to sign these.” I think maybe there are updated ways of covering additional holes or something like that, I’m not sure.
Rob: I guess our agreements were perhaps good enough for their lawyers, they probably looked at them and said, “This covers everything.” Because it was recent, it was within the last year or something and everyone had signed. I broke everything out, Numa Group which is my umbrella LLC that owns a bunch of stuff, it owned Drip until maybe 9 or 10 months before it was acquired.
I was already in the process of ripping it out of Numa Group because that was when Derrick was taking some equity in the company and he essentially became cofounder. I was already in that process which was painful and agonizing and took five months and more money than it should have. Drip was already in an S Corp. I was very, very thankful for that because if it did not, then it would’ve been a fiasco to try it doing during the negotiation and the acquisition process.
When that all happened, I basically fired all of us from Numa Group, we all got new jobs with Drip, S Corp, Drip Incorporated. We all signed agreements at that point again even though some of us already signed up with Numa Group. Then, essentially when Leadpages acquired us, we all got fired from Drip Incorporated and all got new employment agreements with Leadpages.
I think they probably had some IP stuff in their employment agreement as well which is fine because then anything you do for them they own but they didn’t have a specific additional stuff we had to sign.
Mike: I wonder if it maybe it was because Altiris was a public company and they had additional things that they had to cover themselves, I don’t know.
Rob: I can see that, it makes sense. Thanks for the question, guy. I hope that was helpful. Our next question is actually not a question, it’s some kudos for us and it’s a voicemail.
“I just listened to episode 838 with the questions. It was great to have that interactive […] podcast, I just wanna give you guys some feedback, a long time listener. My name is Chris. I really enjoyed the episode, just hearing those questions and getting some more of your perspectives and your background and experience. […]. Take care, guys. Thank you again. Keep up the good work.”
Awesome. Thanks for calling, Chris. I wanted to play that because it’s good to hear feedback and folk’s opinion. He said episode 838 but I think he meant 383 which was just another one of these Q and A episodes. I specifically mentioned in that one that I like doing them more often and that I like getting voicemails because it shows it has the interaction. Thanks for that, man. I’m always happy to hear from folks.
Our next question is from Mr. Andrew Connell about GDPR. “Hey Rob and Mike, this is Andrew Connell from Voitanos, that’s voitanos.io. I do online training and I do it for everybody around the world or developers around the world. With the coming effectiveness of the GDPR for data privacy and personal privacy data at Europe, I’m curious if you guys can comment a little bit, of course not being lawyers, I’m not a lawyer either. I just think about what kinds of things developers really need to be paying attention to? What kinds of things you need to be careful of?
I’m asking these guys because it’s also very much in the way of how we’ve all be listeners of your show worked on doing email based marketing and collecting email addresses and potentially phone numbers and other information about users. What kinds of things you need to think about, I’ve seen things about privacy statements that you need to have on your site, how you’re collecting the data, what talent is being used, how you’re protecting it, all those kinds of things.
I’m just curious, what things do you really need to be paying attention to? There’s probably the gold standard but also what’s the standard that you can do where you’re at least defensible. Maybe you’re collecting data and the user finds out, they decided they no longer wanna be tracked by you. Can you just go back to them and say, ‘Yes I track you by your email address. Here’s all the information I have about you. If you want me to delete you, I can delete you.’ I’m just curious, do you guys have some comment there or maybe even have somebody who is a lawyer who can jump on the show and maybe comment? Thanks a lot. I love the show. See you guys in Vegas.”
The riveting conversation topic of GDPR.
Mike:Oh, joy.
Rob: Everyone is thinking about it so it’s important, it’s just such a fiasco. I’m gonna use the word stupid a lot in this conversation insight. Big parts of it, I think, are really dumb. There’s a 250 page doc or whatever and Brandon, our senior director product, went through the entire thing.
The end result is gonna wind up being something like we have to rewrite a bunch of internal policies and we’re gonna add a checkbox to a form for our users. That’s very similar to what MailChimp is doing and Active Campaign, all the ESPs. I’ll stop there and circle back because I’ve been talking a lot this episode. I know that you saw a talk at FemtoConf about it and I’m sure you have other thoughts on this.
Again couching it that we aren’t lawyers, we are not giving personal advice to anyone and certainly don’t have an exhaustive understanding of this but this is just our general thoughts on what we feel like folks might wanna do for GDPR.
Mike: The talk that I saw on FemtoConf, there’s a linkable posted in the show notes from Aleth, she’s the one who gave the talk. There’s a link to an overview of her talk as a recap from Christoph. He runs FemtoConf with Benedikt. You can go out there, there’s an overview of it but I’ll say it glosses over certain details that she talked about specifically.
With GDPR, the thing that you really have to make sure that you’re aware of is that if you touched the data in any way, shape or form, you’re on the hook for it. You have to make sure that you are both protecting it and if you are able to personally identify somebody, that you are complying to those GDPR policies.
If you have metadata about somebody, like custom fields or something like that, that’s not considered personally identifiable information but there are certain pieces that are. For example, an email address would be personally identifiable, an IP address would be personally identifiable, first name, last name, address, those kinds of things.
You tag somebody, that’s not considered personally identifiable but you have to spell it out in your privacy policy what you are doing with those types of things. Are you adding those types of things?
Rob: How is an IP address personally identifiable? That’s stupid. It’s not personally identifiable because IP address, a, can change constantly, b, you could have a single IP address for 100 people at a company, there’s so many ways that that’s not. I will stop.
Mike: You just have to be careful about what it is that you’re doing with that data. A couple of big things that I’ve seen that you have to really pay attention to if you’re selling stuff is that one, people have to be able to request a copy of all of the data that is associated with them.
If you’re running a SaaS app and it’s collecting the information, let’s say it’s Drip ESP, your customers are gathering information based on that email address, the person who owns that email address has to be able to come in and say, “Show me everything that you collected about me.” You have to provide them with the mechanism to give them that data dump. I’ve seen this recently, Facebook is doing this, Twitter is doing this.
You can go and you can request a download of all the information that Facebook has on you, the same thing with Twitter, you can get a download of it. I haven’t done that with mine yet but my understanding is that it is absurd and I’ve seen the amount that Facebook has on you, for example. There’s obviously backlash in the news right now about the amount of data and how personal it can be in certain cases. That’s something you have to pay attention to when you’re trying to comply to these, you need to give that to somebody.
Rob: Here’s what I would say, if you’re a developer, you don’t have to have an automated way. They can email you and you can go run a sequel query. I would not go and build something consul or anything especially it’s a small company. You know that you can do stuff agile and just do it when it happens, do it just in time, whatever.
They can also request that you have to delete everything, then at that point, the first time, it’s gonna be a pain in the butt but you’re gonna write that sequel query to delete it out, it probably gonna break something then you’re gonna fix it and then the next time you’ll have the same query. That’s how I would think about it. If you’re Facebook, that’s not gonna work because it’s not scalable. The odds of you getting a request when you have 1000 users or 5000 users, it’s pretty low.
Mike: The downside of that, though—I was just about to mention that—with deleting the information because you do have to comply to the right to be forgotten clauses.
Rob: Which is the stupidest thing I’ve ever heard.
Mike: I think you said it in the middle of the other comment as well, we’ll say it’s three. The right to be forgotten says that somebody can say, “Completely forget about me.” The problem I have with this is that where do you draw the line for that? I know that there’s a timeline that you have in which you can say, “We’ll get this taken care of.” You have a certain amount of time or this 14 days or 30 days to get rid of the data.
The question I have in my mind is that yes, I understand that that applies to backups but does that mean you have to go into your backups or you are only allowed to basically hold 30 days worth of backups? For the sake of arguments, say that it’s 30 days, is that all you’re allowed to maintain because that seems scary.
Rob: That’s why this is insane. It’s a legislation, it’s government getting involved in something that technically is a bad choice for a company or a bad choice for a business. We know as IT people, as developers, as professionals, as DBAs, you wanna have weekly backups or monthly backups for literally years probably. It’s not so you can hoard and use a bunch of information, it’s so if stuff goes sideways at some point and you realized you have this big error, you always go back, it’s a safety mechanism.
Mike: The other thing that bugs me about this is the right to be forgotten. I get the intent and I understand it but let’s say that somebody comes to you and says, “Rob, I want Drip to forget about Mike Taber.” What happens in three days if my contact information makes it back into Drip? How do you prevent my information from going back into the system without knowing who I am and keeping track of that? That’s a total chicken and egg problem.
Rob: None of that, as far as we’ve seen, is in GDPR. That isn’t addressed. The example is you say you want the right to be forgotten, you sign up for Rob Walling’s newsletter and you, Mike Taber, say, “I want to be pulled out of there.” You’re pulled out. What if you’re in 10 of our other customer’s accounts, are you only forgotten out of that one account? Are you forgotten out of everyone? It’s not specified.
Like you said, what if you then go to sign up to a new newsletter tomorrow and XYZ person is also hosting on Drip. There are so many edgy cases. The problem is every version is gonna be this much of a pain in the ass. If they do V2 in a year, think of how many personal hours and how many dollars have been pissed away by companies that would otherwise have been productive building products, doing interesting things, creating jobs.
Marketing alone on the Drip team which is not a huge app, we’ve wasted hundreds of hours and thousands, if not tens of thousands, on legal fees just having our lawyer’s advice and stuff. That sucks, that’s money that could’ve actually been productive and instead it’s sitting here dealing with what essentially is legislation.
Another issue I have is that in the US, they often will pass things, they’ll pass laws like this but they will exempt small businesses. If you’re 25 employees or less, you don’t have to comply to certain things. They do that because they don’t wanna put an undo burden on small companies because small companies are the ones that don’t have the budget, that don’t have the analysis council and that don’t have the bandwidth to handle a 250 page doc that’s completely opaque and everyone is confused about and freaking out. I think there should be an exception.
Isn’t this really meant to be for Google and Facebook and Apple and Fortune 1000 or Fortune 5000 Companies. How much do they care about these tiny little 3 person, 5 person, 10 person companies. They’re just trying to run a business, they’re just trying to make a living. That’s where I think they overlooked having some kind of exemption for small businesses.
Mike: There are certain pieces of it that are exempt; there’s the security officer, a dedicated security officer. Stuff like that, I believe is exempt. If you’re a small business below a certain size, you don’t have to have that. But the reality, at the end of the day is if you’re a single owner, that’s you anyway. It almost doesn’t matter. I totally agree, they’ve overreached is really what it comes down to. It doesn’t makes sense for much smaller businesses to try and have to comply to that.
Rob: Again, you and I agree, we understand the spirit of what they are trying to do. I don’t disagree with any of that, I disagree with the amount of burden that they’re placing on all the small businesses. Everyone is talking about this right now. It’s a waste of everyone’s time. When I say everyone, in our circles, in the startup circles. Yes, Facebook should worry about it but it’s so much wasted bandwidth.
Mike: The other thing that I saw that was interesting was when you spell out in your privacy policy what data you have that you’re collecting and what you’re using it for, you also have to give the person the ability to opt out of individual pieces of it which to me seems absurd. I don’t know why you would allow that.
Rob: I have not come across that, I don’t know about that. That’s an interesting piece.
Mike: Let me give you an example, if on your website you have Google Analytics, a Facebook Pixel, and a Drip Widget for example, somebody can come and say, “I don’t want you to track me using Facebook Pixels but the other things are okay, just not that.”
Rob: I had a guy who read all 250 pages of it and that is not on our list. I would look to see if perhaps there’s an exemption or there’s something in there that says you can otherwise not do that because, again, I haven’t heard anyone else talk about that.
Mike: The thing is there’s a piece that revolves whether or not you’re a data processor or a data controller. That’s the part that revolves on it. You mentioned earlier that there’s a question in your mind about whether or not if somebody is asked to be forgotten, is it just for that one account or is it for all them? My understanding is it’s all of them.
They could go to Facebook, you don’t have control over but they could go to Facebook and say, “Opt me out of everything, don’t track me. Forget me completely.” That has a trickle down effect on you running Drip because if you guys use the Facebook Pixel to track people, then you can’t track me, for example. Facebook essentially blocked it. Again it goes back to how do you keep track of that unless you know who the person is to not track them.
Rob: To be honest, I asked someone who I know is familiar with GDPR and had spent some time looking at it. He runs a small business, less than 10 employees. I was saying, “What are you actually gonna do here?” He said he is gonna handle things as they come in in terms of the request, in terms of deleting and in terms of giving a report of what they know.
He is seriously considering not creating all the documents because they basically say you have to have these 10 policies or 12 policies, all this internal documentation you’re supposed to have, processes to do this. He was going to say that his company is compliant with the spirit of GDPR and we’ll live up to the request but they do not have all of those policies in place.
It was like some verbiage of we believe in the spirit of it, we will comply as needed type of thing with the thought in mind that he’s not in Europe so he’s not European business so it would be very unlikely that the EU is gonna reach across the pond and come and try to take some little 10 person company out. Like I was saying, this is really more intended, my understanding is more intended for these larger companies.
That’s the balance, is being practical about it and not putting your head in the sand and not doing anything but understanding some basic fundamentals which is what we’ve talked about here. If folks are opting in to hear from you or receive marketing, there’s supposed to be a specific checkbox that says you agree to the privacy policy and our terms of service or whatever which again I think is idiotic because they already know that.
A checkbox and them checking a checkbox is gonna make a difference, it’s like agreeing to a ULA, user license agreement with Apple, no one reads those things. You’re gonna put a checkbox with the link and it’s just gonna become this route thing that everyone does. It’s not gonna change anything but that is what it says technically. Consider if you’re asking for keeping your customer’s customers data somewhere, it gets more complicated.
In Andrew’s case, he runs online training. He has an online training, video training, people can sign in. He’s not collecting his customer’s customers data so it’s very much more simplified. I would consider a just in time or a simplified approach if I were in his shoes. How about you, Mike? You wanna talk about how every aspect of your business is not gonna comply and open yourself up towards the EU?
Mike: That’s the interesting thing is that for businesses that are not based in Europe, they don’t have the jurisdiction to force you to do any of that anyway. There’s literally nothing that they can do, they can’t sue you and say, “You are not complying to this.”
Rob: They could sue you in US court, they could. The EU could file a sue in Massachusetts court. You would have to fight it out, you would have to settle or you would have to fight. The odds of that happening, though, for you are almost non existent.
Mike: The thing is there’s a difference between them filing suit versus them having jurisdiction over. The sucky part would be you’re gonna have to comply to it just to make that lawsuit go away or you’re gonna have to fight it which you’ll win if you fight but you’re gonna incur a ton of legal fees over the course of doing that because they don’t have the jurisdiction and that’s what the court would rule.
I certainly wouldn’t recommend trying to fight it yourself and be your own lawyer there. I’m sure that somebody probably is skilled enough to be able to do that but I wouldn’t wanna be that person, I wouldn’t wanna risk it.
Rob: Here’s another option I heard someone throw out. They said EU customers are less than 10% of my business, I’m gonna reject, not allow EU customers anymore because I don’t have the bandwidth to do it. That’s what someone told me, that was really interesting. That’s a super bummer but at some point you have to throw your hands up and you gotta do IP detection or you just ask, “Are you in the EU, yes or no?” If they say yes, during the signup, you just say, “Sorry we can’t support you through the GDPR.” It’s pretty fascinating, I hope it does not come to that but I can imagine some businesses that’s just going to be easier and simpler to do that.
Mike: I’ve heard some people tried to, I think it came up at MicroConf Europe this past year about the legislation. There is someone there I met who was basically basing his higher business idea off of the idea that there were going to be US based businesses who aren’t going to comply to GDPR and they were gonna say. “You can use our service and you will be compliant.” I disagree that that’s a great business idea because all they have to do is comply and then suddenly your whole business value proposition goes off the window.
Rob: Obviously it’s complicated but I do think there’s a pragmatic way to approach this. As with any legislation, it will iron itself out, it will be more understood. You can watch companies like MailChimp or Drip Leadpages or whatever, GitHub, or Slack and watch how they handle it and then evaluate, “Do I need to do some other things?” You can also read that 250 pages doc and try to sort it out.
I don’t think it’s as bad as people make it out, I’m hoping it’s not gonna be that way. I do think if you’re in the EU, there is definitely more of a cause for concern if you’re running a business. Thanks for the question, Andrew. I think that was super helpful and a timely topic to discuss.
Mike: I think with that question, we’ll wrap things up for the day. If you have a question for us, you can call it into our voicemail number at 1-888-801-9690 or you can email it to us at 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. Visit startupsfortherestofus.com for a full transcript of each episode. Thanks for listening. We’ll see you next time.
Welcome to Startups For The Rest Of Us, the podcast that helps developers, designers, and entrepreneurs be awesome at building, launching and growing software products whether you built your first product or you’re just thinking about it. I’m Rob.
Mike: And I’m Mike.
Rob: We’re here to share our experiences to help you avoid the same mistakes we’ve made. What is our word this week, sir?
Mike: Why is it in Zencastr it says Chronomustard?
Rob: Chronomustard, that’s my name this week. I think that’s gonna confuse our editor. I’m trying a new thing, creativity. I’m trying to enter a different name each week just to see if I can make you laugh.
Mike: They usually do make me laugh, I appreciate that.
Rob: For sure. What’s going on this week?
Mike: I did a demo yesterday for a customer who’s looking at switching over from a competitor and they have a bunch of different users for the product that are in the competitor. When I went through and was doing the demo, afterwards he’s just like, “Wow this is way more advanced than what we’re currently using.” I’m just thinking to myself, “Is that a good thing or a bad thing?” Apparently it was a good thing.
They were looking through and signing up for it. Next week they’re gonna reach internally. Hopefully they’ll turn into a fairly large customer for Bluetick.
Rob: It’s always good to get off a demo and get that feeling that you’re gonna be making more money, it’s always worth it.
Mike: What was really interesting to me was just the fact that they had said how advanced it was in relation to this competitor because the impression that I get from their website and all the things that it seems like it does is that it’s probably more advanced than Bluetick but I got the distinct feeling that that was not the case.
I knew that they were having problems with it but I wasn’t clear until the phone call and exactly what those problems were and how they were dealing with them and what they were looking to do.
Rob: That’s awesome, man. Do you have any avenue if you sign this guys up that you’re able to find more customers like them?
Mike: I do but I think it’s gonna be more word of mouth relationship than anything else. This one came through a personal relationship so it’s not as if they came in through a marketing channel or anything like that. I knew who the person was and contact them and went from there.
Rob: You could also think about going to build with your Datanyze. Since they are using this competitor pulling down the list to people who are using the competitor doing the cold email thing, we talked a little bit about that last week. It’s obviously time consuming but that can be an interesting avenue if you do know that you are better than a specific competitor.
Mike: I don’t know how well BuiltWith would identify that because it’s through email so there’s no really a lot of onsite stuff that’s gonna tell me who’s using that unless they have a JavaScript which I don’t have that so nobody will be able to use BuiltWith to reverse engine but maybe they do, I’d have to go take a look though.
Rob: Probably be worth a few minutes. You have been busy, man. I was pleased to see an article on Indie Hackers, Starting and Growing a Conference for Internet Entrepreneurs, got quite a few upvotes. You said you spent several hours doing this, it’s one of the most in depth Indie Hackers Q and A I had seen.
Mike: I spent a lot of time on that, probably close to a day and a half to two days. I threw in the word because I was curious since how long it actually was, it came in at 6000 words.
Rob: It’s like a book chapter or two. It has screenshots and everything, you did a really good job. If folks are interested in hearing about the history of MicroConf, what it was like starting it, how it runs today. There’s just a ton of insight stuff, although some of it is projected revenue, I think you gave this year. Some years don’t include MicroConf Europe, it’s not all exact but there are graphs and everything that I think that Indie Hackers folks put together.
Mike: They took the attendance numbers and extrapolated with the revenue was from those numbers. It’s off a little bit but it’s not really that big deal, it’s more of the trajectory, I think, that’s important to see.
Rob: It doesn’t include sponsorships and all which are big chunk. It’s fun for me to read because I could be like, “Oh yeah.” I was nodding along like, “I remember that. I can’t believe Mike remembers this.” You are pulling stuff out, all the anecdotes that I had long forgotten.
Mike: Some of the things I had to go back. I looked through my email to see when it was that we first started talking about MicroConf and I traced it back to the exact day which I don’t know if we talked about. We had a name for it before then and we were talking about it separately and just calling it a conference or we had the name and we picked it on the day and went from there.
I don’t remember how long we talked about it before we decided to register the domain name and start looking forward or if it was just like spare the moment thing.
Rob: I remember being very spur of the moment. It just made sense, it was like, “Why don’t we just do that?” That’s cool. There’s a lot of engagement, a lot of really good comments and in depth discussion going on and 36 upvotes, I get the feeling that’s quite a few for most articles. Anyways, if you’re interested in hearing that story, we’ll link it up in the show notes but you can obviously go to indiehackers.com and give it a search. You also went on Justin Jackson’s podcast, MegaMaker. It was a couple weeks ago.
Mike: I think that was last week as well. We recorded it and then it went live either later that day or the very next day. It was all about MicroConf itself and what Starter Edition was about. We’ve announced that Justin Jackson is going to be emcee for Starter Edition.
We did that last year, Starter Edition as well, with Jordan Gal from CartHook. He was the emcee for that, we basically turned over the reins to him and let him run the show at Starter Edition which was really cool because it’s nice to be able to sit back a little bit and enjoy the conference a little bit more. I don’t know how you feel about that but it’s nice to let somebody else take the reins for a little while.
Rob: That was something that Zander, our conference coordinator, encouraged us to do because since Growth and Starter are back to back, we’d be solo energy by the fourth day of trying to emcee and run the conference that I think he knew that it would just wouldn’t come off as well as it could. Jordan certainly knocked it out the park as the emcee that was really, really good and to give them their style up there on stage is fun.
You know, with Starter, Justin is such a good fit for it because that is really the crowd that he is talking to everyday and interacting with so he knows that crowd perhaps these days, you know better than I do in all honesty. It was years ago that I was really knee deep in all of the transitioning from developer to marketer and talking about all that stuff. He just has his finger on the pulse of that. I think he’s a good fit to emcee. This year he’s also doing a talk which is cool.
Mike: How about you, what have you been up to?
Rob: I’ve just been working, kicking back a little bit. I have a spring break coming in a week or two. We are heading down to Florida, starting to warm up in Minneapolis but still in the 30s and we wanna get some sun. It’s an easy flight down to Miami and we rented up Big Ol’ Airbnb off of 80 and we’re looking forward to that.
I was enjoying, I don’t know if you’ve heard it but Sherry was on Mixergy. It’s actually her second time on Mixergy. Her first time, it was when she interviewed Andrew Warner and put it on ZenFounder and he simulcast that basically onto Mixergy. But this time it’s called Keeping Your Feet Together As A Founder and it’s Andrew Warner interviewing Sherry about the book and about the stuff she’s doing in the entrepreneurial communities. It’s really a pretty intense interview but it’s really good. Have you had the chance to listen to it?
Mike: I have not, no. I don’t get a chance to listen to Mixergy too often. I’m actually about two months behind on most of my podcast at the moment anyway.
Rob: I listen to select Mixergy interviews just because there’s a lot of them and they are long but this is one that obviously I jumped on, I just wanted to hear the content. It’s a good one, we’ll link it up in the show notes but you can obviously search for Sherry Walling Mixergy and find that in Google.
Mike: Awesome. What are we talking about today?
Rob: We’re gonna answer a bunch of listener questions and see how many we get through. It was cool, we were down to one listener question. When we announced it on the show, I think we’re up to 12 or 15 now and so we can hammer through. I feel like this cadence every other week answering these questions has become something that I’ve enjoyed and I’ve gotten positive feedback about it.
Voicemails are even better because it shows people that there are all these different people with different businesses listening to the show. You and I know we have tens of thousands of listeners but as a listener, you don’t know that. It would be hard to know or understand your fellow listeners and your fellow entrepreneurs doing it. I have enjoyed this and I think we’ll keep doing it as long as the questions keep coming in.
Our first question today is for me, it’s actually from a guy, Louis. He said, “The question I have is what would Rob wished he had prepared in advance in going through the process of selling Drip? Imagine there might be things like intellectual property who may have purchased the use with his own name but now need to be transferred to the company, manuals and processes, bank issues such as PayPal not being able to transfer, etc. The list could be endless, maybe a good topic for a book.”
I’ve actually thought about this. There are two thing I wanted to say here. The first is I’m gonna make an announcement but not really an announcement, Mike, I haven’t even told you this. I’ve started writing what I think may become a book. That’s the exact right response. I don’t know if it will yet. My goal for this year is not to tackle any big new projects.
There’s a lot to tell, there’s a lot of story that has happened since the last book I wrote. Maybe it’ll just be about Drip and the trials and tribulations, the last year of personal finance hell and being unable to fund the business and then the year of the acquisition and then the year of moving. As I started thinking about it, I was like, “Isn’t this interesting enough? Will anyone care?”
I sat down with a notebook and I just wrote out what were the most stressful parts of my life both personally and professionally since 2011 in essence. The list was crazy long. Each of them just shaped into this narrative and they link together in this very interesting way. Even if I were to write about acquiring HitTail and not use it in the book, it’s still […] for me to write about the process of growing it and then selling it. There’s a bunch of stress that went along with that sale.
I started just thinking about all the stuff that happened growing Drip. I made this big list, when I looked at it I feel like it’s interesting enough, at least worth sitting down and hacking some stuff out. I had like three pages of just bulleted list. About a week and a half ago, I just sat down one evening, I started doing it on a weekend. It’s kind of writing itself because it’s a narrative. I’m pulling out actionable things but I’m trying to get the grit of what it was actually like.
I have emails, I have Voxers, I have all this, I have my MicroConf talk from last year talking about the sale and my thought process, I started to listen to that and transcribing pieces of it. It’s cool in this day and age, all the digital elements that we have because I can’t remember exact dates but Gmail sure doesn’t forget. It remembers the exact date of this email that I sent to Derrick about this topic.
I’ve literally just been doing it on the side almost as a journal but trying to be very honest about everything, trying not to sugarcoat things. I’m about 7000 words in and it has just poured out of me, it’s all out of order, I just picked the next thing on the list that I think, “Man, I really wanna write about that today,” and I’m cranking it out.
I don’t know if it will be a book, I don’t know if I will ever release it but it’s something that I think could have the potential to be that. It’s always funny, when I got this question I started thinking, “Maybe that should be a piece of this.” Because I don’t just want it to be a narrative, I actually want it to be in typical or a podcast style and MicroConf style. I want it to have lessons that people can take away.
Whether they’re acquired or not, even just the growing part of it, the mistakes that they can avoid that I made or smart decisions that we made that I feel like people can learn from.
Mike: There are two pieces of that because there are people who would read that just because they know who you are or they’ve seen you speak and they just want the inside baseballs so to speak. They’re interested in the story, I totally hear what you’re saying about having the lessons but I think you could do both where you’ve got the story itself and then after each chapter or after each section you have a list of things that you personally pull out and be like, “Here are the lessons that you could take away from this, here’s the story piece of it and then here’s the lessons that go with each of these.”
Some of them may not have any lessons at all, it’s just something happened and you got lucky or unlucky and you just had to deal with the consequences or fallout. There may not have been anything that you could do about it. Maybe that’s the lessons, you can’t plan for everything but I think that it’s still going to be interesting to a lot of people.
Rob: I appreciate that. I kind of think of it as I think of any MicroConf talk I’ve ever given or at least the best talks that I’ve given tend to be a story, like a hero’s journey and then pulling out super actionable tactical things. That’s how I’m envisioning it. I’ve read only a couple books like that, I like it because it’s different, it’s not just a narrative. I want them to be not obvious takeaways, it’s not like work hard and persevere and you will make it. It’s not stupid stuff like that.
I realized that I think I’m telling myself that I don’t know if it’ll be a book so that I don’t feel in pressure or anxiety. I don’t want to feel forced to write it, I don’t want the writing to feel forced. I’m telling myself no one will ever read this because I wanna tell the story honestly, because there’s obviously a lot that went on that no one else knows that was very internal, that was between Derrick and I or between Clay and I or whatever.
Eventually, I’m sure I’ll have to edit some of that out but I’m trying to get it all out and then evaluate, is this worth doing? Maybe it’s an ebook or maybe it’s a series of blog posts that I’ll release or maybe it’s an audiobook, I don’t even know. It’s an interesting project. Hopefully it’ll turn into something.
Mike: Man, if it doesn’t, you did it for yourself and that’s not a big deal either. There’s something to be said for just doing things for yourself once in a while.
Rob: Exactly. That’s what I said, it’s like what’s the worst that can happen, I should just write this out. If nothing else, my kids can read it someday or something.
Mike: All of these aside and back to the question, are there any top level things that you can take away that you wish you had done that were probably a major things that you either overlooked or hadn’t thought about upfront that needed to be transferred or you wish you had done?
Rob: The prep work that I think everyone should do that you don’t think about is it’s far more mental prep work than anything else. I listened to the book Built to Sell three or four times, I listened to Finish Big multiple times, I did a lot of journaling, I did a lot of thinking. You have to know what your deal breakers are, you have to know probably what your drop dead price is. There’s a bunch of stuff that you need to think about and that it the prep work that I would focus on. I’ll just put that out there, first and foremost spend more time doing that.
The examples that the guy brought up, the guy who answered the question, most of these were not an issue. He brought up intellectual property, I had already transferred all of that into an LLC. If I hadn’t done that, it would’ve been disastrous, it would’ve been a huge pain in the ass.
One big thing that I do think you need to think about as you’re building your companies to have a clean IP, meaning that all of your contractors who touch your code, all of your employees who touch your code, you need to have them sign in their employee agreement, it should say, “Everything I do, the company owns.” I had that, I had only missed one contractor. I went back and asked him nicely, we still have a good relationship and everything was fine.
Had I not had that, it would’ve been really tough because when we went through the acquisition, they needed that. This funded company is not going to pay a premium for my startup if there are IP holes that someone could come back later and sue them or ask for ownership with the code or whatever. It’s not something you think about when you’re two, four or five person startup but it’s something that you should definitely have.
I signed to the same employee agreement, and Derrick signed, even us cofounders. We had to have agreements that basically Drip, the S Corp that owned everything own everything, that Derrick and I couldn’t walk away with that. That’s one thing I would think about.
The guy mentioned manuals and processes, that was not an issue because we were an eight person team and they’re acquiring the team. They weren’t looking to automate everything. I think if the team was walking away, yes they would want manuals and processes to hand off to the next team but there was zero questions about that. There were more questions about what our vacation policy and HR staff and employment agreements looks like than anything like that.
In terms of bank issues, they didn’t acquire the company, if you think about it. They acquired all the assets of the company and that’s typically how it’s done because they don’t want any of the liabilities. They left an S Corp that Derrick and I still own the same amount that we’ve always owned, they just bought all the internal assets of it including the code and the goodwill and the recurring revenue and employment agreements and all that stuff.
As a result, the corp still owns the bank account, they didn’t acquire any of that stuff. Thankfully we never had to setup a PayPal account or anything like that. Same thing with domain names, we just transferred them over. They were all in the GoDaddy account and we transferred them over to their GoDaddy account.
The only other thing I could think of as I was going through this list that I think would be interesting to think about it they ask for, this is typical, the standard due diligence stuff, all corporate documentation, your articles of incorporation, every single amendment you’ve ever made to them, everything. Have that all in one place because going out and finding it and scanning it is a pain in the ass.
Having record keeping doesn’t seem like a big deal when you’re a three person startup or when you’re a solo founder. But if you’re ever planning being acquired, you probably want all of this stuff somewhere so it doesn’t take you weeks to put these docs together.
The next thing is having really solid books, basically having income statements for every month. For me it was literally just a Google Doc with revenue, expenses and that kind of stuff. I also had Xero, the accounting software that they could look at. When they were asking for high level numbers, top line revenue and that kind of stuff, I was sending them Google Docs.
They’re gonna ask every single service you use, what’s every SaaS app that you pay for? Hopefully they’re all on a credit card, you could just go to credit card, that’s what I did and just started listing those out. Copies of leases and every contract you’ve ever signed for every service. Transferring the Stripe account did happen because all the subscriptions were in there.
That’s the high level overview, I think it’s something that I hadn’t thought about. When there’s a technology transfer, you think more about, “Boy, the tech has to be good and has to be automated and you want processes in place.” When it’s a company acquisition, it can be different. When people bought HitTail just as a product, they didn’t ask for articles of incorporation because they weren’t buying the team, it wasn’t a strategic acquisition. Those are my high level thoughts.
Mike: I hadn’t realized that they did not acquire the entire company itself and they were just acquiring the assets from the company. That’s the way that my wife had purchased the fitness studio that was in town. She didn’t acquire the business, she acquired the assets of the business.
I was very clear to her about just because the records of the business were obviously a little screwy and the person who own the business before couldn’t really explain certain things and was a little cagey about certain pieces of it where I’m just like, “Do not acquire the business.” Because let’s say she’s got a car, for example, that is owned by the business, if you acquire the business, you’re also acquiring the debts that go with it and any liens or anything else that goes with it. You will be on the hook for those things. If you don’t know about it, it doesn’t matter, you still have acquired them which may suck.
Rob: If you buy the company, you acquire the assets and all liabilities. That’s why almost without exception, anyone who knows what they’re doing, when they buy a “company” they’re just buying the assets of the business, that’s the standard. When Facebook bought Instagram, you can bet, their lawyers did not buy the Instagram LLC or C Corp. They bought just the assets of it.
As a result, you have to then list out what all the assets are which is interesting because you have to list out your code and the database and this, it’s just a big long list of stuff.
Mike: With my wife, there was a tax bill that ended up coming in. It was sent to her and she’s like, “No, this isn’t me because I didn’t acquire the business.” There was stuff that came up afterwards that had she’d acquired it, she would’ve been stuck with it and there is nothing she would’ve been able to do.
The other thing I find interesting is that when I worked for Pedestal Software and they got acquired by Altiris, the Altiris acquisition team came in and they handed us, all the employees, these documents that we had to sign that were basically more or less a copy of what our previous agreement with Pedestal had been for all the IP rights and signing them over to Pedestal but it was their version of it.
We’d already signed all the stuff but they said, “Yes that’s fine and everything looks good but you also have to sign these.” I think maybe there are updated ways of covering additional holes or something like that, I’m not sure.
Rob: I guess our agreements were perhaps good enough for their lawyers, they probably looked at them and said, “This covers everything.” Because it was recent, it was within the last year or something and everyone had signed. I broke everything out, Numa Group which is my umbrella LLC that owns a bunch of stuff, it owned Drip until maybe 9 or 10 months before it was acquired.
I was already in the process of ripping it out of Numa Group because that was when Derrick was taking some equity in the company and he essentially became cofounder. I was already in that process which was painful and agonizing and took five months and more money than it should have. Drip was already in an S Corp. I was very, very thankful for that because if it did not, then it would’ve been a fiasco to try it doing during the negotiation and the acquisition process.
When that all happened, I basically fired all of us from Numa Group, we all got new jobs with Drip, S Corp, Drip Incorporated. We all signed agreements at that point again even though some of us already signed up with Numa Group. Then, essentially when Leadpages acquired us, we all got fired from Drip Incorporated and all got new employment agreements with Leadpages.
I think they probably had some IP stuff in their employment agreement as well which is fine because then anything you do for them they own but they didn’t have a specific additional stuff we had to sign.
Mike: I wonder if it maybe it was because Altiris was a public company and they had additional things that they had to cover themselves, I don’t know.
Rob: I can see that, it makes sense. Thanks for the question, guy. I hope that was helpful. Our next question is actually not a question, it’s some kudos for us and it’s a voicemail.
“I just listened to episode 838 with the questions. It was great to have that interactive […] podcast, I just wanna give you guys some feedback, a long time listener. My name is Chris. I really enjoyed the episode, just hearing those questions and getting some more of your perspectives and your background and experience. […]. Take care, guys. Thank you again. Keep up the good work.”
Awesome. Thanks for calling, Chris. I wanted to play that because it’s good to hear feedback and folk’s opinion. He said episode 838 but I think he meant 383 which was just another one of these Q and A episodes. I specifically mentioned in that one that I like doing them more often and that I like getting voicemails because it shows it has the interaction. Thanks for that, man. I’m always happy to hear from folks.
Our next question is from Mr. Andrew Connell about GDPR. “Hey Rob and Mike, this is Andrew Connell from Voitanos, that’s voitanos.io. I do online training and I do it for everybody around the world or developers around the world. With the coming effectiveness of the GDPR for data privacy and personal privacy data at Europe, I’m curious if you guys can comment a little bit, of course not being lawyers, I’m not a lawyer either. I just think about what kinds of things developers really need to be paying attention to? What kinds of things you need to be careful of?
I’m asking these guys because it’s also very much in the way of how we’ve all be listeners of your show worked on doing email based marketing and collecting email addresses and potentially phone numbers and other information about users. What kinds of things you need to think about, I’ve seen things about privacy statements that you need to have on your site, how you’re collecting the data, what talent is being used, how you’re protecting it, all those kinds of things.
I’m just curious, what things do you really need to be paying attention to? There’s probably the gold standard but also what’s the standard that you can do where you’re at least defensible. Maybe you’re collecting data and the user finds out, they decided they no longer wanna be tracked by you. Can you just go back to them and say, ‘Yes I track you by your email address. Here’s all the information I have about you. If you want me to delete you, I can delete you.’ I’m just curious, do you guys have some comment there or maybe even have somebody who is a lawyer who can jump on the show and maybe comment? Thanks a lot. I love the show. See you guys in Vegas.”
The riveting conversation topic of GDPR.
Mike:Oh, joy.
Rob: Everyone is thinking about it so it’s important, it’s just such a fiasco. I’m gonna use the word stupid a lot in this conversation insight. Big parts of it, I think, are really dumb. There’s a 250 page doc or whatever and Brandon, our senior director product, went through the entire thing.
The end result is gonna wind up being something like we have to rewrite a bunch of internal policies and we’re gonna add a checkbox to a form for our users. That’s very similar to what MailChimp is doing and Active Campaign, all the ESPs. I’ll stop there and circle back because I’ve been talking a lot this episode. I know that you saw a talk at FemtoConf about it and I’m sure you have other thoughts on this.
Again couching it that we aren’t lawyers, we are not giving personal advice to anyone and certainly don’t have an exhaustive understanding of this but this is just our general thoughts on what we feel like folks might wanna do for GDPR.
Mike: The talk that I saw on FemtoConf, there’s a linkable posted in the show notes from Aleth, she’s the one who gave the talk. There’s a link to an overview of her talk as a recap from Christoph. He runs FemtoConf with Benedikt. You can go out there, there’s an overview of it but I’ll say it glosses over certain details that she talked about specifically.
With GDPR, the thing that you really have to make sure that you’re aware of is that if you touched the data in any way, shape or form, you’re on the hook for it. You have to make sure that you are both protecting it and if you are able to personally identify somebody, that you are complying to those GDPR policies.
If you have metadata about somebody, like custom fields or something like that, that’s not considered personally identifiable information but there are certain pieces that are. For example, an email address would be personally identifiable, an IP address would be personally identifiable, first name, last name, address, those kinds of things.
You tag somebody, that’s not considered personally identifiable but you have to spell it out in your privacy policy what you are doing with those types of things. Are you adding those types of things?
Rob: How is an IP address personally identifiable? That’s stupid. It’s not personally identifiable because IP address, a, can change constantly, b, you could have a single IP address for 100 people at a company, there’s so many ways that that’s not. I will stop.
Mike: You just have to be careful about what it is that you’re doing with that data. A couple of big things that I’ve seen that you have to really pay attention to if you’re selling stuff is that one, people have to be able to request a copy of all of the data that is associated with them.
If you’re running a SaaS app and it’s collecting the information, let’s say it’s Drip ESP, your customers are gathering information based on that email address, the person who owns that email address has to be able to come in and say, “Show me everything that you collected about me.” You have to provide them with the mechanism to give them that data dump. I’ve seen this recently, Facebook is doing this, Twitter is doing this.
You can go and you can request a download of all the information that Facebook has on you, the same thing with Twitter, you can get a download of it. I haven’t done that with mine yet but my understanding is that it is absurd and I’ve seen the amount that Facebook has on you, for example. There’s obviously backlash in the news right now about the amount of data and how personal it can be in certain cases. That’s something you have to pay attention to when you’re trying to comply to these, you need to give that to somebody.
Rob: Here’s what I would say, if you’re a developer, you don’t have to have an automated way. They can email you and you can go run a sequel query. I would not go and build something consul or anything especially it’s a small company. You know that you can do stuff agile and just do it when it happens, do it just in time, whatever.
They can also request that you have to delete everything, then at that point, the first time, it’s gonna be a pain in the butt but you’re gonna write that sequel query to delete it out, it probably gonna break something then you’re gonna fix it and then the next time you’ll have the same query. That’s how I would think about it. If you’re Facebook, that’s not gonna work because it’s not scalable. The odds of you getting a request when you have 1000 users or 5000 users, it’s pretty low.
Mike: The downside of that, though—I was just about to mention that—with deleting the information because you do have to comply to the right to be forgotten clauses.
Rob: Which is the stupidest thing I’ve ever heard.
Mike: I think you said it in the middle of the other comment as well, we’ll say it’s three. The right to be forgotten says that somebody can say, “Completely forget about me.” The problem I have with this is that where do you draw the line for that? I know that there’s a timeline that you have in which you can say, “We’ll get this taken care of.” You have a certain amount of time or this 14 days or 30 days to get rid of the data.
The question I have in my mind is that yes, I understand that that applies to backups but does that mean you have to go into your backups or you are only allowed to basically hold 30 days worth of backups? For the sake of arguments, say that it’s 30 days, is that all you’re allowed to maintain because that seems scary.
Rob: That’s why this is insane. It’s a legislation, it’s government getting involved in something that technically is a bad choice for a company or a bad choice for a business. We know as IT people, as developers, as professionals, as DBAs, you wanna have weekly backups or monthly backups for literally years probably. It’s not so you can hoard and use a bunch of information, it’s so if stuff goes sideways at some point and you realized you have this big error, you always go back, it’s a safety mechanism.
Mike: The other thing that bugs me about this is the right to be forgotten. I get the intent and I understand it but let’s say that somebody comes to you and says, “Rob, I want Drip to forget about Mike Taber.” What happens in three days if my contact information makes it back into Drip? How do you prevent my information from going back into the system without knowing who I am and keeping track of that? That’s a total chicken and egg problem.
Rob: None of that, as far as we’ve seen, is in GDPR. That isn’t addressed. The example is you say you want the right to be forgotten, you sign up for Rob Walling’s newsletter and you, Mike Taber, say, “I want to be pulled out of there.” You’re pulled out. What if you’re in 10 of our other customer’s accounts, are you only forgotten out of that one account? Are you forgotten out of everyone? It’s not specified.
Like you said, what if you then go to sign up to a new newsletter tomorrow and XYZ person is also hosting on Drip. There are so many edgy cases. The problem is every version is gonna be this much of a pain in the ass. If they do V2 in a year, think of how many personal hours and how many dollars have been pissed away by companies that would otherwise have been productive building products, doing interesting things, creating jobs.
Marketing alone on the Drip team which is not a huge app, we’ve wasted hundreds of hours and thousands, if not tens of thousands, on legal fees just having our lawyer’s advice and stuff. That sucks, that’s money that could’ve actually been productive and instead it’s sitting here dealing with what essentially is legislation.
Another issue I have is that in the US, they often will pass things, they’ll pass laws like this but they will exempt small businesses. If you’re 25 employees or less, you don’t have to comply to certain things. They do that because they don’t wanna put an undo burden on small companies because small companies are the ones that don’t have the budget, that don’t have the analysis council and that don’t have the bandwidth to handle a 250 page doc that’s completely opaque and everyone is confused about and freaking out. I think there should be an exception.
Isn’t this really meant to be for Google and Facebook and Apple and Fortune 1000 or Fortune 5000 Companies. How much do they care about these tiny little 3 person, 5 person, 10 person companies. They’re just trying to run a business, they’re just trying to make a living. That’s where I think they overlooked having some kind of exemption for small businesses.
Mike: There are certain pieces of it that are exempt; there’s the security officer, a dedicated security officer. Stuff like that, I believe is exempt. If you’re a small business below a certain size, you don’t have to have that. But the reality, at the end of the day is if you’re a single owner, that’s you anyway. It almost doesn’t matter. I totally agree, they’ve overreached is really what it comes down to. It doesn’t makes sense for much smaller businesses to try and have to comply to that.
Rob: Again, you and I agree, we understand the spirit of what they are trying to do. I don’t disagree with any of that, I disagree with the amount of burden that they’re placing on all the small businesses. Everyone is talking about this right now. It’s a waste of everyone’s time. When I say everyone, in our circles, in the startup circles. Yes, Facebook should worry about it but it’s so much wasted bandwidth.
Mike: The other thing that I saw that was interesting was when you spell out in your privacy policy what data you have that you’re collecting and what you’re using it for, you also have to give the person the ability to opt out of individual pieces of it which to me seems absurd. I don’t know why you would allow that.
Rob: I have not come across that, I don’t know about that. That’s an interesting piece.
Mike: Let me give you an example, if on your website you have Google Analytics, a Facebook Pixel, and a Drip Widget for example, somebody can come and say, “I don’t want you to track me using Facebook Pixels but the other things are okay, just not that.”
Rob: I had a guy who read all 250 pages of it and that is not on our list. I would look to see if perhaps there’s an exemption or there’s something in there that says you can otherwise not do that because, again, I haven’t heard anyone else talk about that.
Mike: The thing is there’s a piece that revolves whether or not you’re a data processor or a data controller. That’s the part that revolves on it. You mentioned earlier that there’s a question in your mind about whether or not if somebody is asked to be forgotten, is it just for that one account or is it for all them? My understanding is it’s all of them.
They could go to Facebook, you don’t have control over but they could go to Facebook and say, “Opt me out of everything, don’t track me. Forget me completely.” That has a trickle down effect on you running Drip because if you guys use the Facebook Pixel to track people, then you can’t track me, for example. Facebook essentially blocked it. Again it goes back to how do you keep track of that unless you know who the person is to not track them.
Rob: To be honest, I asked someone who I know is familiar with GDPR and had spent some time looking at it. He runs a small business, less than 10 employees. I was saying, “What are you actually gonna do here?” He said he is gonna handle things as they come in in terms of the request, in terms of deleting and in terms of giving a report of what they know.
He is seriously considering not creating all the documents because they basically say you have to have these 10 policies or 12 policies, all this internal documentation you’re supposed to have, processes to do this. He was going to say that his company is compliant with the spirit of GDPR and we’ll live up to the request but they do not have all of those policies in place.
It was like some verbiage of we believe in the spirit of it, we will comply as needed type of thing with the thought in mind that he’s not in Europe so he’s not European business so it would be very unlikely that the EU is gonna reach across the pond and come and try to take some little 10 person company out. Like I was saying, this is really more intended, my understanding is more intended for these larger companies.
That’s the balance, is being practical about it and not putting your head in the sand and not doing anything but understanding some basic fundamentals which is what we’ve talked about here. If folks are opting in to hear from you or receive marketing, there’s supposed to be a specific checkbox that says you agree to the privacy policy and our terms of service or whatever which again I think is idiotic because they already know that.
A checkbox and them checking a checkbox is gonna make a difference, it’s like agreeing to a ULA, user license agreement with Apple, no one reads those things. You’re gonna put a checkbox with the link and it’s just gonna become this route thing that everyone does. It’s not gonna change anything but that is what it says technically. Consider if you’re asking for keeping your customer’s customers data somewhere, it gets more complicated.
In Andrew’s case, he runs online training. He has an online training, video training, people can sign in. He’s not collecting his customer’s customers data so it’s very much more simplified. I would consider a just in time or a simplified approach if I were in his shoes. How about you, Mike? You wanna talk about how every aspect of your business is not gonna comply and open yourself up towards the EU?
Mike: That’s the interesting thing is that for businesses that are not based in Europe, they don’t have the jurisdiction to force you to do any of that anyway. There’s literally nothing that they can do, they can’t sue you and say, “You are not complying to this.”
Rob: They could sue you in US court, they could. The EU could file a sue in Massachusetts court. You would have to fight it out, you would have to settle or you would have to fight. The odds of that happening, though, for you are almost non existent.
Mike: The thing is there’s a difference between them filing suit versus them having jurisdiction over. The sucky part would be you’re gonna have to comply to it just to make that lawsuit go away or you’re gonna have to fight it which you’ll win if you fight but you’re gonna incur a ton of legal fees over the course of doing that because they don’t have the jurisdiction and that’s what the court would rule.
I certainly wouldn’t recommend trying to fight it yourself and be your own lawyer there. I’m sure that somebody probably is skilled enough to be able to do that but I wouldn’t wanna be that person, I wouldn’t wanna risk it.
Rob: Here’s another option I heard someone throw out. They said EU customers are less than 10% of my business, I’m gonna reject, not allow EU customers anymore because I don’t have the bandwidth to do it. That’s what someone told me, that was really interesting. That’s a super bummer but at some point you have to throw your hands up and you gotta do IP detection or you just ask, “Are you in the EU, yes or no?” If they say yes, during the signup, you just say, “Sorry we can’t support you through the GDPR.” It’s pretty fascinating, I hope it does not come to that but I can imagine some businesses that’s just going to be easier and simpler to do that.
Mike: I’ve heard some people tried to, I think it came up at MicroConf Europe this past year about the legislation. There is someone there I met who was basically basing his higher business idea off of the idea that there were going to be US based businesses who aren’t going to comply to GDPR and they were gonna say. “You can use our service and you will be compliant.” I disagree that that’s a great business idea because all they have to do is comply and then suddenly your whole business value proposition goes off the window.
Rob: Obviously it’s complicated but I do think there’s a pragmatic way to approach this. As with any legislation, it will iron itself out, it will be more understood. You can watch companies like MailChimp or Drip Leadpages or whatever, GitHub, or Slack and watch how they handle it and then evaluate, “Do I need to do some other things?” You can also read that 250 pages doc and try to sort it out.
I don’t think it’s as bad as people make it out, I’m hoping it’s not gonna be that way. I do think if you’re in the EU, there is definitely more of a cause for concern if you’re running a business. Thanks for the question, Andrew. I think that was super helpful and a timely topic to discuss.
Mike: I think with that question, we’ll wrap things up for the day. If you have a question for us, you can call it into our voicemail number at 1-888-801-9690 or you can email it to us at 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. Visit startupsfortherestofus.com for a full transcript of each episode. Thanks for listening. We’ll see you next time.
Episode 384 | Bluetick Marketing Plan Teardown
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Show Notes
In this episode of Startups For The Rest Of Us, Rob and Mike talk about the Bluetick marketing plan. Mike breaks down his plan in three categories, one-time, ongoing, and long-term. The two go back and forth on the most effective strategies for each category.
Items mentioned in this episode:
- Bluetick
- FemtoConf
- Price Intelligently
- Product Hunt
- CSS Gallery List
- LeadFuze
- Whitetail Software
- Zapier
Mike: In this episode of Startups For The Rest Of Us, Rob and I are gonna be doing a teardown of the Bluetick Marketing plan. This is Startups For The Rest Of Us episode 384.
Welcome to Startups For The Rest Of Us, the podcast that helps developers, designers, and entrepreneurs be awesome at building, launching and growing software products, whether you’ve built your first product or you’re just thinking about it. I’m Mike.
Rob: I’m Rob.
Mike: We’re here to share our experiences to help you avoid the same mistakes we’ve made. How are you doing this week, Rob?
Rob: I’m doing alright. I was just looking through our 584 worldwide iTunes reviews. We’re approaching 600 people, 16 more and we’ll be crossing that 600 mark, which is quite a milestone. Some recent reviews, there’s one here form just last week, from […] and he says, “Great podcast, been listening for years.” One from Mr. Man Man from the UK, he says, “Full of great practical advice. Discovered the show recently and now a regular listener. Extremely valuable advice for anyone who wants to build tech products.” Limons from the US says, “Every episode is invaluable. Somehow Mike and Rob ensure that every episode has at least one and usually a ton of valuable info. I love the presentation style and how much they pack in. I don’t think anyone just started tech business without listening to this podcast.” Thank you very much for those.
You can log into iTunes, or Stitcher, or Downcast, or Overcast, and leave a five-star review without even typing in all those crazy technical words and phrases and sentences. Just hit the five star button and it will go a long way towards helping us stay motivated to record the podcast. Also, helps us grow our audience which convinces us to keep doing every week, to ship every Tuesday, as they say.
How about you? What have you been up to aside from-so you lost power. People know I did a solo episode last week. How was that with no power and no water?
Mike: Oh, that sucks. It was about a day or so that we lost power. We lost it, I think, at around 10:00 o’clock or 11:00 o’clock at night and then we didn’t get power back until probably 6:00 or 7:00 the next day.
Rob: It’s tough.
Mike: Yeah, it sucks. The real hard part is that with no running water either because we have a well and the water comes up through the well with the electricity that powers the pump. We actually have some giant jugs of water that we keep downstairs just in case we do lose power or something happens with our water because we’ve had issues with our pump as well. You lose your pump and you can’t have any running water which is surprising, you use it a lot but you never ever think about of what would happen if I didn’t have water today or what would happen if I don’t have electricity today. It’s just inconvenient to say the least.
Rob: Right. I’m glad you’re back. You went to Germany recently.
Mike: Yup. Went to FemtoConf which was pretty awesome. I had a great time. There were probably about 40-50 people there. There were some issues with a few people getting into FemtoConf just because they were flying in from the Eastern US. Of course the snow storm came through and hit the New England area so some people were delayed, some people just didn’t get there at all. Travel for a few people was kind of a mess. Fortunately, I flew out on Thursday and got there and kind of recovered, no real major issues with jet lag. But I really like the feel of it.
It was a lot like MicroConf when it was much, much smaller. Just much smaller groups, intimate conversations very much like MicroConf. The feel of it and the vibe was very reminiscent of that, I’d say in the very, very early days of MicroConf 2011-2012 when you didn’t necessarily know everybody or you’re just kind of getting introduced to what other people’s businesses were. There were a couple of talks on the first day. Then the next day Sherry gave a small workshop. Then we split off into a couple other ones where Alex Yumashev from JitBit did one on kind of like engineering growth hacking that you could do. Then Mojca Mars gave one on Facebook Ads which I went to that one. She went through and basically set everybody up with their Facebook Ads account, walked them through exactly how to get things started, and kind of helped them figure out what it was that they needed to do moving forward.
Rob: That sounds super cool. There was just one or two talks a day?
Mike: On Saturday there was four talks and then on Sunday there was Sherry’s workshop in the morning, and then there were two other workshops after that. Thomas Smale from FE International was supposed to be there, so there was supposed to be two workshops, and followed by another two workshops. It kind of run simultaneously in different rooms but because Thomas couldn’t make it, Sherry ended up doing one for everybody, and then the other two were split. First speaker on Saturday was Claire Suellentrop who’s also going to be speaking at MicroConf in a couple of months.
Actually, what’s that? Six weeks away right now? Claire spoke first and then it was followed by Aleth, she spoke about GDPR, and then I spoke about email follow-ups, and then Patrick Campbell, he was one of the people who was delayed, he spoke about modifying your pricing and how to figure out what an ideal pricing model should be for your business, and then using it as one of the biggest growth leverage in your business. I think I got a lot out of that talk because I’m kind of right in the middle of evaluating pricing and figuring out what to do with it, and how to pitch it to people.
But he also pointed out the fact that SaaS has gotten substantially more competitive over the past several years. He had graphs and charts to show the number of competitors, the people that started five years ago had versus people who started two years ago versus people who started last year. It was just fascinating the amount of data that he had on that based on all the stuff that they do for Price Intelligently.
Rob: Yep. His talks are always super valuable and have a lot of data. It sounds like a lot of fun, man. Sherry was there, obviously. Told me about it and said she enjoyed it as well and said there was a ton of overlap with the MicroConf crowd. I think she said most people go to one of the MicroConfs which is fun. It’s fun to get together in almost a more mastermind-y arrangement. I know it’s not that small but I bet you kind of know everybody and know what they’re up to and you can literally talk to everyone at the conference.
Mke: Yeah. If you don’t know them before you get there then it’s easy to at least have those conversations and get to know them by the end of it.
Rob: For sure. Cool. What are we talking about today?
Mike: Well, I had asked a few people what they wanted to hear on the podcast. One of the biggest things that came out of it was what is going to be the initial marketing plan for Bluetick now that the new website is up and running. I wanted to talk about that and kind of just go back and forth, and giving I guess a high level indication of what I’m going to be doing. And then you and I can talk about either specifics of it or vet some ideas around or even just tear some of these ideas apart, and say, “Look, don’t do this,” because more than happy to hear some of the advice that you have to share.
Rob: For sure. I know I had shared with you at one point the Drip marketing game plan and the HitTail one actually. The HitTail is a little bit out of date but did you look through that, at all, to populate this list you have?
Mike: Some of those things are pulled from there. I haven’t gone back to either those in a while. I probably should do that at this point. Most of what I’ve been doing lately has been really focused on either MicroConf or getting the new website up and running and now that that’s in place and things are settling down a little bit with MicroConf, I can go back and take a look at those. But some of these things are pulled from that.
Rob: Yeah, that makes sense. One thing I would consider before we dive in, you have it broken down into two categories, kind of, “I’m gonna do these things now,” and then my longer term things. Maybe you do them over as you get time or as you get budget. Something I would think about is to even have one before now or to split the now into two buckets is to have one-time things and on-going things. One of your bullets here is product listing sites, like product on beta list, and I would even go so far as to say all the CSS Galleries.
There’s 50 different things; there’s getapp.com, there’s Capterra, there’s AppStorm, there’s this whole list that you can put together. Those are truly gonna be one-time things. I think it might help your mental model of like, “Okay, gonna do those once. Gonna get the heat of traffic.” Even podcast store is kind of a one-time thing. You’re not gonna do that for a year whereas webinars, joint webinars, and that kind of stuff I think is more on-going. Does it help for you to think about it like that?
Mike: Yes. In Teamwork I have a project that’s specifically called Bluetick Marketing that just has lists and lists of things there. I’m looking at it now there’s probably 20 different lists in here and there’s about 162 different to-do items in there. One of them is specifically one-time marketing tasks. Things like going into the Chrome Web Store and looking to see if there’s anything that can be leveraged there, submit into the Google Apps Marketplace. The products listing sites, inside of that various accounts are different places, and documented certain processes, etc. Mostly just one-time things that I need to do it once or is it’s a task that needs to be done but the output of that could then be leveraged over and over again.
Rob: Okay, that makes sense. What I’ve done is update the list a little bit and I just kind of threw some things that’s called one-time and then we have on-going, and then a later list. Will that work for you?
Mike: Yeah.
Rob: Let’s see. Let’s dive in.
Mike: You wanna go straight into the now sort of things?
Rob: Yeah. Let’s talk about the one-time things because I think that these are things that I have all of my marketing plans. But specifically, I’m gonna keep talking about HitTail and Drip because that’s when I formalized this and put it into a doc. I really thought through where are the places that I can get a bump now that I’ve launched. It’s like the website’s live, every time I try to get written up on Venturebeat, and Techcrunch, and ReadWrite web, and GigaOM when it existed, all these things. It never worked but at least I tried it. I was trying to get some type of buzz.
Then there are the ones that are easier or guaranteed. It’s like startupli.st and BetaList, and makeuseof.com, all the things we just talked about, like Producton and that kind of stuff. You’re almost guaranteed to get a listing even though it might take a while to do. I think if you ever venture back, maybe those little-oh, and CSS Galleries is the other one. If your site is good enough and is a custom-design, I realize yours is probably more templatized, but always got a lot of traffic with HitTail and Drip from the CSS Galleries.
Did it convert amazingly well? No. But did it to convert to some trials for almost zero effort because in essence I would have a VA or I think I may have even hired a service at one point because there are like a hundred different CSS Galleries. I think there was someone who productized it and I paid $99 and submitted some info and they submitted it to all of them. To me, that’s a great zero time $99 investment because if you get one or two trials, depending on your price point, that pays it off.
That’s how I always entered it. I think if you ever venture back then need to make a bazillion dollars then maybe these kind of little initial approaches could be a waste of focus or a waste of time but I think given that every trial counts for you, I think those things are important to do. Chrome Web Store is the other one you said in the Google Apps Marketplace. I had zero look with the Chrome Web Store. What’s the difference between the Chrome Web Store and the Google Apps Marketplace?
Mike: I’ll be honest, I don’t know. I’d have to go and take a look at that. I think the Chrome Web Store was specifically for Chrome plugins. At one point, I had on my list of things to put into Bluetick like a small Chrome extension. Obviously, it never materialized. It’s not that it’s not a road map, it’s just I didn’t get there. I don’t know if that’s even viable or something that I could do because they may just say, “No, you have to have an actual Chrome extension to be able to put that in here.”
Rob: Yeah, that’s what it is. While you were talking, I went to the Google Apps Marketplace. It’s now called the G Suite Marketplace. If you integrate essentially into the G Suite, it also looks like you can just integrate with Gmail as well. Since you do that and neither Drip nor HitTail did, I never submitted to the Google Apps Marketplace. That would an interesting distributing channel.
On the Chrome Web Store I did get a minimum Drip and HitTail in and it had zero traction. But I’m not saying it’s not worth the time but it didn’t do anything. It’s pretty crowded in there now. It’s kind of like the iOS app store I think about, in the early days it was a lot easier to get found. I know that PipeDrive said that a lot of their early growth came from the Chrome Web Store but that was a different time. It was five years ago or whatever. It’s one of those things where you have to create some images and you have to create some XML and you have to submit it and it will take you probably half a day to do. You gotta wait if you wanna do that or not. It depends on what else you have going on.
I would probably lean towards doing it just because it is one more distribution channel and you could get lucky but I think it’s not as high priority as pitching podcasts as an example, because that’s gonna have a really high success rate for you.
Mike: Right. The other thing that comes to mind is going through the process of putting out on all those products listing sites. It contributes to long tail SEO as well.
Rob: Yeah, that’s right.
Mike: It contributes to your page authority and Google will see all those lengths coming in and just building those backlinks is kind of important.
Rob: Yup, I would agree with that.
Mike: You said CSS Galleries, fill me in on this because this is something that hadn’t even crossed my mind.
Rob: The only reason that they even came on my radar is when I acquired HitTail–no, it wasn’t HitTail. It was a different site. It was a productized service I had. It was called CMS Themer, CMS Themer at the time.
Mike: I remember that.
Rob: Yeah. It had a really nice design and it would get quite a bit traffic from CSS Galleries. The interesting thing is CMS Themer was really targeting designers and so that traffic converted very well. I’ve just always made it part of the marketing plan. Obviously, it doesn’t convert nearly as well when it’s an app like HitTail or Drip, but again, this posted a link into our docket. It’s cssgallerylist.com. For $60, they submit to hundreds of galleries. For $60 and almost no time it’s worth it for the backlinks, it’s worth it even if the traffic doesn’t convert, it’s just another channel to get out there. Again, the last time I did this was five years ago, there maybe a better resource than this cssgallerylist.com but I do know that I used these guys and it saved me a lot of time.
Mike: Yeah, for sure.
Rob: This is not something that’s gonna grow your business overnight or be some huge game-changing thing but it’s just all these little parts of the snowball that you’re kind of turn the pack on and then seeing which ones get you any kind of traction.
Mike: Right. I think the important thing to keep in mind when going through this stuff is that every little bit helps and you don’t always know that any one link is going to contribute anything but if it gets one person over and the ROI on that is gonna be almost no way to calculate that but you may get three people over and one person converts. It’s not a 33% conversion rate for that obviously but that can help.
Rob: That’s right. Have you considered how you could do an ‘ask me anything’ on Reddit or you could do a Show HN where you say, “Hey, here’s this business. It doing…” whatever the revenue is, or I don’t know if you can be vague about that or not, but I don’t know how you wanna handle it. Then basically say, “I’ve grown it to this. Give me your feedback,” or whatever. Have you thought about that? I don’t know if that’s worthwhile or if that’s just a big waste of time.
Mike: I have. I’m in a couple of Facebook groups. That was suggested to me a couple of months ago via somebody that said, “Hey, you should do an ‘ask me anything’ on Reddit.” I put it on my list but it wasn’t something that kind of rose, I’ll say, close to the top of things that I thought were, not necessarily game changers, but in terms of weighted priority, I didn’t feel it was something that would help out a lot.
Rob: It’s tough. If you’re marketing directly towards developers, then it would make more sense.
Mike: Right. If it was something like ‘ask me anything’ on growthhackers.com for example, that’d be a totally different story. That’s something that I probably should add to the list to be honest.
Rob: Oh, I think you should, yep.
Mike: Anything else in terms of one-time activities that come to mind that’s not on this list?
Rob: I was just trying to think about that. On startups.com, answers that are on Startups used to be kind of a place but I don’t even think that exist anymore. The bummer about Quora is that it’s really not a one-time thing. What I would do with a one-time thing is set-up, subscribe to some topics, there’s probably a cold email, or even just email. You want email sales, you want the email sales channels not the email marketing channel because email marketing tends to be bulk email and that’s not what you’re doing.
I would subscribe to categories or topics that fit your thing so that you’re notified when questions are asked because you wanna be an early answer. You don’t wanna go on a bunch of old Quora threads and add your answer because those threads already have a bunch of up votes and you’re not likely to be the answer that shows for everybody because that’s really what you want. I did that in the early days of Drip. It’s a bit time-consuming but what I found was the questions that come through tend to be so far into your wheelhouse, that they’re really easy to answer.
Even if I type a couple of paragraphs, it just flowed out. I didn’t have to research because it was things like, “What are approximate open right rights? What’s a good open right for a list?” It’s like, “Well, I actually know what the range is. Here, I’ll talk it through.” It’s gonna be stuff that these questions for me would be tough to answer because I’m not knee-deep in this warm email engagement the way you are. Anyways, I would consider as the one-time part of that just subscribing and seeing how it shapes out.
Mike: Yeah,that’s interesting being able to rattle off some of those numbers right off the top of your head. Because it’s part of my talk that I did for FemtoConf. I looked specifically into that and looked across 70,000 emails that had been sent out through Bluetick and looked to see what the open rates were and what the response rates were across those, and then I cross-sectioned them and got the average, the best case, worst case, across everybody’s accounts. It was interesting what the numbers came out to be and then asking the audience I said, “Hey, here is a number, what do you think is this in terms of the open rate?” It was about, I’d say a third of the audience got it right which means that two-thirds did not which indicates that these numbers are, I’ll say, a little bit obscure or opaque and not everybody knows that they are.
Rob: Yeah, that makes sense.
Mike: I think a couple of other things that come onto this list is, I don’t know if they’re one-time or you would classify them as one-time, but like a podcast tour, for example. I feel like it’s something that you can do it once when you start and then if you’re going to try and do it again you have to have something compelling to follow-up with, I’ll say.
Rob: I do think of a podcast tour as a one-time thing but it’s not as one-time as say CSS Gallery submission, but it’s gonna move the needle more than them. CSS Gallery and the BetaList and all that stuff. I just posted a link to whitetailsoftware.com and Robert Graham had that pre launch email list building directories. We can include that in the show notes but I think you have 50 or 100 that he had his VA submit to, so that’ll help as well. But all that to say, podcast tour is gonna take several months because you’re gonna email and get scheduled, and by the time it comes out, it’ll be months down the line.
I think the big thing, the advice that I would give when doing a podcast tour is it would be easy for you to just go on a bunch of entrepreneur podcasts and say, “Look, I launched a product. I’m building this SaaS product.” You’ll convert some of those, it’ll be a low conversion rate. The audience who’s gonna convert the best for you is gonna be folks doing sales. It’s gonna be folks both doing cold outreach and then doing the warm nurturing that Bluetick allows you to do, this stuff that comes right out of your inbox and looks very personable. It’s not bulk email like MailChimp or Drip but it’s the one-on-one connecting whether it’s cold or warm. Who’s doing that, right? This is BDRs and salespeople. I know some of those are also founders but I don’t think that’s gonna be your market.
I think initially, you can get SaaS founders, and you can get our audience, and the MicroConf audience, and not crew. It’s good to talk about it here. I’m not saying you shouldn’t go on Mixergy and talk about it but compared to the size of that audience, the conversion rate is gonna be pretty small. The podcast that I would target that I think are gonna be your low-hanging fruit, is to go on podcast that are talking about sales, and talking about tech sales, selling SaaS apps is probably the B2B sales approach.
You can come on not to tell the story of your product but you can pitch it as, “Look, I’m an expert in this because I’m in it day-to-day and I’m seeing dozens or hundreds of customers who use our product and I’m seeing the patterns. I’m seeing the successes and how they’re doing it well. I see the failures and the mistakes people are making.” Does that make sense? I would definitely go after that space rather than focus on the founder and entrepreneur space.
Mike: Yeah, it totally makes sense. That was actually my hesitation, I’ll say, of doing that because I didn’t think that approaching those, the startups community would be something that will really resonate. Like you said, I’ll get some sales out of it but it’s not gonna be a high-converting channel for me.
Rob: Yeah, in all honesty, I will probably do both but I would start with the sales folks, the sales podcast. We both know at least a dozen people who have podcasts that I’m sure you could come on and talk about some aspect of your business. Try to vary it because we have this small community and so if you go on all the podcast of our friends and talk about the same thing on every podcast, everybody hears it, there’s only so many people in it. I will try to suggest different topics, different aspects. If you could talk about the launch on one, you could talk about the stress on another, you could talk about marketing approaches on another.
I do think that is still worthwhile because it’s easy for you to do because you’re used to doing podcasts and it’s 30-45 minutes of your time once it’s booked. It’s not actually that much of a time investment to be in the earbuds of likely several thousands or tens of thousands of people, but as I said, I do think I would start with trying to assess out what are kind of some B2B sales podcast that I can get on?
Mike: The interesting thing about that is there’s two different ways that I could approach that particular problem of going out to the people who are running those podcast. One of them is send directly into Bluetick and let Bluetick follow up with those people. The other one is that there’s a company I’ve stumbled across that will take kind of what your requirements are for appearing on podcast and will go out through the different network of podcasts that they have contact with, and essentially pitch you to them. I’ve mixed feelings on doing that, to be perfectly honest, but at the same time, there’s a time component that it’s gonna suck up some of my time to do it myself but in many ways, it comes across better if I do it myself.
Rob: Yeah. That’s hard. There is a balance because we get a lot of pitches on this show and on Zen Founder. If it’s not the person pitching themselves, I tend to delete them, that’s just a thing. I do glance through them but I don’t think we’ve ever had anyone on the show who wasn’t pitching themselves. When I had an executive assistant who is doing stuff back in the Drip days, when I was still running the business, she could email people as me, look straight out of my inbox, and so you could develop the pitch and have someone else send it as you. But it just depends on what you wanna do. I don’t know but I don’t have a good answer for that.
Mike: But again, at that point, I could just put it through directly into Bluetick and have Bluetick send out the email.
Rob: That’s true. Ta-da. That’s cool.
Mike: It’s interesting because occasionally, when I’ll email people whether they contacted me to ask me something about Bluetick, occasionally they’ll have heard the podcast and they’ll ask in their email as to whether or not it was sent from me personally or whether Bluetick sent it. I’m just, “If you can’t tell, doesn’t that speak to what the product does?”
Rob: Right. Does it matter? Yeah, that’s funny.
Mike: Does it matter?
Rob: We’ve talked at length here about the one-time upfront things. You have nice list of the things that you plan to do on an on-going basis, why don’t we look at a few of those?
Mike: Sure. The things that pop-up high on my priority list-actually, you know what, now that I’m looking through this, one of the other things that is on the on-going list should probably be moved over into one-time is the public Zapier integration.
Rob: Oh, yeah.
Mike: I’ve got a private integration right now but I’ve not taken it public and that’s something that I’ve been asked about a couple of times by Zapier. I just haven’t done it yet to be perfectly honest. There’s a lot of edge cases that either are not handled well or I know that there’s other changes that need to be made and I’d rather make those changes before I open it up than have to fix a bunch of other stuff. Because there’s some things that I do some manual data manipulation just to make sure that things are working right for certain customers. I need to put a more permanent solution in place for those.
That’s something that after going through the process, I believe they put it out through their mailing list. I forget what their mailing list is but it’s something like 1 million people or something like that, something ridiculously large. The conversion rate is not gonna be high but it’s more about driving awareness than it is about converting people at that point.
Rob: Yeah, you’re just trying to get the word out so people have heard of you at this point. One other one-time thing that I would do, it’s not a marketing approach, but I would set up Google alerts for relevant terms that you wanna monitor like company names of competitors, try to hear about like articles I think are relevant or conversations that are relevant, you have to use your judgment there but I do think getting something setup so that your kind of participating or at least aware of what’s going on in your space is helpful.
Mike: Yeah. I have a couple of them set up right now but it’s mainly for Bluetick. What I find is I’m getting a lot of emails about dog conversations that are happening.
Rob: Yeah, I could see that.
Mike: I guess if we’re gonna jump right into the ongoing stuff or the short term things that I was looking at, the first on my list is webinars.
Rob: Yep. Are you planning, because right below that you have JV webinars.
Mike: Right. I wouldn’t say I lumped them together but I think the general process is going to be similar for them whereas with the webinars, there’s joint webinars and there’s just the regular webinars. The regular ones are ones that I was probably gonna promote to my own email list and then maybe do one on a regular basis or promote it on a Tuesday every other week or something like that. And then with the joint webinars those would be much more scheduled where I’m leveraging other people’s audiences and contacting influencers and see if they’re interested in having me come and talk specifically to their audience about how Bluetick can solve a particular problem for them. I see it almost like the podcast tour but with a little bit more, I’ll say, pinpoint accuracy or a little bit more focused specifically on those people because I don’t wanna go pitch somebody and say, “Hey, can I just do a joint webinar with you?” But not actually have something that’s gonna be valuable to offer to their audience.
Rob: Right. I would the joint webinars before I try to do internal webinars because it is such a nice way to reach out beyond your own audience. Just through doing webinars to your own list, you’re gonna one and then you’re not gonna fill anymore, you know what I mean, until you get more people either using your product or on your email list. We tried early on with Drip to just run Facebook ads, get people to opt into a webinar, and we’re gonna try to run one every week, and we just couldn’t get people to show up at a price that was worth it for us.
Again, not saying it’s not possible but it’s an entire funnel that you have to develop. It’s gonna take you quite a bit of time and money to do whereas the JV webinars is a low-hanging fruit for you, because JV webinars is about who you know. You do have a good network of people who I think you could contact and have access to their audience right away, basically for free, without running all the ads and developing a funnel. It’s just conversations. I’d definitely prioritize the joint webinars above do your own.
Mike: How would you structure any sort of special offers for those people going to a joint webinar? There’s a lot of discussion and I’ve thought about this myself. I was like, do I wanna offer a discount or I wanna give additional services or special templates like, “Hey, you can only get this here because you’re coming to this particular person’s webinar.” My concern is really putting a lot of extra effort into something that-at the end of the webinar, it may turn out to be nothing. I may not get very many sign-ups out of it or I may get a lot but I don’t know. It’s hard to predict how much time and effort to make things custom for that person’s audience. You know what I mean?
Rob: Yeah, I do. I would lean heavily towards some type of bonus and it’s time-limited. You say, “Hey, free to sign up in the next two or three days, then you get this extra thing.” whether it’s a discount or the thing that you billed. Discounts are the lazy way to do it. It’s like the zero time way but it chews through your money. If you have no time, absolutely no time, then yeah, give people a discount, but discounts are not exciting. They’re not as exciting as like, “Get this complete email series,” even if it’s only three or four emails, my guess is, you can crank that out just using copy+paste from what you’re using already or from what you’re recommending to people and just edit it for their specific niche.
If you talk to a bunch of freelancers then it’s like, “Here’s the way they follow-up and do it for freelancers.” A lot of it is gonna be the same as any other sequence you have but you’re just gonna tweak a few things. I’m guessing, in about half an hour you could probably crank something like that out. You don’t even need to do that in advance of the webinar because if you don’t get sign-ups then you just don’t build it. But if you get sign-ups using that coupon code then you just manually reach out to people because it’s not like you’re gonna get 500 sign-ups. You’re gonna get 10, or 20, or 30. It’s gonna be a small amount. You can just hit people up and distribute that to them. I’m thinking of something like that. It’s high value for someone signing-up but it’s pretty low effort for you to create.
Mike: Yeah, that makes sense. I think right now when you go and sign up, I was probably gonna pull this off as things progress, but when you go and sign up right now, there’s kind of an offer there that basically says I’ll create an email sequence for you based on whatever scenario you describe and that will be your first sequence. It’s kind of concierge onboarding but I’ll say it’s probably not very well described in the website right now but it is something that I just offer to people as they come to sign up.
Rob: Yeah. If you get 30 sign-ups at a time that’s gonna get tough. I think you’re gonna have to stop doing that because it’s too time-intensive. You have to back off as you start getting more sign-ups.
Mike: Right.
Rob: What else? You have direct follow-ups with the following; invite to demos, you have current mailing list, prior prospects which I think is good, and personal LinkedIn contacts.
Mike: Yep. I have a couple of different spreadsheets based on when I was doing early validation. Some people said, “Hey, now is not a good time. Maybe later on when you’re further along.” And then there’s people who have come in and I’ve done a demo with them and things just didn’t work out for whatever reason, or they sign-up but they never followed through or they used it for a little bit, and then they said, “Yeah, this isn’t working out for me.” I’ve got this pool of people that I can go to that fit into that criteria, that I can put them into a Bluetick sequence, for example, and invite them to come back and check it out or go to a demo or something like.
But in addition to that, I also have the mailing list that is in the Drip account which I have been putting on the website where there’s an email course that you can go through. It’s like a 5-day course which I’m in the process of copy+pasting all the content all of that to make it a slightly longer course. But those people that I can go to directly, I can take them out of Drip and then plug them into Bluetick, and individually follow up with each of them. I could do that based on lead score for example and just sort them by lead score and then add them in in that order and say, “These are the people that I’m gonna approach first versus these are all the people who are probably, I’ll say, less interested, but still on the list.”
Rob: Yeah. I think that’s a good idea to kind of approach. I was definitely gonna say anybody who’s cancelled in the past, if the product’s a lot better than when they’ve tried it, you definitely wanna contact them. Prospect who haven’t converted, people who’ve been paywalled because they don’t wanna give their credit card, now is the time when you’re doing this to just circle back and clean all that out.
The personal LinkedIn contacts, you gotta use your judgement there, you don’t wanna come off as… I’ve never done that but if you know someone who really should value out of it and you do a very soft pitch like, “Hey, just to let you know I just launched this. I thought it might be helpful.” Not anything that’s forceful like, “Jump on a call. Jump on a call.” Then, I think, it’s halfway reasonable.
Mike: Yeah. I wasn’t planning on doing that. What I was gonna do was go through my LinkedIn contacts and just look. Obviously, I’m gonna hand pick which ones i’m gonna contact and which ones I’m not. I’ve got people who I know are software developers or they’re engineering managers, or something like. They’re really not a good fit for it but that doesn’t mean that I can’t go to them and say, “Hey, I just wanted to check in with you and see how are things going, and let you know I just recently launched this. If you know of anyone who could use this, I’d love an introduction just to kind of help me out.” I’m leveraging my personal relationships at that point.
Rob: I could see doing that. I just added a couple things to the list. Actually, you have retargeting on there, mostly Facebook. I think it says Facebook primarily, I think that’s a really good idea to get set up whether you use perfect audience, you have the display networks like Google and stuff already, you just tick Facebook and it gets probably a material but I think you should get that set up pretty quick. That’d be probably towards the top of my list. Do you already have the pixel installed?
Mike: Yep.
Rob: Okay, good.
Mike: yeah, I’ve had that in pixel installed for a while. But then, the reality there is, I’ve put it under ongoing because there’s a one-time piece of setting it up and there is the follow on activities where you go in and you analyze how much traffic you’ve brought in, do you have a critical mass yet, what kind of advertisements you’re doing. It’s kind of two different components to that but I do find that even with my two-step process for the sign-up, you put in your email address and password, and it takes you over to a credit card page, and there’s people who don’t fill that out.
Obviously, those people, I wanna follow up with anyway but I also wanna make sure that people who come to the iste and then go over there but never even fill out that first page, I still wanna be able to retarget those people to bring them back. Because obviously, they were interested enough to go look at the signup page but they didn’t actually sign up.
Rob: I think in the interest of time here because we’re running pretty long today. I think you should consider-paid acquisition I have written here, it’s a tough one. It all depends on if you have budget and if you have time to sit there and test a bunch of stuff, so something to consider, maybe it goes on your later list but it’s definitely if you can get it to work, it’s really, really good. Cold email outreach, you have the tool to do it, nice to use your own tool. You can go to something like LeadFuze and get a list of people, and start doing the outreach yourself, or you can hire someone to the outreach for you.
We had mixed results when we did Drip but it definitely drove enough trials that have made it worth spending. We were spending money on it at that time and it definitely had positive ROI for us. Integration Marketing which is you just think of all the top 10 integrations that you would wanna have and think about trying to get either in their director. If it’s Stripe or Basecamp, they’re probably not gonna co-promote with you because they’re so big but they have these integration directories. Or if they’re a little bit smaller, if they’re a startup, they’ll probably have a list and are willing to email out and promote you. That requires dev time, of course, so it has to be worth your while.
But that was something we did 30 something integrations with Drip and it makes a lot of sense with a tool like Drip because it it a hub of data and so we integrated with a bunch of shopping carts and all types of marketing tools. That both helped our customers but it also really helped to start to get traction and kind of be everywhere in their early days. I think those are the other three I would throw out that you may wanna do sooner rather than later.
Mike: Yeah. I’ve already been asked by people about integrating directly into Bluetick using the API and I’ve kind of pushed off mainly because I know that there are parts of the API that are still changing, so I haven’t really structured it in a way that says, “Hey, this is available for you to use and it’s pretty solid versus these other pieces where you shouldn’t touch it.” I had a conversation with somebody at FemtoConf where they said they actually have three different versions of their API published. One of them was for them internally, and then there’s another one that’s a public API, and then they have special endpoint specifically for Zapier. It’s interesting they split theirs out and I think it makes a lot of sense as well. It’s just a matter of rearranging some things a little bit to allow people to do that and say, “Hey, this area is solid. This area is off-limits or don’t touch them.”
Rob: Yep, that makes sense. Anything else that you wanna pull out of here? Either in ongoing? It looks like you have a couple more and then you have some stuff for later?
Mike: Yup. The one idea that have come to mind that somebody had mentioned to me at FemtoConf was the idea of having Bluetick offered as sort of a managed service for x thousand dollars a month. Then they’ll send all of their contacts over into Bluetick and then, it’s my responsibility to make sure that things are running smoothly for them so that they don’t have to go in and manage anything which, if you set up a lot of the automation and stuff, you don’t have to worry about that, but there’s also ongoing tweaking, A/B testing, or making sure that, “Are these numbers any reasonable ballpark of what they should be?” If you’re getting a low open rate, for example, how would you necessarily know unless you’re looking at all the other data. I have access to that but other people don’t. Those are the things that I can provide a lot of additional value for customers but they don’t necessarily have access to it on their own if they just signed up.
Rob: Yeah. That makes sense. There’s a risk with managed services because they can just suck up a bunch of your time and also the revenue is not worth nearly what a SaaS revenue is in terms of a multiple-whether you’re gonna raise funding or whether you’re gonna sell or whatever. If you have a bunch of consulting revenue, it’s worth like 1X, 1X the revenue versus actual recurring revenue, it’s a different story. I shouldn’t say recurring. It’s higher margin revenue where if it’s software it has 70% or 80% margin. If it’s consulting it has what, 10%, 20%, 30% margin. It’s something that I would consider in the early days but it just matters what cash position you’re in. I think you would do it for the cash and not really for the long term prospect of the company because I don’t think you wanna grow a big kind of productized service long term.
Mike: No, I agree. The way I was gonna structure it was like, “Hey, here’s a managed service that if you wanna subscribe to you can,” and it’s either a three-month or a six-month contract, and then that’s it. If I decide to continue offering it then they can continue paying me for it but if I decide that we’re not gonna do this anymore, then things are kind of pushed back. It wouldn’t be something that you can just go to the website and buy off the shelf but it’d be limited three to six months contract or something like that. You’re right, it would absolutely be for improving cash flow for example, but it would also put a solid number on, “Hey, what is this particular customer going to be worth to me in the next three months or in the next six months.” Does that make sense?
Rob: Yeah, I think it’s interesting. Certainly trying it with one customer is not gonna hurt much. That’s the thing, is to see how much-if it’s valuable to them, if it’s workable for you, and obviously if you do it for 10 or 20 people, you’re getting yourself in pretty deep but you don’t have to do that. You can just dip your toe and then figure it out.
Mike: Yeah. I was gonna do it for probably one to five. The other nice thing that I thought that would deliver to me is the ability to work hand-in-hand with those customers and see what exactly what it was that they’re trying to do as opposed to, “Hey, here sign up to Bluetick,” and then after that, I don’t really have a ton of visibility into their business or exactly what challenges they’re trying to solve. I know generally what they’re trying to do but I don’t get that insight or I don’t have calls with them to really see on a weekly basis like, “Hey, what are you really trying to get out with this?” I think that those insights would actually help me build a better product longer term.
Rob: One of the thing I see on your later list that I like, that I don’t think we’ve covered, is you have this library of email templates, lead gen, and you use this as a lead gen to acquire email addresses? I think that’s intriguing both for the SEO and you can always run ads to it, you could retarget to it and you’re basically giving something away. I think that’s gonna take a ton of time for you to set-up. It’s a little more complicated than it sound but I’m glad you have it on your later list so at least, in a few months, once you get some of these other ones done, you can move into that, and start thinking about how to shape that up.
Mike: Right. The other nice, I’ll say, by-product of doing that is that, I could create those inside of Bluetick as a library where you can when you create your account, you can just select from a bunch of them, kind of a similar to the way that Drip has those pre-made blueprints for different situations, this would be exactly that. Like, “What situations have I run into with different customers that they’re trying to get a response or get the customer to take an action? What sorts of things work? What sorts of things don’t? What sorts of approaches do you wanna try?” You can almost categorize them. It’s like, “This is extremely aggressive versus to do the exact same thing to get somebody to a call. This one is much more laid back and hands off, and it depends on the situation whether it’s cold email versus a warm email with somebody who’ve had three or four conversations with us.” Which one you would use?
Rob: Cool. Well this was a good run. Thanks for bringing this on the show. I had fun talking about it. I’m guessing we’ve provided quite a bit of value for the folks who are thinking about this kind of stuff.
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Welcome to Startups For The Rest Of Us, the podcast that helps developers, designers, and entrepreneurs be awesome at building, launching and growing software products, whether you’ve built your first product or you’re just thinking about it. I’m Mike.
Rob: I’m Rob.
Mike: We’re here to share our experiences to help you avoid the same mistakes we’ve made. How are you doing this week, Rob?
Rob: I’m doing alright. I was just looking through our 584 worldwide iTunes reviews. We’re approaching 600 people, 16 more and we’ll be crossing that 600 mark, which is quite a milestone. Some recent reviews, there’s one here form just last week, from […] and he says, “Great podcast, been listening for years.” One from Mr. Man Man from the UK, he says, “Full of great practical advice. Discovered the show recently and now a regular listener. Extremely valuable advice for anyone who wants to build tech products.” Limons from the US says, “Every episode is invaluable. Somehow Mike and Rob ensure that every episode has at least one and usually a ton of valuable info. I love the presentation style and how much they pack in. I don’t think anyone just started tech business without listening to this podcast.” Thank you very much for those.
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How about you? What have you been up to aside from-so you lost power. People know I did a solo episode last week. How was that with no power and no water?
Mike: Oh, that sucks. It was about a day or so that we lost power. We lost it, I think, at around 10:00 o’clock or 11:00 o’clock at night and then we didn’t get power back until probably 6:00 or 7:00 the next day.
Rob: It’s tough.
Mike: Yeah, it sucks. The real hard part is that with no running water either because we have a well and the water comes up through the well with the electricity that powers the pump. We actually have some giant jugs of water that we keep downstairs just in case we do lose power or something happens with our water because we’ve had issues with our pump as well. You lose your pump and you can’t have any running water which is surprising, you use it a lot but you never ever think about of what would happen if I didn’t have water today or what would happen if I don’t have electricity today. It’s just inconvenient to say the least.
Rob: Right. I’m glad you’re back. You went to Germany recently.
Mike: Yup. Went to FemtoConf which was pretty awesome. I had a great time. There were probably about 40-50 people there. There were some issues with a few people getting into FemtoConf just because they were flying in from the Eastern US. Of course the snow storm came through and hit the New England area so some people were delayed, some people just didn’t get there at all. Travel for a few people was kind of a mess. Fortunately, I flew out on Thursday and got there and kind of recovered, no real major issues with jet lag. But I really like the feel of it.
It was a lot like MicroConf when it was much, much smaller. Just much smaller groups, intimate conversations very much like MicroConf. The feel of it and the vibe was very reminiscent of that, I’d say in the very, very early days of MicroConf 2011-2012 when you didn’t necessarily know everybody or you’re just kind of getting introduced to what other people’s businesses were. There were a couple of talks on the first day. Then the next day Sherry gave a small workshop. Then we split off into a couple other ones where Alex Yumashev from JitBit did one on kind of like engineering growth hacking that you could do. Then Mojca Mars gave one on Facebook Ads which I went to that one. She went through and basically set everybody up with their Facebook Ads account, walked them through exactly how to get things started, and kind of helped them figure out what it was that they needed to do moving forward.
Rob: That sounds super cool. There was just one or two talks a day?
Mike: On Saturday there was four talks and then on Sunday there was Sherry’s workshop in the morning, and then there were two other workshops after that. Thomas Smale from FE International was supposed to be there, so there was supposed to be two workshops, and followed by another two workshops. It kind of run simultaneously in different rooms but because Thomas couldn’t make it, Sherry ended up doing one for everybody, and then the other two were split. First speaker on Saturday was Claire Suellentrop who’s also going to be speaking at MicroConf in a couple of months.
Actually, what’s that? Six weeks away right now? Claire spoke first and then it was followed by Aleth, she spoke about GDPR, and then I spoke about email follow-ups, and then Patrick Campbell, he was one of the people who was delayed, he spoke about modifying your pricing and how to figure out what an ideal pricing model should be for your business, and then using it as one of the biggest growth leverage in your business. I think I got a lot out of that talk because I’m kind of right in the middle of evaluating pricing and figuring out what to do with it, and how to pitch it to people.
But he also pointed out the fact that SaaS has gotten substantially more competitive over the past several years. He had graphs and charts to show the number of competitors, the people that started five years ago had versus people who started two years ago versus people who started last year. It was just fascinating the amount of data that he had on that based on all the stuff that they do for Price Intelligently.
Rob: Yep. His talks are always super valuable and have a lot of data. It sounds like a lot of fun, man. Sherry was there, obviously. Told me about it and said she enjoyed it as well and said there was a ton of overlap with the MicroConf crowd. I think she said most people go to one of the MicroConfs which is fun. It’s fun to get together in almost a more mastermind-y arrangement. I know it’s not that small but I bet you kind of know everybody and know what they’re up to and you can literally talk to everyone at the conference.
Mke: Yeah. If you don’t know them before you get there then it’s easy to at least have those conversations and get to know them by the end of it.
Rob: For sure. Cool. What are we talking about today?
Mike: Well, I had asked a few people what they wanted to hear on the podcast. One of the biggest things that came out of it was what is going to be the initial marketing plan for Bluetick now that the new website is up and running. I wanted to talk about that and kind of just go back and forth, and giving I guess a high level indication of what I’m going to be doing. And then you and I can talk about either specifics of it or vet some ideas around or even just tear some of these ideas apart, and say, “Look, don’t do this,” because more than happy to hear some of the advice that you have to share.
Rob: For sure. I know I had shared with you at one point the Drip marketing game plan and the HitTail one actually. The HitTail is a little bit out of date but did you look through that, at all, to populate this list you have?
Mike: Some of those things are pulled from there. I haven’t gone back to either those in a while. I probably should do that at this point. Most of what I’ve been doing lately has been really focused on either MicroConf or getting the new website up and running and now that that’s in place and things are settling down a little bit with MicroConf, I can go back and take a look at those. But some of these things are pulled from that.
Rob: Yeah, that makes sense. One thing I would consider before we dive in, you have it broken down into two categories, kind of, “I’m gonna do these things now,” and then my longer term things. Maybe you do them over as you get time or as you get budget. Something I would think about is to even have one before now or to split the now into two buckets is to have one-time things and on-going things. One of your bullets here is product listing sites, like product on beta list, and I would even go so far as to say all the CSS Galleries.
There’s 50 different things; there’s getapp.com, there’s Capterra, there’s AppStorm, there’s this whole list that you can put together. Those are truly gonna be one-time things. I think it might help your mental model of like, “Okay, gonna do those once. Gonna get the heat of traffic.” Even podcast store is kind of a one-time thing. You’re not gonna do that for a year whereas webinars, joint webinars, and that kind of stuff I think is more on-going. Does it help for you to think about it like that?
Mike: Yes. In Teamwork I have a project that’s specifically called Bluetick Marketing that just has lists and lists of things there. I’m looking at it now there’s probably 20 different lists in here and there’s about 162 different to-do items in there. One of them is specifically one-time marketing tasks. Things like going into the Chrome Web Store and looking to see if there’s anything that can be leveraged there, submit into the Google Apps Marketplace. The products listing sites, inside of that various accounts are different places, and documented certain processes, etc. Mostly just one-time things that I need to do it once or is it’s a task that needs to be done but the output of that could then be leveraged over and over again.
Rob: Okay, that makes sense. What I’ve done is update the list a little bit and I just kind of threw some things that’s called one-time and then we have on-going, and then a later list. Will that work for you?
Mike: Yeah.
Rob: Let’s see. Let’s dive in.
Mike: You wanna go straight into the now sort of things?
Rob: Yeah. Let’s talk about the one-time things because I think that these are things that I have all of my marketing plans. But specifically, I’m gonna keep talking about HitTail and Drip because that’s when I formalized this and put it into a doc. I really thought through where are the places that I can get a bump now that I’ve launched. It’s like the website’s live, every time I try to get written up on Venturebeat, and Techcrunch, and ReadWrite web, and GigaOM when it existed, all these things. It never worked but at least I tried it. I was trying to get some type of buzz.
Then there are the ones that are easier or guaranteed. It’s like startupli.st and BetaList, and makeuseof.com, all the things we just talked about, like Producton and that kind of stuff. You’re almost guaranteed to get a listing even though it might take a while to do. I think if you ever venture back, maybe those little-oh, and CSS Galleries is the other one. If your site is good enough and is a custom-design, I realize yours is probably more templatized, but always got a lot of traffic with HitTail and Drip from the CSS Galleries.
Did it convert amazingly well? No. But did it to convert to some trials for almost zero effort because in essence I would have a VA or I think I may have even hired a service at one point because there are like a hundred different CSS Galleries. I think there was someone who productized it and I paid $99 and submitted some info and they submitted it to all of them. To me, that’s a great zero time $99 investment because if you get one or two trials, depending on your price point, that pays it off.
That’s how I always entered it. I think if you ever venture back then need to make a bazillion dollars then maybe these kind of little initial approaches could be a waste of focus or a waste of time but I think given that every trial counts for you, I think those things are important to do. Chrome Web Store is the other one you said in the Google Apps Marketplace. I had zero look with the Chrome Web Store. What’s the difference between the Chrome Web Store and the Google Apps Marketplace?
Mike: I’ll be honest, I don’t know. I’d have to go and take a look at that. I think the Chrome Web Store was specifically for Chrome plugins. At one point, I had on my list of things to put into Bluetick like a small Chrome extension. Obviously, it never materialized. It’s not that it’s not a road map, it’s just I didn’t get there. I don’t know if that’s even viable or something that I could do because they may just say, “No, you have to have an actual Chrome extension to be able to put that in here.”
Rob: Yeah, that’s what it is. While you were talking, I went to the Google Apps Marketplace. It’s now called the G Suite Marketplace. If you integrate essentially into the G Suite, it also looks like you can just integrate with Gmail as well. Since you do that and neither Drip nor HitTail did, I never submitted to the Google Apps Marketplace. That would an interesting distributing channel.
On the Chrome Web Store I did get a minimum Drip and HitTail in and it had zero traction. But I’m not saying it’s not worth the time but it didn’t do anything. It’s pretty crowded in there now. It’s kind of like the iOS app store I think about, in the early days it was a lot easier to get found. I know that PipeDrive said that a lot of their early growth came from the Chrome Web Store but that was a different time. It was five years ago or whatever. It’s one of those things where you have to create some images and you have to create some XML and you have to submit it and it will take you probably half a day to do. You gotta wait if you wanna do that or not. It depends on what else you have going on.
I would probably lean towards doing it just because it is one more distribution channel and you could get lucky but I think it’s not as high priority as pitching podcasts as an example, because that’s gonna have a really high success rate for you.
Mike: Right. The other thing that comes to mind is going through the process of putting out on all those products listing sites. It contributes to long tail SEO as well.
Rob: Yeah, that’s right.
Mike: It contributes to your page authority and Google will see all those lengths coming in and just building those backlinks is kind of important.
Rob: Yup, I would agree with that.
Mike: You said CSS Galleries, fill me in on this because this is something that hadn’t even crossed my mind.
Rob: The only reason that they even came on my radar is when I acquired HitTail–no, it wasn’t HitTail. It was a different site. It was a productized service I had. It was called CMS Themer, CMS Themer at the time.
Mike: I remember that.
Rob: Yeah. It had a really nice design and it would get quite a bit traffic from CSS Galleries. The interesting thing is CMS Themer was really targeting designers and so that traffic converted very well. I’ve just always made it part of the marketing plan. Obviously, it doesn’t convert nearly as well when it’s an app like HitTail or Drip, but again, this posted a link into our docket. It’s cssgallerylist.com. For $60, they submit to hundreds of galleries. For $60 and almost no time it’s worth it for the backlinks, it’s worth it even if the traffic doesn’t convert, it’s just another channel to get out there. Again, the last time I did this was five years ago, there maybe a better resource than this cssgallerylist.com but I do know that I used these guys and it saved me a lot of time.
Mike: Yeah, for sure.
Rob: This is not something that’s gonna grow your business overnight or be some huge game-changing thing but it’s just all these little parts of the snowball that you’re kind of turn the pack on and then seeing which ones get you any kind of traction.
Mike: Right. I think the important thing to keep in mind when going through this stuff is that every little bit helps and you don’t always know that any one link is going to contribute anything but if it gets one person over and the ROI on that is gonna be almost no way to calculate that but you may get three people over and one person converts. It’s not a 33% conversion rate for that obviously but that can help.
Rob: That’s right. Have you considered how you could do an ‘ask me anything’ on Reddit or you could do a Show HN where you say, “Hey, here’s this business. It doing…” whatever the revenue is, or I don’t know if you can be vague about that or not, but I don’t know how you wanna handle it. Then basically say, “I’ve grown it to this. Give me your feedback,” or whatever. Have you thought about that? I don’t know if that’s worthwhile or if that’s just a big waste of time.
Mike: I have. I’m in a couple of Facebook groups. That was suggested to me a couple of months ago via somebody that said, “Hey, you should do an ‘ask me anything’ on Reddit.” I put it on my list but it wasn’t something that kind of rose, I’ll say, close to the top of things that I thought were, not necessarily game changers, but in terms of weighted priority, I didn’t feel it was something that would help out a lot.
Rob: It’s tough. If you’re marketing directly towards developers, then it would make more sense.
Mike: Right. If it was something like ‘ask me anything’ on growthhackers.com for example, that’d be a totally different story. That’s something that I probably should add to the list to be honest.
Rob: Oh, I think you should, yep.
Mike: Anything else in terms of one-time activities that come to mind that’s not on this list?
Rob: I was just trying to think about that. On startups.com, answers that are on Startups used to be kind of a place but I don’t even think that exist anymore. The bummer about Quora is that it’s really not a one-time thing. What I would do with a one-time thing is set-up, subscribe to some topics, there’s probably a cold email, or even just email. You want email sales, you want the email sales channels not the email marketing channel because email marketing tends to be bulk email and that’s not what you’re doing.
I would subscribe to categories or topics that fit your thing so that you’re notified when questions are asked because you wanna be an early answer. You don’t wanna go on a bunch of old Quora threads and add your answer because those threads already have a bunch of up votes and you’re not likely to be the answer that shows for everybody because that’s really what you want. I did that in the early days of Drip. It’s a bit time-consuming but what I found was the questions that come through tend to be so far into your wheelhouse, that they’re really easy to answer.
Even if I type a couple of paragraphs, it just flowed out. I didn’t have to research because it was things like, “What are approximate open right rights? What’s a good open right for a list?” It’s like, “Well, I actually know what the range is. Here, I’ll talk it through.” It’s gonna be stuff that these questions for me would be tough to answer because I’m not knee-deep in this warm email engagement the way you are. Anyways, I would consider as the one-time part of that just subscribing and seeing how it shapes out.
Mike: Yeah,that’s interesting being able to rattle off some of those numbers right off the top of your head. Because it’s part of my talk that I did for FemtoConf. I looked specifically into that and looked across 70,000 emails that had been sent out through Bluetick and looked to see what the open rates were and what the response rates were across those, and then I cross-sectioned them and got the average, the best case, worst case, across everybody’s accounts. It was interesting what the numbers came out to be and then asking the audience I said, “Hey, here is a number, what do you think is this in terms of the open rate?” It was about, I’d say a third of the audience got it right which means that two-thirds did not which indicates that these numbers are, I’ll say, a little bit obscure or opaque and not everybody knows that they are.
Rob: Yeah, that makes sense.
Mike: I think a couple of other things that come onto this list is, I don’t know if they’re one-time or you would classify them as one-time, but like a podcast tour, for example. I feel like it’s something that you can do it once when you start and then if you’re going to try and do it again you have to have something compelling to follow-up with, I’ll say.
Rob: I do think of a podcast tour as a one-time thing but it’s not as one-time as say CSS Gallery submission, but it’s gonna move the needle more than them. CSS Gallery and the BetaList and all that stuff. I just posted a link to whitetailsoftware.com and Robert Graham had that pre launch email list building directories. We can include that in the show notes but I think you have 50 or 100 that he had his VA submit to, so that’ll help as well. But all that to say, podcast tour is gonna take several months because you’re gonna email and get scheduled, and by the time it comes out, it’ll be months down the line.
I think the big thing, the advice that I would give when doing a podcast tour is it would be easy for you to just go on a bunch of entrepreneur podcasts and say, “Look, I launched a product. I’m building this SaaS product.” You’ll convert some of those, it’ll be a low conversion rate. The audience who’s gonna convert the best for you is gonna be folks doing sales. It’s gonna be folks both doing cold outreach and then doing the warm nurturing that Bluetick allows you to do, this stuff that comes right out of your inbox and looks very personable. It’s not bulk email like MailChimp or Drip but it’s the one-on-one connecting whether it’s cold or warm. Who’s doing that, right? This is BDRs and salespeople. I know some of those are also founders but I don’t think that’s gonna be your market.
I think initially, you can get SaaS founders, and you can get our audience, and the MicroConf audience, and not crew. It’s good to talk about it here. I’m not saying you shouldn’t go on Mixergy and talk about it but compared to the size of that audience, the conversion rate is gonna be pretty small. The podcast that I would target that I think are gonna be your low-hanging fruit, is to go on podcast that are talking about sales, and talking about tech sales, selling SaaS apps is probably the B2B sales approach.
You can come on not to tell the story of your product but you can pitch it as, “Look, I’m an expert in this because I’m in it day-to-day and I’m seeing dozens or hundreds of customers who use our product and I’m seeing the patterns. I’m seeing the successes and how they’re doing it well. I see the failures and the mistakes people are making.” Does that make sense? I would definitely go after that space rather than focus on the founder and entrepreneur space.
Mike: Yeah, it totally makes sense. That was actually my hesitation, I’ll say, of doing that because I didn’t think that approaching those, the startups community would be something that will really resonate. Like you said, I’ll get some sales out of it but it’s not gonna be a high-converting channel for me.
Rob: Yeah, in all honesty, I will probably do both but I would start with the sales folks, the sales podcast. We both know at least a dozen people who have podcasts that I’m sure you could come on and talk about some aspect of your business. Try to vary it because we have this small community and so if you go on all the podcast of our friends and talk about the same thing on every podcast, everybody hears it, there’s only so many people in it. I will try to suggest different topics, different aspects. If you could talk about the launch on one, you could talk about the stress on another, you could talk about marketing approaches on another.
I do think that is still worthwhile because it’s easy for you to do because you’re used to doing podcasts and it’s 30-45 minutes of your time once it’s booked. It’s not actually that much of a time investment to be in the earbuds of likely several thousands or tens of thousands of people, but as I said, I do think I would start with trying to assess out what are kind of some B2B sales podcast that I can get on?
Mike: The interesting thing about that is there’s two different ways that I could approach that particular problem of going out to the people who are running those podcast. One of them is send directly into Bluetick and let Bluetick follow up with those people. The other one is that there’s a company I’ve stumbled across that will take kind of what your requirements are for appearing on podcast and will go out through the different network of podcasts that they have contact with, and essentially pitch you to them. I’ve mixed feelings on doing that, to be perfectly honest, but at the same time, there’s a time component that it’s gonna suck up some of my time to do it myself but in many ways, it comes across better if I do it myself.
Rob: Yeah. That’s hard. There is a balance because we get a lot of pitches on this show and on Zen Founder. If it’s not the person pitching themselves, I tend to delete them, that’s just a thing. I do glance through them but I don’t think we’ve ever had anyone on the show who wasn’t pitching themselves. When I had an executive assistant who is doing stuff back in the Drip days, when I was still running the business, she could email people as me, look straight out of my inbox, and so you could develop the pitch and have someone else send it as you. But it just depends on what you wanna do. I don’t know but I don’t have a good answer for that.
Mike: But again, at that point, I could just put it through directly into Bluetick and have Bluetick send out the email.
Rob: That’s true. Ta-da. That’s cool.
Mike: It’s interesting because occasionally, when I’ll email people whether they contacted me to ask me something about Bluetick, occasionally they’ll have heard the podcast and they’ll ask in their email as to whether or not it was sent from me personally or whether Bluetick sent it. I’m just, “If you can’t tell, doesn’t that speak to what the product does?”
Rob: Right. Does it matter? Yeah, that’s funny.
Mike: Does it matter?
Rob: We’ve talked at length here about the one-time upfront things. You have nice list of the things that you plan to do on an on-going basis, why don’t we look at a few of those?
Mike: Sure. The things that pop-up high on my priority list-actually, you know what, now that I’m looking through this, one of the other things that is on the on-going list should probably be moved over into one-time is the public Zapier integration.
Rob: Oh, yeah.
Mike: I’ve got a private integration right now but I’ve not taken it public and that’s something that I’ve been asked about a couple of times by Zapier. I just haven’t done it yet to be perfectly honest. There’s a lot of edge cases that either are not handled well or I know that there’s other changes that need to be made and I’d rather make those changes before I open it up than have to fix a bunch of other stuff. Because there’s some things that I do some manual data manipulation just to make sure that things are working right for certain customers. I need to put a more permanent solution in place for those.
That’s something that after going through the process, I believe they put it out through their mailing list. I forget what their mailing list is but it’s something like 1 million people or something like that, something ridiculously large. The conversion rate is not gonna be high but it’s more about driving awareness than it is about converting people at that point.
Rob: Yeah, you’re just trying to get the word out so people have heard of you at this point. One other one-time thing that I would do, it’s not a marketing approach, but I would set up Google alerts for relevant terms that you wanna monitor like company names of competitors, try to hear about like articles I think are relevant or conversations that are relevant, you have to use your judgment there but I do think getting something setup so that your kind of participating or at least aware of what’s going on in your space is helpful.
Mike: Yeah. I have a couple of them set up right now but it’s mainly for Bluetick. What I find is I’m getting a lot of emails about dog conversations that are happening.
Rob: Yeah, I could see that.
Mike: I guess if we’re gonna jump right into the ongoing stuff or the short term things that I was looking at, the first on my list is webinars.
Rob: Yep. Are you planning, because right below that you have JV webinars.
Mike: Right. I wouldn’t say I lumped them together but I think the general process is going to be similar for them whereas with the webinars, there’s joint webinars and there’s just the regular webinars. The regular ones are ones that I was probably gonna promote to my own email list and then maybe do one on a regular basis or promote it on a Tuesday every other week or something like that. And then with the joint webinars those would be much more scheduled where I’m leveraging other people’s audiences and contacting influencers and see if they’re interested in having me come and talk specifically to their audience about how Bluetick can solve a particular problem for them. I see it almost like the podcast tour but with a little bit more, I’ll say, pinpoint accuracy or a little bit more focused specifically on those people because I don’t wanna go pitch somebody and say, “Hey, can I just do a joint webinar with you?” But not actually have something that’s gonna be valuable to offer to their audience.
Rob: Right. I would the joint webinars before I try to do internal webinars because it is such a nice way to reach out beyond your own audience. Just through doing webinars to your own list, you’re gonna one and then you’re not gonna fill anymore, you know what I mean, until you get more people either using your product or on your email list. We tried early on with Drip to just run Facebook ads, get people to opt into a webinar, and we’re gonna try to run one every week, and we just couldn’t get people to show up at a price that was worth it for us.
Again, not saying it’s not possible but it’s an entire funnel that you have to develop. It’s gonna take you quite a bit of time and money to do whereas the JV webinars is a low-hanging fruit for you, because JV webinars is about who you know. You do have a good network of people who I think you could contact and have access to their audience right away, basically for free, without running all the ads and developing a funnel. It’s just conversations. I’d definitely prioritize the joint webinars above do your own.
Mike: How would you structure any sort of special offers for those people going to a joint webinar? There’s a lot of discussion and I’ve thought about this myself. I was like, do I wanna offer a discount or I wanna give additional services or special templates like, “Hey, you can only get this here because you’re coming to this particular person’s webinar.” My concern is really putting a lot of extra effort into something that-at the end of the webinar, it may turn out to be nothing. I may not get very many sign-ups out of it or I may get a lot but I don’t know. It’s hard to predict how much time and effort to make things custom for that person’s audience. You know what I mean?
Rob: Yeah, I do. I would lean heavily towards some type of bonus and it’s time-limited. You say, “Hey, free to sign up in the next two or three days, then you get this extra thing.” whether it’s a discount or the thing that you billed. Discounts are the lazy way to do it. It’s like the zero time way but it chews through your money. If you have no time, absolutely no time, then yeah, give people a discount, but discounts are not exciting. They’re not as exciting as like, “Get this complete email series,” even if it’s only three or four emails, my guess is, you can crank that out just using copy+paste from what you’re using already or from what you’re recommending to people and just edit it for their specific niche.
If you talk to a bunch of freelancers then it’s like, “Here’s the way they follow-up and do it for freelancers.” A lot of it is gonna be the same as any other sequence you have but you’re just gonna tweak a few things. I’m guessing, in about half an hour you could probably crank something like that out. You don’t even need to do that in advance of the webinar because if you don’t get sign-ups then you just don’t build it. But if you get sign-ups using that coupon code then you just manually reach out to people because it’s not like you’re gonna get 500 sign-ups. You’re gonna get 10, or 20, or 30. It’s gonna be a small amount. You can just hit people up and distribute that to them. I’m thinking of something like that. It’s high value for someone signing-up but it’s pretty low effort for you to create.
Mike: Yeah, that makes sense. I think right now when you go and sign up, I was probably gonna pull this off as things progress, but when you go and sign up right now, there’s kind of an offer there that basically says I’ll create an email sequence for you based on whatever scenario you describe and that will be your first sequence. It’s kind of concierge onboarding but I’ll say it’s probably not very well described in the website right now but it is something that I just offer to people as they come to sign up.
Rob: Yeah. If you get 30 sign-ups at a time that’s gonna get tough. I think you’re gonna have to stop doing that because it’s too time-intensive. You have to back off as you start getting more sign-ups.
Mike: Right.
Rob: What else? You have direct follow-ups with the following; invite to demos, you have current mailing list, prior prospects which I think is good, and personal LinkedIn contacts.
Mike: Yep. I have a couple of different spreadsheets based on when I was doing early validation. Some people said, “Hey, now is not a good time. Maybe later on when you’re further along.” And then there’s people who have come in and I’ve done a demo with them and things just didn’t work out for whatever reason, or they sign-up but they never followed through or they used it for a little bit, and then they said, “Yeah, this isn’t working out for me.” I’ve got this pool of people that I can go to that fit into that criteria, that I can put them into a Bluetick sequence, for example, and invite them to come back and check it out or go to a demo or something like.
But in addition to that, I also have the mailing list that is in the Drip account which I have been putting on the website where there’s an email course that you can go through. It’s like a 5-day course which I’m in the process of copy+pasting all the content all of that to make it a slightly longer course. But those people that I can go to directly, I can take them out of Drip and then plug them into Bluetick, and individually follow up with each of them. I could do that based on lead score for example and just sort them by lead score and then add them in in that order and say, “These are the people that I’m gonna approach first versus these are all the people who are probably, I’ll say, less interested, but still on the list.”
Rob: Yeah. I think that’s a good idea to kind of approach. I was definitely gonna say anybody who’s cancelled in the past, if the product’s a lot better than when they’ve tried it, you definitely wanna contact them. Prospect who haven’t converted, people who’ve been paywalled because they don’t wanna give their credit card, now is the time when you’re doing this to just circle back and clean all that out.
The personal LinkedIn contacts, you gotta use your judgement there, you don’t wanna come off as… I’ve never done that but if you know someone who really should value out of it and you do a very soft pitch like, “Hey, just to let you know I just launched this. I thought it might be helpful.” Not anything that’s forceful like, “Jump on a call. Jump on a call.” Then, I think, it’s halfway reasonable.
Mike: Yeah. I wasn’t planning on doing that. What I was gonna do was go through my LinkedIn contacts and just look. Obviously, I’m gonna hand pick which ones i’m gonna contact and which ones I’m not. I’ve got people who I know are software developers or they’re engineering managers, or something like. They’re really not a good fit for it but that doesn’t mean that I can’t go to them and say, “Hey, I just wanted to check in with you and see how are things going, and let you know I just recently launched this. If you know of anyone who could use this, I’d love an introduction just to kind of help me out.” I’m leveraging my personal relationships at that point.
Rob: I could see doing that. I just added a couple things to the list. Actually, you have retargeting on there, mostly Facebook. I think it says Facebook primarily, I think that’s a really good idea to get set up whether you use perfect audience, you have the display networks like Google and stuff already, you just tick Facebook and it gets probably a material but I think you should get that set up pretty quick. That’d be probably towards the top of my list. Do you already have the pixel installed?
Mike: Yep.
Rob: Okay, good.
Mike: yeah, I’ve had that in pixel installed for a while. But then, the reality there is, I’ve put it under ongoing because there’s a one-time piece of setting it up and there is the follow on activities where you go in and you analyze how much traffic you’ve brought in, do you have a critical mass yet, what kind of advertisements you’re doing. It’s kind of two different components to that but I do find that even with my two-step process for the sign-up, you put in your email address and password, and it takes you over to a credit card page, and there’s people who don’t fill that out.
Obviously, those people, I wanna follow up with anyway but I also wanna make sure that people who come to the iste and then go over there but never even fill out that first page, I still wanna be able to retarget those people to bring them back. Because obviously, they were interested enough to go look at the signup page but they didn’t actually sign up.
Rob: I think in the interest of time here because we’re running pretty long today. I think you should consider-paid acquisition I have written here, it’s a tough one. It all depends on if you have budget and if you have time to sit there and test a bunch of stuff, so something to consider, maybe it goes on your later list but it’s definitely if you can get it to work, it’s really, really good. Cold email outreach, you have the tool to do it, nice to use your own tool. You can go to something like LeadFuze and get a list of people, and start doing the outreach yourself, or you can hire someone to the outreach for you.
We had mixed results when we did Drip but it definitely drove enough trials that have made it worth spending. We were spending money on it at that time and it definitely had positive ROI for us. Integration Marketing which is you just think of all the top 10 integrations that you would wanna have and think about trying to get either in their director. If it’s Stripe or Basecamp, they’re probably not gonna co-promote with you because they’re so big but they have these integration directories. Or if they’re a little bit smaller, if they’re a startup, they’ll probably have a list and are willing to email out and promote you. That requires dev time, of course, so it has to be worth your while.
But that was something we did 30 something integrations with Drip and it makes a lot of sense with a tool like Drip because it it a hub of data and so we integrated with a bunch of shopping carts and all types of marketing tools. That both helped our customers but it also really helped to start to get traction and kind of be everywhere in their early days. I think those are the other three I would throw out that you may wanna do sooner rather than later.
Mike: Yeah. I’ve already been asked by people about integrating directly into Bluetick using the API and I’ve kind of pushed off mainly because I know that there are parts of the API that are still changing, so I haven’t really structured it in a way that says, “Hey, this is available for you to use and it’s pretty solid versus these other pieces where you shouldn’t touch it.” I had a conversation with somebody at FemtoConf where they said they actually have three different versions of their API published. One of them was for them internally, and then there’s another one that’s a public API, and then they have special endpoint specifically for Zapier. It’s interesting they split theirs out and I think it makes a lot of sense as well. It’s just a matter of rearranging some things a little bit to allow people to do that and say, “Hey, this area is solid. This area is off-limits or don’t touch them.”
Rob: Yep, that makes sense. Anything else that you wanna pull out of here? Either in ongoing? It looks like you have a couple more and then you have some stuff for later?
Mike: Yup. The one idea that have come to mind that somebody had mentioned to me at FemtoConf was the idea of having Bluetick offered as sort of a managed service for x thousand dollars a month. Then they’ll send all of their contacts over into Bluetick and then, it’s my responsibility to make sure that things are running smoothly for them so that they don’t have to go in and manage anything which, if you set up a lot of the automation and stuff, you don’t have to worry about that, but there’s also ongoing tweaking, A/B testing, or making sure that, “Are these numbers any reasonable ballpark of what they should be?” If you’re getting a low open rate, for example, how would you necessarily know unless you’re looking at all the other data. I have access to that but other people don’t. Those are the things that I can provide a lot of additional value for customers but they don’t necessarily have access to it on their own if they just signed up.
Rob: Yeah. That makes sense. There’s a risk with managed services because they can just suck up a bunch of your time and also the revenue is not worth nearly what a SaaS revenue is in terms of a multiple-whether you’re gonna raise funding or whether you’re gonna sell or whatever. If you have a bunch of consulting revenue, it’s worth like 1X, 1X the revenue versus actual recurring revenue, it’s a different story. I shouldn’t say recurring. It’s higher margin revenue where if it’s software it has 70% or 80% margin. If it’s consulting it has what, 10%, 20%, 30% margin. It’s something that I would consider in the early days but it just matters what cash position you’re in. I think you would do it for the cash and not really for the long term prospect of the company because I don’t think you wanna grow a big kind of productized service long term.
Mike: No, I agree. The way I was gonna structure it was like, “Hey, here’s a managed service that if you wanna subscribe to you can,” and it’s either a three-month or a six-month contract, and then that’s it. If I decide to continue offering it then they can continue paying me for it but if I decide that we’re not gonna do this anymore, then things are kind of pushed back. It wouldn’t be something that you can just go to the website and buy off the shelf but it’d be limited three to six months contract or something like that. You’re right, it would absolutely be for improving cash flow for example, but it would also put a solid number on, “Hey, what is this particular customer going to be worth to me in the next three months or in the next six months.” Does that make sense?
Rob: Yeah, I think it’s interesting. Certainly trying it with one customer is not gonna hurt much. That’s the thing, is to see how much-if it’s valuable to them, if it’s workable for you, and obviously if you do it for 10 or 20 people, you’re getting yourself in pretty deep but you don’t have to do that. You can just dip your toe and then figure it out.
Mike: Yeah. I was gonna do it for probably one to five. The other nice thing that I thought that would deliver to me is the ability to work hand-in-hand with those customers and see what exactly what it was that they’re trying to do as opposed to, “Hey, here sign up to Bluetick,” and then after that, I don’t really have a ton of visibility into their business or exactly what challenges they’re trying to solve. I know generally what they’re trying to do but I don’t get that insight or I don’t have calls with them to really see on a weekly basis like, “Hey, what are you really trying to get out with this?” I think that those insights would actually help me build a better product longer term.
Rob: One of the thing I see on your later list that I like, that I don’t think we’ve covered, is you have this library of email templates, lead gen, and you use this as a lead gen to acquire email addresses? I think that’s intriguing both for the SEO and you can always run ads to it, you could retarget to it and you’re basically giving something away. I think that’s gonna take a ton of time for you to set-up. It’s a little more complicated than it sound but I’m glad you have it on your later list so at least, in a few months, once you get some of these other ones done, you can move into that, and start thinking about how to shape that up.
Mike: Right. The other nice, I’ll say, by-product of doing that is that, I could create those inside of Bluetick as a library where you can when you create your account, you can just select from a bunch of them, kind of a similar to the way that Drip has those pre-made blueprints for different situations, this would be exactly that. Like, “What situations have I run into with different customers that they’re trying to get a response or get the customer to take an action? What sorts of things work? What sorts of things don’t? What sorts of approaches do you wanna try?” You can almost categorize them. It’s like, “This is extremely aggressive versus to do the exact same thing to get somebody to a call. This one is much more laid back and hands off, and it depends on the situation whether it’s cold email versus a warm email with somebody who’ve had three or four conversations with us.” Which one you would use?
Rob: Cool. Well this was a good run. Thanks for bringing this on the show. I had fun talking about it. I’m guessing we’ve provided quite a bit of value for the folks who are thinking about this kind of stuff.
If you have question for us, call our voicemail 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. Visit startupsfortherestofus.com for a full transcript of each episode. Thanks for listening. We’ll see you next time.
Episode 383 | Considering Monetizing SaaS with Ads, Should a WP Plugin Company Consider SaaS, and More Listener Questions
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Show Notes
In this episode of Startups For The Rest Of Us, Rob flies solo and answers a number of listener questions. The topics include monetizing SaaS with ads, should a WP plugin company consider SaaS and more.
Items mentioned in this episode:
- ZenFounder
Startup Blueprint: 7 Skills For Founders, Builders & Leaders
Start Small, Stay Small: A Developer’s Guide to Launching a Startup
In this episode of Startups For The Rest Of Us, I kicked Mike off the show. I fly solo and I’m answering a bunch of listener questions, covering topics ranging from monetizing SaaS using ads to whether a WordPress Plugin company should consider launching a SaaS, as well as how to deal with the struggles of launching a two sided marketplace. This is Startups For the Rest of Us episode 383.
Welcome to Startups For The Rest Of Us, the podcast that helps developers, designers, and entrepreneurs be awesome at building, launching, and growing software products. Whether you’ve built your first product or you’re just thinking about it. I’m Rob, and Mike has no power for the past day or two. He has no internet, and I think a storm came through and knocked out a bunch of power. He won’t have it back he said at the earliest til midnight tonight. I jump into a car with my son, my 11 year old. We are heading to Lake Geneva, Wisconsin for Gary Con in about two hours. There was no overlap.
Mike emailed me and let me know he wasn’t able to make it and so my goal was to find a guest this morning. I emailed three or four people short notice and no one is able to show up. Here I am, we ship every week, every Tuesday morning an episode comes out.
I dug into our listener question bag and we were down to one listener question last week, we’re up to eight or nine this week, which is great. I enjoy these episodes when we answer listener questions. We’ve been doing them a lot more lately. What I’ve noticed is it feels like there’s a lot more listener participation and it also feels like we’re keeping up with topics that are not just coming out of our heads.
These are really questions and topics that you, the listener, are thinking about. It feels like I enjoy these episodes because I feel like they’re as relevant as we can be to the moment of what you’re thinking about and what you’re launching as a listener base. We are here to share our experiences, to hope you avoid the same mistakes we’ve made. Also, to weigh in on questions that you have as you’re growing, building, launching your startup.
Let’s dive into our first question. It’s from [Dylan Dee 00:02:10] and it’s about whether he can use advertising as a SaaS revenue model. He says, “My company is Dunwich Technologies, it’s a healthcare focused consultancy. We’re developing a SaaS app to help patients better understand their confusing medical bills. I see the value in one off uses, doesn’t feel like an app that could garner much daily activity or many daily active users. It’s more like an every so often use. This coupled with not wanting to charge for the app leaves me with few revenue options. Would medical/pharma ads on this app be the only or the best way to monetize it in your opinion?”
My opinion is this will not work at all. Because if you don’t have a lot of daily actives, then ad based revenue models are gonna bring in pennies for you. I would be shocked if you have people logging in once a month or once every other month. Let’s say you had 100,00 people using the app and they only log in once a month, you’re gonna make hundreds of dollar. It is catastrophically low, the ad rates are just very low these days. You look at a company like Facebook or Twitter, Google, and the only reason that ads work for them is because they have so many people constantly using the app.
If you’re going direct to consumer and you don’t think you can charge for it or don’t want to charge for it, I would think of this as more of a lead gen thing. Can it generate leads? Can you build up a free customer based and generate leads for your consultancy? Or, can it generate leads for another SaaS app that you may want to charge for, or a video course–I’m just throwing things out.
Obviously, you may not want to create a video course, you get the idea. If you’re gonna build something that truly is freemium but there is no ‘mium’ to it, there’s no premium aspect because you’re not gonna upsell. But actually, that is another thing you can think about is to launch this. See what happens, see if there’s any uptick. If you get 10,000 free users in there asking for more things, you could then consider going freemium and having a paid tier on top of this. Even if it does just a $5 or $10 a month thing.
It’s really hard to do B2C SaaS, it’s not done very often. If you look at even Dropbox, they are trying to pivot into the enterprise because that’s where more money is and the lower churn and all the stuff. Box.net kind of beat them to the punch on that. I think that Dropbox was conceived as a B2C company but if they really want to maximize the valuation frankly, they want to get into the enterprise because enterprise customers have higher lifetime values. And if you look at the stock market in public or even the private markets, companies serving mid market and enterprise, and even SMBs are valued higher than the same amount of revenue serving consumers because that revenue tends to be more volatile.
All that to say, I don’t think you have any chance of making any money that’s gonna move the needle using an advertising model. I would say if you’re gonna build it, if you really want to, give the thing away, see what happens, see if it becomes lead gen. If nobody uses it, then that’s fine too. At least you took your shot.
Our next question is an audio question. It’s about a WordPress Plugin company, whether they should offer a SaaS offering.
“Hey Rob and Mike. I love the show. My name is Kyle, thanks for taking my question. I work for a small WordPress Plugin company. We’re pretty well established and doing just fine, but looking to grow and take on some new exciting project. I have some ideas that I wanted to get your input on.
Basically, I want to see if introducing a small SaaS offering might make sense for our business? Obviously, we distribute our WordPress Plugin, that’s our business right now. Our customers are mostly in ecommerce but I was in the interest of helping our customers succeed and solve real problems that they have. Also becoming as indispensable to them as we can be while at the same time introducing new streams of revenue for our business.
I was wondering if maybe we should consider adding a SaaS offering which we make available only initially to our existing users. Not something that we market to our broad audience, but something that we just silently roll out to users of our plugins already. I’m thinking this could be something very simple, some tool like helping them with their email delivery or file storage, data backups, staging environments, remote site management, reporting businesses sites, something like that, I don’t know. We can make a simple tool, put it in front of existing users and say, ‘Click here to take advantage of this extra monthly tool.’
My questions are, how do you feel about the idea of creating some simple, light MVP simple SaaS product? Initially making it only available to current users of our plugin. Do you have any opinions about the type of SaaS product which would be the best for us to choose if so? Something simple yet still useful to our customers for mostly running ecommerce sites. Thanks so much and I look forward to meeting both of you this year at Micro Conf, thanks.”
This is a great question. I think a lot of WordPress Plugin vendors probably think about this because the appeal of having monthly recurring revenue versus the potential spikiness of WordPress Plugin in the one time sales, it’s appealing. SaaS and subscription revenue is the golden ticket that everyone is looking for.
I would say that just to start with, a, I think this is a great idea. I’m all for it. I think if you wanted to tip toe into it, you should definitely do it. I would say that when I talk to folks who do WordPress or do one time sales, they’re always talking about launching a SaaS. When I talk to people who have SaaS apps, so many of them are jealous of these one time sale products because those product price points tend to be higher.
You might sell a WordPress Plugin for $40 to $200 and you get that nice pop right off the bat. If you sell one customer, you make $200 that month. Whereas if you have a lightweight SaaS, you might make $10 that month from the customer and you gotta keep them around and you’re constantly working to do that to retain them. I know that with DotNetInvoice, which was an invoicing software I owned years ago, it was $300 for the product, for a developer to buy it and use it.
We only sold 8-15 copies a month. You think about that, you think about let’s just say 10, you think about making 10 new SaaS sign ups that stick around and become customers and that is catastrophic. Unless you’re very, very expensive, in the enterprise. But just the normal, let’s say you’re $20, $30, $40 a month, that’s slow growth. It’s gonna be agonizing. Whereas if we sold 10 of DotNetInvoice, it was $3,000 a month. At the time, I was looking to make a car payment or make a house payment and I was doing consulting. This was just a little side project that I didn’t spend a ton of time on. That dollar amount and getting all the lifetime value upfront from your customers, there is some appeal to that.
I would say don’t look that [inaudible 00:09:17]. Do realize that the couple beauties of WordPress are that you do get all the lifetime value upfront and that you have that built-in distribution channel of the WordPress repo, and that also ranks high in Google which then can bring people to your WordPress page and get that free download. With all that said, when I talked to a lot of WordPress folks who have plugins, are making some money, they are always thinking of how to get into SaaS, and I don’t think that’s a bad thing. A, I think it’s great. SaaS is more complicated, it levels you up. There’s more to learn, it is that recurring revenue that you’re looking for.
Number one, I think yes, you should give this a shot. Number two, I think you have an advantage because you already have paying customers. I have no idea about this business if you have a thousand people who’ve purchased it or if you have ten thousand, but that is a great built in audience right there to start a SaaS from.
I’ve talked on the podcast and at MicroCon a couple of years ago about what I believe are the only four true competitive advantages in SaaS. It’s who you know, it’s your network. It’s who knows you, it’s your audience, that includes customers. And it’s being early to a space and being a growth hacker, someone who knows how to think through methodically and really grow anything.
This is a case where you already have an existing audience of customers, you do have an advantage over someone starting from scratch. You have customers who probably trust you and like you. If you build something with them in mind, you should be able to have a pretty good strat to your business.
In addition, you probably have a bunch of free users and I know they won’t convert as well but that should be a number that’s 10 or even 100 times the number of people who’ve actually paid you and so you do have some reach there. That’s the plus side.
The negative side is you building a SaaS is gonna take a lot more time than building a WordPress Plugin in general. There’s so much more, there’s the hosting and the infrastructure and uptime and all the stuff that you don’t have to deal with. It is gonna be a big learning experience. I wouldn’t want you to think just because you’ve built software, you’ve built products and you’ve sold it, you definitely have learned a lot but SaaS is going to be that next level up in terms of complexity.
In my opinion, if I were you, especially in the ecommerce space, I would start talking to my customers, you already have them. You can have a few ideas and I think in a perfect world you might have three of four ideas that you start running by customers and saying which one of these would you absolutely, no doubt, would sign up for tomorrow. Take that short list and run it by, I’m sure you know a bunch of them personally, and then start emailing a hundred of your customers at a time even if you don’t know them and being just like, “Hey we’re considering branching into this, would you buy it?” I think you’re gonna get pretty good feedback form that pretty quickly.
That’s how I would approach it, I think, asking my opinion, you’ve asked my opinion about what kind of app you should build, I have no idea because I don’t know. I don’t know your customer base or what you’re currently serving. I think that the best WordPress to SaaS progressions are things like Opt-In Monster where it was just a WordPress Plugin and then they just launched basically the same thing as the SaaS app. It was subscription, they already had the features that they knew that was killer, they had experience in it. They literally just turned the WordPress Plugin into a recurring subscription.
If you’re not on WordPress, you can still use it but you pay the monthly. Craig Hewitt is doing this with his WordPress Plugin Seriously Simple Hosting, and then it’s Castos now. Moving from this WordPress space and just building a SaaS out of it, I think that’s a good way to go because you already have experience with that. You already have inbound interest, folks finding you through the WordPress repo so you do have that traffic source and distribution channel.
Again, I think if you want to get in this and get into the recurring game, I think it’s a good idea and I do think you have some advantages given your current business. Thanks for the question.
Our next question is from Alex Baxter. He says, “Love the podcast, big fan. I’m attempting to bootstrap a startup in the job site space.” A job website, a two-sided marketplace. “As I begin to look for companies to post jobs to the site, would you suggest allowing companies to post jobs for free to get the initial supply of jobs up for candidates to view then worry about monthly fees later, or trying to charge from the get go? I’m leaning towards free but I wanted your thoughts.”
The reason I like this question is because it’s the classic two sided marketplace. Whenever I talk to anyone about a two-sided marketplace, I say basically the same thing. You’re gonna have to figure out which side you need to get first. In this case, you’re not gonna have any job seekers come to the site if it has no jobs. You have to get the jobs up first.
Yes, I would beg, borrow, and steal to get jobs on this site. I’ve seen new job sites launched and they’ll go and scrape Monster, Indeed, Hot Jobs and all these other things in order to populate their jobs and start form there and then spin out. I’m not saying you should or shouldn’t do that but it’s a way to think about it. There are jobs postings out there that you would be able to populate on your site and it’s additional distribution for them.
In terms of offering for free to employers, I probably would, because you have no traffic. You really can’t charge them because you have no job seekers yet. In my opinion, it’s probably a, “Hey, this is going to be free for the first three months or six months or until we have 10,000 uniques a month, or until every job receives 50 views per month.” There’s something that just needs to trigger that they need to start paying you. Because you don’t want to get a bunch of your best employers and just be like, “Yep, this side is free to post,” because that’s not a business perpetually.
You have to take an approach that long term you’re not comping your best customers. That’s why it kills me, I‘ve seen people pretty often do this with SaaS where they get this launch list or they get 5 or 10 interested customers and they say, “Yeah, for your feedback, I’m just going to comp you lifetime.” I think to myself no, these are your first 10 people. You can give them a discount, you can comp them for six months, give a discount for the first year. You can do that because they are giving you effort but also providing them a ton of value with the software.
If they’re willing to sit and work for beta software with you, then they probably have a pain point that you’re also helping with. Don’t do that would be my advice. Don’t cut that revenue off at the knees, especially in the early days when you need it most.
For this, I would definitely consider just cold outbound outreach. I’m guessing this is probably a vertical and you probably know all the companies in that vertical and that would be cold emails, cold phone calls to basically just start with like, “Hey, I see jobs on your site. Can I repost these here? Do you give me permission?”
Technically, I got to be honest, I don’t know if you even need permission legally. Whether it’s an ethical thing. You’re providing them with more distribution, you’re republishing jobs, but do they have a copyright to the job posting? They may. You may want to check with them first. You’re gonna have to talk to a lawyer, just do your research on that, but that’s what I would do is if they already have jobs posted in their own site, I would look to just be like I will do this for free for the first three months since we’re getting started up and I will just pull all your jobs in, are you cool with that? Try to make it as easy as possible. I would either a scraper, an importer, hire a VA, I would do something that is able to pull in those jobs so these folks are not having to do the work and it’s just a simple and easy yes.
And then, your results are gonna make or break whether they want to pay you. That’s a cool and a stressful situation to be in. I think back to I believe it was TripAdvisor in their early days. Their big game is building all these SEO pages. They’ll have a destination and then they’ll have all the rankings and then they get all the search engine traffic. They were trying to monetize and they went to cut deals with travel ticketers, airlines, hotels, all of this stuff. They basically said, “Buzz off, we don‘t care.”
TripAdvisor already had a bunch of traffic, they turned on this [inaudible 00:17:22] to some of these ticketers, and I don’t know if it was airlines or hotels or just people selling tickets but whatever it is, people selling the things that they were talking about on TripAdvisor. They turned on this [inaudible 00:17:33] and just started sending a bunch of traffic, they didn’t charge for it and they didn’t get a kickback, they didn’t get a commission, but then they turned it off after two to four weeks. At that point, the people selling tickets said, “Wait a minute, what did you just do?” They said, “We turned the traffic off.” They said, “What do we need to do to get that turned back on?” That’s your conversation.
That’s where you start. You said, “Well, we’re gonna charge you. You need to give us a cut of the ticket sales.” That’s what you’re going to be, that’s the situation you’re gonna be in here is thinking about if you get these job for free for three months and no one applies to your site, they’re not gonna pay you. But if they get fantastic talent, it doesn’t need to be a lot, I’ve used a few job sites where I only got three or four applicants but they were all top notch because it was just a really small niche and I continued using them after that. Very good question, I appreciate that Alex and I hope it helps.
Our next question comes from Robert Andrews. He says, “I’m a long time tech journalist and editor turned content consultant. I’ve written a book it’s called Startup Blueprint: Seven Skills For Founders, Leaders and Builders. It was a bit of an experiment in discovering those skills, distilling them and frankly trying to make my first product. Think it turned out great. I have some good reviews but I’d love to get feedback particularly on the marketing strategy. After spending so long witting the book, I did almost nothing to get it in people’s hands. It’s the proverbial tree which no one heard falling in the forest.
My current approach is to offer a free sample chapter in return for an email triggering email sequence and weekly insights from the book as well as links to purchase,” which I think is a great idea. “Built out the campaign in Drip, put the sign up form on the site, but it has no traffic. I thought of driving sign-ups with Facebook and LinkedIn lead ads but I’m not sure these can be cost effective enough to market product like a book. Any thoughts? Appreciate it.”
This is a good question. I think, as Robert alluded to, this is somewhat of a common thing. Authors don’t tend to think about the marketing side of it. If you were to do this “right”, then you would be doing pre launch. You’d build a prelaunch list. If you listen to ZenFounder, you heard Sherry and I talking about our book for the past six months when we started writing it. You can even go so far–when Brennan Dunn works on a project, he’s actively sharing pieces of it on Twitter, on his blog, to his email list, and just build anticipation over time. That’s what I did when I wrote my first book back in 2010. I was sharing pieces of it getting feedback and that’s really the way to do it because it engages people and then by the time you get there it’s a no brainer for someone to buy it.
If you haven’t done that, then, yeah you are starting from a cold start and especially in this space, there’s so many people with the startup message and the entrepreneurial message. It is hard to stand out. I think Facebook and LinkedIn ads I do not believe will work just because of the cost. Typically, you need LTV of 150 and up to work but you know what? This is the learning experience.
You’ve said it, I totally, personally, would run some Facebook and LinkedIn ads just to see what it feels like. Maybe your conversion rate on a book because it’s so cheap will be way higher than the software that I’ve tried to sell using Facebook and LinkedIn ads. There’s a chance it will work, you can find a small subset of people or some some audience that will be willing to buy it. Even if you only breakeven, part of this is just getting the reach out there. Because every customer who buys from you, now they’re part of your audience. You have their email address and I think that’s a great way to do it.
I think another way is of course, I’ve talked about this a lot, is a podcast tour. If you have no name or no reach, then it is just gonna be cold emails to podcasts, you’re going to have to figure out what the story is because it’s not, “I just wrote a book. Can I come and talk about it on your show?” Because you’re gonna get zero yeses for that. You have to figure out what the angle is for that particular show and why that show’s audience would really want to hear about one of the concepts from your book. If you have any type of network in this space obviously, then that’s where you want to start.
And then of course public speaking, if you do any of that. If you get invited, you can often ask the organizers to buy a copy of your book for everybody at the conference, both Sherry and I have done that and it’s worked out really well. It gets it in more people’s hands, you give them a discount of course. But then you get up there and people get to here you and then you have a video that gets on YouTube or Vimeo and then you can promote that. There’s all these angles.
But I find selling a book a lot different than selling software because it’s so much more about your credibility, it’s about the person who wrote it, and it’s also about the message as well but it’s much less about the utility than software. Software has to solve a problem right away. People will churn out of it immediately. But a book can be an impulse purchase and it’s just about throwing a wide net and finding a lot of people who could potentially be interested. Like I said, it’s an impulse purchase. I will often hear about a book, and just as I’m hearing the podcast, jump into Audible and buy it because my Audible credits were so dang cheap.
I’m on the annual plan and I buy a bazillion books a year, very much an impulse purchase for a lot of people, especially if it’s a $20, $25 book. But the advice I would give is figure out how you’re gonna couch or position your book so that it’s different than everything else. Because when I hear the title, which again is Startup Blueprint: Seven Skills For Founders, Leaders and Builders, it sounds like a lot of other books, it sounds somewhat generic, it’s not super inspiring to me, personally. I probably wouldn’t buy it based in the title alone. You’re gonna have to figure out how do I further differentiate it from all the other books that are talking about the same topics.
An example is my first book came out 2010, it’s called Start Small, Stay Small: A Developer’s Guide to Launching a Startup. I had a couple of advantages. I had an audience of a bunch of developers who a lot were into products. I called it Start Small, Stay Small which was interesting title for a startup book because no one ever talks about staying small. It was like that’s curious. I really niched it down; A Developer’s Guide to Launching a Startup. I actually got a bunch of people telling me, “This isn’t just for developers, anyone can use this.” I said, “I know, but I really wanted, if you were a developer, to just basically be a no brainer purchase for you.” That’s what happened, and the book has done very well.
I’m trying to think what the most recent numbers are, it’s probably sold maybe 12,000 copies at between $20 and $35 a piece. Some of that’s been on Amazon, but yeah, hundreds of thousands of dollars literally I’ve made from that book. That was never the intent but it definitely did very well and I think part of that was because I had this small audience. This was before Micro Conf, it was I believe before the podcast or maybe right at the same time as the podcast was coming out. It was before a lot of this stuff.
I was really just a blogger and a guy who was making a full time living off of these small products and that was about it. It wasn’t like I had the reach or the network or anything that I have today and yet this book just kept selling. I think it also helped, it was a good book. It was well written, I put everything I had into it. I was super prescriptive and super detailed. It wasn’t like it was just a pure marketing thing, there was also a virtuous cycle of word of mouth that helped it continue to spread and sell over the years.
Good question, Robert, I appreciate it. I hope those thoughts are helpful.
I think that wraps this show. If you have a question for us, call our voicemail at 888-801-9690. You can also email an mp3 file or any type of audio file really to us at questions@stratupsfortherestofus.com, audio questions go to the top of the stack almost always, answer those first, but we do of course accept text questions as well via email. 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 and visit startupsfortherestofus.com for a full transcript of each episode. Thanks for listening, we’ll see you next time.
Welcome to Startups For The Rest Of Us, the podcast that helps developers, designers, and entrepreneurs be awesome at building, launching, and growing software products. Whether you’ve built your first product or you’re just thinking about it. I’m Rob, and Mike has no power for the past day or two. He has no internet, and I think a storm came through and knocked out a bunch of power. He won’t have it back he said at the earliest til midnight tonight. I jump into a car with my son, my 11 year old. We are heading to Lake Geneva, Wisconsin for Gary Con in about two hours. There was no overlap.
Mike emailed me and let me know he wasn’t able to make it and so my goal was to find a guest this morning. I emailed three or four people short notice and no one is able to show up. Here I am, we ship every week, every Tuesday morning an episode comes out.
I dug into our listener question bag and we were down to one listener question last week, we’re up to eight or nine this week, which is great. I enjoy these episodes when we answer listener questions. We’ve been doing them a lot more lately. What I’ve noticed is it feels like there’s a lot more listener participation and it also feels like we’re keeping up with topics that are not just coming out of our heads.
These are really questions and topics that you, the listener, are thinking about. It feels like I enjoy these episodes because I feel like they’re as relevant as we can be to the moment of what you’re thinking about and what you’re launching as a listener base. We are here to share our experiences, to hope you avoid the same mistakes we’ve made. Also, to weigh in on questions that you have as you’re growing, building, launching your startup.
Let’s dive into our first question. It’s from [Dylan Dee 00:02:10] and it’s about whether he can use advertising as a SaaS revenue model. He says, “My company is Dunwich Technologies, it’s a healthcare focused consultancy. We’re developing a SaaS app to help patients better understand their confusing medical bills. I see the value in one off uses, doesn’t feel like an app that could garner much daily activity or many daily active users. It’s more like an every so often use. This coupled with not wanting to charge for the app leaves me with few revenue options. Would medical/pharma ads on this app be the only or the best way to monetize it in your opinion?”
My opinion is this will not work at all. Because if you don’t have a lot of daily actives, then ad based revenue models are gonna bring in pennies for you. I would be shocked if you have people logging in once a month or once every other month. Let’s say you had 100,00 people using the app and they only log in once a month, you’re gonna make hundreds of dollar. It is catastrophically low, the ad rates are just very low these days. You look at a company like Facebook or Twitter, Google, and the only reason that ads work for them is because they have so many people constantly using the app.
If you’re going direct to consumer and you don’t think you can charge for it or don’t want to charge for it, I would think of this as more of a lead gen thing. Can it generate leads? Can you build up a free customer based and generate leads for your consultancy? Or, can it generate leads for another SaaS app that you may want to charge for, or a video course–I’m just throwing things out.
Obviously, you may not want to create a video course, you get the idea. If you’re gonna build something that truly is freemium but there is no ‘mium’ to it, there’s no premium aspect because you’re not gonna upsell. But actually, that is another thing you can think about is to launch this. See what happens, see if there’s any uptick. If you get 10,000 free users in there asking for more things, you could then consider going freemium and having a paid tier on top of this. Even if it does just a $5 or $10 a month thing.
It’s really hard to do B2C SaaS, it’s not done very often. If you look at even Dropbox, they are trying to pivot into the enterprise because that’s where more money is and the lower churn and all the stuff. Box.net kind of beat them to the punch on that. I think that Dropbox was conceived as a B2C company but if they really want to maximize the valuation frankly, they want to get into the enterprise because enterprise customers have higher lifetime values. And if you look at the stock market in public or even the private markets, companies serving mid market and enterprise, and even SMBs are valued higher than the same amount of revenue serving consumers because that revenue tends to be more volatile.
All that to say, I don’t think you have any chance of making any money that’s gonna move the needle using an advertising model. I would say if you’re gonna build it, if you really want to, give the thing away, see what happens, see if it becomes lead gen. If nobody uses it, then that’s fine too. At least you took your shot.
Our next question is an audio question. It’s about a WordPress Plugin company, whether they should offer a SaaS offering.
“Hey Rob and Mike. I love the show. My name is Kyle, thanks for taking my question. I work for a small WordPress Plugin company. We’re pretty well established and doing just fine, but looking to grow and take on some new exciting project. I have some ideas that I wanted to get your input on.
Basically, I want to see if introducing a small SaaS offering might make sense for our business? Obviously, we distribute our WordPress Plugin, that’s our business right now. Our customers are mostly in ecommerce but I was in the interest of helping our customers succeed and solve real problems that they have. Also becoming as indispensable to them as we can be while at the same time introducing new streams of revenue for our business.
I was wondering if maybe we should consider adding a SaaS offering which we make available only initially to our existing users. Not something that we market to our broad audience, but something that we just silently roll out to users of our plugins already. I’m thinking this could be something very simple, some tool like helping them with their email delivery or file storage, data backups, staging environments, remote site management, reporting businesses sites, something like that, I don’t know. We can make a simple tool, put it in front of existing users and say, ‘Click here to take advantage of this extra monthly tool.’
My questions are, how do you feel about the idea of creating some simple, light MVP simple SaaS product? Initially making it only available to current users of our plugin. Do you have any opinions about the type of SaaS product which would be the best for us to choose if so? Something simple yet still useful to our customers for mostly running ecommerce sites. Thanks so much and I look forward to meeting both of you this year at Micro Conf, thanks.”
This is a great question. I think a lot of WordPress Plugin vendors probably think about this because the appeal of having monthly recurring revenue versus the potential spikiness of WordPress Plugin in the one time sales, it’s appealing. SaaS and subscription revenue is the golden ticket that everyone is looking for.
I would say that just to start with, a, I think this is a great idea. I’m all for it. I think if you wanted to tip toe into it, you should definitely do it. I would say that when I talk to folks who do WordPress or do one time sales, they’re always talking about launching a SaaS. When I talk to people who have SaaS apps, so many of them are jealous of these one time sale products because those product price points tend to be higher.
You might sell a WordPress Plugin for $40 to $200 and you get that nice pop right off the bat. If you sell one customer, you make $200 that month. Whereas if you have a lightweight SaaS, you might make $10 that month from the customer and you gotta keep them around and you’re constantly working to do that to retain them. I know that with DotNetInvoice, which was an invoicing software I owned years ago, it was $300 for the product, for a developer to buy it and use it.
We only sold 8-15 copies a month. You think about that, you think about let’s just say 10, you think about making 10 new SaaS sign ups that stick around and become customers and that is catastrophic. Unless you’re very, very expensive, in the enterprise. But just the normal, let’s say you’re $20, $30, $40 a month, that’s slow growth. It’s gonna be agonizing. Whereas if we sold 10 of DotNetInvoice, it was $3,000 a month. At the time, I was looking to make a car payment or make a house payment and I was doing consulting. This was just a little side project that I didn’t spend a ton of time on. That dollar amount and getting all the lifetime value upfront from your customers, there is some appeal to that.
I would say don’t look that [inaudible 00:09:17]. Do realize that the couple beauties of WordPress are that you do get all the lifetime value upfront and that you have that built-in distribution channel of the WordPress repo, and that also ranks high in Google which then can bring people to your WordPress page and get that free download. With all that said, when I talked to a lot of WordPress folks who have plugins, are making some money, they are always thinking of how to get into SaaS, and I don’t think that’s a bad thing. A, I think it’s great. SaaS is more complicated, it levels you up. There’s more to learn, it is that recurring revenue that you’re looking for.
Number one, I think yes, you should give this a shot. Number two, I think you have an advantage because you already have paying customers. I have no idea about this business if you have a thousand people who’ve purchased it or if you have ten thousand, but that is a great built in audience right there to start a SaaS from.
I’ve talked on the podcast and at MicroCon a couple of years ago about what I believe are the only four true competitive advantages in SaaS. It’s who you know, it’s your network. It’s who knows you, it’s your audience, that includes customers. And it’s being early to a space and being a growth hacker, someone who knows how to think through methodically and really grow anything.
This is a case where you already have an existing audience of customers, you do have an advantage over someone starting from scratch. You have customers who probably trust you and like you. If you build something with them in mind, you should be able to have a pretty good strat to your business.
In addition, you probably have a bunch of free users and I know they won’t convert as well but that should be a number that’s 10 or even 100 times the number of people who’ve actually paid you and so you do have some reach there. That’s the plus side.
The negative side is you building a SaaS is gonna take a lot more time than building a WordPress Plugin in general. There’s so much more, there’s the hosting and the infrastructure and uptime and all the stuff that you don’t have to deal with. It is gonna be a big learning experience. I wouldn’t want you to think just because you’ve built software, you’ve built products and you’ve sold it, you definitely have learned a lot but SaaS is going to be that next level up in terms of complexity.
In my opinion, if I were you, especially in the ecommerce space, I would start talking to my customers, you already have them. You can have a few ideas and I think in a perfect world you might have three of four ideas that you start running by customers and saying which one of these would you absolutely, no doubt, would sign up for tomorrow. Take that short list and run it by, I’m sure you know a bunch of them personally, and then start emailing a hundred of your customers at a time even if you don’t know them and being just like, “Hey we’re considering branching into this, would you buy it?” I think you’re gonna get pretty good feedback form that pretty quickly.
That’s how I would approach it, I think, asking my opinion, you’ve asked my opinion about what kind of app you should build, I have no idea because I don’t know. I don’t know your customer base or what you’re currently serving. I think that the best WordPress to SaaS progressions are things like Opt-In Monster where it was just a WordPress Plugin and then they just launched basically the same thing as the SaaS app. It was subscription, they already had the features that they knew that was killer, they had experience in it. They literally just turned the WordPress Plugin into a recurring subscription.
If you’re not on WordPress, you can still use it but you pay the monthly. Craig Hewitt is doing this with his WordPress Plugin Seriously Simple Hosting, and then it’s Castos now. Moving from this WordPress space and just building a SaaS out of it, I think that’s a good way to go because you already have experience with that. You already have inbound interest, folks finding you through the WordPress repo so you do have that traffic source and distribution channel.
Again, I think if you want to get in this and get into the recurring game, I think it’s a good idea and I do think you have some advantages given your current business. Thanks for the question.
Our next question is from Alex Baxter. He says, “Love the podcast, big fan. I’m attempting to bootstrap a startup in the job site space.” A job website, a two-sided marketplace. “As I begin to look for companies to post jobs to the site, would you suggest allowing companies to post jobs for free to get the initial supply of jobs up for candidates to view then worry about monthly fees later, or trying to charge from the get go? I’m leaning towards free but I wanted your thoughts.”
The reason I like this question is because it’s the classic two sided marketplace. Whenever I talk to anyone about a two-sided marketplace, I say basically the same thing. You’re gonna have to figure out which side you need to get first. In this case, you’re not gonna have any job seekers come to the site if it has no jobs. You have to get the jobs up first.
Yes, I would beg, borrow, and steal to get jobs on this site. I’ve seen new job sites launched and they’ll go and scrape Monster, Indeed, Hot Jobs and all these other things in order to populate their jobs and start form there and then spin out. I’m not saying you should or shouldn’t do that but it’s a way to think about it. There are jobs postings out there that you would be able to populate on your site and it’s additional distribution for them.
In terms of offering for free to employers, I probably would, because you have no traffic. You really can’t charge them because you have no job seekers yet. In my opinion, it’s probably a, “Hey, this is going to be free for the first three months or six months or until we have 10,000 uniques a month, or until every job receives 50 views per month.” There’s something that just needs to trigger that they need to start paying you. Because you don’t want to get a bunch of your best employers and just be like, “Yep, this side is free to post,” because that’s not a business perpetually.
You have to take an approach that long term you’re not comping your best customers. That’s why it kills me, I‘ve seen people pretty often do this with SaaS where they get this launch list or they get 5 or 10 interested customers and they say, “Yeah, for your feedback, I’m just going to comp you lifetime.” I think to myself no, these are your first 10 people. You can give them a discount, you can comp them for six months, give a discount for the first year. You can do that because they are giving you effort but also providing them a ton of value with the software.
If they’re willing to sit and work for beta software with you, then they probably have a pain point that you’re also helping with. Don’t do that would be my advice. Don’t cut that revenue off at the knees, especially in the early days when you need it most.
For this, I would definitely consider just cold outbound outreach. I’m guessing this is probably a vertical and you probably know all the companies in that vertical and that would be cold emails, cold phone calls to basically just start with like, “Hey, I see jobs on your site. Can I repost these here? Do you give me permission?”
Technically, I got to be honest, I don’t know if you even need permission legally. Whether it’s an ethical thing. You’re providing them with more distribution, you’re republishing jobs, but do they have a copyright to the job posting? They may. You may want to check with them first. You’re gonna have to talk to a lawyer, just do your research on that, but that’s what I would do is if they already have jobs posted in their own site, I would look to just be like I will do this for free for the first three months since we’re getting started up and I will just pull all your jobs in, are you cool with that? Try to make it as easy as possible. I would either a scraper, an importer, hire a VA, I would do something that is able to pull in those jobs so these folks are not having to do the work and it’s just a simple and easy yes.
And then, your results are gonna make or break whether they want to pay you. That’s a cool and a stressful situation to be in. I think back to I believe it was TripAdvisor in their early days. Their big game is building all these SEO pages. They’ll have a destination and then they’ll have all the rankings and then they get all the search engine traffic. They were trying to monetize and they went to cut deals with travel ticketers, airlines, hotels, all of this stuff. They basically said, “Buzz off, we don‘t care.”
TripAdvisor already had a bunch of traffic, they turned on this [inaudible 00:17:22] to some of these ticketers, and I don’t know if it was airlines or hotels or just people selling tickets but whatever it is, people selling the things that they were talking about on TripAdvisor. They turned on this [inaudible 00:17:33] and just started sending a bunch of traffic, they didn’t charge for it and they didn’t get a kickback, they didn’t get a commission, but then they turned it off after two to four weeks. At that point, the people selling tickets said, “Wait a minute, what did you just do?” They said, “We turned the traffic off.” They said, “What do we need to do to get that turned back on?” That’s your conversation.
That’s where you start. You said, “Well, we’re gonna charge you. You need to give us a cut of the ticket sales.” That’s what you’re going to be, that’s the situation you’re gonna be in here is thinking about if you get these job for free for three months and no one applies to your site, they’re not gonna pay you. But if they get fantastic talent, it doesn’t need to be a lot, I’ve used a few job sites where I only got three or four applicants but they were all top notch because it was just a really small niche and I continued using them after that. Very good question, I appreciate that Alex and I hope it helps.
Our next question comes from Robert Andrews. He says, “I’m a long time tech journalist and editor turned content consultant. I’ve written a book it’s called Startup Blueprint: Seven Skills For Founders, Leaders and Builders. It was a bit of an experiment in discovering those skills, distilling them and frankly trying to make my first product. Think it turned out great. I have some good reviews but I’d love to get feedback particularly on the marketing strategy. After spending so long witting the book, I did almost nothing to get it in people’s hands. It’s the proverbial tree which no one heard falling in the forest.
My current approach is to offer a free sample chapter in return for an email triggering email sequence and weekly insights from the book as well as links to purchase,” which I think is a great idea. “Built out the campaign in Drip, put the sign up form on the site, but it has no traffic. I thought of driving sign-ups with Facebook and LinkedIn lead ads but I’m not sure these can be cost effective enough to market product like a book. Any thoughts? Appreciate it.”
This is a good question. I think, as Robert alluded to, this is somewhat of a common thing. Authors don’t tend to think about the marketing side of it. If you were to do this “right”, then you would be doing pre launch. You’d build a prelaunch list. If you listen to ZenFounder, you heard Sherry and I talking about our book for the past six months when we started writing it. You can even go so far–when Brennan Dunn works on a project, he’s actively sharing pieces of it on Twitter, on his blog, to his email list, and just build anticipation over time. That’s what I did when I wrote my first book back in 2010. I was sharing pieces of it getting feedback and that’s really the way to do it because it engages people and then by the time you get there it’s a no brainer for someone to buy it.
If you haven’t done that, then, yeah you are starting from a cold start and especially in this space, there’s so many people with the startup message and the entrepreneurial message. It is hard to stand out. I think Facebook and LinkedIn ads I do not believe will work just because of the cost. Typically, you need LTV of 150 and up to work but you know what? This is the learning experience.
You’ve said it, I totally, personally, would run some Facebook and LinkedIn ads just to see what it feels like. Maybe your conversion rate on a book because it’s so cheap will be way higher than the software that I’ve tried to sell using Facebook and LinkedIn ads. There’s a chance it will work, you can find a small subset of people or some some audience that will be willing to buy it. Even if you only breakeven, part of this is just getting the reach out there. Because every customer who buys from you, now they’re part of your audience. You have their email address and I think that’s a great way to do it.
I think another way is of course, I’ve talked about this a lot, is a podcast tour. If you have no name or no reach, then it is just gonna be cold emails to podcasts, you’re going to have to figure out what the story is because it’s not, “I just wrote a book. Can I come and talk about it on your show?” Because you’re gonna get zero yeses for that. You have to figure out what the angle is for that particular show and why that show’s audience would really want to hear about one of the concepts from your book. If you have any type of network in this space obviously, then that’s where you want to start.
And then of course public speaking, if you do any of that. If you get invited, you can often ask the organizers to buy a copy of your book for everybody at the conference, both Sherry and I have done that and it’s worked out really well. It gets it in more people’s hands, you give them a discount of course. But then you get up there and people get to here you and then you have a video that gets on YouTube or Vimeo and then you can promote that. There’s all these angles.
But I find selling a book a lot different than selling software because it’s so much more about your credibility, it’s about the person who wrote it, and it’s also about the message as well but it’s much less about the utility than software. Software has to solve a problem right away. People will churn out of it immediately. But a book can be an impulse purchase and it’s just about throwing a wide net and finding a lot of people who could potentially be interested. Like I said, it’s an impulse purchase. I will often hear about a book, and just as I’m hearing the podcast, jump into Audible and buy it because my Audible credits were so dang cheap.
I’m on the annual plan and I buy a bazillion books a year, very much an impulse purchase for a lot of people, especially if it’s a $20, $25 book. But the advice I would give is figure out how you’re gonna couch or position your book so that it’s different than everything else. Because when I hear the title, which again is Startup Blueprint: Seven Skills For Founders, Leaders and Builders, it sounds like a lot of other books, it sounds somewhat generic, it’s not super inspiring to me, personally. I probably wouldn’t buy it based in the title alone. You’re gonna have to figure out how do I further differentiate it from all the other books that are talking about the same topics.
An example is my first book came out 2010, it’s called Start Small, Stay Small: A Developer’s Guide to Launching a Startup. I had a couple of advantages. I had an audience of a bunch of developers who a lot were into products. I called it Start Small, Stay Small which was interesting title for a startup book because no one ever talks about staying small. It was like that’s curious. I really niched it down; A Developer’s Guide to Launching a Startup. I actually got a bunch of people telling me, “This isn’t just for developers, anyone can use this.” I said, “I know, but I really wanted, if you were a developer, to just basically be a no brainer purchase for you.” That’s what happened, and the book has done very well.
I’m trying to think what the most recent numbers are, it’s probably sold maybe 12,000 copies at between $20 and $35 a piece. Some of that’s been on Amazon, but yeah, hundreds of thousands of dollars literally I’ve made from that book. That was never the intent but it definitely did very well and I think part of that was because I had this small audience. This was before Micro Conf, it was I believe before the podcast or maybe right at the same time as the podcast was coming out. It was before a lot of this stuff.
I was really just a blogger and a guy who was making a full time living off of these small products and that was about it. It wasn’t like I had the reach or the network or anything that I have today and yet this book just kept selling. I think it also helped, it was a good book. It was well written, I put everything I had into it. I was super prescriptive and super detailed. It wasn’t like it was just a pure marketing thing, there was also a virtuous cycle of word of mouth that helped it continue to spread and sell over the years.
Good question, Robert, I appreciate it. I hope those thoughts are helpful.
I think that wraps this show. If you have a question for us, call our voicemail at 888-801-9690. You can also email an mp3 file or any type of audio file really to us at questions@stratupsfortherestofus.com, audio questions go to the top of the stack almost always, answer those first, but we do of course accept text questions as well via email. 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 and visit startupsfortherestofus.com for a full transcript of each episode. Thanks for listening, we’ll see you next time.
Episode 382 | Fixing Onboarding, Marketing a Low LTV Product, and More Listener Questions
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Show Notes
In this episode of Startups For The Rest Of Us, Rob and Mike answer a number of listener questions, topics include fixing onboarding, marketing a low LTV product, and the legality of cold email.
Items mentioned in this episode:
Mike: In this episode of Startups For The Rest Of Us, Mike and I talked about how to fix your onboarding, marketing the product with a low lifetime value, and more listener questions. This is Startups For The Rest Of Us episode 382.
Welcome to Startups For The Rest Of Us, the podcast that helps developers, designers, and entrepreneurs be awesome at building, launching and growing software products, whether you’ve built your first product or you’re just thinking about it. I’m Mike.
-: And I’m Rob, I guess. And I’m not Mike.
Rob: That’s what Sherry said when she was on the show, “And I’m not Mike.” What’s going on this week, man?
Mike: I just pushed the new Bluetick website live this week. That’s finally out there, they were out, I think, Monday night. Just been making some minor tweaks here and there just to get the images all straightened out and smooth out some other rough edges.
My main focus was just getting the design itself in place and then the copy along with the new updated theme because it’s all built on WordPress. Now that that’s stuff’s in place, I actually have to leave in four or five hours to go to FemtoConf and then once I get back, then I’ll probably finish off the rest of the little minor things that need to be taken care of and just make sure all my plugins are installed and all the analytics are working and then from there just start marketing.
Rob: The site looks great, it looks really nice. It’s like ten times better than what you had up there. All the way from the look, to the images, to just the verbiage and then what you have there. Bravo on that. Can I give you two small critiques? I’m sure these are behind on your list. You have a testimonial on the home page which I think is great.
Mike: Actually those are gonna be swapped out.
Rob: Cool, you got multiple, but put big old quotes around it. There’s something about seeing quotes around it. I know there’s Justin’s face there and then there’s a testimonial to the right of it but without the quotes, it’s like there’s just something there. I really like to call out large quotes because then people know the guy is saying that. It’s a little thing that I see in a lot of sites but I think there’s some impact.
Mike: Yeah, I’ll definitely do that. What’s the next one?
Rob: The other one is, you know what, this one isn’t actually a critique. You have one sentence description at the bottom of the page in the footer about Bluetick and it says, “Bluetick relieves the soul deadening drudgery of email follow up for founders, overworked sales executives, and anyone who’s ever lost a perfectly good lead to the email blackhole.” That’s a really well-written thing. Why does it say FIP? What’s FIP mean?
Mike: I don’t know, actually I think that’s gotta be RIP.
Rob: There’s just a little typo there. I don’t love your logo because it took me a while to figure out what it is but it looks like it’s a dog eating an envelope or carrying an envelope, is that right?
Mike: Yeah, it’s carrying an envelope.
Rob: I’m sure it looks better when it’s big but given the size on your site right now. Listeners, you should go to bluetick.io and check all this out and see if you agree with me or what else we can figure out. I’m sure changing your logo is like priority 942 on your list right now.
Mike: Yeah. The only reason I even had the logo done was because before it was just text and I wanted to have something up there so that people could associate the logo with the text itself because there’s familiarity that people get with certain text fonts especially when they go with a particular logo but I’m gonna be using that logo inside of some of the emails and stuff that are being sent out. I just want that familiarity to at least be there.
It wasn’t necessarily important, it was just like okay, if I’m doing a step up, the previous logo was literally a stock image that was just black and white of a dog’s face and it was just not very relevant, I’ll say.
Rob: I would think if you could somehow simplify just the dog’s face, turn it into a line drawing or something. Again, I realized it’s hard because you can’t do it yourself, you’re gonna have to hire somebody. I don’t think this is a deal breaker, I don’t think people are not gonna sign up for the app because of that. It’s just something that every time I come to the site I notice it and I’m like it’s a little busy.
Mike: This is gonna turn into a website tear down episode.
Rob: It’s gonna be the whole episode. These are very minor things. There are no typos on the page, the copy is good, personal touch at scale for all your follow up emails, that’s your headline. It’s really well-written. Obviously you could split test against something but nothing comes to mind as like boy, this copy is really jacked up or anything. It looks good.
The only two, again these are minor things, your Drip widget popped up on me after maybe 5 to 10 seconds. I was in the middle of reading your headline or the subheading and the thing popped up. I would probably push that out to 30 seconds, you have quite a bit of [inaudible 00:05:05] on the page, maybe even 45 seconds. Just give people a bit of time to read a little more.
Last thing is, your title tag on your home page, it says, “Home-Bluetick.” I know you’re not doubling down on SEO right now but really, Google has probably indexed you already. You may wanna start that with something, I don’t know what keyword you’re gonna be targeting or keywords but whether it’s email follow up or whatever generic phrase you would love to rank number one in Google, at least have that somewhere in there, probably towards the front.
Again, I wouldn’t keyword stuff but Home-Bluetick isn’t gonna get you much. You don’t want people to find you for the word home. People are gonna find you for the word Bluetick. Neither those really need to be there, although I’d probably still have Bluetick in there somewhere. That’s about it, man.
Mike: All of those are great suggestions. Some of them, like you said, the typo, I knew that I had to get to that but I just hadn’t gotten to it. I feel like extending out the Drip widget a little bit so that it gives people more time. All the title tags and stuff like that, I have not even looked at any of those yet. That’s on the list of things to do when I get back.
Rob: You have some art on the tour page, that’s very cartooning. Those look really cool, I like the feel of that. It’s very professional feel.
Mike: The designer who did the website, he came up with those illustrations. We went back and forth on a couple of different design ideas that he had and those are the ones that came out of it.
Rob: Very cool, man. Good luck. I’m interested to hear how it impacts conversions and all that kind of stuff.
Mike: The main focus of doing all of this stuff was just to give the website a much better feel to it so that when somebody either came to the website itself or was directed to it because of a referral, it doesn’t look like something that they would’ve just clicked the back button and said, “No, I’m not even gonna give this a chance.” I did hear that as feedback from people where I recommend it to so and so they told me that if I had not recommended it to them, they wouldn’t have even given a second thought.
It’s really to just overcome that as a primary objection. I can do a demo for somebody or a webinar and I could sell them on it and say, “Yes, this is what the product does.” By showing them inside the product and what it can do for them and solve their problems, yes it’s fine. But a completely cold lead who comes to the website has no idea and they’re not gonna give it a chance, that’s really what it is. The bar for something like a SaaS product is much higher than something that the old website could even overcome.
Rob: The bar is much higher than it was five or ten years ago as well. I think you made a good call here. Doubling down on this, you’re at the point where you’re starting to scale getting more trials coming through the websites, now is the time to do that. If you spent much time on this when you’re in customer development, it would’ve been a waste of time. I think it was a good use of time and money.
I wanted to talk a little bit about MicroConf, it’s coming up in April, Starter Edition. We still have tickets left and we have some really good speakers this year. We have Mary Pullen who’s talking about her first year of SaaS bootstrapping. We have Alli Blum talking about copywriting and onboarding emails, she’s been on the show. You’re speaking, Justin Jackson, Ben Orenstein, Courtland Allen from Indie Hackers, Mojca Mars about Facebook Ads, really solid lineup this year.
If you’re at all interested in hanging out with 100-250 folks who are all the way from idea to making a full time living from their business, head over to microconf.com, click on Starter and the tickets are relatively inexpensive compared to most conferences and we do still have some left. We’d love to see you there.
The other thing is I’m driving to Lake Geneva, Wisconsin next Thursday or I guess it’s two days after this will air to attend Gary Con, have you heard of that?
Mike: I have not. Is that related to Gary Gygax?
Rob: Yes, Gary Gygax was the creator of Dungeons and Dragons. He died in I think it was 2010, 2012. Basically friends and family just got together and played a bunch of games. It’s like there’s table top games, there’s card games, and RPGs and miniatures and the war games and all that kind of stuff. It was like 20 or 30 people the first year and they jokingly called it Gary Con in his honor. The next year, they sold a few tickets and they had 100 people and it just turned into this thing.
I went last year, it’s kinda neat being in the midwest. I’ve never gone because I was never gonna fly from California out to Lake Geneva, Wisconsin but being in the midwest, it’s like a four or five hour drive. Last year I was kinda nervous about going, my son and I, we obviously love and play these games but we’re not sophisticated gamers, we’re just playing for fun and there are about 1200 people there. It was a blast, man. It was so much fun.
People are really nice and welcoming. I’d come up with my ten year old son and I was like, “Hey, we’ve never played this.” They’re like, “No problem, we have a character for you, here’s how you do it.” They were just super helpful. Anyways, I’m really looking forward to that. If anybody happens to listen to this and be there, please drop me a line. We’d love to connect with you but if not, I’ll certainly report back about the nerdery that’s gonna take place in Lake Geneva next week.
Mike: That’s awesome. I’ve been to a couple of gaming conventions like that, there was one in Buffalo, New York that I went to. It’s probably 10 or 12 years ago. It’s interesting because there was a guy there who had a role playing game that he was trying to launch and trying to get funding for but he was also still doing play testing for it. There was a room of 25 of us, he basically threw us into this game. I think the game was called monoxide amazon or something like that.
The idea was you’re in this world where you just basically have to run away from everything, everything is out to kill you. Half the people died in 10 or 15 minutes or something like that. It was like an hour long session but out of all of us, I think there were only five or six of us that made it out alive.
Rob: That’s cool. That’s the neat part. Last year the same thing happened, there were several people there who were trying to get their games on Kickstarter or going to put them on but they were doing play testing. My son actually played that Tower Defense game board game that he enjoyed a lot. The convention itself, it is four days.
We’re only going for three days of it but it’s not just some eight hour session, we’ll probably game as much as we can, eight to twelve hours a day, we’ve already signed up for tables in advance and then we’re also wandering around. There’s so much cool stuff to buy too, it’s really bad. I need to limit my spending but I get overwhelmed how much cool stuff people bring. It’s a great time to buy dice and miniatures and all kinds of geeky stuff.
Mike: Cool. What are we talking about this week?
Rob: We have a few listener questions. Actually, by the end of this episode, we will have zero listener questions in the cue. I don’t know if it’s woohoo or not. We’re gonna have to come up with some content next week. If you do have questions for us, please, email them to us at questions@startupsfortherestofus.com or certainly call our voicemail number which we read at the end of every show.
Our first question is from Tim Win. He has a couple questions in the same email. His first question, he says, “I was wondering, for a B2B Saas targeting specific niche market, what will be a good amount of traffic I should try to generate to get meaningful feedback?” Aside from it depends, do you have thoughts on this? Because it does depend, that’s a very general answer. Let’s weigh it on, I may have some thoughts.
Mike: I think when you ask a question like this, what you’re really trying to get out is the amount of feedback that I’m getting good enough in relation to what other people would get or are you getting the feedback that you need to make a decision. I think that’s how I would approach it to figure out whether or not you’re getting enough traffic.
You have to decide on what your KPI for that website is and how you’re going to be gathering information from people. Let’s say that you use Hotjar and you put a poll on your website and you get 100 or 500 people to it and you get 3 people to answer the poll, that’s not a good percentage but 3 people out of 500 visitors is not going to help you in any way, shape, or form. Even just adding once answer is gonna skew things in such a direction that it’s just not helpful.
I think I would look at it in terms of how much feedback you’re getting versus how many people are visiting. Also, recognize that when you’re looking at the traffic stats for a particular website, it’s very easy to misinterpret bots coming to the website to just crawl it versus actual visitors who were there for purpose or came from a particular search term or were directed from an email or another website.
Rob: If you’re using Google Analytics, though, I don’t think it picks up bots, I’m pretty sure it does not, it’s only if you look at raw server logs, just a caveat in there.
Mike: But it is hard to tell when you’re looking at that because you do see on the server logs, you’ll get 20 or 30 visits a day. I’m not convinced that Google accurately filters out all the robots that it’s supposed to.
Rob: Really? Because it’s JavaScript. Typically a bot is like a crawler, it’s a Python Script that’s just doing something. It shouldn’t “execute” JavaScript. You need to execute JavaScript to have Google Analytics track you. I know that Google’s crawler does execute some JavaScript, there are stuff, it’s possible but my guess is that most bots are not executing the Google Analytics.
I’m guessing they would exclude it if they could. They’re pretty smart about that. The point is if you’re not using Google Analytics and you’re using your logs, they could be in there.
Mike: That’s true. With this particular question, what you’re really trying to get out is what is the information that you’re trying to retrieve from people and what feedback is it that you want. Do you want conversations? Do you want them to comment on something? Do you want to get them on a phone call? What is the KPI that you’re trying to push people towards? Are they doing it?
I don’t think it’s a matter of trying to measure the actual traffic itself because, I think, bear minimum, you probably need at least 500 visitors a month, anything below that you’re just really not gonna be able to make a meaningful business out of it.
The other thing to consider is the fact that not every B2B SaaS product needs to have traffic coming to its website if that’s not your primary source or primary channel for marketing the product. If you’re doing outbound cold emails, for example, or if you’re sending postcards in the mail to people or you’re doing cold calling, none of those things involve people coming back to your website so there’s an implicit assumption here that the traffic that’s coming to the website is based on SEO or content marketing or something along those lines.
I would just be hesitant to say that there’s 100% correlation between website traffic versus being able to get that meaningful feedback because if you are doing cold calling, for example, you can get on a call with somebody and you can ask them questions and talk to them, get the information you need and they never hit your website at all. That’s something to keep in mind.
Rob: I think that’s probably the first point that I would make. I think that that’s something to keep in mind, is it’s not about necessarily driving a bunch of traffic to a form or to an opt-in. It depends on your business idea but boy, if you have no audience and no reach, I would probably start with some type of outbound, cold email, or maybe some ads going to a landing page or something.
There’s just no better way to get feedback because that’s his questions, it’s not how do I build a meaningful business, it’s how do I get meaningful feedback. The way you do that is you ask for it. It tends to have to be outbound. I would hang on with this concentric circle marketing I was talking about.
I would talk to my friends and colleagues and then their friends and colleagues and then their audience and then eventually you get to the cold audiences but I would start in the center with the people that you know if you truly are going for feedback.
In the early days of Drip, yes, I threw up a landing page and put some copy on there. The only reason I did that was because I was going on podcasts and people were asking me about it and I wanted somewhere to send people.
Eventually, once I knew what we were gonna build, I started doing some ads to it and I did build a list from there but that was not the way I got meaningful feedback. The way I got meaningful feedback was a bunch of warm emails to people within my network asking them, would you use this tool? Here’s a screenshot, what do you think? And then started building momentum there. I think that’s the way to think about this.
If you wanna build an actual sustainable business and you’re asking about how much traffic, DotNetInvoice, which depended on the month but between $2000 and $4000 a month, pretty consistent, sometimes it got to 5000. That site had 1000 to 1500 uniques for years. It was just a really high converting site and it was in a vertical. That’s what he’s asking about here.
He’s like, it’s a B2B SaaS, it’s in a vertical niche. You don’t need that much but you are gonna top out at some point and just stop growing. DotNetInvoice was $300 one-time purchase. Keep that in mind as well.
With 1500 people coming to your site, if you think about, let’s just throw out a 1% conversion rate to trial, you’re gonna get 15 people into trial funnel, that’s with credit card upfront. Let’s say you close 50% of those to customers which is likely, then you’re gonna have seven or eight new customer a month.
You have to ask yourself, if you charge $1000 a month, that’s probably pretty good. If you’re charging $10 a month, that’s not very good. You have to think about your price point and just think about the numbers that I threw out there and you can do backwards math and figure out how many people you need to send to figure out how fast you wanna grow.
Tom’s second question was that he seems to be getting free trial sign ups but once users get into his onboarding which is like a getting started wizard, he seems to lose them. It’s only three steps, it’s nothing too complicated, just adding their location, product service they provide, and setting a payment processor so they can take payments from their customer.
“Some seem to get to this part and never log in. Any idea why? It’s driving me crazy.” What would you do if you were in his shoes, Mike?
Mike: I was gonna say there’s no way for us to really answer why that is. I think that if I were in his shoes and I was having this particular problem, I would email those people individually who never got past that point and see if you can help them, either just walk them through it or ask them questions about what their experience was. Your best case scenario is to get them onto a call to walk them through it and do a personalized onboarding session and then watch them as they go through it so you could just use Zoom to watch over their shoulder as they go through.
The nice thing about doing that is if you do it for them, then they see it but if you let them do it because they don’t know exactly what they’re doing, they’re going to click on stuff that they shouldn’t and you’re gonna be able to recognize that and say, “Why did that person click there?” You can ask them literally on the call, “Why did you click on that? What was it that made you think that you were supposed to click on that?”
Maybe they’re getting confused about the UI, maybe they just don’t have time to log in so they never set up their account.
I think there are other questions I would also ask about like do they come into the site and get there or do they just never come in? If they’ve gone through the signup, does it take them directly over to this three-step process or do they have to get an email and then they click on the email and then they come back into the application. How is that sequence of events set up and what’s the flow look like for the end user?
It could very well be that some people, depending on their browser for example. I’ve run into this with Bluetick in certain situations where some browsers, on occasion, do not work and it had to do with a race condition inside the JavaScript code. Some things work fine and then other ones didn’t. I didn’t know that because I wasn’t monitoring exactly what browsers people were using.
Like I said, because it was a race condition, it sometimes happened but not always. You really just need to talk to them and watch over their shoulder to watch them go through that and ask those questions to find out what it is that you’re doing. If they already got through that first step, they signed up, you have their email address or at least presumably you should. Contact them and follow up with them until you get an answer as to why they didn’t go through that next step.
Maybe they realized at that point that it was going to be more to set up than they thought it was. At that point, you have to evaluate, do I put this process in place? Do I need them to do those three things all at once? Could I spread it out? Are there ways to interject that as part of them using the product without forcing them through that concrete step all upfront? Let’s say that the location, for example, could you pull that from their credit card information?
Rob: Like their IP.
Mike: Yeah, that too. It depends on how accurate you need it to be. Like time zone, you could probably pull from somebody’s browser. If you need the address, could you pull it from their credit card? That depends on whether or not you’re taking credit card upfront which sounds like it’s not because it’s free trial. Those are the places I would start.
Rob: I think that’s spot on. The one other thing I would consider is taking away self-service signup and just putting a request demo button. When they hit that, they can just book right in Calendly and set something up. If you really wanna do this well and this is what you’re focused on, the requested demo button, you could respond to that within minutes.
If you’re relatively low traffic and you really are just hacking away all day right now, try to get back to people within ten minutes of them clicking that and just get them on the phone, do a Zoom meeting and do a screen share and walk them through. It’s essentially what you said, Mike, but I’m just saying you take away the self-service signup portion.
I think that right now it’s gonna be about talking to customer sounds like you’re still in the early days. You could throw Hotjar on there and do screen recordings, you could throw Crazy Egg in there and do heat maps, you can do all that stuff but you’re never gonna find out why, you’re just gonna see what is happening. The why is obtained through having a conversation with them. I would be more hands on these early days, you don’t have to do that forever. I think you’ll certainly find out that it’s pretty valuable for your learning, for accelerating your learning in these early days.
The last question was for you, Mike. He says, “I was listening to one of the podcasts, Mike was saying bluetick.io was having usability issues he had to fix. Are you able to get into detail? Just curious as to what some of them are.” I recall you talking about one usability issue, interested in talking about that?
Mike: Sure. The main usability issue that I have addressed towards the past six months or so, they had to do with onboarding. When somebody signs up for Bluetick, one of the first things that you have to do is you have to set up your mailbox and you have to add in your username and password. If you’re using Gmail, there’s all these different settings that you have to connect. You have to have IMAPS or hostname, username, password, port number, the encryption level. You also have to have the exact same information for your SMTP server because it may not be the same.
Initially, I had a set up page where you had to set up your mailbox and there were probably a dozen different settings. What I would do is I would personalize onboarding for each person, walk them through it, watch the backend because not everybody knows what ports they’re using for their mail server. Some people are technical, some people are not, so I walk through it with them.
I got to a point where I knew that certain types of mail servers were very common, you’re using Gmail or Google Apps. I could guess what those are because it’s always gonna be imap.gmail.com and then also smtp.gmail.com but your username and password are gonna be different.
I could basically filter out a bunch of those and I was able to shorten down the page itself but in addition to that, there were still problems because if you a have two factor authentication set up or you don’t, you either have to enable less secure apps or you have to enable two factor authentication and you also have to make sure that IMAP is enabled.
Overtime, I whittled down the number of things that somebody had to do to get their mailbox set up. At some point, I transitioned to the point where if you are using Google Apps or G Suite, as I call it now, you can just click through and go through the OAuth authentication. That basically takes care of everything for you, you’re just putting your username and password in Google, click the button and boom, everything is taken care of for you.
There’s very much a progression where I slowly pulled myself out of the setup process. On day one, I didn’t necessarily know what everybody needed and I didn’t have everything coded. I pushed myself into the process to make sure that it got done.
Rob: I think that’s a great way to do it. We had several integrations in Drip that were a pain in the butt to set up. You had to go and install a WebHook and do all this and that. We’ve been going back as we’ve grown and scaled and making them all OAuth if the provider allows OAuth. We always call it V1. V1 integration was just to plugin and then V2 is to add OAuth and V3 was to make the triggers native. There were all these things and we just have the verbiage or the language that we all knew on the dev team.
You have been in your early days, it’s customer development time. You could’ve spent another three weeks in the early days making it super simple but you didn’t need to because you’re walking people through it. I guess this is technically a usability issue but it’s like a deliberate decision to move faster and then circle back and iterate. I think that’s something that people should keep in mind as you’re building your app. It doesn’t need to be the best all the time, you gotta do your best.
Do you want your code to have not a lot of croft and not have technical debt? I wouldn’t skimp on that. But when you’re moving fast, I think making a first past through and having the usability in some areas be not as ideal as maybe you’d like and you know that and you plan to come back, I think that’s a pretty good approach.
Mike: The other thing that I use specifically in this particular case which people might find useful is that I made this decision for this piece of it specifically because it was a setup piece. I knew that it was something that most customers are only ever going to do once and once it’s done, that’s the end of it. Even if it takes me 30 minutes or 45 minutes on a call to set somebody up and get that stuff connected properly, it doesn’t matter because it won’t have to be done again.
Obviously I don’t wanna be on a call with every single person for 45 minutes just to get them set up and then after that try to do some level of onboarding and customer development. If I can get that stuff taken care of later on, I basically just kicked it down the road because it was that one-time set up and it wasn’t gonna have to be done again. You can use that as a deciding factor as to where you’re going to spend your time.
I see a lot of other vendors doing this where if certain things are painful, you tend to find those things in places where the customer doesn’t have to do it very often. The one example that comes to mind is Oracle installer which for 10 to 15 years was busted. It was fundamentally broken on Windows, you literally could not install Oracle without it failing and then having to go in and fix stuff. They finally fixed it in 2012 or something like that. But for a long time, it did not work at all.
Rob: I remember that, that was crazy.
Our next question is about cold email, it’s from Greg Ristow from utheory.com. He says, “I love the show, I’ve got a startup music theory learning site which is just now at $1500 per month in revenue with very little marketing.” Congratulations, by the way. That’s a nice market to hit.
“Starting to think about email marketing strategies for reaching college music theory faculty, and high school music teachers. I’m wondering about the legality of gathering names and emails from school websites. When I look around the web, I get conflicting information on how CAN-SPAM applies.” That’s a law in the US about not spamming people. “I know in my own day job as a college music faculty member, I regularly get emails from companies who pulled my email from my school’s website. Any advice?”
Mike, I know you have a lot of thoughts on this. I’d say give a short answer and then a longer answer.
Mike: The shorter answer is that it is legal to go to somebody’s website and pull the email addresses. At that point, depending on how you email them, that’s where the piece of CAN-SPAM falls into place. It’s not about whether or not you pull the emails from the website or whether you gather their contact information, it’s really about what you do with it after the fact.
Underneath the umbrella of the CAN-SPAM Act, there’s basically three different types of emails that are sent out. There’s commercial emails, there’s transactional emails or relationship emails, and then there’s other. I’ll talk about those in a minute but most of what CAN-SPAM basically says is don’t lie to people or forge header information when you’re sending emails and try to hide what it is that you’re trying to do.
For example your from email address should actually be you or your business. Who it’s to should be that person, don’t be forging emails to people like if I were to send an email to you and I forged the header information and said that it was Bill Gates, then it starts to fall under the CAN-SPAM laws. Lying about those things, not specifying that something’s an advertisement, or line about what the subject is.
Let’s say that you say that it’s about your recent payment, and then in the body of the email you’re saying it’s a Viagra commercial or advertisement. That right there is a violation of CAN-SPAM because you’ve not said that it’s an advertisement and you’ve also lied in the subject line.
Not telling people how to opt out of future emails, that’s another one and then honoring the opt outs. A lot of those things are typically handled by an email service provider. Those are the things that you don’t typically have to worry about.
Going back to the three different categories of email that are defined here, there’s the commercial intent which basically is an advertisement of some kind. That’s really where the pieces of the CAN-SPAM Act are that you need to pay attention to. If you’re advertising a product or a service and you’re promoting it and sending emails to these people, it’s very clear that you’re trying to get them to sign up for a service, that is a commercial intent email.
If it’s a transactional email, that essentially is exemplified by things like somebody comes to your website, buy something, and then you send them a receipt. Emailing them the receipt, that’s a transactional email because they did something and then they received based on what they did.
The third one is other. This is where you get into a very, very grey area because all three of these things are all about the primary purpose of the message. What is it that that email was intended to do and what are the contents of it. If I send somebody an email that is completely unsolicited and it’s got links for them to buy my service or to come into my website and look at the product to learn more because I’m essentially pitching it to them and saying, “Hey, would you like to learn more about this? Here’s the website.” That is more of a commercial content.
If I email somebody and I say, “Hey, I’d like to talk to you about X because I’m exploring this idea.” Or, “I have a product and I’m doing some customer development.” That is not commercial because you’re not actively selling them something, there’s not an advertisement in it. It’s also not transactional. What happens is those types of emails fall under other.
I will put a blanket categorization here that says I’m not a lawyer. Just take some of this with a little bit of interpretation and a grain of salt because this isn’t legal advice. But my reading of all of these things is that that commercial content, the transactional and other, you can essentially leverage those three. Depending on what it is that you’re putting in the email, a lot of times, you can force it to fall underneath the other category which essentially says that it doesn’t need to follow these CAN-SPAM laws and regulations.
Rob: I think the TLDR on that. Again, we’re not lawyers, we can’t give legal advice but it is generally accepted practice that, yes, people do scrape emails from websites, whether they gather them by hand or whether they have a VA to do it or whether they write a script to do it. It is legal to cold email people even for commercial purposes, I receive them all the time.
I may morally or ethically consider them spam and certain people do and they say, “You’re spamming me.” Based on the legal definition, that’s not. I would give you the advice, don’t use a bulk email program, you’ll get shut down. Script that list and then import it into Drip or MailChimp or anywhere, we’ll block your account because people will mark them as spam, there’s gonna be bounces, people are not gonna open them, they’re just gonna have low engagement. Those cold emails should not be in a tool like Drip or MailChimp, they should be in a tool more like Yesware or Bluetick.
Mike: That’s correct. The interesting thing there is that the reason Drip and AWeber and MailChimp and all those others are stopping people from sending those types of emails and stopping them from importing the list and blasting them out is because what happens is that people on the receiving end of it, if they don’t like the message, they can mark it as spam. That’s not a legal definition that it was spammed, it was that that person classified as spam. What happens is that then negatively impacts the provider.
In that case, they’re protecting not only themselves but also all of the other customers that they have. Let’s say that I imported a thousand emails into Drip and I basically blast something out and then a lot of them started getting marked as spam, I am then thereby impacting the rest of Drip’s customer which obviously is a no, no. I would expect them to shut me down.
Versus if you send it out through Yesware or Bluetick or all these other things. What happens in those cases is if somebody reports to the spam, it actually goes against your own domain as opposed to somebody else’s. From my standpoint, if you’re gonna bash your own domain and you really are spamming people, and it is classified as spam, then you’re negatively affecting your own domains, not mine, not any other customers. At that point it doesn’t impact me as much.
The email service providers, the reason they’re doing it is not for legal reasons, it’s to essentially protect their current customer base and the send rates and deliverability of everything else that they’re doing.
Rob: That’s right because they shared IPs and shared sending domains. We are at time, sir. At the start of the show I said we’d get through all the questions but we did not, we have one question for future episodes. We will revisit that at some point. You wanna wrap us up for today?
Mike: Was that a deliberate lengthening of the episode to make sure that we had the one left or no?
Rob: No it wasn’t, I figured we would get to all of them, we didn’t have that many questions but obviously some of the answers were more in depth and we just ran a little long today.
Mike: If you have questions for us, you can call it into 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. Visit startupsfortherestofus.com for a full transcript of each episode. Thanks for listening. We’ll see you next time.
Welcome to Startups For The Rest Of Us, the podcast that helps developers, designers, and entrepreneurs be awesome at building, launching and growing software products, whether you’ve built your first product or you’re just thinking about it. I’m Mike.
-: And I’m Rob, I guess. And I’m not Mike.
Rob: That’s what Sherry said when she was on the show, “And I’m not Mike.” What’s going on this week, man?
Mike: I just pushed the new Bluetick website live this week. That’s finally out there, they were out, I think, Monday night. Just been making some minor tweaks here and there just to get the images all straightened out and smooth out some other rough edges.
My main focus was just getting the design itself in place and then the copy along with the new updated theme because it’s all built on WordPress. Now that that’s stuff’s in place, I actually have to leave in four or five hours to go to FemtoConf and then once I get back, then I’ll probably finish off the rest of the little minor things that need to be taken care of and just make sure all my plugins are installed and all the analytics are working and then from there just start marketing.
Rob: The site looks great, it looks really nice. It’s like ten times better than what you had up there. All the way from the look, to the images, to just the verbiage and then what you have there. Bravo on that. Can I give you two small critiques? I’m sure these are behind on your list. You have a testimonial on the home page which I think is great.
Mike: Actually those are gonna be swapped out.
Rob: Cool, you got multiple, but put big old quotes around it. There’s something about seeing quotes around it. I know there’s Justin’s face there and then there’s a testimonial to the right of it but without the quotes, it’s like there’s just something there. I really like to call out large quotes because then people know the guy is saying that. It’s a little thing that I see in a lot of sites but I think there’s some impact.
Mike: Yeah, I’ll definitely do that. What’s the next one?
Rob: The other one is, you know what, this one isn’t actually a critique. You have one sentence description at the bottom of the page in the footer about Bluetick and it says, “Bluetick relieves the soul deadening drudgery of email follow up for founders, overworked sales executives, and anyone who’s ever lost a perfectly good lead to the email blackhole.” That’s a really well-written thing. Why does it say FIP? What’s FIP mean?
Mike: I don’t know, actually I think that’s gotta be RIP.
Rob: There’s just a little typo there. I don’t love your logo because it took me a while to figure out what it is but it looks like it’s a dog eating an envelope or carrying an envelope, is that right?
Mike: Yeah, it’s carrying an envelope.
Rob: I’m sure it looks better when it’s big but given the size on your site right now. Listeners, you should go to bluetick.io and check all this out and see if you agree with me or what else we can figure out. I’m sure changing your logo is like priority 942 on your list right now.
Mike: Yeah. The only reason I even had the logo done was because before it was just text and I wanted to have something up there so that people could associate the logo with the text itself because there’s familiarity that people get with certain text fonts especially when they go with a particular logo but I’m gonna be using that logo inside of some of the emails and stuff that are being sent out. I just want that familiarity to at least be there.
It wasn’t necessarily important, it was just like okay, if I’m doing a step up, the previous logo was literally a stock image that was just black and white of a dog’s face and it was just not very relevant, I’ll say.
Rob: I would think if you could somehow simplify just the dog’s face, turn it into a line drawing or something. Again, I realized it’s hard because you can’t do it yourself, you’re gonna have to hire somebody. I don’t think this is a deal breaker, I don’t think people are not gonna sign up for the app because of that. It’s just something that every time I come to the site I notice it and I’m like it’s a little busy.
Mike: This is gonna turn into a website tear down episode.
Rob: It’s gonna be the whole episode. These are very minor things. There are no typos on the page, the copy is good, personal touch at scale for all your follow up emails, that’s your headline. It’s really well-written. Obviously you could split test against something but nothing comes to mind as like boy, this copy is really jacked up or anything. It looks good.
The only two, again these are minor things, your Drip widget popped up on me after maybe 5 to 10 seconds. I was in the middle of reading your headline or the subheading and the thing popped up. I would probably push that out to 30 seconds, you have quite a bit of [inaudible 00:05:05] on the page, maybe even 45 seconds. Just give people a bit of time to read a little more.
Last thing is, your title tag on your home page, it says, “Home-Bluetick.” I know you’re not doubling down on SEO right now but really, Google has probably indexed you already. You may wanna start that with something, I don’t know what keyword you’re gonna be targeting or keywords but whether it’s email follow up or whatever generic phrase you would love to rank number one in Google, at least have that somewhere in there, probably towards the front.
Again, I wouldn’t keyword stuff but Home-Bluetick isn’t gonna get you much. You don’t want people to find you for the word home. People are gonna find you for the word Bluetick. Neither those really need to be there, although I’d probably still have Bluetick in there somewhere. That’s about it, man.
Mike: All of those are great suggestions. Some of them, like you said, the typo, I knew that I had to get to that but I just hadn’t gotten to it. I feel like extending out the Drip widget a little bit so that it gives people more time. All the title tags and stuff like that, I have not even looked at any of those yet. That’s on the list of things to do when I get back.
Rob: You have some art on the tour page, that’s very cartooning. Those look really cool, I like the feel of that. It’s very professional feel.
Mike: The designer who did the website, he came up with those illustrations. We went back and forth on a couple of different design ideas that he had and those are the ones that came out of it.
Rob: Very cool, man. Good luck. I’m interested to hear how it impacts conversions and all that kind of stuff.
Mike: The main focus of doing all of this stuff was just to give the website a much better feel to it so that when somebody either came to the website itself or was directed to it because of a referral, it doesn’t look like something that they would’ve just clicked the back button and said, “No, I’m not even gonna give this a chance.” I did hear that as feedback from people where I recommend it to so and so they told me that if I had not recommended it to them, they wouldn’t have even given a second thought.
It’s really to just overcome that as a primary objection. I can do a demo for somebody or a webinar and I could sell them on it and say, “Yes, this is what the product does.” By showing them inside the product and what it can do for them and solve their problems, yes it’s fine. But a completely cold lead who comes to the website has no idea and they’re not gonna give it a chance, that’s really what it is. The bar for something like a SaaS product is much higher than something that the old website could even overcome.
Rob: The bar is much higher than it was five or ten years ago as well. I think you made a good call here. Doubling down on this, you’re at the point where you’re starting to scale getting more trials coming through the websites, now is the time to do that. If you spent much time on this when you’re in customer development, it would’ve been a waste of time. I think it was a good use of time and money.
I wanted to talk a little bit about MicroConf, it’s coming up in April, Starter Edition. We still have tickets left and we have some really good speakers this year. We have Mary Pullen who’s talking about her first year of SaaS bootstrapping. We have Alli Blum talking about copywriting and onboarding emails, she’s been on the show. You’re speaking, Justin Jackson, Ben Orenstein, Courtland Allen from Indie Hackers, Mojca Mars about Facebook Ads, really solid lineup this year.
If you’re at all interested in hanging out with 100-250 folks who are all the way from idea to making a full time living from their business, head over to microconf.com, click on Starter and the tickets are relatively inexpensive compared to most conferences and we do still have some left. We’d love to see you there.
The other thing is I’m driving to Lake Geneva, Wisconsin next Thursday or I guess it’s two days after this will air to attend Gary Con, have you heard of that?
Mike: I have not. Is that related to Gary Gygax?
Rob: Yes, Gary Gygax was the creator of Dungeons and Dragons. He died in I think it was 2010, 2012. Basically friends and family just got together and played a bunch of games. It’s like there’s table top games, there’s card games, and RPGs and miniatures and the war games and all that kind of stuff. It was like 20 or 30 people the first year and they jokingly called it Gary Con in his honor. The next year, they sold a few tickets and they had 100 people and it just turned into this thing.
I went last year, it’s kinda neat being in the midwest. I’ve never gone because I was never gonna fly from California out to Lake Geneva, Wisconsin but being in the midwest, it’s like a four or five hour drive. Last year I was kinda nervous about going, my son and I, we obviously love and play these games but we’re not sophisticated gamers, we’re just playing for fun and there are about 1200 people there. It was a blast, man. It was so much fun.
People are really nice and welcoming. I’d come up with my ten year old son and I was like, “Hey, we’ve never played this.” They’re like, “No problem, we have a character for you, here’s how you do it.” They were just super helpful. Anyways, I’m really looking forward to that. If anybody happens to listen to this and be there, please drop me a line. We’d love to connect with you but if not, I’ll certainly report back about the nerdery that’s gonna take place in Lake Geneva next week.
Mike: That’s awesome. I’ve been to a couple of gaming conventions like that, there was one in Buffalo, New York that I went to. It’s probably 10 or 12 years ago. It’s interesting because there was a guy there who had a role playing game that he was trying to launch and trying to get funding for but he was also still doing play testing for it. There was a room of 25 of us, he basically threw us into this game. I think the game was called monoxide amazon or something like that.
The idea was you’re in this world where you just basically have to run away from everything, everything is out to kill you. Half the people died in 10 or 15 minutes or something like that. It was like an hour long session but out of all of us, I think there were only five or six of us that made it out alive.
Rob: That’s cool. That’s the neat part. Last year the same thing happened, there were several people there who were trying to get their games on Kickstarter or going to put them on but they were doing play testing. My son actually played that Tower Defense game board game that he enjoyed a lot. The convention itself, it is four days.
We’re only going for three days of it but it’s not just some eight hour session, we’ll probably game as much as we can, eight to twelve hours a day, we’ve already signed up for tables in advance and then we’re also wandering around. There’s so much cool stuff to buy too, it’s really bad. I need to limit my spending but I get overwhelmed how much cool stuff people bring. It’s a great time to buy dice and miniatures and all kinds of geeky stuff.
Mike: Cool. What are we talking about this week?
Rob: We have a few listener questions. Actually, by the end of this episode, we will have zero listener questions in the cue. I don’t know if it’s woohoo or not. We’re gonna have to come up with some content next week. If you do have questions for us, please, email them to us at questions@startupsfortherestofus.com or certainly call our voicemail number which we read at the end of every show.
Our first question is from Tim Win. He has a couple questions in the same email. His first question, he says, “I was wondering, for a B2B Saas targeting specific niche market, what will be a good amount of traffic I should try to generate to get meaningful feedback?” Aside from it depends, do you have thoughts on this? Because it does depend, that’s a very general answer. Let’s weigh it on, I may have some thoughts.
Mike: I think when you ask a question like this, what you’re really trying to get out is the amount of feedback that I’m getting good enough in relation to what other people would get or are you getting the feedback that you need to make a decision. I think that’s how I would approach it to figure out whether or not you’re getting enough traffic.
You have to decide on what your KPI for that website is and how you’re going to be gathering information from people. Let’s say that you use Hotjar and you put a poll on your website and you get 100 or 500 people to it and you get 3 people to answer the poll, that’s not a good percentage but 3 people out of 500 visitors is not going to help you in any way, shape, or form. Even just adding once answer is gonna skew things in such a direction that it’s just not helpful.
I think I would look at it in terms of how much feedback you’re getting versus how many people are visiting. Also, recognize that when you’re looking at the traffic stats for a particular website, it’s very easy to misinterpret bots coming to the website to just crawl it versus actual visitors who were there for purpose or came from a particular search term or were directed from an email or another website.
Rob: If you’re using Google Analytics, though, I don’t think it picks up bots, I’m pretty sure it does not, it’s only if you look at raw server logs, just a caveat in there.
Mike: But it is hard to tell when you’re looking at that because you do see on the server logs, you’ll get 20 or 30 visits a day. I’m not convinced that Google accurately filters out all the robots that it’s supposed to.
Rob: Really? Because it’s JavaScript. Typically a bot is like a crawler, it’s a Python Script that’s just doing something. It shouldn’t “execute” JavaScript. You need to execute JavaScript to have Google Analytics track you. I know that Google’s crawler does execute some JavaScript, there are stuff, it’s possible but my guess is that most bots are not executing the Google Analytics.
I’m guessing they would exclude it if they could. They’re pretty smart about that. The point is if you’re not using Google Analytics and you’re using your logs, they could be in there.
Mike: That’s true. With this particular question, what you’re really trying to get out is what is the information that you’re trying to retrieve from people and what feedback is it that you want. Do you want conversations? Do you want them to comment on something? Do you want to get them on a phone call? What is the KPI that you’re trying to push people towards? Are they doing it?
I don’t think it’s a matter of trying to measure the actual traffic itself because, I think, bear minimum, you probably need at least 500 visitors a month, anything below that you’re just really not gonna be able to make a meaningful business out of it.
The other thing to consider is the fact that not every B2B SaaS product needs to have traffic coming to its website if that’s not your primary source or primary channel for marketing the product. If you’re doing outbound cold emails, for example, or if you’re sending postcards in the mail to people or you’re doing cold calling, none of those things involve people coming back to your website so there’s an implicit assumption here that the traffic that’s coming to the website is based on SEO or content marketing or something along those lines.
I would just be hesitant to say that there’s 100% correlation between website traffic versus being able to get that meaningful feedback because if you are doing cold calling, for example, you can get on a call with somebody and you can ask them questions and talk to them, get the information you need and they never hit your website at all. That’s something to keep in mind.
Rob: I think that’s probably the first point that I would make. I think that that’s something to keep in mind, is it’s not about necessarily driving a bunch of traffic to a form or to an opt-in. It depends on your business idea but boy, if you have no audience and no reach, I would probably start with some type of outbound, cold email, or maybe some ads going to a landing page or something.
There’s just no better way to get feedback because that’s his questions, it’s not how do I build a meaningful business, it’s how do I get meaningful feedback. The way you do that is you ask for it. It tends to have to be outbound. I would hang on with this concentric circle marketing I was talking about.
I would talk to my friends and colleagues and then their friends and colleagues and then their audience and then eventually you get to the cold audiences but I would start in the center with the people that you know if you truly are going for feedback.
In the early days of Drip, yes, I threw up a landing page and put some copy on there. The only reason I did that was because I was going on podcasts and people were asking me about it and I wanted somewhere to send people.
Eventually, once I knew what we were gonna build, I started doing some ads to it and I did build a list from there but that was not the way I got meaningful feedback. The way I got meaningful feedback was a bunch of warm emails to people within my network asking them, would you use this tool? Here’s a screenshot, what do you think? And then started building momentum there. I think that’s the way to think about this.
If you wanna build an actual sustainable business and you’re asking about how much traffic, DotNetInvoice, which depended on the month but between $2000 and $4000 a month, pretty consistent, sometimes it got to 5000. That site had 1000 to 1500 uniques for years. It was just a really high converting site and it was in a vertical. That’s what he’s asking about here.
He’s like, it’s a B2B SaaS, it’s in a vertical niche. You don’t need that much but you are gonna top out at some point and just stop growing. DotNetInvoice was $300 one-time purchase. Keep that in mind as well.
With 1500 people coming to your site, if you think about, let’s just throw out a 1% conversion rate to trial, you’re gonna get 15 people into trial funnel, that’s with credit card upfront. Let’s say you close 50% of those to customers which is likely, then you’re gonna have seven or eight new customer a month.
You have to ask yourself, if you charge $1000 a month, that’s probably pretty good. If you’re charging $10 a month, that’s not very good. You have to think about your price point and just think about the numbers that I threw out there and you can do backwards math and figure out how many people you need to send to figure out how fast you wanna grow.
Tom’s second question was that he seems to be getting free trial sign ups but once users get into his onboarding which is like a getting started wizard, he seems to lose them. It’s only three steps, it’s nothing too complicated, just adding their location, product service they provide, and setting a payment processor so they can take payments from their customer.
“Some seem to get to this part and never log in. Any idea why? It’s driving me crazy.” What would you do if you were in his shoes, Mike?
Mike: I was gonna say there’s no way for us to really answer why that is. I think that if I were in his shoes and I was having this particular problem, I would email those people individually who never got past that point and see if you can help them, either just walk them through it or ask them questions about what their experience was. Your best case scenario is to get them onto a call to walk them through it and do a personalized onboarding session and then watch them as they go through it so you could just use Zoom to watch over their shoulder as they go through.
The nice thing about doing that is if you do it for them, then they see it but if you let them do it because they don’t know exactly what they’re doing, they’re going to click on stuff that they shouldn’t and you’re gonna be able to recognize that and say, “Why did that person click there?” You can ask them literally on the call, “Why did you click on that? What was it that made you think that you were supposed to click on that?”
Maybe they’re getting confused about the UI, maybe they just don’t have time to log in so they never set up their account.
I think there are other questions I would also ask about like do they come into the site and get there or do they just never come in? If they’ve gone through the signup, does it take them directly over to this three-step process or do they have to get an email and then they click on the email and then they come back into the application. How is that sequence of events set up and what’s the flow look like for the end user?
It could very well be that some people, depending on their browser for example. I’ve run into this with Bluetick in certain situations where some browsers, on occasion, do not work and it had to do with a race condition inside the JavaScript code. Some things work fine and then other ones didn’t. I didn’t know that because I wasn’t monitoring exactly what browsers people were using.
Like I said, because it was a race condition, it sometimes happened but not always. You really just need to talk to them and watch over their shoulder to watch them go through that and ask those questions to find out what it is that you’re doing. If they already got through that first step, they signed up, you have their email address or at least presumably you should. Contact them and follow up with them until you get an answer as to why they didn’t go through that next step.
Maybe they realized at that point that it was going to be more to set up than they thought it was. At that point, you have to evaluate, do I put this process in place? Do I need them to do those three things all at once? Could I spread it out? Are there ways to interject that as part of them using the product without forcing them through that concrete step all upfront? Let’s say that the location, for example, could you pull that from their credit card information?
Rob: Like their IP.
Mike: Yeah, that too. It depends on how accurate you need it to be. Like time zone, you could probably pull from somebody’s browser. If you need the address, could you pull it from their credit card? That depends on whether or not you’re taking credit card upfront which sounds like it’s not because it’s free trial. Those are the places I would start.
Rob: I think that’s spot on. The one other thing I would consider is taking away self-service signup and just putting a request demo button. When they hit that, they can just book right in Calendly and set something up. If you really wanna do this well and this is what you’re focused on, the requested demo button, you could respond to that within minutes.
If you’re relatively low traffic and you really are just hacking away all day right now, try to get back to people within ten minutes of them clicking that and just get them on the phone, do a Zoom meeting and do a screen share and walk them through. It’s essentially what you said, Mike, but I’m just saying you take away the self-service signup portion.
I think that right now it’s gonna be about talking to customer sounds like you’re still in the early days. You could throw Hotjar on there and do screen recordings, you could throw Crazy Egg in there and do heat maps, you can do all that stuff but you’re never gonna find out why, you’re just gonna see what is happening. The why is obtained through having a conversation with them. I would be more hands on these early days, you don’t have to do that forever. I think you’ll certainly find out that it’s pretty valuable for your learning, for accelerating your learning in these early days.
The last question was for you, Mike. He says, “I was listening to one of the podcasts, Mike was saying bluetick.io was having usability issues he had to fix. Are you able to get into detail? Just curious as to what some of them are.” I recall you talking about one usability issue, interested in talking about that?
Mike: Sure. The main usability issue that I have addressed towards the past six months or so, they had to do with onboarding. When somebody signs up for Bluetick, one of the first things that you have to do is you have to set up your mailbox and you have to add in your username and password. If you’re using Gmail, there’s all these different settings that you have to connect. You have to have IMAPS or hostname, username, password, port number, the encryption level. You also have to have the exact same information for your SMTP server because it may not be the same.
Initially, I had a set up page where you had to set up your mailbox and there were probably a dozen different settings. What I would do is I would personalize onboarding for each person, walk them through it, watch the backend because not everybody knows what ports they’re using for their mail server. Some people are technical, some people are not, so I walk through it with them.
I got to a point where I knew that certain types of mail servers were very common, you’re using Gmail or Google Apps. I could guess what those are because it’s always gonna be imap.gmail.com and then also smtp.gmail.com but your username and password are gonna be different.
I could basically filter out a bunch of those and I was able to shorten down the page itself but in addition to that, there were still problems because if you a have two factor authentication set up or you don’t, you either have to enable less secure apps or you have to enable two factor authentication and you also have to make sure that IMAP is enabled.
Overtime, I whittled down the number of things that somebody had to do to get their mailbox set up. At some point, I transitioned to the point where if you are using Google Apps or G Suite, as I call it now, you can just click through and go through the OAuth authentication. That basically takes care of everything for you, you’re just putting your username and password in Google, click the button and boom, everything is taken care of for you.
There’s very much a progression where I slowly pulled myself out of the setup process. On day one, I didn’t necessarily know what everybody needed and I didn’t have everything coded. I pushed myself into the process to make sure that it got done.
Rob: I think that’s a great way to do it. We had several integrations in Drip that were a pain in the butt to set up. You had to go and install a WebHook and do all this and that. We’ve been going back as we’ve grown and scaled and making them all OAuth if the provider allows OAuth. We always call it V1. V1 integration was just to plugin and then V2 is to add OAuth and V3 was to make the triggers native. There were all these things and we just have the verbiage or the language that we all knew on the dev team.
You have been in your early days, it’s customer development time. You could’ve spent another three weeks in the early days making it super simple but you didn’t need to because you’re walking people through it. I guess this is technically a usability issue but it’s like a deliberate decision to move faster and then circle back and iterate. I think that’s something that people should keep in mind as you’re building your app. It doesn’t need to be the best all the time, you gotta do your best.
Do you want your code to have not a lot of croft and not have technical debt? I wouldn’t skimp on that. But when you’re moving fast, I think making a first past through and having the usability in some areas be not as ideal as maybe you’d like and you know that and you plan to come back, I think that’s a pretty good approach.
Mike: The other thing that I use specifically in this particular case which people might find useful is that I made this decision for this piece of it specifically because it was a setup piece. I knew that it was something that most customers are only ever going to do once and once it’s done, that’s the end of it. Even if it takes me 30 minutes or 45 minutes on a call to set somebody up and get that stuff connected properly, it doesn’t matter because it won’t have to be done again.
Obviously I don’t wanna be on a call with every single person for 45 minutes just to get them set up and then after that try to do some level of onboarding and customer development. If I can get that stuff taken care of later on, I basically just kicked it down the road because it was that one-time set up and it wasn’t gonna have to be done again. You can use that as a deciding factor as to where you’re going to spend your time.
I see a lot of other vendors doing this where if certain things are painful, you tend to find those things in places where the customer doesn’t have to do it very often. The one example that comes to mind is Oracle installer which for 10 to 15 years was busted. It was fundamentally broken on Windows, you literally could not install Oracle without it failing and then having to go in and fix stuff. They finally fixed it in 2012 or something like that. But for a long time, it did not work at all.
Rob: I remember that, that was crazy.
Our next question is about cold email, it’s from Greg Ristow from utheory.com. He says, “I love the show, I’ve got a startup music theory learning site which is just now at $1500 per month in revenue with very little marketing.” Congratulations, by the way. That’s a nice market to hit.
“Starting to think about email marketing strategies for reaching college music theory faculty, and high school music teachers. I’m wondering about the legality of gathering names and emails from school websites. When I look around the web, I get conflicting information on how CAN-SPAM applies.” That’s a law in the US about not spamming people. “I know in my own day job as a college music faculty member, I regularly get emails from companies who pulled my email from my school’s website. Any advice?”
Mike, I know you have a lot of thoughts on this. I’d say give a short answer and then a longer answer.
Mike: The shorter answer is that it is legal to go to somebody’s website and pull the email addresses. At that point, depending on how you email them, that’s where the piece of CAN-SPAM falls into place. It’s not about whether or not you pull the emails from the website or whether you gather their contact information, it’s really about what you do with it after the fact.
Underneath the umbrella of the CAN-SPAM Act, there’s basically three different types of emails that are sent out. There’s commercial emails, there’s transactional emails or relationship emails, and then there’s other. I’ll talk about those in a minute but most of what CAN-SPAM basically says is don’t lie to people or forge header information when you’re sending emails and try to hide what it is that you’re trying to do.
For example your from email address should actually be you or your business. Who it’s to should be that person, don’t be forging emails to people like if I were to send an email to you and I forged the header information and said that it was Bill Gates, then it starts to fall under the CAN-SPAM laws. Lying about those things, not specifying that something’s an advertisement, or line about what the subject is.
Let’s say that you say that it’s about your recent payment, and then in the body of the email you’re saying it’s a Viagra commercial or advertisement. That right there is a violation of CAN-SPAM because you’ve not said that it’s an advertisement and you’ve also lied in the subject line.
Not telling people how to opt out of future emails, that’s another one and then honoring the opt outs. A lot of those things are typically handled by an email service provider. Those are the things that you don’t typically have to worry about.
Going back to the three different categories of email that are defined here, there’s the commercial intent which basically is an advertisement of some kind. That’s really where the pieces of the CAN-SPAM Act are that you need to pay attention to. If you’re advertising a product or a service and you’re promoting it and sending emails to these people, it’s very clear that you’re trying to get them to sign up for a service, that is a commercial intent email.
If it’s a transactional email, that essentially is exemplified by things like somebody comes to your website, buy something, and then you send them a receipt. Emailing them the receipt, that’s a transactional email because they did something and then they received based on what they did.
The third one is other. This is where you get into a very, very grey area because all three of these things are all about the primary purpose of the message. What is it that that email was intended to do and what are the contents of it. If I send somebody an email that is completely unsolicited and it’s got links for them to buy my service or to come into my website and look at the product to learn more because I’m essentially pitching it to them and saying, “Hey, would you like to learn more about this? Here’s the website.” That is more of a commercial content.
If I email somebody and I say, “Hey, I’d like to talk to you about X because I’m exploring this idea.” Or, “I have a product and I’m doing some customer development.” That is not commercial because you’re not actively selling them something, there’s not an advertisement in it. It’s also not transactional. What happens is those types of emails fall under other.
I will put a blanket categorization here that says I’m not a lawyer. Just take some of this with a little bit of interpretation and a grain of salt because this isn’t legal advice. But my reading of all of these things is that that commercial content, the transactional and other, you can essentially leverage those three. Depending on what it is that you’re putting in the email, a lot of times, you can force it to fall underneath the other category which essentially says that it doesn’t need to follow these CAN-SPAM laws and regulations.
Rob: I think the TLDR on that. Again, we’re not lawyers, we can’t give legal advice but it is generally accepted practice that, yes, people do scrape emails from websites, whether they gather them by hand or whether they have a VA to do it or whether they write a script to do it. It is legal to cold email people even for commercial purposes, I receive them all the time.
I may morally or ethically consider them spam and certain people do and they say, “You’re spamming me.” Based on the legal definition, that’s not. I would give you the advice, don’t use a bulk email program, you’ll get shut down. Script that list and then import it into Drip or MailChimp or anywhere, we’ll block your account because people will mark them as spam, there’s gonna be bounces, people are not gonna open them, they’re just gonna have low engagement. Those cold emails should not be in a tool like Drip or MailChimp, they should be in a tool more like Yesware or Bluetick.
Mike: That’s correct. The interesting thing there is that the reason Drip and AWeber and MailChimp and all those others are stopping people from sending those types of emails and stopping them from importing the list and blasting them out is because what happens is that people on the receiving end of it, if they don’t like the message, they can mark it as spam. That’s not a legal definition that it was spammed, it was that that person classified as spam. What happens is that then negatively impacts the provider.
In that case, they’re protecting not only themselves but also all of the other customers that they have. Let’s say that I imported a thousand emails into Drip and I basically blast something out and then a lot of them started getting marked as spam, I am then thereby impacting the rest of Drip’s customer which obviously is a no, no. I would expect them to shut me down.
Versus if you send it out through Yesware or Bluetick or all these other things. What happens in those cases is if somebody reports to the spam, it actually goes against your own domain as opposed to somebody else’s. From my standpoint, if you’re gonna bash your own domain and you really are spamming people, and it is classified as spam, then you’re negatively affecting your own domains, not mine, not any other customers. At that point it doesn’t impact me as much.
The email service providers, the reason they’re doing it is not for legal reasons, it’s to essentially protect their current customer base and the send rates and deliverability of everything else that they’re doing.
Rob: That’s right because they shared IPs and shared sending domains. We are at time, sir. At the start of the show I said we’d get through all the questions but we did not, we have one question for future episodes. We will revisit that at some point. You wanna wrap us up for today?
Mike: Was that a deliberate lengthening of the episode to make sure that we had the one left or no?
Rob: No it wasn’t, I figured we would get to all of them, we didn’t have that many questions but obviously some of the answers were more in depth and we just ran a little long today.
Mike: If you have questions for us, you can call it into 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. Visit startupsfortherestofus.com for a full transcript of each episode. Thanks for listening. We’ll see you next time.
Episode 381 | SaaS Marketing from Square One
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Show Notes
In this episode of Startups For The Rest Of Us, Rob and Mike talk about SaaS marketing from square one. Topics include where to start marketing, what types of channels to use, and what your timeline will look like.
Items mentioned in this episode:
Mike: In this episode of Startups For The Rest Of Us, Rob and I are going to be talking about SaaS marketing from square one. This is Startups For The Rest Of Us episode 381. Welcome to Startups For the Rest of Us, the podcast that helps developers, designers, and entrepreneurs be awesome at building, launching, and growing software products, whether you’ve built your first product or you’re just thinking about it. I’m Mike.
Rob: And I’m Rob.
Mike: We’re here to share our experiences to help you avoid the same mistakes we’ve made. What’s going on this week, Rob?
Rob: I had never realized that we say Startups For The Rest Of Us three times in the introduction.
Mike: Yeah. I stumble over it a little bit sometimes. I think you did it well.
Rob: It’s a long title. Yeah, I know. We should think about changing that.
But aside from that, things are actually going really well this week. As you know, I mentioned on the show before, Sherry and I have put together a book called the Entrepreneur’s Guide to Keeping Your Shit Together. Sherry was very much the first authored and the driving force behind this and I can contributed topics, stories, anecdotes, I did some of the writing, but for the most part it was Sherry writing. But super stoked to have it out, men.
It launched on Wednesday of last week and so far, sales have been good. We’re going with an all Amazon approach, which is interesting. It’s something I haven’t don’t before. It’s a trip because you don’t get your customer email addresses but the one click buy makes it so much easier for people to buy versus coming to your website and entering credit card and phone into a Stripe form or whatever.
So far two thumbs up. I think Sherry’s learning a ton. I’ve obviously been offering advice and helping draft emails and put the wrong link in the launch email, that was me in my own software. I said it though Drip and I told Sherry, “If it’s a bug in Drip, or it’s my copy paste error, I’m still screwed! I can’t even blame it on anybody. It’s my fault.” It wasn’t a bug in Drip. I just made a copy paste error and left the ‘h’ off the http for the book link. I had to resend the correction which I pretty much never done, ever in my launch career. I always triple check stuff and I was in too much of a hurry.
Mike: That’s funny. I was actually going to accuse you of writing only one line in the entire book and it was the little anecdote where it says Rob’s thoughts and then there is, “Uhm, no.” and then “and Rob.”
Rob: Yeah. Exactly. I wrote that. I also wrote a bunch of the stories in there. It was a fun project. You know what’s fun about it for me, was being able to contribute, I did more than just consult on it but the redrafts and the edit and help shape things. It was not the full burden. I was not the founder on this one, I was more like the board member, adviser or something. That’s kind of cool.
It’s also fun to see someone launch a product like this at this scale for the first time. Because you feel vulnerable, you’re excited but you’re not sure what to do, and you’re just stumbling along. I can just see all the stuff shaping up as she’s going through the process.
Mike: Yeah. I’m sure it’s nerve wracking for her too. When you first put something out there, especially with a book. I think with software there’s that layer of obstruction like, oh yeah, you created this but you’re in the background and the software is the thing that people are seeing. I think with the book, you’re putting your expertise out there as well and that can be a little nerve wracking, especially because you’re not sure how it’s going to be received, did you hit on the right pain points that people have, are they really the things that people are feeling. Not that you’re not confident, it’s just that there’s a difference between a small subset of people that you’ve actively worked with versus a much larger set, especially when you don’t know who those people are.
Rob: Totally. It’s always just vulnerable. I think vulnerable is the right word, when you throw something out and thousands of people in essence are going to wind up buying this book here and hopefully most of them read it. You just have to be prepared for thoughts and comments and that’ll be both positive as well as critiques. It’s just a lot to put yourself out there, whether it is with software or a book.
Mike: Yeah. I’m very glad that I got both the paperback version and the Kindle version because I had to fight my wife off for the book because she saw it and she took it.
Rob: Oh, that’s funny. Cool. Glad to hear it.
Mike: Yup. Anyway, we went through that over the weekends. It’s a good read, I liked it.
Rob: I was going to ask what you thought of it.
Mike: It touches on a lot of topics that have not been well talked about but they’re starting to and I think that Sherry’s probably a very big contributing factor to that just based on her talks at MicroConf and how well they’ve been received, but I think it’s a topic of discussion that people are a little bit more comfortable discussing now than they were 5 years or 10 years ago. It’s nice to have it now but I almost wish it was out there 10 years ago.
Rob: Yeah, I know. Absolutely, I wish I had this book when I started. If you don’t know what this book is about, it’s about how to run your business without letting it run you. It’s how not to spin out of control and be super stressed out and how to know yourself more, how not to burn your relationships, how to stay human, how to stay connected to people. She calls it like Founder Mental Health but I always think of that as like, I don’t know, if I’m not depressed, or I don’t have an anxiety, I don’t need it. But it’s not that. It’s just how to fight through and really stay sane and maintain solid relationship to not piss off your wife, and your kids, and neglect your family, and gain a bunch of weight, and go crazy. I was so freaking stressed running Drip and selling Drip, I wish that I had a resource like this.
If that sounds like you, or you think you might be encountering that anytime soon, you can search on Amazon, there’s a Kindle and a paperback version, Entrepreneur’s Guide To Keeping your Shit Together, and we’ll link it up in the show notes for sure. Sherry recorded an audio version and has submitted it to Audible but it is not approved yet. I’ll probably talk about that once it’s approved as well.
Mike: Very cool. I’m in the middle of working on my FemtoConf Talk and it’ll probably be something of a preview of my MicroConf Talk to be honest. It’s nice to be getting that much of a jumpstart on it. I don’t think that usually I start on my talks until probably a month or so before the conference. It’s like two and a half, three months out at this point. It’ll be nice to get that done in advance and then give a preview of it and see what resonates and what doesn’t and be able to go through it a few times in addition before a live audience as opposed to just getting up there and giving it in front of a live audience for the first time at MicroConf.
Rob: Yeah. I could see that. It’s really nice to be able to give a talk twice. I always give a talk better, almost always given better the second time.
Mike: And the other thing is paper spiders. If you enjoy pranks of any kind, go into the bathroom, and on the other side of the toilet paper roll, draw a giant black spider and then put it back so they can’t see it.
Rob: Really. Even though it’s just drawn?
Mike: Because you can’t see it until you flip the roll over.
Rob: Nice. Where did you hear about this?
Mike: I saw it online but I practiced that yesterday and my son was not pleased.
Rob: Yeah. That’s funny. Cool. What are we talking about today?
Mike: Today we’re going to be talking about SaaS marketing from square one. This actually comes to us as a sort of a listener question. I put out on Twitter a couple of weeks ago asking if there were any topics specifically that people wanted to hear about. One of them is from Phillip who’s asked, “How to start a product from scratch? After my MVP is ready, because growth hacks are everywhere but nobody talks about starting marketing from a blank page. No social media, no newsletter recipients, no SEO, nothing, zero traffic.” I thought we would go through this and talk though some ideas around where you would even start with that.
At the very base level, you’ve got an MVP, we talked about this extensively. If you haven’t done marketing before, you get to this point where you got a product to put out there, then you’ve done things wrong but I also feel like we just get a number of questions that are around this where people have already made that mistake and it’s too late to change it, so now what do I do?
We’re going to talk thorough where you start, different types of channels you can use, and strategies to put the product out there and try to make it into a success even if you haven’t started doing any of the marketing beforehand.
Rob: Sounds good. I know this is a common question. It’s something that overtime, if you listen back to previous episodes, and if you look in both of our books, Start Small, Stay Small, The Single Founder Handbook, or even blog posts. This is just such a common topic that we’ve covered but it’s worth revisiting every so often and trying to see if there is either new information or just to revisit for all of our edification and a reminder for all of us.
Mike: The first question to ask is where do you even start? I think that in a situation like this, you need to work a little bit backwards. The first thing to look at is knowing what’s your timeline and your runway look like. By this, I mean really what date is it that you need to be making x dollars and MRR, whether it’s $5000 a month or $10,000 a month. How much money is it that you’re spending on a monthly basis, how much do you need to leave your job, how much money do you need to recover in order to pay back a particular loan or something like that. What are the hard deadlines that you have set that you need to be conscious of? Then based on those things, what are their current pricing plans that you have, how many customers would you need in order to be able to meet whatever that MRR goal is?
Establishing this timeline really does two things for you. The first one is that it provides you with a required trajectory. How many customers do you need to add on a daily, weekly, or monthly basis in order to get there? And the second thing this does is it helps you to eliminate certain types of marketing channels, because if you have a really short timeline, some longer term marketing channels are simply not going to work for you so you can completely throw the out the window and focus on other things that are shorter. And they may not be repeatable or suitable but they will help get you to where you need to be.
Rob: I like the idea of this one. I think that as you get more experience, let’s say it’s your second or third app, or second or third success, I think you can get really good at determining these timelines, build timelines, actually building the product and then ramping up marketing and taking a half ass guess at it.
I remember that doc I put together for HitTail, it was like the marketing game plan. It wound up being somewhat accurate but I wasn’t as experienced as I was when we launched Drip in 2013. That doc, I put together this whole analysis of how many uniques I thought I could drive to the site each month, how many would convert to trial, how many would convert to paid, what the growth would look like. I mapped it out and it wound up being shockingly accurate. The only thing that killed us was we didn’t have a product market fit yet and so I underestimated churn.
When you don’t have product market fit, your churn can be 20%, 25%, so you lose a lot more people. If churn had been closer to what I thought, the growth would have been very, very much in line with what I was guessing at.
The one issue I have with this, with the thing that I think could be hard, if this is literally your first time, you don’t know any of the rules of thumb. You don’t know, hey if I asked for credit card up front, I’m going to get between 0.5% and 2% of visitors convert to trial depending on how appealing my site is, what the price point is, and all that. You don’t know if you’re asking for credit card upfront, you should convert between 40% and 60% of trials to paid users and then your churn should be pretty thing in the first two months and then drop.
It’s just all that stuff you can either learn from experience or you can listen to podcasts like this, when we had Ruben Gomez on the show, probably, 50-100 episodes ago, he and I threw out a bunch of rules of thumb exactly around this and it’s towards the end of that episode. If you want to go back and listen to it, I also put it in my MicroConf Talk last year or the year before. I just had one slide, the rules of thumb things I use to do it.
I like the idea of asking where do you need to get to because this is something investors would ask you if you took them. If you’re not taking investment, it is nice to think about where you’re going and not just go out and wander. I feel like if you don’t know where you’re going, how do you know how to get there?
Mike: That introduces the idea of having a fudge factor. The timeline that you can put together based on your pricing plans and how many customers you need and the timeline, that’s a best case scenario. You’re going to have to go over that. Let’s say that you need 200 customers in order to get to 10,000 a month, how many do you realistically need to shoot for? Is it 200? Probably not, because you’re going to have people who sign up and then decide that they are not going to become customers or they go through a trial and then they say, “This isn’t for me.” Or they just never even set up the software, or set up their account and do anything with it. There’s lots of people who fall into that category.
You have to overshoot by some margin but at the same time you need a starting point of some kind. This simple calculation of your timeline runway and number of customers is going to at least help put you in the right ballpark. That’s really what you’re looking for. How do I get in the right ballpark? How do I get started on the right path versus I’m not going to do anything because I don’t even know where to start.
The next step is once you got that information in mind, the next thing to do is to break out your plan of attack into the different types of marketing channels that you’re going to go after. These aren’t specifically marketing channels you probably find in a book that it would say that okay, these are all encompassing.
These are two that I thought would apply specifically to this type of situation. The first pair of marketing channel is sustainable versus unsustainable. It’s really just a broad categorization of the different types of marketing approaches you might try. And then the second one is inbound versus outbound efforts. There’s lots of different ways to categorize or classify different marketing efforts but let’s just focus on these two pair.
Sustainable versus unsustainable, the way I really put these into perspective or talk about these is that with sustainable, it requires some sort of systematic repetition over time. It’s usually harder to get going but they tend to have a longer life to them.
Some examples of this will be things like SEO, content marketing, blogging, email newsletters, video channels on YouTube, paid acquisition, etc. And then with unsustainable marketing channels, these tend to be one time or burstable activities. If it’s one time, typically you can do it once and then that’s it. An example of something like that would be listing your website on product time. You could do that once but the chances of you being able to do that more than once for the same application are probably pretty slim. You can come out with new features or subsets of things you could add on there but they tend to be things that you’re not going to do for a while.
And then there’s burstable activities like doing a podcast story. You’re probably not going to go on the same podcast over and over again but you could go to multiple podcasts and do it like a podcast story. You could answer a bunch of questions on Quora, you could do joint seminars with other people, you could do integration marketing. Again, that’s an example of something that you would be able to do one time but you’re not going to integrate with Calendly more than once for example.
Those are the types of sustainable versus unsustainable activities that I would look at and I will classify your marketing activities as one of the two. That leads us down the road in the inbound versus outbound.
Rob: Yeah. Some of the sustainable channels you mentioned, most of them require ongoing work but they’re like a flywheel, they’re this big heavy wheel that just getting going is going to take you months and months. It’s going to start yielding rewards maybe three, six, nine months down the line. But the longer you push it, the faster it’s going to go.
SEO is that where boy, you’re going to see nothing for maybe six months. Obviously, there’s ways to hack around that and stuff, I’m just setting some expectations. It’s like don’t expect a bunch of results right away. But if you start seeing results, then you just build on those and build on those and then they last for a long time.
As you said, the unsustainable are those one time activities that I do actually think so you have questions on Quora in the unsuitable. I’ve seen some folks take an approach where those get upvoted and they wind up being popular and they get a lot of SEO traffic overtime. It depends on how you do it. I think there are still some question I’ve answered on Quora that continued to get votes two, three years later. When you look at it, they’ve had thousands and thousands of views.
I think you need a mix of both but as I said, I think it was last episode, an answer to Craig Hewitt’s question. The one time things or the things I would do early on because they get you the big boost, they’re one time and they’re quick. Doing that joint webinar, if that gets you 10, 20 paying customers, you might not see 20 paying customers from SEO for six months or more. Right now, what you need is revenue. You need customers, you need people paying you. Once you have the people paying you, then you can use that money then to par lay up and reinvest it back into more joint webinars or you can invest in SEO content marketing, etc.
Mike: When I mentioned answering questions on Quora, it wasn’t so much that your traffic was sustainable, it was like you can’t answer the same questions on Quora more than once or it’s a burstable thing where you might answer 10 or 15 or 20 different questions and then you wouldn’t continue looking for more questions because there aren’t more questions to answer. You basically have to wait a while. That’s really what I meant by classifying it as unsustainable. Not that ongoing benefit from it is not sustained, but the activity that you do around it is just that one time or you do it a couple of times and that’s it. Does that makes sense?
Rob: Oh yeah, totally.
Mike: Again, I think as Rob pointed out, some of these things will cross over from one side to the other. It’s not very much black and white. Some things will cross over from one type to the next. That leads us over into inbound versus outbound. The way I separate or classify things as inbound or outbound is inbound is functions on the basis of attracting people versus outbound activities and marketing channels, they function on the basis of actively and proactively going out and contacting people.
Inbound would be things like the SEO content marketing where you’re publishing things and you’re trying to attract people to your platform or you blog or email newsletter, things like that, versus outbound which is you’re actively doing cold calling, sending out cold emails, doing outbound email prospecting on LinkedIn or doing paid advertisements. Paid ads is kind of a mixed bag as well because that flips a couple of different categories of these channels. That’s the main differences between inbound versus outbound.
When you’re early on and if your timeline is short, you want to focus mostly on the outbound efforts. The reason for that is because you need a lot more control over the activity. You want to be able to tie the activity that you’re doing to the number of people coming in because waiting for customers to come to you is not going to be enough. You could wait for months or years, you may not still get the number of customers that you need versus doing those outbound activities where you can essentially drive the conversation and you can go actively get in front of those people as opposed to waiting for them to come to you.
Rob: I agree. I think that outbound has become more and more prominent in SaaS. I think it’s become more prominent as the enterprise players or enterprise software has come in. If you think back 10 years, they were very, very few enterprise SaaS or even mid-market SaaS companies that were targeting mid-market and enterprise companies. In those fields, there’s a lot outbound. There’s a lot of outbound cold calling, is what it’s traditionally been.
I think when SaaS was mostly focused on the Fortune 5 Million as 37signals says, it’s so much more about creating content. It’s the Joel Spolsky approach, it’s the Basecamp approach, and those were the models that I think we saw and those are the models that certainly resonated with me coming over as a developer. I didn’t want to do the cold calls, and the cold emails, and the outbound stuff.
I see a lot of value in both, to be honest. Probably not cold calls myself these days but I think even if you’re bootstrapped, I think getting over the mental stigma of not doing outbound, I think is something that you’re going to want to at least wrestle with internally and not just focus on the SEO, and the split testing, and the content marketing. Those are the things that I was blogging about 2007, 2008, and they do still work but they’re not nearly as easy because there’s so much more competition.
If you want to get somewhere faster than I do think you’re going to a mix of inbound and outbound. Again, going back to HitTail, I did no outbound except for JV emails that I would do with folks, but with Drip, we absolutely did outbound cold emails and we did a lot of paid advertising both for HItTail and Drip.
Mike: Once you’ve established a revenue base or gotten to your initial goals, you can switch over a little bit. Or if your timeline is long enough because you’ve got a lot of runway to work with or you love your full time job and you don’t want to quit but you like doing something on the side, then it’s easier to wait for those longer term strategies to pan out. Basically, it gives you more options when you’ve got a longer runway or you’ve got a longer timeline.
At that point, things like concept marketing make a lot more sense because you can decouple the customer acquisition rate from the activities that you’re doing. You can do link building, you can create content, create videos for YouTube, all those different things because you have the time to spare. But if you are in a position where you want to find out quickly whether or not this is going to go anywhere, you need to push on those things and you need to do those outbound efforts in order to verify quickly versus waiting because you could wait for a very long time to find out, and you almost never know for sure. But obviously, if somebody posts a link on Reddit or something like that and you get 10,000 customers, yeah, that’s a pretty good stamp of approval. But the chances of that happening are so minute that it’s not realistic to even think about depending on those things.
I think with the things that we’ve talked about so far, the next question that comes to mind is, okay, all of this sounds great but where do I actually start? We’ve talked around the issue and I think to address it head on, the first place that I would start is looking at your personal network and seeing if there’s anyone in that personal network who can help you.
The prime example that I think I would point people to in most cases is go to your LinkedIn profile and see who you’re connected to, who you’ve worked with in the past, or go to your Twitter profile and see who you follow or who follows you and find those people, contact them, and say, “This is what I’m doing, this is what I’m working on. Is there a use for this either in your business or do you know somebody it could be useful for?”
There’s ways to go about it without seeming overly salesy. You can definitely just say, “Hey, I’m working on this. Can you take a look at it and give me some advice.” Or, “I’d like a little bit of help. What do you think that I should do?” Those are great places to start the conversations because it’s asking somebody for help versus, “Hey, can I sell this to you?”
That’s a much better starting point for conversation especially if you don’t have a good working relationship with that person or you haven’t met them in person before because then it opens the door for them to put themselves in a position of “expert” where they’re giving you advice. People love to give advice on whatever your new product is.
No matter what you built, people will always want to give you advice on it. It doesn’t mean that it’s good or bad or that it’s going to be exactly what you should be doing, but it’s at least a starting point for conversation. From there, you can branch out, find out who they know, see if there’s channels that they can promote it through, or if they’re just interested.
Some types of products are going to resonate very, very well with certain people and they may say, “Hey, I can’t personally use this but I have an audience that I cater to and they would love to take a look at this. Can we take a look at it and do a deep dive, or get on a call and talk about a little bit more, or maybe go through a demo?” That gives them a little bit more materials to work with than you just sending them a cold email saying, “Hey, I would like you to take a look at this and I think it might help your business.” Those conversations and discussions are going to get you a lot farther if you have some sort context with the person, try to help them to understand what it is that you’re doing.
Rob: That’s a good point. I think that if I was starting out today, some of the approaches that I would focus on early on, I would definitely be looking at paid acquisition. I’d be looking depending on your product, it’s going to be Facebook, or Instagram, or LinkedIn, or Twitter probably. AdWords is probably not going to work because it’s just too expensive these days. It depends on how much you want to get in to run the ads.
I know some people just are averse to it and I had someone doing some marketing for me at one point. I was mentoring and teaching him and he said, “Is there anything I can do aside from running ads?” He just really didn’t want to learn that. It’s an interesting opinion and perspective.
Some people want to do it more the viral approach or with content. You have to figure out what you’re going to enjoy. If you have budget to hire somebody, that’s great because folks who know how to run ads are going to be way, way, way better at it than you. But if you have to suck it up and you don’t have any money to hire someone, then obviously, that’s going to be an option.
The thing that I like about paid acquisition, man, is even in the early days, if it’s not profitable at least you’re getting people in there to try it out and you get some kind of feedback.
Another thing I would consider right off the bat of course is an email newsletter. Email has just been a critical part for everything I have ever done including MicroConf, and my blog, and selling books, and selling software, getting people to use SaaS. It’s just such an asset to have.
I don’t know these days that I would start a blog if I were going to try to market a new SaaS app. If I was going to do content marketing, I would probably take a different approach to it. I would at least debate whether the resources that I would need and the on-going publication, the on–going article cost would not be better spent doing more bigger content efforts. We did this with Drip, we started getting success, we had an ebook, and then I did an audio version of that ebook. It was about email marketing automation I think I was getting started with.
I think maybe we did a video course and we submit those to Producton, and we put it on Gumroad, and we sold a bunch of copies but we gave it away for the first few days and it got a bunch of traction through those. They were more one time bursts but they did help longer term with SEO because we had so many backlinks from these things. It’s an interesting thing to think about instead of publishing content constantly.
Is it an option to do less frequent content but just try to make a bigger splash? This is part of the thing that you see, let’s say Neil Patel or some of the other big blogger, content marketers moving in that direction writing. Even if they aren’t doing ebooks or package products that they’re giving away, they are doing this longer form stuff. It’s less content or fewer posts but they’re a lot longer form.
Of course then that leads you to SEO. If you know how to do SEO and you’re good at it, by all means do it. If you’re trying to learn it from scratch today, it’s going to take a while, I’m not saying don’t do it but it is much harder than it used to be and it’s going to be a big road up there, but if you can get SEO content marketing, email newsletter, and paid acquisition, if you get two of those working, you’re going to have a pretty nice growth engine.
In the early days of Drip, I just have alerts on Quora and when stuff would come up in the email marketing category or startup category, I try to jump in and answer those. I’m a big fan of podcasts tours. I have done them for years and if you can pull one off, I think there’s a lot of value there, for not a lot of time investment.
And then of course, join webinars if you do have the network. It all depends on what your unique asset it. If you’re really good at SEO, then go after that, if you’re good at paid acquisition then go after that, and if you have a good network then you can work that to get people to email you.
If you have none of these, one day, back in the day, all of us had none of those. You have to pick one, you have to start from scratch, you have to hustle.
That’s the thing is it’s never going to be as hard as this first app. When you’re starting it with no revenue, no customer base, no network, no audience, that’s when it’s going to be the hardest. That’s when you have to push the hardest. It’s only going to get easier from then on.
Mike: Something else I mentioned that goes along with what you said was that in those early days, when you’re trying to get the product out the door and get it in the hands of people, there’s almost no substitute for getting directly in front of somebody and talking to them about your products and what it is that you’re trying to achieve and how it solves the problem that you went after.
There’s a lot of credibility and trust that goes into signing up for a SaaS app these days. You can overcome a lot of objections just by having a conversation with somebody. Whether it’s a phone call, or a webinar, or one on one demo through a Zoom account or Skype or something like that, you can overcome a lot of trust issues just by having that one on one conversation with somebody and answering their questions. Your website doesn’t need to look fantastic, you don’t have to have a great onboarding experience.
You can hand walk somebody through your onboarding and talk them through every single question they have and the information you’re going to get from them about what concerns they have or just the questions that they ask are going to be very valuable to you and being able to come up with answers that will not only answer them but also answer everyone after them who’s going to have the same types of questions. If they ask, “How do I use this piece over here?” You know that that’s probably going to come up for other customers. Or if they say, “What does this button on the bottom right here do?” If it’s got a weird icon, they may say something to you. If they do, you can use that to make the product better and hopefully reduce the number of questions which ultimately reduces the friction which helps people move through the sales pipeline a little bit better.
Yes, it’s tedious. It takes a long time to get through that but the insights that you’re going to get from that are massive. It just helps you move things along. It is slow, it’s a slow process but it does work over the long term. You just have to walk through every single step of it.
Rob: That wraps us up for the day. If you have a question for us, call our voicemail number at 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 and visit startupsfortherestofus.com for a full transcript of each episode. Thanks for listening, we’ll see you next time.
Episode 380 | Allocating Your Marketing Budget, Minimum SaaS Documentation and More Listener Questions
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Show Notes
In this episode of Startups For The Rest Of Us, Rob and Mike answer a number of listener questions. The topics include marketing budget allocation, documentation for SaaS, and digital marketing.
Items mentioned in this episode:
Rob: In this episode of Startups For The Rest Of Us, Mike and I discuss allocating your marketing budget, minimum SaaS documentation, and we answer more listener questions. This is Startups For The Rest Of Us episode 380.
Welcome to Startups For the Rest of Us, the podcast that helps developers, designers, and entrepreneurs be awesome at building, launching, and growing software products, whether you’ve built your first product or you’re just thinking about it. I’m Rob.
Mike: I’m Mike.
Rob: We’re here to share our experiences to help you avoid the same mistakes we’ve made. What is the word this week, sir?
Mike: Well, if I had a way to put an emoji in here, I’d put a sad face in because my new website is not live yet. I was expecting it to be done.
Rob: Yeah. It’s been a couple of weeks since we recorded last.
Mike: I handed the things off to a designer and he was working on it and then some stuff came up and he wasn’t able to finish it on the previously proposed schedule. Completely understandable stuff, completely out of his control, but I’m a little disappointed when things get pushed off a little bit. Still plugging forward and hoping that things will be pushed out and live within the next week or so anyway.
Rob: Got it. Next podcast episode I will give you a bunch of crap if it’s not live.
Mike: Yeah, sure. You can evaluate the design and I can tell you to go to hell.
Rob: “Hey, Mike. I would tweak these three things. Boy, that’s really an odd color,” and you’re like, “Dude, stop. It’s all done. I’m going with this.”
Mike: I like fluorescent orange.
Rob: Yeah, that’s funny.
Mike: I’m just kind of in a holding pattern right now waiting for that to get all squared away so that I can kind of launch some other marketing campaigns and see how things go.
Rob: That’s cool. It’ll be nice to get that. I’m excited to see it because we talked about it a couple of episodes ago. Your current site doesn’t do the product justice. I’m interested to see what it looks like. For me, I was in San Francisco last week at SaaStr. I will admit it, I liked it better this year than last year.
I’ve only been to two SaaStrs and my general appraisal is they’re way too damn big, way too big. They say that they’re 10,000 people there and it feels like more than that. I really think they should a, sell fewer tickets, and b, there’s this big emphasis on bring your whole team, so half of the people you talk to it’s like, “I run marketing for this startup. I am in support.”
Nothing against that but I don’t get a lot of value out of that. I wanna be with other founders or I wanna be, if it’s a marketing conference, I wanna be with people in marketing. But it’s this really broad swath of people. I find the lack of focus and the size to be detrimental to the conference. I think it would be better but I think the point there is different with MicroConf where it’s highly focused content, and we try to get the people together.
A lot of people were just there to network and business meetings. It wasn’t even hallway track conversation it was like, one guy I saw in the lobby, I’m trying to think. I think he recognized me or he recognized the Drip name of or the other. He said, “Yeah, a long time Drip user. I just lined up seven meeting a day. Here, I don’t go to any of this sessions.” There are people who came and did just that which I’m sure is fruitful but it’s an interesting way to view the conference. We had, I participated in about four or five meetings over the course of the three days myself.
Mike: I use to go do the Symantec and Altiris conferences out in Vegas and it was the same type of thing. There were people who would go solely so that they had easy access to people to line up meetings one after another. That was the only reason that they went. They didn’t go to any of the sessions or anything. They just go there to talk to people.
Rob: Yes. With that in mind, again, I went to somewhere between three and five meetings so I did miss a few sessions but with that in mind, my learning this year were that the panels, panels in general, not just at SaaStr, I’ve never seen a panel that’s any good. They’re always gonna be watered down and even if the topic is super intriguing, they’re just not well done.
That’s one of the reasons we don’t do panels at MicroConf. I think we’ve done one panel out of the 14 or 15 MicroConfs we’ve run. We set it up very specifically and we gave everybody a heads up and asked them to be super tactical but I just started avoiding the panels early on in the conference, the SaaStr conference. I was only going to the solo where it was one person, because I knew that they would have slides, and they would have thought through a premise, and be making a point, and having an opinion.
That’s what I really enjoyed about it where I saw several talks that were good. They were like, I’ll say, MicroConf quality with a high bar with a lot of – from experienced people like a former product leader at box.net, as an example. You know that she has a lot of experience and knows what she’s talking about.
Mike: Yeah, I’m with you. I’ve never really seen panels work out very well to the point that they’re interesting and you get any reasonable takeaways from them. I wonder if that has a lot to do with, I don’t think it’s just the format, but I also think that it’s a matter of trying to give everybody either equal opportunity to talk or I think another contributing factor is the issue of having questions that aren’t necessarily, I’ll say, as well prepared as a talk.
Because if somebody’s up on stage, they’ve given their talk generally a fair amount of thought behind it, have a story arc or something like that. There’s background, they can do lead ins to different pieces of the story but with a panel, you can’t do that at all. It’s very difficult to establish rapport and create some sort of an arc that people can follow.
Rob: It’s a good point. We’re touching on some things that could be fixed. I was talking to Jason Cohen, he was there, he did a talk and then he and I were hanging out, talking. We were having this exact conversation and he suggested, “You know what? If you instead made it a debate, it would be way more interesting.” It’s a panel but it’s essentially a debate and then I said, “Wow, but then don’t do three-person panels, just have two.”
Can you imagine Jason Cohen, Hiten Shah up on stage? “Alright, I want one of you to take the side of bootstrapping, one to take the side of raising funding, and then we’re gonna go through six topics.” We’re gonna say, “Alright, how does this impact hiring? Go.” And the two of them debate. Then, “How does this impact how fast you can grow? Go.” Just run through these topics. That, I was suddenly intrigued by.
Mike: Yeah, that is something interesting. As soon as you started mentioning that and saying that you’re gonna have two people like Hiten Shah and Jason Cohen up on stage and kind of debating something, I was like, “What happens when they agree on something?” Well, yeah, you have one of them take opposing sides, that makes more sense.
Rob: You have to set it up in advance to either that even if they don’t fully believe it, they just do it. Folks who are on the debating team or have done debate, you just have to do that. You sometimes have to debate something, you have to be on the side that you don’t agree with or you pick issues that you do know that they’re on the opposite sides of. You and I could debate things like…
Mike: Who’s gonna win an arm wrestling match?
Rob: Who’s gonna win an arm wrestling match, inbound and outbound email, because you’re outbound and I’m inb–anyway. Coming up with things off the cuff is not my strong – this is why I prepare talks.
Alright, we’re gonna answer some listener questions this week. First question is a voicemail. It’s about allocating your marketing budget. This question comes to us from our very own Craig Hewitt, the founder of PodcastMotor, and Seriously Simple Podcasting.
Mike: And Castos now.
Rob: And Castos now. “Hey, Rob and Mike. This is Craig Hewitt from the Rogue Startups podcast. I had a question for you guys today about how you would think about allocating marketing. Say you have $1000 month you wanna spend on marketing for a SaaS tool, how would you think about allocating that money for different things like content, or SEO, or paid acquisition, and let’s say that it’s a relatively young SaaS product that is, say, below a few thousand dollars a month at MRR. Interested to hear your thoughts on how you would approach this problem and if you have any specific answers that you think would be kind of best practices. As always, love the show, thanks for everything you guys do.”
Mike: I think this is an interesting question because the parameters of the problem here is that you have $1000 for the month and what marketing activities do you prioritize for your business or how do you go about evaluating them. I think, in some ways, the question is almost misphrased because not everything is going to have a dollar cost associated with it, especially if you’re bootstrapping and you’re early on, and you are able to do things yourself.
For example, if you’re doing SEO, there is not really a dollar cost associated with that. It’s actually more of your time than anything else versus if you’re doing paid advertising where clearly, there is a budget that you have to set aside, and you have to be able to do that or if you’re paying people to write articles, but at the same time, you can also write those articles yourself. It’s a question of resource allocation, not necessarily just dollars. There’s the time of yourself for doing it, and then there’s the money associated with those things, and then there’s the output of that. How much are you going to be able to reach people? How broad is your reach going to be after you spend the money and the time?
I think that that’s probably the most important thing to focus on is what is your reach going to be based on the resources you have spend. If you spend half your time for the month and you’re able to get 10x the reach, then if you were to spend $1000 or even $2000, then you’re going over your budget at that point, but you’re not gonna be able to get to as many people. I would look at it in terms of reach and then refine that over time because you’re probably not gonna get it right in the first month, you’re probably not even gonna get it right by the third or fourth month. You’ll be able to narrow it down and you’ll be able to start eliminating different options.
But I would probably focus on most three different things in any given month, and then at the end of every month evaluate them against one another to see how far of a reach did you get, and was it qualified. Did you reach the right people? Because if you’re not reaching the right people, and you’re not getting to a scale that you need, then it means that that channel or whatever it was that you were trying is basically worthless. It doesn’t do anything for you.
If you get in front of them and you are doing it at a rate that is, I’ll say reasonable, it’s gonna depend a lot on what your channel is because 1% in one channel could be, you should expect 50% in another. But as long as it’s reasonable, then I would essentially double down on that, and refine it, and optimize it.
But if you can’t get anywhere close to what is reasonable based on what objectively other people are telling you that they’re seeing in their industries, then I would switch to a different tactic and see if that one works out because it’s gonna be different for every type of business, every type of product.
Rob: Yeah, the way I would think about this is it’s actually an approach that I used to do. Well, I did it for HitTail and did it for Drip, and I saw Noah Kagan doing something similar but better. It’s basically take a Google spreadsheet or an Excel spreadsheet and write out all your marketing approaches, and then try to guesstimate how many trials you think or visitors you think you can drive from it.
You put the cost, estimated level of effort for hours whether that’s for you or someone on your team is doing it, and then you just try to sort them, you come up with a simple algorithm, just sort probably by impact unless there’s something that’s substantially more and more effort. You just want pure volume of trials, or new customers, or revenue, however you wanna measure that.
Early in the SaaS apps career, assuming you have product market fit where people are using it, paying for it, return is low, all you’re trying to do is find marketing approaches that work. You’re very likely, for small SaaS app, you’re gonna find one, maybe two. You’d love to have 10 but it’s gonna be one or two that’s gonna have the most impact over time. I like to think of them, there is short term, there is long term.
The short term ones are doing a joint venture mailing where you email your list – I’m gonna say podcast because we know that Craig runs Castos which is a podcast hosting and let’s just assume that that’s what he’s looking at. You’d find either a podcast blog or someone who does a podcast about podcasting, ask them to mention it, and you would also mention their podcast too to your audience or something like that. That’s a little bit of a quirky way to do it but you get the idea.
Maybe there’s another podcasting SaaS that helps with recording like ZenCastr or something and you do a JV with them where they email your people and you email yours. Then there’s just straight up affiliate stuff. That’s where you can approach people and just say, “Look, I’ll pay you 30% perpetual or 20% perpetual topline revenue from anybody you refer. Here’s your link.” See how many people will do that. There’d be podcast advertising.
The reason I keep coming back to podcast is because your audience’s podcast hosts are most likely to listen to other podcasts, and so you can just start buying spots on those podcasts that are talking to other content creators. There’s paid ads which these days I’m gonna say is Facebook. AdWords is gonna be very unlikely, it’s just gonna be too expensive for you to get to work although you could try it, outbound email. These are all the short term things.
When I say short term, they can work for a long time, but they can give you a short term boost. They’ll instantly, if you do a JV mailing, boom, you’ll get much customers that day, hopefully, you do. Then you have to do another one every month in order to make it work. Then there’s these longer kind of flywheel things, stuff like SEO, content marketing even, I’ll say, guest post is kind of in the middle there. Guest posts can get you a one-time shot but they also build up SEO overtime.
You may wanna do both but honestly, if I were in your shoes, and I were just getting started, I would go for a bunch of the short wins because when you’re doing, I don’t know Craig’s revenue, but I’m gonna try when Hittail was doing $1500 or $2000 a month, all I wanted to do was get it to $5000 or $10,000 a month. I didn’t care if it was unsustainable, or the marketing approaches completely didn’t scale at all.
As soon as I got to $5000 or $10,000, I had so many more options. I can hire better people, I can hire more people, I had huge budget than the market. I wasn’t constrained to the $1000. I didn’t have very high expenses so I had $5000 or $8000 a month to market this thing. Now things really open up for you. Then you can start doing multiple. “Alright, I’m gonna get a blog going with landing pages and blah, blah, blah.”
I have to admit, if I was marketing a podcast hosting service, I love the idea of – you know where all your customers are. They’re all in the iTunes store. It’s like the best deal ever, to be marketing to that audience. It’s not a huge audience but you know where they all are. You know that the business podcast and any kind of for profit podcast that takes advertising is making money.
There’s a lot of hobbyist podcasts talking about whatever, dungeons and dragons, movies, or whatever, that’s more like a B2C sale. You’re gonna want to stick to the more popular ones and you’re gonna want to stick to certain categories that common sense is gonna tell you, “These people have money and they’re gonna be willing to pay for it.” That would probably, to me, be the very first thing I do is either have VA scrape or write a scraper because you know all the iTunes pages are all on the web, in the browser.
Hopefully Craig hasn’t already come up with this. It’s like some secret sauce thing but I’m totally giving it away but I’m just coming off the top of my head and thinking how I would begin to approach it. Maybe I would test some paid advertising but probably not before I did outbound email, joint venture mailings, trying to get some affiliates to work with me, and even joint venture webinars are interesting, I don’t know if that one’s gonna work in this space but to basically latch onto someone else’s audiences and be like, “Hey, let’s either do a webinar to each other’s audiences,” or you say, “Hey, can I do it to your audience Mr. Podcaster? You fill the seats and I’ll give you cut of whatever the people buy.”
I realized that’s a long answer but that’s how I would think about it and with $1000 a month, I would, like I said, I would test things until something works because that’s something working buys you the luxury of being able to do multiple things at once. While I was testing, I would really stick to one thing at a time, and I would hustle, and I’d learn everything about it that I know. I’d read up on it and immerse myself in it for one to two weeks of just consuming content about it, and buying the Udemy course, and watching the MicroConf talk, and talking to XYZ expert about it, calling them up on clarity, paying them their $3 a minute that they need. Once I’ve figured I have my head around it, I would just dive in deep.
This is what I did with HitTail back in 2012, I think it was. I just picked the topic that I thought would work and dove into it. I spent one to two months just hammering on it. If it didn’t work, I moved on to the next one. The ones that did, they made that up. They made it so that I was able to grow it as substantially as I did.
Great question, Craig. I appreciate you sending that in.
Our next question is another voicemail. It’s about what documentation you might need for a SaaS. “Hi, Mike and Rob. Thanks so much for your podcast. It’s been so useful over the years I’ve been listening to it.
My question today is around documentation. What do both of you think you need, a standard, to run a SaaS online business? I’m looking for things like a test document to do routine tests on new releases, for example, checking everything is still working, documentation on service, processes, service definitions, the list could be endless. But I’d really like to hear from you in terms of what you think you need structurally, in terms of documentation set to operate, to run your businesses. Also, what was required, do you think, for selling businesses well or would be seen to be required by someone looking to invest or purchase your business? Thanks for this again.”
Mike: I think there’s actually two questions here. One is what is the documentation you need internally to run the business and then the second one is what do you need to have in place in order to sell the business. I think that there’s two answers to that. It can be on completely opposite extremes.
In order to run the business, at the very least, again this may depend on how complicated your business is, but there are businesses that are run with everything in the founder’s head and that’s really all they need because it’s small enough and it makes enough money. There’s not a lot of things that they need to do on a day-to-day basis that are gonna be things that they’re going to forget how to do. Then as your business gets more complicated and as you add more people into the business, that’s where you need to start documenting things and having things, processes written down so that whoever you bring in to help you out, they can follow those, and you don’t have to micromanage them because that’s really why you’re bringing somebody into the business is so that they can do things without you having to do them yourself.
Some of it is for scalability purposes of the business, some of it is just you don’t have enough hours in a day, but all of those things need to be documented so that you don’t have to still be involved in those things that you’re hiring somebody else to do. When you get to the point where you’re selling the business, that’s probably where there’s gonna be a lot more documentation that’s going to be needed so when somebody comes in to take over the business, they are going to be able to pick up the business and run without you having to be involved.
Again, this is a little bit more advanced. If you’re gonna be there for the next year or two, it’s probably not as big a deal. If somebody is acquiring your business and you’re required to be with them for the next 18 months, or 24 months, or 36 months, whatever happens to be, that’s probably less important but it still probably needs to be done at some point along the way because they don’t want to run into a situation where, let’s say, you stepped out on the street, you got hit by a bus and killed, they bought this asset that they don’t know how to leverage and you continue to make money from, that’s a very valid concern for the acquirer.
But if it’s something small and it’s very simple to run and operate, you’re probably gonna need less documentation. There is that slide and scale and it really depends a lot on your business complexity, revenue, number of employees, and overall risk tolerance, I’ll say.
Rob: Yeah. When I think of internal documentation, which is what we’re talking about here, I think of two types; I think of processes, non-technical processes, “This is how you do a marketing campaign.” Or, “This is how you check support. This is how you respond to these,” kind of a Wiki type thing. Then I think of kind of the technical docs of if stuff goes down, this is how you repair it, this is what the architectural schema is like in the end points and stuff.
Again, that’s all internal. If you have an API that’s external, you obviously need to document that but let’s just keep internal docs in mind. For internal processes, I never created documents until I was ready to hand it off to a person. If I was doing it myself, I did not spend the time. That has always worked. It’s just like in time documentation. Often, the way I would document it is I would bring the person on it and say, “Alright, here’s your job, it’s to check sporty mails and respond to these. Please look through the history and see I’ve responded, and I’m gonna throw together a Google doc, or I would throw together a Screencast.” And then I’d say, “Can you turn that into a Wiki? So that if we bring a second person on, then you can train them using the materials.” I have put the burden on the person doing it. I delegate that to them to create the processes.
This is just the way I do it. This is way more time-efficient for me. I don’t enjoy creating the processes. If you do, then by all means, you can do it. It’s gonna be better than the person creating it themselves. But for me, I’m trying to get stuff done in the business and I don’t wanna spend a bunch of time writing a bunch of stuff up for technical documentation.
If you’re a single developer and you’re working on it, I would veer very much on the side of less documentation purely because a lot of us came from these enterprise backgrounds, I was coding in Java, and .net, and doing these big consultant projects, and we had to document everything, you don’t wanna do that for your startup. It’s a waste of time. Until you’re bringing more people on and trying to get them ramped up, and even then, even these days where it’s as complicated as Drip is, we basically have a GitHub Wiki where we have articles written by internal developers on different subsystems, and then we do have these things called Runbooks. I’m not sure if you’ve heard this term but it’s a developer term, kind of a DevOps term to describe how to run a system.
If you get a page that something is down, if you got a text that something’s down, you go to the Runbook for that subsystem and it’s supposed to tell you how to troubleshoot and how to do things. Those are valuable. We did not have those until we were at probably 8-10 engineers. It didn’t feel like we did it too late, it didn’t at all. I’m glad we have them now but it wasn’t like we were running around for years with our hair on fire because we didn’t have this documentation.
With that said, Derrick was more stressed out than I would’ve liked and that he would’ve liked because we didn’t delegate this stuff soon enough, and Derrick was on call for years. It was too much. That is how the one regret is it would’ve been nice to have some Runbooks early on. But to document a system, extensive, detailed system documentation falls out of sync so fast when you’re in a startup, and not doing waterfall development, like we did 10 years ago. I would go very documentation light until there comes a time when you need it and then you can document it. That’s a good question. Thanks for sending that in. I hope that helps.
Our next question is from Eoin from Bitesize Irish Gaelic. He’s a developer and he has a question about hiring a developer to write code. He says, “Hi Mike and Rob. What are your thoughts on hiring a developer contractor rather than doing my own development? Do you generally see more leverage in stepping away from development? I’m thinking of Michael Gerber’s book, The E Myth Revisited. I lean towards not being a developer/technician,” as he calls it, “in my business.
Having said that, there’s time and energy involved in hiring and delegating, and on Odesk, a good developer can be $40 an hour. Admittedly, what probably muddies the water on my question is I like development. I’ve had a few developers working on my projects over the years and it’s hard psychologically to let go of the development to someone else. I found the best flow to be developing new features for my webapp, that’s not to say I get great satisfaction from trying to work straight to growing up the business, this really is my life’s work. Possibly, a better way for me to ask the question about it is how can I train my thinking to allow myself to get out of the way of my business’ growth?”
What do you think, Mike?
Mike: Well, there’s obviously definitely opportunities to hire somebody as a developer and pull yourself out of that particular role. As long as you hire the right person, that can be awesome because it will remove you from the heavy lifting of writing the code day in and day out, and having to flip back and forth between things like marketing activities, and sales activities, and then going hardcore into the software development, and then diving into customer support.
The ability to replace yourself in one of those areas that requires a lot of mental overhead is, I won’t say priceless, but there’s a lot of value in being able to do that. That said, I would also ask the question what is it that you are probably the best at? Is it writing code? Is it going to be that for you? Or are you much better at doing marketing activities? I would kind of make the conscious decision about whichever one of those roles you provide the most value for, you take on that responsibility and probably stay there.
It’s not to say that if you’re a developer you can’t learn marketing or that you’re not gonna be any good at it. But what is is that you enjoy doing, what is it that really kind of excites you, and drives you forward everyday. Because if you like diving back into the coding and you do it constantly, it’s gonna be difficult for you to step away from that and hand it over to somebody else and let them make all the difficult decisions.
You can, in some cases, stay heavily involved in the development side of things, if you wanna switch over to marketing, if that’s your passion, but I will say that it’s difficult to do both heavy marketing activities and also be heavily involved in the product architecture side of things especially if it gets to any level of complexity. It’s gonna be difficult. I would just keep those things in mind but it’s a balancing act.
There’s no one right way that’s going to work in every situation. It’s really about what is going to work for you and what is gonna be less distracting for you because if you’re in the middle of an email campaign, and you’re thinking, “God, I wish I can go in and fix this code,” for example and then you start doing it. You’re actually hurting yourself even if you have somebody else there who can do it and they are tasked with that.
You’re basically hurting the relationship or the parameters of the employee-contractor agreement by taking things over and doing them. Because then, it’s gonna feel to them like, “Oh, this person doesn’t trust me,” or “I’m being micromanaged.” Then you introduce yourself to a world of other problems that you had no idea that you were gonna run into.
Rob: Yeah. And to add one more piece of information, because we often shorten emails people send, and I skipped one paragraph. He said, “I run this business while working a full time job and I have a family. I spend around 45 minutes per day on ‘rock activities’.” Means developing new features, analyzing customer survey, planning new price points, like doing really solid stuff. Then another 45 minutes managing part time employees and generally trying to keep up with his inbox.
He’s very, very time constrained. That’s another data point. I think I’ll speak to his situation and then I’ll speak more generally. I think given his situation, it sounds, given that his time is so constrained, this is when I start to think about hiring help. At first it was VAs, then it was contractors even though I could write the code, and really enjoyed writing the code, with only 45 minutes a day for rock activities or big rock activities. I would seriously think about trying to find a good developer.
I think that’s the thing is he’s saying, “How can I train my thinking to allow myself to get out of the way?” It sounds like he already knows what the right answer is in his situation. I think that, assuming that the webapp features and having more of them are gonna help the business grow, and that there is enough competition that is warranted because sometimes, that’s not the case. Sometimes the app is good and it just needs marketing in which case I wouldn’t hire a developer, just let the app sit there, it’s a single feature, and it has a product market fit, and you just need to dump marketing into it, then go do that.
But if you really do need on-going development to continue acquiring new customers and/or compete with competitors, I would heavily, heavily lean in this situation towards finding a good contractor. I’m glad he suggested a $40/hour contract because I think at $15/hour, it can introduce a lot of headaches because you find kind of less experienced people and they can write crappy codes.
So yes, there is a hurdle, a mental hurdle to get over, I think I’ve repeated it to myself over and over, “Is this hassle worth it if it grows the business and allows me to quit my job?” What is your number one goal here? Is it to quit your job? Is it to have enough money to live on from your business and what’s the fastest way to get there? It’s probably, in this case, assuming you do need to develop features, it’s gonna be hiring someone.
I would also look, everyone else has done this, I shouldn’t say everyone else but a lot of people have done this. I made this work on a shoestring budget and almost exactly – [inaudible 00:28:47] you’re talking about, and so have many other people. Hiring developers when we were developers and it felt weird, and yes, you micromanage it first. You just figure it out.
As entrepreneurs, we tend to have growth mindsets, we tend to be somewhat flexible even if we don’t think we [inaudible 00:29:01] the code, and eventually you will, I think, feel better about it.
More generally when people ask this question, I kind of say, “What do you really wanna do? What’s gonna make you happy? What is your goal here?” My goal early on was to quit consulting and quit my job. That was more important to me than continuing coding even though I really, really liked to code.
For me, the quickest way to get there was to buy webapps or to pay contractors to build things because I was working 8-10 hours a day. I was booked full time, billing $100, $150 an hour, it didn’t make sense for me to take days when I was earning that money and go write something when I can hire someone back then for $20/hr, that was decent. That was my number one goal. I was willing to sacrifice writing code even though I loved it. Some people are not and that’s okay.
I listen to the Art of Product podcast with my co-founder Derrick and Ben Orenstein who a lot of folks know from MicroConf and Thoughtbot. I’m pretty sure at one point he said, “Yeah, if I’m gonna do a software product, I wanna write the code. I don’t wanna get out of it.” That’s okay. You can totally do this. You look at what Derrick did. Derrick still wrote a bunch of the code on Drip, or all the code for the first year.
In that case, he found essentially a non-technical co-founder in me. For Ben, I would just say okay, go into the business. But that can strain on you. You can do whatever you want. You’re just gonna have to move a little slower which is fine. You’re probably gonna have to contract out to do other things that normally I would tell you to do, like being the Chief Operations Office, handling and helping with support, and hiring.
If you’re really in the code, you need to be shielded from that. You’re gonna need to find somebody that can help shield you. Build a simpler product because you can’t build, and market, and do sales, and do all these things for a bigger product if you’re not gonna delegate the code. It’s gonna be a challenge for you long term.
But there are people that do it. Peter the CEO of Teamwork, he still writes some code. I’m sure he would admit that it’s probably not the best use of his time at times with a 100-150 person company, but he enjoys it so much that he still wants to be part of it. I think there’s leeway here but best practices, what I would advise, what I think maximizes your chance of success, and will get you there faster, is to stop writing code.
But I totally think you can succeed while still writing code if it really, really is what you wanna do, and you love it. I’ll add one final note. I still write code on the weekends. I wrote some crappy PHP script a few weeks ago just to scrape some websites and hit some APIs because it’s fun, for no other purpose and to do it. Even though I don’t do it for my job, I do have the freedom now to kind of do it for fun and really enjoy it.
I think we have time for one more question today. This one is about digital marketing and whether it works for B2B SaaS. This is from Alistair Scott from riskmemo.com. He says, “What’s the best marketing channels for B2B SaaS business? Is digital marketing such as Facebook, AdWords, etcetera, a viable technique for a B2B SaaS business or is it too broad?”
I don’t know if he’s talking about digital marketing or paid advertising because Facebook and AdWords are really more paid advertising. “My app will be ready to market in a couple of months, and I only need to target a specific role in a company, the person responsible for health and safety. I’m getting very promising feedback from people within my network but test digital marketing campaigns as a smoke test haven’t been successful. Your thoughts are much appreciated.”
Mike: I think this is a really hard question to answer because there’s so many variables involved in doing what appears to be just paid advertising which I think that’s what he’s referring to when he says digital marketing because there’s lots of other forms of digital marketing.
You could write ebooks for example. I’ve seen companies who write ebooks and then they publish it on Amazon and use that as a marketing channel. Now that’s digital marketing, but at the same time, you could also argue that it’s not necessarily marketing because you’ve got a book that you’re selling but you could say that’s a product, it’s a revenue stream. But at the same time, if you have a longer term goal of converting to people who are buying the book into customers of your SaaS application, and the book tells them how to do it, but your SaaS does it for them, then in theory that’s a marketing channel for you. It’s digital marketing.
I would differentiate between those two and say that digital marketing can absolutely work but it really depends on the specific implementation of it. In terms of doing paid advertising, it’s hard for me to say. I feel like there are certain types of industries where paid ads are simply not going to work. It’s not because they can’t work, it’s because the ROI does not work. The numbers themselves don’t make sense. If you have to spend $50 to get a customer and their lifetime value is only $30, yes, you can spend money and acquire those customers but you’re losing money every single time so you can’t sell at a loss and make it up on volume. It’s not gonna happen.
Rob: You make it up on volume.
Mike: Yeah, you can’t do that. I mean, you can but you’re gonna go broke. That’s the bottomline. You can try to spend your way out of it and maybe it’s possible that you have to do that in the short term to figure out something that you can tweak and optimize because your first cuts at it are not going to probably work out very well. You’re still learning what to do, what things work, what the software does, and how you target different types of people, and different companies. There’s a learning curve associated with it.
You’re not gonna be the best at it when you first go out there and try it but eventually over time, your costs are going to go down because you’re gonna get better at it, and you’re gonna be able to outperform your competitors, and get in front of the right people. That said, even after you have all that, it still may not work out financially because you’re still losing money on it. It could be that there’s other things that you have to do aside from paid advertising. But I think that if you’re selling a B2B SaaS product, in most cases, doing online marketing in some format, is probably going to drive revenue for you especially if it’s a low touch sales process.
If it’s high touch, the digital marketing may bring awareness, but you may very well have to do outbound campaigns, and cold calling, and direct marketing, and things like that. I would combine it if that’s the case but this sounds to me like this question’s really aimed directly at how do I do digital marketing to make it successful.
Rob: Yeah. The answer to will this work is I don’t know until you try it. That’s what I would do. I would think that your odds are gonna be…
Mike: Well, it sounds like he has tried it and it hasn’t worked.
Rob: Yeah, I guess you’re right. Here’s what I would think. Facebook, I can’t imagine it working for this. I don’t think you can get someone’s title from Facebook. Can you, in the ads? I don’t know what their segmentation is like these days.
Mike: I don’t know. I don’t think so.
Rob: Here’s the two things I would try for this; outbound email and LinkedIn advertising. Yep, LinkedIn advertising because you can then target based on someone’s title, their job title. You can title regions and all that stuff. Then outbound email, because then you just go somewhere, find a list, outbound email or calling, whatever it is. Because then you can find the list of people. It’s cold calling in essence but at least you know that they are the role that you need if it’s that specific.
I could see toying around with some AdWords because you don’t necessarily need someone to be the role but you need them to searching for something that implies they need your software. The problem with that is it’s gonna be too expensive. I don’t know any AdWords keywords anymore that are possibly affordable unless your LTV is just through the roof. Those are the two things I would try. Facebook, probably not. AdWords, probably too expensive. Thanks or the question. I hope that helps.
Mike: I think that about wraps us up for today. If you have a question, you can call it into our voicemail number at 1-888-801-9690 or you can email it to us at questions@startupsfortherestofus.com. Our theme music is an excerpt from We’re Outta Control by MoOt used under Creative Commons. Subscribe to us in iTunes by searching for Startups and visit startupsfortherestofus.com for a full transcript of each episode. Thanks for listening, we’ll see you next time.
Episode 379 | There and Back Again, a Founders Tale of Services to Product to Services
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In this episode of Startups For The Rest Of Us, Mike interviews Marie Poulin, chief designer and digital strategist at Oki Doki, about her journey from consulting to products and services.
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Episode 378 | Billing Systems Suck, Here’s How to Make Yours Suck Less
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In this episode of Startups For The Rest Of Us, Rob and Mike talk about billing systems. Some of the topics covered include monthly vs. annual, credit cards upfront/or not, dunning, and paid vs free trials.
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Mike: In this episode of Startups for the Rest of Us, Rob and I are gonna be talking about why billing systems suck, and how to make yours suck less. This is Startups for the Rest of Us Episode 378.
Welcome to Startups for the Rest of Us, the podcast that helps developers, designers, and entrepreneurs be awesome at building, launching, and growing software products, whether you’ve built your first product, or you’re just thinking about it. I’m Mike.
Rob: I’m not eating a sandwich.
Mike: We’re here to share our experiences to help you avoid the same mistakes we’ve made. What’s the word this week, Rob, aside from not having a sandwich?
Rob: I’m hungry and you’re eating a sandwich.
Mike: Yes.
Rob: You have a turkey sandwich.
Mike: I do. I described it to you in exquisite details just before the podcast.
Rob: I know you did. I’m like starving. I realized it was lunch time right now. This week’s pretty good, man. I think it feels like when I dropped my 11-year old off to school, was 23 below, but it’s up to 17 below. That’s not too bad. T-shirts and shorts day.
Mike: I think it was Brennan Dunn who had asked on Twitter earlier today why you didn’t ski.
Rob: I saw that. Yeah. I have a serious answer for it.
Mike: Oh, yeah.
Rob: Yeah.
Mike: I’ll tell you what, you give your answer and then I was gonna give my answer that I was…
Rob: Oh, got it. In all honesty, I grew up, we just didn’t really have the money to go to the mountains, and get all the gear, or I should say we spent the money doing other things. We didn’t go on ski vacations. There were mountains a couple of hours drive from us in Tahoe, but it just wasn’t a thing we did, and we always played sports, and so you didn’t wanna get injured, because I had friends who busted their knees up, they needed surgery.
I ran track for nine years, and my brother played football for eight. It was just something that we’re like sports were more important to us than the potential danger of doing that. That’s the serious answer. Now, what’s your take?
Mike: Mine was gonna be that because you grew up in California, whenever the temperature got below 70, you wrap yourself in a parka and just didn’t go outside.
Rob: This is true. Yeah, that’s the real answer.
Mike: But, of course, it’s ironic that now you’re in Minneapolis and it feels like 23 below.
Rob: I know. It hurts you’re nose and stuff, but man, with the right gear, it’s not the end of the world. You don’t wanna stay out for too long, but it sounds really awful and it’s fun. The sun’s out, you know, the sun’s shining, it’s bright.
Mike: As long as you’re not standing still, you’re fine. If you’re standing out there, of course, you’re gonna get cold, but if you’re moving around, it’s not a big deal.
Rob: Right. Yep. Anyways, I wanna extend an invitation. If you’re a listener, and you or your company might be interested in sponsoring MicroConf, or sponsoring some scholarships. We have quite a few companies that are lining up to pay for folks who can’t afford to come to MicroConf but feel those people would get some value out of it.
If you’re interested in doing either of those things, we’ll give you a recognition on the podcast. You’re obviously talked about a lot at MicroConf itself. And then we have you on the website, and people are hearing about you, you’re just kind of doing good for the founder community. Get in touch with Mike at sponsors@microconf.com.
How about you, what’s going on?
Mike: Well, I’ve had a rough week of support tickets after I pushed my new release. I’ve talked about this before. I was working on this major release. I got to a point where I’d done enough testing on it that I said, “Okay, everything looks good. Let me push this out.” Pushed it out, and see here is two weeks ago on Thursday. It was the week before I went to Big Snow Tiny Conf and pushed it out, everything looked fine, everything was great for four days or so.
Then, Monday I leave. Then, I started getting a couple of support tickets, and I started to get more support tickets. I ended up spending basically a full day while I was at Big Snow Tiny Conf just working on those things and trying to figure out what was going on. It got to the point where I actually rolled back to the previous release and then the problems kept continuing, I’m like, “Oh, God. What is going on here?”
Finally, I tracked it down, it turns out that it was a library from Google that I was using for authentication that was causing the issue, that was causing like one piece of the app to break. But everything else was still working. Eventually, I fixed that. Unfortunately, it was not actually directly related to the release itself, it happened to show up at the same time. I spent a lot of time trying to figure out what I did wrong versus, “Hey, what library is causing this?”
Rob: Wow, yeah, that sucks. That happens every once in a while. Obviously, it’s something you try to avoid but it will happen with these apps that we’re just constantly changing. It’s like you’re rolling changes out, or a library itself changes and breaks things. Are you completely past it now or is there any fall out?
Mike: I’m still dealing with the support issues here and there. Part of the reason for me pushing out was that I knew I didn’t have 100% test code coverage, but I also knew that the vast majority of it was working, and I just don’t know what little things are broken. There’s been a few things here and there that I’ve had to fix, but nothing major aside from the one issue, the Google library.
Everything’s working fine. It actually functions a lot faster, and is more scalable than it was before as well. I think it’s in a better place. It’s just that week or so was rough while trying to figure out what was going on. I was doing like a lot of stuff manually.
Rob: Yeah, that’s a bummer, man. That’s when your hair is on fire, and you’re not shipping any features because you’re just rushing around from one thing to the next, trying to figure it out.
Mike: What’s worse is that it’s just things sort of worked. That was the worst part. There were fundamental changes I made, and it’s just, I couldn’t figure it out. It’s just forever.
Rob: That’s a bummer. Cool.
What are we talking about this week?
Mike: We’re gonna be talking about billing systems, and mostly why they suck, and how do you make yours suck a little bit less. This question had come to us, I asked on Twitter what people wanted to hear, and Brennan Dunn had asked a question about billing. I pointed them to Derrick’s article, Derrick your co-founder on Drip, where he’d written a blog article about when to build your own billing engine. We’ll link that up in the show notes. This discussion, I think, kind of relates back to episode 375 where we talked about how to evaluate per seat versus tiered pricing models. But this is more about the mechanics of the billing system.
I think the place to start the discussion is really what is it that you’re actually billing people for? Because this is gonna impact your product messaging, your marketing, the positioning in the industry versus competitors, and the pricing itself.
Rob: Yeah. There’s a lot of things to think about with this. Brennan’s particular question was on handling annual billing and kind of talking through do you do credits versus just do an annual bill where you bill someone upfront. We’ll certainly be talking about that as well as a number of other things that you have listed here in the outline.
Mike: As I said with the first question, what is it that you’re actually billing people for. I think you have to narrow it down and talk about it in terms of what is going to be on your pricing page. I actually saw a website earlier today where they had three different pricing tiers, and then they had the enterprise plan which you would kind of expect.
But then when you start looking through at the different limits on the different plans, it was all over the map. It was actually very difficult to figure out where you would fit into each of these. They build on the number of users, and then there were two other metrics that they build on, but both of them were variable.
Some customers may have a lot of one metric versus the second metric. Some of them may have a lot of both, and then there’s obviously room for somebody to say, “Well, I don’t need that at all, that doesn’t matter to me.” Like, “Why am I actually being billed for this?” I just think that it’s interesting to note that. You have to make sure that what you’re billing people for is what they care about.
Rob: Yeah, exactly. We talked about this a few weeks ago with per seat versus kind of a metered billing based on subscribers, or disc space, or whatever. As soon as you go to multiple of those, you’re gonna make some people mad. That’s not to say you shouldn’t do it. But like we talked about, in the early days, you don’t have a lot of data, just pick one. Pick one thing to kind of meter on and make some tiers, and go with it. Then, as you get more data, you can later add them. But the more complicated your billing, the more complicated your billing engine. That is not something that you wanna be dealing with when you’re trying to find product market fit.
Mike: Some of the things you might want to bill people on, obviously, like there’s the pricing tiers themselves and the different metrics within it, but Drip for example uses a metered billing system. You bill based on the number of subscribers that are in your account. Why don’t you talk a little bit about metered billing because that applies a lot to web hosts, for example, where you’re paying for storage, or bandwidth, or processing usage, and things like that. But talk a little bit about what was it that made you decide to choose that specifically for Drip?
Rob: Yeah. Metered billing is a bit of a misnomer for Drip. When I think of metered billing, I think of Amazon, AWS, where it’s truly like per minute billing, or per gigabyte used, whereas Drip is metered with tiers, and it’s based on subscriber count.
In the early days of Drip, it was a different metric. It was the number of new subscribers you got into your account each month because Drip was more focused around just having an email mini course. It was not a full-blown ESP. Once we became an email service provider, it just made more sense to kind of fit into the mental model that other competitors were doing. That’s how we started.
It probably won’t be that way forever. We’ve got to the point where we’re a marketing automation platform now, and there are some people with 20,000 subscribers who send 4 million webhooks a month. It really hammers our servers, and you think about it, and you’re like, “Huh. That person’s actually getting quite a bit of value out of Drip. More value than someone with 20,000 subscribers, and sending 0 webhooks, and it costs us more because we need to add more servers and such.”
There’s something to think about. Again we started fairly simple, we adjusted, we’ve had multiple versions of our billing. At this point, for the most part, how many subscribers you have should be how much value you get out of the app. That’s the key thing to think about. What is the thing in your app that someone gets a lot of value by having more of it?
With Amazon EC2, which is Elastic Computing, it’s how many minutes you have a server running. With Dropbox, it’s how much storage space you need. With something like Drip, it’s how many subscribers you have or email sends. You could argue that way, but the standard way to do it is subscribers. Or with a tool like a CRM system or a sales management system, it would most likely be seats, because the more people that are using it, the more value you get out of it.
Mike: That’s kind of an overview of the metered side of things, but then there’s also per subscription, and you also mentioned per user, and then you could feature gate based on the features themselves. You could charge more for certain features versus other features. You could have add-ons. But all of these things kind of factor into what it is that you’re actually billing people for, and that’s what you need to pay attention to when you’re looking at your billing system or you’re trying to implement one for your product.
Once you’ve decided on that piece of it, you need to understand whether or not you’re gonna be offering a free trial, or it’s essentially going to be paid upfront. That has implications on the database itself, and whether you can have a user that doesn’t have a credit card. Do they have to give you money first? Do you have the opportunity to put something in there that says, “Okay, somebody can sign up without a credit card.” Do you have to build that side of things?
These are things that I’m kind of looking at now with Bluetick. Initially, it was designed in a very particular way, and then I just kind of ripped out the subscription side of things and then did everything through like a WordPress plugin and had people paying me that way. I’m just kind of like manually doing things back and forth to kind to synchronize between Stripe, and between the application. I’m still doing that today. But it made me think about, “Oh, well, had I gone down the road of trying to design all these things in early on, it would have been a lot more difficult because I was trying to answer questions that I didn’t know the answers to, it just would have been really, really hard.”
That’s something else to think about. Are you going to require that credit card upfront or not? Can you have users without a subscription attached to them? Can users be shared between accounts or between subscriptions, for example, are you gonna have a multi-user system? Those are things to take into account.
Rob: Yeah. I think there are four stages, or four different levels of providing friction upfront. Friction is a negative way to say it, but it’s how a new trial user will think about it. You can ask for a credit card upfront and charge them in advance. Then, refund them on request. That’s the most amount of friction because they literally have to put money out. You can ask for credit card upfront and not bill them upfront, but then bill them after a 14-day trial, or 21, or 30-day trial. That’s a pretty standard way to do it.
You can not ask for a credit card upfront. I guess there’s only three, as I’ve thought through it, you cannot ask for a credit card up front then they basically have a free trial until it expires, and then at that point you ask for a credit card. I guess the fourth would be that it’s a free trial, a freemium model where it’s free perpetually at a small usage number like a Dropbox, or like Drip, Drip has a forever free plan.
Typically, when I default, it depends on the space you’re in. If you’re B2C, you’re probably gonna wanna go more either freemium or no credit card upfront. Your conversion rates to paid are gonna be a lot lower. But you’re gonna get a lot more people in the funnel. If you’re going enterprise, you either want to not have self-service sign up at all or if you’re more mid market which is below enterprise but not quite small to medium, you probably don’t wanna have a credit card because a lot of folks let’s say you’re in a $50 million company, the marketing manager may or may not have access to a credit card to just sign up for free trials. It’s not as common as we think it is when you’re dealing with really small businesses or kind of 10-person startups like we think about.
But for the most part, if you’re going kind of B to small B, B to SMB, might think of an app like HitTail, I think of maybe even like a Bluetick. They’re probably gonna have a credit card available, asking for it upfront does not tend to be too much of a blocker and having a free trial where you charge them at the end is what I’ve defaulted to in the past. Probably, if I were to launch a new app, that’s what I would do.
The one kicker there is if you have enough people who can handle the support and/or the sales burden of all the leads that you’re gonna get without asking for credit card, then by all means, do that. But you’re gonna have more pre-qualified leads, or I should say, the leads you get, you’ll have fewer of them but they’re going to be more qualified if you do ask for that credit card. It is a way to limit the number of people that are signing up for your app if you are bootstrapped. If you’re underfunded, and understaffed, asking for a credit card upfront is a good way to do that.
But there are pros and cons to each of these. It’s probably an entire episode on its own. I think we may even have one or two episodes where we just discussed that. But those are the kind of levels to think about. All of those impact your billing system, because it’s gonna impact how your billing systems works, when emails are sent out, if you have a trial versus credit card. You have an entirely different sequence of emails that need to be triggered to notify people.
My advice is if you’re gonna build a billing system that’s gonna handle this, then, you keep in mind that you very well may want to switch this. You don’t hard code a bunch of stuff. You make it extremely flexible, such that you could later go in and just change the length of your trial without modifying a bunch of code and having to retroactively update the database, or that you can switch from credit card upfront to credit card after without catastrophic consequences.
Mike: That’s all the hard part really is trying to figure out all that stuff out in advance, and knowing that if you go down a particular path with the marketing side of things, if you want to experiment or change things, or run into and educate a certain situation that you didn’t expect for example, the person signing up does not have a credit card available for them typically that they can use for this.
Or if they want to be able to sign up for it, and then use the value that they received out of it to go back to their manager and say, “Hey, can I get the corporate credit card now?” Versus asking for it upfront, kind of putting their own reputation on the line. If things don’t work out, then they look bad to their manager. Those are things that you probably don’t know upfront until you get far enough down the path of validating the product for your customers and getting them on boarded. You have to be able to reverse course on some of those things, and that’s what makes this stuff challenging.
I guess the next question is where do you store this data? Where do you store this information? I referred to this kind of thing or this question as what’s your source of authority? A lot of people just use Stripe or whatever the payment gateway is that they use for it. A lot of different payment vendors will have this data available for you, but it’s not always easy to get at and there may not always be an API for it.
I think most listeners are probably developers and they’re going to want to store this information in their own database, but you can only store so much of it. You can’t store every credit card number for example because it’s a PCI compliance violation. There’s a lot of stuff that you can’t store in your own database. There’s gonna be a need to synchronize, in some way, shape, or form between your own database and the other systems. Is that gonna be webhooks? Is that going to be a data dump that you just bring down from them, and upload into your own database? Do you need to synchronize with an accounting system? Those are all the things you need to at least think about.
But really, the fundamental question you’re trying to answer here is what is going to be your source of authority for this data, because you have to keep in mind not only all of those things, but all of the different situations that we’ve talked about previously. Where are you getting credit card upfront, or afterwards, and then other stuff that we’re gonna be talking about which is things like chargebacks and credits, and upgrades, and downgrades, and proration, and things like that.
Rob: Yeah. In the past, I think HitTail was already built, it was actually built using PayPal subscriptions. I acquired it, I turned it to Stripe, and I kept some of the info in the database but I also had to login to Stripe to do certain things, and that was a pain in the butt and I regretted it.
When we did Drip, we agreed that the Drip database itself would be the source of truth, and it was made super easy to report so that you could just do a select in the database. Didn’t need to go out and hit other APIs. That meant that every monetary transaction has to come from within the Drip app. We have a web admin where you don’t go into Stripe to refund people. You literally hit a refund button in the Drip admin, it goes out and hits Stripe and refunds it.
In very early days, it was kind of a pain in the butt because let’s say we had a refund the second month we were live and we had 20 people, 20 customers, I remember saying, “Derrick, I’m just gonna go onto Stripe really quick and do it.” He said, “No, no, no. Don’t. We want everything in the database, and I don’t wanna have to go back.” He spent an hour wiring up a little refund button, just hacking it in. It was kind of a pain in the early days because I didn’t wanna spend that time working on that. But now, once we kind of hit escape velocity, I was very, very thankful that we did take the time to do it.
Moving forward, if I were to build another app like this with recurring billing, I would want all the data. I would lean towards having all of the data in my database. But there obviously are tradeoffs with that, because it’s gonna require a little more time upfront.
Mike: Yeah. I was gonna mention that. The requirement for you to essentially do development every single time you need to make an update in one of those systems, it just adds to the number of things that you need to implement. Sometimes, they’re not always straight forward, not every vendor has an API that’s as easy to navigate and use as Stripe does. A lot of them are just terrible, some of them just don’t have something you can use.
There’s other sides of storing all of that data in your own app which is, for example, reporting or using other third party services like dunning services, or something like Baremetrics where you’re trying to figure out what does my revenue look like over time. You may be able to hook it in, and just say, “Okay, use Stripe and pull that information out.” But if you’re doing your own billing system with your own subscriptions versus Stripe subscriptions, it can be a lot more difficult to pull those reports.
Rob: That’s exactly correct, yup. It’s a bummer there. A bunch of services that you’ve named, Churn Buster, and I think Stunning, and certainly Baremetrics, and there’s a bunch that tie into Stripe subscriptions. If you don’t use that and you build your own, you miss out on that.
That is something that we did. We had to build some additional reporting that we know we’re not gonna be able to get from those apps, and that’s the tradeoff we had. The Drip billing is complicated enough that Stripe subscriptions were not a fit for us. It would have been catastrophic. We would have been very, very limited if we had used them. But there are cases where people are not bouncing up and down tiers as frequently, and you don’t want to take control of let’s say the trial and how prorating and all that’s done where Stripe subscriptions, I think, are a fit.
Mike: You mentioned upgrading and downgrading, that’s something else we should probably dive right into. I think this goes partially towards monthly subscriptions. I think you can get away with, let’s say for example, somebody decides to upgrade their account or downgrade their account, I think a lot of times you’d get away with it if they’re in a monthly subscription to not bother prorating it.
Either you just bite the bullet and take the loss on it or you kind of eyeball it, and say, “Okay, we’ll charge you this much to kind of get it in there.” Stripe does have a proration option that you can use. But if they’re on an annual plan and they decide that they wanna upgrade three months into it, what do you do? Clearly, you’re probably gonna wanna upgrade them at that point, but if they’ve already paid for a year in advance, you can’t just charge them for another year and extend the contract by another year on top of that. That’s something your billing system is going to need to take care of and handle.
In addition to that, there’s downgrades, but what happens if somebody accidentally upgrades, or they upgrade, and then the next day they upgrade again, or they upgrade an hour later, for example, maybe they chose the wrong one, how do you handle that?
Rob: Yeah. There’s a bunch of different ways to handle it, and all of them has some type of negative outcome, including just being confusing if it’s hard to explain to people, they might get confused. There are ways to do it. If you’re gonna do it annually, you can do it with credits where someone just buys a certain amount of credits upfront and then you consume them overtime. They could pay $500, get $600 in credit. Then, as they go up and down each month, you’re just drawing from their credits. That’s the way we chose to do with Drip.
Derrick and I had a three hour whiteboarding session trying to figure this out. I remember, trying to decide which approach to go. If you look at WP Engine, if you sign up for an annual account, you pay in advance, then you have overages like, I think, too many people hit your site or whatever, I think they just bill you that month. They’ll say you went over by $10, and here’s a $10 charge to your card. They trust that the card is gonna be good on file for the duration of that year. That’s certainly another way to approach it.
This is not an annual thing, but if someone’s mid-month–we have Drip customers who will literally get upgraded three times in a month, or four times in a month because their list is growing so fast. Each of those times, you can either bill them right on the spot as it goes up, which gets a little irritating for people, they don’t like seeing a bunch of charges, or you can bill them, you’re essentially billing them at the end of the month for the prior month’s usage. That’s how MailChimp does it. That’s how a lot of ESPs do it actually. When your first month billing is the plan, it bills you for the next 30 days for the plan that you’re currently on, and then, at the end of that month, it looks backwards, and it bills you for the next month, but it bills you the amount of the prior month. Again, it’s a little confusing, but it’s kind of technically the right way to do it, or certainly an accurate way to do it.
Mike: Yeah. That’s the problem with that type of metered billing, or a situation where they could go over some particular limit and you have to charge them more is that you don’t know that until afterwards. Clearly, if somebody goes over by one unit of whatever it is on a given day, you don’t wanna charge them for just that one, you wanna wait until the end of the month. It really depends on what the thing is that you’re actually billing people for. All the different other situations that could potentially come up, and anticipating those, and gearing your billing system to account for those, not just from a technical standpoint and a monetary standpoint, but how is it going to make the customer feel?
You mentioned the idea that somebody doesn’t wanna see a bunch of charges on their card, especially in a short period of time. If you’re charging them at the point where they upgrade or downgrade, that could be an issue because then they’re seeing all these things that are all on a short period of time. I use an American Express for a lot of things. I have it hooked to my phone. I will get like a little notification every time something gets charged on it. If other people have that hooked up, they’ll see it every single time you do it. You have to be sensitive to that kind of thing.
Rob: Another thing to think about is versioning your pricing and/or grandfathering. These things are related. Typically, if you’re gonna build your own system, you may change pricing overtime. You may even change what you bill on. Like I had said in the early days of Drip, we billed on the number of new subscribers, and now we bill on the number of subscribers that you have in your account at any given time.
During those changes, you don’t just want to rewrite your billing engine, you don’t just wanna rewrite that code. You wanna have a version of it that can still run at least in the short term, or if you decide to grandfather people, existing customers, which is what I’d recommend. It isn’t always the thing to do but it’s what I’ve always done. Eventually, at some point, you run an app for 10, 20 years, you probably don’t wanna have all these people still grandfathered in at your prices from 20 years ago. But grandfathering in in general, especially for long term customers, it makes them feel good, and let them know that you’ve done that. You can send out the email and say, “Hey, pricing is going up, but we’re gonna grandfather you in for now.” It’s also cool, you can use this as a way to get a bump in trials, or bump in new customers, is to be public that prices are going up in two or three weeks. If anyone’s on the fence thinking about signing up, they’ll sign up if you are gonna indeed grandfather people.
Mike: Something that’s probably not talked a lot about when you’re dealing with the billing system is things like chargebacks or credits. Let’s say that you have a customer where something goes wrong, or maybe you lost data of theirs, or something went wrong with their account, or you’ve made a promise that such and such feature will be delivered, and you had to roll it back, and it’s just not there or you wronged them in some way, or even if you just wanna give somebody a warm fuzzy feeling because you think that they deserve it or just wanna promote some good will, you may give them a credit.
If somebody’s really pissed off at you, they could do a chargeback and then those things need to somehow be reflected in whatever your source of authority is. If you’re doing that in your own database, you have to have the mechanisms in place to be able to surface those things, and then also be able to account for them in your reporting plus the customer’s reporting. If they have a page where they can go and see what they’ve been billed, they need to be able to see that stuff.
Rob: Another thing to think about is whether your free plan, if you have a free plan, if that is a billing plan. In general, I would recommend, that yes, it be a billing plan. It just helps with reporting and it helps if someone’s on a free plan that they get an email receipt at the end of every month saying, “Hey, you were billed $0 for this account.” Reminds people that the account is there. Obviously, people can cancel the account if they don’t wanna get the email anymore, but in our early days, we have compt accounts for developers who are working on integrations, and of course, we have a free plan now, and everyone gets essentially an invoice email that says, “You’ve been charged $0.” We really haven’t had issues with that. I think that’s the way to go.
Mike: Yeah. But I think that’s easy to overlook as well, because if you’re thinking about writing a billing engine, you’re not thinking about how do I send an invoice to somebody for $0 because they’re not being charged. Why would you even do that? But the points that you bring up are valid. I think the one that’s the most benefit you is that it gets you another excuse to get in their mailbox every month. Even if it’s for a free offering or you gave somebody a free plan.
I guess you probably wouldn’t do this for an annual plan, because you’re only sending them the billing emails at the billing cycle itself. You’re not gonna email them every month, but for all the other ones, you’re gonna wanna send that email regardless whether or not they got charged so that, if they’re not using that product, and you don’t have other automations in place to help bring them back, then it does remind them that the account exists, and they could use it.
I think the one other thing to think about that is probably not really commonly thought about for annual plans is that there’s an implication and an impact that an annual plan can have on an acquisition offer. If you are selling a business, or buying one, if there are people who have paid for annual plans, and let’s say that somebody gave you $1000 for an annual plan, if you’re six months into it and let’s say that you go to sell that business, well, whoever you’re selling it to is on the hook for delivering the other $500 of value that you’ve promised to that customer.
There’s almost a little bit of debt here that you’re accumulating in the product by offering that annual plan if you were to transfer ownership of it to somebody else. The reverse is true as well. If you buy a product from somebody and there’s a bunch of annual plans that have been paid, you still need to deliver on those services for the annual plans because that money is presumably already spent, or is considered inside of the bank account. But that’s something you have to take into account when you’re either acquiring or selling a company. If the company is big enough, that could mean a lot of money in one direction or the other.
Rob: I never sell lifetime plans.
Mike: Yes.
Rob: Throw that in there.
Another thing to think about is dunning. I remember, the first time I heard this phrase, I had no idea what it meant, but it just means how do you let people know that their credit card, or their payment method is failing? If you’ve used Stripe subscriptions, then you could use something like Churn Buster, or Stunning. If not, then you’re probably gonna have to either write your own. I think, with our Drip billing engine, we throw an event into Drip and it triggers a workflow in Drip. We’ve built it out in Drip which is an easy enough way to do it. But you do need to think about this.
Whether you’re gonna have to make phone calls, that’s the other thing. Are you gonna call people or are you just gonna email them, because you’re gonna get a lot more credit card members and accidental churn, in essence, or involuntary churn as it’s called. You’re gonna get a lot less of that if you make the phone calls. But do you have their number? Do you have the time to do that? I would say if you’re at any scale that it is worth your time to collect that phone number and give them a call, even if you’re not and you’re just in their early days, I would definitely use email. You’re gonna have to hit them up multiple times. You’re gonna wanna retry the charges as well, so there’s a lot to think about here.
That’s the cool part, if you do think about using Stunning or Churn Buster. They have figured out the best practices, so you don’t have to do that. I will disclose that I am an angel investor in Churn Buster. I’m not trying to necessarily promote them. But I do know that they get better results than you will probably get early on until you’ve done some testing, and you’ve seen what works, which may or may not be worth the effort.
Mike: That’s kind of the benefit of using those types of services. They’ve already got the process laid out, because they’ve worked on it, and implemented it with multiple people. If you’re doing all of this yourself, then you’re essentially forced to figure out what that process should look like, then evaluate later on whether or not it’s a good process. They’ve done that work for you so that you can just pay them. It kind of gets taken care of versus building it all out yourself and doing all the work and then kind of recovering from the mistakes that you’re gonna make along the way.
I think one of the most painful things that I’ve found is dealing with currency, taxes, and invoices. Depending on what it is that you’re selling, you may or may not have to collect sales tax for it. But currency, being able to accept currency in multiple denominations, and be able to provide invoices to people, it seems like you wouldn’t necessarily need that. But there are people in certain countries where they absolutely have to have an invoice, and there’s really no way around it. You can do them manually but it’s still painful to have to do it.
Early on, you can just do them manually, and you get on with your life but it’s nice if you can batch them up. But having an invoice in the apps so that your customers don’t have to ask you every single time, once you get to a certain scale, it really is not feasible to do them manually anymore. You just can’t do it. Either you have to build something, or you can use off-the-shelf services like Chargify or Chargebee, Biddly I think it is. Spreedly, I think that’s what they’re called. But a lot of them will create these invoices for you so that you don’t have to do it. But again, there’s downsides to that, because you have to do all the integrations with them. They will take care of a lot of these things that we’ve already talked about.
Rob: Invoices are something that will be a pain for you, if you have customers in the European Union. Because in the US, you don’t need to give every customer an invoice and they’re able to write stuff off. But in EU, they need an invoice with a bunch of specific stuff on it in order to be able to write it off.
What we did early on is just made a simple Ruby on Rails template, and it’s an invoice. You just click it right from your billing page in Drip and it spits out all the info that you need. The first few times I was doing it manually in a Word doc, and it gets old really quick, especially if you’re gonna have to do that every month. Something you’d wanna think about once it starts becoming a pain but don’t prematurely optimize that one.
Mike: Then, the last thing to think about when you’re looking at a billing system is whether or not you’re going to have multiple products. Are those products gonna be tied to specific subscription plans? For example, if you have three-tier subscription plan, and you can buy this particular add-on or service, but it’s only available if you buy the third tier. Those things have implications on your backend design, and how you account for it in not just the billing engine, but also in your reporting as well.
These are things that can be difficult. They can be hard to figure out how are you going to put those in but it is something to consider because you may get to a point or a situation where you realize that your product itself is probably something that could stand alone. But it may do better as a productized service offering where you have this add-on service, or there could be other add-on services that you discover later on, and say, “Hey, I could make an extra $500, or $1000 per customer that I sign up,” or maybe you have an onboarding fee, or a consulting fee, or something like that that you add in there.
They could be potential revenue generating opportunities, but it impacts how you implement and design everything. Those are things that are worth considering. But I wouldn’t say, as Rob said earlier, don’t premature optimize for those things. But just be aware that they do exist, and there are other opportunities there.
Rob: Lastly, you’ll wanna think about reporting. How are you going to see which payments are failing? How are you gonna see how many new trials you have, how much money you’ve made each day, how much money you’ve made each month? Are you gonna build out extensive reports, or are you just gonna have a raw sequel query in the early days?
If you’re a developer, that’s what I would do. But you gotta think about that as your team grows. As you start getting other people on board, you will need to build some type of dashboard if you don’t have one from your billing system provider, or something like a Baremetrics that can just link right into your Stripe subscriptions.
There’s pros and cons to both of these. I think if you have the ability to just use a third party, do that because building these things is such a pain. But you do get more control when you build them and overtime you can extend it. You can do exactly what you want with it, again, since we didn’t use Stripe subscriptions, we did build our own dashboards. We have some pretty killer stuff inside Drip that’s abled, that’s predictive, and then there’s also historical.
I can tell this by looking at a few numbers kind of where we are in the month at any given time. You will definitely wanna have some kind of nice reporting with the SaaS app, because your metrics are really the lifeblood of the company.
Mike: There’s advantages to integrating with these third party subscription management software companies, but at the same time, you don’t necessarily wanna go down that road early on if you can’t afford it. That’s just the tradeoff that you need to make. It’s like the classic. Do you build it or do you buy it? We kind of talked a lot about the different things to be careful of if you’re building it. If you don’t wanna go down that road, then, buying something off-the-shelf is also an option.
Rob: Well, Mike, I’m off to go eat a sandwich. If you have a question for us, call our voicemail number at 1-888-801-9690 or email us at questions@startupsfortherestofus.com. Our theme music is an excerpt from We’re Outta Control by MoOt. It’s used under Creative Commons. Subscribe to us in iTunes by searching for Startups and visit startupsfortherestofus.com for a full transcript of each episode. Thanks for listening, we’ll see you next time.
